Stocks Slammed by AIG Woes, War Jitters
Tue February 4, 2003 04:36 PM ET
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Stocks slumped on Tuesday after American
International Group Inc. AIG.N , the world's largest insurer, warned
it had greatly underestimated its liabilities, further unnerving
investors on edge ahead of a diplomatic meeting that could heighten
the threat of war with Iraq.

War jitters sent the price of gold to a 6-year high, drove the dollar
lower and pumped up oil prices a day before Secretary of State Colin
Powell is scheduled to provide the U.N. Security Council with
evidence Washington says will show that Iraq is hiding banned weapons
from U.N. arms inspectors.

"Apprehension is growing about the uncertainties of what may occur in
the Middle East," said A.C. Moore, chief investment strategist at
Dunvegan Associates. "It's to be expected to see this type of
volatility and softness until, perhaps, a successful outcome is
obtained."

Worries about the foggy corporate profit outlook were reignited after
AIG announced a massive charge of $1.8 billion to cover liability
claims that have built up in recent years. AIG sank more than 6
percent and pulled other insurers down.

"AIG is more than a bellwether. It's a reflection of where the global
economy is, and for them to say they have balance sheet problems, it
calls into question valuations everywhere," said John Gillette, ADR
trader at investment firm Lazard Freres.

Technology bellwether Cisco Systems Inc. CSCO.O dropped 2 percent as
investors awaited its earnings after the bell. Telecommunications
stocks limped lower after French equipment maker Alcatel CGEP.PA
ALA.N warned of weak sales.

The blue-chip Dow Jones Industrial average .DJI fell 96.81 points, or
1.19 percent, to 8,013.01, and the broad Standard & Poor's 500
index .SPX dropped 12.14 points, or 1.41 percent, to 848.18. The tech-
loaded Nasdaq Composite .IXIC lost 17.79 points, or 1.34 percent, to
1,306.00.

Decliners beat advancers by a ratio of about 10 to 7 on the New York
Stock Exchange and about 5 to 3 on Nasdaq. More than 1.4 billion
shares changed hands on the Big Board and more than 1.3 billion were
traded on Nasdaq in heavy trading.

INSURERS GET WHACKED

AIG sank $3.63 to $51.70 and topped the New York Stock Exchange's
most active list. The after-tax charge will help cover runaway costs
of workers' compensation and directors' and officers' liability
claims, the company said.

Investors worried that the problems affecting AIG, regarded as one of
the best-performing insurers, would hurt rivals. ACE Ltd. ACE.N fell
$1.50, or 5 percent, to $28.25. Chubb Corp. CB.N sank $2.97, or 5
percent, to $51.60. Travelers Property Casualty Corp. TAPa.N dropped
55 cents, or 3 percent, to $15.60.

Cisco fell 28 cents to $12.98 during the regular session and topped
Nasdaq's most active list by a wide margin. The world's No. 1 maker
of gear that directs Internet traffic after the close reported a
higher quarterly profit, but said its sales fell amid the technology
spending slowdown.

Dow component General Electric Co. GE.N fell 60 cents, or 2.5
percent, to $23.05. British bank Abbey National ANL.L sold most of
its First National consumer lending unit to General Electric for 848
million pounds ($1.39 billion) -- a premium of 218 million pounds
over the firm's net tangible assets.

French telecoms equipment maker Alcatel lost 22 cents, or 3 percent,
to $6.78 after it predicted a deeper-than-expected decline in first-
quarter 2003 sales. U.S. competitor Lucent Technologies Inc. LU.N
fell 19 cents, or 10 percent, to $1.65. The North American
telecommunications index .XTC fell more than 1 percent.

Biotechnology company Genzyme General GENZ.O tumbled $2.55, or more
than 7 percent, to $30.65. The company said its earnings for 2003
would trail Wall Street estimates due to steep costs to develop and
market new drugs.

NAGGING WAR WORRIES

Investors worry that war will jeopardize the nation's fragile
economic recovery, trigger a spike in oil prices and put the brakes
on corporate profit growth. The bulk of the fourth-quarter reporting
season is over with few signs that corporate earnings are poised for
a solid upturn in 2003.

"The key to a stock market recovery would be a feeling among
investors that profits are going to recover," said Rick Meckler,
president of investment firm LibertyView. "Some of the large and well-
known companies are really disappointing -- maybe not so much in
actual numbers but in outlook."

Powell, who will address the U.N. Security Council on Wednesday, has
said he will provide "sober and compelling proof" that Iraq is hiding
weapons from U.N. arms inspectors -- a move seen as adding to the
likelihood of a U.S.-led attack against Iraq.

Friction between the United States and North Korea put another dent
in investor sentiment. U.S. aircraft and warships were put on alert
for possible deployment after North Korea said on Monday its troops
were at the ready in case of any U.S. "military and political moves"
against it.

02/04 11:01
Quek's Return to Hong Kong May Help Malaysian Banker Tap China
By Chan Tien Hin

Hong Kong, Feb. 5 (Bloomberg) -- Malaysian billionaire Quek Leng
Chan's bid for International Bank of Asia Ltd. aims to gain a
foothold in China, helping counter slowing profit growth at home,
some investors said.

A successful bid by Hong Leong Bank Bhd., Malaysia's sixth- biggest
lender, would mean a return to a market Quek exited in 2001 when he
sold Dao Heng Group Ltd. to DBS Group Holdings Ltd. for $5.3 billion.
Quek's bank announced its attempt last week, without disclosing a
price for a lender valued by the market at HK$3.34 billion ($428
million).

The former barrister, who built a fortune in Malaysia on property,
stock-broking and building motorcycles, is turning to China as rising
rivalry and the lowest interest rates in a decade crimp earnings.
Singapore's DBS and United Overseas Bank Ltd. are among others
seeking access to the world's most populous nation.

``Hong Kong banks have strong balance sheets and can act as a
stepping stone to the China market,'' said Winson Fong, who manages
$2 billion at SGY Asset Management in Singapore.

Granted, earnings were flat in the first nine months at banks in Hong
Kong, where bankruptcies and jobless rates are close to record highs.
The government estimates the economy expanded 2 percent last year, a
quarter the pace of China's, while loans for use in Hong Kong fell
2.4 percent in 2002.

With banks facing another ``tough'' year in 2003, lenders should take
note that those which have been involved in mergers will likely
report higher profits for last year, said David Carse, deputy chief
executive of the Hong Kong Monetary Authority,

``It's a lesson to some of the other banks to think about mergers and
acquisitions in the future,'' Carse said.

Shares Rise

International Bank, 55 percent owned by Arab Banking Corp., the
largest lender among the Persian Gulf monarchies, said net income
fell 38 percent in the six months through June to HK$100.8 million
($12.9 million). China-controlled China Everbright Ltd. owns 20
percent of the bank.

The lender's shares rose more than half in the past year, a period in
which the Hang Seng Finance Index fell 5 percent and the benchmark
Hang Seng Index slid 14 percent. Most of the gains for the bank's
shares came since mid-December, when International Bank first said
its main shareholders may sell their stakes.

At about HK$2.85, its shares now trade at about 11 times this year's
earnings, compared with 16 times for the finance index as a whole.
Hong Leong Bank may pay as much as HK$4 a share, valuing the bank at
HK$4.7 billion, Malaysia's Edge magazine said on Saturday. Hong Leong
declined to comment.

Déjà vu?

Shares of International Bank surged 13.5 percent on Jan. 28 when they
resumed trading after Hong Leong confirmed it's in talks to buy the
Hong Kong lender.

Helping fuel gains in the Hong Kong lender is speculation Quek will
manage to repeat his success in selling Dao Heng for a 60 percent
premium in 2001. He sold Dao Heng for 3.33 times book value, 60
percent more than the share price at the time, ending 20 years of
control in the bank.

``Quek's already done it with Dao Heng and disposed of it at a very
good price,'' said Lo at OSK-UOB Asset Management. ``So if he can
start to look at another cheaper institution, why not?''

