Tag Archives: unlikely

Shares unlikely to recover yesterday’s losses today

By finance reporter Rebecca HyamUpdated February 22, 2013 09:25:37

The Australian share market looks unlikely to bounce back straight after yesterday’s big fall, with more weak leads from overseas.

Signs of further weakness in Europe and lingering concerns about the latest US Federal Reserve minutes have hurt global share markets overnight.

A report on the euro area’s economy signalled the region is struggling to recover from a recession.

In the US, the Fed minutes released yesterday showed policy makers think the central bank should be ready to vary the pace of its $US85 billion in monthly bond purchases, fuelling concern stimulus will be curtailed.

In official economic news, US data showed jobless claims rose more than forecast, with applications for unemployment benefits rising by 20,000 last week to 362,000.

A separate report revealed Philadelphia-area manufacturing has shrunk unexpectedly.

The Dow Jones Industrial Average closed down 47 points to 13,881, the S&P 500 Index fell 0.6 per cent to 1,502, and the Nasdaq gave up 33 points, or just over 1 per cent, to 3,131.

Across the Atlantic, UK insurance firm Aviva recovered some of its losses from the previous session.

However, losses among mining stocks weighed on the broader market and, by the close, London’s FTSE 100 Index had fallen 104 points, or 1.6 per cent, to 6,291.

It is set to be a flat start on the Australian share market after yesterday’s 2.3 per cent slide, and in futures trading the Share Price Index 200 was down 6 points to 4,961.

The Australian dollar was also weak, and was worth 102.4 US cents around 9:00am (AEDT).

West Texas crude oil eased to $US92.85 a barrel, Tapis was also weaker at $US120.06.

However, spot gold was fighting back from recent weakness, trading at $US1,577 an ounce.

Topics: business-economics-and-finance, markets, currency, futures, stockmarket, australia, united-kingdom, united-states

First posted February 22, 2013 09:24:28

Unlikely partners push for greater housing density

Updated February 20, 2013 18:38:41

They may make for strange bedfellows but the Property Council and the Greens are seeing eye-to-eye right now on one of Perth’s most controversial issues: infill housing.

They are calling for urban infill development in just seven key transport corridors where rapid transit routes are expected to be built.

The two have joined forces with the Australian Urban Design Research Centre to produce a blueprint for higher density housing across the city, building on the Government’s vision of a series of urban infill hotspots.

The proposed corridors are Charles Street and Wanneroo Road, Fitzgerald Street and Alexander Drive, Scarborough Beach Road, Great Eastern Highway, South Street and Armadale Road, Hampton Road and Beeliar Avenue, and Manning Road & Stirling Highway.

According to the group’s ‘Transforming Perth’ report, 80 per cent of the Government’s total infill target of 154,000 dwellings by 2031 could be built this way.

It says focusing infill in transport corridors would create vibrant high streets, while leaving the character of suburbs intact.

It’s a bold vision, and one that harks back to a time when the town square or high street was the heart of a suburb, but its proponents acknowledge there are plenty of potential hurdles.

The Property Council’s executive director Joe Lenzo says it’s a question of whether local councils can be brought on-side, particularly those in the inner suburbs.

“From a property development point of view, we’ve just about had enough of local governments who keep saying that their constituents don’t want any growth, that suburbs have to be left the way that they are,” he said.

“Developers are ready to spend money on infill development.

“They just need the impetus from government, and in particular the impetus from local government.”

It’s an issue the City of Nedlands has already faced.

In 2008, the council found itself with a fight on its hands over a proposed rezoning of Waratah Avenue in Dalkeith.

The plan, a mixed-use precinct of up to five storeys, saw locals take to their front lawns with pickets and spawned the residents’ group, People Against Density Dalkeith.

A watered-down rezoning was eventually adopted after the Planning Minister intervened but several councillors were voted out over the issue.

Since then, urban infill has become a flashpoint issue across the western suburbs, with multiple protest groups banding together to form the Western Suburbs Alliance.

