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					                                                                                                                                                                                                                                ARAB TIMES, SATURDAY, AUGUST 20, 2011
    BUSINESS                                                                                                                                                                                                                                                                         37


                                                               Asian LNG prices rise above $15m                                                                               Hong Kong arrests man over exchange hacking

    Asian liquefied natural gas (LNG) spot prices for September           increased 9 percent year-on-year.                                       Hong Kong police said on Friday they had arrested a 29-          half a day. The website of the Hong Kong bourse, the
    rose above $15 per million British thermal units (mmBtu)                 Spot prices in Asia have now risen over 50 percent since             year-old man over a cyber attack on the city’s stock             world’s most valuable exchange operator, displays listed
    during the week, with strong Asian demand keeping prices              Japan’s earthquake in March boosted demand for LNG.                     exchange website which halted trading in the shares of           companies’ regulatory filings.
    high.                                                                    The spread between Asian spot prices around $15.10                   seven companies. Police said they detained the man on               The bourse said it had to suspend the trading to ensure
       “Asian markets were holding just north of the $15 level for        and British prices was about $5.40 per mmBtu this week,                 Thursday, seizing five computers, two mobile phones and          investors had equal access to the filings.
    cargoes as the demand for LNG continues to ramp up,”                  wide enough to coax cargoes to Asia from the Atlantic.                  other items, a police spokesman told AFP.                           The exchange had said its other systems were not affect-
    ICAP analysts said in a note. Top LNG importers Japan and             Recent Nigerian cargoes have been sent east to higher-                     “He is being investigated under the offence of access to a    ed and trading in its securities and derivatives markets were
    South Korea both reported higher imports for July.                    paying Pacific markets. Shipments to Asia from the Middle               computer with criminal or dishonest intent,” the spokesman       operating normally.
       Japan’s LNG imports rose 14.3 percent in July compared             East and the Atlantic Basin increased by 1.357 million and              said, adding that the man was being held for questioning.           The hacking was detected after HSBC announced the
    with the same period a year earlier as the nation continues           1.146 million metric tons respectively in July, while Asia-                The bourse was hit last week by what it called a “mali-       sale of its United States credit card and retail services busi-
    to depend on the fuel to replace nuclear power lost due to            Pacific shipments of LNG to Asian buyers fell, Waterborne               cious” attack which caused firms including banking giant         ness as part of an overhaul to streamline its operations, while
    the March earthquake, while South Korea’s imports                     LNG analysts said in a note. (RTRS)                                     HSBC and flag carrier Cathay Pacific to suspend trading for      Cathay reported its 2011 half-year earning results. (AP)



                                                                          Western prospects dim, developing economies can do only so much


Emerging powerhouses can’t save the world: analysts
LONDON, Aug 19, (RTRS): Emerging                 rent account deficit leaves it vulnerable         For Bill Belchere, global economist        dynamic that is developing here is            is a shift that matters. “China’s own         if the rich world fell into recession, and
markets will not save the world if the           to an outflow of capital. Brazil is slow-      at Mirae Asset Securities in Hong             under-appreciated outside Asia,”              demand has quickly become an impor-           reduced demand for its exports would
West slides back into recession. In an           ing under the weight of lower spending         Kong, Asia is finally reaping the bene-       Belchere said.                                tant driver of growth in the rest of Asia;    have a knock-on effect on commodity
interconnected global economy, decou-            by middle-class consumers hit by ris-          fits of policies to nurture home-grown           Rob Subbaraman, chief Asian econo-         it is no longer just an assembly hub for      prices and producers. This was the
pling is a beguiling myth.                       ing interest rates.                            demand. With incomes across much of           mist at Nomura in Hong Kong, said the         the region,” Subbaraman said.                 main factor behind a cut in Morgan
   As fears mount that the developed                The resilience displayed by the likes       the continent now rising faster in the        region would run into headwinds from             Fitch on Tuesday cited the increased       Stanley’s projection of 2012 GDP
world is shifting from slow growth to            of China and Indonesia is evidence of a        countryside than in towns, millions of        slower exports to the United States,          importance of Asia as one reason why          growth in Latin America, announced
no growth, emerging markets seem to              secular shift in the global economy            peasant farmers are suddenly able to          Europe and Japan. But he too pointed          the economic outlook in sub-Saharan           on Thursday, to 3.6 percent from 4.6
many economists better placed to                 from North to South, from West to              afford a motorbike and a mobile phone         to Asia’s reduced reliance on external        Africa is brighter than it has been in        percent.
