GCC markets track Saudi gains_ but volatility remains

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					                                                                                     US MAY TAP                                                    ASIAN
                                                                                     STRATEGIC                                                     NATIONS
                                                                                     OIL RESERVE                                                   DOLING OUT
                                                                                     TO EASE                                                       SUBSIDY
                                                                                     SOARING                                                       TO CURB
                                                                                     PRICES                                                        INFLATION
                                                                                     PAGE 26 | IN THE PIPELINE                                     PAGE 27 | GLOBAL ECONOMY

                   Bullion Market

                   Crude oil
                                                                     +2.01                                                                                                                                        “           ASSETS
                                                                                                                                                                                                                              “People are definitely a
                                                                                                                                                                                                                              company’s greatest asset.
                                                                                                                                                                                                                              It doesn’t make any difference
                                                                                                                                                                                                                              whether the product is cars
                                                  PRICE         PERCENTAGE

                 USD / BBL
                                                                                                                                                                                                                              or cosmetics.”
                                 BRENT            115.97             +1.03
                                 WTI              104.42             +2.46
                                                                                                         Monday, March 7, 2011                                                                                                –MARY KAY ASH

       Please send all press
   releases, coverage requests
     and invitations regarding
    business events meant for
                                                                       GCC markets track                                                                                                                Stuttgart now
          Qatar Tribune to
                                                                       Saudi gains, but                                                                                                                 QA’s fourth
                                                                                                                                                                                                        gateway in
 Burst of hiring could mark
 turning point for jobs
                                                                       volatility remains
 WASHINGTON Companies added                                                            DUBAI
 more workers in February than in                                                                                                                                                                       TRIBUNE NEWS NETWORK               of Qatar Airways’ inaugural
 any month in almost a year — a                                        GULF Arab markets rose on                                                                                                                 STUTTGART                 flight QR937 at Stuttgart
 turning point for the economy                                         Sunday, with the Dubai and Kuwait                                                                                                                                   Airport, the aircraft was
 that finally pushed the unemploy-                                      benchmarks pulling away from six-                                                                                                QATAR Airways is celebrat-         welcomed by a dramatic
 ment rate below 9 percent.                                            year lows to track gains a day earli-                                                                                            ing the launch of scheduled        water salute and met by
 Economists say the stronger hir-                                      er on Saudi Arabia’s bourse, the                                                                                                 flights to Stuttgart following      senior airport officials and
 ing should endure all year. The                                       region’s largest.                                                                                                                the arrival of its inaugural       local dignitaries.
 222,000 jobs the private sector                                          The kingdom’s index rose 0.9 per-                                                                                             service from Doha to the              Addressing guests at the
 created more than offset layoffs                                      cent after surging 7.3 percent on                                                                                                Capital       of      Baden-       airport       ceremony       in
 by financially squeezed state and                                      Saturday to end a 14-session losing                                                                                              Wuerttemberg, Germany’s            Stuttgart following the lat-
 local governments. They slashed                                       run.                                                                                                                             sixth largest city and one of      est European route launch,
 30,000 jobs, the most since                                              “Buying is short-term and based                                                                                               the country’s economic             al Baker said: “We are
 November. The unemployment                                            on a market bounce, rather than a                                                                                                powerhouses.                       delighted to add Stuttgart to
 rate sank to 8.9 percent, the low-                                    full recovery,” said Walid Shihabi,                                                                                                 Qatar Airways is the only       our international route net-
 est since April 2009. The rate                                        Shuaa Securities chief executive.                                                                                                Gulf carrier to operate serv-      work and further enhance
 has now fallen almost a full per-                                     “Saudi Arabia is looking for direc-                                                                                              ices to Stuttgart, establish-      our presence in Germany,
 centage point in just three                                           tion and the main concerns remain.”                                                                                              ing vital links between this       clearly proving how impor-
 months — the sharpest drop in a                                          Gulf Arab markets had tumbled                                                                                                 highly important German            tant this dynamic market is
 generation. (PG 30)                                                   in the wake of deadly unrest in                                                                                                  automobile centre and rest         for Qatar Airways.
                                                                       Oman and Bahrain, sparking fears                                                                                                 of the world through con-             “Stuttgart, as an attrac-
                                                                       turmoil would spread to Saudi                                                                                                    venient connections via its        tive business location and
Foreign carmakers make a                                               Arabia, with the latter’s Shiite          marches would be enforced.               swung to a fourth-quarter profit.              Doha hub.                          driving       force    behind
beeline for Russian market                                             minority staging some small                  Dubai’s index made its largest gain      “It’s mostly down to Saudi’s rise             Stuttgart becomes the           Germany’s strong econo-
                                                                       protests in the oil-producing east-       in four weeks, rising 2.7 percent.       yesterday, but there’s also some              airline’s fourth German            my, is a destination of great
MOSCOW Russia’s car market is                                          ern region.                                  Air Arabia climbed 2.2 percent        euphoria from Zain announcing its             gateway and represents the         appeal and potential for
again tempting the appetites of                                           Some buyers have now returned,         and was the most active stock,           dividend,” said a Kuwait trader who           first step in capacity              Qatar Airways. Qatar has
foreign carmakers lured by the                                         but volatility remains acute.             accounting for about a fifth of all       asked not to be identified.                    increases across Germany           one of the fastest growing
country’s vast potential and a                                            “Gulf markets have been taking         shares traded. The low cost carrier’s       “The market no longer thinks the           during March, when addi-           economies in the world and
rebound from the global down-                                          their cues from Saudi Arabia, with a      shares had slumped on fears              Zain-Etisalat deal will go through,           tional flights to Frankfurt         we are delighted to link the
turn. Several alliances to produce                                     very strong correlation,” said            regional turmoil would disrupt its       but a nice dividend yield is good             and Munich will be intro-          two dynamic powerhouses
cars in Russia have been                                               Haissam Arabi, chief executive and        operations and as rising oil prices      compensation.”                                duced. The Berlin route            with non-stop flights, fos-
announced by foreign and                                               fund manager at Gulfmena                  likely increased fuel costs for air-        Zain shares are widely used as col-        remains daily non-stop             tering       business       and
Russian enterprises in the space                                       Alternative Investments.                  lines.                                   lateral by investors to borrow from           from Doha.                         tourism ties.
of just a few weeks. (PG 28)                                              “This is a great opportunity to sell      “Near term volatility should con-     banks and lenders’ shares were                   On board the maiden                “This is the start of a busy
                                                                       rather than buy — nothing much has        tinue. Last week’s sell-off was over-    among the biggest gainers. Kuwait             flight to Stuttgart was Qatar       week for Qatar Airways in
                                                                       really changed in terms of the            done,” said Shahid Hameed, Global        Finance House climbed 5.7 percent             Airways’ Chief Executive           Germany. In three days’

