IEA stock release impact wearing out QNB report

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					                                                                                BOEING, DAE IN                                                    WAGES OF
                                                                                TALKS OVER                                                        DEFAULT:
                                                                                ORDER                                                             ARGENTINA
                                                                                CANCELLATIONS                                                     EXPERIENCE

                                                                                PAGE 26 | IN THE PIPELINE                                          PAGE 28 | BOTTOM LINE

                Bullion Market

                Crude oil
                                                                +0.08                                                                                                                                           “            DREAMS
                                                                                                                                                                                                                             “Follow your own particular
                                                                                                                                                                                                                             dreams. We are handed a life by
                                                                                                                                                                                                                             peers, parents and society, you can
                                                                                                                                                                                                                             do that or follow your own dreams.
                                               PRICE       PERCENTAGE                                                                                                                                                        Life is short, be a dreamer but be a

               USD / BBL     BRENT             118.00           -0.48
                                                                                                    Sunday, July 10, 2011                                                                                                    practical person.” –HUGH HEFNER
                             WTI               96.35            -2.35

      Please send all press
  releases, coverage requests
    and invitations regarding
                                                                  Al Jazeera in talks with FTE for Orange Sport
   business events meant for                                                 DOW JONES                   tion,” Richard said. “Al Jazeera                                                 way to lure new clients.                   Al Jazeera’s sports channel
                                                                                                                                                    Al Jazeera’s foray into
         Qatar Tribune to                                                        PARIS                   has stated an interest and talks           France’s soccer                         A recent bid by Orange for the        had already won the rights to
                                                                                                         are underway; it is a bit early to         broadcasting market                   right to air French soccer match-       broadcast French soccer games                                    FRANCE Telecom (FTE) Chief             say more today, but it is a possible       comes as Qatar is                     es on mobile devices was                outside France for EUR200 mil-
                                                                  Executive Stephane Richard has         option,” he said on Friday.                ramping up its focus                  deemed too low by the league            lion a year.
                                                                  said the telecoms group is in dis-        Al Jazeera recently agreed to           on soccer ahead of                    and rejected.                              Al Jazeera’s moves came as the
                                                                  cussions with Qatar’s based televi-    pay €90 million a year for the             the 2022 World Cup                      Al Jazeera’s foray into               Qatar Investment Authority, a

Businessline                                                      sion company Al Jazeera over a
                                                                  possible deal to sell its Orange
                                                                  Sport channel.
                                                                                                         right to broadcast two live pre-
                                                                                                         mium soccer matches a week
                                                                                                         and for other associated rights
                                                                                                                                                   Since taking the helm at France
                                                                                                                                                 Telecom, Richard has looked to
                                                                                                                                                                                          France’s soccer broadcasting
                                                                                                                                                                                          market comes as Qatar is ramp-
                                                                                                                                                                                          ing up its focus on soccer ahead
                                                                                                                                                                                                                                  Qatari government-owned firm,
                                                                                                                                                                                                                                  bought a 70 percent interest in
                                                                                                                                                                                                                                  French soccer club Paris Saint-
                                                                    “What will happen to our soccer      over four seasons between 2012          end the group’s strategy of buying       of 2022, when it will host the          Germain last week for an esti-
Food, govt spending push                                          channel remains an open ques-          and 2016.                               up exclusive rights to content as a      soccer World Cup.                       mated EUR50 million.
Saudi inflation to 4.7%
RIYADH Saudi Arabia’s annualised
                                                                  IEA stock release impact
rate of inflation accelerated to 4.7
percent in June, from 4.6 percent
in May, a sign that the recent surge
in global food prices and a mega
citizen support package could be
becoming an inflation headache for
                                                                                                                                                                                                                                   in long-term
                                                                  wearing out: QNB report
the kingdom, data from the Central
Department of Statistics &
Information showed on Saturday.
Rent, fuel and housing related
                                                                                                                                                                                                                                   urea contract
services saw a 7.1 percent rise in                                                                                                                                                                                                   TRIBUNE NEWS NETWORK
June year-on-year, compared with                                                                                                                                                                                                                DOHA
a 7 percent jump in May, while                                          TRIBUNE NEWS NETWORK
food and beverage prices gained                                                  DOHA                                                                                                                                              QATAR Fertiliser Company
5.5 percent on the year, versus a                                                                                                                                                                                                  (Qafco) has entered a long-term
5.7 percent rise in the previous                                  THE June 23 announcement by                                                                                                                                      pact       with     Coromandel
month, the CDSI said on its web-                                  the International Energy Agency                                                                                                                                  International Limited for sup-
site. Meanwhile, the cost of living                               (IEA) about its members releas-                                                                                                                                  ply of urea. The contract signed
index in the kingdom, the Arab                                    ing 60 million barrels from their                                                                                                                                on July 5 with India’s largest