weather the storm than they were dur-            East, rather than a substitute for zero or     and perhaps set up their own small            demand. In China, for example, net            many decades; as trade with Asia                 “We are wondering what’s going to
ing the great financial crisis of                negative growth in the West.                   businesses.                                   exports subtracted from GDP growth in         remained buoyant, Africa was less             happen with China right now,” said
2008/2009.                                          Morgan Stanley estimates emerging              “What we’re seeing is new poles of         the first half of the year.                   exposed than in the past to what hap-         Pedro Mariani Lacerda, the head of
   That is not universally true. India is        markets will generate 80 percent of            domestic growth in the larger                    The size of China’s economy will be        pens in advanced countries, the ratings       Horto, a financial consultancy and
hamstrung by high government debt                global gross domestic product growth           economies. No one is totally insulated        close to $7 trillion this year, up from       agency said.                                  investment fund in Rio de Janeiro, said
and inflation. Turkey’s yawning cur-             in 2011-2012.                                  in a globalised economy, but the              $4.5 trillion as recently as 2008, so this       Still, China would not be unscathed        of Brazil’s economic prospects.



                                Hurdles ahead
                                                                                                Smarting companies strengthen
    Australia having scope
    to defend its economy                                                                       case for India’s policy breather
    SYDNEY, Aug 19, (RTRS): Australia            Between September 2008 and April
    is almost uniquely placed among its
    rich peers in having scope to defend
                                                 2009 it slashed rates by 425 basis
                                                 points to 3 percent, the lowest in over
                                                                                                                                                11 interest rate hikes since March 2010
    its economy from a global slowdown,          two decades.
    yet there are hurdles this time that will       That pulled mortgage rates down             NEW DELHI/MUMBAI, Aug 19, (RTRS): A. Chandra                                             “The scenario is that industries require my technology and services, but I do not have
    make it much harder to repeat the            sharply and delivered a powerful                                                                                                     the funds to start the projects,” said Shekhar, who predicts Solar India Solutions will do
    recession-beating         stimulus      of   boost to incomes as around 85 percent          Shekhar, the CEO of a small alternative energy solutions firm
                                                                                                                                                                                      well to break even this fiscal year with no chance of order-book growth.
    2008/09.                                     of all home loans in Australia are             at the heart of India’s much-vaunted boom story, should be                               “While we are trying to raise money, it has become too costly to even think about it.
        With laudably low government             based on floating rates.                       rolling in orders and expanding his business on the coat-tails                        It is impossible for me to approach a big company without financial backing.”
    debt and the highest interest rates of          Anticipating a replay of the last cri-
    any developed nation, there seems            sis, the market has already moved to           of near double-digit economic growth.                                                    Reeling from 11 interest rate rises since March 2010, Shekhar is one of a chorus of
    plenty of scope to ease should turmoil       price in cuts of a full percentage point          But his funding and growth prospects for the immediate future have dried industrialists and corporates suffering from the central bank’s single-minded strategy,
    in world markets morph into some-            by Christmas with a chance of a move           up, thanks to the anti-inflationary crusade of one of the most aggressive cen- which is increasingly presenting policymakers with a dilemma.
    thing worse.                                 as early as September.                         tral banks in the world.                                                                 With the government effectively paralysed by corruption scandals and protests, the
        “Australia arguably has more room           However, there is a crucial differ-                                                                                                                                               Reserve Bank of India (RBI) has been left
    for policy stimulus than any other           ence with 2008: inflation.                                                                                                                                                           to fight the inflationary battle without fis-
    advanced country,” said Nomura sen-             While underlying inflation was                                                                                                                                                    cal policy support, and equipped with lim-
    ior economist Stephen Roberts. “But          much higher back then the central                                                                                                                                                    ited tools. It seems determined to persist
    politics and inflation mean there’s no       bank was confident it had peaked and                                                                                                                                                 with its crusade against inflation for now.
    way it can ease on the scale it did dur-     would head lower over the next cou-                                                                                                                                                     “At the moment the biggest priority for
    ing the last global crisis.”                 ple of years.                                                                                                                                                                        India is inflation. Of that, there is very lit-
        On the face of it, Australia’s Labor        Underlying inflation topped out                                                                                                                                                   tle doubt in my mind”, said Bimal Jalan,
    government has plenty of ammunition          around 4.7 percent in the third quarter                                                                                                                                              a former governor of the RBI.
