14 theSun | MONDAY JULY 13 2009

business

Australia: Rio ‘spy’ arrest bad

for China’s business standing
MELBOURNE: Australia
yesterday warned China
risked damaging its busi-
ness reputation abroad by
holding a top Rio Tinto
executive accused of spy-
ing, and predicted a lengthy
diplomatic stand-off over
his fate.
As the opposition labelled
Canberra-Beijing relations
“fractured” over Australian
passport holder Stern Hu’s
arrest, Australian Foreign
Minister Stephen Smith
urged China to consider
how the row would impact
on its standing in the busi-
ness world.
“One of the issues for
Chinese authorities to
contemplate is the extent to
which the circumstances
of this case will cause the
international business com-
munity to have any cause for
concern,” he told reporters.
Hu, the head of the
Shanghai office for mining
giant Rio, was arrested on
suspicion of espionage
and stealing state secrets
by bribing staff at Chinese
steel companies during
protracted iron ore price
negotiations.
China has become the
world’s biggest buyer of
iron ore, the main ingredi-
ent in steel, as economic
growth fuels demand for
commodities in the world’s
third-largest economy.
EXCHANGE RATES July 10, 2009
Hu was arrested in government websites to find countries.
Shanghai on July 5 but out information on Mr Hu.” “It shouldn’t matter what Foreign currency Bank sell Bank buy Bank buy
Australian consular staff Smith quoted at length our relationship is in terms TT/OD TT OD
only gained access to him Friday from a Chinese gov- of trade, all Australians Finding
1 US DOLLAR 3.5980 3.5330 3.5230
five days later and Canberra ernment website outlining who are overseas and in new life 1 AUSTRALIAN DOLLAR 2.8570 2.7320 2.7160
has still received no official the allegations levelled at trouble should be getting in 1 BRUNEI DOLLAR 2.4770 2.4150 2.4070
explanation about the al- Hu, saying there had been appropriate action from
legations he faces. no direct contact with Chi- the government, and that is death 1 CANADIAN DOLLAR 3.1070 3.0310 3.0190
Smith said Australia had nese officials on the matter. what we’re doing,” he told pg 18 1 EURO 5.0540 4.9320 4.9120
asked China to deal with And Trade Minister Si- Channel Nine. 1 NEW ZEALAND DOLLAR 2.3040 2.2020 2.1860
the matter quickly, adding mon Crean said in Shanghai Analysts have linked 1 PAPUA N GUINEA KINA 1.4880 1.2490 1.2330
that it would be another on Saturday the government Hu’s arrest to Rio’s rejection
1 SINGAPORE DOLLAR 2.4765 2.4150 2.4070
month before consular staff was reliant on press reports of state-owned Chinalco’s
were next allowed to see the for updates on Hu’s case. US$19.5-billion (RM69.23 1 STERLING POUND 5.8830 5.7400 5.7200
executive. Bishop said Australia billion) bid to lift its stake 1 SWISS FRANC 3.3420 3.2620 3.2470
“We may well be in for a should be demanding an- in the miner and the Anglo- 100 ARAB EMIRATES DIRHAM 99.7100 94.4400 94.2400
long haul here,” he said. swers directly from Beijing. Australian mining giant’s 100 BANGLADESH TAKA 5.3400 5.2100 5.0100
China is Australia’s “The Australian minis- tough stance in iron ore 100 CHINESE RENMINBI N/A N/A N/A
number two trading part- ters, as far as we’re aware, negotiations.
100 DANISH KRONE 69.8900 64.2200 64.0200
ner, in a relationship worth have not even picked up the “Although we cannot say
US$58 billion (RM205.9 bil- phone to their counterpart whether it is China’s revenge 100 HONGKONG DOLLAR 47.2500 44.7600 44.5600
lion) last year, according to ministers and raised this or retaliation, the incident 100 INDIAN RUPEE 7.6800 7.0500 6.8500
official figures. issue,” she said. will definitely dampen the 100 INDONESIAN RUPIAH 0.0368 0.0314 0.0264
Opposition foreign Employment Minister commercial relationship be- 100 JAPANESE YEN 3.8790 3.7850 3.7750
affairs spokeswoman Julie Mark Arbib denied Can- tween Beijing and the over- 100 NEW TAIWAN DOLLAR N/A N/A N/A
Bishop said Beijing’s lack berra was reluctant to raise seas companies,” Hongkong
100 NORWEGIAN KRONE 57.3300 52.4900 52.2900
of cooperation on the issue the case more forcefully Baptist University associate
showed deep problems in with Beijing because of the finance professor Billy Mak 100 PAKISTAN RUPEE 4.5100 4.2200 4.0200
Australia’s diplomatic rela- trade ties between the two said. – AFP 100 PHILIPPINE PESO 7.6400 7.1900 6.9900
tions with China. 100 QATAR RIYAL 103.3700 95.4700 95.2700
“There appears to be a 100 SAUDI RIYAL 97.4500 92.6900 92.4900
major fracture in the rela- 100 SOUTH AFRICAN RAND 45.8100 42.1400 41.9400
tionship between Canberra
100 SRI LANKA RUPEE 3.2400 2.9700 2.7700
and Beijing,” she told public
broadcaster ABC. 100 SWEDISH KRONA 47.6100 43.2700 43.0700
“There’s been a lack of 100 THAI BAHT 11.3300 9.6000 9.2000
cooperation, no response to Source: Malayan Banking Berhad/Bernama
numerous requests for in-
formation and no informa- KL market summary
tion coming from Beijing.
“In fact our Foreign Min-
JULY 10, 2009
ister Stephen Smith has been
reduced to scouring Chinese INDICES CHANGE
FBMEMAS 7197.74 18.19

Global economy ready to roll or still on the rocks?

FRANKFURT: Some hard data
is now underpinning prospects
for a global economic recovery,
but world leaders urge caution
and at least one says the worst
is still to come for some.
So should we perk up and
head for the high street, keep
cash ready under the bed, or
prepare for long, hard times?
Some sample figures released
this week gave reason for hope.
In the US, the world’s biggest
economy, key jobless claims fell
to a six-month low point, and
a four-week average seen as a
better indicator also declined.
In Germany, the biggest
European economy and a top
global exporter, industrial or-
ders and output soared in May,
catching analysts by surprise.
And the International Mon-
etary Fund raised forecasts for
growth in China, the world’s
third-biggest economy, to 7.5%
this year from 6.5%, as well
as those for the US and Japan,
number two worldwide.
Germany, Japan and the
US are all believed to be at the
bottom of their worst recessions
since the bitter battles of World
War II.
That’s the good news.
But leaders of the Group of
Eight agreed that a full eco-
nomic recovery was not waiting
around the corner, US President
Barack Obama said on Friday.
“We agreed that full recovery
is still a way off, that it would
be premature to begin wind-
ing down our stimulus plans,”
Obama told a post-summit
press conference.
And World Trade Organisa-
tion chief Pascal Lamy said: “The
worst of the crisis in social terms
is still to come, which means that
the worst of the crisis in political
terms is still to come.”
Other examples of seeing
the glass half-empty or half-full
were provided by two Paris-
based groups, the International
Energy Agency and the Organi-
sation for Economic Coopera-
tion and Development.
The IEA said: “Over the past
two weeks the mood has sud-
denly changed, as many leading
economic and energy indicators
continue to show very weak
readings.”
But the OECD reported the
same day some leading global
economies showed signs of
improvement in May, raising
the chances of recovery.
For many analysts, the key
factor in determining how
things will go is a single word:
credit. “The credit outlook is the
main threat that may yet turn
the scant recovery we expect
into a worst-case credit night-
mare,” UniCredit economists
wrote.
Barclays Capital economist
Thorsten Polleit told AFP:
“Credit is drying up and it’s very
unlikely that it starts flowing
again as easily around the globe
as it did a couple of years ago,”
a phenomenon now seen as a
principal cause of the crisis.
Germany’s finance minister
warned of a “very serious”
threat of a credit crunch later
this year and its economy min-
ister added: “We must prepare
for difficult times and we must
do it very soon.”
The European Central Bank
will invest €60 billion (RM294
billion) into low-risk corporate
bonds to boost business finance,
and banks have been warned
they could be sidestepped later if
necessary to ensure more credit
got to the overall economy.
On an industrial level, Pol-
leit said the end of the credit
boom “is going to change the
production structure of major
economies substantially”.
The economist explained
that “by generating ever-greater
doses of credit,” the global mon-
etary system had a “formative
impact on ... the kind of jobs
that were created, on the kind of
products people were buying.”
He observed: “This is now
subject to a correction.”
A global recovery is nonethe-
