Latest: Chinese curb on Hutchison Whampoa port company, Singapore boosts r&d budget, $US2.4 billion in unpaid catalogue bills, AT&T plans breakup, Honeywell takeover.
26 October 2000
American rednecks reckoned Hutchison Whampoa’s takeover of the ports at both ends of the Panama Canal was part of a Beijing scheme to gain strategic influence in the Americas through the group’s chairman, Li Ka-shing. Now China itself is reported in the Far Eastern Economic Review to be curbing Mr Li’s influence. Hutchison Whampoa handled 25% of Chinese container traffic last year.
Singapore will raise its research & development budget from $S4 billion in the past five years to $S7 billion in the next five, with one-third of it earmarked to encourage corporate laboratories to set up in Singapore. The government also plans a move from broadbased to niche research.
25 October 2000
US retail chain Federated Department Stores’ catalogue division, Fingerhut, has $US2.4 billion of unpaid accounts, which it intends to auction.
As they grow bigger, so they can still be broken up: AT&T plans to cut itself in quarters. The piece to carry forward the old identity will be the business services division, which is biggest and most profitable.
23 October 2000
The next mega-deal in the US is said to be a $US45 billion one, in which General Electric takes over aircraft electronics company Honeywell International, after a $US40 billion takeover by United Technologies fell apart.
18 October 2000
Ishak Ismail, an associate of former Malaysian Deputy Prime Minister Anwar Ibrahim, is under more pressure two months after losing his job as chairman of Idris Hydraulic to Annuar Senawi, a nephew of the Finance Minister, Daim Zainuddin. Idris was one of the Asian groups hooked into investing in Auckland’s Britomart project by Jihong Lu’s Pacific Capital Assets. Ishak is still executive chairman of an Idris unit, Prime Utilities, and managing director of Malaysia’s biggest fast foods operator, KFC Holdings. Idris wants Prime to buy more of KFC but Ishak has resisted. In turn, Idris forced the deferral of a Prime meeting this week to re-elect Ishak and three supporters to the Prime board.
China expects economic growth to beat its 7% target this year, after a gradual slowdown since it hit 14.2% in 1992.
15 October 2000
Malaysia’s attempts to become more prominent were hit this week by British Airways, which decided to can flights to Kuala Lumpur, routing that traffic to Singapore. More pressure will come on Kuala Lumpur’s hub ambitions as Singapore adds its third terminal by 2006 and Bangkok upgrades. This is amid further woes for the whole of Asia, which is expected to see only $US15 billion of foreign capital flow into Asian equities this year, compared to $US96 billion last year. Harder to get to equals less traffic, higher costs, lower value.
10 October 2000
Japan’s 12th biggest life insurance company, Chiyoda Life, has filed for bankruptcy with total debts of Â¥2.94 trillion ($NZ67 billion). Japanese insurance companies have been paying an average 4% on investment policies bought in the 80s, but have had a negative spread over the past five years as their return on assets has averaged only 3%.
9 October 2000
China has drawn 80 African foreign and economic affairs ministers to a co-operation forum in Beijing, aimed at emphasising China is a champion of the developing world.
4 October 2000
Deposed Indonesian President Suharto’s youngest son, Tommy ( Hutomo Mandala Putra), has pleaded guilty to making an illegal swap of his company’s swamp for prime government land, been sentenced to 18 months’ jail and has asked for presidential clemency. The fate of his father’s corruption trial remains in the balance.
Most of Singapore’s listed companies failed a Singapore Business Times transparency test. Many are very good operators, but the test wouldn’t have had to be hard. In feudal versus transparency territory, feudal wins.
Taiwan’s Kuomintang premier, Tang Fei, has resigned and been replaced by Chang Chun-hsiung, of the ruling Democratic Progressive Party.
In the US, small windshifts are given monumental importance by the amount of gaze they’re given, so the tiny shifts in this or that indicator over the past six months has usually created an impression beyond its real significance. The comparisons are always month-on-month not same month year-to-year, and they usually whip a bit of seasonal adjustment in. The latest one to be counted is an index of leading economic indicators, which of course follows the course of all the components, and the weighting means it’s down. New home sales rose sharply in July but fell 3% in August.
North-eastern supermarket chain Grand Union, owner of 197 stores, ignored all the US up but is joining in the down, with its third Chapter 11 bankruptcy protection call since 1995. In 1998 creditors forgave $US600 million of debt. It lost $US307 million in the year to March.
2 October 2000
The possibility has receded, for perhaps another 18 months, of a US-European Union trade war over the US’ $US4 billion in annual subsidies through export tax breaks to major corporations. The two sides will go into a huddle for months, essentially to avert an all-out trade war, which means the US has won the argument, for a while at least.
The European Commission is due to approve, this week, new rules allowing European pension funds to invest 30% of their funds in currencies other than their own, and to raise to 70% the proportion that can go into equities. Germany and Austria allow only 35% in equities now. The next step will be tax relief for cross-border investment.
While Daewoo may miss its selloff deadline, South Korea’s largest carmaker, Hyundai, is planning to build a $US1 billion manufacturing plant in the US, to start production in 2003.