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World Business Quick Take

■ Macroeconomics
Fed helping China: analyst
The US Federal Reserve is doing China a favor by raising interest rates and thus curbing the spending of the American consumer, said Morgan Stanley's chief economist, Stephen Roach, writing in the Financial Times. The move will help China reduce its over-reliance on exports to fuel its economy, because a third of its overseas shipments go to the US, he said. The Fed may be forced to double federal funds rates, to as much as 5.5 percent, as inflation accelerates amid concerns about the US current account deficit and a real-estate bubble, the economist said. China's attempts to slow property markets have so far not had much effect, Roach said. If US consumers slow their buying of imported goods from China, that will help government leaders as they try to better balance the economy away from an over-reliance on exports, he wrote.

■ Electronics
Creative's profits slump
Singapore's NASDAQ-listed Creative Technology Ltd yesterday reported sharply lower fiscal third-quarter earnings as it attempted to catch Apple Computer Inc in the red-hot MP3 market. Net profit for the three months ended March 31 slumped 72 percent to US$15.9 million, from US$57 million in the same period a year ago. Creative's revenue in the third quarter grew by 65 percent year on year to US$333.8 million from US$201.8 million a year ago. In a bid to grow its No. 2 position in the MP3 market, Creative last year embarked on a risky strategy of cutting prices, increasing advertising spending to US$100 million and offering retailers rebates for selling its Zen Micro and other MP3 products. "This was our second consecutive quarter of selling 2 million MP3 players, an achievement that further positions us as an industry leader in the explosive MP3 market," Creative chairman Sim Wong Hoo said. Apple said last week it shipped 5.3 million iPods, ringing up US$1 billion in sales in the January-March quarter.

■ Banking
HSBC redeploys executive
HSBC Holdings PLC said yesterday it has appointed the head of its China business to be vice president of the Bank of Communications, China's fifth largest, which plans stock listings in Hong Kong and Shanghai soon. The appointment was expected as the two banks agreed HSBC would send an executive over to take up a senior role at the Bank of Communications after it sold a 20 percent stake to HSBC last August. HSBC said the Bank of Communications' board approved the appointment of Dicky Yip, chief executive for China business of Hongkong & Shanghai Banking Corp, on April 5, but it was being verified by the China Banking Regulatory Commission.

■ Telecoms
Ericsson's earnings soar
Swedish telecommunications giant Ericsson yesterday reported an unexpectedly strong rise in profits in the first quarter, but warned that growth of the mobile phone market would be modest this year. Ericsson's net profit came in at 4.6 billion kronor (US$654 million) in the first quarter, against 2.6 billion a year earlier, a rise of 77 percent. Pre-tax profit was 6.7 billion kronor against 3.7 billion kronor earlier, and well ahead of the 5.8 billion kronor forecast from sector analysts in financial markets. Earnings per share were 0.29 kronor, up from 0.16, and sales grew to 31.5 billion kronor from 28.1 billion, against market expectations of 30.3 billion.

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