world’s largest economy, stood at                                 strategic oil reserves onto the                                                                                                                                  private phosphatic fertiliser
134.2 points last month. (PG 27)                                  market over the next month is                                                                                                                                    manufacturer is the first long-
                                                                  unlikely to have a long-term                                                                                                                                     term contract signed by Qafco
                                                                  impact on prices, according to                                                                                                                                   with an Indian firm, the Qatari
Lexus to lose top spot in                                         QNB Capital.                                                                                                                                                     company said in a press release.
US luxury car market                                                The IEA is a grouping of 28                                                                                                                                      Qafco CEO Khalifa Abdulla al
CHICAGO Toyota Motor Corp’s                                       major oil importing countries. It                                                                                                                                Sowaidi and Coromandel MD
brand Lexus will end its streak of                                was established in 1973 to moni-                                                                                                                                 Kapil Mehan signed the papers
11 years as the top luxury brand                                  tor the oil market and counter-                                                                                                                                  at Hyderabad. Muruggapa Gro-
in the US market due to lost sales                                balance the influence of the                                                                                                                                      up Chairman A Vellayan, Qafco
in the aftermath of the Japan                                     Organisation of Petroleum                                                                                                                                        Sales Manager, Ammonia, Ali
earthquake and tsunami, said                                      Exporting Countries (OPEC).                                                                                                                                      Ahmed al Sanadi and Urea
Mark Templin, Lexus Division gen-                                 This is only the third time in its                                                                                                                               Sales Manager Yousef al Khaldi
eral manager. Templin said Lexus                                  history that the IEA has released                                                                                                                                were present.
US sales will fall about 17 percent                               a portion of its strategic reserves.                                                                                                                               Al Sowaidi said it was a mile-
to around 190,000 vehicles in                                     The previous times were in                                                                                                                                       stone pact as it made Qafco the
2011. The United States is the                                    response to Hurricane Katrina in                                                                                                                                 first firm to have direct con-
biggest market for Lexus. All Lexus                               2005 and the Gulf War in 1991.                                                                                                                                   tract with Indian end user, Co-
models, except the RX 350                                           The IEA stated that the coordi-                                                                                                                                romandel, who has direct urea
crossover sport utility vehicle, are                              nated move was a response to the                                                                                                                                 import permission. He the
made in Japan. Templin said the                                   supply disruption caused by the                                                                                                                                  decanalisation policy will allow
Cambridge, Ontario plant that                                     recent unrest in Libya. Half of                                                                                                                                  direct import by more Indian
makes the RX 350 will be back at                                  the IEA release will come from                                                                                                                                   private firms in future.
full capacity in September. (PG 28)                               US reserves. The IEA’s concern is                                                                                                                                  Outlining Qafco’s strategy for
                                                                  that this has driven oil prices too                                                                                                                              India he said it was one of the
                                                                  high and is a threat to the fragile                                                                                                                              most important markets for
Mitsubishi Chemical to                                            global economic recovery. This         unchanged.                                The rapid recovery in oil prices     grouping of developed countries            Qafco products which currently
make solar cell film                                               suggests that IEA members,               The IEA announcement sur-            suggests that the impact of the         that has the same membership as            supplies over 50 percent of its
                                                                  major European economies and           prised the oil market. Crude oil       release of strategic reserves will      the IEA, with six additional rela-         Ammonia to Indian customers
TOKYO Mitsubishi Chemical                                         the US are extremely worried           prices immediately fell by             be minimal in the longer term,          tively small countries). If indus-         through long term agreements.
Holdings Corp will start making                                   about the state of the global          around US$8 per barrel in              according to QNB Capital. Total         try stocks and petroleum prod-               “Qafco aims to substantially
adhesive film used in solar cells,                                 economy.                               London and US$6 per barrel in          world consumption of crude oil is       ucts are also taken into account,          increase its share of the Urea
challenging Bridgestone Corp and                                    The IEA announcement was             New York, although they closed         currently around 90m barrels            60 million barrels only repre-             market in India in line with
Mitsui Chemicals Inc , who make                                   made after OPEC took the deci-         US$6 per barrel and US$4 per           per day. Therefore, the IEA deci-       sents 1.4 percent of overall               expansion of its ammonia and
the key material that determines                                  sion to keep its production quo-       barrel lower, respectively, for the    sion to release 60m barrels of          reserves in OECD countries.                urea facilities,” he added.
the life span of the cells, the                                   tas of 24.8 million barrels per        day. However, by July 1, the           crude oil over 30 days, or 2 mil-       Given that the market absorbed               It is a step forward in in the
Nikkei business daily said.                                       day unchanged at its last meeting      price of the international bench-      lion barrels per day, is only           the release of strategic reserves          marketing strategy of the firm
Mitsubishi will spend about 10                                    in early June. The IEA had been        mark, Brent crude oil, had             around 2.2 percent of one               within a short period, the ability         which on completion of
billion yen ($123 million)                                        lobbying OPEC to increase pro-         recovered to an average of             month’s global demand.                  for the IEA to influence the oil            Qafco-5 this year and Qafco-6
through 2015 to grab 30 percent                                   duction. Therefore, the release of     US$112 per barrel, marginally             The release of 60 million bar-       market by releasing reserves has           by next year will be the
of the global market for the film,                                 strategic reserves can also be         higher than its average price on       rels represented around 4.6 per-        been shown to be limited.                  largest producer of ammonia
and will launch a large plant in                                  seen as a response to OPEC’s           June 22, the day before the IEA        cent of government stocks of            Further releases are therefore             and urea .
China by the end of 2012, the                                     decision to keep production            announcement.                          crude oil in OECD countries (a          highly unlikely.
daily reported. (PG 26)

                                                                  Financial sector propels QE index over 8,500 level
Exchange Rate                                                           TRIBUNE NEWS NETWORK
                                                                                                                                                                                          rose to 25,327,105 with a daily aver-
                                                                                                                                                                                          age of 5,065,421 shares; this was
                                                                                                                                                                                                                                    The most active companies in
                                                                                                                                                                                                                                  terms of volume traded were:
Currency                    buy QR         sell QR                                                                                                                                        3.9 percent higher than the previ-      Masraf Al Rayan which repre-
US                          3.6315         3.6485                 THE Qatar Exchange (QE)                                                                                                 ous week’s number of shares             sented 22.9 percent of total vol-
Euro                        5.1687         5.2654                 showed a positive performance                                                                                           24,378,582. The number of deals         ume traded, followed by Barwa
Pound Sterling              5.7873         5.8573                 during the five-day trading week                                                                                         reached 16,066 with a daily average     Real Estate co. (15.4 percent),
Indian Rupee                0.0809         0.0826                 that started on July 3. The official                                                                                     of 3,213 which is higher by 11.9 per-   Nakilat 11.8 percent, Qatar
Pakistani Rupee               0000         0.0428                 QE index increased by 1.69 per-                                                                                         cent as compared to the previous        International Islamic Bank (7.5
Philippine Peso               0000         0.0862                 cent over previous five day week’s                                                                                       week’s number of deals (14,355).        percent) and Vodafone Qatar (5.5
Sri Lankan Rupee              0000        0.03398                 closing to finish at 8,502.49                                                                                              The top five leading companies         percent).
Bangladeshi Taka              0000         0.0493                 points last Thursday.                                                                                                   in terms of value traded during           Of a total 42 listed companies
Nepalese Rupee                0000         0.0519                   The cap weighted Alshall index                                                                                        the week were: Industries Qatar,        stocks of 29 advanced and ended
Japanese Yen               0.04442        0.04551                 closed at 1,194.24 points, rising                                                                                       which represented 14.9 percent of       the week at higher prices than
Kuwaiti Dinar               13.103         13.356                 1.60 percent compared to previ-        week was QR1,0523,945,169. This         ing value, followed by the industri-     the total value traded, followed by     their previous week last trading
Saudi Riyal                  0.957         0.9736                 ous week’s closing of 1,175.39. The    represents an increase of 9.1 per-      al sector which accounted for 25.7       Masraf Al Rayan (13.1 percent),         day’s prices, while 9 stocks
Omani Riyal                  9.246           9.486                index is produced by Alshall           cent compared to the value of the       percent, while the consumer serv-        Qatar National Bank (12.4 per-          declined and ended at lower
UAE Dirham                   0.977         0.9938                 Economic Services, a Qatari busi-      previous week of QR966,350,262.         ices sector represented 15.9 per-        cent), Barwa Real Estate Co (11.3       prices than their previous week
Bahraini Dinar               9.541          9.691                 ness advisory services firm.              The financial sector led the trad-     cent of the total trading value.         percent), and Qatar International       last trading day’s prices and four
                             Source:            Total value of trade during the      ing, with49.8 percent of total trad-       The number of shares traded           Islamic Bank (8.7 percent).             stocks remained unchanged.
26           Sunday, July 10, 2011
                                                                       IN THE PIPELINE

Australian                                                               Boeing, DAE in talks over
carrier Jetstar
under                                                                    order cancellations
                                                                           DOW JONES NEWSWIRES


                                                                         DUBAI’S state-owned aircraft
                                                                         leasing company is in talks
                                                                         with Boeing Co about possible
               AFP                    launched.                          cancellations of its remaining
             SYDNEY                      “We’ve had a detailed brief-    orders,     having       already
                                      ing from them on what hap-         scrapped the bulk of a splashy
AUSTRALIA’S aviation regu-            pened and what they’ve done        $27 billion push to enter the
lator said on Saturday it had         since. We certainly don’t          industry’s global elite.
launched a review of mainte-          believe there were any imme-          Boeing confirmed it is dis-
nance at budget airline Jetstar,      diate or serious safety issues,”   cussing the future of Dubai
a Qantas offshoot, in the wake        said Peter Gibson, a               Aerospace Enterprise Ltd’s
of another low-cost carrier           spokesman for the regulator.       remaining 56-plane backlog,
being grounded.                          “But we are reviewing what      but no further cancellations
   The Civil Aviation Safety          Jetstar have done and we will      have been made and that
Authority (CASA) said it was          be looking carefully at their      Boeing      currently       isn’t
examining databases and               maintenance systems, particu-      expecting any. DAE has in
conducting checks at Jetstar          larly their maintenance con-       recent months already
after a records mix-up result-        trol systems, to ensure that       dropped a raft of 737 and 787
ed in some planes missing             they are robust and are operat-    orders. The lessor’s last
routine inspections.                  ing as we would expect.”           orders for Airbus aircraft
   The announcement follows              Gibson said the missed          were cancelled this week.
the grounding of fellow               inspections and procedures            The move highlights the
budget airline Tiger Airways          were “all lower-level issues”      dramatic scaling back of the
Australia until at least              and denied there was cause for     Gulf emirate’s ambitions to
August 1 due to “serious and          concern about safety across        become a global financial cen-
imminent” safety risks — the          the budget flight industry.         tre in addition to its estab-        DAE has in recent months already dropped a raft of Boeing 737 and 787 orders.       (EPA)
first such ban of an entire               “I don’t think anybody’s        lished position as a transport
carrier in Australian history.        jumping to that conclusion,”       and trading hub.                     with ambitious plans to com-          With bulging order books,         other occasions in the past        standing orders for 56 aircraft
   Jetstar said it took four of its   he said.                              The Dubai International           bine aircraft leasing, mainte-      the cancellations aren’t seen as    year,” said Paul Sheridan,         from the US manufacturer for
Airbus A320 jets out of service          “The same safety standards      Financial Centre has cut             nance, training, parts manu-        a problem for Airbus and            head of risk advisory at con-      delivery between 2012 and
on Thursday for overdue               apply whether you’re a full-       rents and fees in an effort to       facturing and airport devel-        Boeing, which are both boost-       sultant Ascend Worldwide.          2018 — including 35 737NGs,
works including “testing of           cost carrier or a low-cost car-    keep banks and traders,              opment, but scaled back its         ing aircraft output to meet           Sheridan doesn’t expect          15 747-8Fs and six 777
batteries of emergency lights         rier, we do the same types of      while the emirate’s financial         efforts as the emirate’s finan-      demand from airlines and            Airbus to have any problems        freighters, according to
on board the aircraft, sampling       audits, we do the same types       exchanges have struggled to          cial problems saw it cancel         other lessors.                      finding alternative customers       Ascend Worldwide.
of hydraulic fluid and the             of surveillance.                   establish more than a region-        157 plane orders, including           “DAE Capital has not been         for the DAE slots.                   Airbus said on Friday that
lubrication of door switches.”           “Where airlines seek to         al presence, despite owning          100 with Airbus and 57 with         a strategic business for its          DAE runs a fleet of 46            DAE had cancelled remain-
   “We have robust safety and         lower costs and to deliver         large stakes in Nasdaq OMX           Boeing. Bob Genise, the             owners since the financial cri-      Airbus and Boeing planes           ing orders for 34 A320 and 11
maintenance procedures in             cheaper fares the one thing        Group Inc and London Stock           industry veteran who ran its        sis hit Dubai’s finances and         leased to carriers including       A350 aircraft, valued at a
place. This is what helped us         they can’t do is cut corners       Exchange Group PLC.                  DAE Capital leasing arm, left       the company has cancelled           Emirates Airlines and Garuda       total of $5.8 billion at cata-
to identify some routine              on safety.”                           DAE was launched in 2006          last month.                         some of its orders on four          Indonesia and still has out-       logue prices.
maintenance tasks (that                  Gibson would not be drawn
needed completion) within             on whether Jetstar was facing
specific time limits,” a com-          penalties over the incident,
pany spokesman told AFP.
   The planes were serviced
overnight and back in opera-
tion by Friday. There were “no
                                      saying only that CASA would
                                      take “any appropriate action
                                      if it’s required”.
                                         Tiger, an Australian off-
                                                                         BP wants future spill claims limited                                                                                                            Mitsubishi
                                                                                                                                                                                                                         Chemical to
safety implications.”
   “It should also be noted
CASA did not order the
                                      shoot of the Singapore
                                      brand of the same name, has
                                      vowed to take all necessary
                                                                                                                                                                                      caused the government to
                                                                                                                                                                                      shut down deepwater explo-
                                                                                                                                                                                      ration for months.
                                                                                                                                                                                                                         make solar
grounding of any Jetstar air-
craft,” the spokesman added.
                                      steps to return to the skies
                                      and says it has a bright
                                                                         BP PLC wants to limit future
                                                                         claims related to its Gulf of
                                                                                                                                                                                         But now, Gulf residents are
                                                                                                                                                                                      getting back to work and
                                                                                                                                                                                                                         cell film
   The CASA said Jetstar had          future, despite losing Aus$2       Mexico oil spill disaster as the                                                                             industries are on the rebound,               REUTERS
immediately reported the              (US$2.15) million every            region’s economy recovers, the                                                                               BP said, citing lodging, fishing                TOKYO
issue and a review had been           week it is grounded.               oil company said in a docu-                                                                                  and other data.
                                                                         ment made public on Friday.                                                                                     “The GCCF welcomes any          MITSUBISHI          Chemical
                                                                           The Gulf economy is strong                                                                                 and all input from any interest-   Holdings Corp will start
                                                                         and “there is no basis to                                                                                    ed sources including BP,”          making adhesive film used
                                                                         assume that claimants, with                                                                                  Feinberg said in an email. “We     in solar cells, challenging
                                                                         very limited exceptions, will                                                                                take all of the submissions        Bridgestone Corp and
                                                                                                                                                                                      ‘under advisement.’”               Mitsui Chemicals Inc , who
                                                                           At the beginning                                                                                              BP supports the payment of      make the key material that
                                                                           of July, the GCCF                                                                                          legitimate claims and future       determines the life span of
                                                                           had paid $4.5                                                                                              losses that are substantiated,     the cells, the Nikkei busi-
                                                                           billion in claims                                                                                          but the company objects to         ness daily said.
                                                                           to 195,000                         BP’s deepwater Macondo well ruptured in April 2010, causing a           the GCCF’s “practice of              Mitsubishi will spend about
                                                                                                              fiery explosion that killed 11 rig workers. (REUTERS)                    assuming futures losses on         10 billion yen ($123 million)
                                                                           claimants                                                                                                  certain claims,” the company       through 2015 to grab 30 per-
                                                                         incur a future loss related to       British oil company said.             BP’s deepwater Macondo            said in an email.                  cent of the global market for
                                                                         the oil spill,” BP said in a paper      Kenneth Feinberg is the          well ruptured in April 2010,           At the beginning of July,       the film, and will launch a
                                                                         filed with the Gulf Coast             administrator of the $20 bil-       causing a fiery explosion that       the GCCF had paid $4.5 bil-        large plant in China by the
                                                                         Claims Facility (GCCF).              lion GCCF fund established at       killed 11 rig workers and           lion in claims to 195,000          end of 2012, the daily report-
                                                                           Oystermen, whose beds              the urging of President Barack      spewed more than 4 million          claimants. There are also          ed.            Group firm
The Civil Aviation Safety Authority said it was examining databases      have been destroyed by               Obama to compensate people          barrels of oil into the Gulf. The   about $430 million worth of        Mitsubishi Plastics Inc
and conducting checks at Jetstar after a records mix-up resulted in      crude, should be considered          and businesses for losses relat-    accident closed waters to fish-      offers that are under consid-
some planes missing routine inspections.                                 for future payments, the             ed to the BP oil disaster.          ing, disrupted tourism and          eration by Gulf residents.           Mitsubishi will
                                                                                                                                                                                                                           spend about 10 bil-
                                                                                                                                                                                                                           lion yen ($123 mil-
                                                                                                                                                                                                                           lion)through 2015 to

