18 FRIDAY, JULY 10, 2015

BRIEFSWorld food prices fall further

Brussels, Thursday

A race to save Greece from bankruptcy and keep it in the euro gathered pace yesterday when Athens formally applied for a three-year loan and European authorities launched an accelerated review of the request.

Greek Prime Minis-ter Alexis Tsipras called in a speech to the European Parliament for a fair deal, acknowledging Greeces his-

toric responsibility for its plight, after EU leaders gave him five days to come up with convincing reforms.

The government submitted a request to the European Sta-bility Mechanism bailout fund to lend an unspecified amount to meet Greeces debt obliga-tions and to ensure stability of the financial system. It promised to begin implement-ing tax and pension measures sought by creditors as early as Monday.

With its banks closed, cash withdrawals rationed and the economy in freefall, Greece has never been closer to a state bankruptcy that would probably force it to leave the euro and print an alternative currency.

European officials told Reuters that some Greek banks may have to be shut and taken over by stronger rivals, regard-less of whether the country bailout funds or not.

Yet leftist premier Tsipras

seemed almost nonchalant, albeit with a note of humility, when he appeared before EU lawmakers in Strasbourg to cheers and scattered boos.

Speaking hours after euro zone leaders, at another emer-gency summit in Brussels, set Greece a deadline of the end of the week to come up with far-reaching reform proposals, Tsipras said Greeks had no choice but to demand a way out of this impasse.

We are determined not to

have a clash with Europe but to tackle head-on the establish-ment in our own country and to change the mindset which will take us and the euro zone down, he said to applause from the left. But he gave scant details of his reform plans, frustrating many lawmakers.

The head of the Euro-group of finance ministers of the 19-nation currency area, Jeroen Dijsselbloem, asked the European Commission and the European Central Bank

to evaluate the loan request, assess Greek debt sustainabil-ity and study whether Greece poses a risk to the financial stability of the euro zone.

IMF chief Christine Lagarde reiterated that Greeces massive debt would need restructuring, something Germany is resisting. Greece is in a situation of acute crisis, which needs to be addressed seriously and promptly, she said at the Brookings Institu-tion think-tank in Washington.

Greece seeks new EU loan dealRome, Thursday

GLoBAL food prices fell in June, continuing an almost uninterrupted slide since April 2014, led by falling dairy and sugar prices, the United Nations food agency said today.

The Food and Agriculture organisations (FAo) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 165.1 points in June, down 1.5 points or 0.9 percent from May.

CAPE ToWN: Raising South Africas 14 percent value-added tax (VAT) rate would be a more efficient way of boosting revenue than increasing direct taxes but would also hurt the poor, a tax advisory committee to the government said yesterday.

By contrast, hiking personal or corporate tax rates would cause less inflationary pressure in Africas most advanced economy, although there would be a negative impact on real gross domestic product and employment, said the Davis Tax Committee.

South Africa mulls changes to VAT

ToKYo: Honda Motor Co is recalling about 1.63 million more cars in Japan to replace air bag inflators made by supplier Takata Corp, a filing with the Japanese transport ministry showed today.

Globally, Honda is recalling 4.5 million more Takata-made inflators, although North America is not included in this latest recall, said a Honda spokesman.

Takata is at the center of the recall of millions of vehicles equipped with air bag inflators which can explode with too much force and spray metal fragments inside vehicles.

Honda expands recalls

ATHENS: Some large Greek banks may have to be shut and taken over by stronger rivals as part of a restructur-ing of the sector that would follow any bailout of the country, European officials have told Reuters.

European leaders will gather on Sunday in a last-ditch attempt to salvage agreement with Greece after months of acrimonious nego-tiations that have taken the country to the brink of leaving the euro. But regardless of whether or not fresh funds are now unlocked for the government, some Greek banks, damaged by political and economic havoc, may have to be closed and merged with stronger rivals, officials, who asked not to be named, told Reuters.

Greek banks face closures

Washington, Thursday

THE US trade deficit widened in May, fueled by a drop in exports that could heighten concerns over weak overseas demand and a strong US dollar.

The Commerce Department reported yesterday that the trade gap grew $1.2 billion to $41.9 billion. That was less than the $42.6 billion deficit expected by analysts and suggests Wall Street economists may slightly raise their forecasts for economic growth in the second quarter.

