FTSE ekes out gains as WPP gets Publicis boost

Updated 13 November 2012
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FTSE ekes out gains as WPP gets Publicis boost

LONDON: Britain's FTSE 100 edged higher in choppy trade early yesterday with WPP receiving a boost from French peer Publicis but broader gains were capped by continued worries over the US budget deficit and Greece's debt crisis.
By 0957 GMT, the FTSE 100 was up 12.48 points, or 0.2 percent, at 5,782.16.
Volumes were a paltry 7 percent of their already weak 90-day daily average, reflecting the unwillingness of investors to take up fresh positions in equities amid weak earnings and global macro economic uncertainty.
The index bounced off an intraday low on Friday, having probed the 200 day moving average level around 5,730 but the market continues to trade in a tight range of barely 20 points, amid.
"Greece has become a feature recently, although compared to a year ago overall it is a more positive space ... but the real problem is the US fiscal cliff and whether there is going to be gridlock or if it is going to be resolved," said Richard Hunter, head of equities at stockbroker Hargreaves Lansdown.
The outcome of talks over the fiscal cliff - a $ 600 billion package of tax increases and spending cuts that will take effect in January if there is no long-term pact to cut the budget deficit - is a major uncertainty for markets.
"It is difficult to see a rally into the year-end and unless the US politician decide to sort out the US fiscal cliff this side of Christmas it is difficult to see where another positive catalyst is coming from," he said.
There was little evidence that the appetite was there among investors to propel riskier assets, stocks that tend to outperform when economic condition improves, higher.
Miners shed 0.6 percent as weak GDP data from Japan, uncertainty over the euro zone and the looming US fiscal cliff took the sheen off slightly better trade data from China.
Platinum producer Anglo American fell 1.1 percent blighted by strikes in South Africa, which forced mining peer Lonmin to go ahead with a cash call to slash its debt and fund a recovery, after being hit by six weeks of strikes.
But it was defensively perceived stocks, companies that tend to outperform in times of economic uncertainty that led the gainers.
British American Tobacco rose 0.5 percent, while heavyweight telecoms firm Vodafone, liked for its dividend attractions, added 0.3 percent.
Car insurance firm Admiral, up 2.6 percent, continued its recent resurgence boosted by the firm's dividend yield of over 9 percent.
WPP RISES
FTSE 100 advertising firm WPP was among the top gainers, rising 2 percent after French peer Publicis PUBP.PA said on Sunday that demand for advertising rebounded in October.
Earnings have been capricious at best with 43 percent of European companies missing earnings expectations so far in the current quarter, according to Thomson Reuters Starmine data.
Aero electronics group Cobham fell 7.6 percent after it said it expected its revenues to fall due to increasing pressures on the defense budgets of the US. Industrial services provider Cape Plc slumped more than 30 percent after a profit warning.
JP Morgan said that while earnings growth forecasts for 2013 have started to nosedive it thinks there is much more to go.
"Our call remains for range trading at best into year end - "travel and arrive", to be followed by a break lower in Q1," JP Morgan said in a note.


Malaysia reviews China infrastructure plans

Malaysia’s former PM Najib Razak (AFP)
Updated 18 June 2018
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Malaysia reviews China infrastructure plans

  • Malaysia's scandal-mired former PM Najib Razak signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.
  • New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

KUALA LUMPUR: Malaysia has been a loyal partner in China’s globe-spanning infrastructure drive, but its new government is to review Beijing-backed projects, threatening key links in the much-vaunted initiative.

Kuala Lumpur’s previous regime, led by scandal-mired Najib Razak, had warm ties with China, and signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.

But the long-ruling coalition was unexpectedly voted out last month by an electorate alienated by allegations of corruption and rising living costs.

Critics have said that many agreements lacked transparency, fueling suspicions they were struck in exchange for help to pay off debts from the financial scandal which ultimately helped bring down Najib’s regime.

The new government, led by political heavyweight Mahathir Mohammed, has pledged to review Chinese deals seen as dubious, calling into question Malaysia’s status as one of Beijing’s most cooperative partners in its infrastructure push.

China launched its initiative to revive ancient Silk Road trading routes with a global network of ports, roads and railways — dubbed “One Belt, One Road” —  in 2013.

Malaysia and Beijing ally Cambodia were seen as bright spots in Southeast Asia, with projects in other countries often facing problems, from land acquisition to drawn-out negotiations with governments.

“Malaysia under Najib moved quickly to approve and implement projects,” Murray Hiebert, a senior associate from think-tank the Center for Strategic and International Studies, told AFP.

Chinese foreign direct investment into Malaysia stood at just 0.8 percent of total net FDI inflows in 2008, but that figure had risen to 14.4 percent by 2016, according to a study from Singapore’s ISEAS-Yusof Ishak Institute.

However, Hiebert said it was “widely assumed” that Malaysia was striking quick deals with China in the hope of getting help to cover debts from sovereign wealth fund 1MDB.

Najib and his associates were accused of stealing huge sums of public money from the investment vehicle in a massive fraud. Public disgust at the allegations — denied by Najib and 1MDB — helped topple his government.

Malaysia’s first change of government in six decades has left Najib facing a potential jail term.

New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

The project was in its early stages and had not yet received any Chinese funding as part of “One Belt, One Road.” But Chinese companies were favorites to build part of the line, which would have constituted a link in a high-speed route from China’s Yunnan province to trading hub Singapore, along which Chinese goods could have been transported for export.

Work has already started in Malaysia on another line seen as part of that route, with Chinese funding — the $14-billion East Coast Rail Link, running from close to the Thai border to a port near Kuala Lumpur.

Mahathir has said that agreement is now being renegotiated.

Other Chinese-funded initiatives include a deep-sea port in Malacca, near important shipping routes, and an enormous industrial park.

It is not clear yet which projects will be amended but experts believe axing some will be positive.

Alex Holmes, Asia economist for Capital Economics, backed canceling some initiatives, citing “Malaysia’s weak fiscal position and that some of the projects are of dubious economic value.”

The Chinese foreign ministry did not respond to request for comment.

Decoder

What is the "One Belt, One Road" initiative?

The “One Belt, One Road” initiative, started in 2013, has come to define the economic agenda of President Xi Jinping. It aims to revive ancient Silk Road trading routes with a network of ports, roads and railways.