The Border Watch : June 10th 2014
Business China’s growth to moderate BEIJING: China’s economy will moderate over the next few years as Beijing looks to rebalance it, the World Bank says, but it has warned of risks from local government debt, a cooling real estate sector and an uncertain export recovery. The bank’s Economic Update on China yesterday came amid fears the Asian giant and driver of global growth is slowing too much, as the leadership looks to pivot towards private, domestic demand from a reliance on big-ticket government investment projects. “China’s growth will continue to moderate over the medium term and the structural shifts will become more evident,” it said. The report pointed out the world’s No.2 economy had shown signs of picking up in recent months, thanks to government support measures, robust consumption and improving foreign demand. The lender forecast growth of 7.6 per cent this year, unchanged from its April estimate but lower than China’s actual growth of 7.7 per cent in 2013. Beijing’s own target for this year is 7.5 per cent. Compo win for councils MELBOURNE: Twelve NSW local councils are free to recover $25 million in losses after a legal win over toxic financial products sold to them just before the global financial crisis. The Federal Court dismissed an appeal by ratings agency Standard & Poor’s investment bank ABN Amro and Local Government Financial Services against the original judge’s ruling in 2012. The court yesterday extended Federal Court Justice Jayne Jagot’s decision to rule each of the three defendants – S&P, ABN Amro and LGFS – were 100 per cent liable for the damages, rather than only one-third each. That more fully protects the councils if one of the parties cannot pay their share of the damages. Building sector stuck in decline SYDNEY: Australia’s construction industry remains in decline as weakness in engineering and commercial construction outweighs strength in home building. The Australian Industry Group/Housing Industry Association Performance of Construction Index rose 0.8 points to 46.7 in May – below the 50 level that separates expansion from contraction. The index has now been in the red for five straight months. House building strengthened to 54.4 points Home construction improves, but industry continues to struggle “Commercial “The rebalancing of the construction sector is gathering pace, with a further decline in engineering construction in May partially offset by healthy expansions in house and apartment building.” in May and apartment building jumped to 64.9. But commercial construction contracted and engineering construction continued to decline, to 34.8 points, on the back of the mining investment wind-down. “The rebalancing of the construction sector is gathering pace, with a further decline in engineering construction in May partially offset by healthy expansions in house and apartment building,” Ai Group director of public policy Peter Burn said. construction, on the other hand, is struggling to sustain momentum after some promising signs earlier in the year.” Housing Industry Association chief economist Harley Dale said there were many positives in the data. “A contraction in engineering construction is hardly surprising, but commercial construction is very close to expansion mode, house building continues to expand and apartments posted their best result in seven months,” Dr Dale said. UniSuper fighting against change AAP MELBOURNE: Westfield Retail Trust’s main shareholder, UniSuper, has likened a $70 billion restructure of shopping centre assets to getting the wrong piece of fruit. UniSuper, which holds an 8.5 per cent stake in WRT, has opposed the restructure of assets that are jointly held between WRT and Westfield Group, believing the changes favour Westfield Group to the detriment of WRT. “In simple terms, one could say we bought an apple, and now we are being asked to accept an orange,” UniSuper said in an investment update to clients. The boards of Westfield Group and WRT have proposed merging WRT, the jointly owned Australian and New Zealand shopping centres, and management rights held by Westfield Group, into a new entity called Scentre. Westfield Group’s international business, which includes malls in Britain and the US, would become Westfield Corporation. UniSuper said it bought AAP into WRT because WRT was a lowly geared landlord, earning steadily growing rental streams which converted into growing dividends. Scentre would have much higher levels of gearing Unimpressed: UniSuper says a proposed restructure of assets between Westfield Retail Trust and Westfield Group would favour the latter. and higher risk associated with property development management fees. The proposed restructure hit a brick wall last week when the vote by WRT securityholders on the matter was postponed at the last minute amid heated debate about its merits and the strong possibility the restructure would be rejected. Since then, Westfield Group has unveiled plans for an alternative restructure AAP in Brief Vegetable growers slam Woolies fee SYDNEY: Australia’s peak vegetable growers’ body has attacked Woolworths for asking farmers to contribute to the cost of its new Jamie Oliver-centred marketing campaign. Ausveg said growers had received requests to voluntarily pay a charge towards the costs of the new promotion, equal to 40c a crate of produce sold to the supermarket. “The growers feel like they are in a position that, if they were to say no, they are worried their contracts would be reduced or terminated completely,” Ausveg national marketing manager Simon Coburn said. General Motors fires execs over scandal WASHINGTON: General Motors chief executive Mary Barra says the US company has fired 15 mostly senior executives over the deadly ignition scandal that has put the car maker under federal investigation. But Barra said an internal investigation into why the company did not act on the problem for 11 years concluded there had been no concerted effort to hide it, instead showing a “deeply troubling” history of “incompetence and neglect”. She said the company was setting up a compensation fund for victims of accidents tied to the faulty ignitions, four months after GM began recalling 2.6 million cars over the problem. Samsung teams up with Barnes & Noble Picture: AAP without the involvement of WRT. Under “Plan B”, the Australian and NZ assets could be run by a new entity named Newco Australasia, independently of WRT. NEW YORK: Samsung has unveiled plans to produce a co-branded tablet computer with US bookseller Barnes & Noble, which has struggled with its Nook line of devices. The two firms said in a statement yesterday they would produce Samsung Galaxy Tab 4 Nook tablets “with easy access to Barnes & Noble’s expansive digital collection of more than three million books, leading magazines and newspapers”. Alcoa evaluating its options in Suriname AAP Sundance appoints African engineering firm PERTH: Africa iron ore hopeful Sundance Resources says it’s a step closer to its goal of building a $US3.5 billion mine, rail and port. Sundance said it had appointed engineering and construction company Mota-Engil Africa as contractor to build port and rail infrastructure for the MbalamNabeba Iron Ore Project in the republics of Cameroon and Congo. Perth-based Sundance recently raised $40 million to start developing the project. Sundance added financing discussions were well advanced 10 - The Border Watch, Tuesday, June 10, 2014 with a variety of potential funding partners, export credit agencies, development funds and commercial banks. The company aims to finalise debt-funding requirements by mid2015 and construction is expected to take three and a half years once finance is secured. It comes a week after Sundance secured a 10-year off-take agreement with global commodities trader Noble Group. Former Leighton Holdings chief executive Wal King was recently appointed deputy chairman of Sundance. AAP PARAMARIBO: Aluminium producer Alcoa says it is reviewing options for its Suriname bauxite subsidiary two days after the country’s leader said the multinational was preparing to slash local operations. In an email, a company spokeswoman said Alcoa was working with the South American nation “to ensure the long-term viability of the operations” in Suriname, where it has had mining operations for nearly a century.
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