    on hand. Net debt is expected to peak        of 2008 and slowed steadily to a                                                                                                                                                        India’s growth rate is slowing — car
    at 6 percent of the country’s AUS$1.3        trough of 2.25 percent in the last quar-                                                                                                                                             sales in July contracted for the first time
    trillion of annual gross domestic prod-      ter of 2010. But since then it has sur-                                                                                                                                              in nearly three years — and consumer
    uct (GDP), almost laughably small            prised by accelerating to 2.7 percent                                                                                                                                                goods demand in June slowed substan-
    compared to its peers.                       and the RBA recently had to lift its                                                                                                                                                 tially from a year earlier. Manufacturing
        Even gross debt of 24 percent            forecast for inflation to 3.25 percent                                                                                                                                               output also slowed substantially in the
    seems trifling when the OECD aver-           for all of 2012 and 2013.                                                                                                                                                            April to June period.
    age is nearing 100 percent. That is a           Since the bank has a target of keep-                                                                                                                                                 Businessmen like Shekhar are not alone.
    major reason Australia is now only           ing inflation within 2 and 3 percent for                                                                                                                                             Many small businesses in India have aban-
    one of 14 countries in the world rated       the medium term, that gives it very lit-                                                                                                                                             doned expansion plans or closed down
    triple-A by Standard & Poor’s.               tle wiggle room on policy.                                                                                                                                                           units due to a dearth of affordable finance,
        The government ran budget sur-              “We still have higher rates in mind                                                                                                                                               says Chandrakant Salunkhe, president of
    pluses in 10 of the 11 financial years       as the RBA is forecasting underlying                                                                                                                                                 the Small and Medium Business
    to end June 2008, giving it the scope        inflation at, or above, the top of the                                                                                                                                               Development Chamber of India.
    to launch a powerful stimulus package        target band for the next three years,”                                                                                                                                                  In the debt-intensive real estate indus-
    worth 6 percent of GDP when the              said Kieran Davies, chief economist at                                                                                                                                               try, major players have sold off land
    global financial crisis struck.              RBS.                                                                                                                                                                                 parcels to meet soaring repayments, and
                      Deficit                       “Annualised inflation is already                                                                                                                                                  there are signs of a squeeze in sectors
                                                 above the band, which is why the                                                                                                                                                     from autos to mining to fast-moving con-
        But with the budget now in deficit                                                                                                                                                                                            sumer goods - all at the heart of the India
    for three years there is less money to       Bank almost raised rates this month,
                                                 and we suspect that the inertia in price                                                                                                                                             growth story.
    splash out should the global economy                                                                                                                                                                                                 “There is a likelihood of closing down
    falter again. Indeed, tax receipts are       pressures means that inflation could
                                                 continue to surprise the market.”                                                                                                                                                    many SMEs for want of funds ... It is
    still running short of forecasts as                                                                                                                                                                                               therefore indispensable that the RBI
    Australians chose to spend less and             Australia’s economy shrank 1.2
                                                 percent in the first quarter from the                                                                                                                                                should not only bring down interest rates
    save more, and coal exports struggle to                                                                                                                                                                                           but also introduce new lending schemes
    recover from flooding early in the year.     previous quarter, suffering its biggest
                                                 decline in 20 years, after extensive                                                                                                                                                 for the sector at lower interest rates,” said
        Yet the far greater constraint is                                                       An Indian stockbroker watches share prices on his screen at a brokerage house in Mumbai on Aug 19. Indian stocks slid                 Salunkhe.
    domestic politics.                           flooding hit coal exports, but a mining        nearly three percent to a 15-month low in afternoon trade extending opening losses, as Asian and European markets
                                                 boom is expected to help growth                                                                                                                                                         That would be doable if inflation was
        It is almost an article of faith in                                                                                              plunged on feats of a fresh recession. (AFP)                                                 falling quickly. But headline inflation
    Australia that budget surpluses are          bounce back quickly this year.
