. Earth Science News .




.
POLITICAL ECONOMY
IMF chief warns world economy risks 'downward spiral'
by Staff Writers
Beijing (AFP) Nov 9, 2011


International Monetary Fund chief Christine Lagarde on Wednesday warned the world risked plunging into a "downward spiral" of financial instability and urged Asian economies to be on their guard.

Lagarde said Asia was not immune to problems currently sweeping the eurozone, as she began a two-day visit to China likely to focus on the deepening debt crisis in Europe.

"If we do not act together, the economy around the world runs the risk of a downward spiral of uncertainty, financial instability," she said at the International Finance Forum in Beijing.

Lagarde has so far held talks with Chinese central bank governor Zhou Xiaochuan on the "global economic situation", the People's Bank of China said in a brief statement.

Foreign ministry spokesman Hong Lei said Lagarde would also meet with "state leaders" but did not specify who they would be.

Any discussions are expected to touch on China's possible contribution to a bailout fund -- the European Financial Stability Facility -- established to provide support to the bloc's struggling economies.

European leaders have called on China, which has the world's largest foreign exchange reserves at $3.2 trillion, to invest in the fund.

The head of the fund, Klaus Regling, has travelled to Beijing for talks about a possible contribution, but China has so far made no firm commitment to provide financial assistance for the troubled eurozone.

Europe has been discussing with China and other investors how to structure a special purpose investment vehicle and is exploring the possibility of linking it to the IMF.

"We are all in it together and our fortune will rise or fall together," said Lagarde, fresh from a visit to Russia where she warned Moscow against complacency, given the budget crises in eurozone states.

"Asia is not immune. Whether it is the trade channel or whether it is the financial sector which can operate as a crisis accelerator, Asia needs to be prepared."

Lagarde added to pressure on Beijing for a faster appreciation in the yuan, saying that while China was on the "right path" in terms of boosting domestic demand, a stronger Chinese currency "in real effective terms" was needed.

The United States and Europe -- major buyers of Chinese products -- have accused Beijing of deliberately keeping its currency undervalued to give its exporters an unfair advantage. Beijing has rejected the charges.

At the G20 summit last week, China pledged to promote greater flexibility in the currency, but analysts do not expect to see a dramatic change in the value of the yuan given the importance of exports to the Chinese economy.

A move to help developed European countries out of the current crisis would be a hard sell for leaders of a country where millions of people still live in poverty, and inflation and housing costs are straining household budgets.

China has also been burned before on risky overseas investment. It bought stakes in investment bank Morgan Stanley and asset management firm Blackstone only to see values collapse in the 2008 global financial crisis.

The losses led to severe criticism of the investment choices made by the $400 billion sovereign wealth fund -- China Investment Corp (CIC) -- only a year after it was established in 2007.

At the weekend, a top official at the CIC accused Europe of "indolence".

Jin Liqun, chairman of the board of supervisors of the fund, said in an interview with Al-Jazeera that Beijing would consider investing in Europe but any decision would be based on likely investment returns.

Lagarde is due to brief the press about her visit on Thursday, before leaving for Japan.

Related Links
The Economy




.
.
Get Our Free Newsletters Via Email
...
Buy Advertising Editorial Enquiries


HSBC logs surging net profit, warns of 'headwinds' in sector
London (AFP) Nov 9, 2011 - Global bank HSBC said Wednesday its third-quarter net profit soared on a large accounting gain but underlying earnings sank as the group warned of "significant headwinds" for the sector.

Profits after taxation rallied 66 percent to $5.22 billion (3.79 billion euros) in the three months to September, reflecting a revaluation of its debt, compared with net profit of $3.15 billion in the same period 2010.

However, Europe's biggest bank added in a results statement that underlying pretax profits slumped 35 percent to about $3.0 billion as revenues dropped and the bank's bad loans rose in the United States.

"The (banking) sector faces significant headwinds," HSBC chief executive Stuart Gulliver said in the earnings release.

"The continuing macroeconomic, regulatory and political uncertainty, particularly in Europe, adversely affected our industry's performance in the quarter ... Against this backdrop, HSBC remains resilient, with a strong balance sheet and robust liquidity," he said.

Asia-focused HSBC added that its exposure to the debt of weak eurozone states Greece, Ireland, Italy, Portugal and Spain stood at $5.5 billion at the end of the third quarter, down from $8.2 billion on June 30.

The bank's share price slumped 5.04 percent to 510.40 pence on London's FTSE 100 index, which finished down 1.92 percent at 5,460.38 points -- although equities were down across the board on eurozone debt crisis worries.

"HSBC continues to be better placed than most European banks but its third-quarter results are a reminder that even HSBC is not insulated from various headwinds bufetting economies and markets in Europe, the US and Asia," CreditSights analysts said in a note to clients.

HSBC said its core Tier One capital ratio hit 10.6 percent by the end of the third quarter -- above the 9.0 percent now demanded by regulators.

To prevent a repeat of the 2008-2009 global financial crisis when governments were forced to bail out the banks, regulators agreed in 2010 on Basel III rules requiring lenders to strengthen their capital reserves to 7.0 percent.

In addition, regulators decided in 2011 to impose additional rules on the world's biggest banks, by asking them to hold 1.0 to 2.5 percentage points more in core reserves, on top of the 7.0 percent required for all banks.

HSBC, meanwhile, is undergoing major changes under Gulliver, who became chief executive in January.

He plans to axe 30,000 posts by 2013 and create another 15,000 jobs in emerging markets over roughly the same period as part of plans to save $2.5-3.5 billion in costs by 2013.

HSBC also recently agreed to sell its US credit card and retail services business to Capital One Financial Corp. in a deal worth $32.7 billion.

Founded in Hong Kong and Shanghai in 1865, HSBC sees Asia as its most important region although it remains headquartered in London. More than a third of its current workforce of about 300,000 are based in Asia.

"Despite numbers which have beaten estimates on an accounting adjustment, the shares have fallen foul of high expectations," noted Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.



.

. Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle



POLITICAL ECONOMY
China's October inflation slows to 5.5%
Beijing (AFP) Nov 9, 2011
China's inflation slowed sharply in October as food prices fell, official data showed Wednesday, fuelling expectations the government will relax its grip on bank lending and property purchases. The country's consumer price index - a key gauge of inflation - rose 5.5 percent year-on-year, the National Bureau of Statistics said in a statement, marking the slowest pace since May when the infl ... read more


POLITICAL ECONOMY
Tokyo city starts radiation tests on food in shops

Social media use soars in flood-hit Thailand

Current Training Programs May Not Prepare Firefighters to Combat Stress

Japan govt hands $11.5 bln aid to TEPCO: reports

POLITICAL ECONOMY
Adobe pulls plug on Flash for mobile

Electronics set to power US holiday sales: report

Tying atomic threads in knots may produce material benefits

GMV Awarded Contract For Paz Satellite Control Center

POLITICAL ECONOMY
Geologists find ponds not the cause of arsenic poisoning in India's groundwater

Crop diversity myths persist in media

NOAA designates critical habitat for black abalone

Swimming Jellyfish May Influence Global Climate

POLITICAL ECONOMY
Peatland carbon storage is stabilized against catastrophic release of carbon

New webcam allows world to watch live polar bear migration

Campaigners push for vast Antarctic marine reserve

A Crack in the Pine Island Glacier Ice Shelf

POLITICAL ECONOMY
Peru's Congress approves 10-year GMO ban

African farmers struggle to fund green projects

Cultural thirst drives China's high-end tea boom

Asia's largest wine fair kicks off in Hong Kong

POLITICAL ECONOMY
More than 500 die in Thai floods

Arabian Sea tropical cyclones are intensified by air pollution

Floods show what lies ahead for sinking Bangkok

US state of Oklahoma rattled in series of quakes

POLITICAL ECONOMY
Hitting the bottle to solve Nigeria's housing problem

China denies abuses in Zambian mines

Kenya claims Somali rebels receive third weapons airdrop

Chinese firms accused of ignoring Zambian workers' rights

POLITICAL ECONOMY
The benefits of being the first to settle

Human skin begins tanning in seconds, and here's how

Jawbone found in England is from the earliest known modern human in northwestern Europe

Increased use of bikes for commuting offers economic, health benefits


.

The content herein, unless otherwise known to be public domain, are Copyright 1995-2011 - Space Media Network. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement