Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, agreed to buy a stake in Bank of East Asia Ltd.’s U.S. operations, according to a company statement today.
ICBC will buy an 80 percent stake in Bank of East Asia’s U.S. unit for $140 million, the two companies said in a joint e- mailed statement today. Both companies are seeking regulatory approval in the U.S. and in China for the transaction, according to the statement.
“Our acquisition of an 80 percent interest in BEA USA will enable us to establish a solid presence in the U.S.,” ICBC Chairman Jiang Jianqing said in the statement. “With this commercial bank license in the U.S., ICBC can further expand its retail banking business and operating network across the nation.”
If completed, the deal would mark the first purchase of a majority stake in a U.S. depository institution by a Chinese bank. It may give financial companies in both countries greater access to each others’ markets, Chip MacDonald, a partner a law firm Jones Day in Atlanta, said of the transaction on Jan. 22.
Chinese President Hu Jintao concluded a four-day visit to the U.S. with a signing ceremony in Chicago on Jan. 22. China’s Commerce Minister Chen Deming said that deals worth $25 billion were being reached among U.S. and Chinese companies during the visit, excluding an accord with Boeing Co.
Agreements Reached
Beijing-based ICBC and Bank of East Asia, based in Hong Kong, are among as many as 60 companies signing contracts, the Chicago Council on Global Affairs said in a statement. The list of firms didn’t include details on the agreements.
ICBC opened its first branch in the U.S. in October 2008. The Chinese bank bought a 70 percent stake in Bank of East Asia’s Canadian unit for about C$80.3 million last year to gain a “strong platform to further expand our businesses and network across North America,” ICBC’s Jiang said then. ICBC last week opened five branches in Europe, doubling its presence in the region to nine countries.
The Federal Reserve will have to make a determination, under the Bank Holding Company Act, that China’s central bank has enough information on ICBC operations to supervise its financial condition and compliance with the law, MacDonald said.
The U.S. operations of Bank of East Asia include 13 branches, with 10 in California and three in New York, according to its website. Bank of East Asia is run by the family of Chairman David Li. The U.S. unit held about $425.2 million in domestic deposits at the end of September, according to the Federal Deposit Insurance Corp.
source:http://www.bloomberg.com
Sunday, January 23, 2011
Brisbane Roads Circling Globe Twice Needed in Flood Disaster
To build an average house, you need 6,200 bricks, 2,950 roof tiles, 785 floor tiles and 15 cans of paint -- multiply that 28,000 times and you get a picture of the task to rebuild Brisbane after Australia’s worst flood.
It gets worse: the state of Queensland will need to rebuild 90,000 kilometers (56,000 miles) of roads, enough to circle the globe twice, thousands of kilometers of rail line, almost 100 schools, an unknown number of bridges, several regional airports, power lines, sewers and water treatment -- the list goes on.
Australian companies, including its largest building- materials seller Boral Ltd., the No. 1 furniture and electrical retailer Harvey Norman Holdings Ltd., paint maker DuluxGroup Ltd. and plumbing supplier Reece Australia Ltd., will benefit from the reconstruction estimated to cost A$20 billion ($20 billion). The floods are the most expensive natural disaster in the nation’s history and have claimed at least 20 lives.
“The state’s a disaster zone,” said Greg Hoffman, general manager at the Queensland Local Government Association, which estimates up to 90,000 kilometers of road and “tens of thousands of drains” will need to be replaced or repaired across Queensland. “Roads have been torn away, airport terminals have been uprooted and you can’t believe your eyes when you see the wasteland left behind,” he said in a telephone interview.
Reinforcements Needed
The average cost of building a new home is A$300,000, meaning the bill to replace housing alone in Brisbane, Australia’s third-largest city with a population of 2 million, may be A$8 billion, Australia & New Zealand Banking Group Ltd. says. ANZ based its forecast on the state Premier Anna Bligh’s Jan. 16 comment that 28,000 dwellings need rebuilding. Bligh says 2.1 million people have been affected by Queensland’s flood.
Since Jan. 10, 20 people have died and nine are missing as a result of the floods, Queensland police said yesterday.
It will take two years and 34,000 tradesmen to rebuild homes in Brisbane, according to Graham Cuthbert, Master Builders Queensland executive director.
“Australia has never before seen a program of this scale,” Cuthbert said in a telephone interview. “We will probably need reinforcements.”
Builder John Rist, from Port Sorrell in Australia’s southernmost island state of Tasmania, is ready to pack his tools and drive 1,800 kilometers north to Queensland.
“I’ll be there in a flash, as long as there is a need,” 38-year-old Rist said in a telephone interview. “Things will probably slow down here, so it could be just what I need.”
Competition for Labor
Finding skilled labor for the reconstruction in Queensland, plus the flood-damaged eastern states of Victoria and New South Wales, may be difficult. A mining boom, to feed China’s appetite for raw materials, has caused a shortage of tradesmen at a time when the jobless rate was just 5 percent in December, the lowest level since January 2009.
Already two coal-seam gas projects, expected to cost more than A$30 billion, are proceeding near the Queensland port of Gladstone. Santos Ltd., Australia’s third-largest oil producer, and BG Group Plc, the U.K.’s third-biggest gas producer, will start hiring the first of more than 10,000 construction workers needed for the two projects later this year.
The Queensland Resources Council estimates A$2.3 billion of coal sales have been lost because of the floods and just 15 percent of Queensland coalmines have been at full production.
The extra construction work and spending to replace lost consumer goods may add as much as 1 percentage point to the nation’s economic growth rate, according to ICAP Australia Ltd. senior economist Adam Carr. The Reserve Bank of Australia forecast in November that the economy would grow 3.75 percent this year.
Curtains to Cars
“Think of the building supplies that will need to be purchased, the carpets that need to be bought, the curtains, toasters, refrigerators and the cars,” Carr said in a Jan. 19 note.
Gerry Harvey, executive chairman of Harvey Norman, said sales in Queensland would outpace the rest of the country in February and March as people replaced plasma televisions, washing machines and household goods.
“This is Queensland’s very own economic stimulus and our sales will be stronger there than anywhere else,” Harvey said in a telephone interview. “People will need to refurnish their homes, so there will be a benefit for retailers.”
Boral and James Hardie Industries NV, Australia’s largest supplier of fiber cement products, both told Bloomberg News they expect demand for their products will increase as the damage becomes clearer. The Insurance Council of Australia on Jan. 19 said companies had so far received 12,000 claims worth A$410 million.
Stocks to Watch
“It’s clear that there’s going to be a significant rebuild required in areas both involving construction materials and building products,” said Penny Berger, a spokeswoman for timber, tiles and concrete supplier Boral. Berger said customers would lodge orders after the clean-up was completed.
Since Jan. 12, after evacuations began in Brisbane, Boral shares gained 0.8 percent, Reece rose 4.3 percent, Harvey Norman gained 7.9 percent, James Hardie fell 4 percent and DuluxGroup advanced 1.1 percent.
“There are more losers than winners, but the winners are the homebuilders and some of the smaller retailers,” said Chris Stott, who helps oversee about $400 million at Wilson Asset Management in Sydney. “It’s clear they’ll benefit, but in terms of quantifying that, it’s still too early because the clean-up is still happening.”
Stocks he tips will benefit include Boral, Harvey Norman, Reece, Dulux, Fantastic Holdings Ltd., a furniture seller, Breville Group Ltd., an electrical appliances maker, CSR Ltd., which manufactures building materials, and Brickworks Ltd., which makes bricks and floor tiles.
Volunteer Army
Queensland’s initial flood clean-up is being done by about 60,000 mop-wielding volunteers.
