The Star Online: Business
The Star Online: Business |
- In Davos, world seeks U.S. engagement
- Nikkei rises as yen extends loss to new lows
- Malaysia’s inflation rate to hit 2%-2.5% this year
| In Davos, world seeks U.S. engagement Posted: 27 Jan 2013 06:03 PM PST DAVOS, Switzerland: As President Barack Obama starts his second term, the world's business and political elite pines for greater American engagement to tackle a thicket of security challenges. From Syria to Mali, from Iran to the South China Sea, the United States' reluctance to be drawn into conflicts far from its shores was a leitmotiv of geopolitical debate at this year's World Economic Forum in Davos. The absence of top Obama administration officials from the annual brainstorming and networking event in the Swiss mountains symbolized to some a perceived pullback from global leadership, even though it was Inauguration Week in Washington. Leaders of Russia, Germany, Britain, Italy, South Africa, Jordan and many other nations made the journey. U.S. bankers, business leaders and academics were out in force, but the most senior U.S. government officials were a Treasury undersecretary, an assistant secretary of state and the outgoing U.S. Trade Representative. Delegates debated whether and when China would overtake America as the number one economy and global power -- estimates ranging from the early 2020s to never -- and what troubles were brewing while Washington remains in hands-off mode. The ground rules of many Davos panels preclude identifying the speakers. One minister, shielded by that anonymity, lamented the dangers of "a world without American leadership". Without U.S. involvement, one session was told, Syria would become a "Somalia on the Mediterranean", with Middle East states waging a proxy war via sectarian factions, some of which would export militant violence to the neighbors and to Europe. Iran may accelerate its nuclear program to try to break out of isolation, Vali Nasr of Johns Hopkins University said, because Washington is squeezing it with economic sanctions but shunning either direct diplomatic engagement or military action. "NEW TALIBAN IN SYRIA" In a public address, King Abdullah of Jordan said his country, which had sent troops to fight Islamist militants in Afghanistan, now faces a "new Taliban in Syria", where an al-Qaeda affiliate has gained ground among forces fighting to oust President Bashar al-Assad. It could take years after the fall of Assad to "clean them out", the king said. His fragile desert kingdom has taken in some 300,000 Syrian refugees, straining its thin resources and political stability. Some Syrian exiles present in Davos complained that Jordan has closed its border to Syrian opposition fighters. Turkish Foreign Minister Ahmet Davutoglu, whose country has absorbed some 150,000 refugees and serves as a rear base for rebel fighters, said the international community would one day have to apologize to the Syrian people, as it had done in Rwanda, for failing to intervene to prevent massacres. At least 60,000 people have been killed in two years of civil war in Syria, according to the United Nations. Saudi Arabia's Prince Turki al-Faisal, a senior member of the royal family, former head of intelligence and ambassador to London and Washington, said the rebels were not receiving game-changing anti-aircraft and anti-tank weapons because of U.S. and manufacturers' restrictions on transfers to third parties. U.S. strategic experts explained that Washington's sole interest in Syria was to prevent any threat to Israel and ensure chemical weapons did not fall into "terrorist" hands. The same reluctance to be sucked into conflict meant Washington would provide little more than verbal and intelligence support for France as it battles in Mali against al-Qaeda-linked militants who have taken root in the vast ungoverned spaces of the Sahara and Sahel. Few if any expect Obama, who burned his fingers in an early attempt to revive Israeli-Palestinian negotiations when Israeli Prime Minister Benjamin Netanyahu refused to stop Jewish settlement building, to launch a fresh peace initiative now. Any risk of the United States being drawn into military intervention in the Islamic world after extricating itself from Iraq and winding down its presence in Afghanistan is anathema to the Obama administration, said Gideon Rose, editor of the policy journal Foreign Affairs. ASIA PIVOT Some delegates cited Obama's strategic "pivot" towards Asia, shifting Washington's focus towards the fast-growing economies of the Asia-Pacific region, as one reason why tensions were on the rise in the Middle East and North Africa. The president's first foreign trip after his re-election in November to southeast Asia was overshadowed by a flare-up between Israel and the Palestinians in Gaza, a reminder of an issue on the back-burner that can explode at any time. It came during a potentially dangerous phase in relations around east Asia between China and Japan, North Korea and its neighbors, and above all China and the United States. Former Australian Prime Minister Kevin Rudd, a China expert, urged Obama to use his second term to take a major initiative to build a cooperative security relationship with China, partly to avert conflicts in the South China Sea. Rose doubted that the Obama administration would undertake anything so ambitious. Wu Xinbo, dean of the School of International Studies at Fudan University in China, said Washington should start by ending aggressive air and sea patrolling off China's shores, which he said smacked of the "containment" of the former Soviet Union. He voiced concern that Japan, driven by a more nationalist new government and public opinion, could pursue an "offensive" approach to a dispute over a group of small islands in the South China Sea known as Senkaku in Japan and Diaoyu in China. Joseph Nye, a former U.S. official and Harvard academic who visited Japan and China recently as part of a semi-official U.S. delegation, said both countries were worried by the perceived growth of nationalism and militarism in the other although "this is not 1930s nationalism". But Nye said both countries' new leaderships would give top priority to economic development and provided the United States sent careful messages to both, there was the prospect of a strong triangular relationship. - Reuters |
| Nikkei rises as yen extends loss to new lows Posted: 27 Jan 2013 06:00 PM PST TOKYO: Japanese equities rose on Monday as the yen extended losses to fresh lows, further improving earnings prospects for exporters as Japan's corporate reporting season enters full swing this week. Global investor sentiment improved on Friday due to brighter prospects for the European economy and its debt crisis as well as solid U.S. corporate earnings. Japan's Nikkei stock average <.n225> traded 0.7 percent higher after jumping 2.9 percent on Friday to log an 11th straight week of gains, its longest such run since 1971. <.t> Against the yen, the dollar hit 91.26 early on Monday, its highest level since June 2010 while the euro touched 122.91, its highest point since April. New Prime Minister Shinzo Abe has called for aggressive monetary easing and huge fiscal spending to beat deflation. The yen has fallen some 13 percent since mid-November when he began making those calls as part of his election campaign. "The potent mix of Abenomics and strong risk appetite abroad is continuing to soften the yen, which means investors will still be buying stocks," said Masayuki Doshida, senior market analyst at Rakuten Securities. South Korean shares <.ks11> fell 0.7 percent, after closing on Friday at an eight-week low, weighed by caution ahead of fourth-quarter earnings and a stronger won hitting exporters. U.S. stocks extended a rally to an eighth day, their best run since late 2004, with the Dow Jones industrial average <.dji> and the benchmark Standard & Poor's 500 Index <.spx> both closing at their highest in more than five years on solid U.S. corporate earnings. The improving global macroeconomic environment has curbed interest in safe haven assets such as gold. Spot gold steadied around $1,658.54 an ounce on Monday, still below its 200-day moving average. As riskier equities rallied on Friday, bullion saw its biggest weekly drop this year on Friday. U.S. crude inched up 0.1 percent to $95.94 a barrel. Investors pumped $5.65 billion into stock funds worldwide in the latest week, with most of the sum flowing into emerging market stock funds, data from EPFR Global showed on Friday. The euro hovered near an 11-month high of $1.3480 hit on Friday. The Australian dollar stumbled to an eight-month low against the euro early on Monday. The European Central Bank said on Friday banks will repay 137.2 billion euros ($185 billion) in 3-year loans, more cash than expected, in a sign at least parts of the financial system are returning to health. The ECB lent banks a total of more than 1 trillion euros in twin 3-year, ultra-cheap lending operations in December 2011 and February 2012, easing funding concerns. German Ifo business morale index improved for a third consecutive month in January to its highest in more than half a year, further evidence that Europe's largest economy is gathering speed again after contracting late last year. European shares scaled fresh multi-month peaks on Friday, led by Frankfurt's DAX index <.gdaxi> scaling five-year highs. Data on Sunday also showed profits earned by China's industrial companies rose 17.3 percent in December from a year earlier to 895.2 billion yuan ($143.9 billion). Investors will focus this week on the Federal Reserve's Open Market Committee statement on Wednesday and U.S. nonfarm payrolls due on Friday. ($1 = 0.7421 euros) - Reuters |
| Malaysia’s inflation rate to hit 2%-2.5% this year Posted: 27 Jan 2013 05:57 PM PST KUALA LUMPUR: Malaysia's consumer price index (CPI) is expected to increase by between 2% and 2.5% this year, mainly because of the implementation of minimum wage policy and subsidy rationalisation programme in 2H2013. "Resilient domestic demand could possibly facilitate partial transfer of higher cost to consumers particularly by industries that are heavily reliant on foreign labour," said Hong Leong Research. It forecast the first half of 2013 (1H13) would have a mild inflation trend at about 1.6% on-year and rising to 2.4% on-year in the second half. The government reported that the CPI for last year averaged by 1.6% in comparison to 3.2% in 2011. The CPI for December 2012 increased to 1.2% from a year ago, the slowest pace within a three-year. Alliance Bank Malaysia research chief economist, Manokaran Mottain said moving ahead, "we expect a two-speed consumer prices movement". He told Starbiz that while expecting a slower pace of inflation in the first half-year, potential subsidy cuts after the post GE 13 could likely pressure a reversal in price pressures in 2H13. "Overall, we expect inflation to accelerate to 2.5%, aided by a recovery in demand in later part of this year, both internally as well as externally," he said. He said a recent World Bank forecast further softening in global commodity prices in 2013 on extreme weather conditions and sluggish economic growth in major parts of the advanced economies. Although the U.S. and Chinese economies look to remain on track for slow growth, Europe's debt problem is still seen weighing on economic expansion, reducing the appetite for commodities, according to the World Bank report. Food prices should drop by 3.2%, led by a sharp downturn in edible oils, such as soy oil or palm oil. Meanwhile, Bank Negara Malaysia's monetary policy committee, which meets this week, is scheduled to announce the overnight policy rate (OPR) on Jan 31 and analysts expect the OPR to likely to remain at 3%. Manokaran said due to the low levels of inflation risks to recovery, he reckons the central bank would have more room to keep the OPR at accommodative levels. The OPR will likely to remain unchanged at 3% for this year, ensuring an accommodative monetary policy stance and price stability in the domestic economy, he added. Hong Leong Investment Research said the OPR would ensure domestic demand to support the economic growth, despite "inflation outlook accords room for a rate cut". JF Apex research affirmed its stance that the OPR would be maintained at 3% until 1H13, with CPI below 2.5%. It said the demand for food is likely to keep rising as emerging economies continue to consume more due to growing of population and affluence. However, uncertain weather conditions would threaten the supplies and hence drive food commodity prices up. |
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