GERMANY
GDP contracted 0.2% in Q4
Germany’s economy contracted by 0.2 percent in the fourth quarter on sagging exports and private consumption, data showed yesterday, but analysts said they expected Europe’s growth engine to pick up steam again this year. Investments, particularly in construction, were a bright spot. The seasonally adjusted data from the Statistics Office confirmed an earlier flash estimate and showed trade and private consumption subtracting 0.3 and 0.1 percentage points respectively from GDP. Exports in particular dropped 0.8 percent in the fourth quarter after growing 2.6 percent in the previous quarter. Economists put this down to weaker demand from the eurozone, which is mired in a sovereign debt crisis. “The economy was driven into the red by the decline in exports, but this was weaker than expected,” Berenberg Bank’s Christian Schulz said.
INSURANCE
AIG has record Q4 earnings
American International Group Inc (AIG), the bailed-out insurer, cited a return to “sustainable operating profit” as it booked a tax benefit that fueled record fourth-quarter earnings. AIG’s biggest unit, property-casualty insurer Chartis, and its plane-leasing business swung to operating profits in the period, the New York-based company said in a statement yesterday as it posted a net income of US$19.8 billion. The insurer is projecting that it will generate enough profit to use tax assets, tied to prior losses, that can limit future payments to the government. Shares rose above US$30 in extended trading yesterday, surpassing the average price at which the government would need to sell a majority stake to recoup its investment. The stock has closed below the break-even price on the New York Stock Exchange every day since late July. AIG’s after-tax operating income was US$1.56 billion in the fourth quarter, compared with a loss of US$2.21 billion a year earlier, according to the statement.
COMMODITIES
Oil rises on economy, Iran
Oil prices were higher in Asian trade yesterday, supported by buoyant economic data from the US and Germany, as well as concerns over Iran’s nuclear program, analysts said. New York’s main contract, West Texas Intermediate light sweet crude for April delivery, rose US$0.72 to US$108.55, while Brent North Sea crude for April gained US$0.37 to US$123.99 in the afternoon. “The level oil prices have risen to this week is quite unexpected,” said Ken Hasegawa, energy desk manager at Newedge brokerage in Japan. Positive economic news from the US and Germany, as well as “the continuing tension in Iran, are factors supporting oil prices,” he said.
EMPLOYMENT
US unemployment steady
New US claims for unemployment benefits were unchanged last week, holding at the lowest level since the early days of the 2007-2009 recession and giving a fresh sign the battered labor market was healing. Workers filed 351,000 initial claims for state unemployment benefits, the US Department of Labor said on Thursday. “It’s broadly in line with recent US data showing a gradually improving economic backdrop,” said Omer Esiner, a market analyst at Commonwealth Foreign Exchange in Washington. The last two weekly readings have been the lowest since March 2008. With weekly claims nearing levels last seen before the recession that began in December 2007, economists said employers might be close to ending a long cycle of heavy layoffs, laying the ground for more hiring.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure