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Oct
31
The Federal Reserve has decided to provide the central banks of Brazil, Mexico, South Korea and Singapore with $30 billion each in the first instance of aid to emerging economies. The finance package will form part of the Federal Reserve’s attempts to unclog the credit system and encourage banks to lend to each other.
In a statement issued on Wednesday, the Federal Reserve announced that it was setting up liquidity swap facilities with the central banks of these four countries which would remain effective until April 30 of next year. The Federal Reserve also said that arrangements were put in place in order to minimise the difficulty in obtaining dollar funding by the “large systemically economies” of Mexico, Brazil, Singapore and South Korea.
The Federal measure coincided with key interest rate cut ordered by the central bank of China which was then followed by the central banks of Taiwan and Hong Kong on Thursday. Investors and banking institutions are hoping that these measures will prevent the financial market from upending. South Korea especially benefited from the Federal step as its benchmark stock index witnessed its largest gain since 1980 even as its currency, the won, surged and the cost of protecting Asia-Pacific bonds from default took a nosedive.
Oct
30
In one of the biggest mergers in recent aviation history of the US, two of its major domestic carriers, Delta Airlines and Northwest Airlines announced that they would be coming together. The official announcement of the merger came just hours after the US Department of Justice declared that the agreement to create the world’s largest airline did not raise anti-trust concerns for the government.
The new airline after the merger will be named Delta and will have its headquarters at Atlanta. It will take from 14 to 16 months for the operations of the two carriers to combine. After the merger, the new airline will be the largest in the world by several measures like the total number of passengers carried, the number of departures as well as the total number of destinations.
In the past few months, domestic airlines in the US too have felt the negative impact of weakened economy. While job cuts and stagnant wages cut down on the average people’s disposable income, they take to travelling less in order to save money for essentials. However the recent fall in fuel prices from record-level highs in the summer has spelt good news for the aviation industry which was already giving rise to talks of airline bankruptcies and wider industry consolidation.
Oct
30
For the third time in six weeks, China’s central bank cut the benchmark deposit and lending rates bringing it down by a further 0.27% on Wednesday.
The People’s Bank of China announced on Wednesday that from now on one-year bank loans will cost 6.66% as compared to the earlier cost of 6.93% while the deposit rates too will fall from 3.87% to 3.60%. The website of China’s central bank also stated that the new rates will take effect from Thursday. There was no reason given for the latest round of cuts in the benchmark rates by the People’s Bank of China.
Before this China’s central bank had reduced its benchmark lending and deposit rates on two occasions – on September 15 as well as October 8. The second reduction in interest rates and reserve requirements by the People’s Bank of China had coincided with rate cuts by central banks of leading economies across the world.
The global credit crisis that gripped world markets recently led to coordinated attempts by several governments to shore up the global banking system. As part of this intervention major central banks announced reduction in benchmark lending rates in an attempt to pump in more liquidity into a financial system crippled by frozen credit lines.
Oct
30
Qwest Profits Fall in Third Quarter
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US telecommunications company Qwest Communications International Inc reported a decline in profits during the third quarter as the weak economy forced consumers to disconnect landlines in an attempt to save money.
Qwest posted its third-quarter results on Tuesday which saw profits coming down to $151 million or 9 cents a share as compared to $2.1 billion or $1.08 a share in the same period a year ago. Returns of the previous year however included tax benefits. The company further revealed that adjusted earnings before interest, taxes, depreciation as well as amortization came down from $1.15 billion in the last year’s quarter to $1.08 billion in the third quarter this fiscal year.
Revenue also declined marginally from $3.43 billion a year back to $3.38 billion which was roughly in keeping with $3.3 billion forecast made by Reuters Estimates. Full year forecasts by Qwest came down to the lower end of its previous outlook and now estimates that revenue will decline by a further 2.5 percent while adjusted earnings before interest, taxes, depreciation and amortization will come down by between 1 percent and 2 percent.
Qwest Communications Inc blamed the fall in profits to an increase in the number of disconnected telephone landlines as consumers strove to save costs during difficult economic times. The company has already said that it would slash around 1200 jobs in the fourth quarter.
Oct
25
The CNNMoney list of 1991 billionaires hardly springs any surprises at the start. The first rank continues to be held by the Sultan of Brunei who controls the oil reserves of one of the smallest countries of the world and remains secure in his position as one of the last absolute monarchs on earth. While the Sultan’s status as the biggest billionaire in the world is the result of his royal lineage, the CNN list of billionaires also includes members of the nouveau riche or those who have gathered the billions by themselves.
Nouveau riche or “new money” refers to an individual who has acquired great wealth within his or her own generation. In the 21st century, America witnessed the rise of many individuals to wealth and high social status on the dint of entrepreneurial success. Many of these belonged to industries such as oil and real estate but the rise of the Silicon Valley in the early 1990s saw many a young people riding the wave of material success. The CNNMoney billionaire list includes first-timers as varied as Japanese entrepreneur Kenkichi Nakajima, Cosmetic queen Estee Lauder and software giant Bill Gates.
