What Happened This Week / Quotes Of The Week / The Week Ahead

The Age

Saturday March 17, 2007

Compiled by Ari Sharp, with AGENCIES

WHAT HAPPENED THIS WEEK

AUSTRALIA

Why the gloom over Qantas profit lift?

PROSPECTS for the success of the Qantas buy-out bid remain clouded after confirmation of an improved 2008 profit outlook.

In an unusual qualification of positive news, Qantas said on Thursday it expected pre-tax profit to be about $1.23 billion for the year to June 30, 2008 - and then listed multiple reasons why it might not meet that goal.

Those qualifications appeared aimed at countering claims by three institutional shareholders with a blocking stake in Qantas that the offer price from Airline Partners Australia was inadequate.

The consortium needs acceptances for 90 per cent of Qantas shares for its bid to succeed.

Confidence on high

CONSUMER confidence has reached a 19-month high, propelled by jobs growth, slowing inflation and a steadier interest rate outlook.

And the pick-up in household and business borrowing continued at the start of the year, overcoming the dampening effect of last year's three interest rate rises.

The Westpac/Melbourne Institute's Consumer Sentiment Index rose 3.7 per cent in March to 115.5 index points from 111.4 in February.

Bets off for Slatter

TABCORP CEO Matthew Slatter returned to work on Tuesday after a series of overseas investor briefings only to be shown the door, three weeks after receiving the board's full support. Mr Slatter walks away with at least $3.2 million. That is a year's compensation in lieu of notice.

His final pay-out is likely to be substantially greater, including options and accrued annual leave entitlements.

Tabcorp is expected to give preference to candidates with experience in gaming and wagering businesses as it begins to search the world for a new chief executive, with acting CEO Elmer Funke Kupper the leading internal candidate.

Drought worries ease

BUSINESSES are still concerned about inflation, especially rising fuel prices, but a survey shows that the impact of the drought on non-farming sectors is beginning to ease.

The latest Dun & Bradstreet Business Expectations survey found 64 per cent expected selling prices to be higher in the June quarter than for the corresponding period last year.

Miners on a mission

AS THE cost of expanding production in Western Australia's Pilbara has skyrocketed in the past few years due to a shortage of skilled labour and equipment, Rio Tinto and BHP Billiton have started to venture beyond their traditional comfort zone.

Africa is the new hot spot, and Rio has already sunk $US50 million ($A63 million) into studying the Simandou iron ore project in the west African nation of Guinea. The project is undergoing pre-feasibility studies.

Westpoint lawsuit

INVESTORS who lost more than $9.5 million after the Westpoint prop-erty group collapsed are suing two financial planning companies for giving misleading information.

The investors claim Quantum Securities and Masu Financial Management gave inappropriate advice and made misleading state-ments about Westpoint investments.

RBA likes deficit

AUSTRALIA'S net foreign liabilities are likely to rise to 86 per cent of the nation's annual output before they stabilise, even on favourable assump-tions, Reserve Bank modelling has revealed.

But in a paper releasing the model-ling, RBA researchers argue that a large current account deficit allows Australians to keep spending when foreign income falls, and is a sign of resilience rather than vulnerability.

The paper, by RBA researchers Rochelle Belkar, Lynne Cockerell and Christopher Kent, says policymakers now share the "consenting adults" view that the deficit stems from decisions freely made by lenders and borrowers, with no implications for others.

THE WORLD

China trade surplus higher than expected

CHINA'S trade surplus was three times more than economists expected in February, giving more ammunition to US legislators calling for a stronger yuan.

The gap widened to $US23.8 billion ($A30.1 billion), the second-highest monthly surplus, from $US2.5 billion, the Chinese Customs Bureau said.

US legislators complain that the world's manufacturing and assembling hub keeps its exports cheap by curbing gains by the yuan.

Commerce Minister Bo Xilai said in Beijing that China was trying to reduce the trade gap.

Wall Street tumbles

WALL Street tumbled on Tuesday as US investors took fright at rising defaults in the subprime mortgage market, with several subprime lenders looking prone to bankruptcy.

People with subprime mortgages do not qualify for lenders' mortgage insurance, normally payable when buyers have less than a 20 per cent deposit.

Lenders have to bear any losses when they foreclose and sell the asset, which in many US states has lost value since the purchase was made.