Its supporters now reach as far as East Fremantle, where some residents are opposing the planned oval redevelopment as the council bids to sell part of an A-class nature reserve to pay for it.

Last month, Fremantle council moved to increase housing density in non-heritage areas, in a drive to quadruple the number of CBD residents.

It is part of a plan to revitalise the city and boost economic activity through the week.

Curtin University’s Sustainability Professor, Peter Newman, says there are long-term consequences for suburbs that do not permit higher density development.

He says by failing to build smaller, more affordable dwellings in suburbs such as Nedlands and Cottesloe, younger residents are effectively barred from entry, which dampens economic activity.

“That’s the problem, decline sets in if you don’t change,” he said.

“I think parts of the western suburbs will struggle in the future.”

It’s a problem Fremantle is dealing with, he says, following a decade-long hiatus from development.

Urban planning expert and architect, Timothy Horton, says opposition by some Perth residents to high density development is understandable, given Australia’s track record.

Part of the solution to winning residents over, he says, is to create better guidelines around what constitutes good design.

“That’s something that state government and local council can both use as they work with developers,” he said.

In 2010, the South Australian government created an integrated design commission, which he headed, to oversee its 30-year strategic plan for greater Adelaide.

It’s a model Perth could adopt, Mr Horton says, to promote public education in urban design.

And, he says it’s one of a number of tools which promote good design, enabling more people to “be housed where they want to be.”

“This plan shows you can get really a large part, if not all of Perth’s future growth, infill growth, in some of the most desirable areas,” he said.

Greens Senator Scott Ludlam says infill does not mean the demise of a suburb’s character, which opponents often claim.

“We’re not interested in bowling over heritage,” he said.

“It means the fabric of our suburbs can remain the way they are.”

Mr Ludlam says localised, targeted infill will bring social and environmental benefits.

“It means we can preserve our bushland and our peri-urban agricultural areas, and actually bring people closer together,” he said.

The report says 1575 hectares of land in total could be developed.

Under a high density scenario, there would be 140 dwellings per hectare, equating to 220,000 new dwellings by 2031.

The Property Council says it’s unlikely sufficient development to match population projections will happen without such an approach.

“There is no question in our minds that the government’s targets with respect to infill will not be met unless we do things like this report puts out,” Mr Lenzo said.

“It shows that they can be met in an environmentally-sustainable way.”

Topics: housing, housing-industry, perth-6000

First posted February 20, 2013 17:43:40

Compo unlikely for fire-hit tourism sector

Updated January 25, 2013 15:49:25

Tasmania’s Premier has indicated it is unlikely the State Government will provide compensation to tourism businesses which lost income due to the bushfires.

The Tourism Industry Council says that while some tourism operators are eligible for Federal clean-up and recovery grants, many need compensation for lost revenue.

Spokesman Luke Martin says operators have missed out on their busiest few weeks of the summer season and the cancellations are continuing.

“There is a valid argument for a lot of them to get some support, just enough to tie them over the January period and hopefully allow them to get back on their feet,” he said.

Mr Martin hopes the state and federal governments will announce an assistance package next week.

But the Premier, Lara Giddings, says many businesses should be able to recoup lost revenue through their insurance companies.

“I’m not aware of that specific issue that Luke Martin’s speaking of but you have to be fair about how far taxpayers money can go along these pathways,” she said.

Tourism Tasmania has already announced a marketing campaign, but how that is to be funded is still being worked out.

Topics: rural-tourism, tourism, bushfire, port-arthur-7182

First posted January 25, 2013 15:48:21

Compo unlikely for fire-hit tourism sector


Tasmania’s Premier has indicated it is unlikely the State Government will provide compensation to tourism businesses which lost income due to the bushfires.


The Tourism Industry Council says that while some tourism operators are eligible for Federal clean-up and recovery grants, many need compensation for lost revenue.


Spokesman Luke Martin says operators have missed out on their busiest few weeks of the summer season and the cancellations are continuing.


“There is a valid argument for a lot of them to get some support, just enough to tie them over the January period and hopefully allow them to get back on their feet,” he said.


