Australia says no let up in search for MH370 answers

Australia Saturday reiterated its commitment to finding answers for the families of those on board missing Flight MH370, with Foreign Minister Julie Bishop hailing the "first positive sign" that part of the plane has been found. 

PHOTO: AFP

AUG 1, 201510:21 AM

[SYDNEY] Australia Saturday reiterated its commitment to finding answers for the families of those on board missing Flight MH370, with Foreign Minister Julie Bishop hailing the "first positive sign" that part of the plane has been found.

A wing part that washed up on the French Indian Ocean island of La Reunion was being flown to Paris for analysis in what could be the first breakthrough in a case that has baffled aviation experts for 16 months.

Ms Bishop said she was hopeful it could provide insight into what happened to the Malaysia Airlines flight, which disappeared on March 8 last year en route from Kuala Lumpur to Beijing with 239 people on board.

"Well, this piece of wreckage is being analysed by experts in France. It's believed to be part of a Boeing 777. That is the same kind of aircraft that was MH370," she said.

"So, in a sense, this is the first positive sign that we have located part of that plane." Australia has been leading the hunt for the plane with satellite and other data pointing it to coming down in the southern Indian Ocean.

Ships have been scouring more than 50,000 square kilometres (19,000 square miles) of deep ocean floor for evidence, although none has so far been found. Authorities plan to search a total of 120,000 square metres.

Ms Bishop said Australia remained determined to locate the main debris field.

"Australia is in charge of that search, it's an international effort," she said.

"Of course, experts will have to analyse if this is a piece of MH370, the current drifts and how it ended up there and what does that mean for the broader search question.

"But Australia is still committed to assisting and doing whatever we can so that we can locate MH370 and provide answers for the families of the 239 people onboard that flight." On Friday, Deputy Prime Minister Warren Truss said Australia was "confident that we're searching in the right place".

"And if in fact the plane parts found on Reunion Island are linked to MH370, that would rather strengthen the case that we are in the right area," he added, with the debris find consistent with currents from the area being scoured.

But Mr Truss also cautioned that while the discovery "could be a very important piece of evidence" if it was linked to MH370, using reverse modelling to determine more precisely where the debris may have drifted from was "almost impossible".

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Tumbling oil prices slam profit at Exxon Mobil, Chevron

Weak oil prices shriveled quarterly profit at Exxon Mobil Corp and Chevron Corp on Friday, compelling both companies to rethink operations and plan for what many expect to be a sustained period of cheap crude.

PHOTO: AFP

AUG 1, 20157:21 AM

[NEW YORK] Weak oil prices shriveled quarterly profit at Exxon Mobil Corp and Chevron Corp on Friday, compelling both companies to rethink operations and plan for what many expect to be a sustained period of cheap crude.

Earnings at US oil majors Exxon, which were the worst in a decade, and Chevron missed analysts' expectations, adding to concerns that perhaps executives had not acted quickly enough to mitigate the impact of an over-50-per cent drop in oil prices since last summer.

The results highlight how smaller and more nimble US shale oil companies have slashed costs faster and more aggressively than global majors. Some shale producers have cut back drilling by 60 per cent or more.

Evan Calio, an analyst with Morgan Stanley, said on Exxon's earnings conference call that the oil giant appeared to be less vocal than its peers about cutting costs.

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Jeff Woodbury, Exxon's head of investor relations, responded that the company was constantly focused on capital efficiency and cost management.

Still, Exxon is sticking for now with its plans to spend US$34 billion this year, although that figure has a downward bias because of cost savings and efficiencies, Woodbury said.

Chevron also still plans to spend US$35 billion this year, but said it would spend less in 2016 and 2017 as several mega projects come online.

Exxon and Chevron's European peers such as Royal Dutch Shell Plc have taken more aggressive action. BP Plc cut its budget for the second time this year, while Shell said it would lay off 6,500 workers.

Exxon's profit fell by more than half, with the biggest drop in its exploration and production business, where earnings slumped by nearly US$6 billion Chevron's profit plunged 90 per cent, a starker drop and one exacerbated by a US$2.22 billion loss in its exploration and production division.

Pat Yarrington, Chevron's chief financial officer, seeking to head off complaints about cost management, said the company had slashed about US$3 billion in spending so far this year, and wasn't done. Still, analysts peppered her throughout the earnings call for details.

Though production grew at both companies, they missed the estimates of many analysts who had expected the energy giants to pump more.

Shares of both slumped more than 3 per cent in afternoon trading.

To be sure, the two companies benefited from their refining divisions, which make gasoline and other fuels.

Refining units tend to be far more profitable when oil prices are low, providing Chevron and other integrated energy companies with an internal hedge during times when core operations, such as oil production, are weighed down by weak prices.

