Tuesday, March 30, 2010

Government must prove mining is worthwhile

Most New Zealanders will support mining on conservation land if the Government can prove it will benefit the country, Prime Minister John Key says.

Proposals released last week to remove 7058 hectares of protected land from schedule four of the Crown Minerals Act are raising intense debate, and the Government will make final decisions after six weeks of public discussion.

Asked at his post-cabinet press conference today whether the Government might decide not to mine any of the proposed areas, Mr Key said that was "a possibility" but he believed there was potential for the mining industry to expand.

"New Zealand already has extensive mining activities," he said.

"There are three tests that have to be met if we are going to extend those activities -- we need to demonstrate there will be increased investment and jobs, we need to prove that the economic benefits will largely stay in New Zealand, and we need to prove we can sustainably mine the areas we are promoting."

Mr Key said those three issues would be at the core of the discussions over the next six weeks.

"I think the bulk of New Zealanders will, in broad terms, apply those three tests," he said.

"If there's enough in it for New Zealand, if we make enough money out of it and if we can do it in an environmentally sustainable way, I think the bulk of New Zealanders will support it."

The proposed areas are on Great Barrier Island, in the Coromandel and in Paparoa National Park.

Whether they were actually mined would depend on decisions by mining companies, Mr Key said.

"It's always possible they won't be interested -- mining companies will only progress these areas if they think its economically viable and they can make money.

"But it's my sense that given the mineral wealth of New Zealand, and if those opportunities are there, they will take them."

Mr Key said it was possible that Solid Energy, the state-owned coal mining company, could become involved in extended mining.

"It's already a very large miner, and 100 per cent government-owned," he said.

"It's a possibility they could have an expanded role in the future but it's too early to tell."


Trade deal with Hong Kong signed

New Zealand and Hong Kong will today sign a closer economic partnership (CEP) agreement, building on the free trade agreement with China.

Trade Minister Tim Groser said the agreement strengthened economic links between New Zealand and the Asia-Pacific region.

"The CEP complements our existing FTA with China and, given Hong Kong's position as a regional trading and investment hub, supports New Zealand business engagement with the wider region," said Groser.

"With a remarkable 43 per cent increase in our exports to China over the past 12 months - an extra billion dollars of export revenue earned - there is real potential here for New Zealand.

"Our trade agreements with Hong Kong and China provide us with an unparalleled opportunity to increase our exports and our positive engagement with a region that will continue to be of central importance to our economy over the decades ahead."

The CEP is Hong Kong's first of the type aside from their agreement with mainland China.

"This agreement is focused on cementing certainty of access to markets and establishing a clear framework for companies to operate within," Groser said.

"It is designed to encourage ease of doing business and to foster the free flow of people, innovation and business engagement.

"The conclusion of the CEP will also help to raise the profile of New Zealand businesses in Hong Kong's competitive consumer market and with regional distributors."

The CEP would come into effect late this year after domestic implementation procedures were done.


Sunday, March 28, 2010

Property market still feeling recession's bite

The easing of mortgagee sales is still some way off with the January figures up 31 per cent on the same month last year, says land information company Terralink.

There were 196 registered mortgagee sales in January compared with the 150 in January 2009.

Terralink managing director Mike Donald said there were fewer sales in January than the previous month but this probably did not signal the start of a downward trend.

"We do often see a drop in mortgagee sales in January compared to other months. This may be because January is generally a quiet business month in New Zealand as most of us are on holiday.

"When you compare year-on-year figures and see that the number of forced sales was still 31 per cent higher than a year ago it shows there's no sign of a let up just yet."

Mr Donald said he didn't expect to see a return to pre-recession figures until mid next year, and only a number of consecutive months of dropping figures would show the pressure was abating.


Thursday, March 25, 2010

China thwarts Google's detour around censorship

SAN FRANCISCO: Google's attempted detour around China's Internet censorship rules was met with countermeasures Tuesday by the communist government, which blocked people on the mainland from seeing search results dealing with such forbidden topics as the pro-democracy movement.