Mr Martin hopes the state and federal governments will announce an assistance package next week.


But the Premier, Lara Giddings, says many businesses should be able to recoup lost revenue through their insurance companies.


“I’m not aware of that specific issue that Luke Martin’s speaking of but you have to be fair about how far taxpayers money can go along these pathways,” she said.


Tourism Tasmania has already announced a marketing campaign, but how that is to be funded is still being worked out.

Topics: rural-tourism, tourism, bushfire, port-arthur-7182

First posted January 25, 2013 15:48:21

New rules unlikely to trouble Australian banks

Updated January 08, 2013 10:39:38

Banking analysts say new international regulations designed to prevent another global financial crisis will affect Europe far more than Australia.

The new rules, stipulating that banks must hold minimum quantities of cash or sellable assets, have been set out by the Basel Committee on Banking Supervision in Switzerland.

The stress test rules will come in from 2015, although they will not be fully put in place until 2019.

James Dakin, a senior executive at Morgan Stanley in Australia, told The World Today the changes primarily target European banks and, to a lesser extent, banks based in the United States.

“The US banks really started the crisis. It was the US banks in trouble, courtesy of very poor mortgages,” he said.

“So the US banks have already raised a lot of capital. They’ve already cleaned up their balance sheets substantially.

“You haven’t seen that in Europe yet. Clearly European banks are at much greater risks of problems than the US banks.”

Brian Johnson, a senior banking analyst with Asian investment firm CLSA, says Australian banks will easily meet the new requirements.

“In any case, to the extent that they’re short, the Reserve Bank will actually supply what’s called a committed liquidity facility, which would suggest that all of the Australian banks would comfortably meet both the capital and liquidity requirement,” he said.

“I don’t see today’s news as really being all that significant for the Australian banks.”

Mr Johnson agrees the regulations are primarily designed to whip European banks into shape.

“If I was the Australian banks, I would continue to moan and groan about how much tougher things are in Australia,” he said.

“But the reality is that we’ve still got until January 2015 to get there, and when you have a look in terms of both capital and liquidity, it looks to me as though they will comfortably meet any target without adversely impacting their earnings to any great extent.”

Topics: banking, industry, business-economics-and-finance, regulation, australia, european-union, united-states

First posted January 07, 2013 15:42:27

India Kingfisher unlikely to fly again: minister

MUMBAI: India’s aviation minister on Monday virtually sounded the death knell for the cash-strapped Kingfisher airline, saying it would be “very difficult” for the ailing carrier to resume operations.


The statement comes after the aviation regulator on Saturday suspended the flying licence of the debt-laden airline, which has grounded its fleet since October 1 due to a crippling strike by employees over unpaid salaries.


Kingfisher, promoted by liquor baron Vijay Mallya on its best selling beer brand, owes billions of dollars in taxes, airport fees and to staff who have not been paid for the past seven months and are on strike.


“It would be very difficult,” Ajit Singh, India’s civil aviation minister told New Delhi Television on Monday, when asked if Kingfisher could start flying again.


In a desperate bid to bring the staff back to work, the carrier on Monday proposed to pay employees three months of pending pay by the Hindu festival of Diwali on November 13.


Kingfisher shares slid 4.8 percent to 10.9 rupees at the Bombay Stock Exchange on Monday. Shares have fallen 29 percent since the staff agitation started.


Relations between management and staff reached boiling point last month after the company declined to commit to a date for settling its debts, prompting employees to walk out.


Mallya is desperately seeking a foreign buyer to save it from complete collapse, but many analysts are doubtful any rescue is possible.


Kingfisher was India’s second-largest airline until a year ago but now it has a market share of just 3.5 percent, the smallest of the country’s carriers.


Local banks which own a quarter of Kingfisher have rejected a request from the company for another loan.


At least 4,000 of Kingfisher’s staff which includes pilots, engineers and ground staff have not been paid salaries since April, despite previous promises.


Kingfisher employees “must be feeling that they have been taken for a ride,” Singh said.


“There were continuous emails, discussions and assurances that they would be paid, they (employees) had hope they would be paid. It must be a very sad experience for them,” he added.