But the drop in exports in

May highlights a change in the tenor of economic growth since the United States exited the 2007-2009 recession. The economy relied more on export-led indus-tries such as manufacturing early in the recovery, but growth is increasingly coming from domes-tic drivers like construction and services as the economic cycle matures.

Exports fell $1.5 billion, or 0.8 percent, to $188.6 billion in May, led by a drop in overseas sales of US-made capital goods. Imports fell by about $300 mil-lion, or 0.1 percent, to $230.5

billion.Prices for US Treasuries rose

after the data, while US stock index futures were unchanged. The dollar gained against a basket of currencies.

Since the middle of last year when the Federal Reserve made clear it was planning to raise interest rates to keep the economy from eventually overheating, the dollar has strengthened, making US exports less competitive.

Since that time, Europes economy also has been on shaky ground and the European Central Bank has eased monetary policy,

causing the euro to weaken against the dollar. European poli-cymakers are currently fighting a debt crisis in Greece that threat-ens to rip apart the continents monetary union.

Exports of goods to Germany fell 6.0 percent in May from the prior month, according to non-seasonally adjusted figures. Sales fell 4.2 percent to France, 2.1 percent to Mexico and 3.0 percent to Japan.

The US economy contracted at a 0.2 percent annual rate in the first quarter, hit by bad weather, a strong dollar, spending cuts in

the energy sector and disruptions at West Coast ports.

other economic data, includ-ing figures on hiring and con-sumer spending, have pointed to a rebound during the second quarter, and a firming domestic economy could encourage the Fed to raise rates later this year.

In May, the drop in imports came as purchases from China rose 9.5 percent. That could fan further criticism from US manufacturers that Chinese firms are using a cheap currency and unfair subsidies to gain market share in America.

US trade deficit widens, weakness abroad fuels fast drop in exports

New York, Thursday

THE New York Stock Exchange was forced to suspend trad-ing for several hours yesterday in the biggest outage to hit a US financial market in nearly two years, unnerving investors already rattled by the meltdown in Chinese stocks and the Greek debt crisis.

The exchange, a unit of Intercontinental Exchange Inc, reopened at 3:10 p.m. EDT after being halted shortly after 11:30 a.m. EDT. NYSE said the outage was due to an internal techni-cal issue and not the result of

a cyberattack. other exchanges were trading normally.

Its not a good day, and I dont feel good for our customers who are having to deal with the fallout, NYSE President Thomas Farley told CNBC during the halt.

NYSE, which traces its roots back to an agreement under a Buttonwood tree on Wall Street in 1792, handled 6.12 percent of U.S. stock volume for the day, with much of that coming after the exchange reopened, according to statistics from BATS Global Markets. That compares to an average of about 13.4 percent last month.

Traders had awaited the reopening anxiously because much of the NYSEs business happens when portfolio managers put in orders designed to occur at the exact market close to ensure end-of-day pricing.

However, many traders said that it did not matter that the NYSE was down. Thats because there are 11 US stock exchanges, including those run by Nasdaq oMX Group and BATS, along with more than 40 private stock-trading venues, so the trading of NYSE-listed stocks was uninter-rupted.

This is one of the rare cases

where the fragmented markets we live in actually serve a purpose, said Dave Nadig, director of exchange-traded funds at Fact-Set Research Systems. If this happened at (the London Stock Exchange), you would just be sitting staring at a blank screen.

NYSE had been experiencing technical issues even before the market opened. The exchange had said it was experiencing con-nectivity problems that may have prevented some of its customers from getting acknowledgements on orders submitted in some 220 stocks.

NYSEs glitch came on the

same day that computer problems led United Airlines to ground all its flights for about two hours and the home page of the Wall Street Journals website temporarily went down.

The US Department of Homeland Security said there were no signs that the problems at NYSE and United Airlines stemmed from malicious activ-ity. The SEC said on Wednesday that it was closely monitoring the situation at NYSE. The White House said President Barack obama had been briefed on the matter.

Nearly all US trading is done

electronically, and the NYSE out-age again raised questions about the robustness of the technology at exchanges after a raft of major glitches in recent years.

A technical problem at NYSEs Arca exchange in March caused some of the most popular exchange-traded funds to be tem-porarily unavailable for trading. And in August 2013, trading of all Nasdaq-listed stocks was frozen for three hours, leading U.S. Secu-rities and Exchange Commission Chair Mary Jo White to call for a meeting of Wall Street executives to insure continuous and orderly functioning of the markets.