    Information                                                        regional political picture. There are
                                                                       rumours of more protests taking
                                                                       place in the Gulf and March 11 will
                                                                                                                 Investment House head of asset
                                                                                                                 management for the Gulf region.
                                                                                                                    Kuwait’s index rose for a first ses-
                                                                                                                                                          and Gulf Bank rose 3.2 percent.
                                                                                                                                                             National Bank of Kuwait fell 1.5
                                                                                                                                                          percent after Moody’s put Kuwait’s
                                                                                                                                                                                                        Officer Akbar al Baker, who
                                                                                                                                                                                                        led a high-profile delega-
                                                                                                                                                                                                        tion,      including      the
                                                                                                                                                                                                                                           time we will increase the
                                                                                                                                                                                                                                           number of flights between
                                                                                                                                                                                                                                           Doha and Munich from
                KIOSK                                                  be a key day to look out for in Saudi.”   sion in four.                            largest listed lender on review for           Germany’s Ambassador to            daily to 11 flights a week.
 Exchange Rate                                                            More than 17,000 have backed a
                                                                       call on Facebook to hold two
                                                                                                                    Zain, subject to a protracted $12
                                                                                                                 billion takeover bid by the UAE’s
                                                                                                                                                          possible downgrade.
                                                                                                                                                             Oman’s Renaissance Services
                                                                                                                                                                                                        Qatar HE Anne Ruth
                                                                                                                                                                                                        Herkes, and key media rep-
                                                                                                                                                                                                                                           Also on March 9, we will
                                                                                                                                                                                                                                           once again be participating
Currency                       buy QR        sell QR                   demonstrations in Saudi Arabia this       Etisalat, ended flat, having surged       climbed 4.4 percent after saying it           resentatives from across the       in the world’s largest travel
US                             3.6315          3.648                   month, the first one slated for            4.7 percent in the preceding session.    aimed to raise about $500 million             Gulf.                              show ITB in your capital
Euro                           5.0015        5.0951                    March 11, while Saudi authorities            The telecoms firm has proposed a       in a London listing of a Dubai-                  Following the touchdown         city of Berlin,” he said.
Pound Sterling                 5.9102        5.9818                    on Saturday warned a ban on               200 fils per share dividend after it      based unit.
Indian Rupee                   0.0798        0.0815
Pakistani Rupee                  0000         0.043
Philippine Peso                  0000        0.0851
Sri Lankan Rupee
Bangladeshi Taka
Nepalese Rupee
Japanese Yen
                                                                       Bahrain mulls housing scheme to tackle grievances
Kuwaiti Dinar                  12.939        13.189                          ZAWYA DOW JONES            “into a huge workshop,” the        Protests      demanding         Bahrain’s largely-Shiite      announced on Monday—                 also working to set up a
Saudi Riyal                     0.957        0.9736                              MANAMA                 country’s newly-appointed        political reform—and more       opposition movement has         the government will give             mortgage guarantee system
Omani Riyal                     9.246         9.486                                                     minister of housing, Majeed      recently the government’s       long pointed to inefficiency     private developers about 20          through a local housing
UAE Dirham                      0.977        0.9938                    BAHRAIN’S government             al Alawi, said in an inter-                                      in the government’s social      percent of the land on which         bank, and will boost home
Bahraini Dinar                  9.541          9.691                   plans to build 50,000 hous-      view this week.                    Over 45,000 appli-            housing scheme and opaque       they will be hired to build          loans to existing land-own-
Source:                                            ing units in three years to        “If you give people a            cations for low-to-           land sales as signs of cor-     houses, in order to reduce           ers by BHD20,000 to
                                                                       meet a gap in social housing     decent house, a decent job,        mid income hous-              ruption and discrimination      the government’s develop-            BHD60,000, Alawi said.
 GCC Market                                                            that has had families wait-      freedom to express them-           ing units are on a
                                                                                                                                           government wait-
                                                                                                                                                                         against the Shiites, but the    ment cost and allow it to sell          The move comes as the
                                 index change %                        ing for more than a decade       selves, and political repre-                                     need to build homes for the     houses to citizens at cost.          latest in a series of meas-
                                                                       for homes, as it moves to        sentation, then you will real-     ing list, some dat-           lower income population is        Alawi said government              ures announced to assuage
 Qatar Exchange                      -         -
                                                                       address longtime popular         ly have peace,” Alawi said.        ing back to 1990.             widely recognised as a          land has already been allocat-       protestors camped out at a
 Muscat Securities Market        6,403    +0.81
 Dubai                           1,389    +2.72
                                                                       grievances.                      Some 45,000 applications         dissolution—have moved          major social issue the gov-     ed to the project. “I have the       major roundabout in the
 Abu Dhabi                       2,558    +1.12
                                                                         The $6.6 billion housing       for low-to-mid income            past their third week in        ernment has yet to tackle.      land, I have the money, I have       city, and urge the opposi-
                                                                       programme, which the gov-        housing units are on a gov-      Bahrain, a tiny island            “Housing now is the most      the plans, I have the architec-      tion to open dialogue with
 Kuwait                          6,189    +0.69
                                                                       ernment will develop in          ernment waiting list, with       Kingdom with a restive          pressing issue in Bahrain,”     tural designs, I even have the       the country’s crown prince,
 Bahrain                         1,395    +1.33
                                                                       partnership with the private     some applications dating         Shiite population ruled by a    Alawi said. Under the new       contractors waiting.”                now entrusted by the king
 Saudi Arabia                    5,762    +0.92
                                                                       sector, will turn Bahrain        back to 1990, he said.           Sunni dynasty.                  housing project—set to be         The housing ministry is            to solve the political crisis.
                                         Source: Agencies
26       Monday, March 7, 2011                                                                  IN THE PIPELINE

