ARGENTINA
President to negotiate debt
Investors betting that talks between President Cristina Fernandez and holders of the nation’s defaulted bonds from 2001 will avert a second default in 13 years may be headed for disappointment, TCW Group Inc said. For the first time in a decade, Fernandez agreed on Friday to negotiate with holdout creditors from the nation’s US$95 billion default. The dispute has hit markets since the US Supreme Court on Monday last week left intact a ruling requiring Argentina to pay the investors in full. On Monday next week, the country has an interest payment due on its restructured bonds that would be blocked if the holdouts remain unpaid. The country’s bonds rallied 8.8 percent on average after Fernandez’s comments.
ECONOMY
Official sees bust bubbling
German Federal Minister of Finance Wolfgang Schaeuble on Friday said that central banks’ efforts to inject liquidity into the financial system are feeding asset bubbles that could burst and cause the next crisis. Schaeuble also rejected a recommendation by the IMF that the European Central Bank should resort to large-scale bond purchases — of the kind the US Federal Reserve is making — to help growth and protect the 18-nation eurozone from deflation. “We do not have too little liquidity in financial markets, but rather too much,” Schaeuble said after a meeting of European finance ministers in Luxembourg. “All experience of economic history tells us that such situations lead to bubbles,” he added, saying that the low interest rates in developed economies are pushing investors into riskier markets including real estate.
JAPAN
Panasonic TV plant for sale
Electronics giant Panasonic plans to sell the plant where it first got into the television business half a century ago as it shifts away from the money-losing division, a report said yesterday. The company plans to sell 60 percent of the plant’s 120,000m2 site in Ibaraki, near the western city of Osaka, to major homebuilder Daiwa House by early next year, the business daily Nikkei said. The price tag is estimated at ¥10 billion (US$97.9 million). Daiwa House is expected to build a logistics facility at the site and lease it to parcel-delivery company Yamato Holdings Co, Nikkei said. The plant started producing cathode-ray tube sets in 1958 and helped turn Matsushita Electric Industrial — as Panasonic was then known — into a global electronics company.
SPAIN
Tax cuts pledged, bashed
Spain said on Friday that it would cut income tax and reduce corporate tax to 25 percent for large companies by 2016, aiming to speed up a nascent economic recovery. The cuts are part of a proposed bill that is Prime Minister Mariano Rajoy’s main structural reform this year and also included reducing tax breaks to lift the country’s tax revenue, currently one of the lowest in Europe. The government said the plan would boost GDP by 0.55 percent over the next two years, but it has been roundly criticized by unions and economists over the past few months. Unions say tax cuts are merely a populist measure ahead of elections next year, while some economists say growth is not yet strong enough to justify tax cuts and the move risks hurting the government’s ability to meet its deficit targets.
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