“They’re scraping mud from walls, shifting ruined furniture, it’s dirty work,” Volunteering Australia spokesman Peter Cocks said from Brisbane. “After the clean-up, people can assess the damage and look toward replacing things and rebuilding their homes. It’s a process.”
The flooding across three states represents Australia’s biggest natural disaster in economic terms, said Prime Minister Julia Gillard, who has pledged the federal government will cover 75 percent of the reconstruction cost. ANZ Bank said the bill to rebuild just Queensland could be as much as A$20 billion, or 1.5 percent of the national economy.
The sugar- and coal-producing state accounts for about 20 percent of the A$1.3 trillion economy. The national and state governments have not yet said how much the flooding will cost.
“This effort is bigger than Cyclone Tracy in 1974, which destroyed Darwin, it’s bigger than the 1989 Newcastle earthquake, the 1999 Sydney hail storm and any other flood or bushfire we have seen,” said Professor Peter Grace, from the Queensland University of Technology. “It will take at least two years.”
source:http://www.bloomberg.com
It gets worse: the state of Queensland will need to rebuild 90,000 kilometers (56,000 miles) of roads, enough to circle the globe twice, thousands of kilometers of rail line, almost 100 schools, an unknown number of bridges, several regional airports, power lines, sewers and water treatment -- the list goes on.
Australian companies, including its largest building- materials seller Boral Ltd., the No. 1 furniture and electrical retailer Harvey Norman Holdings Ltd., paint maker DuluxGroup Ltd. and plumbing supplier Reece Australia Ltd., will benefit from the reconstruction estimated to cost A$20 billion ($20 billion). The floods are the most expensive natural disaster in the nation’s history and have claimed at least 20 lives.
“The state’s a disaster zone,” said Greg Hoffman, general manager at the Queensland Local Government Association, which estimates up to 90,000 kilometers of road and “tens of thousands of drains” will need to be replaced or repaired across Queensland. “Roads have been torn away, airport terminals have been uprooted and you can’t believe your eyes when you see the wasteland left behind,” he said in a telephone interview.
Reinforcements Needed
The average cost of building a new home is A$300,000, meaning the bill to replace housing alone in Brisbane, Australia’s third-largest city with a population of 2 million, may be A$8 billion, Australia & New Zealand Banking Group Ltd. says. ANZ based its forecast on the state Premier Anna Bligh’s Jan. 16 comment that 28,000 dwellings need rebuilding. Bligh says 2.1 million people have been affected by Queensland’s flood.
Since Jan. 10, 20 people have died and nine are missing as a result of the floods, Queensland police said yesterday.
It will take two years and 34,000 tradesmen to rebuild homes in Brisbane, according to Graham Cuthbert, Master Builders Queensland executive director.
“Australia has never before seen a program of this scale,” Cuthbert said in a telephone interview. “We will probably need reinforcements.”
Builder John Rist, from Port Sorrell in Australia’s southernmost island state of Tasmania, is ready to pack his tools and drive 1,800 kilometers north to Queensland.
“I’ll be there in a flash, as long as there is a need,” 38-year-old Rist said in a telephone interview. “Things will probably slow down here, so it could be just what I need.”
Competition for Labor
Finding skilled labor for the reconstruction in Queensland, plus the flood-damaged eastern states of Victoria and New South Wales, may be difficult. A mining boom, to feed China’s appetite for raw materials, has caused a shortage of tradesmen at a time when the jobless rate was just 5 percent in December, the lowest level since January 2009.
Already two coal-seam gas projects, expected to cost more than A$30 billion, are proceeding near the Queensland port of Gladstone. Santos Ltd., Australia’s third-largest oil producer, and BG Group Plc, the U.K.’s third-biggest gas producer, will start hiring the first of more than 10,000 construction workers needed for the two projects later this year.
The Queensland Resources Council estimates A$2.3 billion of coal sales have been lost because of the floods and just 15 percent of Queensland coalmines have been at full production.
The extra construction work and spending to replace lost consumer goods may add as much as 1 percentage point to the nation’s economic growth rate, according to ICAP Australia Ltd. senior economist Adam Carr. The Reserve Bank of Australia forecast in November that the economy would grow 3.75 percent this year.
Curtains to Cars
“Think of the building supplies that will need to be purchased, the carpets that need to be bought, the curtains, toasters, refrigerators and the cars,” Carr said in a Jan. 19 note.
Gerry Harvey, executive chairman of Harvey Norman, said sales in Queensland would outpace the rest of the country in February and March as people replaced plasma televisions, washing machines and household goods.
“This is Queensland’s very own economic stimulus and our sales will be stronger there than anywhere else,” Harvey said in a telephone interview. “People will need to refurnish their homes, so there will be a benefit for retailers.”
Boral and James Hardie Industries NV, Australia’s largest supplier of fiber cement products, both told Bloomberg News they expect demand for their products will increase as the damage becomes clearer. The Insurance Council of Australia on Jan. 19 said companies had so far received 12,000 claims worth A$410 million.
Stocks to Watch
“It’s clear that there’s going to be a significant rebuild required in areas both involving construction materials and building products,” said Penny Berger, a spokeswoman for timber, tiles and concrete supplier Boral. Berger said customers would lodge orders after the clean-up was completed.
Since Jan. 12, after evacuations began in Brisbane, Boral shares gained 0.8 percent, Reece rose 4.3 percent, Harvey Norman gained 7.9 percent, James Hardie fell 4 percent and DuluxGroup advanced 1.1 percent.
“There are more losers than winners, but the winners are the homebuilders and some of the smaller retailers,” said Chris Stott, who helps oversee about $400 million at Wilson Asset Management in Sydney. “It’s clear they’ll benefit, but in terms of quantifying that, it’s still too early because the clean-up is still happening.”
Stocks he tips will benefit include Boral, Harvey Norman, Reece, Dulux, Fantastic Holdings Ltd., a furniture seller, Breville Group Ltd., an electrical appliances maker, CSR Ltd., which manufactures building materials, and Brickworks Ltd., which makes bricks and floor tiles.
Volunteer Army
Queensland’s initial flood clean-up is being done by about 60,000 mop-wielding volunteers.
“They’re scraping mud from walls, shifting ruined furniture, it’s dirty work,” Volunteering Australia spokesman Peter Cocks said from Brisbane. “After the clean-up, people can assess the damage and look toward replacing things and rebuilding their homes. It’s a process.”
The flooding across three states represents Australia’s biggest natural disaster in economic terms, said Prime Minister Julia Gillard, who has pledged the federal government will cover 75 percent of the reconstruction cost. ANZ Bank said the bill to rebuild just Queensland could be as much as A$20 billion, or 1.5 percent of the national economy.
The sugar- and coal-producing state accounts for about 20 percent of the A$1.3 trillion economy. The national and state governments have not yet said how much the flooding will cost.
“This effort is bigger than Cyclone Tracy in 1974, which destroyed Darwin, it’s bigger than the 1989 Newcastle earthquake, the 1999 Sydney hail storm and any other flood or bushfire we have seen,” said Professor Peter Grace, from the Queensland University of Technology. “It will take at least two years.”
source:http://www.bloomberg.com
Super-Cycle Leaves No Economy Behind Before Davos Summit
For only the third time since the Industrial Revolution, the world may be entering a long-term growth cycle that will lift all economies simultaneously, driving bond yields and commodity prices higher.
The depth and scope of the expansion will be a focus for discussion at this week’s annual meeting of the World Economic Forum in Davos, Switzerland. Evidence of a broadening global recovery will enable U.S. Treasury Secretary Timothy F. Geithner, investor George Soros and 2,500 political, business and academic leaders to shift their emphasis away from crisis- fighting.
With the economic and investment outlooks “much better” than in recent years, “people are talking about how to get back to business as normal and what comes next,” said Jitesh Gadhia, a delegate to the conference and the London-based senior managing director at Blackstone Group LP, which runs the world’s largest buyout fund.
Goldman Sachs Group Inc., PricewaterhouseCoopers LLP and London’s Standard Chartered Bank are among the financial companies sending executives to the meeting. Their economists predict a growth spurt in coming decades led by emerging nations that will be strong enough to boost developed countries.
Global gross domestic product will swell to $143 trillion by 2030, allowing for inflation and market-exchange rates, from $62 trillion in 2010, with China and other emerging markets accounting for about two thirds of the rise, estimates Gerard Lyons, chief economist and group head of global research in London for Standard Chartered, which generates most of its earnings from Asia.
Investment, Urbanization
Lyons and his colleagues predict a “super-cycle” of historically high growth that will last at least a generation and will be led by booming trade, investment and urbanization, according to a report published in November. He reckons such a cycle has occurred only twice since the end of the 18th century: the four decades before World War I and the three following World War II. He’s betting the new phase will contribute to a reversal in the three-decade decline for U.S. bond yields after 10-year Treasury notes lost an average 40 basis points a year since the early 1980s.
Richard Dobbs, a director of the research division at New York-based McKinsey & Co., will use the Davos meeting to highlight a study by the international consulting firm that sees an imminent end to cheap capital. The causes are a building bonanza in developing economies and aging populations who are draining their savings, according to the report, which was released Dec. 9.
Signs of Momentum
The 10-year U.S. Treasury note yielded 3.41 percent in New York on Jan. 21, according to BGCantor Market Data, compared with 15.8 percent in 1981 and a record low of 2.04 percent in December 2008. Signs of momentum in the U.S. economy have helped increase the yield from about 2.9 percent at the start of December.
“It’s a topic capturing the attention of people who want to think beyond the crisis,” said Seoul-based Dobbs.
While Goldman Sachs Asset Management Chairman Jim O’Neill has found fame for promoting the “BRIC” economies of Brazil, Russia, India and China, he says their rise has positive impact beyond their borders, with Chinese imports totaling about $400 billion, almost the equivalent of South Africa’s economy last year. That should attract investors to rich-nation companies with links to these markets, and the resurgence in the U.S. economy has prompted O’Neill to predict higher U.S. bond yields in 2011. He didn’t provide a specific forecast.
‘Out of Date’
“World-trend economic growth is being lifted,” said London-based O’Neill, who helps manage $840 billion. “The notion that BRICs benefit at the expense of others is increasingly out of date.”
Investors should buy copper, coal and oil to take advantage of the growth of cities in emerging markets, according to Standard Chartered, which says the Chinese yuan, Indian rupee and Korean won will appreciate on strengthening domestic growth.
Developed nations also will benefit as their emerging- market counterparts invest more abroad, hire more of their workers and rely on their expertise in areas such as financial services, said Lyons, who will be at Davos. He predicts both the U.S. and European Union will enjoy an average trend growth of 2.5 percent through 2030, compared with the 1.9 percent and 1.7 percent he forecasts for this year.
“It’s a win-win situation,” said Lyons, who concedes growth won’t always be strong and continuous during the entire period.
Increasing Integration
The increasing integration of China and other developing economies will boost commerce and investment worldwide, agrees Edward Prescott, a senior monetary adviser to the Federal Reserve Bank of Minneapolis who shared the 2004 Nobel Prize for analysis of business cycles and economic policy.
Prescott points to South Carolina, which has benefited from new factories opened by Chinese companies such as appliance maker Haier Group. The International Monetary Fund projects this year will be the first in which Chinese foreign investment outpaces inward flows.
“The whole world’s going to be rich by the end of this century,” Prescott said.
Such euphoria may be muted in Davos, given the European sovereign-debt crisis, fears of a real-estate bubble in China and mounting public-debt burdens, said Nariman Behravesh, chief economist at consultants IHS in Lexington, Massachusetts, who is attending the meeting.
“There’s going to be more optimism but still some worries,” he said.
High Unemployment
Talk of a super-cycle gets little support from Joseph Stiglitz, a Davos veteran and 2001 Nobel laureate. He contends that globalization and free trade may be stymied by unemployment in rich nations and the risk that more of these countries’ jobs will be lost abroad. The U.S. jobless rate has remained above 9 percent since May 2009.
“Standard Chartered works mostly in developing markets, and that shapes its world view,” said Stiglitz, an economics professor at Columbia University in New York. “If you work in emerging markets, you feel the energy. If you are in the U.S. or Europe, you see the numbers and it’s hard not to feel depressed.”
The difference reflects a “shift in the center of gravity in the world economy, in which the West is struggling to keep up with turbo-charged,” emerging markets, says Stephen King, chief global economist in London at HSBC Holdings Plc and a former U.K. Treasury official. He will outline in Davos what he calls the next phase of globalization: increased trade among emerging countries.
Rising Global Output
His team calculated this month that by 2050, global output will have trebled and average annual growth will accelerate toward 3 percent from 2 percent in the last decade, with emerging markets contributing twice as much to the expansion as the developed world.
Ian Bremmer, president and founder of the Eurasia Group, a political-risk consulting company in New York, is more downbeat as he heads to the Swiss ski resort. He predicts what he calls a “G-Zero” era in which no country has the political or economic leverage to dominate the international agenda and all nations focus on their own priorities. That will reduce economic efficiency and prompt trade conflicts, he said.
Volatility, Uncertainty
The subsequent volatility and uncertainty mean U.S. assets will prove the “comparative safest bet” and the price of gold will stay high, Bremmer said, after touching a record $1,432.50 an ounce on Dec. 7. Fixed-income securities still may suffer as nations impose capital controls, which Brazil and South Korea have done lately, while companies will continue saving rather than spending, he predicted.
“Corporations will keep trillions of dollars on the sidelines,” he said Jan. 5 on “Bloomberg Surveillance” with Ken Prewitt and Tom Keene. “They’re just very uncertain about where the world is heading.”
John Hawksworth, the London-based head of macroeconomics at PricewaterhouseCoopers, is confident a so-called zero-sum world isn’t in the cards. His own attempt to see into the future this month generated a projection that a bloc of seven leading emerging markets, including India and China, will be 64 percent larger than the current Group of Seven by 2050 at market- exchange rates, compared with 36 percent smaller today.
Even so, average income levels in the G-7 countries will rise in absolute terms as new market opportunities open up for their businesses, and consumers will benefit from lower-cost imports, predicts Hawksworth, who has served as a consultant to the World Bank and whose company will release its annual survey of executives in Davos tomorrow.
“There is a shift in economic power from West to East, but the West can still do well,” Lyons said.
source:http://www.bloomberg.com
The depth and scope of the expansion will be a focus for discussion at this week’s annual meeting of the World Economic Forum in Davos, Switzerland. Evidence of a broadening global recovery will enable U.S. Treasury Secretary Timothy F. Geithner, investor George Soros and 2,500 political, business and academic leaders to shift their emphasis away from crisis- fighting.
With the economic and investment outlooks “much better” than in recent years, “people are talking about how to get back to business as normal and what comes next,” said Jitesh Gadhia, a delegate to the conference and the London-based senior managing director at Blackstone Group LP, which runs the world’s largest buyout fund.
Goldman Sachs Group Inc., PricewaterhouseCoopers LLP and London’s Standard Chartered Bank are among the financial companies sending executives to the meeting. Their economists predict a growth spurt in coming decades led by emerging nations that will be strong enough to boost developed countries.
Global gross domestic product will swell to $143 trillion by 2030, allowing for inflation and market-exchange rates, from $62 trillion in 2010, with China and other emerging markets accounting for about two thirds of the rise, estimates Gerard Lyons, chief economist and group head of global research in London for Standard Chartered, which generates most of its earnings from Asia.