Housing firms
push new units
                                                                   Major US airlines raising
against cheap
                                                                   domestic fares again
            AP                  nationwide in 2010.
          PHOENIX                  That has left plenty of         AIRFARES at major US air-
                                inventory available for buy-       lines are climbing again, con-
HOMEBUILDERS trying             ers and not much room for          tinuing a dizzying pace of
to fight off customers’          new home sales since the           nearly weekly increases on
attraction to cheap foreclo-    peak of the building boom          both penny-pinching vaca-
sures are doing more to         in 2005, when about                tioners and expense-account
show buyers that the good       60,000 new homes were              corporate fliers.
deals can come with pit-        built in the Phoenix area.            The airlines are raising fares
falls.                          Last year, the number was          to cover higher jet fuel prices,
  The companies are             about 7,000.                       and the strategy seems to be
increasingly trying to woo         Lennar Corp.’s website is       working. US Airways said
buyers like Katie and Mike      fighting back with a                Thursday that if the trend
Zwanziger, hoping that          “Buying a New Home vs. a           toward higher revenue contin-
warnings about unknown          Foreclosed Home” page              ues, it will be able to cover
repairs, limited selection      that lays out the benefits of       foreseeable increases in fuel
and haggling with banks         new construction, like             costs.
might help them recover         home warranties, energy               Jet fuel prices are over $3 a
from the most dismal year       efficiency, and customisa-          gallon, the second-highest
for new home sales in more      tion options, while high-          reading in March behind only
than 50 years of record-        lighting the potential risks       2008, when oil prices surged
keeping.                        of buying a foreclosed             to record levels and US air-
  The Zwanzigers were           home.                              lines lost billions of dollars.
ready to move to a larger          PulteGroup Inc uses sim-           Delta Air Lines touched off
home and were enticed by        ilar tactics in its advertising,   the latest fare hike by adding
the number of resales and       as does Shea Homes and             up to $20 to the price of
foreclosures in the area        Phoenix-area            builder    domestic round-trip flights for
they liked. But after several   Fulton Homes. Fulton and           tickets bought on short notice.
weekends of hunting, the        Shea both promote new              American Airlines choose a
physical therapists from        homes with a “foreclosure          more modest increase of $10         A fuel truck backs into position in preparation to refuel an airliner at Sky Harbour International Airport, in Phoenix, recently.   (AP)
the Phoenix suburb of           cost calculator” on their          per round trip but applied it to
Gilbert decided to look at a    websites that lets customers       virtually all tickets for travel    lines, including Southwest,         routes. Low-cost airlines have       lyst Daniel McKenzie said            from testing new highs for
new development.                calculate potential costs.         within the 48 contiguous            JetBlue and AirTran, had            blocked some previous fare           higher fares will force compa-       base domestic ticket prices,”
  “And we got in there and         Although foreclosures           states.                             raised prices, according to         hikes by refusing to match           nies to burn through their           he said. US Airways President
found out that, truly, we       have helped metro Phoenix             By midday on Thursday,           Rick Seaney, CEO of                 them.                                travel budgets and freeze or         Scott Kirby said Thursday that
spent maybe $50,000             home prices drop 50 per-           Delta, United, Continental If they              Some analysts think if             reduce travel later this year.       travel demand in February
more and got the exact          cent from the mid-2000s,           and US Airways had all settled      continue to hold out, he said,      prices go any higher, leisure          Seaney doesn’t share that          remained        “exceptionally
house we want, the layout       homebuilders point out             on matching American’s $10          Delta and the other big air-        travelers, and maybe some            view yet. “It is pretty clear that   strong,” allowing the company
we wanted, the backyard         numerous drawbacks such            increase.                           lines could be forced to scale      corporate fliers, will just stay      demand hasn’t softened               to generate enough revenue to
we wanted,” said Katie          as hidden defects and the             None of the low-cost air-        back their increases on some        home. Hudson Securities ana-         enough to prevent airlines           offset higher fuel prices.
Zwanziger, 31. “So we could     potential of having to deal
be happier with just a little   with disgruntled former
bit more money.”                owners or evicting a cur-
  Many national builders
are using some form of
marketing to try to make
that point and beat back
the quiet competition from
                                rent tenant.
                                   “There are hundreds of
                                people that purchased
                                homes from us that have
                                been lured in by low prices
                                                                   Oman’s Renaissance to raise $500 million
lower-priced foreclosures       on foreclosures, have tried                   REUTERS                  expected to be above 51 per-        JP Morgan.                           share sale will be through a         board of the listed firm. The
and short sales.                to purchase those homes                         DUBAI                  cent after the IPO, it said in         “Renaissance now believes         book building process. It said       company said Topaz will
  More than 4 percent of        and have been outbid by                                                its 2010 annual report.             a listing of Topaz on the            the precise timing of the IPO        have the “attributes” to
the homes in the Phoenix        investors,”        said     Ken    OMAN’S            Renaissance          The exact size of the sec-       London Stock Exchange                will need “careful considera-        become a FTSE 250 company
area were lost to foreclo-      Peterson, Shea’s vice presi-       Services aims to raise about        ondary share sale will be           offers the most effective way        tion” due to the political           after the IPO.
sure last year, according to    dent of sales and market-          $500 million in a London            decided closer to the date of       to optimise future growth            unrest in the Middle East and          The Gulf’s IPO market has
a report from Arizona State     ing. “Or, they waited              listing of its Dubai-based oil-     Topaz’s IPO pricing.                opportunities and increase           north Africa.                        suffered in the wake of the
University’s        business    months to get an answer            field services unit and may             A source close to the deal       shareholder value,”                    The       company       will       global financial crisis with
school. Statewide, foreclo-     back on ‘can I get this short      also divest part of its stake in    said on Thursday that the             Chairman Samir Fancy               announce a timetable for the         investor appetite for regional
sures topped 70,000, part       sale, can I get this foreclo-      a secondary offer, it said on       offering is expected to be          said     in    the      report.      IPO, once Topaz advises of its       offerings severely damp-
of a wave of more than a        sure,’ only to discover that       Sunday.                             completed in early April and        Renaissance did not provide          readiness to proceed, it said.       ened, forcing some firms to
million       repossessions     they didn’t get that home.”           Renaissance’s          Topaz     is being run by Bank of             a specific timeline for the IPO       Renaissance’s chairman and           look at London as an alter-
                                                                   Energy and Marine stake is          America Merrill Lynch and           but said valuations for the          chief executive will be on the       nate destination.

                                                                                                       US may tap strategic oil reserve
                                                                                                       to ease soaring prices
                                                                                                                  REUTERS                                                                                            and “substantial” reserves on
                                                                                                                 WASHINGTON                                                                                          hand.
                                                                                                                                                                                                                        “If    necessary,     those
                                                                                                       WHITE House Chief of Staff                                                                                    reserves could be mobilised to
                                                                                                       William Daley said on Sunday                                                                                  help mitigate the effect of a
                                                                                                       the Obama administration                                                                                      severe, sustained supply dis-
                                                                                                       was considering tapping into                                                                                  ruption,” Geithner told the
                                                                                                       the US strategic oil reserve as                                                                               U.S. Senate Foreign Relations
                                                                                                       a way to help ease soaring oil                                                                                Committee.
                                                                                                       prices.                                                                                                          Geithner said high food and
                                                                                                          Speaking on NBC televi-                                                                                    oil prices were causing hard-
                                                                                                       sion’s “Meet the Press,” Daley                                                                                ships in many parts of the
                                                                                                       said: “We are looking at the                                                                                  world. But he said Americans
                                                                                                       options. The issue of the                                                                                     were feeling less impact.
                                                                                                       reserves is one we are consid-                                                                                   There has been support
                                                                                                       ering. It is something that                                                                                   among Senate Democrats for
                                                                                                       only is done — and has been                                                                                   tapping America’s emergency
                                                                                                       done — in very rare occasions.                                                                                oil supply to cool gasoline
                                                                                                       There’s a bunch of factors                                                                                    prices.
                                                                                                       that have to be looked at. And                                                                                   Senator Jay Rockefeller
                                                                                                       it is just not the price.” “All                                                                               urged Obama on Thursday to
                                                                                                       matters have to be on the                                                                                     allow a “limited draw-down”
                                                                                                       table when you see the diffi-        A Libyan oil worker at a refinery inside the Brega oil complex, in         from the oil reserves, to “pro-
                                                                                                       culty coming out of this eco-       Brega, Libya, on Saturday. (AP)                                           tect our national security by
                                                                                                       nomic crisis we’re in and the                                                                                 preventing or reducing the
                                                                                                       fragility,” Daley added.            world had options, including         er had blocked about 60 per-         adverse impact of an oil
                                                                                                          Congress has pressured the       oil reserves, that could be          cent of Libya’s 1.6 million          shortage.”
                                                                                                       Obama administration to             used to prevent an inflation-         bpd (barrels per day) oil out-          But Republican Senator
                                                                                                       look to the emergency oil sup-      ary price spiral due to oil sup-     put, largely due to the flight        Lamar Alexander, speaking
                                                                                                       ply to ease consumers’ fears        ply disruptions, none have           of thousands of foreign oil          on CNN’s “State of the Union”
                                                                                                       over rising gasoline prices,        taken the rare step of tapping       workers.                             on Sunday, said he would not
                                                                                                       which are threatening again         into their oil reserves.               On Thursday, US Treasury           support the oil reserve draw-
                                                                                                       to top $4 per gallon at US gas        US oil prices jumped on            Secretary Timothy Geithner           down.
                                                                                                       stations.                           Friday to more than $3 a bar-        played down the risks to the            On Wednesday, US Energy
                                                                                                          Higher oil prices could          rel to $105.17, their highest        oil supply from political dis-       Secretary Steven Chu ruled
                                                                                                       undermine the fragile US eco-       level since September 2008,          turbances in the oil-rich            out releasing oil from the
                                                                                                       nomic recovery and political-       as fighting in Libya worsened         Middle East and North Africa         reserve, saying ramped-up oil
                                                                                                       ly damage President Barack          and protests in the Middle           in testimony before a con-           production in Saudi Arabia
                                                                                                       Obama as he moves toward            East intensified.                     gressional panel.                    should lower the crude price.
                                                                                                       his 2012 re-election bid.             The International Energy             He said there was “consid-            “That’s going to mitigate
                                                                                                          While the White House has        Agency said the revolt in            erable” spare oil production         the price increase,” he told
                                                                                                       said governments around the         Africa’s third-largest produc-       capacity around the world            reporters.
                                                                                             GLOBAL ECONOMY                                                                                                   Monday, March 7, 2011
                                                         FOOD AND FUEL REACH HISTORIC HIGHS                                                                                                                           Spain’s
                                                                                                                                                                                                                      race to
                                                                                                                                                                                                                      find funds