China's maneuver, as well as its public rebuke of Google's decision to stop censoring searches for the government, rattled some of the company's investors, advertisers and users.

The chief concern is whether Google poisoned its business in one of the world's most promising Internet markets.

One analyst critical of Google's move predicted the maneuver will cause the company's stock to fall by as much as $50 - or about 10 percent - in the coming weeks.

The stock fell $8.50, or 1.5 percent, to $549 Tuesday.

Last month, Google said it no longer felt comfortable complying with the country's demands that it censor Web content deemed objectionable by the communist rulers.

On Monday, Google began sending Web searchers in mainland China from the China-based Google.cn to Google.com.hk, based in Hong Kong.

The former British colony has an open Internet, and Google is not legally required to censor results there.

But that end-run doesn't prevent China's government from using its Internet filters - known as the Great Firewall - to block some search results and Web sites from being seen in the mainland.

On Tuesday, a search request from within mainland China about the 1989 Tiananmen democracy protests returned a notice that the "page cannot be displayed."

It also caused the Web browser to disconnect for several seconds.

Under the old google.cn, a similar query usually returned a list of sanitized sites about Tiananmen Square.

If the Chinese leaders really want to foil Google, they could block all mainland access to the Hong Kong service.

Or they could exert their control of Chinese telecommunications companies to slow the speed of queries and responses, to help drive traffic to homegrown rivals.

"It really comes down to the extent of their vindictiveness," said Duncan Clark, managing director of BDA China Ltd., a technology market research firm.

The tensions between Google and China's government already appear to be denting the company's business.

TOM Online, a provider of online and mobile services in China that is owned by a Hong Kong tycoon, said it would not renew an alliance with Google to avoid violating any Chinese laws.

Owners of Chinese businesses also may be more reluctant to advertise on Google for fear of reprisals.

If that happens, Google may reduce its sales force in China.

For now, the company is maintaining both its engineering and sales staffs in the country, reflecting its hope that the Chinese government's anger will cool off.

Google also believes it will be able to revive plans, delayed for now, to have its Android software support more mobile phones and applications in China.

Other foreign companies that have angered the Chinese government have been stymied in the country.

American defense contractor Raytheon Co. closed its Beijing offices last year in frustration over its inability to win contracts for commercial aviation and consulting services.

American executives believed Raytheon was being penalized for selling its Patriot missiles to Taiwan.

Although Google discussed various options in talks with the Chinese government over the past two months, the company made its decision to shift mainland traffic to Hong Kong without the ruling party's approval.

Google makes relatively little of its money in China now.

Analysts have estimated the country accounts for $250 million to $600 million of its $24 billion in annual revenue.

But the pie is expected to get substantially bigger as China's economy expands and the country's Web audience increases beyond the roughly 350 million people online now.

Susquehanna Financial Group analyst Marianne Wolk expects China's Internet ad market to grow from about $3 billion last year to as much as $20 billion in 2014.

Google appeared to be well positioned to pick up about $5 billion to $6 billion of that projected 2014 revenue, Wolk said, because its Chinese search engine has a roughly one-third share - a distant second to the homegrown Baidu Inc.

But Google's share is likely to shrink if the Great Firewall blocks or slows traffic. BGC financial analyst Colin Gillis said he expects Google's dustup with the Chinese government to reduce the company's market value by $10 billion to $15 billion, or $30 to $50 a share.

"What Google has done is a slick trick, but it's also a direct slap in the face to the government," Gillis said.

"The repercussions from this will be going on for several years."

In China some Internet users mourned Google's exit, placing flowers and chocolates at the large Google sign in front of the company's offices in Beijing.

But others noted that the situation could raise awareness about China's strict online censorship.

Zhang Shihe, a freelance Chinese journalist and well-known blogger, said coverage of Google's departure could spur Chinese to demand more free speech online and offline.

