MACROECONOMICS
India mulls holding company
The Indian government is considering a demand for a holding company for its stakes in 27 state-owned banks, a move that may make it easier to raise capital as they struggle with their lowest profitability in at least nine years. “We will take a decision at a later stage,” Indian Secretary of Finance Hasmukh Adhia told reporters in Pune, near Mumbai, where a two-day brainstorming session ended yesterday after officials from the government, the regulator and the banks discussed steps to improve the financial health of the lenders. Leaders including Indian Prime Minister Narendra Modi and Reserve Bank of India Governor Raghuram Rajan joined the unprecedented conclave as they sought to address declining profitability, mounting bad loans and poor access to services in rural areas.
TURKEY
Foreign reserve ratios raised
The central bank increased the foreign-currency reserve ratios required of banks and financing companies, after a month in which the lira was among the world’s worst-performing emerging-markets currencies. The revision announced today would add about US$3.2 billion to the central bank’s foreign currency reserves, the bank said in a statement on its Web site. The average reserve requirement ratio for foreign currency, which currently stands at 11.7 percent, is to rise to 12.8 percent, it said. Central Bank of Turkey Governor Erdem Basci on Dec. 10 in Ankara said that the bank would take measures against excessive short-term foreign currency borrowing by domestic banks. The IMF had urged the country to raise reserve requirements for foreign-currency liabilities in a report on Dec. 5, saying that reducing bank incentives to fund themselves in foreign currency would limit the risk of a balance-of-payments crisis.
MACROECONOMICS
UK caps redundancy pay
The ruling Conservatives on Saturday said they would cap redundancy payments for public-sector workers at £95,000 (US$145,588) if they win a general election set for May 7, as part of their drive to rein in state spending. Official forecasts suggest 1 million government jobs are set to go over the course of the next five-year parliament. The Conservative Party and their Liberal Democrat coalition partners have already cut about 400,000 public sector jobs since taking power in 2010 to reduce the country’s large budget deficit. The Uk’s Exchequer Secretary to the Treasury Priti Patel, in an article in the Daily Telegraph newspaper, said the Conservative Party would make an election manifesto pledge to cap the pay-offs to public-sector workers and would introduce legislation in the new parliament.
FOOD INDUSTRY
Olive oil in short supply
Forget scouring this month’s sales for clothes and electrical goods and cheap Christmas wrapping paper for next year — the thing to be stocking up on this month is olive oil. A dreadful 12 months for olives in several major producing countries has led to last year being labeled a “black year” for the industry and to the doubling of the bulk cost of olive oil in some areas. Unusual weather and a proliferation of insects and bacterial blight have devastated the harvest in several countries. Analysts have been predicting a bad year for olive oil since the summer, after it became clear that hot late-spring weather in Spain — the world’s largest producer of olives — would have a key impact on autumn harvests.
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
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
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
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