less likely, though most analysts
use terms such as fragile, mod-
est or subdued to describe it.
In Eastern Europe, which
sent a chill westwards when
countries like Hungary pleaded
for bailout funds last year, “the
risk of nasty surprises has been
clearly receding during the
last three months,” IHS Global
Insight economist Ralf Wiegert
told AFP.
“Some countries like Poland
look pretty good” now, he said.
Banks are in better shape
than after the US investment
giant Lehman Brothers col-
lapsed in mid September, owing
to massive aid and loans from
governments and central banks,
but little of the windfall cash has
FBMKLCI 1067.76 2.08
INDUSTRIAL 2372.38 -2.20
CONSUMER PROD 320.91 -0.68
INDUSTRIAL PROD 83.60 -0.27
reached businesses. CONSTRUCTION 206.00 1.38
“It is still unclear how the TRADING/SERVICES 143.41 0.72
monetary stimulus is going to FINANCE 8552.22 -21.60
PROPERTIES 694.78 2.84
be passed on to consumers and
PLANTATION 5260.82 25.37
investors,” Deutsche Bank econ- MINING 271.54 -2.03
omist Gilles Moec told AFP. FBMSHA 7436.12 40.72
A second key recovery factor FBM2BRD 4709.49 6.32
was how governments managed TECHNOLOGY 14.44 0.29
stimulus packages which have
prevented the global recession TURNOVER VALUE
from becoming a depression, he 681.788mil RM1.110bil
added.
“There’s a very fine line for
governments to walk” between
allowing swollen public deficits Prices expected to
to drive up long-term lending
rates, and implementing “exit
strategies” too soon and chok-
trade in tight range
ing off growth. SHARE prices on Bursa Malaysia are expected to see a
“If there is a mistake either tight range in trade this week, in the absence of fresh
way it will be bad news,” Moec leads and renewed pessimism over the global economy
said, observing that his bank ex- recovery, said analysts.
pected a “moderate” recovery. SJ Securities technical analyst Phua Kwee Hock said
He also said it was crucial for there was not much news to be expected during the
government stimulus measures month, to boost the local market.
to be replaced eventually by “The market would be in consolidation mode this
sustained growth from within month,” he said.
the economic system. MIMB Investment it its research note said there
“We have to make sure were many technical indicators to support a downside
the recovery evolves from a in the short term.
policy-induced recovery to an Low volume and the fact that the market was stuck
endogenous recovery,” Moec in a tight trading range during the week basically con-
said. “That will be the main firms the cautious sentiment of traders.
hurdle for next year.” OSK Research in its assessment said that it main-
Spanish central bank tains a bearish view towards the near-term market.
governor Fernandez Ordonez “We will likely see the sellers selling more aggres-
urged everyone to avoid hasty sively. On the upside, continue to look for an immediate
conclusions on how to foster a resistance level at the 1,070-point level and support at
rebound. 1,057-1,064 points,” it said.
“There is a Chinese proverb The market was mostly lower for the week ended
that says we cannot say that a with the new FBM KLCI making a bearish debut on
man was happy before the last Monday.
day of his life. We should prob- On a Friday-to-Friday basis, the FBM KLCI eased 5.53
ably take the same precautions points to close at 1,067.76 compared 1,072.69 a week
to discuss resolution of the ago. – Bernama
crisis,” Ordonez advised. – AFP