Investment, Urbanization
Lyons and his colleagues predict a “super-cycle” of historically high growth that will last at least a generation and will be led by booming trade, investment and urbanization, according to a report published in November. He reckons such a cycle has occurred only twice since the end of the 18th century: the four decades before World War I and the three following World War II. He’s betting the new phase will contribute to a reversal in the three-decade decline for U.S. bond yields after 10-year Treasury notes lost an average 40 basis points a year since the early 1980s.
Richard Dobbs, a director of the research division at New York-based McKinsey & Co., will use the Davos meeting to highlight a study by the international consulting firm that sees an imminent end to cheap capital. The causes are a building bonanza in developing economies and aging populations who are draining their savings, according to the report, which was released Dec. 9.
Signs of Momentum
The 10-year U.S. Treasury note yielded 3.41 percent in New York on Jan. 21, according to BGCantor Market Data, compared with 15.8 percent in 1981 and a record low of 2.04 percent in December 2008. Signs of momentum in the U.S. economy have helped increase the yield from about 2.9 percent at the start of December.
“It’s a topic capturing the attention of people who want to think beyond the crisis,” said Seoul-based Dobbs.
While Goldman Sachs Asset Management Chairman Jim O’Neill has found fame for promoting the “BRIC” economies of Brazil, Russia, India and China, he says their rise has positive impact beyond their borders, with Chinese imports totaling about $400 billion, almost the equivalent of South Africa’s economy last year. That should attract investors to rich-nation companies with links to these markets, and the resurgence in the U.S. economy has prompted O’Neill to predict higher U.S. bond yields in 2011. He didn’t provide a specific forecast.
‘Out of Date’
“World-trend economic growth is being lifted,” said London-based O’Neill, who helps manage $840 billion. “The notion that BRICs benefit at the expense of others is increasingly out of date.”
Investors should buy copper, coal and oil to take advantage of the growth of cities in emerging markets, according to Standard Chartered, which says the Chinese yuan, Indian rupee and Korean won will appreciate on strengthening domestic growth.
Developed nations also will benefit as their emerging- market counterparts invest more abroad, hire more of their workers and rely on their expertise in areas such as financial services, said Lyons, who will be at Davos. He predicts both the U.S. and European Union will enjoy an average trend growth of 2.5 percent through 2030, compared with the 1.9 percent and 1.7 percent he forecasts for this year.
“It’s a win-win situation,” said Lyons, who concedes growth won’t always be strong and continuous during the entire period.
Increasing Integration
The increasing integration of China and other developing economies will boost commerce and investment worldwide, agrees Edward Prescott, a senior monetary adviser to the Federal Reserve Bank of Minneapolis who shared the 2004 Nobel Prize for analysis of business cycles and economic policy.
Prescott points to South Carolina, which has benefited from new factories opened by Chinese companies such as appliance maker Haier Group. The International Monetary Fund projects this year will be the first in which Chinese foreign investment outpaces inward flows.
“The whole world’s going to be rich by the end of this century,” Prescott said.
Such euphoria may be muted in Davos, given the European sovereign-debt crisis, fears of a real-estate bubble in China and mounting public-debt burdens, said Nariman Behravesh, chief economist at consultants IHS in Lexington, Massachusetts, who is attending the meeting.
“There’s going to be more optimism but still some worries,” he said.
High Unemployment
Talk of a super-cycle gets little support from Joseph Stiglitz, a Davos veteran and 2001 Nobel laureate. He contends that globalization and free trade may be stymied by unemployment in rich nations and the risk that more of these countries’ jobs will be lost abroad. The U.S. jobless rate has remained above 9 percent since May 2009.
“Standard Chartered works mostly in developing markets, and that shapes its world view,” said Stiglitz, an economics professor at Columbia University in New York. “If you work in emerging markets, you feel the energy. If you are in the U.S. or Europe, you see the numbers and it’s hard not to feel depressed.”
The difference reflects a “shift in the center of gravity in the world economy, in which the West is struggling to keep up with turbo-charged,” emerging markets, says Stephen King, chief global economist in London at HSBC Holdings Plc and a former U.K. Treasury official. He will outline in Davos what he calls the next phase of globalization: increased trade among emerging countries.
Rising Global Output
His team calculated this month that by 2050, global output will have trebled and average annual growth will accelerate toward 3 percent from 2 percent in the last decade, with emerging markets contributing twice as much to the expansion as the developed world.
Ian Bremmer, president and founder of the Eurasia Group, a political-risk consulting company in New York, is more downbeat as he heads to the Swiss ski resort. He predicts what he calls a “G-Zero” era in which no country has the political or economic leverage to dominate the international agenda and all nations focus on their own priorities. That will reduce economic efficiency and prompt trade conflicts, he said.
Volatility, Uncertainty
The subsequent volatility and uncertainty mean U.S. assets will prove the “comparative safest bet” and the price of gold will stay high, Bremmer said, after touching a record $1,432.50 an ounce on Dec. 7. Fixed-income securities still may suffer as nations impose capital controls, which Brazil and South Korea have done lately, while companies will continue saving rather than spending, he predicted.
“Corporations will keep trillions of dollars on the sidelines,” he said Jan. 5 on “Bloomberg Surveillance” with Ken Prewitt and Tom Keene. “They’re just very uncertain about where the world is heading.”
John Hawksworth, the London-based head of macroeconomics at PricewaterhouseCoopers, is confident a so-called zero-sum world isn’t in the cards. His own attempt to see into the future this month generated a projection that a bloc of seven leading emerging markets, including India and China, will be 64 percent larger than the current Group of Seven by 2050 at market- exchange rates, compared with 36 percent smaller today.
Even so, average income levels in the G-7 countries will rise in absolute terms as new market opportunities open up for their businesses, and consumers will benefit from lower-cost imports, predicts Hawksworth, who has served as a consultant to the World Bank and whose company will release its annual survey of executives in Davos tomorrow.
“There is a shift in economic power from West to East, but the West can still do well,” Lyons said.
source:http://www.bloomberg.com
Tuesday, January 18, 2011
China Mobile Uses Hotspots to Stem Internet Addicts Defections
Yolkie Sun’s addiction to Facebook Inc. cost China Mobile Communications Corp. a longtime customer.
Sun, who used China Mobile for 11 years, switched to China United Network Communications Group Co., parent of China Unicom, to access the social networking site. Her smartphone accesses the website through a virtual private network that can take three times longer to run on China Mobile.
“I can’t live without Facebook,” Sun, 23, said. “Lots of people use Unicom for the 3G because the Internet is very fast. China Mobile’s 3G is not as good.”
Defections such as Sun’s may cause the world’s largest mobile-phone company by users to lose market share even as the nation doubles its 3G subscribers this year. The Beijing-based company plans to more than triple its Wi-Fi hotspots this year so subscribers have another way to connect to the Internet, said Kelvin Ho, a Shanghai-based analyst at Yuanta Securities Co.
China Mobile may increase its number of hotspots to 1.1 million by year’s end from the 300,000 it had in June, he said. Its capital expenditures of 111 billion yuan ($16.8 billion) this year may be 13 percent above previous projections, he said.
‘Worried’ About Unicom
“They are more aggressive than before in terms of Wi-Fi rollout and coverage,” Ho said. “China Mobile is worried its higher-spending customers will turn to Unicom.”
China Mobile, the world’s largest phone carrier by market value, has the nation’s largest 3G user base with 18.8 million as of Nov. 30, compared with China Unicom’s 12.8 million, according to subscriber data. China Unicom is the only carrier offering Apple Inc.’s iPhone with a contract.
