Volvo to buy Dongfeng stake
Volvo AB agreed to pay 5.6 billion yuan (US$890 million) for a minority stake in the commercial vehicle unit of China’s Dongfeng Motor Group Co (東風汽車), a transaction the Swedish company said will make it the world largest maker of heavy-duty trucks. Volvo, the world’s second-biggest truck manufacturer, will hold a 45 percent share of the unit, which will make and sell Dongfeng-brand trucks, buses and so-called special-purpose vehicles, the Gothenburg, Sweden-based company said in a statement before a press conference in Beijing on Saturday. “China is the world’s largest truck market with a total market for heavy trucks equivalent to the European and North American markets combined,” chief executive officer Olof Persson said at the press conference. The venture will improve Volvo’s position in the Chinese market and help it to become more globally competitive, he said.
Central bank rate cut likely
The central bank is expected to cut interest rates this week for the first time in nine months in response to the government’s recent economic reform spree and slowing inflation, economists say. Policymakers are “clearly teed up for rate cuts,” banking on a further easing of inflation in coming quarters, lower government borrowing and more pro-market reforms, HSBC economist Leif Eskesen said. However, those hoping the Reserve Bank of India will announce a big cut following its policy-setting meeting tomorrow are likely to be disappointed. The bank “is likely to tread very carefully — given lingering inflation risks,” Eskesen added. Like other economists, he said he expected the bank to limit any rate cut to 25 basis points. The bank’s key repo rate — at which it lends to commercial banks — now stands at 8 percent.
Russia puts in US$7bn bill
Russian giant Gazprom has slapped state gas firm Naftogaz with an unexpected US$7 billion bill for gas it had not bought last year, a source from the firm said on Saturday. Media reports said the amount claimed by Russia’s state natural gas supplier corresponded with a quantity of gas Ukraine should have imported last year, according to the contract between the two sides. A Naftogaz source, who did not wish to be named, confirmed that the company had received the bill, but said the nation had already settled all payments for gas imported last year. Russia has twice halted gas deliveries to Europe across Ukraine in recent years over its neighbor’s outstanding debts and refusal to agree to higher gas prices.
Indonesia key to recovery
Indonesia may hold the key to a US$1 trillion injection into the global economy. That is how much the WTO believes is riding on talks later this year in Bali, when trade ministers hope to cut through some of the red tape that slows global commerce. Indonesian Foreign Minister Marty Natalegawa told reporters that failure is not an option and that a strong effort is being put in to ensure that the WTO meeting in Bali is “crowned with success.” Trade ministers from 24 nations met on Saturday on the sidelines of the World Economic Forum in Davos, Switzerland. Afterward, Swiss Economic Minister Johann Schneider-Ammann said the group agreed they could reach a tentative agreement on some of the key elements of a global trade deal this summer, in preparation for the ministerial talks in Bali in December.