02/04 16:20
Gold Rises to Six-Year High on Threat of U.S. Attack on Iraq
By Claudia Carpenter


New York, Feb. 4 (Bloomberg) -- Gold had its biggest gain in six
months as the U.S. stepped up efforts to win United Nations support
for an attack against Iraq, increasing demand for the metal as a
haven.

The threat of a U.S.-led assault on Iraq to force the Persian Gulf
country to disarm has helped boost gold prices 18 percent in the past
two months to a six-year high. U.S. Secretary of State Colin Powell
yesterday said he will present ``compelling'' evidence to the UN of
Iraq's refusal to disarm.

``Most of the news points to war with Iraq sooner rather than later,
and that's helping gold,'' said David Rinehimer, an analyst at
Salomon Smith Barney Inc. in New York. ``As long as the news
increases that likelihood, there is no reason to think gold will go
lower.''

Gold for April delivery rose $8.30, or 2.2 percent, to $379.90 an
ounce on the Comex division of the New York Mercantile Exchange. It
was the highest closing price for a most-active contract since
November 1996 and the biggest one-day gain since Aug. 7.

Gold futures may climb above $400 an ounce before a U.S. attack,
Rinehimer said.

``If there is news that changes investor sentiment, such as Saddam
Hussein going into exile, that dramatically reduces the chances of
war and gold could go down immediately $20 to $40,'' he said,
referring to Iraq's president.

In London, gold for immediate delivery rose $5.35, or 1.4 percent, to
$376.95 an ounce as of 5 p.m. local time, also a six- year high.

Tensions Boost Gold

Gold often gains in times of increased world tensions as investors
seek protection for their assets. Gold futures rose to $404.50 an
ounce on Jan. 16, 1991, just before U.S.-led forces attacked Iraq to
force it to relinquish Kuwaiti territory seized the previous August.
Prices plunged 7.4 percent the next day on prospects for a quick end
to the war.

The dollar weakened against the euro and yen on war concerns,
boosting gold by making the dollar-priced metal cheaper for buyers
using other currencies, traders said.

Powell's address tomorrow to the UN Security Council comes as the
U.S. and U.K. increase military forces in the Persian Gulf. The two
countries will have 215,000 troops in the region by mid- February.

Gold prices soared 25 percent in 2002, the biggest annual gain in 23
years, as declines for equities and the weaker dollar boosted demand
for the metal as an alternative investment.

Sales of American Eagle gold coins rose to 96,000 ounces in January,
the highest monthly total since December 1999, according to figures
on the U.S. Mint's Web site.

Diversification

``People see how much gold has gone up while their other assets
haven't performed well, and they want to diversify out of the equity
markets into something that is performing better,'' Rinehimer said.

The Standard & Poor's 500 stock index has fallen about 4 percent so
far in 2003, adding to losses during each of the previous three
years.

Gold-mining shares also gained. The Philadelphia Gold & Silver Index
of 11 mining company rose 3.60 to 79.64. Shares of Denver-based
Newmont Mining Corp., the world's largest gold producer, jumped
$1.06, or 3.7 percent, to $29.79 in New York Stock Exchange composite
trading.

Newmont and other mining companies have reduced the amount of future
production they have sold to lock in prices, contributing to the
rally by reducing supply. Gold companies can conduct such hedging by
selling borrowed gold and repaying the loans from future output.

Reduced Hedging

South Africa's AngloGold Ltd., the world's second-biggest gold
producer, last week said it reduced its forward gold sales by 1.2
percent to 10.4 million ounces during the fourth quarter of 2002 and
further cuts are planned.

Newmont said in November it reduced forward sales by 14 percent to
5.8 million ounces during the third quarter last year.

Gold's gains are deterring Indian jewelry buyers, according to Sanjay
Kothari, chairman of India's Gem & Jewellery Export Promotion
Council, an industry group. India is the world's largest consumer of
gold.

``People are reluctant to buy at these prices,'' Kothari said in an
interview. ``In fact, consumers are selling old stock to cash in on
the high prices.''

LONDON East and West are drifting apart politically and economically.
Globalization may still be a word that people love or hate, but the lesson from
the latest Davos and Porto Alegre meetings, or from comparing the priorities of
New York, Paris or São Paolo with those of Beijing, Hong Kong or Seoul, is of
divergence.
.
History holds several examples of contacts between East Asia and the West being
interrupted, sometimes for long periods, by war or chaos cutting the Silk Road.
Are we seeing another as the lands of Islam between the Indus and the Black Sea
face both turmoil within and confrontation with the West?
.
The threat of war in Iraq may be temporary, but it is helping to underline how
Asian and Western perceptions of interest are growing apart.
.
It is occurring, too, at a time when there is a kernel of confidence in East
Asia that its economy has a momentum of its own and can continue to prosper even
if its current main trading partners, the United States and Europe, no longer
provide the stimulus to which Asia has become accustomed.
.
From the standpoint of the East, America and Europe have both, in their
different ways, become so obsessed with Iraq and Islam that they exacerbate
deep-seated problems and so endanger a broader global stability.
.
Asians resent what they mostly see as a latter-day outburst of Western
imperialist instincts, with potential for damage to the global economy.
.
They note, too, that the views of Asia are given scant attention in Europe or
the United States, which both assume that the international configurations of
1945 should and will remain intact.
.
But due to their interest in maintaining good relations with America, the Asians
mostly keep their opinions to themselves.
.
The bottom line is that they want to stay as far away from the issue of Iraq and
the Middle East as a partially globalized world permits. They suspect that the
era when pan-Pacific developments were on the global cutting edge is over, as
America's concerns with Europe and the Middle East, with homeland defense and
with its increasingly important Hispanic population and Western Hemisphere
connections overshadow the links to East Asia. Given U.S. budgetary problems,
there is a likelihood before long of a reduction of the American military
presence in Asia, which has been such a major factor in regional stability. This
is undesirable but probably inevitable. Asia will have to do more to help
itself.
.
Meanwhile, there is growing Asian resentment at under-representation in
international institutions. This does not apply just to the composition of the
Security Council and the policies of the World Bank and the International
Monetary Fund. It is also apparent in UN agencies and at forums such as Davos
and Porto Alegre, where debates on economic policy are framed by the ideological
divides of the West, including Latin America, largely to the exclusion of the
experiences and practices of an East Asia which has long been at the forefront
of development. South Korea, China, Malaysia and others are admired from a
distance, but their views and experts are largely excluded from key
institutions.
.
The reality of Asian growth is reinforcing the self-confidence of the region.
.
The mainstream Western economists who appear at Davos and elsewhere continue to
claim that Asia and most of the rest of the world are hostage to U.S. economic
performance. Porto Alegre emphasizes the evils of Western multinationals and the
"Washington consensus" in stifling development and increasing inequity. Both
views often seem myopic and paternalistic to an Asia which has recovered and
learned lessons from its crisis.
.
Asian economies - excluding Japan but including India - have performed well in
the past two years despite weakness in the West. They should continue to do
relatively very well. All have large reserves and current account surpluses and
are in a position to continue to spur domestic demand if Western demand, held
back by debt and demography, contin- ues to falter.
.
Intra-regional trade is moving gradually from dependence on the West as the
ultimate consumer to consumption within the region. While Western
nongovernmental organizations and once rich Latin Americans blame others for
their own failures, Asians mostly welcome old multinationals, and are too busy
creating their own new ones to bother about Davos or Porto Alegre. Nuts to Davos
and Porto Alegre

LONDON East and West are drifting apart politically and economically.
Globalization may still be a word that people love or hate, but the lesson from
the latest Davos and Porto Alegre meetings, or from comparing the priorities of
New York, Paris or São Paolo with those of Beijing, Hong Kong or Seoul, is of
divergence.
.
History holds several examples of contacts between East Asia and the West being
interrupted, sometimes for long periods, by war or chaos cutting the Silk Road.
Are we seeing another as the lands of Islam between the Indus and the Black Sea
face both turmoil within and confrontation with the West?
.
The threat of war in Iraq may be temporary, but it is helping to underline how
Asian and Western perceptions of interest are growing apart.
.
It is occurring, too, at a time when there is a kernel of confidence in East
Asia that its economy has a momentum of its own and can continue to prosper even
if its current main trading partners, the United States and Europe, no longer
provide the stimulus to which Asia has become accustomed.
.
From the standpoint of the East, America and Europe have both, in their
different ways, become so obsessed with Iraq and Islam that they exacerbate
deep-seated problems and so endanger a broader global stability.
.
Asians resent what they mostly see as a latter-day outburst of Western
imperialist instincts, with potential for damage to the global economy.
.
They note, too, that the views of Asia are given scant attention in Europe or
the United States, which both assume that the international configurations of
1945 should and will remain intact.
.
But due to their interest in maintaining good relations with America, the Asians
mostly keep their opinions to themselves.
.
The bottom line is that they want to stay as far away from the issue of Iraq and
the Middle East as a partially globalized world permits. They suspect that the
era when pan-Pacific developments were on the global cutting edge is over, as
America's concerns with Europe and the Middle East, with homeland defense and
with its increasingly important Hispanic population and Western Hemisphere
connections overshadow the links to East Asia. Given U.S. budgetary problems,
there is a likelihood before long of a reduction of the American military
presence in Asia, which has been such a major factor in regional stability. This
is undesirable but probably inevitable. Asia will have to do more to help
itself.
.
Meanwhile, there is growing Asian resentment at under-representation in
international institutions. This does not apply just to the composition of the
Security Council and the policies of the World Bank and the International
Monetary Fund. It is also apparent in UN agencies and at forums such as Davos
and Porto Alegre, where debates on economic policy are framed by the ideological
divides of the West, including Latin America, largely to the exclusion of the
experiences and practices of an East Asia which has long been at the forefront
of development. South Korea, China, Malaysia and others are admired from a
distance, but their views and experts are largely excluded from key
institutions.
.
The reality of Asian growth is reinforcing the self-confidence of the region.
.
The mainstream Western economists who appear at Davos and elsewhere continue to
claim that Asia and most of the rest of the world are hostage to U.S. economic
performance. Porto Alegre emphasizes the evils of Western multinationals and the
"Washington consensus" in stifling development and increasing inequity. Both
views often seem myopic and paternalistic to an Asia which has recovered and
learned lessons from its crisis.
.
Asian economies - excluding Japan but including India - have performed well in
the past two years despite weakness in the West. They should continue to do
relatively very well. All have large reserves and current account surpluses and
are in a position to continue to spur domestic demand if Western demand, held
back by debt and demography, contin- ues to falter.
.
Intra-regional trade is moving gradually from dependence on the West as the
ultimate consumer to consumption within the region. While Western
nongovernmental organizations and once rich Latin Americans blame others for
their own failures, Asians mostly welcome old multinationals, and are too busy
creating their own new ones to bother about Davos or Porto Alegre. Nuts to Davos
and Porto Alegre

LONDON East and West are drifting apart politically and economically.
Globalization may still be a word that people love or hate, but the lesson from
the latest Davos and Porto Alegre meetings, or from comparing the priorities of
New York, Paris or São Paolo with those of Beijing, Hong Kong or Seoul, is of
divergence.
.
History holds several examples of contacts between East Asia and the West being
interrupted, sometimes for long periods, by war or chaos cutting the Silk Road.
Are we seeing another as the lands of Islam between the Indus and the Black Sea
face both turmoil within and confrontation with the West?
.
The threat of war in Iraq may be temporary, but it is helping to underline how
Asian and Western perceptions of interest are growing apart.
.
It is occurring, too, at a time when there is a kernel of confidence in East
Asia that its economy has a momentum of its own and can continue to prosper even
if its current main trading partners, the United States and Europe, no longer
provide the stimulus to which Asia has become accustomed.
.
From the standpoint of the East, America and Europe have both, in their
different ways, become so obsessed with Iraq and Islam that they exacerbate
deep-seated problems and so endanger a broader global stability.
.
Asians resent what they mostly see as a latter-day outburst of Western
imperialist instincts, with potential for damage to the global economy.
.
They note, too, that the views of Asia are given scant attention in Europe or
the United States, which both assume that the international configurations of
1945 should and will remain intact.
.
But due to their interest in maintaining good relations with America, the Asians
mostly keep their opinions to themselves.
.
The bottom line is that they want to stay as far away from the issue of Iraq and
the Middle East as a partially globalized world permits. They suspect that the
era when pan-Pacific developments were on the global cutting edge is over, as
America's concerns with Europe and the Middle East, with homeland defense and
with its increasingly important Hispanic population and Western Hemisphere
connections overshadow the links to East Asia. Given U.S. budgetary problems,
there is a likelihood before long of a reduction of the American military
presence in Asia, which has been such a major factor in regional stability. This
is undesirable but probably inevitable. Asia will have to do more to help
itself.
.
Meanwhile, there is growing Asian resentment at under-representation in
international institutions. This does not apply just to the composition of the
Security Council and the policies of the World Bank and the International
Monetary Fund. It is also apparent in UN agencies and at forums such as Davos
and Porto Alegre, where debates on economic policy are framed by the ideological
divides of the West, including Latin America, largely to the exclusion of the
experiences and practices of an East Asia which has long been at the forefront
of development. South Korea, China, Malaysia and others are admired from a
distance, but their views and experts are largely excluded from key
institutions.
.
The reality of Asian growth is reinforcing the self-confidence of the region.
.
The mainstream Western economists who appear at Davos and elsewhere continue to
claim that Asia and most of the rest of the world are hostage to U.S. economic
performance. Porto Alegre emphasizes the evils of Western multinationals and the
"Washington consensus" in stifling development and increasing inequity. Both
views often seem myopic and paternalistic to an Asia which has recovered and
learned lessons from its crisis.
.
Asian economies - excluding Japan but including India - have performed well in
the past two years despite weakness in the West. They should continue to do
relatively very well. All have large reserves and current account surpluses and
are in a position to continue to spur domestic demand if Western demand, held
back by debt and demography, contin- ues to falter.
.
Intra-regional trade is moving gradually from dependence on the West as the
ultimate consumer to consumption within the region. While Western
nongovernmental organizations and once rich Latin Americans blame others for
their own failures, Asians mostly welcome old multinationals, and are too busy
creating their own new ones to bother about Davos or Porto Alegre.

Singapore

Strict censorship and a tame press continue to characterize the press
freedom climate in the city-state, which in October promulgated
regulations designed to keep a range of prohibited information from
reaching its citizens by the Internet. Using the threat of costly
lawsuits, harsh national security legislation, and decades of
indoctrination, Singapore's ruling People's Action Party, which has
been in power since independence in 1959, has fashioned a predictably
bland media culture.

Singapore Press Holdings Ltd., a private corporation with close ties
to the government, controls all general-circulation newspapers. The
government-linked Singapore International Media PTE Ltd. has a
virtual monopoly on broadcasting. Satellite dishes are banned with
few exceptions. The government has successfully prosecuted numerous
domestic and foreign journalists in the past, and as a result of
previous run-ins with the government, many foreign publications have
their circulation strictly controlled by the government. Such is the
case with The Asian Wall Street Journal, the Far Eastern Economic
Review, and Asia Week, the three leading regional news publications.

The new Internet regulations allow unhindered access for commercial
users while preventing private users from having access to a wide
range of sites. The Singapore Broadcasting Authority (SBA) requires
Internet service providers to block sites the government identifies
as taboo because of their political or sexual content. The SBA also
requires political and religious societies to register their
Singapore-based websites. Singapore's government has set a goal of
becoming a regional center for both on-line commerce and Internet-
control technology. The government considers its Internet controls to
be a success and an example to other nations in the region, but the
tightly regulated environment for the press at all levels in
Singapore is anathema to the promise of unhindered information flow
promised by the Internet.

SINGAPORE (Reuters) - Gold surged to a seven-year high in early Asian
trade on Tuesday and crude oil prices ticked up as worries of a war
in Iraq and fresh tensions in North Korea (news - web sites) gripped
investors.

The dollar was steady against the yen and was unable to make much
headway against the euro because of the fears of war. But the
region's stock markets were mostly up, boosted by a strong
performance on Wall Street after positive U.S. data.

Gold was bid as high as $374.25 an ounce -- a peak not scaled since
December 1996 -- before easing back to $373.75/374.50 by 0106 GMT.
Speculators bought gold futures heavily ahead of a key speech by
Secretary of State Colin Powell (news - web sites).

Powell is to present evidence to the U.N. Security Council on
Wednesday which Washington says will show Iraq is hiding banned
weapons from U.N. arms inspectors.

The presentation may be a turning point in Washington's effort to
persuade its allies that Iraq has failed to give up its suspected
chemical, biological and nuclear weapons programs, and that military
force is justified.

U.S. aircraft and warships were also put on alert for possible
deployment to deter North Korea, which said on Monday its troops were
at the ready in case of any U.S. "military and political moves"
against it.

Traders on foreign exchange markets said they were wary of both
issues and that they were keeping rates in check. The dollar was last
quoted at 120.26 yen against 120.18/26 in late U.S. trade on Monday.

The impact of escalating tensions over North Korea could be
complicated since it would hurt both the dollar and the yen, dealers
said.

On the energy market, front-month March crude stood at $32.80 per
barrel at 0111 GMT, up four cents from Monday's close in New York,
where the contract fell 75 cents to settle at $32.76.

"There's been no fresh news...and the next news people will be
watching out for is Powell's speech on Wednesday," a Tokyo-based
broker said.

Tokyo benchmark Nikkei index was up 0.35 percent at 8,530.68 points
by midsession, boosted by Wall Street's gains, but brokers said they
did not expect the gains to last.

"I think people are positive and looking for follow-through buying
after we saw new domestic money coming into the market yesterday,"
said the head trader at a foreign bank. "But I expect to see selling
into this, some unwinding (of cross-held shares)."

Stock markets in Singapore and Hong Kong, opening after the long
Chinese New Year weekend, were also up, as were Sydney and Seoul.

China, Taiwan and Kuala Lumpur remained on holiday

02/03 11:01
Hong Kong Bankers Unwind on `Lunatic Fringe' of Extreme Sports
By Kate Linebaugh

Hong Kong, Feb. 4 (Bloomberg) -- Perched at the edge of an ancient
bridge in a forest in China's Guangxi province, Credit Suisse First
Boston broker Paul Jeffery looked into a muddy pool 30 feet below --
and jumped.

Jeffery, who runs CSFB's equity sales team in Hong Kong, spends his
weekends as far from stock trading as he can: competing with
colleagues in races that involve jumping off bridges, rappelling down
cliffs and kayaking through white-water rapids from Vietnam to
Borneo.

``It's slightly druglike. You do get hooked on the endorphins,'' said
the 35-year-old Englishman, who competed in the Guangxi adventure
race last year -- one of four such events he attended on four
continents. ``The competitive thing certainly is true: that old
cliche about executives wanting to find other ways to deal with their
competitive juices.''

Scores of Asia-based bankers at companies like CSFB, Deutsche Bank AG
and Morgan Stanley recover from 14-hour days of dealmaking by
competing in extreme sports events that often last for days. They say
fighting it out in far-flung mountains and jungles eases the pressure
of their jobs while stoking the competitive instincts that help them
succeed at work.

Asia-based bankers may need more stress relief than their
counterparts elsewhere as the region bucks a slump in global deals.
The value of Asian takeovers fell just 10 percent last year, compared
with a 41 percent slide in the U.S. and a 19 percent drop in Europe.
Chinese companies sold $4.9 billion of shares in first-time sales in
2002 and may double that figure this year, bankers estimate.

Ironman Triathlon

Justin Crane, who works at Barclays Capital's syndicated loan
division in Hong Kong, brings his Giant TCR road bicycle on long
business trips. At home in Hong Kong, he squeezes in a 7.5-mile (12-
kilometer) run at 5 a.m. each weekday before his 12-hour workday
kicks off with a 7:45 a.m. sales meeting.

``There's a lycra-clad lunatic fringe in Hong Kong,'' Crane said. He
runs as much as 55 miles and cycles as much as 125 miles a week to
train for the Ironman triathlon in New Zealand in March -- a 2.5-mile
swim, a 108-mile bike ride and a 26.2-mile run.

During his predawn runs on Hong Kong's popular Bowen Road path,
Crane, who turned to extreme sports after tiring of the city's bars
and golf courses, says he passes plenty of people preparing for the
same race.

Keith Noyes ended a 10-year career structuring equity derivatives two
years ago to make a living organizing so-called adventure races.
Bankers, he says, account for about 20 percent of competitors.

300 Events

``By nature, bankers are competitive people,'' Noyes said. His Hong
Kong-based company, Seyon Asia Ltd., is teaming up with VF Corp.'s
North Face outdoor-clothing unit to sponsor three Asian races this
year. It also organizes a series of mountain marathons in Hong Kong.

After-work athletes who find gym workouts too tame have more than 300
extreme sporting events to choose from in Asia this year, from
standard marathons to a 435-mile race across Korea -- double the
number five years ago. Rising interest in the events has attracted
sponsors such as North Face, Nike Inc., Adidas Salomon AG and Japan
Tobacco Inc.'s Mild Seven cigarettes.

``It's a growth industry,'' Noyes said.

That may not be true everywhere. In London, for one, extreme sports
aren't especially popular among bankers.

``To be honest, after the hours that most people put in during the
week in London, the last thing they'd want to do at the weekend are
any extreme physical sports,'' said Chris Smith, a manager at Co-
Operative Bank Plc in London.

Television Coverage

Asia's warmer weather and rough terrain -- which includes the Gobi
Desert, the jungles of Borneo and Mount Everest, as well as hundreds
of miles of hiking trails in Hong Kong alone -- are more conducive to
outdoor sports.

Extreme sports can be big business. The cost of organizing races such
as the Eco-Challenge and the Mild Seven Outdoor Quest, which have
television coverage, can top $1 million, said Nick Freyer, senior
international vice president at International Management Group, the
world's largest sports-management company.

Sponsors are targeting an audience with plenty of cash to burn on
their extreme-sports habit. The addiction isn't unique to bankers.

Clive Saffery, who runs sales and marketing for Swire Pacific Ltd.'s
Coca-Cola bottling division in China, competed in Asia's first
adventure race in Borneo nine years ago and has done five races on
five continents in each of the past 13 years.

Such commitment doesn't come cheap. While Saffery's Nike sponsorship
reduces his spending on gear, he still estimates that he and his
wife -- and now his 13-year-old daughter, who competed in her first
race last month -- spend about HK$140,000 ($17,950) a year taking
part in sports events. The couple has four mountain bikes and two
road bikes between them worth about $8,000.

Risks

``Adventure racing is certainly a sport for those who like their
toys,'' Saffery said.

The Oxford University graduate said he favors races he can measure
``with a calendar, not a watch.'' At 48, he can still hold his own in
an annual 135-mile run across Death Valley. He has competed in the
race four times, placing 10th in 2000.

Extreme sports come with risks. A hundred miles into last year's
Death Valley race, Saffery pulled out when he couldn't put weight on
his leg, discovering later that a leg muscle had separated from the
bone. At an Action Asia race in Malaysia last year, a Hong Kong
fireman fell to his death while descending a cliff face.

The threat of severe injury isn't enough to make Saffery cut back.
This year, he plans to run in 100-kilometer races in Taiwan and Korea
to train for a 150-mile run across China's Gobi desert in September.

Shuttle Loss Another Challenge for Boeing
Sat February 1, 2003 07:50 PM ET
By Kathy Fieweger
CHICAGO (Reuters) - The explosion of the space shuttle Columbia will
present yet another challenge for Boeing Co. BA.N , the largest NASA
contractor, as it struggles through an unprecedented downturn in
commercial aviation that has sharply hurt its profitability.

Chicago-based Boeing builds space shuttles after acquiring the space
business of Rockwell International in 1996. It also maintains the
orbiter as part of a 50/50 joint venture with fellow defense
contractor Lockheed Martin Corp. LMT.N called United Space Alliance,
based in Houston.

Boeing also builds, tests and maintains the shuttle's main reusable
liquid-fueled rocket engines.

With the cause of the explosion unknown, several analysts said it is
too early too determine the precise effect the tragedy will have on
Boeing and Lockheed -- the world's two largest defense and space
contractors -- and other firms.

If the space shuttle fleet is scrapped in favor of a next-generation
orbiter, Boeing and Lockheed could ultimately benefit, even if they
lose payments from maintenance and upgrade operations in the short-
term, analysts said.

If other smaller contractors with cutting-edge technology were
chosen, however, they could lose out completely.

In any case, the watchword across the industry will certainly be one
of caution as the investigation proceeds.

"I think you can speculate about many impacts," said Marco Caceres,
senior space analyst at Teal Group, an aerospace and defense
consulting firm near Washington, D.C.

THE GIANT LAB IN THE SKY

"I think the biggest impact is on the space station," Caceres said,
referring to giant orbiting research center project launched in 1984
by President Ronald Reagan.

The space station, which will be as big as two football fields, is
currently being assembled in orbit with help from 16 nations. Shuttle
missions bring up hardware and supplies, as do launches of Russian
Soyuz rockets to the space platform.

Boeing is also the prime contractor on the space station but has been
criticized for cost overruns. Any delay in shuttle missions and
hence, in supplying the space station, ultimately just costs more,
Caceres said. That could result in the United States relying much
more heavily upon the Russians to ferry up payloads.

John Rogers, aerospace analyst for investment firm D.A. Davidson &
Co. in Portland, Oregon, said the impact will be broadly felt among
contractors.

"There's a lot that's not known, but it seems to me that there won't
be a lot of spending on space programs at least until we figure out
what happened. Anyone involved in supplying space programs will be
impacted."

Boeing, which is both the world's largest commercial airplane
manufacturer and the No. 2 U.S. defense contractor, has laid off
about 30,000 workers since the Sept. 11, 2001, attacks when hijackers
used four of its airliners to attack America.

The company draws in more than $50 billion in annual revenues from
the government, airlines and other customers, but that figure has
been declining.

On Thursday, Boeing reported a big drop in 2002 profits, to $2.3
billion from $2.8 billion in 2001. Revenue fell to $54.1 billion from
$58.2 billion in 2001.

The space and communications division, which includes the shuttle
operations, reported earnings from operations of $357 million on
revenue of $11.0 billion, down from $619 million on revenues of $10.4
billion in 2001. NASA revenues were down.

William Loh, an independent aviation consultant, said he expected
more shuttles to be built despite the tragedy.

"I think they are definitely going to have to build another one and
maybe more than one," Loh said. "With the space station and the
schedule they have, they might not have any choice."

MILITARY SIDE HAS BEEN ON UPSWING

Gains in the military side of its business have helped offset to some
degree the lack of airplane orders from carriers around the globe as
demand for air travel remains slack.

Revenues from its military and space business, now known as
Integrated Defense Systems, will soon surpass that of commercial
airplanes.

A spokeswoman for Boeing could not immediately comment on what the
crash meant for the space shuttle program and Boeing's participation.

On its Web site, Boeing said the space shuttle program was just
hitting its prime. "For the foreseeable future, the shuttle will
remain the nation's primary human-related launch vehicle."

Whether that will change in the near future is an open question,
analysts said.

Peter Gottlieb, senior fund manager for First Albany Asset
Management, said there will be questions surrounding investments in
the entire defense and commercial aviation group.

"There's going to be some time here, a gap, where all areas of the
program are going to be scrutinized and spending will be impacted.
We're going to see a lot more scrutiny, especially (on) the
suppliers."

Lockheed Martin is the largest U.S. defense contractor, with revenues
of $26.6 billion.

--Additional reporting by Chelsea Emery in New York and Chris
Stekiewicz in Seattle

Bush: 'Our entire nation grieves' for astronauts
Saturday, February 1, 2003 Posted: 7:58 PM EST (0058 GMT)

WASHINGTON (CNN) -- "The Columbia is lost. There are no survivors,"
President Bush told the nation Saturday after the space shuttle
Columbia broke apart in flames over Texas, killing the seven
astronauts aboard.

"This day has brought terrible news and great sadness to our
country," the president said in a televised address from the White
House.

Speaking to the families of the astronauts, Bush said, "Our entire
nation grieves with you," and he vowed that U.S.-led space
exploration would continue.

"The cause in which they died will continue," he said. "Mankind is
led into the darkness beyond our world by the inspiration of
discovery and the longing to understand. Our journey will go on."

After naming the six Americans and the first Israeli astronaut aboard
the shuttle, Bush said, "These men and women assumed great risk in
service to all humanity. In an age when space flight has come to seem
almost routine, it is easy to overlook the dangers. ... These
astronauts knew the dangers and faced them willingly, knowing they
had a high and noble purpose in life."

For their courage and idealism, "we will miss them all the more," he
said.

"All Americans today are thinking as well of the families of these
men and women," he said. "Our entire nation grieves with you. And
those you loved will always have the respect and gratitude of this
country."

The Columbia was returning to Kennedy Space Center in Florida after a
16-day research mission when it broke up in flames about 200,000 feet
over north-central Texas minutes before it was scheduled to land.
NASA officials at the Johnson Space Center in Houston, Texas, said
they last had contact with the craft about 9 a.m. EST.

At a news conference from Kennedy Space Center, NASA Administrator
Sean O'Keefe said he had contacted Bush and Homeland Security
Director Tom Ridge shortly after the shuttle did not arrive for its
scheduled 9:16 a.m. landing.

O'Keefe said Bush offered his "full and immediate support." O'Keefe
then met with family members of the astronauts, and he said the
president called them to offer the "deepest national regrets."

Bush cut short his weekend at Camp David to return to the White House
to meet with his chief of staff and top advisers.

According to a senior administration official, the president learned
of the shuttle disaster at about 9 a.m. EST from White House Chief of
Staff Andrew Card, who was also at Camp David.

The official said that while the president was receiving his usual
intelligence briefing, Card was watching NASA Television, awaiting
the shuttle landing, when he saw that NASA had lost contact with
Columbia. Card alerted the president.

The official said Bush's first reaction was "deep concern for those
on board, especially for the families."

After a telephone briefing by O'Keefe, the president returned to the
White House, where he was briefed again by O'Keefe. He then placed a
conference call to the families of the astronauts, the official said.

Afterward, Bush met with top advisers, including national security
adviser Condoleezza Rice, Vice President Dick Cheney and Ridge, and
then called Israeli Prime Minister Ariel Sharon to offer condolences.

Bush ordered American flags to be flown at half-staff in tribute to
the Columbia crew.

In Florida, Gov. Jeb Bush order flags at state buildings lowered to
half-staff.

02/01 17:38
Space Shuttle Breaks Up Over Texas; Crew Members Dead (Update9)
By Susan Decker


Houston, Feb. 1 (Bloomberg) -- The U.S. space shuttle Columbia broke
up about 40 miles over Texas minutes before it was due to land this
morning, killing all seven crew members and putting the space shuttle
program on hold.

``The Columbia is lost. There are no survivors,'' President George W.
Bush said. ``The cause in which they died will continue. Our journey
into space will go on.''

Witnesses in Central and East Texas reported seeing debris rain from
a clear blue sky and hearing explosions overhead, while videotape of
the descent shows multiple white trails of smoke. Search crews were
sent to the Dallas area, and debris is being found across hundreds of
square miles of East Texas.

The accident was the National Aeronautics and Space Administration's
worst disaster since the 1986 explosion of the space shuttle
Challenger, which killed seven, including New Hampshire schoolteacher
Christa McAuliffe.

NASA is investigating whether a piece of insulation foam that broke
free and struck the shuttle's left wing at launch may have
contributed to the crash. Scientists had determined the foam wouldn't
endanger Columbia's heat-deflecting tiles, said Ron Dittemore, space
shuttle program manager.

Temperature gauges on the left side of the craft indicated problems
shortly before 8 a.m. Houston time, said Milt Heflin, NASA's chief
flight director.

``We cannot discount that there may be a connection,'' between the
problems after liftoff and the time the shuttle broke apart,
Dittemore said. Still, ``a lot more evidence and analysis has to come
to the table'' before that's confirmed.

Hold on Missions

Dittemore said the agency is putting a hold on future shuttle
missions, signaling a postponement of construction on the
International Space Station.

The 22-year-old Columbia, NASA's oldest shuttle, left Kennedy Space
Center in Florida 16 days ago to conduct 80 experiments, including
ones for drug and chemical makers. Mission Control in Houston lost
contact with the shuttle at 8 a.m., about 16 minutes before it was
scheduled to land.

``There are no signs of foul play, terrorism, anything,'' Federal
Bureau of Investigation spokeswoman Angela Bell said. Experts with
the Federal Emergency Management Agency, which will become part of
the Department of Homeland Security on March 1, were being sent to
Texas from Washington.

Signs of national mourning have begun.

Flags at Half Staff

The flag atop the White House was at half-staff when Bush returned
from Camp David. Bouquets of flowers and American flags were placed
near the front entrance to the Johnson Space Center in Houston, the
home of Mission Control.

The last contact was before the shuttle was to land at Kennedy Space
Center in Cape Canaveral, Florida, NASA said. The craft was traveling
at 12,500 miles an hour, 18 times the speed of sound, as it descended
through the atmosphere, about 203,000 feet over north-central Texas,
Mission Control said.

The disaster occurred almost 17 years to the day after the shuttle
Challenger exploded shortly after its launch on Jan. 28, 1986. NASA
grounded the shuttle fleets after the Challenger explosion.

The Columbia explosions ``shook my whole house,'' said Betty Graves,
56, of Nacogdoches, Texas. ``It was like a gorilla had a hold of the
whole house and was shaking it. I thought we were having another
tornado.''

Debris Stretching for Miles

Pieces of the shuttle, some five feet in length, were found in
driveways and backyards of the East Texas city, and across a five-
county area stretching at least 120 miles, Nacogdoches, Fire Chief
Thomas Lambert told WFAA-TV in Dallas. Mission Control warned that
debris could contain toxic material from the spacecraft's propellant.

More than two-dozen people were examined at Nacogdoches Memorial
Hospital after reporting they touched the debris, hospital
spokeswoman Julie Akers said.

The shuttle was made by Rockwell International Corp., which was
acquired by Boeing Co. in 1996. Boeing spokeswoman Anne Eisele said
the company wouldn't immediately comment and referred questions to
NASA.

The prime contractor for NASA's Space Shuttle Program is the United
Space Alliance, a joint venture between Boeing and Lockheed Martin
Corp. established in 1996. The alliance is responsible for the day-to-
day operation and management of the U.S. Space Shuttle fleet.

First Flight

The Columbia was first flown in April 1981. It was one of four
shuttles and had 26 flights, second to Discovery's 30 flights,
according to Boeing's Web site. Atlantis and Endeavour are the other
two shuttles.

Jay Miller, an aviation expert and author in Arlington, Texas, said
NASA engineers probably will examine three possible causes for the
crash -- a massive computer failure that would have caused the
shuttle to lose attitude control, a loss of protective tiles that
would have caused the shuttle to burn up as it re- entered the
atmosphere, or collision with space debris prior to re- entry.

Of those, Miller expects a loss of protective tiles will get the most
scrutiny.

``Historically, there's been trouble with the tiles,'' Miller said.
``Burn-through has always been a concern, and (loose tiles) are very
hard to detect from inside the spacecraft.''

Columbia was next scheduled to haul a truss segment and cargo to the
International Space Station no earlier than Nov. 13, according to
NASA plans. The next scheduled shuttle flight is by Atlantis, no
earlier than March 1, to take a new resident crew to the outpost.

Crewmembers

Israeli Air Force Colonel Ilan Ramon was among the seven crew members
conducting experiments for NASA, the European Space Agency and
customers including drug and chemical companies. NASA managers began
preparing for the trip four years ago, and saw technical problems
postpone the launch date for two and a half years.

U.S. Air Force Colonel Rick Husband commanded the mission. U.S. Navy
Commander William McCool piloted Columbia, which also carried U.S.
Air Force Lieutenant Colonel Michael Anderson, U.S. Navy Captain
David Brown, aerospace engineer Kalpana Chawla, U.S. Navy Commander
Laurel Clark and Ramon.

Ramon, 48, a former fighter pilot and son of a Holocaust survivor who
started astronaut training in 1998, was assigned to measure dust
particles in the atmosphere over North Africa.

``The state of Israel and its citizens are as one at this difficult
time,'' Israeli Prime Minister Ariel Sharon said. Indian Prime
Minister Atal Bihari Vajpayee also issued a statement of condolences.
Chawla was born in India.

Security

While Ramon's role in the mission heightened security awareness at
the Kennedy Space Center, NASA security chief David Saleeba has said
the agency received no threat against the mission.

Since the Sept. 11 attacks on New York and the Pentagon, NASA imposed
a no-fly area around the launch pad, put troops at the site and
stopped disclosing launch times days in advance.

This is the third fatal spacecraft accident in NASA history. The
first occurred Jan. 27, 1967, when three astronauts -- Virgil I.
``Gus'' Grissom, Roger Chaffee and Edward White - were killed in the
Apollo 1 fire at launch pad 37 at Cape Canaveral, Florida.

Columbia ushered in the age of the space shuttle on April 12, 1981,
with astronauts John Young and Robert Crippen aboard. Construction of
the vehicle started in the 1970s, though it has been rebuilt and
repaired over the years. During its early years, the shuttle was
plagued by loose heat tiles, designed to absorb heat when the shuttle
re-enters Earth's atmosphere.

JAN 31, 2003
Private hospitals bleed from slowdown, competition
It's a double whammy as more foreign patients go to Malaysia and
Thailand and local patients turn to subsidised public hospitals

By Salma Khalik
HEALTH CORRESPONDENT

PRIVATE hospitals are feeling the heat from public hospitals here,
and also from competitors in Malaysia and Thailand.

The smaller hospitals have been hit especially hard.

Mount Alvernia Hospital slashed some rates earlier this month, East
Shore Hospital turned some wards into a nursing home, Raffles
Hospital has mothballed two-thirds of its beds and Balestier Hospital
has closed its wards.

The economic slowdown is not only pushing local patients towards
public hospitals, where many can benefit from subsidised care, but
also diverting foreign patients to hospitals in Thailand and Malaysia.

Private hospitals here, which offer close to 2,000 beds, say they
have been hit by a double whammy: the strength of the Singapore
dollar and competition in the region, and stronger competition from
public hospitals at subsidised rates.

The dollar has appreciated 200 per cent against the Indonesian rupiah
in the past five years, making hospitals here too expensive for
Indonesian patients who once flocked here with families in tow.

In that time, hospitals in Thailand and Malaysia have improved their
standards and can provide medical services at a fraction of Singapore
prices.

