theSun | MONDAY AUGUST 3 2009
business
KL market summary
JULY 31, 2009
INDICES CHANGE
FBMEMAS 7919.79
FBMKLCI 1174.90
INDUSTRIAL 2575.98
CONSUMER PROD 349.49
INDUSTRIAL PROD 89.41
CONSTRUCTION 227.54
TRADING/SERVICES 155.23
FINANCE 9555.23
PROPERTIES 752.21
PLANTATION
MINING
5609.60
332.34
FBMSHA 8107.56
FMB2BRD 5291.32
TECHNOLOGY 17.09
TURNOVER VALUE
1.257bil RM1.948bil
China is rich abroad
because of worker bulge
GENEVA: China can finance the US
economy because its workforce is large
relative to children and old people, a
new analysis suggests, trying to solve
a mystery why Beijing is a major net
creditor rather than a borrower as
emerging economies usually are.
And this strong ratio of workers
to dependants is set to last for at least
15 years although the net benefit for
China will decline as the burden of
old people creeps up while the cost of
children remains steady.
The personal research by econo-
mists writing in a publication of the
Basel-based Bank for International
Settlements also implies that the work-
force is skewed, with young people
who have left a child-bulge bracket
up to the age of 15 now boosting the
workforce.
And they are saving money sub-
stantially.
Economists Guonan Ma and Zhou
Haiwen argue that China’s savings
glut can in part be explained by its low
“youth dependency ratio,” that is, the
ratio of those below the age of 15 to the
working age population.
A country’s “old-age dependency
ratio,” by contrast, compares the per-
centage of pensioners over 65 to the
work force.
“One striking feature of China’s
demographic transition during 1985-
2007 is that its youth dependency ratio
fell by half while its old-age depend-
ency increased only slightly, leaving
the overall dependence unchanged,”
the report said.
The suggestion that demographics
are a hidden key to why China is able
to buy assets around the world, holding
huge amounts of US government debt,
casts surprising light on an issue at the
heart of long-standing tension between
briefs
Talks collapse at troubled
South Korean auto firm
SEOUL: Talks aimed at ending a prolonged
industrial dispute at South Korea’s trou-
bled auto firm Ssangyong Motor collapsed
yesterday as management pulled out of
negotiations.
Managers said in a statement that
three days of talks had failed due to the
union’s insistence on “unacceptable”
demands for no layoffs and no lawsuits
over their two-month occupation of the
firm’s factory.
Hundreds of workers, armed with
metal pipes, slingshots and inflammable
15
Bourse poised to scale new high
+83.13
+14.24 SHARE prices on Bursa Malaysia are set to at- of Permodalan Nasional Bhd in managing its unit
+38.98 tempt to scale new high this week with the launch trusts.
+4.61 of Amanah Saham 1Malaysia (AS 1Malaysia) “I expect AS 1Malaysia to be fully-subscribed
+0.18 among the factors boosting confidence, dealers and the funds will be a boost to the stock
+4.08 said. market,” he said.
+1.65 They said the FTSE Bursa Malaysia Kuala He said the overall trend this week would
+77.63
+5.39
Lumpur Composite Index (FBM KLCI) is likely to also be influenced by the overseas trend, in
test the 1,183-point level with local and foreign particular the US. “Investors will be looking at
+10.77
+6.08 factors contributing to the upside. the US economy’s health for direction,” he said. EXCHANGE RATES July 31, 2009
+79.20 A dealer said market optimism is boosted Newly-listed integrated offshore crane
+57.03 by expectation of more liquidity flowing into the services provider, Handal Resources Bhd, rose Foreign currency Bank sell Bank buy Bank buy
+0.31 local bourse in the coming months following the 18 sen to close at RM1.34 on Friday. TT/OD TT OD
launch of the RM10 billion AS 1Malaysia. On a week-to-week basis, the FBM KLCI 1 US DOLLAR 3.5630 3.4980 3.4880
“It is expected to be well received by the gained 19.02 points to close at 1,174,90. 1 AUSTRALIAN DOLLAR 2.9770 2.8470 2.8310
public who are encouraged by the track record – Bernama
1 BRUNEI DOLLAR 2.4780 2.4180 2.4100
1 CANADIAN DOLLAR 3.3000 3.2190 3.2070
1 EURO 5.0330 4.9110 4.8910
1 NEW ZEALAND DOLLAR
1 PAPUA N GUINEA KINA
1 SINGAPORE DOLLAR
1 STERLING POUND
1 SWISS FRANC
100 BANGLADESH TAKA
2.3570
1.4800
2.4775
5.8990
3.2870
5.3400
2.2520
1.2220
2.41890
5.7560
3.2070
5.2100
2.2360
1.2060
2.4100
5.7360
3.1920
5.0100
the United States and China. to spend vast sums on child-related
One striking
feature of
100 DANISH KRONE
100 HONGKONG DOLLAR
100 INDIAN RUPEE
100 INDONESIAN RUPIAH
100 JAPANESE YEN
100 NORWEGIAN KRONE
69.6100
46.8000
7.6600
0.0373
3.7440
59.1700
63.9600
44.3200
7.0400
0.0314
3.6530
54.3400
63.7600
44.1200
6.8400
0.0264
3.6430
54.1400
It also gives a new perspective to services and can go abroad in search 100 PAKISTAN RUPEE 4.4100 4.1100 3.9100
the view long held by many econo- of securities and companies to buy, China’s 100 PHILIPPINE PESO 7.5700 7.1200 6.9200
mists that so-called global imbalances, according to this analysis. demographic 100 QATAR RIYAL 99.5000 94.7900 94.5900
principally the US trade deficit with The BIS, known as the central transition 100 SAUDI RIYAL 96.5000 91.7900 91.5900
China matched by import earnings bankers’ central bank, circulated the during 100 SOUTH AFRICAN RAND 47.4600 43.4400 43.2400
for China, would be a factor leading report last week, adding that the argu-
to a crisis of the kind the world is now ments developed by the authors do not
1985-2007 is 100 SRI LANKA RUPEE 3.2300 2.9600 2.7600
experiencing. necessarily reflect those of the bank. that its youth 100 SWEDISH KRONA 49.9500 45.3700 45.1700
The conventional view is that the A net debtor in 1999, China has dependency 100 THAI BAHT 11.2200 9.5200 9.1200
massive Chinese investment abroad since become a major net creditor ratio fell by Source: Malayan Banking Berhad/Bernama
is a way of “sterilising” the country’s and is likely to remain so until 2025, half while
huge earnings from exports, or pre- according to the study.