A report by the Centre for Asia Pacific Aviation, a Sydney-based consultancy, says Kingfisher’s debts total $2.49 billion including bank debts of $1.1 billion, and it had accumulated losses of $1.9 billion.

Copyright AFP (Agence France-Presse), 2012

Huawei says US probe unlikely to affect other overseas business

HANGZHOU: Huawei Technologies Co Ltd, the world’s No.2 telecom equipment maker, said on Wednesday a probe by a US Congress committee over security issues is unlikely to affect its businesses in other overseas markets.


Earlier this month, a US Congress committee issued a report urging US companies to stop doing business with Huawei and ZTE Corp, the world’s No.2 and No.5 telecom equipment vendors respectively, on security concerns.


The move has prompted Canada and Britain to also look into similar issues, sparking some concerns that it could affect Huawei’s business in other markets.


“No, I don’t think there will be an impact,” Huawei’s Senior Vice President Zhang Chunxiang told Reuters, responding to a question on whether its other overseas business would be hit as a result.


Zhang, who spoke on the sidelines of a business event in China’s eastern city of Hangzhou, said both sides were still talking and that the US investigation was a sign of trade protectionism.

Copyright Reuters, 2012

China hard landing unlikely: IMF

Updated October 12, 2012 15:08:28

The International Monetary Fund says the Chinese economy is unlikely to hit serious trouble, but economic growth in the Asia-Pacific region will remain muted.

In the latest update to its Regional Economic Outlook for Asia the IMF says the probability of the Chinese economy having a hard landing remains low.

The report says Australia has weathered global economic uncertainty fuelled by Europe relatively well, with mining-related investment in particular expanding strongly.

The IMF’s Asia-Pacific director Anoop Singh says he is not expecting a sharp downturn in China’s fortunes.

“People ask, ‘is there a risk of that happening and can it happen from the real estate market?’ and obviously yes that is a downside risk,” he stated.

“But our sense is that this is a remote possibility. China is not having a hard landing.”

Topics: business-economics-and-finance, economic-trends, trade, china

First posted October 12, 2012 14:14:52

ECB unlikely to announce more 3-yr loans to banks – traders

ecb54BANGALORE: The European Central Bank is unlikely to announce another round of cheap three-year loans to banks in the next six months, a Reuters poll of euro money market traders showed on Monday.

Seventeen of 23 traders in the poll said the ECB will not conduct a third operation with a three-year maturity in the next six months, similar to a September poll which showed 16 of 25.

The remaining six said it would.

The ECB flooded money markets with more than 1 trillion euros ($1.26 trillion) in two operations, one in December last year and another in February, to calm euro zone markets.

“There is already enough — and more — liquidity in the markets,” said one trader.

ECB Governing Council Member Luc Coene last month said the ECB could offer banks a new round of ultra-cheap funding, or cut its main interest rate from its record low, and put its deposit rate into negative territory.

The regular weekly survey showed banks are expected to borrow 107 billion euros ($140 billion) at its seven-day operation, slightly more than the 102.9 billion euros maturing from last week’s tender.

Results of the tender will be announced on Tuesday and the amount allotted on Wednesday. The start date is Oct. 10 and the maturity date is Oct. 17.

Traders also expect the central bank to allot 14 billion euros at its one-month fine-tuning operation this week, similar to the 13.8 billion maturing from last month’s tender.

For 3G auction, help may come from unlikely quarters

Offici­al believ­es Indian partic­ipatio­n may reinvi­gorate the proces­s.  Official believes Indian participation may reinvigorate the process. DESIGN: ALI DARAB


KARACHI: A telecom official believes that if the Pakistan Telecommunication Authority (PTA) expects to auction third-generation (3G) mobile telecom licences by December this year, the government must increase diplomatic efforts to attract investors from across the border.


“Both countries have made significant progress on the economic front by reducing their lists of items non-tradable items. Given that the telecommunication sector is already open for investment, the government should lobby for attracting Indian telecom operators,” said the source, who spoke on condition of anonymity.


Previously, Chinese, Norwegian, Egyptian, Singaporean, Russian and Qatari companies have invested in the cellular and long distance segments of the Pakistani telecommunication sector. Investments in the telecommunications sector alone account for 32% out of the total of $21.5 billion that Pakistan has received in foreign direct investment (FDI) over the last six years.


In desperate need of funds, the government is relying heavily on proceeds from the oft-delayed auction of cellular spectrum licences. The auction, according to the PTA, will bring in around Rs100 billion through 3G spectrum licences, and another Rs200 billion through infrastructure development.


Before the auction was postponed early this year, telecom service providers Orange Mobile, Vodafone, AT&T and Qtel had confirmed they were not interested in the Pakistani market.


Being the world’s sixth most populous nation, Pakistan is potentially one of the world’s largest telecom markets with a current subscriber base of 120 million. However, PTA’s efforts have so far not been able to attract new players – whose participation could potentially boost the bidding price.


However, given the progress on cross-border trade between the two countries, this may be the right time for the government to invite India for the auction as a gesture of goodwill, the source said.


Telecom, being a services sector, is open to Indian investors, a senior official of the Ministry of Commerce told The Express Tribune; adding that there is no bar on any foreign company, including an Indian one, from participating in the auction. However, he said, non-tariff barriers (NTBs) – such as obtaining a no-objection certificate from the State Bank to repatriate capital – can raise the bar against such participation.


Referring to NTBs, our telecom source said the government should demonstrate an open attitude towards New Dehli by removing all kinds of barriers in this sector. “Participation by India will provide improve the mood of international investors, and the auction may fetch a better price,” he added.


The opening of the telecom sector to India, the source said, may also enable PTA to issue the Mobile Virtual Network Operation (MVNO) licence – a technology for contact-less payment –for both 2G and 3G services for Indian operators. This technology would also help banks on both sides of the border transfer funds through mobile handsets, he said.


Explaining the MVNO, the source said that more than 800 million users worldwide are using the contactless payment technology – which is already in use at large retailers such as Walmart, Starbucks and many others.


PTA can earn additional money from selling off MVNO licences, and later collecting royalty from the proceeds they generate, the source said. He added that the government should make sure that cellular subscribers, while in India, can use their operator’s services without having to pay roaming charges – something he believes will help businessmen as they travel more frequently across the border.


Published in The Express Tribune, September 4th, 2012.

Pakistan Railways unlikely to be revived soon

Modern locomo­tives will take at least a year to arrive.  DEFICIT: Rs45b are the estimated expenses of the railways this year Rs15b are the estimated revenues this year. PHOTO: AFP

LAHORE: 

The precarious condition of Pakistan Railways (PR) is not expected to get better in the next one and a half years as rehabilitated and modern locomotives, which are direly needed, will take at least a year to arrive, says a PR official.


“The corporation needs serious attention of the government because the biggest source of public transport is in danger. Not a single passenger or express train is running in profit and we are bearing losses only to facilitate the people,” said PR Director Public Relations Imtiaz Rizwi while talking to The Express Tribune.


The railways has got a loan of Rs6.1 billion through its ancillary, PR Advisory and Consultancy Services (PRACS), which will be spent on the rehabilitation of 96 locomotives. Besides, tenders for purchase of 75 locomotives are also in process.


“If we start executing these two projects today, we will be able to see some locomotives after a year,” he said.


For this one-year gap, the railways tried to take 50 locomotives on lease from China, but the deal could not go through as Beijing demanded an unbearable cost of $2,600 per locomotive per day, Rizwi said.


The state of cash-strapped PR has once again gone from bad to worse with the locomotives’ strength dropping to around 100. For passenger and express trains, only 90 locomotives are on track and for freight operation only seven locomotives are available, which are nowhere near the demand from both areas, say railway officials.


The number of passenger and express trains, which were more than 400 before the crisis, has dropped below 200, which are being managed with only 90 locomotives. On the other hand, the number of locomotives for freight trains, which were originally around 90 for handling 60 freight trains, has fallen to only 7.