Both companies stressed their ability to weather the price doldrums and emerge stronger.

Chevron's Chief Executive John Watson, for instance, bluntly described the results as "weak." He laid off 2 per cent of its staff earlier this week. "I think in general the industry is putting a sharper pencil to cost cutting," said Brian Youngberg, senior oil company analyst at Edward Jones in St Louis. "I think they are realizing the days of US$100 a barrel (oil) are over." Exxon also said Friday it would slow its share repurchase programme. The company purchased US$1 billion of its own stock in the second quarter, but expects to spend roughly half of that on repurchases in the third quarter.

Chevron earlier this year scrapped its entire repurchase program.

REUTERS

    

Japan police arrest MtGox CEO over loss of bitcoins: media

Japanese police on Saturday arrested Mark Karpeles, CEO of the collapsed MtGox bitcoin exchange, over the loss of nearly US$390 million worth of the virtual currency, local media said. 

PHOTO: BLOOMBERG

AUG 1, 20157:41 AM

[TOKYO] Japanese police on Saturday arrested Mark Karpeles, CEO of the collapsed MtGox bitcoin exchange, over the loss of nearly US$390 million worth of the virtual currency, local media said.

Mr Karpeles is suspected of having accessed the computer system of the exchange and of falsifying data on its outstanding balance, Kyodo News and public broadcaster NHK said.

AFP

    

Update: China July factory growth unexpectedly stalls

Growth at China's big manufacturing companies unexpectedly stalled in July as demand at home and abroad weakened, an official survey showed on Saturday, reinforcing views that the economy needs more stimulus as it faces fresh risks from a stock market slump. 

PHOTO: AFP

AUG 1, 201510:56 AM

[BEIJING] Growth at China's big manufacturing companies unexpectedly stalled in July as demand at home and abroad weakened, an official survey showed on Saturday, reinforcing views that the economy needs more stimulus as it faces fresh risks from a stock market slump.

The official Purchasing Managers' Index (PMI) stood at 50.0 in July, compared to the previous month's 50.2. The 50-point mark separates growth from contraction on a monthly basis.

Analysts polled by Reuters had predicted another tepid reading of 50.2, pointing to expansion, albeit a sluggish one.

However, both export and domestic orders shrank for the large firms covered by the survey.

It did not mention any impact from a savage 30 per cent drop in China's share markets since mid-June, though analysts said the wild price swings could hit consumer and business confidence and investment decisions, adding pressure on the already cooling economy. "It warrants more concrete policy measures to stabilise the real economy. Perhaps the funds used to prop up the share market could be used to support the real economy," ANZ economists Li-Gang Liu and Louis Lam said in a research note.

ANZ maintained its forecast that the central bank will cut interest rates by another 25 basis points (bps) this quarter and reduce banks' reserve requirements by 50 bps by year-end.

The government has rolled out a flurry of steps since last year to try to put a floor beneath sputtering economic growth, including accelerating infrastructure spending and repeated reductions in interest rates and banks' reserve ratio. But growth is still expected to moderate this year to around 7 per cent, the slowest in a quarter of a century.

Volkswagen lowered its global sales forecast on Wednesday and said it was braced for stagnant volumes in China, after years of double-digit growth in its biggest market.

A similar survey suggested strength in the services sector continued to offset some of the persistent weakness at factories, but there were worrying signs on that front, too.

The official non-manufacturing Purchasing Managers' Index (PMI) edged up to 53.9 in July, compared with the previous month's reading of 53.8 and pointing to solid expansion.

But services companies also reported softer orders, with the new orders sub-index falling to 50.1 in July from 51.3 in June, and firms cut jobs at a slightly faster pace. The employment sub-index inched down to 49.2 from June's 49.7.

The services sector has accounted for the bigger part of China's economic output for at least two years, with its share rising to 48.2 per cent last year, compared with the 42.6 per cent contribution from manufacturing and construction.

China's Politburo has promised to step up "targeted" adjustments to economic policy to foster stable growth in the world's second-largest economy, media said on Thursday.

In a rare acknowledgement of the challenges ahead, state radio quoted the decision-making body of the Communist Party as saying that China had yet to find new drivers to power its economy at a time when old engines are flagging.

REUTER
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No final deal in Pacific trade talks: negotiators

Delegates negotiating a huge Pacific free-trade agreement said Friday they have failed to reach a final deal after several days of intense talks in Hawaii, in a setback to US President Barack Obama. 

PHOTO: REUTERS

AUG 1, 201511:37 AM

[WASHINGTON] Delegates negotiating a huge Pacific free-trade agreement said Friday they have failed to reach a final deal after several days of intense talks in Hawaii, in a setback to US President Barack Obama.