                                                                                                              Brazil’s Gol to buy rival
                                                                                                                                                                                                                           grab 30 percent of
                                                                                                                                                                                                                           the global market
                                                                                                                                                                                                                         recently installed adhesive
                                                                                                                                                                                                                         film manufacturing equip-

                                                                                                              Webjet for $61.4mn
                                                                                                                                                                                                                         ment at its plant in
                                                                                                                                                                                                                         Nagahama, Shiga Prefecture,
                                                                                                                                                                                                                         which can turn out 3,000
                                                                                                                                                                                                                         tons of the high-performance
                                                                                                                                                                                                                         film annually, the Nikkei said.
                                                                                                                         REUTERS                  would provide more details in       incomes increase.                    Total production capacity,
                                                                                                                         SAO PAULO                a call with analysts on July 11.       Webjet operates 154 daily       including other locations,
                                                                                                                                                     Gol shares soared more than      flights to 14 Brazilian desti-      will be raised to 5,000-6,000
                                                                                                              BRAZIL’S No 2 airline, Gol          6 percent on Friday afternoon       nations, including the coun-       tons by year-end, for sale to
                                                                                                              Linhas Aereas, confirmed on          amid talk the airline was final-     try’s largest cities, while Gol    solar cell manufacturers
                                                                                                              Friday it plans to buy smaller      ising a deal either to partner      operates around 900 flights         mostly in Japan, China, the
                                                                                                              rival Webjet for 96 million         with Webjet or buy it outright.     per day.                           United States and Europe,
                                                                                                              reais ($61.4 million), the latest   The stock ended trading 3.5            Webjet’s Paulus sold a          the         daily        said.
                                                                                                              consolidation in the booming        percent higher at 19.77 reais.      controlling stake in his           Mitsubishi Plastics will build
                                                                                                              Latin American airline sector.                                          tourism company, CVC, last         the Chinese plant — capable
                                                                                                                 Gol will complete the              Gol will complete                 year to buyout firm Carlyle         of making 20,000 tons of the
                                                                                                              transaction to buy 100 per-           the transaction to                Group in a deal valued at          film a year — in either
                                                                                                              cent of Webjet through its            buy 100 percent of                $300 million at the time.          Shanghai        or    Jiangsu
                                                                                                              Varig subsidiary.                     Webjet through its                   He refused to include           Province, with construction
                                                                                                                 Webjet has been valued at          Varig subsidiary                  Webjet because he expected         set to start at the end of the
                                                                                                              311 million reais, much more          A source told Reuters earlier     better offers from other par-      year, Nikkei said.
                                                                                                              than the deal price. The filing      on Friday that lawyers repre-       ties, people familiar with the       By 2015, annual capacity at
                                                                                                              did not explain why the price       senting the Constantino family      situation told Reuters at the      the Chinese plant will be
                                                                                                              was less than a third of            — Gol’s majority shareholders       time.                              raised to 60,000 tons, Nikkei
                                                                                                              Webjet’s estimated worth, or        — and Webjet’s biggest share-          The potential alliance          said. Mitsubishi’ product
                                                                                                              whether Gol would assume            holder, Guilherme Paulus, had       comes as Gol faces increased       will challenge Bridgestone
                                                                                                              any debt as part of the deal.       been finalising the terms.           competition from a handful         and Mitsui, which make EVA
                                                                                                                 Gol said the deal’s comple-        The takeover underscores          of relatively new carriers in      (ethylene-vinyl acetate) film.
                                                                                                              tion still depended on legal        Gol’s efforts to expand             Brazil, which like Webjet          Mitsubishi’s adhesive film is
                                                                                                              and technical audits of Webjet      capacity to meet growing            target routes largely under-       10 times more water resistant
                                                                                                              and the approval of govern-         demand as more Brazilians           served by Gol and its largest      than EVA film, but may sell at
                                                                                                              ment authorities. It said it        use air travel as household         rival TAM.                         the same price, Nikkei said.
                                                                                                   GLOBAL ECONOMY                                                                                                      Sunday, July 10, 2011
Food, govt                                                                                          UNENDING PROBLEMS
                                                                                                                                                                                                                           Expect US
spending                                                                                                                                                                                                                   jobless rate
push Saudi                                                                                                                                                                                                                 to fall
inflation                                                                                                                                                                                                                  through
to 4.7%                                                                                                                                                                                                                    2012: Poll
     ZAWYA DOW JONES                                                                                                                                                                                                                  NEW YORK
                                                                                                                                                                                                                           ECONOMISTS at top finan-
SAUDI Arabia’s annualised                                                                                                                                                                                                  cial institutions expect the
rate of inflation accelerated                                                                                                                                                                                               US unemployment rate to
to 4.7 percent in June, from                                                                                                                                                                                               fall in 2011 and 2012 despite
4.6 percent in May, a sign                                                                                                                                                                                                 a surprisingly weak jobs
that the recent surge in glob-                                                                                                                                                                                             report on Friday, a Reuters
al food prices and a mega                                                                                                                                                                                                  poll found.
citizen support package                                                                                                                                                                                                      Though the economists at
could be becoming an infla-                                                                                                                                                                                                 primary dealers are calling
tion headache for the king-                                                                                                                                                                                                for unemployment to remain
dom, data from the Central                                                                                                                                                                                                 at historically high levels
Department of Statistics &                                                                                                                                                                                                 through 2012, they ascribe
Information showed on                                                                                                                                                                                                      only a 20 percent chance of
Saturday.                                                                                                                                                                                                                  the Federal Reserve under-
   Rent, fuel and housing                                                                                                                                                                                                  taking another stimulus pro-
related services saw a 7.1                                                                                                                                                                                                 gramme of Treasuries pur-
percent rise in June year-on-                                                                                                                                                                                              chases in the next two years,
year, compared with a 7 per-                                                                                                                                                                                               the poll found.
cent jump in May, while                                                                                                                                                                                                      Most of the economists at
food and beverage prices                                                                                                                                                                                                   primary dealers — the 20
gained 5.5 percent on the                                                                                                                                                                                                  large financial institutions
year, versus a 5.7 percent                                                                                                                                                                                                 that do business directly
rise in the previous month,                                                                                                                                                                                                with the Fed — expect stub-
the CDSI said on its website.                                                                                                                                                                                              bornly high unemployment
Meanwhile, the cost of living                                                                                                                                                                                              will contribute to the US
index in the kingdom, the                                                                                                                                                                                                  central bank holding official
Arab world’s largest econo-                                                                                                                                                                                                interest rates at current lev-
my, stood at 134.2 points                                                                                                                                                                                                  els near zero through the
last month, up from 133.7 in                                                                                                                                                                                               first half of next year.
May. On the month, con-                                                                                                                                                                                                      The poll was conducted
sumer prices rose 0.4 per-                                                                                                                                                                                                 after the government said on
cent in June.                                                                                                                                                                                                              Friday that the unemploy-
   Saudi Arabia, a mostly                                                                                                                                                                                                  ment rate rose to a six-month
desert country with scarce              Bank customers exit the head office of the National Bank of Greece, in Athens, on Friday. Few observers believed that Europe’s crippling debt crisis had been resolved. (EPA)       high of 9.2 percent in June,
water supplies, imports the                                                                                                                                                                                                while non-farm payrolls grew

                                        Eurozone set for a busy
bulk of its food needs.                                                                                                                                                                                                    by a mere 18,000 last month.
   Muhammad al Jasser, the
governor of the Saudi                                                                                                                                                                                                        They ascribe only a
Arabian Monetary Agency                                                                                                                                                                                                      20 percent chance
(SAMA), the country’s cen-                                                                                                                                                                                                   of the Federal
tral bank, has repeatedly                                                                                                                                                                                                    Reserve undertak-
                                                                                                                                                                                                                             ing another stimu-