"The incident has angered and saddened a lot of netizens, and now they will understand what type of country we live in," said Zhang, who blogs under the name "Tiger Temple."

"This is another win for freedom of expression." - AP

Friday, March 19, 2010

Kiwi dollar at two- year high against euro

The New Zealand dollar climbed to a two-year high against the euro, as worries persisted about Greece's debt problems.

The kiwi peaked at 0.5256 euro early today, according to Reuters data, and by 8am was only a little lower at 0.5249, up from 0.5199 at 5pm.

The latest indication of Greek problems came in a report in which an unidentified Greek official said Greece was increasingly pessimistic about the prospect for receiving assistance at a March 25 European Union summit and may seek International Monetary Fund aid during the April 2-4 Easter weekend.

After a bumpy night against the greenback, the NZ dollar was buying US71.48c at the local open, from US71.33c at 5pm, while it also nudged upward to 64.56 yen from 64.33 at the local close.

Against the Australian dollar, the kiwi reached a 2-1/2-week high A77.77c, from A77.28c at the local close, and by 8am was at A77.57c.

The NZ dollar is trudging away from its lowest level against the aussie in more than nine years, A76.10c, reached a fortnight ago.

The trade weighted index rose to 65.89 at 8am from 65.59 at 5pm.

BNZ strategist Mike Jones said the key theme in currency markets overnight was US dollar strength. Fresh concerns about Greece's expanding deficit prompting renewed demand for safe haven assets, supporting the greenback and yen.

Despite that, the kiwi managed to buck the firming US dollar trend.

Solid demand for the NZ dollar against the US currency came from both macro and leveraged accounts. Combined with further recovery in the NZ dollar against the aussie ensured dips by the kiwi against the US dollar were limited to around US71.20c, Jones said.

Markets appeared to have come around to the view that a NZ dollar below A77c was unjustified on the basis of this country's economic fundamentals.


Thursday, March 18, 2010

Australia facing house affordability 'time bomb'

Australia faces a housing affordability "time bomb"- primed by a dysfunctional planning system, a chronic undersupply of homes, and unrealistic expectations from buyers, according to the chief of one of the nation's largest homebuilders.

Stockland managing director Matthew Quinn, in a speech in Sydney, said Australia's current shortage of 200,000 homes and an annual shortfall of 60,000, would balloon to 800,000 by 2020, if no reforms were undertaken.

"There's a faint ticking that I can hear and it's getting louder," he said in a speech yesterday.

"The fuse is burning, and current metropolitan planning strategies are inadequate for our growing and ageing population."

House prices in Australia climbed 13.6 per cent in 2009 alone after a decade in which they posted increases of about 170 per cent, according to the Australian Bureau of Statistics.

Residential real estate prices have soared as Australia's economy nears notching up two decades of growth without a pause.

Over the same period, Australia has lured more immigrants, adding to housing demand. The federal government's 2010 intergenerational report estimates Australia's population will swell to 35.9 million people by 2050 from its current level of 22 million.\

"The average first home buyer today cannot afford to pay the median house price - not even close," Mr Quinn said, with the average median house price at A$485,000 ($625,000).

Mr Quinn blamed what he called "a total disconnect between the different levels of government...without action, housing affordability problems are going to get worse."

Calling Australia's population growth a "federal government responsibility," Mr Quinn lamented the lack of cohesion between the federal government, the state planning policy and infrastructure delivery, and local council approvals.

Mr Quinn said building smaller homes is another factor that could ease the shortage and the housing affordability issue, with Stockland reducing its average lot and house sizes for customers.

"Australia is one of the world's most urbanised nations, with over three-quarters of our population living in major cities and the overwhelming majority in our five largest cities alone," he said.

"Despite this, our cities are by no means densely populated," with Australia's capital cities people per square kilometre density ranking behind Los Angeles, Paris and Tokyo.

Mr Quinn's speech was delivered to the Australia Israel Chamber of Commerce.