                                                                                                                                                                                                                      SPAIN’S ailing regional
                                                                                                                                                                                                                      savings banks are scram-
                                                                                                                                                                                                                      bling to raise billions of
                                                                                                                                                                                                                      euros of fresh funds to meet
                                                                                                                                                                                                                      strict new capital require-
                                                                                                                                                                                                                      ments by Thursday.
                                                                                                                                                                                                                        The country’s 17 savings
                                                                                                                                                                                                                      banks, known as “cajas,”
                                                                                                                                                                                                                      are weighed down by loans
                                                                                                                                                                                                                      that turned sour after the
                                                                                                                                                                                                                      collapse of a housing bubble
                                                                                                                                                                                                                      in 2008 and are at the heart
                                                                                                                                                                                                                      of fears the country could
                                                                                                                                                                                                                      need an Irish-style interna-
                                                                                                                                                                                                                      tional rescue.
                                                                                                                                                                                                                        Last month the govern-
                                                                                                                                                                                                                      ment approved stricter
                                                                                                                                                                                                                      rules on the amount of
                                                                                                                                                                                                                      rock-solid core capital that
                                                                                                                                                                                                                      banks must hold on their
                                                                                                                                                                                                                      balance sheets, seeking to
                                                                                                                                                                                                                      shore up confidence in the
                                                                                                                                                                                                                      battered economy.
Chinese migrant workers outside the central railway station as the country’s vast worker pool which has powered the explosive growth of its labour-intensive exports over the past decade is tightening up.   (AFP)     Under the new rules, sav-
                                                                                                                                                                                                                      ings banks must raise the

Asian nations doling out
                                                                                                                                                                                                                      proportion of core capital
                                                                                                                                                                                                                      they hold to 8.0 percent of
                                                                                                                                                                                                                      total assets from the cur-
                                                                                                                                                                                                                      rent six percent, or 10.0
                                                                                                                                                                                                                      percent if they are unlisted.
                                                                                                                                                                                                                        The Bank of Spain will

subsidy to curb inflation
                                                                                                                                                                                                                      determine on Thursday
                                                                                                                                                                                                                      which savings banks have
                                                                                                                                                                                                                      met the new core capital
                                                                                                                                                                                                                      requirements and in the
                                                                                                                                                                                                                      case of those that have
                                                                                                                                                                                                                      fallen short, how much
                                                                                                                                                                                                                      capital they need to raise
             AFP                   izens, and a flood of capital       lutions in the Middle East and     rored across Asia, with its         mist at Societe Generale.            With new polls tipped for           to meet the new require-
        KUALA LUMPUR               from depressed Western             North Africa could push them       emerging democracies and               “Governments in India           this year, citizens who have          ments. Up to 11 of Spain’s
                                   economies.                         even higher.                       rapid     recent     economic       have lost power due to the         tasted the power of the ballot        17 regional savings banks
AS prices of food and fuel           Supply shocks caused by            From regional giants China       growth. But regional govern-        price of onions... So I think a    box are making it clear that          will need additional capi-
reach historic highs, Asian        severe weather are also            and India to emerging tigers       ments are twitchy over the          politically savvy leadership       inflation and the continuing           tal to reach the levels of
nations with a wary eye on         fuelling inflation that has         Indonesia and Vietnam, gov-        mayhem in the streets of            would definitely be attuned to      undoing of price controls will        solvency set by the gov-
Middle East uprisings are          seen the price of basic com-       ernments are trying to soften      Tripoli and Cairo, and anx-         what’s happening with the          again be a key issue.                 ernment, the ratings
doling out subsidies that          modities spiral — an irritation    the blow with a raft of pop-       ious to head off dissent which      cost of the most basic foods.”       “The removal of subsidies           agency Standard & Poor’s
experts warn are storing up        for Asia’s growing middle          ulist measures including sub-      could see them dumped at the           In Malaysia, the coalition      has really affected our fami-         said last month.
trouble for the future.            class but a matter of life and     sidies, cash handouts and          ballot box even if not unseat-      government paid a heavy            ly. It’s okay for the rich peo-         The government esti-
  Robust Asian economies           death for its countless poor.      price controls.                    ed in a revolution.                 price for winding back heavy       ple but we live off our daily         mates that all the savings
largely escaped the global           The UN’s food agency said          The factors fuelling the           “Political unrest, social         fuel subsidies, a decision that    wages,” said Che Hamsuri              banks will need to raise 20
downturn, and are now in           last week that world food          “Jasmine Revolution” that          unrest and high food prices         tore the lid off brewing dis-      Che Jaafar, a 48-year-old             billion euros to meet the
danger of overheating, stoked      prices have now hit record         has felled the leaders of Egypt    have gone hand in hand              content and helped the oppo-       taxi driver, as he waited for         new requirements, a fig-
by low interest rates, demand      levels, and that oil price         and Tunisia, and threatens a       across the region,” said Glenn      sition make unprecedented          a fare outside a Kuala                ure      many       analysts
from increasingly affluent cit-     spikes triggered by the revo-      civil war in Libya, are not mir-   Maguire, chief Asia econo-          gains in 2008 elections.           Lumpur hotel.                         describe as too low.

Romania to host forum for GCC investors ECB rate hike

ROMANIA will host an
                                        plan highlights
                                   Saudi Arabia and the
                                   United Arab Emirates -
                                   several ministers and some
                                   200 businessmen will take
                                                                        He added that unlike
                                                                      most of Romania’s tradi-
                                                                      tional partners, the Gulf
                                                                                                         of the communist regime,
                                                                                                         in 1989, and the recession”
                                                                                                         having hit this country in
                                                                                                         2009, Mihai Ionescu, head
                                                                                                                                             states and regretted that
                                                                                                                                             the “rich tradition” of
                                                                                                                                             cooperation in energy and
                                                                                                                                             infrastructure going back
economic forum bringing
together officials and busi-
nessmen from the oil-rich
Gulf countries, hoping to
                                        eurozone plight
                                   part in the reunion.
                                     “The participants will
                                   discuss projects worth
                                   around 10 billion euros,
                                                                      countries were spared from
                                                                      the negative impact of the
                                                                      global economic crisis.
                                                                        “Romanian businessmen
                                                                                                         of the exporters and
                                                                                                         ANEIR, said.

                                                                                                           He recalled that commu-
                                                                                                                                             to the 1970s and the 1980s
                                                                                                                                             was abandoned after 1989.
                                                                                                                                               A follow-up meeting is to
                                                                                                                                             be organised in January
become an investment hub           mainly in gas, oil and             hope to recover what they          nist Romania had strong             2012 in one of the Gulf                          AFP
in the region, a senior            infrastructure,” Sofineti          lost following the collapse        ties with some of the Gulf          countries.                                   FRANKFURT
diplomat said.
  “The Gulf countries want                                                                                                                                                      A HUGE European Central
to set up a bridgehead in                                                                                                                                                       Bank hint at a rate hike next
Central     and     Eastern                                                                                                                                                     month jolted markets and
Europe. Romania must                                                                                                                                                            highlighted       the   ECB’s
                                                                                                                                                                                predicament faced with rising
  The two-day forum                                                                                                                                                             inflation and a three-speed
  organised jointly                                                                                                                                                             eurozone recovery.
  by the Romanian                                                                                                                                                                  “The contrast between
  foreign ministry                                                                                                                                                              financial crises at the periph-
  and the Gulf Coop-                                                                                                                                                            ery and a strong Germany
  eration Council                                                                                                                                                               could really make things
  will start on Tues-                                                                                                                                                           extremely difficult for the
  day and focus on                                                                                                                                                              ECB,” Berenberg Bank’s sen-
  investment oppor-                                                                                                                                                             ior     economist      Holger         Head of European Central Bank
  tunities in energy,                                                                                                                                                           Schmieding said.                      Jean-Claude Trichet.
  banking, agricul-                                                                                                                                                                He referred to struggling
  ture, construction                                                                                                                                                            economies such as Greece,             sion, along with others
  and tourism.                                                                                                                                                                  Ireland and Portugal.                 where timid signs of growth
                                                                                                                                                                                   Schmieding spoke after             have appeared and stronger
strive to become an invest-                                                                                                                                                     ECB president Jean-Claude             states like Austria, Finland
ment hub for them in the                                                                                                                                                        Trichet suggested the central         and France.
region,” ambassador-at-                                                                                                                                                         bank would raise lending                The ECB has also oriented
large Vasile Sofineti told                                                                                                                                                      rates in April to combat infla-        exceptional cash supply
AFP.                                                                                                                                                                            tion which hit 2.4 percent in         measures towards banks in
   “Our aim is to place                                                                                                                                                         February.                             weaker      countries      and
Romania on the map of the                                                                                                                                                          An interest rate increase          Trichet said it would keep
Gulf countries’ economic                                                                                                                                                        “is possible,” but “not cer-          providing unlimited liquidity
interests,” he stressed.                                                                                                                                                        tain,” Trichet said, which            through June at least.
   The two-day forum                                                                                                                                                            markets interpreted as a                The bank’s apparent deci-
organised jointly by the                                                                                                                                                        sign it would probably hap-           sion to raise the benchmark
Romanian foreign ministry                                                                                                                                                       pen.                                  interest rate for 330 million
and the Gulf Cooperation                                                                                                                                                           The rate has been at a             people before a recovery was
Council (GCC) will start on                                                                                                                                                     record low of 1.0 percent             ensured for all was disputed
Tuesday and focus on                                                                                                                                                            since May 2009 but is no              by many economists, but
investment opportunities                                                                                                                                                        longer appropriate for                Schmieding said the ECB was
in energy, banking, agri-                                                                                                                                                       Germany where the econo-              “doing it exactly the right
culture, construction and                                                                                                                                                       my has bounced back from              way.”
tourism.                                                                                                                                                                        recession and might be                  A higher rate should damp-
   Despite the political tur-                                                                                                                                                   starting to overheat.                 en inflation expectations,
moil in Bahrain and Oman                                                                                                                                                           The 17-nation eurozone             while fragile banks would not
- two of the GCC members,          UAE Vice-President and Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid al Maktoum with Spanish Prime Minister Jose              also includes Greece howev-           suffer unduly since ample
alongside Kuwait, Qatar,           Luis Rodriguez Zapatero (left), in Dubai, recently. (EPA)                                                                                    er, which is still in reces-          cash would still be available.
28         Monday, March 7, 2011
                                                            CORPORATE DOSSIER

Foreign carmakers make a                                                                                                                                                                                            Glencore fee
                                                                                                                                                                                                                    bonanza may
                                                                                                                                                                                                                    elude Xstrata
beeline for Russian market
             AFP                  ed to go into high gear in

                                                                                                                                                                                                                    TIES to Swiss miner Xstrata
                                                                                                                                                                                                                    may exclude Deutsche Bank
                                                                                                                                                                                                                    and JPMorgan from the
           MOSCOW                 Russia after the encouraging                                                                                                                                                      $300-$400 million in fees
                                  rebound of the country’s                                                                                                                                                          that a listing of Xstrata’s part-
RUSSIA’S car market is again      automobile market, which —                                                                                                                                                        owner Glencore could yield.
tempting the appetites of for-    thanks to the Russian govern-                                                                                                                                                        A      standoff     between
eign carmakers lured by the       ment’s support — saw a 30                                                                                                                                                         Glencore Chief Executive
country’s vast potential and a    percent increase in sales in                                                                                                                                                      Ivan       Glasenberg        and
rebound from the global           2010 after a drop of 49 per-                                                                                                                                                      Xstrata’s Mick Davis — who
downturn.                         cent in 2009.                                                                                                                                                                     has called on JPMorgan’s Ian
  Several alliances to produce      “Now there are some 15                                                                                                                                                          Hannam and Brett Olsher,
cars in Russia have been          main global players that have                                                                                                                                                     formerly of Deutsche Bank,
announced by foreign and          already come to the Russian                                                                                                                                                       for a string of deals — could
Russian enterprises in the                                                                                                                                                                                          force banks to take sides.
space of just a few weeks.          On February 18,                                                                                                                                                                    The listing may also test the
  In early February, US giant       Russia’s Sollers                                                                                                                                                                much-vaunted client conflicts
General Motors said it had          announced the cre-                                                                                                                                                              policy of Goldman Sachs ,
signed an agreement with            ation of a joint                                                                                                                                                                which helped Anglo American
Russia’s GAZ, controlled by         venture with Ford                                                                                                                                                               thwart a bid from Xstrata and
oligarch Oleg Deripaska, to         to produce Ford                                                                                                                                                                 is Olsher’s new employer.
assemble the new model              vehicles at two                                                                                                                                                                    Conflict of interests are par-
Chevrolet Aveo at the Russian       jointly-owned fac-                                                                                                                                                              ticularly thorny in mining,
group’s factory in Nizhny           tories in Russia’s                                                                                                                                                              which is dominated by a
Novgorod.                           Leningrad and                                                                                                                                                                   handful of huge, acquisitive
  On February 18, Russia’s          Tatarstan regions.                                                                                                                                                              companies, and has played
Sollers announced the cre-                                                                                                                                                                                          host to a string of acrimo-
ation of a joint venture with                                                                                                                                                                                       nious bid battles such as BHP
Ford to produce Ford vehicles     market and are interested in                                                                                                                                                      Billiton’s tilt at Rio and
at two jointly-owned factories    its further growth,” said                                                                                                                                                         Xstrata’s move on Anglo.
in Russia’s Leningrad and         Stanley Root, an analyst from                                                                                                                                                        Long-time           advisers
Tatarstan regions.                the Russian branch of the            Vice-president of Global Design with General Motors Ed Welburn unveils the new Chevrolet Camaro ZL1 at the Chicago Auto Show,                Citigroup, Morgan Stanley
  And GAZ said it inked a         consulting           company         recently. (AP)
deal      with     Germany’s      PricewaterhouseCoopers.
Volkswagen to manufacture            Especially as many analysts       could see sales increasing             Aware of these encouraging      ernization of Russia’s econo-      develop alliances with major         The listing may
at its plant at least 100,000     agree that Russia is about to        from 1.9-2.5 million (cars)          prospects, the authorities        my, Root said.                     foreign manufacturers, Root          also test the much-
Volkswagen and Skoda cars         become one of major world            this year to 3.0 million and         have decided not to miss the         All the more so since the car   added. In this context, they         vaunted client con-
per year.                         markets for years to come.           perhaps beyond,” he said.            chance to boost the industry.     industry is a big employer,        undertook a series of provi-         flicts policy of
  Renault-Nissan said in             Root said the volume of              “The (car) fleet (in Russia)         “The government realizes        both directly and indirectly.      sions to push major global           Goldman Sachs ,
November it could take con-       Russia’s automotive market           is aging,” said Ivan Bontshev        that it is really important to       Moreover, the authorities       groups to ally with Russian          which helped Anglo
trol of Russia’s AvtoVAZ, in      “could double in five years.”         of Ernst and Young, adding           keep core industries that         know that Russian manufac-         partners, such as tax reduc-         American thwart a
which Renault currently holds        “If the market continues to       that, compared to other coun-        employ large numbers of           turers can not survive in a        tions on machine parts’ import       bid from Xstrata
25 percent of the capital.        regain the growth rate it had        tries, in Russia relatively          highly skilled engineers,” who    highly competitive interna-        in case at least 300,000 cars        and is Olsher’s new
  Foreign groups have decid-      (before the global crisis), we       fewer people have cars.              may participate in the mod-       tional market unless they          are manufactured per year.           employer.