                                                    Data showed annual growth in                                                                     See Market Page 39                                                               remains above 9 percent, much above the
    good, deficits bad and debt downright                                                                                                                                                                                             RBI’s comfort level of 4 to 4.5 percent,
    evil. The former Liberal-National            gross domestic product slowed to a
                                                 tepid 1 percent, down from 2.7 per-                                                                                                                                                  forcing the central bank to continue its
    government spent well over a decade
    demonising government debt, long             cent. The results were in line with a
                                                 Reuters poll of analysts.
                                                                                                                                   Household spending clammed up                                                                      hawkish monetary policy stance.
                                                                                                                                                                                                                                         “A formal lowering of its GDP growth
    before it ever became a lightening rod                                                                                                                                                                                            forecast of 8 percent may not happen
    in US politics.                                 Damage from the flooding and
                                                                                                                                                                                                                                      until ... October, but it will probably sig-
        As a result the current Labor gov-
    ernment felt it had to commit to a sig-
    nificant tightening of fiscal policy to
    return the budget to surplus by
                                                 Cyclone Yasi came at a time when ris-
                                                 ing utility and fuel prices were already
                                                 crimping household spending and a
                                                 strong local dollar was taking a toll on
                                                                                                Australia retail sales data so soft                                                                                                   nal downside risk to its growth forecast,”
                                                                                                                                                                                                                                      leading brokerage house CLSA said in a
                                                                                                                                                                                                                                      note.
                                                 trade-exposed industries like manu-                                                                                                                                                     “But RBI will maintain its hawkish
    2012/13, an earlier date than many                                                          SYDNEY,          Aug     19,     (RTRS):      “It’s true that people are spending in away,” he added.                                 stance”, the note added.
    economists thought necessary.                facturing and tourism.                         Australia’s official retail sales data is different ways. Over time our wealth           To gauge the extent to which retail
                                                    Add to that the effect of earth-                                                                                                                                                     India’s stubborn inflation is due to sup-
        And Labor now governs in a minor-                                                       so soft that it gives the impression that has increased and we are spending less sales data understates the strength of ply bottlenecks, food prices and high oil
    ity, with the aid of a handful of inde-      quakes in Japan and New Zealand, the
                                                 nation’s major trading partners, and           household spending has clammed up, and less on essential goods,” James the supposedly closeted Australian prices, and now it faces worries that a
    pendent and Greens MPs, meaning                                                             but even official statisticians doubt the said, noting that an early-1960s shop- consumer, it is worth comparing retail possible new round of quantitative easing
    that virtually any legislation, even rel-    it’s not surprising that the economy
    atively uncontroversial bills, are noto-     went into reverse.                             situation is really that bad.               ping list was mostly made up of food sales data with a less conspicuous data by the US Federal Reserve could see a
    riously difficult to push through.              “The economy has hit a temporary               The Australian Bureau of Statistics and other essentials.                          series — household final consumption flood of capital into emerging markets.
                                                 pot hole courtesy of the natural disas-        believes its monthly data series, a           “It’s nowhere near that order of expenditure.                                              “Obviously, Ben Bernanke’s upcoming
        Talk that the latest turmoil in global                                                                                                                                                                                        speech in Jackson Hole, Wyoming, will
    markets could lead to slippage in the        ters this year,” said Besa Deda, chief         number that can move currency and magnitude now.”                                        Household consumption spending is
    surplus timetable was instantly              economist at St George Bank. “We are           interest-rate markets, is in important        Those June figures, released on Aug. produced quarterly, as part of the be the joker in the pack,” said a note by
                                                                                                                                                                                                                                      leading brokerage house CLSA. “Any
    pounced upon by the opposition as            looking for the economy to recover as          need of modernising and probably no 3, combined with global fears of a national accounts, and is published hint of further strong quantitative easing
    evidence the government could not be         this year progresses, as a rebound in          longer reflects the true strength of world economic slowdown to hurt the about two months in arrears — way by Bernanke could favourably affect risk
    trusted.                                     coal exports occurs and we get a boost         household spending.                         Australian dollar and to help drag the too late for markets to pay much notice appetite and commodity prices, and
        Which, in turn, forced Prime             from construction.”                               “We think retail trade (data) covers local stock market to an 11-month low. — but it is a lot closer to actual house- hence will be bad for India’s inflation and
    Minster Julia Gillard to state in parlia-       The Australian dollar rose nearly           around about 35 percent of household          They seemed to chime with endless hold spending patterns.
