Race, Youth, Even ‘Burbs Go Against Republicans: Albert R. Hunt

Commentary by Albert R. Hunt

Dec. 1 (Bloomberg) -- Republicans running under the deadly drags of a financial crisis, an unpopular president and the political cycle didn’t do as poorly in the U.S. elections as some had feared.

Barack Obama won by about seven percentage points, more than Bill Clinton in his first victory, about the same as George H.W. Bush in 1988, and less than Ronald Reagan in 1980. The party lost almost two-dozen House seats and seven or eight Senate seats, severe setbacks but short of devastating.

A deeper look at the changing shape of the electorate suggests more fundamental problems for Republicans. Their core constituencies are shrinking, and the wedge issues that used to plague Democrats are now more divisive for Republicans.

If the racial and generational composition on Nov. 4 had been identical to four years ago, John McCain might have won.

Non-whites comprised 26 percent of the electorate, up from 23 percent in 2004. Obama carried 80 percent of these voters. African-Americans turned out in record numbers, and almost all of them voted for the first black president.

Republicans once hoped to score well among Hispanics, the fastest-growing slice of the population. They were 9 percent of the electorate last month, with almost three times as many Latino voters as just 16 years ago.

Obama carried Hispanics, 67 percent to 31 percent, according to exit polls. That gave him a cushion in heavily Hispanic-populated states like New Mexico, Nevada and Colorado -- all of which were in the Republican column four years before -- and in places like Iowa and North Carolina, which have growing Latino populations.

Hispanics Decisive

Obama won North Carolina by 13,000 votes as Hispanics, who comprised 3 percent of the voters, provided the margin. In eight years, that vote in North Carolina may double.

What killed McCain, who has a consistently pro-Latino and pro-immigration record, was the Republican Party’s not-so- subtle Hispanic-bashing in scuttling immigration reform in Congress last year.

This creates a considerable wedge-issue dilemma for Republicans: In primaries, many of the party’s core voters believe these “aliens” are debasing American values; that’s why politicians like Mitt Romney flipped into immigration- bashers this year.

Yet as long as that persists, this portion of the American electorate will vote more and more Democratic. The argument some Republicans advance, that they can oppose “illegal” immigration and woo Latinos on traditional values, assumes these voters can be duped. This election demonstrated that’s a canard.

Youth Movement

Next, voters ages 18 to 29, almost one-fifth of the electorate, went better than 2-to-1 for Obama.

Here, too, the trends in the past couple of elections have been all Democratic. Some of that is because there are more minorities among younger voters; some of it is the lousy economy, and some the opposition to the Iraq War.

But interviews and survey data suggest that another reason is tolerance, and the feeling that on matters like gay rights and race relations, Republicans are out of step. Most young people have no trouble with gay relationships.

Cultural conservatives celebrated that three states, California, Arizona and Florida, voted last month to ban gay marriage. They will learn these were pyrrhic victories much like the anti-immigration measure California Republicans rode to electoral success in 1994, where they won an election and lost a generation.

Research suggests that once young people cast a few votes for one political party, it’s often a lifetime habit.

The ‘Burbs

The third and overlapping signature political trend this year were the suburbs and rapidly growing exurbs, previously Republican strongholds. Two states tell this story. One is Virginia, particularly Prince William and Loudoun counties, about an hour from Washington.

In 2000, George W. Bush carried these counties comfortably. This time, Obama carried one with almost 58 percent of the vote, and the other with 54 percent, as he became the first Democratic presidential candidate to win Virginia in 44 years.

Fueled by places like these exurbs, the political dynamics of this formerly sleepy state (once described as a hotbed of social rest) are changing, and not just in this election. When Bush was first elected president, Republicans held the Virginia governorship, both U.S. Senate seats and eight of the 11 House districts. In January, the picture will look quite different: Democrats will hold the state house, both Senate seats and six of the 11 House districts.

Then There’s Pennsylvania

The other is Pennsylvania, the one traditionally Democratic state the Republicans contested this time. The rationale was the Democrats would win large majorities in Philadelphia and Pittsburgh, as usual, while the Republicans would carry the smaller, more rural and more working-class areas. The battleground would then be the big Philadelphia suburbs. These used to be the base of the Republican Party in the state, though Bush narrowly lost them in 2004.

This time, Obama carried all four of these counties -- Bucks, Chester, Delaware and Montgomery -- by a combined 200,000 votes. These suburbs now comprise more than a fifth of the electorate, about the same as Philadelphia and Pittsburgh combined. Without carrying them, a Republican has little chance statewide.

More Minorities

There are more minorities in the suburbs than during the Republicans’ salad days, and the voters are younger. But these suburbs are also full of moderate swing voters, whose disenchantment with Republicans extend well beyond 2008. Any of the other Republican presidential candidates this year would have lost these suburbs and the state by more than McCain.

If Pennsylvania is gone and Virginia is turning into a Democratic-leaning -- or “purple-blue” -- state, the Obama coalition of minorities, young people and moderate suburbanites could dominate American politics for a generation.

To be sure, if the economy craters and the Obama administration fails, Republicans will come back and win elections. To avoid being a minority party for the next generation, however, they’re going to have to crack this coalition.

It’s a task for which the Republican Party currently seems ill-suited.

(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: Albert R. Hunt in Washington at ahunt1@bloomberg.net

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Idemitsu to Shut 3 Refineries for Scheduled Maintenance in 2009

By Yuji Okada and Michio Nakayama

Dec. 1 (Bloomberg) -- Idemitsu Kosan Co., Japan’s second- largest oil refiner, will shut three crude refineries for scheduled maintenance next year.

The company will shut the 220,000 barrels-a-day Chiba refinery near Tokyo from April to May, spokesman Ryuichi Sato said by phone from Tokyo. It will also shut the 140,000 barrels- a-day Hokkaido refinery in the country’s north from June to July, and the 160,000 barrels-a-day Aichi refinery in central Japan from October to November, he said.

To contact the reporter on this story: Michio Nakayama in Tokyo at mnakayama4@bloomberg.net;

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Newcastle Coal Falls to 13-Month Low on Higher China Stockpiles

By Jesse Riseborough

Dec. 1 (Bloomberg) -- Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, slumped 8.7 percent to a 13-month low amid rising stockpiles of the fuel in China and a drop in electricity demand.

The weekly index for thermal coal prices at the New South Wales port fell $7.50 to $78.19 a metric ton in the week ended Nov. 28 to the lowest since Oct. 26, 2007, according to the globalCOAL NEWC Index.

Coal supplies in China, the world’s biggest consumer, rose 19 percent in October while power generation fell 5.3 percent, curbing demand for exports, Macquarie Group Ltd. said today. The price has dropped 60 percent from a July record and has traded below this year’s contract price of $125 a ton for the past nine weeks as demand drops and supplies in China increase.

“The Chinese thermal coal market has moved into oversupply as electricity and coke demand collapse yet coal supply continues to grow,” Macquarie analysts led by London-based Jim Lennon said. “Major production cuts may be imminent, whether voluntary or via government safety shutdowns.”

The monthly index fell 15 percent to $91.36 a ton in November, from $106.92 the previous month. Goldman Sachs JBWere Pty cut its forecast for 2009 coal prices to $90 a ton in a Nov. 17 report, implying a 28 percent decline from this year’s contract.

Xstrata Plc, the world’s largest exporter of power-station coal, BHP Billiton Ltd. and Rio Tinto Group are among mining companies that ship coal through Newcastle.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net

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South Korea Oil Imports Fall as Slowing Economy Curbs Demand

By Shinhye Kang

Dec. 1 (Bloomberg) -- South Korea imported 6.5 percent less crude oil in November as slowing economic growth cut fuel demand.

Imports dropped to 73 million barrels last month from 78.1 million a year earlier, the Ministry of Knowledge Economy said in an e-mailed statement today. The country’s crude oil import bill dropped 20.9 percent to $5.1 billion.

To contact the reporter on this story: Shinhye Kang in Seoul at skang24@bloomberg.net

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China National Makes Six Major Oil, Gas Discoveries

By Wang Ying

Dec. 1 (Bloomberg) -- China National Petroleum Corp. has made six major oil and gas discoveries this year as the country's biggest oil explorer steps up efforts on fuel searches to meet rising domestic demand for energy.

The additional oil reserves found may hit a record for a third year, China National, parent of Hong Kong-listed PetroChina Co., said in a statement on its Web site. The incremental natural-gas deposits discovered may exceed 400 billion cubic meters for a fourth time. No further details were given.

PetroChina, Asia's biggest oil producer, will maintain its pace of spending next year at 2008 levels, Chairman Jiang Jiemin said on Nov. 8. Its parent targets a ``stable'' increase in crude production and a ``rapid'' gain in gas output next year, according to the statement today.

China National will control its unit cost and spending to increase exploration profits amid the global financial crisis, the statement said.

The Beijing-based oil producer aims to become an integrated international energy company and the next five to eight years will be important, Vice General Manager Zhou Jiping said during an internal meeting last week, according to the statement.

To contact the reporter on this story: Wang Ying in Beijing at ywang30@bloomberg.net.

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OPEC Failure Foretells Decline 10 Years After $10 Oil

By Anthony DiPaola

Dec. 1 (Bloomberg) -- A decade after OPEC failed to prevent oil from collapsing to $10 a barrel, the world’s biggest producers are delaying the action needed to arrest the steepest slide in energy prices.

Ministers from the Organization of Petroleum Exporting Countries postponed debate on a second cut in output in as many months during meetings in Cairo Nov. 29. They will wait until later this month, after a slump in global economies and the popping of the commodities bubble sent oil down almost $100 from its record price in July to as low as $48.25 a barrel in New York on Nov. 21.

“They are riding the economic wave just like the rest of us,” Adam Sieminski, Deutsche Bank AG’s chief energy economist, said in a telephone interview in Washington. “In the past when there has been a big economic downturn, OPEC has had to go through a series of cuts to stabilize the oil market.”

They haven’t done enough this time around to halt the 67 percent drop. Merrill Lynch & Co., forecasting the first contraction in global demand in a quarter century, sees crude bottoming at an average $43 a barrel in the first quarter, 21 percent below where it ended last week. In December 1998, crude tumbled 61 percent from its peak to as low as $10.35 when OPEC failed to eliminate a supply glut.

Demand Suffers

OPEC members, the producers of 40 percent of the world’s oil, said at the Cairo meeting that they would wait to gauge the effect of a 1.5 million-barrel cut agreed to Oct. 24. That reduction was meant to restrict OPEC’s daily output by 5.2 percent, about the same amount that Spain, the world’s ninth- largest economy, uses in a day.

Ali al-Naimi, the oil minister of Saudi Arabia, OPEC’s largest exporter and its de facto leader, said in Cairo that $75 a barrel oil represents a “fair price” needed to support investment in new fields. The group’s next meeting is in Oran, Algeria, on Dec. 17.

Oil fell as much as $99.02 a barrel from its July record, making the four-month slump steeper than crude’s drop from its 1996 peak to the low set in December 1998.

At that time the hesitation of countries including Iraq, Venezuela and Russia to rein in output amid the Asian financial crisis and a warm U.S. winter contributed to the decline. Now, sinking demand is the main issue as the world’s largest economies slip into recession.

Crude oil for January delivery dropped as much as $1.47, or 2.7 percent, to $52.96 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $53.07 at 10:19 a.m. in Singapore.

Supplies Rise

OPEC, the International Energy Agency and the U.S. Energy Department reduced consumption projections in November because of the economic outlook. OPEC trimmed its forecast for average oil use next year by 530,000 barrels, or 0.6 percent, and the IEA cut its estimate by 670,000 barrels, or 0.8 percent.

“Prices are coming down because demand is,” said Robert Ebel, a senior adviser on energy and national security at the Center for Strategic and International Studies in Washington. “There’s no way of knowing how long this will continue.”

U.S. crude-oil supplies rose for a ninth week, the longest stretch since April 2005, the Energy Department said Nov. 26. U.S. fuel demand declined the most in 27 years in the first 10 months of this year, the American Petroleum Institute reported Nov. 18.

The world’s three biggest economies, the U.S., Japan and Germany, are in or close to recession. The countries represented about one-third of global demand in 2007.

‘The Main Determinant’

Oil prices may fall more as world growth slows, Fatih Birol, the IEA’s chief economist in Paris, said in an interview Nov. 27.

“The main determinant will be how the global economy performs,” Birol said. “If the economy continues to slow, this will put downward pressure on demand and also have an impact on prices.”

OPEC reduced its quota 11 percent in the year through March 1999 to battle falling prices, according to data on the group’s Web site. Its decision in October to cut removed less than half that amount from the market.

By June 2000, the cartel’s quota was almost 25 percent lower than the 27.5 million-barrel limit agreed to in the three months from January 1998 through March 1998.

While New York-based Merrill Lynch predicts a recovery in the second half, with 2009 prices averaging $50 a barrel, Barclays Plc says crude will trade at $72.10 next quarter and average $100.50 for 2009, according to a report Nov. 21.

Spending Programs

Oil producers are depending on crude prices to support spending programs. Venezuela, the largest oil exporter in the Western Hemisphere, estimated an average price of $60 a barrel for its 2009 budget. The Latin American country depends on oil for half its public spending and more than 90 percent of exports.

Russia’s 2009 spending plans are based on a forecast of $95 a barrel of Urals crude, and Finance Minister Alexei Kudrin said Sept. 16 the budget will break even next year if the price of oil averages $70 a barrel. Urals crude, Russia’s benchmark blend, was last priced at $49.60.

Oil producers “do have leverage but it depends on how much unity they can muster up,” said Simon Wardell, an analyst at Global Insight Inc. in London. “They’re facing budget shortfalls, so a decline in output will hurt them even if it does push prices up.”

At the same time, international oil companies, concerned falling crude may make new exploration projects unprofitable, are curtailing investment plans and slowing projects. That may affect supply when demand does recover.

Investment Plans

Producers such as Royal Dutch Shell Plc are cutting back plans to develop deposits like Canadian oil sands. Shell indefinitely postponed the second-phase expansion of its Athabasca project because of rising construction costs. Shell, based in The Hague, also delayed seeking regulatory approval for Carmon Creek. Higher cost plans require $80-a-barrel oil to be profitable, according to Merrill Lynch.

“The market is very related to the global economic crisis,” Qatari Oil Minister Abdullah bin Hamad al-Attiyah said in Cairo. “There’s pressure on demand.”

To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.

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Bank of Japan Will Hold Emergency Meeting on Funding, NHK Says

By Tak Kumakura and Mayumi Otsuma

Dec. 1 (Bloomberg) -- The Bank of Japan will hold an emergency meeting this week to consider accepting a broader range of collateral from lenders as a way to help companies obtain funding, public broadcaster NHK said.

The central bank will discuss creating a special lending program for the first time in 10 years, NHK reported on its Web site today, without saying where it got the information. Under the plan, commercial banks would be able to use corporate bonds with lower credit ratings as collateral for obtaining cash from the central bank, the report said.

A record number of publicly traded Japanese companies went bankrupt this year as the global credit crisis made banks less willing to lend. The corporate debt market has closed to all but the top-ranked companies, and interest rates banks in Tokyo charge each other have increased in each of the past 15 days.

“Commercial banks remain reluctant to lend to each other as long as they are worried about counterparty risks in financial markets, which is the core of the ongoing problem,” said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “This situation won’t improve much even if the central bank and the government launch policy steps.”

Bank of Japan Chief Press Officer Yoshihiro Sugimoto told Bloomberg News that the central bank doesn’t comment on whether unscheduled meetings will be held.

The central bank’s extended collateral program would stay in place until April to help companies get cash needed to settle accounts at the end of the calendar and fiscal years, NHK said.

Reluctant to Lend

The Bank of Japan currently accepts the top seven of 10 investment-grade corporate bonds that are publicly placed. It also takes AAA-rated asset-backed securities and some higher grades of asset-backed commercial paper.

Lending between banks has tightened in Japan even after the central bank’s Oct. 31 decision to cut its benchmark overnight lending rate to 0.3 percent from 0.5 percent. The three-month Tokyo interbank offering rate, or Tibor, rose for the 15th straight day to 0.876 percent on Nov. 28, 576 basis points higher than the target for overnight lending on Nov. 28. Three- month Tibor was 0.388 basis points higher on Oct. 30.

Bank of Japan Governor Masaaki Shirakawa acknowledged last month that the key-rate cut hasn’t been reflected sufficiently on other borrowing costs. Last month he instructed his staff to study new ways of making money available for lending.

Strains Reach Japan

“Strains in global financial markets are reaching Japan and investors are increasingly avoiding risks,” Shirakawa said on Nov. 21. “Conditions for businesses to borrow from markets are worsening” as credit spreads widen and companies have to cancel sales of bonds and commercial paper, he said.

Morimoto Co., a property developer, went bankrupt last week, citing difficulty obtaining finance in the wake of the credit crisis. The company’s collapse brought the number of failures of publicly traded companies in Japan to 30 this year, a postwar record, based on information from Teikoku Databank Ltd.

The balance of commercial paper, which companies use for short-term funding, fell to 12.8 trillion yen ($134 billion) in October, the lowest since March 2002.

Corporate bond sales in Japan plunged 45 percent in November from a year ago as the world’s second-largest economy fell into its first recession since 2001, data compiled by Bloomberg show. NTT DoCoMo Inc. and Nippon Steel Corp. paid higher yield premiums last week when they sold the first bonds outside the public works sector since Oct. 15.

Shirakawa, who will give a speech later today in Fukuoka, southwestern Japan, has indicated he’s reluctant to lower the benchmark rate again and revive a 2001-2006 policy of keeping borrowing costs near zero percent. Further reductions could impede the flow of funds in the money market by making returns so low that investors have little incentive to trade, he said at least six times last month.

To contact the reporters on this story: Tak Kumakura in Tokyo tkumakura@bloomberg.net; Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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Malaysian Ringgit Extends 4-Month Slide as Growth, Exports Cool

By David Yong

Dec. 1 (Bloomberg) -- Malaysia’s ringgit fell for a second day on speculation a government report this week will show export growth cooled in October, adding to signs the economic slowdown in deepening.

The currency extended a four-month slide after the central bank said last week the economy grew 4.7 percent in the three months ended Sept. 30, the least in three years. Shipments abroad may have increased at the slowest pace since March, according to a Bloomberg News survey.

“Global economic deceleration is going to hit Malaysia and the correction in commodity prices will cap the value of exports,” said Sebastien Barbe, a strategist at Calyon in Hong Kong. “Asia-ex Japan currencies, with the exception of the Hong Kong dollar and Chinese yuan, will have to adjust lower.”

The ringgit fell 0.2 percent to 3.6275 per dollar as of 9:32 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency has declined 10 percent since the end of July. The ringgit will weaken to 3.90 to the dollar by June next year as economic growth slows to zero in 2009, Barbe said.

Malaysian exports rose 5.7 percent in October from a year earlier as prices of key exports such as crude oil and palm oil slumped, according to the Bloomberg survey before the trade ministry report on Dec. 4. They gained 15.1 percent in September.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

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Korea Won Ends 4-Day Gain as Exports Fall; Bonds Little Changed

By Kim Kyoungwha

Dec. 1 (Bloomberg) -- South Korea’s won fell, snapping a four-day gain, after a government report showed exports shrank the most in seven years last month. Bonds were little changed

The won extended its losses this year to 37 percent, the worst performer of the 10 most-traded Asian currencies outside Japan, as investors fled emerging markets due to slower global growth. Exports, which make up more than half of Korea’s economy, declined 18.3 percent in November from a year earlier, after growing 8.5 percent the previous month.

“The gloomy export number is having a negative psychological impact on the won,” said Jay Won, a currency dealer at Korea Exchange Bank in Seoul. “Still, losses will be limited as there’s caution against intervention around the 1,500 level.”

Korea’s won fell 0.4 percent to 1,475.25 per dollar as of 10:25 a.m. local time, according to Seoul Money Brokerage Services Ltd. The currency has declined for the past four months.

South Korea’s export growth may be less than 10 percent in 2009, the Maeil Business Newspaper reported Nov. 28, citing Knowledge Economy Minister Lee Youn Ho. The ministry said in November that the government is targeting exports to expand 15 percent next year.

Goldman Sachs Group Inc. last week cut its 2009 economic- growth forecast for South Korea to 1.8 percent from a previous prediction of 3.1 percent, citing faltering local and overseas demand. The change came after Macquarie Securities Ltd. forecast the economy will contract 2 percent next year and UBS AG said it will shrink 3 percent.

Bonds were little changed before the government sells 1.2 trillion won ($814 million) of three-year notes today. The finance ministry will announce the result of the auction at 11:30 a.m. local time.

The yield on the 5.5 percent bond due June 2011 rose 1 basis point to 4.87 percent, according to the Korea Securities Dealers Association. The price fell 0.018, or 2 won per 10,000 won face amount, to 104.092. A basis point equals 0.01 percentage point.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.

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Colombian Peso Sinks Under the Weight of Venezuelan Oil Crash

By Andrea Jaramillo and Michael J. Moore

Dec. 1 (Bloomberg) -- For five years, Mario Hernandez’s Bogota-based, leather goods-company sent record shipments of designer wallets, purses and shoes over the border to Venezuela. Demand got so hot, Hernandez says with a laugh, that he started signing autographs at stores and restaurants in Caracas.

That boom, part of a seven-fold surge in Colombian exports to its northern neighbor that helped drive the peso to a nine- year high in June, is coming to an end as Venezuela’s oil-driven economic expansion careens toward a bust.

“Time to tighten the belt,” says Hernandez, whose company, Marroquinera SA, has been exporting to Venezuela since 1985.

The looming slowdown in trade will deepen the peso’s 30 percent slide against the dollar since mid-June and make it the worst-performing currency in Latin America over the next year, Morgan Stanley and Goldman Sachs Group Inc. say. When Venezuela last fell into a recession, in 2002, Colombian shipments to its second-biggest trading partner sank 38 percent, helping spark a 21 percent rout in the peso.

There’s going to be “a major drop in Venezuelan demand for Colombian products,” said Boris Segura, a Latin America economist at Morgan Stanley in New York. “That’s a clear and imminent risk.”

Morgan Stanley predicts the peso will weaken 11 percent by the end of 2009 to 2,600 from 2,319.1 on Nov. 28. Goldman Sachs forecasts it will depreciate 9 percent over the next 12 months, more than any other currency in the region except the Argentine peso, whose exchange rate is managed by the government. Colombia’s peso will drop to 2,364 next year, according to the median of eight forecasts in a Bloomberg survey.

Murder, Kidnapping

Even at those rates, the peso won’t get near the record low of 2,986.8 reached in January 2003, when an increase in kidnappings by guerrillas curbed investment in the country. The currency strengthened since then, reaching a high to the dollar of 1,633 on June 18, as President Alvaro Uribe restored rule of law, cutting homicides and kidnappings more than 40 percent, according to Defense Ministry figures.

The peso is falling now in part because Colombia sends 17 percent of its $30 billion in annual exports to its neighbor.

Venezuela relies on oil for more than 90 percent of its international sales, making the country more dependent on commodities than any other in the region, said Alberto Ramos, an economist with Goldman in New York. Colombia also gets 24 percent of its exports from crude, which plunged 62 percent from a July record of $147.27 a barrel.

For Colombia, it’s a “double whammy of negative shocks,” Ramos said.

‘Seen This Movie’

Hernandez, 67, says he may cut advertising and inventories and borrow less to offset the slump in Venezuela, where Marroquinera gets 30 percent of its sales.

Venezuela will post “marginal” economic growth next year after expanding 11.8 percent on average since 2003, said Pedro Palma, an economics professor at the IESA business school in Caracas. President Hugo Chavez will be forced to reduce government spending after tripling it over the past four years, Palma said.

Chavez, 54, may also devalue the government-set 2.15 bolivar-per-dollar exchange rate, crimping demand for Colombian exports, Palma said. The bolivar trades at 5.15 per dollar in an unregulated, parallel market, a sign investors are anticipating the government will devalue the official rate.

“We have seen this movie several times,” said Palma, a University of Pennsylvania-trained economist who’s tracked Venezuela’s boom-and-bust cycle for three decades. “Every time we see the movie, we expect that this time it’s going to end differently: ‘This time oil prices are not going to drop.’ We’re just making the same mistakes.”

‘Feel the Pinch’

The economy shrank 1.7 percent on average per year from 1980 to 1984 after expanding at an annual rate of 5.1 percent during the oil boom of the 1970s. Economists predict growth will slow to 2.6 percent next year, according to the median of eight forecasts in a Bloomberg survey. VenEconomia, a Caracas-based research firm, is more bearish, predicting a 2 percent contraction.

The country can still dominate Colombia because Venezuela’s gross domestic product totaled $228 billion last year, 33 percent more than its neighbor’s $172 billion.

“Under current oil prices, not even a miracle can save Venezuela from a crisis,” said Juan Pablo Fuentes, a Latin America analyst at Moody’s Economy.com in West Chester, Pennsylvania. “Colombia is already beginning to feel the pinch.”

Shrinking Pie

Fuentes forecasts the peso will weaken to 2,627 by the end of 2009 as Venezuela’s slump helps trim Colombian growth to 3.6 percent from an average of 6.4 percent over the past three years.

Exports to Venezuela may drop below $4 billion from a record $5.4 billion this year, said Roberto Cajamarca, head of research at the Colombian-Venezuelan Chamber in Bogota.

The trade boom forged an unlikely bond between Chavez and Uribe, who feuded for much of the past six years. When Colombian soldiers crossed into Ecuador to attack a guerrilla camp in March, Chavez sent 10 tank battalions to the border in protest and lashed out at Uribe, 56, calling him a Mafioso, a liar and a “lackey” of the U.S.

“The politics were very hostile, very complex and yet people on both sides of the border were engaging in a lot of cross-border investment and commerce,” said Alvaro Vargas Llosa, a senior fellow at the Independent Institute, a Washington-based policy research group. “Of course all this oil money coming into Venezuela had a lot to do with it.”

As oil revenue dries up, Hernandez, the designer-goods maker in Bogota, prepares for the slowdown. After posting five straight years of sales growth of more than 20 percent in Venezuela, he predicts the rate will slip to about 10 percent this year before collapsing to zero in 2009.

“The pie may shrink on us,” said Hernandez. “But we have to hang on to our slice.”

To contact the reporters on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net; Michael J. Moore in New York at mmoore55@bloomberg.net

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Australian, New Zealand Dollars Slide as Central Bank Cuts Loom

By Candice Zachariahs

Dec. 1 (Bloomberg) -- The Australian and New Zealand dollars declined before meetings by the two nations’ central banks this week where economists expect they will slash borrowing costs to boost domestic growth and combat a global recession.

The Reserve Bank of Australia will make a fourth consecutive reduction to its key rate tomorrow, cutting by 75 basis points to 4.5 percent, according to the median estimate of 20 economists surveyed by Bloomberg. New Zealand’s central bank will slash its cash rate 150 basis points to 5 percent on Dec. 4, based on a survey of 17 economists. A basis point is 0.01 percentage point.

“The focus is going to be on these central bank decisions,” said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group in Sydney. The currencies are likely to move in ranges, he said, with the Australian dollar trading between 66.20 and 64.50 U.S. cents, and New Zealand’s currency between 54 and 55.5 U.S. cents.

Australia’s currency fell 0.4 percent to 65.31 U.S. cents as of 7:59 a.m. in Sydney from 65.54 cents late in New York on Nov. 28. The currency declined 0.3 percent to 62.37 yen.

New Zealand’s dollar slid 0.4 percent to 54.68 U.S. cents from 54.89 cents in New York late last week. It bought 52.21 yen from 52.37.

Australia’s dollar will “outperform” its neighbor said Morriss, as the Reserve Bank of New Zealand will cut rates by more than the RBA. Traders are betting on a 92 percent chance of a 1.25 percentage point cut to the RBNZ’s 6.5 percent benchmark rate, according to a Credit Suisse index based on overnight swaps trading.

The Reserve Bank of Australia will lower its 5.25 percent benchmark rate 100 basis points, with a 36 percent chance of a 125-point cut, according to a separate Credit Suisse index.

Benchmark interest rates are 0.3 percent in Japan and 1 percent in the U.S., attracting investors to the South Pacific nations’ assets through so-called carry trades. The risk in such trades is that currency market moves will erase profits.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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Dollar Falls Against Yen as Reports to Show Deepening Recession

By Stanley White and Ron Harui

Dec. 1 (Bloomberg) -- The dollar fell against the yen before U.S. reports this week that may show manufacturing contracted and employers cut jobs by the most since 2001 as the recession deepens.

The euro declined against the dollar and the yen as traders bet the European Central Bank will reduce borrowing costs this week in response to the recession. The Australian and New Zealand dollars weakened as economists forecast policy makers in both countries will lower interest rates this week as the economic outlook deteriorates.

“People may look more closely at the U.S. economy, so there’s some scope for dollar depreciation,” said Akio Shimizu, chief manager of foreign-exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest publicly listed lender. “Higher-yielding currencies are losing their appeal because the interest-rate differential isn’t working in their favor.”

The dollar traded at 95.30 yen as of 11:30 a.m. in Tokyo from 95.52 in New York on Nov. 28. It fell to 94.61 yen on Nov. 26, the lowest since Nov. 21. The euro bought $1.2661 from $1.2691 at the end of last week. The euro was quoted at 120.66 yen from 121.22 on Nov. 28. The U.S. currency may decline to 94.80 yen and trade at $1.2550 per euro today, Shimizu said.

The Australian dollar fell 1.2 percent to 64.76 U.S. cents from Nov. 28 in New York. The Aussie, as the currency is known, also weakened 1.4 percent to 61.72 yen. New Zealand’s dollar declined 1.2 percent to 54.21 U.S. cents and 1.43 percent to 51.67 yen.

Rate Cuts

The Reserve Bank of Australia will make a fourth straight reduction to its key rate tomorrow, cutting by 75 basis points to 4.5 percent, according to the median estimate of economists surveyed by Bloomberg News. New Zealand’s central bank will lower its cash rate by 150 basis points to 5 percent on Dec. 4, based on a separate Bloomberg survey. A basis point is 0.01 percentage point.

U.S. nonfarm payrolls shrank by 320,000 workers in November following a decline of 240,000 the previous month, according to a Bloomberg News survey before the Labor Department’s Dec. 5 report. The jobless rate may have jumped to 6.8 percent, the highest level since 1993, a separate Bloomberg survey showed.

The ISM may say manufacturing shrank in November for a fourth month, according to another Bloomberg survey. The Tempe, Arizona-based Institute releases the data at 10 a.m. in New York.

Fighting Recessions

The world’s largest economy contracted at a 0.5 percent pace in the third quarter and consumer spending fell at a 3.7 percent rate, the most since 1980, the government said last week. The global economy is grappling with recession as financial firms worldwide racked up $967 billion in losses on mortgage derivatives since the start of 2007, leading to a credit-market seizure and declines in company and personal spending.

The euro weakened for a fifth day versus the yen, its longest stretch since Oct. 6, on speculation the European Central Bank will lower rates this week to revive growth.

Europe’s inflation rate fell to 2.1 percent in November from 3.2 percent in October, a Nov. 28 report showed, giving policy makers more room to cut borrowing costs when they meet Dec. 4.

“European data continue to deteriorate at an increasingly rapid pace and the recent easing of inflation pressures means there is scope for a bold cut by the ECB,” said Danica Hampton, currency strategist at Bank of New Zealand Ltd. in Wellington. “For euro-dollar, this suggests a visit to the recent lows of between $1.2300 and $1.2400 is likely.”

Producer Prices

Producer prices in Europe fell 0.3 percent in October from the previous month, after a 0.2 percent decline in September, according to a Bloomberg News survey of economists before the report tomorrow. Retail sales dropped 0.4 percent in October from the prior month, after a 0.2 percent decline in September, a separate Bloomberg survey shows. The report is due on Dec. 3.

Traders increased bets the ECB will cut its 3.25 percent benchmark rate. The implied yield on Euribor futures contracts expiring in June declined to 2.42 percent on Nov. 28 from 2.44 percent on Nov. 27.

The yen rose on speculation a recession in the global economy and a stock-market slide will spur Japanese investors to bring money held in overseas assets back home.

The MSCI Asia Pacific Index of regional shares dropped 1.2 percent today, while the Nikkei 225 Stock Average fell 2 percent.

Japanese reports last week showed companies plan the sharpest production cuts in 35 years and retail sales fell for a second month, adding to signs the recession in the world’s second-biggest economy is deepening.

“Japan is in recession and the yen is likely to continue to strengthen,” said Joseph Capurso, currency strategist at Commonwealth Bank of Australia in Sydney. “When the economic climate is poor, Japanese investors tend to repatriate capital during periods of risk aversion.”

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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Korea Zinc to Cut Output on Weakening Demand, Price

By Sungwoo Park

Dec. 1 (Bloomberg) -- Korea Zinc Co., the world’s second- biggest zinc smelter, will cut production of the refined metal by 10 percent for more than a year because of weakening demand and falling prices.

Korea Zinc will maintain the reduced output at its Onsan plant, which has annual capacity of 450,000 metric tons, from today to the end of 2009, the Seoul-based company said today in an e-mailed statement. That may change depending on market conditions, it said.

Zinc has tumbled nearly 50 percent this year as slowing economic growth and the worst financial crisis since the Great Depression curbed demand for industrial metals. Chinese zinc smelters, which are all unprofitable, have cut production to try to lift prices and ease a domestic oversupply.

Zhuzhou Smelter Group Co., China’s biggest zinc smelter, slashed production by 20 percent last month because of slumping metal prices and weak demand, an executive said Nov. 17.

Korea Zinc declined 1.7 percent to 68,000 won at 10:02 a.m. in Seoul, compared with a 0.8 percent drop in the benchmark Kospi Index. The Onsan plant is the company’s only zinc smelter excluding those owned by its affiliates.

The Korean company produced 433,000 tons of zinc and 195,000 tons of lead in 2007, according to its Web site.

Zinc futures in London fell 0.8 percent to $1,210 a ton on Friday. The metal is used to galvanize steel used in cars and home appliances.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.

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Crude Oil Falls After OPEC Delays Decision to Reduce Production

By Gavin Evans and Christian Schmollinger

Dec. 1 (Bloomberg) -- Crude oil fell below $53 a barrel in New York after the Organization of Petroleum Exporting Countries deferred for another two weeks a decision to reduce output.

Slowing global growth means demand will be ``much lower'' than expected a month ago, OPEC said in a statement after the group's Nov. 29 meeting in Cairo. Another cut on Dec. 17 may not be needed if member states enacted 80 percent of the 1.5 million barrel-a-day reduction agreed in October, Al Hayat reported, citing Saudi Arabia's Oil Minister Ali al-Naimi.

``We've got a market that's focused a little bit too much on the demand-side factors and perhaps less on supply,'' Gerard Burg, energy and minerals economist at National Australia Bank Ltd. in Melbourne, said in a Bloomberg television interview. The impact of future cuts ``will be muted by the fact that spare capacity has been on the increase,'' he said.

Crude oil for January delivery fell as much as $1.47, or 2.7 percent, to $52.96 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $53.30 at 9:56 a.m. in Singapore.

The contract fell 1 cent on Nov. 28, when trading was shortened because of the Thanksgiving holiday the day before. Prices leapt 7.2 percent on Nov. 26 after China, the world's fourth-largest economy, slashed interest rates to sustain growth and the European Union proposed $259 billion of measures to limit the impact of the global financial crisis.

OPEC Output

OPEC, which pumps about 40 percent of the world's oil, plans to meet on Dec. 17 in Oran, Algeria. The group put off the decision to cut supplies to gauge the impact of the cuts agreed to on Oct. 24. Oil has dropped 17 percent since then.

``Right now they did the right thing,'' Tony Regan, a Singapore-based independent energy consultant, said in an interview with Bloomberg News. ``Had they cut dramatically and the market continued to fall because of the continued concerns about the economy, then they would have been seen to be in disarray.''

Prices around $75 a barrel would be ``fair'' and would support investment in new fields, al-Naimi said at the weekend. Slowing demand means the global market is over-supplied by more than 2 million barrels a day, Iranian Oil Minister Gholamhossein Nozari said yesterday.

OPEC ``is hoping that thing may look completely different in a couple of weeks,'' said Regan. ``They won't but things may be looking sufficiently different for them to take a bit of action to tighten the market.''

Brent crude oil for January settlement fell as much as $1.34, or 2.5 percent, to $52.15 a barrel on London's ICE Futures Europe exchange today. It was at $52.20 at 9:57 a.m. Singapore time.

Market Struggling

New York oil futures have tumbled 64 percent from their July 11 record of $147.27 a barrel as the U.S., Europe and Japan headed for their first simultaneous recession since World War II.

Prices gained 9 percent last week, having reached $48.25 on Nov. 21, the lowest since May, 2005, as U.S. equity prices plunged and U.S. oil stockpiles rose for an eighth week.

``The prospect of cuts in future might tend to stabilize the crude market for the short-term'' and prices have established ``something of a floor'' at $50, said National Australia's Burg.

A report today in the U.S., the world's largest oil consumer, will probably show manufacturing contracted for a fourth month in November, according to a survey of economists. The forecast decline will take the Institute for Supply Management's factory index to the lowest in 28 years.

Tanker Storage

U.S. crude oil inventories jumped 2.3 percent to 320.8 million barrels in the week ended Nov. 21, the most in six months, according to Energy Department data. Global stockpiles are equivalent to about 56 days of demand, when 52 days would be usual this time of year, OPEC Secretary General Abdalla el-Badri said Nov. 27.

Weak near-term oil prices have made it viable for companies to hire supertankers to store the commodity for later use, Frontline Ltd. Chief Executive Officer Jens Martin Jensen said Nov. 28. The company has leased two tankers for storage and is in talks for a third, he said.

To contact the reporters on this story: Gavin Evans in Wellington on gavinevans@bloomberg.net; Christian Schmollinger in Singapore on christian.s@bloomberg.net.

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Gold May Rise for Fifth Week on Dollar Outlook, Survey Shows

By Claudia Carpenter

Dec. 1 (Bloomberg) -- Gold may rise for a fifth straight week on speculation the dollar will extend a decline, increasing demand for the precious metal as an alternative investment.

Twenty-two of 35 traders, investors and analysts surveyed from Melbourne to Dallas from Nov. 26 to Nov. 28 advised buying gold, which climbed 3.4 percent last week to $819 an ounce in New York. Eight said to sell, and five were neutral.

The dollar dropped 1.9 percent last week against a weighted basket of six major currencies. Gold rose to a record in March as the dollar headed to the lowest ever against the euro.

Gold’s gain last week surprised the majority of analysts surveyed on Nov. 20 and Nov. 21. The survey has forecast prices accurately in 142 of 239 weeks, or 59 percent of the time.

Last week’s survey results: Bullish: 22 Bearish: 8 Neutral: 5

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

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Asia Commodity Day Ahead: Gold Monthly Rise Biggest in 9 Years

Dec. 1 (Bloomberg) -- Gold had the biggest monthly increase in nine years, and cocoa had the largest weekly gain in six years. ThyssenKrupp AG said it will cut costs by more than 1 billion euros ($1.3 billion) this fiscal year. Freeport-McMoRan Copper & Gold Inc. may increase production cuts and take a “significant” writedown on its $26 billion acquisition of Phelps Dodge Corp., an analyst said.

PRECIOUS METALS

Gold Has Biggest Monthly Gain in Nine Years on Demand for Haven

Gold prices rose in New York, capping the biggest monthly increase in nine years, on demand for a haven following terrorist attacks in India. Gold rose $7.70, or 0.9 percent, to $819 an ounce on Nov. 28 in New York. This month, the price rose 14 percent, the most since September 1999. Platinum climbed $12.60, or 1.4 percent, to $882.30 an ounce. Silver fell 3.9 cents, or 0.4 percent, to $10.23 an ounce. Palladium gained $2.60, or 1.4 percent, to $194.25 an ounce.

Lonmin May Cut 5,400 Jobs, or 17% of Workforce, as Platinum Falls

Lonmin Plc, the world’s third-largest platinum producer, said it may cut as many as 5,400 jobs, or about 17 percent of its workforce, after prices plunged.

STEEL, COAL, URANIUM AND IRON ORE

ThyssenKrupp Plans to Reduce Costs By More Than $1.3 Billion

ThyssenKrupp AG will cut costs by more than 1 billion euros ($1.3 billion) this fiscal year as a weakening of demand from carmakers and builders leads to a “significant” drop in sales.

Cameco Temporarily Suspends Uranium Processing at Canada Plant

Cameco Corp., the world’s largest uranium producer, is suspending uranium-processing temporarily at a plant in Canada because of a dispute over supplies of hydrofluoric acid used in the production of nuclear fuel.

Metorex Shares Slump After Announcing Capital-Raising Plan

Metorex Ltd., a producer of copper in Africa, lost more than a third of its market value after it announced a plan to borrow money and sell new shares because of cost overruns at a Congolese mine.

INDUSTRIAL METALS, MINING

Freeport May Take ‘Significant’ Writedown, Dahlman Rose Says

Freeport-McMoRan Copper & Gold Inc. may increase production cuts and take a “significant” writedown on its $26 billion acquisition of Phelps Dodge Corp. because of slumping copper prices, Dahlman Rose & Co. said.

Copper Falls for Fifth Straight Month, Longest Slump Since 1999

Copper prices fell, capping the longest stretch of monthly declines since early 1999, as inventories climbed to the highest level in more than four years, signaling waning demand. Copper fell 4.2 cents, or 2.5 percent, to $1.6495 a pound in New York.

Frontera Copper Says Invecture Buys Stake, Seeking Control

Frontera Copper Corp., owner of the Piedras Verdes mine in Mexico, said closely held Invecture Group SA de C.V. has bought 16 percent of its shares and intends to purchase more until it has a controlling stake.

Rio Tinto Pension Plan Was Issue for BHP, Merrill Lynch Says

BHP Billiton Ltd., the world’s largest mining company, took into account Rio Tinto Group’s $16.5 billion pension plan liability when scrapping its hostile takeover this week, Merrill Lynch & Co. said.

Lundin Mining Says HudBay Deal ‘Fiscally Prudent’ Amid Turmoil

Lundin Mining AB, the Canadian copper miner negotiating a takeover by HudBay Minerals Inc., said the deal will help shield it from volatile markets that have slashed the value of both companies by more than 80 percent this year.

Alcoa Doesn’t Plan to Increase Its Stake in Rio Tinto Group

Alcoa Inc., the largest U.S. aluminum producer, said it doesn’t plan to increase its stake in Rio Tinto Group after BHP Billiton Ltd. abandoned a hostile takeover.