venting them from causing inflation The country’s “net foreign asset po- its old-age
and driving up the yuan. The export sition (NFA),” the difference between dependency
surpluses are an undisputed fact: its overseas assets and liabilities, came increased
however, the new research suggests
that they are not the only big source of
surplus funding available to China.
to 30% of its gross domestic product in
2007 and amounted to more than US$1
trillion (RM3.55 trillion).
only slightly,
leaving
the overall
Nissan
For the United States, struggling
to spark a recovery, the stakes are
high, a point apparently driven home
by senior US officials during talks in
In absolute terms, its NFA status
was second only to that of Japan.
The authors of the study describe
the turnaround in China’s external
dependence
unchanged.”
unveils ‘Leaf’
Washington last week with Chinese
Vice-Premier Wang Qishan.
US Treasury Secretary Timothy
financial situation as “puzzling,” given
its relatively low per capita income
level, US$2,500 (RM8,875), and its siz-
electric car
Geithner urged China to shift its zling growth of recent years. YOKOHAMA: Nissan unveiled yesterday its first all
economy away from exports and to- “A faster growing economy tends to electric car, the Leaf, vowing to open a new chapter
wards domestic demand to strengthen attract more capital inflows,” the report for the troubled auto industry and take a lead over
the ailing global economy. He was in noted, adding that “by conventional its bigger rivals in zero emission vehicles.
essence asking the Chinese to save less wisdom China should ... be a signifi- The mid-sized hatchback, which will go on sale
and import more. cant importer of foreign savings.” in late 2010 in Japan, the United States, and Europe,
The personal research from the Ma But that is not what has happened, represents a bold bet by Nissan that hybrids are
and Haiwen offers insights into why the report contends, largely because merely a passing fad on the road to pure electric
China has funds to invest abroad and the Chinese are zealous savers rather vehicles.
points to a high ratio of personal sav- than consumers of foreign goods. The Leaf, described by Nissan as “the world’s
ings and a reduction of government And those savings are increas- first affordable, zero-emission car,” can travel more
borrowing as important factors. ingly being invested abroad, notably than 160km on a single charge, at a top speed of
These, they say, are driven by de- in the US, where Chinese holdings in 140kph, the company said.
mographics and enable the emerging US Treasury bonds now amount to It will “lead the way to a zero emission future,
Chinese powerhouse to export capital more than US$800 billion (RM2.840 opening a new era in the automotive industry,”
instead of importing it, and thereby trillion). chief executive Carlos Ghosn said, unveiling the
defying classical economic theory. “Given China’s growing role in the car at the group’s new headquarters in Yokohama,
With a relatively low percentage of global financial system, the stakes are southwest of Tokyo.
the population under 15, the Chinese high, not only for China but for the rest of “The Leaf is totally neutral to the environment:
government is freed from having the world,” the authors contend. – AFP there is no exhaust pipe, no gasoline-burning
engine. There is only the quiet, efficient power
provided by our own lithium-ion battery packs.”
paint thinner, have occupied the factory to ensure their survival. The price was not announced but Ghosn said it
in Pyeongtaek, 70km south of Seoul since India’s private carriers, which carry would be “very competitive.”
May 21 in protest at job cuts. about 80% of the country’s airline traffic,
Nissan plans to sell the car at a similar price to
The debt-stricken firm in February are caught in a quagmire of soaring a comparable model with a petrol-powered engine.
secured court protection from creditors losses, high debt and falling passenger Ghosn with the The battery, which will be stored under the seat
after China’s Shanghai Automotive Indus- numbers. Leaf electric and floor, will be leased separately.
try gave up management control. “We need help to stay in business,” car he unveiled “The monthly cost of the battery, plus the elec-
Court-appointed managers have since said Naresh Goyal, chairman of Jet
struggled to turn it around through job Airways, India’s second-largest carrier by
in Yokohama tric charge, will be less than the cost of gasoline,”
Ghosn said. - AFP
yesterday.
cuts and cost savings. market share, as the stoppage for Aug 18
EPAPIX
The programme calls for the sacking was announced late last week.
of 2,646 workers or 36% of the workforce, India’s airline sector was once vaunted
in what would be the country’s first mass as a symbol of the country’s economic
layoff since the onset of the global eco- vibrancy.
nomic crisis in September. – AFP But its fortunes have nose-dived due
to over-expansion, intense competition
Loss-hit Indian airlines and expensive fuel and other costs.
The move to suspend flights is to
plan stoppage “highlight the urgency for the govern-
NEW DELHI: India’s private airlines, ment to intervene immediately,” said Anil
awash in red ink, say they will ground Baijal, secretary general of the Federation
their planes in an unprecedented one-day of Indian Airlines (FIA) which represents
stoppage to demand the government act seven private carriers. – AFP