                                        summer of crisis talks
said that inflationary pres-
sures, caused mainly by an                                                                                                                                                                                                   lus program of Trea-
increase in global food                                                                                                                                                                                                      suries purchases
prices, are worrying, but the                                                                                                                                                                                                The lacklustre jobs growth
central bank sees no need to                                                                                                                                                                                               stunned most economists, as
change interest rate policy.                                                                                                                                                                                               the median of forecasts was
   Economists expect infla-                                                                                                                                                                                                 for growth of 90,000.
tion in the world’s top oil                           AP                    junk, saying a bank contri-        the bank talks.                       A bond swap is common-               The EU’s new banking reg-          “It is a pretty jarring result,
exporter to remain higher                          BRUSSELS                 bution plan would likely             After     rating     agency       ly seen as a more radical           ulator has stressed that this       especially on the back of a
than its historic average of 1                                              push it to take a second           Standard & Poor’s said that         option than a rollover,             year’s tests are much stricter      weak May report,” said
percent as the government               THE eurozone’s hope that it         bailout.                           even the market-friendly            because it would be easier          and insists that states have        Omair Sharif, US economist
continues to post expansion-            could enjoy a summer lull in          And with Greece due for          French model for a bond             to verify how many                  the necessary backstops in          with RBS Securities in
ary budgets.                            its crisis has vanished as          another review of its finances      rollover would likely be seen       investors are actually tak-         place to deal with the results.     Stamford, Connecticut. “But
   New       spending      pro-         quickly as it appeared.             in August, the European            as a “selective default” by         ing part and thus leave                “Before the stress tests are     we know that a number of
grammes announced recent-                  Last week, it seemed all         Union’s traditionally quiet        Greece, Germany is pushing          more room for naming and            published, the affected states      data sets are going to
ly by King Abdullah, which is           sides would get a time out.         summer period looks set for a      again for its original plan: a      shaming.                            have to be in a position to say     improve in the third quarter,
likely to cost the government           Greece had avoided a default        repeat of the June drama.          bond swap where, instead of           “We have to walk a very           ‘this is how we will react,’”       especially in respect to the
at least 485 billion Saudi              on its huge debts. Banks had          That month, Greece’s                                                 narrow path between a vol-          said a eurozone official. That       factory sector with auto pro-
riyals ($129.28 billion) in             agreed to roll over their           international debt inspec-           The results of EU                 untary contribution, and at         involves boosting safety funds      duction and so on.
total over several years, could         holdings in Greek bonds,            tors spent weeks in Athens           bank stress tests                 the same time a substantial         and coming up with models             “There is some evidence
lead to inflationary pressure            and finance ministers sig-           trying to save a faltering           are due next Friday               one,” Kotthaus said.                for an orderly restructuring in     that things started to pick up
in the kingdom, the country’s           naled that a second bailout         bailout while eurozone               and are seen as an                  The situation in Greece           some cases, the official added.      in the second half of June,”
finance minister Ibrahim al              would be agreed — though            states fought about the role         important gauge                   and the currency union’s            He was speaking on condition        Sharif said.
Assaf said in April.                    not before the autumn.              of private creditors and             for the region’s                  other struggling members —          of anonymity because EU               In Friday’s poll, the median
   SAMA in May said that the               But while few observers          Greeks held days of violent          credibility                       already bailed out Ireland          finance ministers, who will          of forecasts from 14 of the 18
kingdom may continue to see             believed that Europe’s crip-        protests.                          buying new bonds, banks and         and Portugal as well as Spain       join their eurozone colleagues      economists who answered
moderate inflationary pres-              pling debt crisis had been            At what was meant to be          other private investors would       and Italy — is also set to          on Tuesday, still had to            the primary dealer poll was
sures in the second quarter of          resolved, the good mood             their last meeting before the      exchange their bonds for ones       overshadow the other main           finalise the decisions on back-      for the US unemployment
this year mainly due to lower           was shattered after ratings         summer, eurozone finance            with longer maturities.             topic at next week’s get-           stops.                              rate to dip to 8.7 percent by
food prices. However, in the            agency Standard & Poor’s            ministers on Monday face the         “If this French model —           together: how to deal with             However, fears over the          the end of 2011.
medium to long term the                 warned that the banks’ plan         challenge of rebuilding an         depending on how it is              banks that fail stress tests.       potential costs for states to         The median of forecasts
kingdom is likely to see slow-          to contribute to a new              eroding consensus on how to        shaped — has this problem             The results of EU bank            deal with failing lenders was       from 17 of the dealers was for
er inflation rates as King               Greek rescue package                bailout Greece again.              (of triggering a default rating)    stress tests are due next           already pressuring bank             a further dip to 8.4 percent
Abdulla’s recent decision to            would likely cause a default.         “It will be a difficult          too, then we can go back to         Friday and are seen as an           shares Friday, especially in        by the middle of 2012, while
build 500,000 homes and                    Rival agency Moody’s             Eurogroup, because posi-           the model that we had pro-          important gauge for the             debt-laden Italy, whose banks       the median from 18 of the
increase the ceiling on loans           then reignited market jit-          tions are hardening,” an EU        posed,” German Finance              region’s credibility, after         have so far weathered the cri-      dealers was a rate of 8.1 per-
from        the      Mortgage           ters in countries outside           official said of the meeting        Ministry spokesman Martin           last year’s exercise glossed        sis much better than their          cent by the end of 2012.
Development Fund will put               Greece when it slashed              on condition of anonymity          Kotthaus said Friday in             over massive problems at            counterparts       in    other        Not all of the economists
less pressure on the rent               Portugal’s credit grade to          because of the sensitivity of      Berlin.                             Irish banks.                        European countries.                 who responded to the poll
index, SAMA added.                                                                                                                                                                                                         answered all the questions.

                                                                                                               China inflation rises to
                                                                                                               3-year high in June
                                                                                                                             AFP                   four percent — is likely to            Higher food prices are like-     year-end and then will stay
                                                                                                                            BEIJING                fuel concern among policy-           ly to hurt low-level income        there for a couple of years.”
                                                                                                                                                   makers anxious about infla-           earners the hardest, as food-         Economist Mark Williams
                                                                                                               CHINA said on Saturday its          tion’s potential to trigger          stuffs account for more than       at Capital Economics told Dow
                                                                                                               politically sensitive inflation      social unrest.                       one-third of the monthly           Jones Newswires ahead of the
                                                                                                               rate accelerated in June to the       China has been struggling          spending of the average            data release that “although we
                                                                                                               highest level in three years, as    to tame inflation despite             Chinese consumer, according        are still expecting inflation to
                                                                                                               the government struggles to         restricting the amount of            to the statistics bureau.          come down, the confidence
                                                                                                               rein in soaring food costs.         money banks can lend on                “The higher-than-expected        with which we hold that view
                                                                                                                 The country’s consumer            numerous occasions and               CPI inflation in June could be      is probably lower than it was a
                                                                                                               price index rose 6.4 percent in     hiking interest rates five            market positive because it         few weeks ago.”
                                                                                                               June, the National Bureau of        times since October — most           increases the chance for CPI          “We don’t have to panic
                                                                                                               Statistics said in a statement,     recently on Wednesday.               inflation to peak in June,” Lu      about the June CPI figure,”
                                                                                                               the highest level since June          Food prices in June were           Ting, a Hong Kong-based            Xinhua news agency quoted
                                                                                                               2008 when the inflation rate         up 14.4 percent year-on-             China economist for Bank of        Zhang Liqun, a macroeco-
                                                                                                               reached 7.1 percent.                year, while the price of pork,       America-Merrill Lynch, said        nomic analyst with the State
                                                                                                                 The June reading — high-          China’s preferred choice of          in an email.                       Council          Development
                                                                                                               er than the 5.5 percent in          meat, was up 57.1 percent              “We expect CPI inflation to       Research Centre, China’s top
Chinese President Hu Jintao at the International Economic Forum, in St Petersburg, Russia, recently. China's   May and well above the gov-         during the period, the               fall steadily after June to        government think-tank, as
Food prices in June were up 14.4 percent year-on-year. (EPA)                                                   ernment’s annual target of          bureau said.                         around 4.0-4.5 percent at          saying.
28         Sunday, July 10, 2011

Moody’s     Wages of default: The
cuts Arab Argentina experience
Banking                                                              A decade after the 2001 default, Argentina has still not been able to re-enter the global credit market and even if it does, analysts say, it will
                                                                     probably have to pay interest rates as much as twice what its neighbour Brazil pays.