Stockland posted after tax profits of A$214 million for the half-year to December 2009, according to Morningstar.

PayPal Partners China UnionPay to Challenge Alipay

March 17 (Bloomberg) -- PayPal Inc., the online-payments service owned by EBay Inc., will offer accounts to customers of China UnionPay in a bid to expand in a market dominated by Chinese rival Alipay.

The partnership will give customers of China UnionPay, a national electronic-payment network, the ability to make Internet purchases from Web sites overseas, San Jose, California-based EBay said today in a statement.

PayPal, the world’s largest online-payments processor besides credit-card companies such as Visa Inc., is fighting to establish itself in China, a market with almost 400 million Internet users. Alipay, a unit of Alibaba Group Holding Ltd., has 300 million users, three times as many as PayPal in China.

“If PayPal is talking about going head-to-head against Alipay and the Chinese banking consortium, that’s very difficult,” said Walter Price, a fund manager at RCM Capital Management in San Francisco. His firm oversees about $100 billion, including EBay shares. “If you’re talking about providing a service to Chinese who want to buy things outside their country, I think that’s where PayPal fits.”

PayPal also said today it will double its workforce in the Asia-Pacific region to 2,000 by the end of 2010. PayPal is trying to make inroads in China, the world’s biggest Internet market, as Google Inc. threatens to pull out.

Web Transactions

Internet transactions through services such as Alipay more than doubled to 576.6 billion yuan ($84.5 billion) last year and will reach 2.75 trillion yuan in 2013, according to Beijing- based research firm IResearch. Alipay controlled about 50 percent of the market in 2009, compared with about 21 percent for nearest rival Tenpay, offered by Internet company Tencent Holdings Ltd., IResearch said.

“We think that the e-commerce is the way of the future, and the more ways there are to pay online, the better,” Linda Kozlowski, a Hong Kong-based spokeswoman for Alibaba, said by telephone.

China UnionPay, based in Shanghai, was established in 2002 and operates the inter-bank clearing and settlement system in China.

Before today, PayPal offered Chinese consumers and businesses two types of accounts: one that allowed domestic transactions in yuan and a second that permitted purchases abroad through dual-currency credit cards. The new program allows customers with a UnionPay credit or debit card to make overseas purchases.

Cash on Delivery

Alipay acts as a middleman on purchases, holding money in an escrow account until the seller delivers the goods. That model has boosted Alipay’s popularity in China, where there’s a high level of fraud and buyers and sellers don’t fully trust each other, Price said.

Chinese consumers prefer cash and are leery of paying on the Web -- less than 40 percent of Internet users in the country are willing to provide financial information online, according to the China Internet Network Information Center. Low trust in online transactions is one of the obstacles to e-commerce growth in China, the government agency said in December.

That may give Alipay an advantage in persuading Chinese consumers to use its service, said William Smead, chief executive officer at Smead Capital Management, which oversees about $170 million, including EBay shares.

‘Natural’ Chinese Bias

“Chinese consumers will favor a local company,” said Smead, who’s based in Seattle. “There’s a natural bias for that.”

PayPal, which entered China in 2005, has about 375,000 active accounts in China, Hong Kong and Taiwan, and more than 80 million globally. The service will become more attractive to Chinese consumers because foreign businesses want payment immediately and don’t want to wait for money to be transferred from an escrow account, said Farhad Irani, head of PayPal’s business in Asia. Eventually, Chinese companies will demand the same, he said.

“There’s no doubt Alipay is the online payment of choice in domestic China at this point,” Irani said in an interview. “We believe there will be an evolution.”

EBay rose 51 cents to $26.79 yesterday in Nasdaq Stock Market trading. The shares have gained 14 percent this year.

Long-Running Rivalry

EBay and Alibaba, China’s biggest e-commerce company, have had a long-running rivalry. EBay entered China in 2002, challenging Alibaba’s auction site, Taobao.com. In 2006, EBay’s then-CEO Meg Whitman shut down the site after its market share declined by half. EBay entered into a joint venture with Tom Online Inc.