China Mobile’s 3G market share may drop to 40 percent this year from 44 percent last year, and China Unicom’s may rise to 33 percent from 31 percent, Donald Lu, a Beijing-based analyst for Goldman Sachs Group Inc., said in a Jan. 6 report.
China Mobile Chairman Wang Jianzhou said building out the Wi-Fi network is “the fastest way” to meet rising Web demand by phone users. The company started the expansion last year and will speed it up this year, he said.
“The competition in the 3G market is very fierce,” Wang said Monday at the Asian Financial Forum in Hong Kong. “We will be adding a lot more hotspots and access points in areas with high population density.”
China Mobile Ltd. rose 6 percent last year in Hong Kong, trailing the 8.2 percent gain in shares of China Unicom (Hong Kong) Ltd.
Italy’s Population
China’s 3G users will reach 103.3 million this year from an estimated 46.8 million last year, Lu said. Those 57 million new subscribers almost equal Italy’s population.
China Mobile’s subscriber numbers include 5.2 million people using its less lucrative “fixed wireless” phone package, according to estimates from Paul Wuh, a Hong Kong-based analyst at Samsung Securities Co. The phones for home or office use the 3G network for voice and texting, though not the Internet.
The growing popularity of tablet computers, including Apple’s iPad, is stoking demand for 3G services that China Mobile hopes to meet with Wi-Fi, Wuh said.
“If people with smartphones or iPads or iPhones want to surf the Web and don’t want to switch to China Unicom, Wi-Fi is one way that China Mobile can help them get around that,” he said.
Zhang Jie received an iPhone three years ago and still uses China Mobile’s 2G network and Wi-Fi, believing it handles phone calls better.
Inferior Network
“China Unicom can be quicker with data, but in many areas even the voice service won’t work,” Zhang said. “China Mobile still has the broader coverage.”
China Mobile in January 2009 received its 3G license for the Time Division Synchronous Code Division Multiple Access system, or TD-SCDMA. The Chinese system was developed as an alternative to the global W-CDMA and CDMA2000 standards.
China Mobile was picked to use the homegrown network because of its market dominance, said Jim Tang, a Shanghai-based analyst at Shenyin Wanguo Securities Co. The government gave China Unicom a license for W-CDMA and China Telecommunications Corp., with a 26 percent market share, one for CDMA2000.
“TD-SCDMA is not as mature,” Tang said. “To offer users a better Web experience, China Mobile has to rely on Wi-Fi.”
In a test by Tang, China Unicom’s 3G network loaded a video clip of a popular song in China called “Tan Te,” or “Perturbed,” about three times faster than China Mobile’s network. Unicom started playing the clip in 25 seconds, compared with 75 seconds for China Mobile, Tang said. Unicom’s data- transfer speed of 110 kilobytes per second compared with China Mobile’s 33 kilobytes.
Planning for 4G
China Mobile customers can buy unlocked iPhones at Apple’s Beijing store and at gray markets. The handsets only work on its older, international 2G network because they aren’t compatible with the homegrown 3G standard.
China Mobile wants Wi-Fi to be an interim solution until it gets a fourth-generation network in place, Ho said.
China Mobile said last month it received government approval to start a network trial in six cities, including Shanghai and Shenzhen. China Mobile likely won’t get a 4G license within two years because the government wants carriers to recoup 3G investments, Ho said.
“China Mobile is pushing 4G hard because their network technology is lagging,” he said.
China Mobile customer Wang Zhen of Beijing said he can wait. The tour guide will use an unlocked iPhone on China Mobile’s 2G network rather than lose his current phone number.
“China Mobile’s network will be slower, but if I need to make heavy use of the Internet, there are lots of hotspots around,” Wang, 24, said. “The problem is I don’t want to change my number.”
Li Gang, 30, started using China Mobile 10 years ago with his first mobile phone. When he recently bought an iPhone 4 for downloading maps and directions, he switched to China Unicom.
“I always used China Mobile but their 3G service is just not as good,” Li, a mining equipment salesman at Jin Feng Co., said at the Apple store. “I like to use my phone to watch movies online, and I don’t want to be restricted to having to find a Wi-Fi hotspot to do it.”
source:bloomberg.com
Sun, who used China Mobile for 11 years, switched to China United Network Communications Group Co., parent of China Unicom, to access the social networking site. Her smartphone accesses the website through a virtual private network that can take three times longer to run on China Mobile.
“I can’t live without Facebook,” Sun, 23, said. “Lots of people use Unicom for the 3G because the Internet is very fast. China Mobile’s 3G is not as good.”
Defections such as Sun’s may cause the world’s largest mobile-phone company by users to lose market share even as the nation doubles its 3G subscribers this year. The Beijing-based company plans to more than triple its Wi-Fi hotspots this year so subscribers have another way to connect to the Internet, said Kelvin Ho, a Shanghai-based analyst at Yuanta Securities Co.
China Mobile may increase its number of hotspots to 1.1 million by year’s end from the 300,000 it had in June, he said. Its capital expenditures of 111 billion yuan ($16.8 billion) this year may be 13 percent above previous projections, he said.
‘Worried’ About Unicom
“They are more aggressive than before in terms of Wi-Fi rollout and coverage,” Ho said. “China Mobile is worried its higher-spending customers will turn to Unicom.”
China Mobile, the world’s largest phone carrier by market value, has the nation’s largest 3G user base with 18.8 million as of Nov. 30, compared with China Unicom’s 12.8 million, according to subscriber data. China Unicom is the only carrier offering Apple Inc.’s iPhone with a contract.
China Mobile’s 3G market share may drop to 40 percent this year from 44 percent last year, and China Unicom’s may rise to 33 percent from 31 percent, Donald Lu, a Beijing-based analyst for Goldman Sachs Group Inc., said in a Jan. 6 report.
China Mobile Chairman Wang Jianzhou said building out the Wi-Fi network is “the fastest way” to meet rising Web demand by phone users. The company started the expansion last year and will speed it up this year, he said.
“The competition in the 3G market is very fierce,” Wang said Monday at the Asian Financial Forum in Hong Kong. “We will be adding a lot more hotspots and access points in areas with high population density.”
China Mobile Ltd. rose 6 percent last year in Hong Kong, trailing the 8.2 percent gain in shares of China Unicom (Hong Kong) Ltd.
Italy’s Population
China’s 3G users will reach 103.3 million this year from an estimated 46.8 million last year, Lu said. Those 57 million new subscribers almost equal Italy’s population.
China Mobile’s subscriber numbers include 5.2 million people using its less lucrative “fixed wireless” phone package, according to estimates from Paul Wuh, a Hong Kong-based analyst at Samsung Securities Co. The phones for home or office use the 3G network for voice and texting, though not the Internet.
The growing popularity of tablet computers, including Apple’s iPad, is stoking demand for 3G services that China Mobile hopes to meet with Wi-Fi, Wuh said.
“If people with smartphones or iPads or iPhones want to surf the Web and don’t want to switch to China Unicom, Wi-Fi is one way that China Mobile can help them get around that,” he said.
Zhang Jie received an iPhone three years ago and still uses China Mobile’s 2G network and Wi-Fi, believing it handles phone calls better.
Inferior Network
“China Unicom can be quicker with data, but in many areas even the voice service won’t work,” Zhang said. “China Mobile still has the broader coverage.”
China Mobile in January 2009 received its 3G license for the Time Division Synchronous Code Division Multiple Access system, or TD-SCDMA. The Chinese system was developed as an alternative to the global W-CDMA and CDMA2000 standards.
China Mobile was picked to use the homegrown network because of its market dominance, said Jim Tang, a Shanghai-based analyst at Shenyin Wanguo Securities Co. The government gave China Unicom a license for W-CDMA and China Telecommunications Corp., with a 26 percent market share, one for CDMA2000.
