Chinese shares closed down 0.95 percent on Tuesday as China Eastern Airlines shares fell despite the announcement of an expanded government bailout plan, dealers said.
The benchmark Shanghai Composite Index, which covers A and B shares, ended down 17.57 points at 1,832.91 on turnover of 37.9 billion yuan (5.5 billion dollars).examda.com
The Shanghai A-share index lost 18.51 points, or 0.95 percent, to 1,924.55 on turnover of 37.8 billion yuan, while the Shenzhen A-share index was down 5.10 points, or 0.86 percent, at 589.21 on turnover of 20.7 billion yuan.
1/19/2009
The worst predictions about 2008
Here are some of the worst predictions that were made about 2008. Savor them -- a crop like this doesn't come along every year.
1. "A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!" -- Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008
At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.
2. AIG (NYSE:AIG) "could have huge gains in the second quarter." -- Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008
AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.examda.com
3. "I think this is a case where Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE:FNM) are fundamentally sound. They're not in danger of going under I think they are in good shape going forward." -- Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008
Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.
4. "The market is in the process of correcting itself." -- President George W. Bush, in a Mar. 14, 2008 speech
For the rest of the year, the market kept correcting and correcting and correcting.
5. "No! No! No! Bear Stearns is not in trouble." -- Jim Cramer, CNBC commentator, Mar. 11, 2008
Five days later, JPMorgan Chase (NYSE:JPM) took over Bear Stearns with government help, nearly wiping out shareholders.
6. "Existing-Home Sales to Trend Up in 2008" -- Headline of a National Association of Realtors press release, Dec. 9, 2007
On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million -- down 11% from a year earlier -- in the worst housing slump since the Depression.
7. "I think you'll see (oil prices at) $150 a barrel by the end of the year" -- T. Boone Pickens, June 20, 2008
Oil was then around $135 a barrel. By late December it was below $40.
8. "I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system." -- Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008
In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup (NYSE:C) needed an even bigger rescue in November.examda.com
9. "In today's regulatory environment, it's virtually impossible to violate rules." -- Bernard Madoff, money manager, Oct. 20, 2007
About a year later, Madoff -- who once headed the Nasdaq Stock Market -- told investigators he had cost his investors $50 billion in an alleged Ponzi scheme.
10. A Bound Man: Why We Are Excited About Obama and Why He Can't Win, the title of a book by conservative commentator Shelby Steele, published on Dec. 4, 2007.
Mr. Steele, meet President-elect Barack Obama.
1. "A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!" -- Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008
At the time of the prediction, the Dow Jones industrial average was at 12,300. By late December it was at 8,500.
2. AIG (NYSE:AIG) "could have huge gains in the second quarter." -- Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008
AIG wound up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.examda.com
3. "I think this is a case where Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE:FNM) are fundamentally sound. They're not in danger of going under I think they are in good shape going forward." -- Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008
Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.
4. "The market is in the process of correcting itself." -- President George W. Bush, in a Mar. 14, 2008 speech
For the rest of the year, the market kept correcting and correcting and correcting.
5. "No! No! No! Bear Stearns is not in trouble." -- Jim Cramer, CNBC commentator, Mar. 11, 2008
Five days later, JPMorgan Chase (NYSE:JPM) took over Bear Stearns with government help, nearly wiping out shareholders.
6. "Existing-Home Sales to Trend Up in 2008" -- Headline of a National Association of Realtors press release, Dec. 9, 2007
On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million -- down 11% from a year earlier -- in the worst housing slump since the Depression.
7. "I think you'll see (oil prices at) $150 a barrel by the end of the year" -- T. Boone Pickens, June 20, 2008
Oil was then around $135 a barrel. By late December it was below $40.
8. "I expect there will be some failures. I don't anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system." -- Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008
In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup (NYSE:C) needed an even bigger rescue in November.examda.com
9. "In today's regulatory environment, it's virtually impossible to violate rules." -- Bernard Madoff, money manager, Oct. 20, 2007
About a year later, Madoff -- who once headed the Nasdaq Stock Market -- told investigators he had cost his investors $50 billion in an alleged Ponzi scheme.