Corporation                                                                NYT NEWS SERVICE
                                                                               BUENOS AIRES

                                                                     A DECADE ago, as Argentina

ratings                                                              slid toward financial collapse,
                                                                     banks barricaded themselves
                                                                     behind sheet metal to keep out
                                                                     protesters demanding access to
                                                                     their life savings.
                                                                        “Thieves!” some yelled,
 TRIBUNE NEWS NETWORK              greater balance sheet liqu        banging hammers.
            DOHA                   ity, potentially limiting its        It was a low moment for
                                   ability to develop new busi-      Argentina as it abandoned an
MOODY’S Investors Service          ness.                             experiment to peg the peso to
has today downgraded the             According to Moody’s, at        the dollar, froze bank accounts
deposit ratings of Arab            the Ba2 level, ABC’s stand-       and defaulted on $100 billion
Banking Corporation (ABC)          alone rating remains under-       in mostly foreign debt.
by one notch to Ba1/Not-           pinned by strong loss-               Today, the sheet metal is
Prime, from Baa3/Prime-3.          absorption capacity (reflect-      gone. But the debilitating
At the same time, Moody’s          ed in a Tier 1 capital ratio of   effects of Argentina’s 2001
downgraded ABC’s stand-            18.4 percent at the end of        default and currency devalua-
alone      bank     financial      December 2010) and by sub-        tion still linger. And now, as
strength rating (BFSR) to D        stantial liqu asset reserves      Greece edges toward a possible
(mapping to Ba2 on the             that can withstand severe         default, the Argentine lessons
long-term scale) from D+.          deposit withdrawals. The          could be instructive.
All the aforementioned rat-        rating agency also takes into        For one thing, a decade
ings now carry a negative          account the bank’s moderate       later, Argentina has still not
outlook.                           profitability, of which           been able to re-enter the
  The rating action con-           approximately 50 percent          global credit market.
cludes the review for down-        derives from its majority            “A default is not free,” said
grade initiated by Moody’s         controlled Brazilian corpo-       Jaime Abut, a business con-         Argentine President Cristina Fernandez de Kirchner (left) with Economy Minister Amado Boudou, in Buenos Aires, Argentina, recently.
on 24 February 2011, a press       rate banking subs iary,           sultant in Rosario, a city
release issued by the ratings      Banco ABC Brasil.                 north of Buenos Aires. “You         Eric Ritondale, a senior econo-    felt this country had no hope,”      ton in 2003 to about $500 a ton      from the fund. That has
agency from Limassol sa .            In the first quarter of 2011     have to pay the consequences,       mist at Econviews, an econom-      recalled Daniel Kerner, an ana-      today.                               enabled the Kirchner govern-
  Moody’s said that posi-          ABC reported improved             and for a long time. Argentina      ic consulting firm here.            lyst with the Eurasia Group, a          Greece, with few agricultural     ments to avoid the agency’s
tioning ABC’s standalone           year-on-year revenues of          is no longer considered a seri-        During the 1990s, seeking       political risk consultancy.          exports, cannot expect a similar     typical stringent prescription
ratings at the Ba2 level bet-                                        ous country.”                       to tame hyperinflation,                De la Rua resigned                windfall. But economists say it      of cutting state spending.
ter reflects (i) the bank’s                                             If anything, economists say,     Argentina had tied the value       December 21, 2001, fleeing the        can benefit from Argentina’s            For Greece, which agreed to
continued reliance on                Moody’s said that               Greece’s prospects could            of its peso to the US dollar – a   government house by helicop-         example on debt restructuring        reduce government spending
Libyan deposits, within the          a significant pro-              prove worse. Argentina was,         “convertibility” strategy that     ter as a riot raged below. Over      – mainly by seeking to avoid         as a condition for a bailout
context of high deposit con-         portion (27 per-                and is, a big exporter of agri-     proved           unsustainable     the next 10 days, four presi-        repeating it.                        package from the IMF and
centrations, and (ii) the            cent) of ABC’s                  cultural products, and it runs      because of rising global inter-    dents assumed power and then            The Argentine government          the European Union, those
potential constraints on its         highly concen-                  a foreign trade surplus. The        est rates. The country priva-      quickly resigned before a fifth,      waited until 2005, when its          austerity measures are now a
franchise given that its 59          trated deposit                  bulk of the Greek economy is        tised many industries, which       Eduardo Duhalde, declared the        economy was already in recov-        big source of social discord.
percent majority sharehold-          base is sourced                 services, particularly tourism,     led to high unemployment           currency devaluation. A short        ery, to conduct the first of two        The Argentine government
er, the Central Bank of Libya        from the CBL and                and Greece perennially runs a       but also made Argentina’s          time later, Congress formally        debt restructurings. Non-gov-        has maintained hefty subsi-
(CBL), remains subject to            from other Libyan               trade deficit.                       economy more efficient.             approved the debt default that       ernment foreign investors – the      dies on energy and some food
sanctions      imposed     by        institutions                       Moreover, at the time of its        (Greece, whose public sec-      was already a de facto reality.      biggest included pension funds       to avoid public discontent –
United Nations, the USA                                              default Argentina had a fiscal       tor accounted for about 40            In 2003 Nestor Kirchner was       from Italy, Japan and the            steps that would be anathema
and the European Union                                               deficit of 3.2 percent of gross      percent of its economy before      elected to replace the interim       United States – took haircuts        to the monetary fund. But
against the Libyan regime.         US$190.0 million and net          domestic product. Greece’s          the debt crisis began last year,                                        costing them two-thirds of their     again, it is high commodity
  Moody’s said that a signif-      profits of US$48.0 million.        deficit was 10.5 percent of GDP      is now under heavy privatisa-         By 1999, however, it              investments.                         prices that have helped let
icant proportion (27 per-             Moody’s said that ABC’s        last year, according to the         tion pressure.)                       was clear to most                    Notably, the one creditor         Kirchner maintain popularity
cent) of ABC’s highly con-         Ba1 deposit rating continues      European Commission – well             By 1999, however, it was           economists that                   that was paid back in full – in      at home through generous
centrated deposit base is          to incorporate one notch of       above the European Union’s          clear to most economists that         Argentina was                     2006 – was the International         government outlays.
sourced from the CBL and           parental support uplift from      limit of 3 percent.                 Argentina was marching inex-          marching inexorably               Monetary Fund, to which                To be sure, Argentina has
from other Libyan institu-         the Kuwait Investment                And as a percentage of           orably toward a default and           toward a default                  Argentina owed $9.8 billion          been trying to lay the ground-
tions. Although Libyan             Authority (KIA), which is         GDP, Greece’s debt of 150           devaluation. The number of            and devaluation                   dating to the 1990s.                 work to begin borrowing again
deposits are currently frozen      the bank’s minority share-        percent is far worse than the       people under the poverty line      president, Duhalde. Kirchner            A lesson for Greece is            on global markets.
and cannot be withdrawn,           holder with 30 percent,           54 percent Argentina had            was growing – it peaked at         embarked on a new economic           “whereas the commercial cred-          One big piece of unfinished
there is uncertainty about         behind the CBL with 59 per-       when it defaulted.                  more than 50 percent of the        model – one that his wife,           itors are expected to take a         business would be settling a
what will happen to these          cent. The Ba1 rating is based        But perhaps the biggest bind     population in 2002 – and           Argentina’s current president,       haircut, the official creditors       debt of as much $9 billion it still
deposits once the situation        on Moody’s assumptions of         for Greece is that it shares a      unemployment was soaring.          Cristina       Fernandez       de    like the IMF are not willing to,”    owes to the Paris Club of credi-
in Libya is resolved.              a moderate likelihood of          common currency with the            The government coalition of        Kirchner, continues to follow.       said Robert S Koenigsberger,         tor nations – a group of 19
  In light of the aforemen-        support from the KIA.             other European nations that         President Fernando de la Rua       Its pillars are sustaining a weak    chief investment officer with         countries with some of the
tioned sanctions, Moody’s             The negative outlook on        use the euro. And so, unless it     began to fall apart.               currency to foster exports and       Gramercy, an emerging mar-           biggest economies. Argentina’s
similarly cons ers that ABC’s      ABC’s ratings reflects uncer-      takes the imponderable and             As with Greece now, social      discourage imports, and main-        kets investment manager.             economy minister, Amado
franchise is constrained by        tainty about the ownership        unprecedented step of break-        tensions rose. There were eight    taining fiscal and trade surplus-        Gramercy’s original $3 bil-       Boudou, has said his nation
the uncertain status of its        of the bank, once the conflict     ing from the euro zone, Greece      general strikes in Argentina in    es that can be tapped for financ-     lion holding in Argentine            expects to reach a settlement by
core shareholder, the CBL.         in Libya is resolved and the      does not have access to one big     2001, with looting and thou-       ing government and paying            debt was shaved to a value of        the end of this year.
Although, as a Bahrain-            possible impact on the fran-      tool – devaluing its sovereign      sands of roadblocks. Huge          down debt.                           $1.5 billion.                          Even if Argentina can go
based institution, ABC is          chise and funding base.           currency – that has helped          lines formed outside many             Aiding this strategy have            “That is how commercial           back into the global debt mar-
operationally independent             Headquartered           in     Argentina weather its econom-       European embassies as waves        been the rising global prices of     creditors get subordinated and       kets, though, analysts say it
from its shareholder and is        Manama, Bahrain, Arab             ic storm.                           of Argentines fled their coun-      agricultural commodities. For        bear the brunt of these failed       will probably have to pay
exempt from these sanc-            Banking Corporation report-          “The big problem for Greece      try.                               Argentina, a major soybean           bailouts,” Koenigsberger said.       interest rates as much as twice
tions, the uncertainty relat-      ed total assets (audited          is that they have a strong cur-        “People sold everything and     producer, the commodity wave            Since paying off the              what its neighbour Brazil
ed to its ownership status         under IFRS) of US$28.1bil-        rency, much stronger in rela-       moved to Spain, and took jobs      has been a godsend. Soybean          International Monetary Fund,         pays. Brazil’s 10-year bonds
requires it to maintain            lion as at December 2010.         tion to their productivity,” said   doing anything, because they       prices have risen from $200 a        Argentina has not borrowed           are at 4.5 percent.