Southern African Coal Port Full Up on Lack of Trade Finance

Southern Africa’s second-biggest coal port, Mozambique’s Maputo, is full because a lack of trade finance is causing stockpiles to build up, according to Grindrod Ltd., the continent’s largest shipping company.

AGRICULTURAL COMMODITIES

Pilgrim’s Pride Anticipates $802 Million Loss in Fourth Quarter

Pilgrim’s Pride Corp., the largest U.S. chicken producer, said it expects to report a fiscal fourth-quarter loss of $802 million partly because of an impairment charge from the purchase of Gold Kist Inc.

Corn, Soybeans Decline as Global Economic Slump Reduces Demand

Corn and soybeans fell, capping the fifth straight month of declines, on speculation that a slumping global economy will reduce demand for meat, milk and eggs. Corn fell 5.25 cents, or 1.4 percent, to $3.6575 a bushel in Chicago. Soybeans declined 3 cents, or 0.3 percent, to $8.83 a bushel.

Wheat Gains as Egypt Buys U.S. Supplies, Bans Ukraine Grain

Wheat rose after Egypt, the world’s largest buyer of the grain, bought supplies from the U.S. and on a report that the North African country had suspended imports from Ukraine. Wheat rose 7.25 cents, or 1.3 percent, to $5.6125 a bushel in Chicago.

Hogs Have Biggest Monthly Gain in Six Years; Cattle Decline

Hog futures rose, capping the biggest monthly gain in six years, on signs that the record supply of animals to U.S. slaughterhouses this year is slowing. Hogs rose 1.25 cents, or 1.9 percent, to 67.025 cents a pound in Chicago. Cattle futures fell 0.5 cent, or 0.6 percent, to 87.65 cents a pound.

Kenya Tea Stockpiles Expand as Buyers Struggle to Finance Trade

Warehouses in the Kenyan port city of Mombasa, host to the world’s biggest tea auction, are filling up with the crop as buyers struggle to secure financing for cargoes, Africa Tea Brokers Ltd. said.

SOFT COMMODITIES

Cocoa Climbs, Caps Biggest Weekly Gain Since 2002; Sugar Rises

Cocoa prices rose, capping the biggest weekly gain in six years, on signs that the annual surplus of the commodity is shrinking. Cocoa added $73, or 3.3 percent, to $2,294 a metric ton in New York. Raw-sugar rose 0.09 cent, or 0.8 percent, to 11.90 cents a pound.

Cotton Rises as Demand Increases; Coffee, Orange Juice Decline

Cotton futures rose to the highest in a month on speculation that demand will increase after prices slumped to a six-year low. Cotton rose 1.36 cents, or 2.9 percent, to 47.91 cents a pound in New York. Arabica coffee slid 0.2 cent, or 0.2 percent, to $1.161 a pound. Orange-juice futures declined 2.55 cents, or 3.3 percent, to 74.35 cents a pound.

OTHER COMMODITIES

Aracruz Board Members, Executives, Resign After $2 Billion Loss

Aracruz Celulose SA, the Brazilian pulpmaker posting a $2.13 billion expense on bad currency bets, said three board members and four executives will step down after the resignation of Chief Financial Officer Isac Zagury.

Commodities Near Bottom on Consumer Rebound: Chart of the Day

Commodity prices that plunged from records since the end of June may be “near a bottom” as a return of consumer confidence signals a rebound, said Dale Durchholz, at AgriVisor LLC in Bloomington, Illinois.

For Related News: Top commodity stories: CTOP Top metals stories: METT Top agriculture stories: TOP AGR

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AirAsia, BHP, Chunghwa, Hyundai: Asia Ex-Japan Equity Preview

By Berni Moestafa

Dec. 1 (Bloomberg) -- The following companies may have unusual price changes today in Asia trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

AirAsia Bhd. (AIRA MK): Southeast Asia’s biggest discount airline posted its first loss since it went public in 2004 after it took a one-time charge for contracts tied to fuel hedging and trades by Lehman Brothers Holdings Inc. AirAsia reported a net loss of 465.5 million ringgit ($128.5 million) from 180 million ringgit a year earlier, it said in a statement. Sales climbed 43 percent to 658.5 million ringgit. AirAsia fell 2 sen, or 1.8 percent, to 1.11 ringgit.

BHP Billiton Ltd. (BHP AU): The world’s largest mining company hired Hubie van Dalsen from Rio Tinto Group as its head of metallurgical coal. Van Dalsen, who was until recently Rio’s Australian managing director of coal, will take up his position in Brisbane on Feb. 2, Melbourne-based BHP said. BHP rose A$2.2, or 7.6 percent, to A$31.

Chunghwa Telecom Co. (2412 TT): Taiwan’s largest phone operator will start selling Apple Inc.’s iPhone on the island Dec. 13, the company said in a statement. Chunghwa rose 30 cents, or 0.6 percent, to NT52.5.

Gome Electrical Appliances Holdings Ltd. (493 HK): The company replaced Chairman Huang Guangyu, moving to distance itself from its billionaire founder after he was detained by Chinese police. Chief Executive Officer Chen Xiao will be acting chairman of Gome, which is “unconnected” to the probe, China’s biggest electronics retailer by stores said. Shares of Gome are suspended and the stock last traded on Nov. 21 at HK$1.12.

Hyundai Steel Co. (004020 KS): South Korea’s second-largest maker of the metal will cut prices of construction products by 11 percent, the second such price reduction this year, after demand fell and costs of raw materials declined. Hyundai Steel fell 350 won, or 1.1 percent, to 32,950.

JES International Holdings Ltd. (JES SP): The company is unsure of the status of a South Korean shipper’s orders for four bulk carriers, Lloyd’s List said, citing the sales and marketing manager at the Chinese shipbuilder. Parkroad ordered four bulk carriers last year and paid 20 percent of the total purchase price so far, Lloyd’s List quoted JES’s Yang Li Feng as saying. JES was unchanged at 11 Singapore cents.

Jih Sun Financial Holdings Co. (5820 TT): Shinsei Bank Ltd., the Japanese buyer of General Electric Co.’s local consumer finance businesses, may invest NT$10 Billion ($300 million) in Taiwan’s Jih Sun. Jih Sun advanced 11 cents, or 4.2 percent, to NT$2.76.

Malaysian Airline System Bhd. (MAS MK): The nation’s largest carrier said third-quarter profit dropped 89 percent to 38.1 million ringgit from a year earlier amid higher oil prices. The carrier said it is “intensifying” cost cuts to stay profitable. Malaysian Airline fell 7 sen, or 2.7 percent, to 2.56 ringgit.

Sime Darby Bhd. (SIME MK): The Malaysian car seller, homebuilder and palm oil producer slashed its profit target for this financial year amid the global recession. Sime is aiming for net income of 1.9 billion ringgit ($525 million) in the year ending June 2009, compared with a previous target of 3.7 billion ringgit, it said. The company also said fiscal first-quarter profit rose 46 percent to 877 million ringgit. Sime was unchanged at 5.85 ringgit.

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

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Australia Stocks Decline as Slowdown Weighs on Profits, Metals

By Shani Raja

Dec. 1 (Bloomberg) -- Australian stocks fell as the deteriorating global economy weighed on corporate profit growth and commodity prices.