Kigali, Thursday

BURUNDI saw its export revenues for tea rising 14 per cent in April this year from the same period a year before, helped by a fall in production of the commodity in Kenya, a tea board official said yesterday.

The figures are for a period mostly before protests erupted against President Pierre Nkurunzizas decision on April 25 to run for a third term. Weeks of often violent demonstrations, mostly in the capital, have hammered parts of the economy since.

Burundis state-run tea board (oTB) said it had collected $1.97 million from the export of 712,440 kg, up from the $1.73 million it earned in April 2014 from selling 811,158 kg.

Production levels from Kenya, the biggest regional producer and the worlds top exporter of black tea, tends to influence the regional market and the countrys fall in output due to poor rains has pushed up prices.

Prices for Burundis tea rose on the regional market following a fall of Kenyan production for the period covering January to April this year, oTB head of export Joseph Marc Ndahigeze told Reuters.

The landlocked East African nation exports 80 percent of its tea through a regional weekly auction held in the Kenyan port city of Mombasa.

oTB said the export average price per kg climbed to $2.77 in April from $2.14 last year.

Cumulative earnings from January to April 2015 jumped to $10.1 million, from $7.1 million the same period in 2014, while overall sales rose to 3,909,974 kg from 3,117,860 kg.

Tea is Burundis second-largest hard currency earner after coffee and employs about 300,000 smallholder producers in the nation of 10 million people.

Beijing, Thursday

CHINESE stocks rebounded around 6 percent on Thursday, as Beijings increasingly fran-tic attempts to arrest a sell-off that has roiled global financial markets finally appeared to gain some traction.

In the most drastic step yet to prop up the market, Chinas securities regulator banned share-holders with large stakes in listed firms from selling. The banking regulator said separately it would allow lenders to roll over loans backed by stocks.

By the close of trading, the CSI300 index of the largest listed companies in Shanghai and Shenzhen had raced up 6.4 percent, while the Shanghai Composite Index bounced 5.8 percent for its biggest daily per-centage gain in six years.

Chinas malfunctioning stock markets remained semi-frozen, however, with the shares of around 1,500 listed companies - or around $2.8 trillion of stock - suspended, and some analysts said it was too early to call the endgame.

The market sees some positive signs today, said Du Changchun, analyst at Northeast Securities in Shanghai. But it is far from calling it a victory for the rescuers as more than half of listed companies are not trading.

More than 25 percent has been knocked off the value of Chinese shares since mid-June, and for some global investors the fear that Chinas market turmoil will destabilize the financial system is now a bigger risk than the crisis in Greece.

We are inclined to believe that Beijing will escalate policy responses until they start work-ing, said economists at Credit Suisse in a research note.

If market conditions do not stabilize, we expect a state-ment of whatever it takes from the Chinese government, given that social stability is at stake and financial systemic risks are evident.

The United States has voiced worries the stock market crash could get in the way of Beijings economic reform agenda.

The plunge in Chinas previ-ously booming stock markets, which had more than doubled in the year to mid-June, is a major headache for President Xi Jinping and Chinas top leaders, who are already grappling with slowing growth.

Beijing, which had made handing a larger role to market forces a centerpiece of its eco-nomic reforms, has responded with a battery of support mea-sures, including an interest rate cut, suspension of initial public offerings and enlisting broker-ages to buy stocks, backed by cash from the central bank.

The government will be able to stabilize the market because they have a lot of tools in the toolbox, said Christopher Moltke-Leth, head of institutional client trading at Saxo Capital Markets. But it is concerning that the Chinese government doesnt allow market forces to work, and thats something China must change over time.

The Global Times, an influ-ential tabloid published by the Communist Partys official newspaper, invoked the national team in an editorial rallying support behind the authorities efforts to arrest the slide.

While there are disaster victims everywhere in Chinas stock market, the other scene is that the national team is truly taking action, the paper said.

Burundi April tea export revenues rise

NewYork Stock Exchange hit by technical glitches

China stocks rebound sharply after curbs

MANAGING Partner of Corporate Auditors of Tanna Sreekumar & Co Certified Public Accountant, Dr Sree Kumar (left) welcomes, a prominent entrepreneur, Mr Andy Chande to a party organised by his firm in Dar es Salaam recently. (Photo by Staff Photographer)