Mortgage lender New Century said in a securities filing that all its lenders had frozen their credit lines and were demanding that it buy back $US8.4 billion ($A10.6 billion) in loans that it issued using money borrowed from banks - money that New Century now says it does not have.

Wal-Mart moves on India

INDIA'S 12 million shopkeepers fear obliteration as a juggernaut bearing the Wal-Mart logo thunders towards them. Wal-Mart is getting ready to open its first supermarket this year, the first in a huge chain that will cover every large town in India.

Wal-Mart will not say how many supermarkets it will open in the first year as it is still finalising the "blueprint".

But it is believed Wal-Mart will eventually open a store in every town with more than 1 million inhabitants.

Japan on a roll

JAPAN'S economy expanded at its fastest pace in three years, exceeding the Government's initial estimate, as surging export demand prompted companies to increase spending on factories and machinery. The economy grew at an annualised 5.5 per cent in the three months to December 31, the Cabinet Office said in Tokyo.

A jump in exports boosted the current account surplus by 50 per cent in January from a year earlier, a separate report showed, and consumer confidence rose to a three-month high, signs that the economy would keep expanding.

Too much too soon?

RESPONDING to criticism from many corporate executives and business groups that rule changes after the Enron and WorldCom scandals had gone too far, US Treasury Secretary Henry Paulson has suggested the Bush Administration may take a frien-dlier approach to business regulation.

At a conference that gathered together executives and government officials, past and present, Mr Paulson questioned whether lawmakers and regulators had struck the right balance between investor protection and competitiveness.

Mr Paulson has been the Adminis-tration's point man in responding to criticism that tougher laws adopted after Enron and other scandals had made the US uncompetitive.

Administration officials said the conference was meant to lay the groundwork for proposing changes before the 2008 election cycle.

-- Compiled by ARI SHARP, with AGENCIES

QUOTES OF THE WEEK

"I love that I've been certified as stupid by the Illinois judge." -- EDWARD GREENSPAN, Conrad Black's Canadian lawyer whose knowledge of US law is being put to the test

"He not only says he's not guilty, he says it to everybody who listens and everybody who doesn't listen." -- EDWARD GREENSPAN, still Conrad Black's lawyer

"This couldn't come at a worse time; the protectionist sentiment in Washington, DC, is probably at the highest in the past 20 years. This is a really, really incredible figure." -- GENE MA, an economist at Citic Securities Co in Beijing on China's record trade surplus

"I am of the school that thinks of this issue in the same way that I think of home insurance. I doubt if my house will burn down, but I'm prepared to pay a premium just in case." -- MICHAEL CHENEY, NAB chairman, on carbon emissions

"I often liken us to a wildcat drilling company, which might drill 50 exploration wells in the hope of finding oil. We have more than 50 new products in our pipeline, and we only need one or two of those to be blockbuster toys to succeed. The difference is that it doesn't cost us millions to develop a toy, like it does to drill a well." -- ALEX AGUERO, managing director of Brainytoys, the only toy developer on the Australian Stock Exchange

JARGON ALERT

"We must make energy saving, decreased energy consumption, reduced emission of pollutants and intensive use of land the breakthrough point and main fulcrum for accelerating economic restructuring and changing the pattern of economic growth."

-- WEN JIABAO, Chinese Premier, on a greener China.

THE WEEK AHEAD

MONDAY

Conferences: ANZ chief John McFarlane speaks at Sustainable Human Capital Management Conference; Energy Regulation 2007 conference starts.

TUESDAY

Report: Australian Bureau of Statistics dwelling unit starts data for December quarter

Launch: Managed Investment Assessments' new rating and research service for investors.

Conference: Centro Properties Group chief executive Andrew Scott addresses Trans-Tasman Business Circle.

WEDNESDAY

Report: Sales of new motor vehicles for February; Westpac/Melbourne Institute index of economic activity for January; Department of Employment and Workplace Relations skilled vacancies index.

Results: David Jones first half.

Ruling: Australian Competition and Consumer Commission decision on OneSteel's proposed acquisition of some assets of the Smorgon Steel Group.

THURSDAY

Conferences: ASIO director-general Paul O'Sullivan speaks at American Chamber of Commerce in Australia luncheon; Paydirt 2007 Uranium Conference begins.

FRIDAY

Conference: Third annual forum against money laundering; businessman James Strong addresses corporate luncheon of the American Chamber of Commerce.

© 2007 The Age

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