But US Trade Representative Michael Froman, in a statement on behalf of the 12 countries involved, insisted that "significant progress" had been made on the Trans-Pacific Partnership (TPP) agreement.

"After more than a week of productive meetings we've made significant progress and will continue on resolving a limited number of remaining issues, paving the way for the conclusion of the Trans-Pacific Partnership negotiations," said Froman.

The negotiators were "more confident than ever that TPP is within reach," he said, adding that the Pacific Rim countries involved would continue to have bilateral discussions to try and iron out their remaining differences.

"The progress made this week reflects our long-standing commitment to deliver an ambitious, comprehensive and high-standard TPP agreement that will support jobs and economic growth across the Asia-Pacific region." The failure to hammer out the final details of the accord are a blow to Obama as it could see the TPP become campaign fodder as the United States gets set to enter election season.

The TPP is the most ambitious trade deal in decades, a vast free-trade bloc encompassing 40 per cent of the world's economy and part of Obama's much-vaunted "rebalance" towards Asia in the face of an increasingly assertive China.

The 12 countries involved, also including Australia, New Zealand, Japan and Canada, have faced criticism for carrying out their negotiations in what opponents have charged is a high level secrecy.

Critics say the proposals indicate a deal moving more toward protection than free trade; one more about corporate benefits than boosting economies and development.

But backers say the modern global economy needs a new framework of rules to protect intellectual property-dependent 21st century industries that aren't covered in traditional free trade pacts like the World Trade Organization.

Several prickly issues were believed to have held up what was supposed to be the final round of talks this week on the island of Maui, prime among them differences over agricultural markets and protection for drug makers.

With the US facing elections in November 2016, and voters suspicious of trade treaties, the delay could jeopardize its ratification in Congress.

"Today's fourth 'final' TPP ministerial without a deal means the clock has run on possible US congressional votes in 2015," Lori Wallach, director of advocacy group Public Citizen's Global Trade Watch, said in a statement.

"No deal means the TPP is thrown into the political maelstrom of the US presidential cycle and with opposition building in many countries there are reduced chances that a deal will ever be reached on a pact that US Trade Representative Michael Froman declared to be in its 'end game' in 2013 but that has become ever more controversial since.

"It's good news for people and the planet that no deal was done at this final do-or-die meeting given the TPP's threats to jobs, wages, safe food, affordable medicines and more."

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Pacific Rim free trade talks unlikely to end in deal: sources

Talks on a Pacific Rim free-trade pact are unlikely to end in a final deal, sources involved in the negotiations said on Friday, with a dispute between Japan and North America over autos, New Zealand digging in over trade in dairy products and no agreement on monopoly periods for next-generation drugs. 

PHOTO: REUTERS

AUG 1, 20159:28 AM

[LAHAINA, Hawaii] Talks on a Pacific Rim free-trade pact are unlikely to end in a final deal, sources involved in the negotiations said on Friday, with a dispute between Japan and North America over autos, New Zealand digging in over trade in dairy products and no agreement on monopoly periods for next-generation drugs.

Trade ministers from the 12 nations negotiating the Trans-Pacific Partnership, which would stretch from Japan to Chile and cover 40 percent of the world economy, delayed until 4 pm local time (10 pm ET/0200 GMT) a news conference originally scheduled for 1:30 pm on the Hawaiian island of Maui.

Three sources involved in the talks said a last-minute breakthrough was unlikely due to issues with dairy and auto trade and a stand-off over biologic drugs, which are made from living cells. "It would be very difficult to arrive at a deal," one of the officials said, requesting anonymity because discussions were ongoing.

Australian Trade Minister Andrew Robb said the problem lay with the "big four" economies of the United States, Canada, Japan and Mexico. "The sad thing is, 98 per cent is concluded," he said. "I don't know how sticky it is." Failure to seal the agreement will be a setback for US President Barack Obama, given the trade pact's stance as the economic arm of the administration's pivot to Asia and an opportunity to balance out China's influence in the region.

The talks, which drew about 650 negotiators, 150 journalists and hundreds of stakeholders to the Hawaiian island of Maui, had been billed as the last chance to get a deal in time to pass the US Congress this year, before 2016 presidential elections muddy the waters.

The deal seeks to meld bilateral questions of market access for exports with one-size-fits-all standards on issues ranging from workers' rights to environmental protection and dispute settlement between governments and foreign investors.

Negotiators from the 12 TPP members had worked through the night and officials said great strides were made in many contentious areas.

But issues pegged as sticking points going into the talks were still blocking a deal after four days of discussions.

New Zealand has said it will not back a deal that does not significantly open dairy markets, with an eye to the United States, Japan and Canada, as well as Mexico.

