Indian airline sector 'to shrink'

It is not going well in the Indian airline sector. Air India boss Raghu Menon says it could happen that half of India's airline could disappear during these economical bad times. He said that Air India has to take care of their money in the future because two other big companies have signed an alliance with each other.

The Indian airlines have to take care with one bad thing after the other. The baddest thing for them was the continuous rise of the fuel during 5 months and for an airline that is a disaster.

The other problem is the falling demand because off the rising ticket prices and the bad situation of the economy. That is why cost cutting is very important.

It will be a challenge for Air India to be a profitable airline in the future, certainly because two other big airline have signed an alliance.

I think it is good from those other two airlines to sign an alliance because they can split the costs and their are a team know, when one airline of the two is in bad papers, the other can help him.

I hope ffor Air India that they can be profitable in the future and that they can compete with the alliance but personnaly I don't think theyy can do. The alliance has more power because they are with the companies and can slit the costs but Air India has to do it al by themself and that will be a difficult job I think.

source: http://news.bbc.co.uk/2/hi/business/7675957.stm

Taiwan takes on tech innovation

Taiwan is the biggest technological workshop of South East Asia. Already 90% of the laptops are produced in Taiwan. But it’s not only laptops, they produce more than that, like self phones and motherboards for many products.
Taiwan had always one problem, it lies in the shadow of one of the biggest economies of the world (China). That is also the reason that many Taiwanese companies move their production to China. Also because they can produce their goods at lower prices.

The big Taiwanese companies, like Asus and Acer, have agreed that there are 2 ways to approach the market : the first one is to go for the global manufacturing as a provider and the second one is to go for the branded business. But to really succeed in the hi-tech space, is to creating innovative products under your own banners.

Brands like Acer and Asus have taking a strong position on the world wide laptop market. These brands offer laptops with the same continence as Western made laptops, but these laptops are cheaper. The fact that they also put time in finding new innovations and not only copy from other companies, make them stronger and give them a better position on the market. Despite that Taiwan is in the shadow of China, this country has a good economy, certainly because they are the market leader on hi-tech market.

Source : http://news.bbc.co.uk/2/hi/programmes/click_online/7686147.stm

East Asia set to start $80bn fund

East Asians nations have decided to raise a fund of $80bn to protect their region from financial turmoil. This has been discussed by the ten members of the Association of Southeast Asian Nations (Asean)and is supported by South Korea, China and Japan. Those last three countries even contributed 80% of the capital.
The fund can be used by any participating country in times of emergency or to boost its liquidity. What’s in my opinion a very good idea to avoid recession and to preserve the confidence of people in the economy.

The political leaders are mostly concerned of the Western economies because they are very reliable of export to the west. There even is increasing evidence that leading countries are entering a recession. Chip maker Samsung for example announced a 44% fall in its third quarter profits.
Earlier Asian shares fell sharply with the Nikkei closing around 9.6% down.
With this fund at their disposal we can only hope that the inflicted damage would be as low as possible. Especially since the emerging economies don’t have the financial reserves Western countries have.

(Asean nations exists out of: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.)


http://news.bbc.co.uk/2/hi/business/7688406.stm

Korea searches for Dollars

Last Saturday, The Wall Street Journal published an article concerning the (South) Korean economy. The South Korean government and banks are asking the citizens to search for Dollars in their houses and to deposit them in banks. The banks can loan that money to small companies.
Korea wants to attract foreign money so they can use it for loans to businesses that deal with foreign customers, who have an other currency. Especially the small manufacturers need foreign money because the don’t bank overseas like big companies do.

Just like a lot of banks in other countries in the world, South Korea has problems to obtain foreign currencies and especially Dollars. The South Korean government understands that problem and wants to help their local economy. This month they provided $8.5 billion to banks so they can help the smaller businesses with their Dollar liquidity problems.

I think it’s a nice initiative from the South Korean government but it doesn’t solve the problems on the long term. The government isn’t able to give that amount of money to the banks every month. So I think they have to find a new solution because the liquidity crisis all over the world will damage the banks’ foreign-currency funding and their creditworthiness.

source: http://online.wsj.com/article/SB122428493988946393.html

The best Asian growth story you've never heard of

Indonesia has a population of 235 million and it has a vast amounts of natural resources such as coal. In the 80’s and 90’s, the economical growth was about 7%, every year. But in 1998, they had an Asian financial crisis and many companies went bankrupt. The last three years, the country is again doing well with an economical growth of 6%. The country has, just like all other countries, problems. The main problems are high corruption, unemployment and the fact that many people live in poverty. Geography is also a sorrow point of Indonesia. The country exist out of 5 island. Communication is not easy, that’s why it is the world fastest-growing mobile market. They skipped the landline stage and jumped straight to wireless. The mobile market is also very competitive. The firms are bidding for customers. The competition is hard, but still attractive.

Indonesia is a underdog in the Asian economy. Everybody is looking to China and India, expecting them to become the new world leaders on the economical market. But Asia has other players, like Indonesia, with a big amount of natural resources and fast growing economy. The biggest problem of Indonesia, is corruption. Corruption makes it not interesting for the Western financier to buy stocks in Indonesia companies. Only Western companies in Indonesia are interesting, like some telecommunication companies.

Source : http://www.moneyweek.com/investments/stock-markets/the-best-asian-growth-story-youve-never-heard-of-13720.aspx

Eastern Savior

Two trillion dollar. That’s the amount of foreign currency reserves of China. And by some, this makes China a potential savior for the Western Banking problems.



To bail out suffering financial firms, the Western governments need a lot of money. And China seems a good place to get it. But it will be very unlikely that will write a blank cheque since they are also busy trying to protect their economy from a domestic economical slow-down. And any offered help will be attached with demands. In a certain way it’s a good thing China gets more power/status but when Western governments become to dependant from foreign loans, they could force all kind of decisions just because they have the money.
In fact, the Chinese are already doing something similar for a couple of years. They bought pieces of the US national debt which allowed the US government to spend more than they actually had.

China can’t help on their own, also the other emerging economies such as India, Brazil,.. need to help. And even if the money is available, it’s not certain the political will is present. Chinese leaders already said they believe Western governments should solve their own problems. I think that the emerging economies should also try to stabilize the world economy with everything what’s in their power, because sooner or later, it will affect their economy to.

Source: http://news.bbc.co.uk/2/hi/asia-pacific/7671482.stm

Domino or dynamo?

China has become the most important country in the world economy because most of the big countries have big losses as result of the global credit crisis. But the economy of China doesn't grow as much as in the past. The main reason is the sinking prices on the housing market. But China banks can handle this because they don't give big mortgages like in America, buyers of a house in China have to invest 30 or 40% of their one.
Chinese banks can also handle the credit crisis better than the Western banks because the total loans that they give to people is just 65% of their total deposit and that's lower compairing to Western banks.
The people of China haven't as much debts as the Western people so they can handle the sinking prices wich the Western people can't do
These are the mains reasons why China isn't a victim of the global credit crisis and with the help of the government and the national bank, the Chinese economy will do it good in the future

I think that all the Western banks and governments can follow China's example because their economy is good despite the global credit crisis.
Also the Westren can better follow China's example. We found it normal that we go to the bank when we needed money and ask for a loan, even if it's for a small amount of money, or a mortgage but we don't think what would happen if the economy is going down or if the prices would go up. But the banks are also guilty because they give us that loan or mortgage.
So I think that Western people, banks and government have to take over a little bit more of the Chinese system.

source:http://www.economist.com/finance/displaystory.cfm?story_id=12381871