                                                 half a cent to $1.0737, as investors                                                                                                                                                 interest rate outlook.”
    ment this week that the government                                                          consumption spending these days,” complaints from the retail industry                    In the March quarter, household                 With New Delhi only recently showing
    was “absolutely determined” to meet          were relieved that the contraction was
    the 2012/13 target.                          not as dire as some had predicted.             said Bruce Hockman, the bureau’s about a cautious mood on the high consumption jumped 6 percent from a fiscal discipline with a long delayed 9
        “The government is only too adept        However, the currency remained well            head of national accounts data, street and with figures showing house- year earlier while retail sales rose just percent increase in diesel prices in June,
                                                 below a 29-year peak of $1.1012 set a          explaining that the monthly retail hold savings rates at 20-year highs.               0.8 percent.                                    and capacity bottlenecks slow to clear as
    at painting itself into corners,” said
    Roberts at Nomura. “Then again, it’s         month ago.                                     series had slowly drifted away from           But, oddly, the retail data also           The government has allocated A$30 big projects and reforms stall, fighting
    almost impossible to have a rational            The Reserve Bank of Australia has           the full reality of modern household appeared to contradict the overall million ($31.5 million)over the next inflation has been left to the central bank.
                                                 said that it would look past the weath-                                                                                                                                                 Despite the series of policy rate
    debate on debt in Australia and that                                                        spending habits.                            health of the economy, which is enjoy- four years for the bureau to improve increases, real interest rates in India are
    greatly reduces the flexibility of fiscal    er-induced slowdown in growth when                “When it (the data series) was first ing its biggest mining boom of all the quality of its economic data, with still in negative territory with the repo
    policy.”                                     setting monetary policy, believing the         introduced ... it was about 60 percent, time, low unemployment and rising retail sales a top priority.                                rate (the RBI’s main lending rate) still
        With fiscal firepower muzzled, it is     effects will be temporary.                     so households have moved away from wages.                                                The focus will be mainly on bring- lower than the headline inflation rate by
    just as well the Reserve Bank of                Indeed, coal exports have showed            perhaps traditional things and they buy       The bureau’s Hockman suspects ing more services spending within the about 120 basis points.
    Australia (RBA) has some room to             signs of recovering in March, helping          more holidays and they spend more on retail sales growth would have been scope of the series, but the bureau is                          Even at an 8 percent pace, India will be
    ease.                                        push the nation’s trade balance back
        Most importantly, with a cash rate       into surplus, and analysts polled by           Internet services and telecommunica- stronger if the survey and research also focusing on another gap — a the second-fastest economy in Asia, but it
    of 4.75 percent, the RBA actually has        Reuters expect data on Thursday will           tions services. All these sorts of things used to compile the data had included growing trend for consumers to bypass needs to grow quickly in order to raise
    something to cut. Rates in the United        show the surplus growing to $2 billion         are not directly covered by retail services such as telecoms and insur- the high street and look for offshore living standards and create jobs for a
                                                                                                trade.”                                     ance, which now make up a large bargains on the Internet.                                 surging working-age population.
    States, UK, Japan and Switzerland are        in April from $1.74 billion in March                                                                                                                                                    There is no sign at all of a possible
    already near zero and further stimulus       as the recovery continues.                        The most recent retail sales data, for chunk of actual household spending.            Australia’s                Productivity
                                                                                                                                                                                                                                      plunge in growth to a “hard landing”,
    is proving problematic, not to mention          Solid demand from Asia has led to           June, showed a fall of 0.1 percent from       “Services have been a growth area Commission estimates annual retail which is technically difficult to define but
    controversial.                               huge price increases for coal and iron         May and just 2.6 percent growth in the of the economy and our traditional col- sales through foreign websites at conceptually would mean India couldn’t
        The events of 2008 and 2009 also         ore, Australia’s two biggest exports,          full year to June, the weakest annual lections (of data) were not quite A$4.2 billion, a fraction of total retail generate the number of new jobs needed
    show the RBA is not afraid to act            helping lift the country’s terms of            growth since 1961-62, according to designed for a modern economy,” sales last year of more than A$240 bil- for its young population or the revenue
    boldly if it thinks it warranted.            trade to the highest in over a century.        Commsec economist Craig James, Hockman said. “People have not lion but a number that has been rising gains the government requires to contain
                                                                                                who was born in 1962.                       directly noticed, but it has drifted rapidly.                                             its fiscal deficit.

				
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