10. A Bound Man: Why We Are Excited About Obama and Why He Can't Win, the title of a book by conservative commentator Shelby Steele, published on Dec. 4, 2007.
Mr. Steele, meet President-elect Barack Obama.
Overseas lenders petition for tax delay
A group of overseas banks have asked the Chinese government to delay a newly imposed interest tax on overseas borrowings, although the tax's levy is in line with international practice, media reports said.
In a petition letter, 36 overseas lenders said the withholding tax on interest payments on all loans to mainland banks from overseas creates an excessive burden. The petitioners included HSBC, Citibank, Standard Chartered and Bank of East Asia.
In the petition signed on Dec 23, banks asked that they only be required to pay the withholding tax incurred after Dec 4 with the back payments put on hold. The tax is retroactive to Jan 1 this year.
However, an unnamed overseas banking source said the tax is also levied in other countries and regions. So overseas banks on the mainland must adhere to the law if the government does not approve the delay, Southern Metropolitan reported yesterday.
The Guangzhou-based newspaper said the mainland government levied a similar tax in mid-1997 but suspended it by that year's end after intense lobbying from overseas banks.examda.com
On Dec 12, the mainland revived the tax in line with its latest corporate income tax law, which charges about 10 percent in withholding tax on income from interest. The law took effect on Jan 1 this year.
Banking professionals estimated the tax would add 3 to 5 percent to banks' overseas borrowings costs.
That concerns overseas banks on the mainland, which are more reliant on overseas sources, such as their parent companies, for borrowings.
Central University of Finance and Economics professor Guo Tianyong said it would be unfair to domestic banks if only overseas lenders enjoyed lower overseas borrowings costs, as the mainland's interest rate is much higher than overseas rates.
In a petition letter, 36 overseas lenders said the withholding tax on interest payments on all loans to mainland banks from overseas creates an excessive burden. The petitioners included HSBC, Citibank, Standard Chartered and Bank of East Asia.
In the petition signed on Dec 23, banks asked that they only be required to pay the withholding tax incurred after Dec 4 with the back payments put on hold. The tax is retroactive to Jan 1 this year.
However, an unnamed overseas banking source said the tax is also levied in other countries and regions. So overseas banks on the mainland must adhere to the law if the government does not approve the delay, Southern Metropolitan reported yesterday.
The Guangzhou-based newspaper said the mainland government levied a similar tax in mid-1997 but suspended it by that year's end after intense lobbying from overseas banks.examda.com
On Dec 12, the mainland revived the tax in line with its latest corporate income tax law, which charges about 10 percent in withholding tax on income from interest. The law took effect on Jan 1 this year.
Banking professionals estimated the tax would add 3 to 5 percent to banks' overseas borrowings costs.
That concerns overseas banks on the mainland, which are more reliant on overseas sources, such as their parent companies, for borrowings.
Central University of Finance and Economics professor Guo Tianyong said it would be unfair to domestic banks if only overseas lenders enjoyed lower overseas borrowings costs, as the mainland's interest rate is much higher than overseas rates.
China’s economy likely to accelerate in 2H of 2009
A vendor prepares Chinese knots for the upcoming Spring Festival at a wholesale market in Xiangfan, Hubei province, December 22, 2008. China’s economic growth is expected to accelerate at mid-year for a full-year figure of more than 8 percent.
BEIJING -- The ongoing financial crisis would pose further challenges for China in 2009, but economic growth would probably accelerate at mid-year for a full-year figure of more than 8 percent, according to economists quoted in a story on Thursday at Xinhuanet.com.
Zhang Yansheng, head of the international economy research institution under the National Development and Reform Commission, said expanding domestic demand in the second half would cushion the impact of plunging exports as macroeconomic measures and stimulus packages would have a further effect.
China would increase investment this year in agriculture and rural development, energy conservation and pollution control, social welfare, environmental protection, major infrastructure projects and raising living standards.
Li Yang, director of the Institute of Finance and Banking under the Chinese Academy of Social Sciences, said the economy would shake off the impact of the global economic turmoil and resume rapid development in the second half.