Health Management International, which ran Balestier Hospital, also
runs the Mahkota Medical Centre in Malacca. It had under 1,000
foreign patients in 1998, but saw nearly 16,000 last year.

Mount Alvernia's chief executive officer, Mr Lee Cheow Seng, said
there has been a clear shift of patients towards public hospitals in
the downturn because of government subsidies.

Demand is weak in wards other than single-bed ones.

So the 303-bed hospital is giving a $35 rebate on its four-bed wards
and $40 for six-bed wards, and a 5-per-cent discount on the bills. p>
The not-for-profit hospital is even offering a $5 rebate for patients
who attend its 24-hour accident and emergency clinic.

Meanwhile, the Singapore General Hospital and Tan Tock Seng Hospital
are bursting at the seams with subsidised patients, despite last
October's hike in charges for subsidised patients.

Some patients have been moved into better-class wards at no extra
charge.

But the 62-bed Balestier Hospital, just around the corner from Tan
Tock Seng, ran at a loss of almost $2 million last financial year.

Said its chief, Dr Gan See Khem: 'That's why I decided to close the
wards and focus on outpatient and day surgery. It's a lot easier to
maintain.'

Its staff of 110 has now been halved, since it no longer runs round-
the-clock. Some wards have been turned into a health-care training
centre and it is now waiting to change its name to Balestier Medical
Centre.

Dr Gan said the private health-care market has been 'very difficult'
for the last three years. 'So we were fairly glad to exit the market.
Now I'm not competing with Mount Alvernia or anybody else on bed
charges.'

At the 380-bed Raffles Hospital, the newest here, only about 50 beds
are occupied at a time.

So it has taken about 180 beds out of service.

Dr Prem Kumar Nair, Raffles Medical Group's general manager of
corporate services, said: 'We will scale up when the economic
recovery is stronger.'

Now it focuses on outpatient treatment, such as day surgery and
health screening, for which demand is strong.

East Shore Hospital is using 31 of its 153 beds for nursing
care.Demand is still high, although there are 50 nursing homes here.

Since 2001, it has also been taking in patients from other hospitals,
who need step-down care after serious illness like a stroke or
amputation.

Though this has pushed its occupancy up 10 points, it is still half
empty.


----------------------------------------------------------------------
----------
Copyright @ 2003 Singapore Press Holdings. All rights reserved.

SYDNEY, Australia (CNN) -- A passenger train derailed south of Sydney
during Friday morning rush-hour, killing at least eight commuters and
injuring more than a dozen others, authorities said.

The derailment occurred around 7:30 a.m. (20:30 GMT Thursday) in a
steep ravine in an extremely remote area near the town of Waterfall,
about 20 miles (30 km) south of Sydney. The train was carrying
passengers south down the coast of New South Wales toward Port
Kembla.

An emergency services spokesman said eight people were confirmed dead
and that at least 15 people were seriously injured. He said at least
16 others were still trapped in the four train cars.

Michael Gleeson, the communications director for the New South Wales
rail authority, said the exact number of people onboard at the time
of the crash is not known. But he said the train is capable of
carrying several hundred people.

Gleeson said right now the focus is on saving lives.

"We really do have to wait and see what transpires in the coming
hours. Emergency service teams are down there now, frantically trying
to get the injured up out of what is a very difficult place to
access," he told CNN.

More than two dozen ambulances were on standby to take the injured to
hospitals, as rescuer crews searched the rail cars in the remote
Royal National Park. Rescue helicopters were also there to airlift
out the most seriously injured.

Sydney hospitals were put on alert to accept injured passengers.

The first two cars were mangled and the other two cars were on their
side. Electrical wires were on the ground and the train track was
ripped up.

Cause unknown
Asked if extremely hot temperatures could have resulted in the tracks
buckling, Gleeson said, "It's highly unlikely that that would be the
case."

He said an investigation will be launched to get to the bottom of
what happened.

"It's too early to speculate what might have caused this," Gleeson
said.

The stretch of track is flanked by the steep embankments of the
ravine, making the rescue operation difficult. Some rescue workers
were dropped into the crash scene by helicopters, while others had to
walk from ambulances parked nearby to the wreck.

"Access (to the site) is our major concern," The Associated Press
reported fire brigade spokesman Ian Krimmer as saying.

The area where the derailment occurred borders a national park, with
thick forests.

01/30 19:32
Japanese Stocks Fall; Nikkei Set for Lowest Close in 2 Decades
By Tomoko Yamazaki

Tokyo, Jan. 31 (Bloomberg) -- Japanese stocks fell, with the Nikkei
225 Stock Average heading for its lowest close in almost two decades.
Exporters such as Advantest Corp. declined after a U.S. government
report showed that the world's largest economy grew less than some
economists expected.

Mizuho Holdings Inc. fell, leading other banks lower after the
Mainichi newspaper reported that the financial regulator will issue a
compliance order to the bank. Lenders may also decline after the debt
ratings of Mizuho, Mitsubishi Tokyo Financial Group Inc. and two
other banks were cut one notch by Fitch Ratings.

``It's hard to bet on any sort of recovery in profits or stocks given
the imminent signs of a slowing global economy,'' said Minoru Tada, a
director at World Nichiei Securities Co. ``We're heading for another
new low and that would renew concerns about another financial
crisis.''

The Nikkei lost 20.84, or 0.3 percent, to 8295.97, as of 9:19 a.m.
Tokyo time. The average is heading for its lowest close since March
1983. The Topix index shed 3.73, or 0.5 percent, to 821.43, with
computer-related shares and banks accounting for about a third of its
drop.

For the week, the Nikkei has lost 5 percent, while the Topix has
declined 4.6 percent. They are headed for their biggest weekly drop
since Oct. 11. For the month, Nikkei is down 3.3 percent, while the
Topix has lost 2.7 percent.

Nikkei 225 futures for March delivery fell 30 yen to 8250 in Osaka
and lost 50 yen to 8250 in Singapore. In orders placed before the
market opened today, overseas investors sold 6.7 million more shares
than they bought through 11 brokerages.

Exporters

Advantest, which depends on overseas sales for about 60 percent of
its total revenue, declined 130 yen, or 2.4 percent, to 5,230.
Matsushita Electric Industrial Co., the world's biggest maker of
consumer electronics, lost 21 yen, or 1.8 percent, to 1,156.
Matsushita exports 35 percent of its products.

A U.S. government report showed that the U.S. economy grew 0.7
percent last quarter. Analysts surveyed by Bloomberg had forecast 0.9
percent. A separate report showed new claims for jobless benefits
rose more than forecast last week. Some 397,000 people sought state
unemployment insurance. The average estimate by analysts was 385,000.

Losses may be limited after the dollar had its biggest gain against
the yen in three weeks, boosting expectations that the value of
exporters' overseas sales may be inflated. The Japanese currency
recently traded at 119.03 yen per dollar.

`Public Funds'

Mizuho, the world's largest bank by assets, lost 3,000 yen, or 3.4
percent, to 113,000. The regulator will issue a compliance order to
Mizuho, the Mainichi newspaper reported on its website. The agency
will issue the order either today or tomorrow to urge the bank to
lend more money.

Banks also declined after Fitch Ratings cut the debt ratings of
Mizuho, Mitsubishi Tokyo Financial Group and two other major Japanese
lenders. Fitch cited that the government has been slow to fix the
nation's banking system.

Mitsubishi Tokyo Financial, Japan's third-largest bank, shed 4,000
yen, or 0.6 percent, to 631,000. UFJ Holdings Inc., Japan's No. 4
lender, declined 3,000 yen, or 2.2 percent, to 133,000.

``The rating cut underscores the fact that the banks' situation won't
improve unless the government uses public funds to strengthen their
finances,'' said Hiromichi Tsuyukubo, who helps manage about $650
million in securities at Tokyo-Mitsubishi Asset Management Ltd.