                                                                                                                                                                                                                    and Credit Suisse will be
                                                                                                                                                                                                                    Glencore’s lead banks for any

Bajaj Auto faces rough                                                                                                                                                                                              initial public offering (IPO),
                                                                                                                                                                                                                    people familiar with the mat-
                                                                                                                                                                                                                    ter say, while a string of rivals
                                                                                                                                                                                                                    are jockeying for secondary

ride in India car market
                                                                                                                                                                                                                       Glencore, the private part-
                                                                                                                                                                                                                    nership that is the world’s
                                                                                                                                                                                                                    largest commodity trader,
                                                                                                                                                                                                                    briefed equity analysts this
             AFP                    The Indian car market,             between Maruti Udyog and                                                                                                                     week ahead of a possible
            MUMBAI                where nearly two million new         the Suzuki Motor Corp.                                                                                                                       flotation which Liberum
                                  cars were sold last year, is            Nowadays, its successor the                                                                                                               Capital estimates could value
ABHIJIT is fiercely proud of       increasingly crowded and cut-        Maruti Suzuki Alto is the                                                                                                                    it at roughly $60 billion.
his Kawasaki Bajaj motorbike      throat.                              country’s most popular small                                                                                                                    A listing is not yet a certain-
and considers himself a com-                                           car, with Hyundai’s Santro                                                                                                                   ty. Its size, timing, and value
pany loyalist.                      Bajaj is India’s sec-              also a firm favourite among                                                                                                                   are all open questions. But
   “Motorbikes are the best for     ond-largest manu-                  urban drivers.                                                                                                                               the stakes are indisputably
urban travel. They’re econom-       facturer of two and                   Car penetration is low, with                                                                                                              high: a $10 billion listing, for
ical and easy to park,” the         three-wheelers, and                just 13 out of every 1,000                                                                                                                   example, could pay $300 to
Mumbai sales executive in his       its name is synony-                Indians owning one. But the                                                                                                                  $400 million in fees,
30s said.                           mous with auto-                    market is the second-fastest-                                                                                                                Freeman & Co reckons.
   But while Abhijit, who uses      rickshaws in the                   growing in the world, with                                                                                                                      “It’s a huge bonanza at a
only one name, wants to             country, the world’s               sales forecast to rise by at least                                                                                                           time when there’s virtually
upgrade to four wheels, he is       largest market for                 25 percent in the current                                                                                                                    nothing going on,” said Philip
not yet sure whether he will        such vehicles.                     financial year, according to the                                                                                                              Keevil, a partner at Compass
stay true to the Bajaj brand,                                          Society of Indian Automobile                                                                                                                 Advisers. Keevil, a former
even though the company has                                            Manufacturers trade body.                                                                                                                    head of European mergers
announced that it is looking         “Bajaj has the right DNA to          Two-wheelers          remain                                                                                                              and acquisitions (M&A) at
to get into the small car mar-    make a car but not the experi-       India’s favourite form of trans-                                                                                                             Citigroup, has advised miners
ket.                              ence,” said Hormazd Sorabjee,        port because of their low cost                                                                                                               including Anglo American
   “You know what you’re get-     editor of Autocar India maga-        and easy maintenance, with                                                                                                                   and Rio Tinto.
ting with bikes and scooters,”    zine.                                motorbikes now accounting                                                                                                                       The two firms are inter-
he explained. “A car from            “It won’t be easy. It will be a   for 80 percent of the market, a                                                                                                              twined: Glencore owns 34
Bajaj? I’m not too sure.”         steep learning curve,” he told       turnaround from just a few                                                                                                                   percent of Xstrata; sold the
   Bajaj is India’s second-       AFP.                                 years ago when cheaper,                                                                                                                      coal assets that helped create
largest manufacturer of two-         Bajaj Auto has tied up with       smaller scooters dominated.                                                                                                                  it; markets much of its pro-
and three-wheelers, and its       French car giant Renault to             Almost all of Bajaj’s two-                                                                                                                duction; and shares a chair-
name is synonymous with           produce, market and sell what        wheeler sales are now motor-                                                                                                                 man with the London-listed
auto-rickshaws in the country,    it says will be a “pathbreak-        bikes,     and       Mahantesh                                                                                                               company.
the world’s largest market for    ing”, ultra low-cost, fuel-effi-      Sabarad, an auto analyst at                                                                                                                     But while people familiar
such vehicles.                    cient minicar. The vehicle is        Mumbai-based            Fortune                                                                                                              with      the     matter       say
   But the attitudes of cus-      slated to be launched next           Equity Brokers, said that the                                                                                                                Glasenberg has weighed a
tomers like Abhijit — one of      year.                                firm’s focus on more powerful                                                                                                                 merger with Xstrata as an
the millions of Indians that         The move makes strategic          machines has paid off.                                                                                                                       alternative route to the public
the automaker has helped          sense with small cars increas-          “The company has seen a                                                                                                                   markets, the idea has been
make more mobile — could be       ing their presence on India’s        rise in profits over the past                                                                                                                 resisted by Davis and Xstrata
a stumbling block for the firm     roads ever since the launch of       decade even as scooter sales                                                                                                                 investors, who wanted a public
when it comes to cars, ana-       the Maruti 800 in 1983 — the         and market share dropped,”                                                                                                                   valuation of Glencore first.
lysts say.                        product of a partnership             he added.

