22 theSun | WEDNESDAY NOVEMBER 5 2008

business news

Australia cuts rates as global

recession gloom builds
SYDNEY: Australia cut interest rates
more than expected yesterday, presaging
likely cuts in Europe later this week in the
face of evidence that the global financial
crisis has already pushed much of the
world into a recession.
The 75 basis point cut followed rate
cuts in the United States, China and Japan
last week. Britain and the euro zone are
expected to follow suit tomorrow with half
point reductions in borrowing costs.
But the recession that central banks and
governments around the world have tried
to ward off loomed ever larger as investors
digested a batch of bleak corporate results
and dismal economic data.
Automotive companies from Japan to
Italy and Detroit said October sales were
the worst in about 20 years as economies
weakened sharply and consumer credit
dried up.
With the US presidential campaign
wrapping up yesterday after nearly two
years, markets expected some temporary
relief for equities from the elimination of
one source of uncertainty.
Whether Democrat Barack Obama or
Republican John McCain will move into
the White House, he will have a tall order
in crafting policies to revive the economy
from devastation wrought by the worst
financial crisis in 80 years.
Indeed, fears about the shrivelling US
economy knocked stock markets yesterday,
with Asia-Pacific stocks falling by 1.9%.
The one exception was Japan’s Nikkei
index, up more than 6%, as exporters
gained on the yen’s recent weakness.
The latest gloomy note came from the
Australian central bank, which said there
was “significant weakness” in major
industrial economies in explaining why it
cut rates to 5.25%, the lowest since March
2005.
Many analysts were blunter.
“A growing number of indicators
have fallen off a cliff in October,” said
Rory Robertson, interest rate strategist at
Macquarie in Sydney.
“Indeed, each of the big developed
economies now is either in a severe
recession or well on the way,” he said.
With Taiwan and South Korea also
cutting rates last week, Sherman Chan,
an analyst at Moody’s Economy.com
in Sydney, praised Asian central banks
for their assertiveness but sounded a
cautionary note.
“Excessive loosening could backfire
by sparking fears about the soundness
of the economy and financial system,”
Chan said in a research note. This would
be a concern especially to emerging
economies, whose appeal to investors
has already weakened amid rising risk
aversion.” – Reuters

Citibank sees double-digit growth

in wealth management business
KUALA LUMPUR: Citibank Bhd is confident
of recording double-digit growth in its wealth
management service despite a tough eco-
nomic condition.
Its head of segment and marketing, retail
bank, Timothy Johnson, said the bank was
optimistic of achieving the target with the
launch of its Citigold Global Banking service for
clients with cross-border needs yesterday.
“The service is expected to see a double-
digit growth in customer base in the next 12
months and we expect to beat the industy’s
expected growth rate of 7% this year,” he
told a media briefing.
He said the bank has served over 30,000
clients in Malaysia since the introduction of
the service in the country in 1985.
Meanwhile, its country business head for
consumer banking, Michellina Triwardhany, said
Malaysian clients were now more affluent.
“I think the creation of wealth is an
on-going process. What we see in the last
five years from 2001-2005 was double-digit
growth throughout Asia, including Malaysia,
in terms of the creation of wealth.”
She said the Citigold Global Banking serv-
ice would now be available in 31 countries.
The new service is targeted at customers
who frequently travel internationally either for
business or pleasure; those who live and work
in other countries; people who have offshore
products and service needs; and, those who
have financial interests/business in multiple
countries/currencies. – Bernama

World equity markets lost US$5.8 trillion last month

KUALA LUMPUR: World equity mar-
kets registered their worst month in
history as investors lost an estimat-
ed US$5.79 trillion (RM20.27 trillion)
last month, Standard & Poors Index
Services announced yesterday.
Measured in dollar change to
investor held equity accounts,
Standard & Poors data showed that
the October loss of the 52 global
equity markets was 45% above that
of September when markets lost
a then record US$4 trillion (RM14
trillion).
Standard & Poors estimated that
investors have lost US$16.22 tril-
lion (RM56.77 trillion) year-to-date
through October.
“What do you get when you
add the underlying concern of the
economy and the fear of a world-
wide recession to a market already
devastated by credit issues? You
get the worst-ever month for global
equity markets in modern history,”
said Howard Silverblatt, Senior Index
Analyst at Standard & Poor’s.
“Overlooked, however, is the fact
that the US market has been one
of the better performing markets
over the past five months - although
the losses are substantial,” added
Silverblatt.
“To some extent, the much high-
er expectations of non-US growth,
as well as the expected US decou-
pling, have caused a much stronger
market decline abroad. As a result,
the US now represents 45.9% of all
global equity issues, compared to
40.5% at the end of May.”
Standard & Poor’s Broad Market
Indices showed the Malaysian
market lost 18.16% in October or
a total of US$12.857 billion (RM45
billion) and year-to-date the market
lost 47.11% or US$52.551 billion
(RM183.93 billion). – Bernama