Investment bank Goldman Sachs on Wednesday warned of the potentially damaging effect for stock market investors of high oil prices, dubbing the process "the revenge of the old economy."
Peter Oppenheimer, the bank's head of European strategy, made one of the first attempts to place a precise estimate of the effect on stock markets of persistently high oil prices. He warned that a 20 percent rise in oil could result in a 15 percent knock to equity markets if other factors remain neutral.
He did not forecast that it would happen -- he still thinks a sideways movement in European stock markets is most likely -- but warned that oil price risks are "skewed significantly to the upside," especially if there is further disruption to existing production.
Jeffrey Currie, Goldman's European head of commodities, added that "a deep fundamental shift" has taken place in the oil market in the past three to four weeks. It is not just short-term spot oil prices that have risen, but prices for oil for delivery in 10 years' time have risen to over US$35 a barrel.
"What that is telling you is that there is potential for sustainability of these higher prices," Currie said.
He said the seeds of the crisis were sown over the past two decades as poor rates of return of energy-related investments persuaded investors to switch capital into the "new economy" industries such as telecoms and technology.
"We are not arguing that we are running out of oil; there are substantial re-serves," Currie said. "What we are running out of is the infrastructure to access, supply and deliver that oil. The last time we build infrastructure on that scale was the 1970s."
He estimates that industry investment now needs to run at US$200 billion a year.
South Korea has adjusted its electronic arrival card system to no longer list Taiwan as a part of China, a move that the Ministry of Foreign Affairs said would help facilitate exchanges between the two sides. South Korea previously listed “Taiwan” as “Taiwan (China)” in the drop-down menus of its online arrival card system, where people had to fill out where they came from and their next destination. The ministry had requested South Korea make a revision and said it would change South Korea’s name on Taiwan’s online immigration system from “Republic of Korea” to “Korea (South),” should the issue not be
The Legislative Yuan’s Finance Committee yesterday approved proposed amendments to the Amusement Tax Act (娛樂稅法) that would abolish taxes on films, cultural activities and competitive sporting events, retaining the fee only for dance halls and golf courses. The proposed changes would set the maximum tax rate for dance halls and golf courses at 50 and 20 percent respectively, with local governments authorized to suspend the levies. Article 2 of the act says that “amusement tax shall be levied on tickets sold or fees charged by amusement places, facilities or activities” in six categories: “Cinema; professional singing, story-telling, dancing, circus, magic show, acrobatics
Tainan, Taipei and New Taipei City recorded the highest fines nationwide for illegal accommodations in the first quarter of this year, with fines issued in the three cities each exceeding NT$7 million (US$220,639), Tourism Administration data showed. Among them, Taipei had the highest number of illegal short-term rental units, with 410. There were 3,280 legally registered hotels nationwide in the first quarter, down by 14 properties, or 0.43 percent, from a year earlier, likely indicating operators exiting the market, the agency said. However, the number of unregistered properties rose to 1,174, including 314 illegal hotels and 860 illegal short-term rental
INFLATION UP? The IMF said CPI would increase to 1.5 percent this year, while the DGBAS projected it would rise to 1.68 percent, with GDP per capita of US$44,181 The IMF projected Taiwan’s real GDP would grow 5.2 percent this year, up from its 2.1 percent outlook in January, despite fears of global economic disruptions sparked by the US-Iran conflict. Taiwan’s consumer price index (CPI) is projected to increase to 1.5 percent, while unemployment would be 3.4 percent, roughly in line with estimates for Asia as a whole, the international body wrote in its Global Economic Outlook Report published in the US on Monday. The figures are comparatively better than the IMF outlook for the rest of the world, which pegged real GDP growth at 3.1 percent, down from 3.3 percent
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