  Lexus to lose top spot in US luxury car market                                REUTERS                  be back at full capacity in          Lexus sales tumbled 18            asked if Lexus could reclaim         once was and it relies heavi-
                                                                                 CHICAGO                 September.                         percent in the first half of         the top spot in 2012, he said.       ly on two models, the RX
                                                                                                           Most Japanese plants             2011 to 88,010, and                   “Whether we’re No. 1 or            350 and ES 350 sedan, a
                                                                        TOYOTA Motor Corp’s              assembling Lexus models            German rivals BMW and               not, I don’t care. We’ve never       spinoff of the Toyota Camry.
                                                                        brand Lexus will end its         have already returned to full      Daimler AG’s Mercedes-              focused on that. We won’t              The RX so far this year
                                                                        streak of 11 years as the top    strength.                          Benz sprinted by.                   change our plan midyear              accounts for 45 percent of
                                                                        luxury brand in the US mar-        However, the RX 450h               BMW’s sales rose 13 per-          because someone else is sell-        Lexus US sales and the ES
                                                                        ket due to lost sales in the     hybrid SUV will not be at full     cent to 113,705, and                ing more cars than us.”              sedan 19 percent.
                                                                        aftermath of the Japan           production until October.                                                Industry analyst Aaron               “Like Toyota, they’ve lost
                                                                        earthquake and tsunami,          The hybrid is typically 15 per-                                        Bragman           of      IHS        their momentum. They have
                                                                        said Mark Templin, Lexus         cent to 20 percent of RX sales       Lexus US sales                    Automotive Insight said on           an aging buyer base, and a lot
                                                                        Division general manager.        in the US market.                    fell 38 percent in                Friday the slump at Lexus            of their dealers are afraid
                                                                          Templin said Lexus US            Lexus US sales fell 38 per-        June as dealers                   goes deeper than a shortage          they will become the next
                                                                        sales will fall about 17 per-    cent in June as dealers ran          ran out of key                    of vehicles. He suggested            Buick. Their new products
                                                                        cent to around 190,000           out of key products. At the          products                          that Lexus could suffer from         haven’t resonated with
                                                                        vehicles in 2011.                end of the month, dealers                                              the same stigma as did               younger buyers.”
                                                                          The United States is the       had about half their normal        Mercedes-Benz climbed 7             General Motors Co’s Buick              The median buyer age for
                                                                        biggest market for Lexus.        stock.                             percent to 110,926. If 2011         brand for the past several           Lexus is in the mid-50s, and
                                                                          All Lexus models, except         “June was the bottom of          full year results end as            decades: old people’s car.           Templin said he is comfort-
                                                                        the RX 350 crossover sport       the trough, and we’ve turned       expected, it would be the first        Bragman said it would be           able with that because it is a
                                                                        utility vehicle, are made in     the corner. We see the rest of     time that BMW has outsold           “quite a challenge” for Lexus        result of high loyalty.
                                                                        Japan.                           the year being much better         Lexus in the US since 1997.         to reclaim No. 1 in luxury             Sportier models such as the
                                                                          Templin        said     the    for us,” Templin said, speak-        Templin shrugged off the          sales in 2012 even with full         IS sedan and CT hybrid
  A Lexus LFA sports car at the 81st Geneva International Motor Show at Cambridge, Ontario plant         ing to reporters at a Lexus        significance of losing the lux-      production because its line-         sedan are attracting younger
  the Palexpo, in Geneva, recently. (REUTERS)                           that makes the RX 350 will       media event in Chicago.            ury sales crown, and when           up is not as alluring as it          owners, said Templin.

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