A nouveau riche is often distinguished from those belonging to “old money”. In the latter case, the individual is born into wealth and inherits vast fortunes from the earlier generation while the former is generally a self-made success and has acquired social power and prestige through material success.
Oct
25
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The main advantage of seeking a loan from EZUnsecured lies in the fact that its loan advisors provide expert guidance in complete and correct preparation of application so that it gets approved the very first time. Moreover those seeking Start-Up loans from EZUnsecured can take advantage of its extensive network of financial institutions that are ready to finance a wide variety of business needs.
Oct
22
The US Treasury Secretary announced on Monday that the federal proposal to invest $250 billion in financial institutions had evoked “interest from a broad group of banks of all sizes”.
Speaking at a Treasury Department news briefing, Henry Paulson Jr declared that the federal move to invest in banks had drawn a wide response from financial institutions across the country. This comes after several reports indicated last week that bank executives in US were unhappy with the federal emergency program and less than thrilled at the prospect of government intrusion in their companies.
Under the $250 billion bank rescue plan, the amount of federal funds a bank may receive is restricted to 3% of the institution’s “risk-weighted assets”. However, Treasury officials reiterated at Monday’s news briefing that enough money had been allocated to cover every financial institution eligible for the funding.
The next major step in the implementation of the bank rescue program will be to decide which banks will be allowed to participate. According to Treasury’s previous statements, it would prefer to invest only in those banks which are “healthy” and well-positioned to use the federal funds to issue new loans. Such banks need help because though they have adequate capital to get through, they may not be positioned to lend as widely as it is necessary to get the economy back on its tracks.
Oct
22
China’s Growth Rate Slides Below 10%
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In a sign that the recent global finance crisis may have had some effect on every economy, China’s growth rate dipped below 10% for the first time in several years of high-speed development.
The Chinese government announced on Monday that the growth of the nation’s gross domestic product had fallen to 9.9% in the third quarter of this year. However China’s National Bureau of Statistics clarified that the decline was the result of the government’s efforts to cool down the economy after its exports recorded feverish growth in past quarters. NBS chief, Yao Jingyuan, in fact, described the slide in GDP growth rate as a “hard-earned achievement”.
Independent analysts however believe that the decline in its GDP rate is an indicator that China has been feeling the impact of a global slowdown due to falling demand of its exports in the US and other markets. Car sales have plunged in America and Western Europe while China’s toy industry is reportedly retrenching workers by the thousands as its export orders are cut down.
At the same time, any GDP rate of 9.9% is impressive according to international standards. What makes the slide in China’s growth rate significant is that it comes after two successive quarters of growth rate above 10% and thus may be an indication that its economy is slowing down.
Oct
21
Halliburton Posts Third Quarter Losses on Higher Costs, Hurricanes
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Halliburton Co posted a loss of $21 million in its third quarter due to high financing costs and loss of revenue caused by hurricanes in its New Mexico oilfields.
The second-largest oilfield services provider in the world Halliburton Co announced Monday that its third quarter loss was 2 cents a share compared to the net income of $727 million or 79 cents a share in the same quarter last year. However the company declared per-share profit of 76 cents which was 2 cents more than the average of 24 that had been predicted by analysts at Bloomberg. However this per-share profit excludes an acquisition charge as well as $693 million in costs related to redemption of convertible bonds.
Houston-based Halliburton also attributed its decline in profits to the Hurricanes Ike and Gustav which disrupted projects and caused damage to many of its operations on the Gulf Coast. The losses inflicted by the hurricanes include a fall in revenue by $74 million and reduced earnings by 4 cents a share.
At present Halliburton is in the process of an overseas expansion. This comes in the wake of gains in oil and natural gas prices which in turn have stoke demand in regions like Latin America and Asia. Recently the company opened its Middle Eastern headquarters besides launching technology centres in Russia and Asia.
Oct
21
South Korea became the latest country to bail out its financial system by offering a $30 billion rescue package for its banking sector as well as backing foreign currency debts of its lenders worth $100 billion. The measures come in the wake of a global market crisis whose impact has left finance sectors of several national economies in shambles.
The finance rescue plan was unveiled by the South Korean government on Sunday and it led to a marginal rise in its currency on Monday morning as won gained 4.1% 1280.80 against the US dollar. The Kospi stock market however remained largely unchanged with the index losing 0.3% to rest at 1177.11 at 9:29 a.m at Seoul on Monday morning after an initial rise of 1.3 %
South Korea’s currency has taken a huge battering in recent times and has emerged as one of the worst=performing currencies in Asia. Likewise its stock market has lost as much as 38% this year. With its government initiatives, South Korea joins Europe, Hong Kong and Australia in providing banks with state guarantees in order to ease global lending which had dropped alarmingly in the aftermath of the world finance crisis and loss of confidence among lenders.
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