John Wilson, chairman of the world's largest dairy exporter, New Zealand dairy cooperative Fonterra, arrived to attend the talks late on Thursday to press home the case.

Ministers had also yet to agree on how long to protect data used to develop biologic drugs. US drugmakers want 12 years, but Australia wants five. People briefed on the talks had seen seven or eight years as a possible compromise.

Ministers will likely head home from Maui with no set date for their next meeting.

Japan and the United States had been trying to agree on the rules of origin for cars, which determine when a product is designated as coming from within the free trade zone and therefore not subject to duties.

The United States and Japan had largely agreed on the rules, but had to get buy-in from Canada and Mexico, which are closely tied in to the US auto industry.

Japanese automakers source many car parts from Thailand, which is not a member of the TPP, and strict rules would upset existing supply chains. Japan also wants the United States to quickly drop duties on Japanese auto parts going to the United States.

REUTERS

    

IMF approves loan to Ukraine despite debt concerns

The International Monetary Fund approved Friday the next installment of its massive loan to Ukraine despite uncertainty about the sustainability of the country's debt and its conflict with separatist forces. 

PHOTO: AFP

AUG 1, 20156:39 AM

[WASHINGTON] The International Monetary Fund approved Friday the next installment of its massive loan to Ukraine despite uncertainty about the sustainability of the country's debt and its conflict with separatist forces.

The IMF executive board, which represents 188 member nations, gave a green light to the immediate disbursement of US$1.7 billion, part of a support program awarded in March that has caused internal strains in the Washington-based institution.

In total, the IMF has pledged US$17.5 billion in financial assistance over four years in exchange for drastic measures by the government to restore public finances, hammered by recession and the loss of part of its territory to pro-Russian separatists.

The new installment, after an initial US$5 billion disbursement released in March, comes after the IMF completed its first review of the government's progress under the loan package, which aims to "put the economy on the path to recovery" and "strengthen public finances", the IMF said in a statement.

David Lipton, the IMF's first deputy managing director, said that the Ukrainian authorities had made a "strong start" in implementing their economic program.

"The momentum needs to be sustained, as significant structural and institutional reforms are still needed to address economic imbalances that held Ukraine back in the past," Mr Lipton said in a separate statement.

Ukraine welcomed the new loan installment, saying it will be used to replenish the National Bank's reserves. "The new tranche will encourage growth in the economy and reassure financial markets both domestically and internationally," the Ukrainian finance ministry said in a statement.

But the task is Herculean. Deprived of the heart of its industrial sector in the eastern part of the country, lost to separatists, the Ukrainian economy is expected to plunge deeper into recession this year - a 9.5 per cent contraction the government estimates.

As gross domestic product shrinks, the country's debt appears on course to reach nearly 135 percent of GDP this year, compared with about 70 per cent in 2014.

Under its policy, the IMF can only provide financing if a country's debt is "sustainable with high probability."

To resolve this headache and satisfy the United States, its largest shareholder, the IMF said that Ukraine needed to find US$15.3 billion in debt relief with private creditors over the coming four years.

But the difficult debt negotiations, under way for the past several weeks, have so far produced no concrete results and increase the risk of a Ukrainian default that could further drive away investors.

The creditors, led by US investment firm Franklin Templeton, have proposed a debt reduction of 10 per cent, according to a source familiar with the discussions, far below the 40 per cent "haircut" sought by Kiev.

Mr Lipton reiterated that the Fund was prepared to continue its programme even if debt negotiations with private creditors founder.

"In the event that talks with private creditors stall, and Ukraine determines that it cannot service this debt, the Fund could continue to lend to Ukraine consistent with its Lending-into-Arrears Policy," he said.

US Treasury Secretary Jacob Lew said the US "strongly supported" the IMF's latest disbursement to Ukraine.

"We urge the creditors participating in the ongoing debt operation to reach a timely agreement with the Ukrainian authorities that fully satisfies the criteria outlined in Ukraine's IMF programme - including the debt sustainability target," Mr Lew said.

The IMF points to Kiev's "commitment" in implementing reforms, in contrast with the lack of cooperation from the Greek authorities, for the apparent difference in its approach to the two heavily indebted countries.

Since the ouster of Ukraine's pro-Russian president Viktor Yanukovych in early 2014, the IMF can rely on a pro-West government which has been more willing to tackle tough programmes, including an increase in gas prices.

The IMF notably has been able to count on the Ukrainian finance minister, Natalie Jaresko, an American who worked at the US State Department and became a Ukrainian citizen just before taking her post.

"Ukraine has been an incredibly encouraging situation," Christine Lagarde, the IMF managing director, said this week.

"We have seen political determination to change the face of Ukraine."

AFP