According to the central economic work conference held in December,rural consumption and spending on housing, cars, services and tourism would be the focus of efforts to boost domestic consumption.
Yi Gang, vice governor of the People’s Bank of China (PBOC), the central bank, said he expected domestic enterprises would draw down inventories by the end of the second quarter and purchase new production goods, which would be a signal of recovery.
Liu He, deputy director of the office for the Central Leading Group on Finance and Economy Work, said exports had been falling but credit support would keep the situation from worsening.
Officials in major world economies have taken unprecedented monetary and fiscal measures to fight the financial crisis, which would probably ease the pain in the second half.
China’s gross domestic product growth slowed to 9 percent in the first three quarters of 2008 as a result of the financial crisis, compared with 11.9 percent in all of 2007.
Exports slid 2.2 percent year-on-year in November, the first monthly decline since June 2001, and fiscal revenue recorded its first monthly decrease for 12 years in October.examda.com
Fan Jianping, chief economist at the State Information Center, said the country’s economy would continue slowing and face tougher conditions in the first half of this year.
China’s top statistician, Yao Jingyuan, said the economy was still in good shape and industrialization and urbanization were still two important powerhouses of growth.
The government urged most stimulus investment be directed into projects and construction before March, when the National People’s Congress and Chinese People’s Political Consultative Conference National Committee would be held.
"Stimulus measures would likely pay off in the second quarter of this year," said Li Jing, chairman of China Equities, JP Morgan Securities.
Measures so far included a 4 trillion yuan stimulus package, increased export tax rebates and tapping the vast rural consumer market with more government subsidies for farmers to buy home appliances.
BEIJING -- The ongoing financial crisis would pose further challenges for China in 2009, but economic growth would probably accelerate at mid-year for a full-year figure of more than 8 percent, according to economists quoted in a story on Thursday at Xinhuanet.com.
Zhang Yansheng, head of the international economy research institution under the National Development and Reform Commission, said expanding domestic demand in the second half would cushion the impact of plunging exports as macroeconomic measures and stimulus packages would have a further effect.
China would increase investment this year in agriculture and rural development, energy conservation and pollution control, social welfare, environmental protection, major infrastructure projects and raising living standards.
Li Yang, director of the Institute of Finance and Banking under the Chinese Academy of Social Sciences, said the economy would shake off the impact of the global economic turmoil and resume rapid development in the second half.
According to the central economic work conference held in December,rural consumption and spending on housing, cars, services and tourism would be the focus of efforts to boost domestic consumption.
Yi Gang, vice governor of the People’s Bank of China (PBOC), the central bank, said he expected domestic enterprises would draw down inventories by the end of the second quarter and purchase new production goods, which would be a signal of recovery.
Liu He, deputy director of the office for the Central Leading Group on Finance and Economy Work, said exports had been falling but credit support would keep the situation from worsening.
Officials in major world economies have taken unprecedented monetary and fiscal measures to fight the financial crisis, which would probably ease the pain in the second half.
China’s gross domestic product growth slowed to 9 percent in the first three quarters of 2008 as a result of the financial crisis, compared with 11.9 percent in all of 2007.
Exports slid 2.2 percent year-on-year in November, the first monthly decline since June 2001, and fiscal revenue recorded its first monthly decrease for 12 years in October.examda.com
Fan Jianping, chief economist at the State Information Center, said the country’s economy would continue slowing and face tougher conditions in the first half of this year.
China’s top statistician, Yao Jingyuan, said the economy was still in good shape and industrialization and urbanization were still two important powerhouses of growth.
The government urged most stimulus investment be directed into projects and construction before March, when the National People’s Congress and Chinese People’s Political Consultative Conference National Committee would be held.
"Stimulus measures would likely pay off in the second quarter of this year," said Li Jing, chairman of China Equities, JP Morgan Securities.
Measures so far included a 4 trillion yuan stimulus package, increased export tax rebates and tapping the vast rural consumer market with more government subsidies for farmers to buy home appliances.
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