                                                                                                            HSBC rebuffs talk of London exit
                                                                                                                         AFP                  change in HSBC’s position ...      region. HSBC insisted that it      and Gulliver.
                                                                                                                       LONDON                 is entirely speculative and        would prefer to remain head-         “We have been very clear
                                                                                                                                              presumptuous.”                     quartered in the British capi-     that it is our preference to
                                                                                                            THE heads of HSBC insisted          HSBC, which has been             tal,   while      highlighting     remain headquartered here.
                                                                                                            on Sunday that Europe’s           headquartered in London for        investor concerns about the        We are however, in light of
                                                                                                            biggest bank would like to        19 years, has warned key           continued international com-       possible regulatory changes
                                                                                                            remain headquartered in           investors that it is looking at    petitiveness of the City,          and additional costs such as
                                                                                                            London after a newspaper          moving to Hong Kong owing          London’s financial district.        the bank levy, being increas-
                                                                                                            said it was considering reloca-   to high levels of British tax        “London continues to be          ingly asked by shareholders
                                                                                                            tion to Hong Kong for tax         and red tape, The Sunday           widely recognised as one of        and investors about the likely
                                                                                                            purposes.                         Telegraph had reported.            the world’s leading interna-       additional cost of being head-
                                                                                                               In a joint statement, HSBC       The group was founded in         tional financial centres, a         quartered in the UK. Britain’s
                                                                                                            chairman Douglas Flint and        Hong Kong and Shanghai in          position it has built over         coalition government last
                                                                                                            chief executive Stuart Gulliver   1865 and the bank regards          many decades through delib-        month increased its annual
A commuter riding a Bajaj Chetak scooter, in Mumbai. (AFP)                                                  said that “talk of imminent       Asia as its most important         erate policy action,” said Flint   banking levy to £2.5 billion.
30          Monday, March 7, 2011

Ireland aims                                                                                    RECOVERY ON TRACK
to woo                                                                                                                                                                                                                 huge labour
Europe                                                                                                                                                                                                                 pool shows
with fiscal                                                                                                                                                                                                            signs of
obedience                                                                                                                                                                                                              drying up
          REUTERS                                                                                                                                                                                                                   AFP
            DUBLIN                                                                                                                                                                                                                SHANGHAI

IRELAND’S new government                                                                                                                                                                                               AS one of the more than 200
will stick to the budget targets                                                                                                                                                                                       million people in China’s
laid down in an 85 billion                                                                                                                                                                                             huge migrant workforce, Lu
euro ($119 billion) EU/IMF                                                                                                                                                                                             Jun has had to hustle for jobs
rescue package as it seeks to                                                                                                                                                                                          his entire life, but suddenly he
win European partners round                                                                                                                                                                                            finds he has more choices and
to giving it easier terms on the                                                                                                                                                                                       bargaining power than ever.
loans.                                                                                                                                                                                                                    Lu, whose skin is tanned
   Ireland’s prime minister in-                                                                                                                                                                                        and his navy suit jacket faded
waiting Enda Kenny is under                                                                                                                                                                                            from the sun, says he is
huge pressure to persuade                                                                                                                                                                                              standing taller these days as
Europe’s paymaster Germany                                                                                                                                                                                             he surveys his many options
to cut the interest rate                                                                                                                                                                                               at a state-funded job fair in
Brussels is charging and give                                                                                                                                                                                          Shanghai following the annu-
Dublin more time to restruc-                                                                                                                                                                                           al Lunar New Year holiday.
ture its banks before a                                                                                                                                                                                                   “Nowadays it’s not easy to
Europe-wide deal on the debt                                                                                                                                                                                           find an experienced worker
crisis is hammered out at                                                                                                                                                                                              like me,” the 25-year-old Lu,
summit on March 24-25.                                                                                                                                                                                                 who worked at a package
   The coalition agreement                                                                                                                                                                                             printing factory in the east-
between Kenny’s center-right                                                                                                                                                                                           ern province of Anhui for five
Fine Gael party and the cen-                                                                                                                                                                                           years, said proudly.
ter-left Labour party, clinched                                                                                                                                                                                           China’s vast worker pool,
shortly after midnight, seems                                                                                                                                                                                          which has powered the explo-
designed to curry favour with                                                                                                                                                                                          sive growth of its labour-
the fiscally conservative                                                                                                                                                                                               intensive exports over the
Germans and draws a veil                                                                                                                                                                                               past decade, is tightening up,
over some of the anti-EU                                                                                                                                                                                               analysts say. That means that,
rhetoric deployed in the elec-                                                                                                                                                                                         while dissatisfied migrant
tion campaign.                                                                                                                                                                                                         workers are still seen as a
   “We have to repair broken                                                                                                                                                                                           source of potential unrest,
bridges across our European                                                                                                                                                                                            power is tilting from employ-
partner to build up an under-        It takes about 125,000 new jobs a month just to keep up with population growth and hold the unemployment rate stable.                                                             ers to employees like Lu.
standing of our position,”

                                     Burst of hiring could mark
Brendan Howlin, one of the
chief negotiators for the                                                                                                                                                                                                The shortage is the
Labour party, told state                                                                                                                                                                                                 result of three
broadcaster RTE.                                                                                                                                                                                                         decades of rapid
   “It is in everybody’s inter-                                                                                                                                                                                          economic expansion
est, not only the national                                                                                                                                                                                               colliding with demo-

                                     turning point for jobs
interest of Ireland, but in                                                                                                                                                                                              graphic changes
Europe’s interest and in the                                                                                                                                                                                             due to China’s one-
interests of the maintenance                                                                                                                                                                                             child policy
of the euro that we have a
path that is sustainable out of                                                                                                                                                                                          “The firm where I used to
the economic hole that we                                                                                                                                                                                              work has called me several
find ourselves now in.”                              AP                  ner,” said Michael Darda,          suppressed        consumer         think private companies will        spending        more.       US       times to ask me back. But
   Fine Gael, which will lead                  WASHINGTON               chief economist at MKM             spending, which lowered            feel comfortable enough to          exporters are selling more           their salary raise is not satis-
the new government, has per-                                            Partners, an economic              corporate profits and trig-         add 200,000 jobs a month            abroad. Stock prices have            fying and I want a job in
suaded Labour to drop its            COMPANIES added more               research firm.                      gered more job cuts.               through the rest of this year.      surged.                              Shanghai just like my wife,”
demand that Ireland be given         workers in February than in           The figures suggest the            On Wall Street, another          That would be an improve-              “The last piston in the eco-      Lu said, after casually asking
an extra year to get its budget      any month in almost a year         economy has entered a              spike in oil prices rattled        ment from the average of            nomic engine has begun to            a recruiter about wages.
deficit under control and is          — a turning point for the          healthier phase typical of         investors and overshadowed         150,000 jobs created over           fire, pointing to sustained             Lu’s former employer
aiming for the bulk of the           economy that finally pushed         what economists call a virtu-                                         the past three months.              economic growth,” said               offered him 3,800 yuan
adjustment to be achieved            the unemployment rate              ous cycle: Americans are                                                It takes about 125,000            economist Sung Won Sohn              ($578) a month, a 27 percent
through spending cuts.               below 9 percent. Economists        spending more, which raises          Hiring last month                new jobs a month just to            at      California       State       raise, but he aims to earn
   The new government will           say the stronger hiring            corporate profits, which              was broad — facto-               keep up with population             University.                          4,000 yuan and says he will
aim to shrink the shortfall          should endure all year.            leads to hiring and then             ries, trucking                   growth and hold the unem-              That said, 8.9 percent            keep looking around until I
from nearly 12 percent of               The 222,000 jobs the pri-       more spending and growth.            companies, health                ployment rate stable. It            unemployment is high by              find an ideal job.
Gross Domestic Product               vate sector created more              At UPS, for example, rev-         care providers,                  could take up to 300,000 to         historical         standards.          Chinese manufacturers and
(GDP) currently to below an          than offset layoffs by finan-       enue and profits have both            construction                     reduce the unemployment             Economists predict it will           local governments are vying
EU limit of 3 percent by 2015,       cially squeezed state and          risen because of the growing         firms, hotels                    rate significantly, econo-           take four or five years for it to     for the services of people like
a deadline already okayed by         local governments. They            economy. The company has             and restaurants                  mists say.                          drop to something more nor-          Lu as the labour crunch — the
Brussels last year amid con-         slashed 30,000 jobs, the           nearly 250 job openings for          all added jobs                     Stronger job growth               mal, near 6 percent. And as          first signs of which surfaced
cerns spluttering growth             most since November.               salaried positions, up from                                           should put the economy on           more people start looking for        in 2007 — has spread from
would prevent Dublin meet-              The unemployment rate           100 this time last year, and is    the good news on hiring. The       track to grow at a roughly 4        jobs later this year, the rate       coastal export powerhouse
ing an original target date of       sank to 8.9 percent, the low-      hiring hourly workers at 150       Dow Jones industrial aver-         percent annual rate in the          could rise.                          zones to the rural heartland.
2014.                                est since April 2009. The          locations.                         age fell 88 points, one day        first three months of this              Government surveys of             The shortage is the result of
   There will be a new cabinet       rate has now fallen almost a          Normally, the company           after posting its biggest gain     year, economists said. That         households don’t count peo-          three decades of rapid eco-
position to deal with public         full percentage point in just      just rehires its temporary         of 2011.                           would be much better than           ple without jobs as unem-            nomic expansion colliding
spending and public sector           three months — the sharpest        employees from the holidays          Other forces are still work-     the 2.8 percent pace in the         ployed unless they say               with demographic changes
reform and the holder of this        drop in a generation.              if it needs them. “But this        ing against the economic           final three months of 2010.          they’re looking for one.             due to China’s one-child poli-
office, along with the finance            Hiring last month was           year, we’ve already hired a        recovery. State and local gov-       Job creation has been the            But for the moment, the           cy, economists say.
minister and a minister from         broad — factories, trucking        lot of those folks back, and       ernments are expected to           missing ingredient in the           jobs picture looks brighter            “The overall story is clear —
each of the two parties will sit     companies, health care             we still have more needs,”         keep shedding jobs. And            economic recovery. The              than most people would               thanks to the decline in births
on an newly-formed econom-           providers,      construction       said Matt Lavery, UPS’ head        inflation and higher gas            economy’s service sector,           have expected three months           20 years ago, China’s labour
ic council.                          firms, hotels and restaurants       of recruiting.                     prices resulting from the          which employs most of the           ago. The issue will be a key         pool will likely stop expanding
   “This is a new structure of       all added jobs.                       During the recession, the       Middle East unrest pose            work force, is expanding at         factor in President Barack           in size very soon,” Stephen
cabinet economic policy will            “Bottom line: The labour        cycle was more vicious than        threats.                           the fastest pace in more than       Obama’s expected re-elec-            Green, an economist with
be determined by this coun-          market is turning the cor-         virtuous: Waves of layoffs           Still, economists now            five years. Shoppers are             tion bid next year.                  Standard Chartered Bank,
cil,” said Howlin.                                                                                                                                                                                                     said in a research note.

Gold gains 1 percent, silver jumps on oil rally, Libya
          REUTERS                  up 0.8 percent at $1,427.31 by                                                                                                                  for a long time.                    my is finally kicking into a
          NEW YORK                 2.08 pm EST (1908 GMT).                                                                                                                            Silver eagles hit a record 6.4   higher gear. In January, the
                                   Gold fixed at $1,427 in                                                                                                                          million ounces in the first          metal lost over 6 percent as
GOLD rose above $1,430 an          London.                                                                                                                                         month of 2011, US Mint data         signs of an improving global
ounce on Friday, while silver         US gold futures for April                                                                                                                    showed. February sales rose         economy and easing worries
surged 3 percent to 31-year        delivery settled up $12.20 at                                                                                                                   year-on-year but was lower          about a European debt crisis
highs, as soaring oil prices       $1,428.60, with volume down                                                                                                                     than January’s level.               weighed on bullion’s safe-
fuelled by widening clashes in     nearly 50 percent from the                                                                                                                         The gold-silver ratio, which     haven appeal.
Libya prompted investors to        previous session and 30 per-                                                                                                                    shows how many ounces of               The US Federal Reserve in
pile into safe havens.             cent below its 30-day average.                                                                                                                  silver it takes to buy one ounce    November resumed buying
  Bullion hit a record high of        The positive correlation                                                                                                                     of gold, fell to a 13-year low,     long-dated government bonds
$1,440.10 an ounce on              between gold and oil has been                                                                                                                   the weakest since 1998 when         to keep interest rates down, a
Wednesday, notching its fifth       strong of late, but its prospects                                                                                                               billionaire Warren Buffett          process known as the second
consecutive weekly gain on         appear questionable going                                                                                                                       bought 130 million ounces of        round of quantitative easing
fears that Libya’s escalating      forward.                                                                                                                                        silver. Holdings in the world’s     or QE2. With the program
unrest could spread across the        Turnover has been weaker                                                                                                                     largest silver ETF, the iShares     now at its midpoint, investors
Arab world.                        than usual during gold’s rally,                                                                                                                 Silver Trust, rose to 10,794.89     are wondering how long gold
  Wall Street lost nearly 1 per-   prompting some analysts to          Bullion hit a record high of $1,440.10 an ounce on Wednesday, notching its fifth consecutive weekly gain.    tonnes by March 3, the largest      can keep rising before the Fed
cent and the dollar declined as    question whether the precious                                                                                                                   since early January.                decides to raise interest rates.
upbeat US jobs data was offset     metal has much upside poten-        percent last week as bullion       earlier hit a high of $35.46, its   Hanlon, president of precious           Gold held gains even as data        Comments        from      the
by fears that rising political     tial without the aid of soaring     prices rallied 2.5 percent, data   loftiest price since 1980.          metals dealer Dillon Gage            showed US employers hired           European Central Bank
tensions in North Africa and       oil prices and geopolitical ten-    from the US Commodity                Silver has risen on record        Metals, said that demand for         workers at the fastest pace in      stoked expectations that euro
the Middle East could crimp        sions.                              Futures Trading Commission         coin buying in a tight physical     the popular one-ounce                nine months in February and         zone monetary policy would
economic growth.                      Net long positions in US         (CFTC) showed on Friday.           market and strong demand            American Eagles silver bullion       the jobless rate slipped to a       tighten sooner rather than
  Spot gold hit a high of          gold futures contracts held by      Spot silver gained 3.3 percent     for industrial metals as the        coins ‘way exceeds’ supply,          nearly two-year low of 8.9          later and knocked gold
$1,431.85 an ounce and was         speculators rose nearly 10          to $35.31 an ounce, having         economy recovers. Terry             and the trend could continue         percent, showing the econo-         sharply lower on Thursday.
Monday, March 7, 2011   31
32   Monday, March 7, 2011

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