According to the officials, not a single locomotive has been fully revamped and is running with all six traction motors. Most of the locomotives have three or four traction motors, which is the main cause of engine failure during journey.


This has led to hours of delay in arrival and departure of trains and overcrowded platforms. These days, the express trains get late by more than 10 hours in many cases as locomotives, which push the trains, develop faults quite often with no alternative available.


Commenting on frequent delays, Rizwi pointed to the small freight operations. Previously, he said, some 50 to 60 freight trains were on their way on different tracks every time, and the management, in case of failure of any passenger train locomotive, brought the locomotive of a nearby freight train to be attached with the passenger train.


He ruled out any fuel shortage, saying the railway utilised only half of the credit line of Rs2 billion provided by Pakistan State Oil.


This year, expenses of the railways are estimated at Rs45 billion, which are three times the targeted earnings of Rs15 billion. During this financial crunch, the government provides salaries and pensions for railway employees every month.


Published in The Express Tribune, July 28th, 2012.

The nightmare of budget invalidation deemed unlikely

Court, legal preced­ent seen as too pragma­tic to risk the fate of the econom­y over one case. Court, legal precedent seen as too pragmatic to risk the fate of the economy over one case. PHOTO: FILE

Nobody expects the court would be so reckless as to invalidate the passage of the federal budget. Because if they are, they will unleash an economic nightmare.

Consider the facts: Article 74 of the Constitution requires the approval of the federal Cabinet, led by the prime minister, for a budget to be presented before parliament. This was done on the morning of June 1. That evening, Finance Minister Abdul Hafeez Shaikh formally presented the budget in the National Assembly.

Now the Supreme Court is saying that Prime Minister Yousaf Raza Gilani was disqualified from holding office on April 26. If that is true, and if the court decides that the prime minister’s decision to approve the budget is not valid, then that means the budget was not validly presented to parliament and hence its passage in the National Assembly is also void.

Consider for a moment what would happen if that were the case. The government then has 11 days till June 30 to elect a new prime minister, approve the budget in the Cabinet again, present it to the National Assembly, send it to the Senate for recommendations, and then pass it again in the National Assembly. Given the pace at which our government moves, that seems a tall order.

So what happens if the budget is not approved in time? The government’s expenses for everything starting July 1 will not have been approved and thus will not be paid. The direct personal impact will be on the 1.4 million government employees, who will not get their salaries. Ironically, this includes Chief Justice Iftikhar Muhammad Chaudhry himself. Millions more pensioners will also not get paid.

But the much larger problem is government debt. The government has approximately Rs1 trillion in short-term debt that needs to be rolled over next quarter, a significant percentage of which will need to be done next month. In addition, interest payments on the remaining government debt need to made.

The overwhelming bulk of this debt is held by the banking system. The banks have already dramatically scaled back lending to the private sector in the aftermath of the 2008 financial crisis. If they can now no longer rely on the government making interest payments on its debt on time, that is likely to create a wave of uncertainty that may well cause the banking system to freeze.

While it is likely that ATMs will continue working and ordinary cash transactions with banks will still take place, lending is likely to dry up. Businesses will find it extremely difficult, if not impossible, to finance their day-to-day operations, let alone expansion plans. In essence, we may return to what happened in late 2008, when the banking system froze and the rupee fell by over 29% as people moved their money out of the country. And Pakistan’s economy today is much more fragile than it had been in the run-up to that crisis.

Most analysts believe that the Supreme Court is highly unlikely to invalidate the budget. “The day-to-day activities of the government will always be validated by the Supreme Court if it is challenged because they want order to prevail in the country. Any activity that is ordinarily legal will likely to be automatically upheld,” said Zain Sheikh, a constitutional lawyer based out of Karachi.

Market analysts concur with this judgement. “I don’t think the nightmare scenario will play out. I don’t think the Supreme Court will unleash that level of uncertainty,” said Imtiaz Gadar, a banking sector analyst and economist at KASB Securities, an investment bank.

Published In The Express Tribune, June 20th, 2012.