“TD-SCDMA is not as mature,” Tang said. “To offer users a better Web experience, China Mobile has to rely on Wi-Fi.”
In a test by Tang, China Unicom’s 3G network loaded a video clip of a popular song in China called “Tan Te,” or “Perturbed,” about three times faster than China Mobile’s network. Unicom started playing the clip in 25 seconds, compared with 75 seconds for China Mobile, Tang said. Unicom’s data- transfer speed of 110 kilobytes per second compared with China Mobile’s 33 kilobytes.
Planning for 4G
China Mobile customers can buy unlocked iPhones at Apple’s Beijing store and at gray markets. The handsets only work on its older, international 2G network because they aren’t compatible with the homegrown 3G standard.
China Mobile wants Wi-Fi to be an interim solution until it gets a fourth-generation network in place, Ho said.
China Mobile said last month it received government approval to start a network trial in six cities, including Shanghai and Shenzhen. China Mobile likely won’t get a 4G license within two years because the government wants carriers to recoup 3G investments, Ho said.
“China Mobile is pushing 4G hard because their network technology is lagging,” he said.
China Mobile customer Wang Zhen of Beijing said he can wait. The tour guide will use an unlocked iPhone on China Mobile’s 2G network rather than lose his current phone number.
“China Mobile’s network will be slower, but if I need to make heavy use of the Internet, there are lots of hotspots around,” Wang, 24, said. “The problem is I don’t want to change my number.”
Li Gang, 30, started using China Mobile 10 years ago with his first mobile phone. When he recently bought an iPhone 4 for downloading maps and directions, he switched to China Unicom.
“I always used China Mobile but their 3G service is just not as good,” Li, a mining equipment salesman at Jin Feng Co., said at the Apple store. “I like to use my phone to watch movies online, and I don’t want to be restricted to having to find a Wi-Fi hotspot to do it.”
source:bloomberg.com
Apple Profit Rises 78% on Holiday Demand for Gadgets
Apple Inc., whose Chief Executive Officer Steve Jobs said yesterday he is taking a medical leave of absence, posted a 78 percent jump in quarterly profit, helped by holiday buying of iPads, iPhones and Macintosh computers.
Net income in the fiscal first quarter rose to $6 billion, or $6.43 a share, from $3.38 billion, or $3.67, a year earlier, Apple said today in a statement. Analysts projected profit of $5.41 a share, the average of estimates compiled by Bloomberg. Apple rose as much as 4.8 percent in extended trading.
Sales increased 71 percent to a record $26.7 billion, exceeding the $24.4 billion predicted by analysts in a Bloomberg survey. The company sold 7.33 million iPad tablet computers in the first holiday season for the device, topping the 6 million projected by Mike Abramsky at RBC Capital Markets LLC. The results suggest Apple will fare well in the coming months as Jobs hands day-to-day operations to Chief Operating Officer Tim Cook, said Ashok Kumar, an analyst at Rodman & Renshaw LLC.
“It was a blowout quarter,” said Kumar, who’s based in Palo Alto, California. “The momentum should sustain for the next 12 months with the iPad and iPhone refresh. The uncertainty investors have to prepare for is beyond that time frame in terms of the company’s ability to execute in this flawless manner and develop new markets.” He rates Apple a “buy” and doesn’t own it.
Apple, based in Cupertino, California, climbed to as high as $357 in extended trading, after earlier falling $7.83 to $340.65 at 4 p.m. New York time on the Nasdaq Stock Market. The shares rose 53 percent last year. The company is the world’s second-most valuable company behind Exxon Mobil Corp.
‘Well-Oiled Machine’
Jobs, 55, who has been fighting a rare form of cancer since 2004, said in an e-mail disclosed yesterday, “I love Apple so much and hope to be back as soon as I can.”
The company is likely to fare well under Cook, said Barry Jaruzelski, a partner at Booz & Co.
“It’s a well-oiled machine,” said Jaruzelski. Jobs’s “ethos and things he focuses on from marketing and innovation are deeply embedded in the process and people, making it an institutional capability,” he said.
Apple sold 16.2 million iPhones, 4.13 million Mac computers and 19.5 million iPod media players, according to the statement. Abramsky at RBC Capital Markets predicted sales of 16 million iPhones, 6 million iPads, 18.7 million iPods and 4.2 million Macs.
More Products Coming
Apple, whose potential U.S. customer base for the iPhone will almost double by adding Verizon Wireless as a carrier next month, said profit this quarter will be $4.90 a share on sales of $22 billion.
“We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon, which customers can’t wait to get their hands on,” Jobs said in the statement.
Analysts estimate Apple will have second-quarter profit of $4.47 a share on sales of $20.9 billion, according to data compiled by Bloomberg.
The period will be the first to include sales from Verizon Wireless, the largest U.S. carrier, which will begin selling the iPhone on Feb. 10. The arrangement ends AT&T Inc.’s exclusive U.S. rights to the iPhone and adds 93.2 million potential customers for Apple.
The iPhone is Apple’s top-selling product, accounting for 39 percent of revenue last fiscal year. The iPad also is becoming a bestselling product for Apple, accounting for 17 percent of revenue last quarter. The company has now sold 14.8 million since it was introduced in April.
Macbooks, Beatles
Gross margin, the percentage of sales left after deducting production costs, was 38.5 percent in the first quarter, compared with 36.9 percent in the fourth quarter.
Apple introduced a lineup of the Macbook Air notebook computers and iPod media players to entice shoppers last quarter, while also adding songs from the Beatles to iTunes for the first time.
Jobs took a leave of absence as his health deteriorates from a bout with a rare form of cancer and the effects of a liver transplant he had almost two years ago, according to a person with knowledge of the situation.
The CEO has been unable to keep on weight as he undergoes treatment for his conditions, said the person, who requested anonymity because the matter is private. He took two previous leaves -- for cancer surgery in 2004 and the transplant in 2009.
Jobs will continue as the CEO, according to a company statement citing an e-mail he sent to employees. Jobs co-founded Apple in 1976 and after being ousted in 1985, he returned in 1997 and transformed it from a computer-industry also-ran into the world’s largest technology company by market value.
“I hope he comes back,” said Jane Snorek, who helps oversee about $75 billion at Nuveen Asset Management and said Apple is Nuveen’s biggest holding. “I don’t care who they get, there’s no way you can replace Steve Jobs.”
source:www.bloomberg.com
Net income in the fiscal first quarter rose to $6 billion, or $6.43 a share, from $3.38 billion, or $3.67, a year earlier, Apple said today in a statement. Analysts projected profit of $5.41 a share, the average of estimates compiled by Bloomberg. Apple rose as much as 4.8 percent in extended trading.
Sales increased 71 percent to a record $26.7 billion, exceeding the $24.4 billion predicted by analysts in a Bloomberg survey. The company sold 7.33 million iPad tablet computers in the first holiday season for the device, topping the 6 million projected by Mike Abramsky at RBC Capital Markets LLC. The results suggest Apple will fare well in the coming months as Jobs hands day-to-day operations to Chief Operating Officer Tim Cook, said Ashok Kumar, an analyst at Rodman & Renshaw LLC.
“It was a blowout quarter,” said Kumar, who’s based in Palo Alto, California. “The momentum should sustain for the next 12 months with the iPad and iPhone refresh. The uncertainty investors have to prepare for is beyond that time frame in terms of the company’s ability to execute in this flawless manner and develop new markets.” He rates Apple a “buy” and doesn’t own it.
Apple, based in Cupertino, California, climbed to as high as $357 in extended trading, after earlier falling $7.83 to $340.65 at 4 p.m. New York time on the Nasdaq Stock Market. The shares rose 53 percent last year. The company is the world’s second-most valuable company behind Exxon Mobil Corp.