Brambles Ltd., the world’s biggest supplier of pallets used to move and store goods, plunged 6.1 percent. BHP Billiton Ltd., the world’s largest mining company, sank 4 percent, while rival Rio Tinto Group plunged 5.5 percent.

The S&P/ASX 200 Index lost 2 percent to 3,668.20 at 11:50 a.m. in Sydney, eroding the biggest weekly gain in the benchmark’s history dating back to 1992. The index has slumped in each of the past three months.

The benchmark has tumbled 46 percent from its Nov. 1, 2007, record as the credit crunch prompted a global recession. The Bureau of Statistics said in Sydney today that Australia’s corporate profit growth slowed in the third quarter as earnings at retailers, transportation businesses and manufacturers dropped.

Brambles lost 6.1 percent to A$6.81. BHP declined 4 percent to A$29.77, the most since Nov. 20. Rio dropped 5.5 percent to A$44.03. A measure of six metals traded in London fell 1.4 percent on Nov. 28. Zinc dropped 0.8 percent, copper 2.1 percent and nickel 0.5 percent.

Woodside Petroleum Ltd. (WPL AU) sank 79 cents, or 2.2 percent, to A$35.26, after Organization of Petroleum Exporting Countries deferred a decision on reducing production this year by two weeks, as it seeks to push oil prices up to $75 a barrel. Crude has dropped 62 percent from July’s record of $147.27 a barrel as the global recession erodes sales.

Australia’s S&P/ASX 200 Index surged 9.5 percent last week, as China, the biggest user of industrial metals and the world’s No. 2 energy consumer, cut interest rates the most in 11 years to ward off an economic slump.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

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Japan Stocks Slide on Developer Bankruptcy; Inpex Slumps on Oil

By Masaki Kondo

Dec. 1 (Bloomberg) -- Japan stocks fell on concern business failures and bad loan costs will mount after builder Morimoto Co. became the nation’s second-biggest bankruptcy this year.

Mitsubishi Estate Co., Japan’s second-biggest developer, dropped 5.9 percent. Japan General Estate Co. plunged 16 percent after Mainichi Daily News said the company withdrew job offers to university graduates. Inpex Corp., Japan’s largest oil and gas explorer, lost 4.7 percent after crude prices fell.

The Nikkei 225 Stock Average slumped 190.02, or 2.2 percent, to 8,322.25 as of 10:01 a.m. in Tokyo, retreating from the gauge’s biggest weekly gain in a month. The broader Topix index declined 12.11, or 1.5 percent, to 822.71, with more than three shares dropping for each that rose.

“The deterioration of the economy has become increasingly clear,” Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television.

Increasing costs to dispose of nonperforming assets and shrinking demand in the U.S. caused Japan’s biggest listed companies to collectively report a 32 percent drop in first-half earnings, according to data compiled by Bloomberg News. Companies ranging from Toyota Motor Corp. to TV maker Sharp Corp. plan to cut jobs to reduce costs.

Morimoto filed for protection from creditors on Nov. 28 with 162 billion yen ($1.7 billion) of debt, nine months after going public. The bankruptcy was the second-biggest in Japan this year after that of developer Urban Corp. and set a new annual record for failures of listed companies in the post-World War II period, according to bankruptcy research company Teikoku Databank Ltd.

Twenty-three of those 30 bankruptcy cases were in the real estate and construction sectors.

‘Severe’ Situation

Mitsubishi Estate, which had gained 32 percent in the previous five sessions, dived 5.9 percent to 1,336 yen, leading a decline in the Nikkei. Japan General Estate plummeted 16 percent to 116 yen, set for the lowest level on record. The Mainichi said on Nov. 29 the Tokyo-based company retracted offers to 53 university students last month because of a “very severe” financial situation.

A gauge of real-estate companies posted the sharpest drop among 33 industry groups on the Topix, followed by mining companies.

Inpex lost 4.7 percent to 583,000 yen, while closest domestic rival Japan Petroleum Exploration Co. slid 6.3 percent to 3,590 yen. Kanto Natural Gas Development Co. fell 4.9 percent to 647 yen.

Crude oil for January delivery fell as much 2.4 percent to $53.10 a barrel in New York after the Organization of Petroleum Exporting Countries deferred a decision to cut output for another two weeks. A $1 price change in a barrel of oil alters Inpex’s annual net income by 2.2 billion yen, the company said in May.

Nikkei futures expiring in December retreated 2.2 percent to 8,330 in Osaka and slumped 1.9 percent to 8,330 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.



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Asian Stocks Decline on Signs Global Recession Is Deepening

By Patrick Rial and Masaki Kondo

Dec. 1 (Bloomberg) -- Asian stocks fell, snapping a four- day winning streak as Australian profit growth slowed and Japan’s Morimoto Co. became the country’s second-largest bankruptcy this year.

BHP Billiton Ltd., the world’s largest mining company, slumped 4 percent in Sydney as a report showed Australia’s corporate profit growth slowed in the third quarter and as commodity prices declined. Mitsubishi Estate Co., Japan’s second-biggest property developer, lost 3.9 percent, leading declines among the country’s real-estate shares after Morimoto filed for protection from creditors.

The MSCI Asia Pacific Index declined 1.4 percent to 81.51 as of 10:32 a.m. in Tokyo, ending a four-day, 7.6 percent advance. The gauge has slumped 48 percent this year, set for the worst annual performance on record, as the U.S. housing slump sparked a global financial crisis that dragged the world’s biggest economies into recession.

“The deterioration of the economy has become increasingly clear,” Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television.

Japan’s Nikkei 225 Stock Average lost 2.1 percent to 8,337.65. Economic and Fiscal Policy Minister Kaoru Yosano told the Financial Times a proposed fiscal stimulus package is unlikely to boost the nation’s economy. Benchmark stock indexes throughout Asia also fell.

The U.S. Standard & Poor’s 500 Index added 0.7 percent on Nov. 28 on speculation government bailouts will shore up the economy. Target Corp. slumped as retailers extended discounts to lure shoppers amid what is forecast to be the slowest holiday shopping season in six years.

Black Friday

U.S. retail sales rose 3 percent the same day, the smallest growth for a “Black Friday” in three years, and compared with a gain of 8.3 percent last year, ShopperTrak RCT Corp. said. The day after the Thanksgiving holiday is considered to be when retailers begin to make the bulk of their yearly profit.

Oil for January delivery dropped 1.6 percent to $53.55 and is off 63 percent from a record reached in July. The Organization of Petroleum Exporting Countries deferred a decision on reducing production this year by two weeks when it met in Cairo over the weekend.

Copper futures fell 2.5 percent in New York on Nov. 28, the biggest drop for a most-active contract since Nov. 19. Stockpiles monitored by the London Metal Exchange rose to the highest level since February 2004, adding to evidence the global recession reduced demand for the metal used in pipes and wires.

In Japan, Morimoto filed for protection from creditors on Nov. 28 with 162 billion yen ($1.7 billion) of debt, nine months after its initial public offering. The bankruptcy was the second-biggest in Japan this year after that of developer Urban Corp. and pushed up the total number of failures of Japan’s listed companies to the most since World War II, according to research company Teikoku Databank Ltd.

Shrinking demand in the U.S. and mounting costs to dispose of nonperforming assets caused Japan’s biggest listed companies to collectively report a 32 percent drop in first-half earnings, according to data compiled by Bloomberg News.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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