The companies are preparing for a second clash as PayPal encroaches on Alipay’s turf. Last year, Alibaba unveiled AliExpress, an online marketplace for businesses, to tap demand for cross-border commerce. PayPal and Alibaba are also trying to work together. The companies have been in talks for about a year to make PayPal a payment option for AliExpress, according to two people with direct knowledge of the matter.

“We always keep an eye out for solutions to help our customers, but there’s no agreement at this time,” Linda Kozlowski, an Alibaba spokeswoman, said in an e-mail. PayPal spokeswoman Sara Gorman declined to comment.

By Joseph Galante

U.K. Jobless Claims Fall at Fastest Pace Since 1997

U.K. jobless claims unexpectedly fell in February at the fastest pace since 1997, suggesting the economic recovery is strengthening as Britons prepare for a general election within weeks. The number of people receiving unemployment benefits dropped 32,300 from January to 1.59 million, the Office for National Statistics said today in London.

The figures are a boost for Prime Minister Gordon Brown, who is seeking to persuade voters his Labour Party has the best strategy to cement the economic recovery. The Conservatives’ pledge to cut the record budget deficit faster than Brown is planning has cost the party support, raising the specter of a minority government after the election due by June.

“This is probably a good thing for Labour -- the ruling party can say unemployment is on its way down,” said David Tinsley, an economist at National Australia Bank in London and a former Bank of England official. “It’s a fine line they have to tread between talking up the recovery too much and not wanting to withdraw fiscal support too early.”

Tuesday, March 16, 2010

Google ‘99.9%’ sure to shut China search engine

SHANGHAI: Talks with China over censorship have reached an apparent impasse and Google, the world’s largest search engine, is now “99.9%” certain to shut its Chinese search engine, the Financial Times said on Saturday.

The FT said in a report on its website that Google had drawn up detailed plans for closing its Chinese search engine.

The newspaper cited a person familiar with the company’s thinking as saying that, while a decision could be made very soon, Google was likely to take some time to follow through with its plans.

That would be in order to bring about an orderly closure as the company took steps to protect local employees from retaliation by authorities, it said.

China warned Google on Friday against flouting the country’s laws, as expectations grow for a resolution to a public battle over censorship and cybersecurity.

Google shocked business and political circles in January when it threatened to pull out of China if it could not offer an unfiltered Chinese search engine. The threat came after cyber attacks originating from China on it and about 30 other firms.

“If you don’t respect Chinese laws, you are unfriendly and irresponsible, and the consequences will be on you,” China’s Industry and Information Technology Minister Li Yizhong told reporters on Friday in answer to a question on what the country would do if Google.cn simply stopped filtering search results.

That came after Google chief executive Eric Schmidt said on Wednesday he hoped to announce soon a result to talks with Chinese authorities on offering an uncensored search engine in China.

The Industry and Information Technology Ministry shares oversight of the Chinese Internet with a number of other bodies. Still more bureaucracies are involved in matters of foreign investment, complicating the Chinese government’s response to Google’s challenge. — Reuters

Thursday, March 11, 2010

Rents will go up if tax rules changed - investors

Property investors have warned that rents could go up by $34 a week if the Government scraps landlords' depreciation claims on housing, but the Government says they are wrong.

TVNZ reported that the Property Investors Association said landlords would lose on average $1750 a year if they lost the tax rebate and this amounted to $34 a week, which would be passed on to tenants.

Labour MP Trevor Mallard estimated that the increase could be as much as $45 across 400,000 households.

Prime Minister John Key told TVNZ that the figures were wrong and the Government's advice was that if there were rent rises they would be small.

The Government is looking at lifting GST from 12.5 per cent to 15 per cent to cut taxes across the board.

The Government has said they will make sure those on benefits are compensated and that no one will be worse off due to the GST rise.

It is planning to use the changes to property taxation to help fund that package and to help make such investments less attractive.