‘Well-Oiled Machine’
Jobs, 55, who has been fighting a rare form of cancer since 2004, said in an e-mail disclosed yesterday, “I love Apple so much and hope to be back as soon as I can.”
The company is likely to fare well under Cook, said Barry Jaruzelski, a partner at Booz & Co.
“It’s a well-oiled machine,” said Jaruzelski. Jobs’s “ethos and things he focuses on from marketing and innovation are deeply embedded in the process and people, making it an institutional capability,” he said.
Apple sold 16.2 million iPhones, 4.13 million Mac computers and 19.5 million iPod media players, according to the statement. Abramsky at RBC Capital Markets predicted sales of 16 million iPhones, 6 million iPads, 18.7 million iPods and 4.2 million Macs.
More Products Coming
Apple, whose potential U.S. customer base for the iPhone will almost double by adding Verizon Wireless as a carrier next month, said profit this quarter will be $4.90 a share on sales of $22 billion.
“We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon, which customers can’t wait to get their hands on,” Jobs said in the statement.
Analysts estimate Apple will have second-quarter profit of $4.47 a share on sales of $20.9 billion, according to data compiled by Bloomberg.
The period will be the first to include sales from Verizon Wireless, the largest U.S. carrier, which will begin selling the iPhone on Feb. 10. The arrangement ends AT&T Inc.’s exclusive U.S. rights to the iPhone and adds 93.2 million potential customers for Apple.
The iPhone is Apple’s top-selling product, accounting for 39 percent of revenue last fiscal year. The iPad also is becoming a bestselling product for Apple, accounting for 17 percent of revenue last quarter. The company has now sold 14.8 million since it was introduced in April.
Macbooks, Beatles
Gross margin, the percentage of sales left after deducting production costs, was 38.5 percent in the first quarter, compared with 36.9 percent in the fourth quarter.
Apple introduced a lineup of the Macbook Air notebook computers and iPod media players to entice shoppers last quarter, while also adding songs from the Beatles to iTunes for the first time.
Jobs took a leave of absence as his health deteriorates from a bout with a rare form of cancer and the effects of a liver transplant he had almost two years ago, according to a person with knowledge of the situation.
The CEO has been unable to keep on weight as he undergoes treatment for his conditions, said the person, who requested anonymity because the matter is private. He took two previous leaves -- for cancer surgery in 2004 and the transplant in 2009.
Jobs will continue as the CEO, according to a company statement citing an e-mail he sent to employees. Jobs co-founded Apple in 1976 and after being ousted in 1985, he returned in 1997 and transformed it from a computer-industry also-ran into the world’s largest technology company by market value.
“I hope he comes back,” said Jane Snorek, who helps oversee about $75 billion at Nuveen Asset Management and said Apple is Nuveen’s biggest holding. “I don’t care who they get, there’s no way you can replace Steve Jobs.”
source:www.bloomberg.com
Thursday, January 13, 2011
Toyota Readying Electric Motors That Don't Use Rare Earths
Toyota Motor Corp., the world’s largest seller of hybrid autos, is developing an alternative motor for future hybrid and electric cars that doesn’t need rare-earth minerals at risk of supply disruptions.
Toyota engineers in Japan and the U.S. are working on a so- called inductive motor that’s lighter and more efficient than the magnet-type motor now used in its Prius, said John Hanson, a company spokesman. Research is at an “advanced stage,” he said, without saying when vehicles with the motors may be sold.
“It’s a long-term approach,” said Hanson, who is based at Toyota’s U.S. unit in Torrance, California. “When you’re looking at a geopolitical issue like rare-earth supply, that can lead to developments that create very good solutions.”
The motor could help cut Toyota’s dependency on rare-earth materials from China, which controls more than 90 percent of the global market for the metals. China’s government cut export quotas for the first half of 2011 by 35 percent last month. That follows a 72 percent reduction in the second half of 2010, causing the price of some of the metals to more than double.
In addition to the Prius, rare-earth minerals such as neodymium and dysprosium are used in motor magnets in Nissan Motor Co.’s all-electric Leaf car, General Motors Co.’s plug-in Volt and Honda Motor Co.’s Insight hybrid, as well as in mobile phones and rechargeable batteries. Toyota confirmed last year it has a task force to find rare-earth supplies outside China.
Toyota rose 1.6 percent to 3,590 yen as of 10:40 a.m. in Tokyo trading. The stock has gained 11 percent this year.
Battery-Powered RAV4
In 2012, Toyota will sell a battery-powered RAV4 compact sport-utility vehicle with an inductive motor supplied by Tesla Motors Inc. that uses no rare-earth minerals. Tesla’s all- electric Roadster sports car and future Model S sedan use a similar motor, also without rare-earth materials.
The RAV4 EV motor is separate from Toyota’s next-generation electric motor project, Hanson said.
Toyota is developing efficient, cheaper, lighter motors, along with advanced batteries and power electronics, as electric propulsion is essential for next-generation autos, Takeshi Uchiyamada, Toyota’s executive vice president for research and product development, said in an interview this week in Detroit. The company is making progress in all three areas, he said, without elaborating.
Toyota engineers in Japan and the U.S. are working on a so- called inductive motor that’s lighter and more efficient than the magnet-type motor now used in its Prius, said John Hanson, a company spokesman. Research is at an “advanced stage,” he said, without saying when vehicles with the motors may be sold.
“It’s a long-term approach,” said Hanson, who is based at Toyota’s U.S. unit in Torrance, California. “When you’re looking at a geopolitical issue like rare-earth supply, that can lead to developments that create very good solutions.”
The motor could help cut Toyota’s dependency on rare-earth materials from China, which controls more than 90 percent of the global market for the metals. China’s government cut export quotas for the first half of 2011 by 35 percent last month. That follows a 72 percent reduction in the second half of 2010, causing the price of some of the metals to more than double.
In addition to the Prius, rare-earth minerals such as neodymium and dysprosium are used in motor magnets in Nissan Motor Co.’s all-electric Leaf car, General Motors Co.’s plug-in Volt and Honda Motor Co.’s Insight hybrid, as well as in mobile phones and rechargeable batteries. Toyota confirmed last year it has a task force to find rare-earth supplies outside China.
Toyota rose 1.6 percent to 3,590 yen as of 10:40 a.m. in Tokyo trading. The stock has gained 11 percent this year.
Battery-Powered RAV4
In 2012, Toyota will sell a battery-powered RAV4 compact sport-utility vehicle with an inductive motor supplied by Tesla Motors Inc. that uses no rare-earth minerals. Tesla’s all- electric Roadster sports car and future Model S sedan use a similar motor, also without rare-earth materials.
The RAV4 EV motor is separate from Toyota’s next-generation electric motor project, Hanson said.
Toyota is developing efficient, cheaper, lighter motors, along with advanced batteries and power electronics, as electric propulsion is essential for next-generation autos, Takeshi Uchiyamada, Toyota’s executive vice president for research and product development, said in an interview this week in Detroit. The company is making progress in all three areas, he said, without elaborating.
Singapore Plans More Housing Curbs as Prices Rise to Record
Singapore will raise down payment requirements for second mortgages and extend the period homeowners must hold properties to avoid a sales tax as it steps up efforts to curb speculation after prices rose to a record.
Individuals with more than one mortgage can only borrow up to 60 percent of a property’s value, down from 70 percent, the government said in a statement yesterday. On loans to entities other than individuals it will be reduced to 50 percent from 60 percent. Sellers will now have to pay a stamp duty for all homes and land sold within four years of purchase, from three years.
Singapore private home prices climbed to a record as the nation’s fastest economic growth since independence in 1965 overwhelmed government measures to cool the market. The city- state has been attempting to rein in home prices since 2009 when the government barred interest-only loans for some housing projects and stopped allowing developers to cover interest payments for apartments still being built.
“The government is erring on the side of caution,” said Donald Han, Singapore-based managing director at Cushman & Wakefield, the world’s largest closely held real estate services company. “We need to monitor this because history has shown that some of these measures lasted only two to three months, and the market comes right back to full life again.”
Singapore’s Straits Times Real Estate Index fell as much as 1.4 percent, with 28 index members out of 38 falling as of 9:18 a.m. CapitaLand Ltd., Southeast Asia’s biggest developer, declined as much as 3.7 percent to S$3.70.
Buoyant Sentiments
While Singapore’s private home prices climbed 2.7 percent to a record in the fourth quarter from the previous three months, the increase was the smallest in six quarters, government data showed. Han said he expects the gain in home prices to cap at 5 percent this year with the latest curbs, from an earlier estimate of as much as 12 percent.
“Previous government measures have to some extent moderated the market, but sentiments remain buoyant,” according to the statement yesterday. “The government has decided to introduce additional targeted measures to cool the property market and encourage greater financial prudence.”
With the additional steps, Singapore joins markets across Asia that added measures to curb property speculation driven by low interest rates. Hong Kong imposed additional taxes and higher down payments in November after home prices climbed more than 50 percent since the beginning of 2009. China, battling at least 18 months of price increases, suspended third mortgages and raised interest rates for the first time in three years.
‘Strong Disincentive’
Singapore’s homeowners who sell a property within a year of purchase will have to pay a tax of 16 percent from 3 percent now. That drops to 12 percent in the second year, 8 percent in the third, and 4 percent in the final year. The government also said it will take further steps if necessary.
“The seller’s stamp duty rates will be increased sharply so as to provide a strong disincentive for investors looking to make short term gains,” the government said. “The impact of the seller’s stamp duty is especially significant as it is payable regardless whether the property is eventually sold at a gain or loss.”
Singapore in February last year said it will levy a seller’s stamp duty on all residential properties and land that are sold within one year from the date of purchase. That was increased to three years in August, when the government also raised down payments for second mortgages.
Caught by Surprise
“This new round of cooling measures will adversely affect sentiments in the property market in the coming months,” said Nicholas Mak, an executive director at SLP International Property Consultants in Singapore. “They could also catch many investors who had bought residential properties in the last two years by surprise. Some of the buyers could be investors who are banking on rising property prices to make a quick profit.”
Private residential sales in November rose the most in seven months. Property transactions reached an unprecedented level in the first 11 months of 2010 as developers sold 15,025 properties, according to preliminary data from the government. That exceeded the high of 14,811 homes in 2007.
“December sales would be as aggressive as the November numbers,” Han said. “The tide is coming onto the shores of places like Singapore, China and Hong Kong, and it’s hard to stop the tide with low interest rates. The only way is to pump in regular measures like what we’ve seen.”
Singapore’s three-month interbank rate fell to 0.43751 percent on Jan. 3, the lowest since Bloomberg began compiling the data in 1999. It was at 0.43779 percent yesterday.
‘Incremental’ Measures
CapitaLand said in November that government measures to curb property speculation had been “incremental” and will help the real estate market develop sustainably over the long term.
The Monetary Authority of Singapore in November said low borrowing costs and excess liquidity globally may push the island’s property prices higher again. There is a risk that financial institutions may ease lending standards and extend more loans to make up for narrowing interest margins, while buyers may also take on “excessive leverage” amid expectations of a sustained period of low rates, the central bank said.
“Low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals,” according to yesterday’s statement. “The government’s objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals.”
Individuals with more than one mortgage can only borrow up to 60 percent of a property’s value, down from 70 percent, the government said in a statement yesterday. On loans to entities other than individuals it will be reduced to 50 percent from 60 percent. Sellers will now have to pay a stamp duty for all homes and land sold within four years of purchase, from three years.
Singapore private home prices climbed to a record as the nation’s fastest economic growth since independence in 1965 overwhelmed government measures to cool the market. The city- state has been attempting to rein in home prices since 2009 when the government barred interest-only loans for some housing projects and stopped allowing developers to cover interest payments for apartments still being built.
“The government is erring on the side of caution,” said Donald Han, Singapore-based managing director at Cushman & Wakefield, the world’s largest closely held real estate services company. “We need to monitor this because history has shown that some of these measures lasted only two to three months, and the market comes right back to full life again.”
Singapore’s Straits Times Real Estate Index fell as much as 1.4 percent, with 28 index members out of 38 falling as of 9:18 a.m. CapitaLand Ltd., Southeast Asia’s biggest developer, declined as much as 3.7 percent to S$3.70.
Buoyant Sentiments
While Singapore’s private home prices climbed 2.7 percent to a record in the fourth quarter from the previous three months, the increase was the smallest in six quarters, government data showed. Han said he expects the gain in home prices to cap at 5 percent this year with the latest curbs, from an earlier estimate of as much as 12 percent.
“Previous government measures have to some extent moderated the market, but sentiments remain buoyant,” according to the statement yesterday. “The government has decided to introduce additional targeted measures to cool the property market and encourage greater financial prudence.”
With the additional steps, Singapore joins markets across Asia that added measures to curb property speculation driven by low interest rates. Hong Kong imposed additional taxes and higher down payments in November after home prices climbed more than 50 percent since the beginning of 2009. China, battling at least 18 months of price increases, suspended third mortgages and raised interest rates for the first time in three years.
‘Strong Disincentive’
Singapore’s homeowners who sell a property within a year of purchase will have to pay a tax of 16 percent from 3 percent now. That drops to 12 percent in the second year, 8 percent in the third, and 4 percent in the final year. The government also said it will take further steps if necessary.
“The seller’s stamp duty rates will be increased sharply so as to provide a strong disincentive for investors looking to make short term gains,” the government said. “The impact of the seller’s stamp duty is especially significant as it is payable regardless whether the property is eventually sold at a gain or loss.”
Singapore in February last year said it will levy a seller’s stamp duty on all residential properties and land that are sold within one year from the date of purchase. That was increased to three years in August, when the government also raised down payments for second mortgages.
Caught by Surprise
“This new round of cooling measures will adversely affect sentiments in the property market in the coming months,” said Nicholas Mak, an executive director at SLP International Property Consultants in Singapore. “They could also catch many investors who had bought residential properties in the last two years by surprise. Some of the buyers could be investors who are banking on rising property prices to make a quick profit.”
Private residential sales in November rose the most in seven months. Property transactions reached an unprecedented level in the first 11 months of 2010 as developers sold 15,025 properties, according to preliminary data from the government. That exceeded the high of 14,811 homes in 2007.
“December sales would be as aggressive as the November numbers,” Han said. “The tide is coming onto the shores of places like Singapore, China and Hong Kong, and it’s hard to stop the tide with low interest rates. The only way is to pump in regular measures like what we’ve seen.”
Singapore’s three-month interbank rate fell to 0.43751 percent on Jan. 3, the lowest since Bloomberg began compiling the data in 1999. It was at 0.43779 percent yesterday.
‘Incremental’ Measures
CapitaLand said in November that government measures to curb property speculation had been “incremental” and will help the real estate market develop sustainably over the long term.
The Monetary Authority of Singapore in November said low borrowing costs and excess liquidity globally may push the island’s property prices higher again. There is a risk that financial institutions may ease lending standards and extend more loans to make up for narrowing interest margins, while buyers may also take on “excessive leverage” amid expectations of a sustained period of low rates, the central bank said.
“Low interest rates plus excessive liquidity in the financial system, both in Singapore and globally, could cause prices to rise beyond sustainable levels based on economic fundamentals,” according to yesterday’s statement. “The government’s objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals.”
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