A government report today before the market opened showed Japan's
jobless rate rose to 5.5 percent in December, from 5.3 percent in
November. The rate had been expected to rise to 5.4 percent,
according to the median forecast of 33 economists surveyed by
Bloomberg News.

Earnings Watch

Bucking the trend, Pioneer Corp., Japan's No.3 audiovisual equipment
maker, jumped 105 yen, or 5 percent, to 2,200. The company yesterday
after the market closed reported that third- quarter net income more
than doubled, helped by home electronics sales and royalties on disk-
drive technology.

Nomura Holdings Inc., Japan's largest securities firm, added 8 yen,
or 0.6 percent, to 1,451. The brokerage reported after the market
close yesterday that its third-quarter profit rose almost eight times
as it cut costs and lured more individual investors to a rallying
bond market.

Among those reporting earnings today are Fuji Photo Film Co., Honda
Motor Co., Nikko Cordial Corp. and Daiwa Securities Group Inc.

01/30 16:25
U.S. Economy: 4th-Qtr GDP Slowed to 0.7% Annual Rate (Update3)
By Carlos Torres

Washington, Jan. 30 (Bloomberg) -- U.S. economic growth slowed to a
0.7 percent annual pace in last year's fourth quarter, restrained by
the smallest gain in consumer spending in a decade. The first
increase in business investment in two years bolstered forecasts for
faster growth in 2003.

The rise in gross domestic product, or the sum of goods and services
produced in the U.S., was the slowest since the third quarter of
2001, when the U.S. was in recession, the Commerce Department said.
It was the fifth straight quarter of growth.

``The economy grew slowly in the fourth quarter, but the modest
advance did not suggest the economy was drifting into recession,''
said Michael Moran, chief economist at Daiwa Securities America in
New York. ``We need to see business firms invest for the economy to
do better and this report showed good news on that front.''

Uneven growth and a weak job market have foiled efforts to call an
official end to the recession that began in March 2001 and that many
economists say halted later that year. To encourage consumers, the
main drivers of the economy, and businesses to spend more, President
George W. Bush this month proposed a $670 billion tax-cut plan and
the Federal Reserve yesterday kept the benchmark interest rate at a
41-year low.

For all of last year, the world's largest economy expanded 2.4
percent, following a 0.3 percent growth rate in 2001. The economy may
grow 2.8 percent this year, based on the consensus of more than 50
economists polled by Blue Chip Economic Indicators.

Economic Growth

The fourth-quarter GDP slipped from a 4 percent pace in the previous
three months. Economists had estimated that the economy grew at a 0.9
percent annual pace last quarter, based on the median of 71 forecasts
in a Bloomberg News survey. About 10 percent had forecast that the
economy might stall or decline.

Before taking inflation into account, the so-called nominal GDP grew
at a 2.5 percent annual pace last quarter and is up 4.1 percent over
the past 12 months. Concern about higher oil prices and
``geopolitical risks,'' interpreted by economists to include a
possible war with Iraq, have made some companies reluctant to spend,
the Fed said in its in statement yesterday.

The dollar today staged its biggest gain against the euro in four
weeks, partly because higher business spending suggests companies may
be more comfortable with profit outlooks.

``It was a relief to see the U.S. economy actually expanded in the
fourth quarter,'' said Paresh Upadhyaya, who helps manage $67 billion
in international assets at Putnam Investments. Putnam increased its
euro-denominated holdings this month.

Adjusted for inflation, GDP totaled $9.503 trillion in the quarter
when measured at an annual rate. In the third quarter, GDP totaled
$9.486 trillion. Strength in housing and government spending helped
boost GDP, while weaker consumer spending, a slower rate of inventory-
building and a wider trade deficit created a drag on growth.

Initial Claims

Other reports today showed that the number of workers filing new
claims for unemployment benefits stayed below 400,000 for a fourth
straight week, suggesting the job market may be stabilizing, and that
labor costs rose last quarter at the slowest pace in four years. The
claims rose 14,000 to 397,000 and the labor-cost index rose 0.7
percent, the Labor Department said.

``Personal income growth is slowing, folks, and a tough labor market
will likely keep this trend in tact,'' said David Rosenberg, chief
North America economist at Merrill Lynch & Co. Inc. in New York.
``Based on the leading indicators at our disposal and the waning
momentum as the year drew to a close, we see Q1 coming in at a 1.5
percent annual rate from 2.2 percent expected earlier.''

The volume of help-wanted advertising in major U.S. newspapers fell
in December to the lowest in almost four decades, the Conference
Board said in a separate report today. The New York research group's
help-wanted advertising index dropped to 39 last month from 40 in
November. The last time the index was so low was November 1963, when
it was 38.

`Starts and Stops'

Stocks fell after the reports. The Dow Jones Industrial Average
closed down 166 points, or 1.9 percent, at 7945.13. The Standard &
Poor's 500 Stock Index declined 20 points, or 2.3 percent, to close
at 844.62. The dollar rose to $1.0819 per euro from $1.0838
yesterday. The 4 percent 10-year note due in November 2012 rose 3/8
point, pushing its yield down 5 basis points to 3.97 percent.

``The economy is emerging from the recession of 2001, and there have
been a series of starts and stops for growth in 2002,'' White House
Press Secretary Ari Fleischer said. ``This is why the president views
the economy to be mixed.''

Consumer spending rose at a just 1 percent annual pace last quarter.
That was the weakest since the first quarter of 1993 and down from a
4.2 percent rate in the previous three months.

The slowdown was led by a 7.3 percent decrease in spending on durable
goods such as automobiles, the biggest drop in almost 12 years.
Economists are forecasting a rebound this quarter after auto sales
logged the best December ever, selling at an annual rate of 18.3
million vehicles.

Business Investment

Business fixed investment, which includes spending on commercial
construction as well as equipment and software, rose at a 1.5 percent
annual rate in the fourth quarter after falling at a 0.8 percent pace
in the third. It was led by a 5 percent increase in spending on
equipment and software.

``We need to see stronger business spending growth and we are
encouraged by three straight quarters of gains in real equipment
spending,'' said John Ryding, chief market economist at Bear Stearns
& Co. in New York.

Business investment in plants and other structures fell at a 9.3
percent annual rate last quarter, compared with a decrease of 21.4
percent in the third quarter. It was the smallest drop in five
quarters.

The decline in capital goods orders in November and December reported
by the Commerce Department this week ``points to a negative capital
expenditure number in the first quarter,'' Merrill Lynch's Rosenberg
said.

Slower Inventory Growth

The slowdown in consumer spending led businesses to trim inventory
building. Companies added inventories at a $3.3 billion annual pace
in the fourth quarter after increasing stockpiles at an $18.8 billion
rate in the previous three months. That subtracted 0.56 percentage
points from growth.

``Managers are nervous about the fallout from a war with Iraq and
they don't want to be stuck with unsold goods,'' Daiwa's Moran said.
Once the situation is more clear, ``businesses will find they have to
add to inventories because they are so lean.''

Housing and government spending provided what lift there was to the
economy last quarter. Government spending rose at a 4.6 percent
annual pace last quarter, after rising at a 2.9 percent annual rate
in the previous three months.

Spending on residential construction rose 6.8 percent at an annual
pace after rising 1.1 percent the previous three months. Demand was
aided by the lowest mortgage rates in four decades.

The effects of a West Coast port shutdown were felt in the fourth
quarter as the nation's trade gap rose, subtracting 0.68 percentage
points from growth. Ports were shut in September and early October,
and the reopening led to a surge of imports in November. Imports rose
by $14.2 billion in the quarter while exports fell by $4.7 billion.
That left a net trade deficit of $506.9 billion, up from $488 billion
in the third quarter.

Inflation stayed in check. The GDP price deflator, a gauge of
inflation tied to the report, rose at a 1.8 percent annual rate in
the fourth quarter after rising at a 1 percent pace from July to
September. The personal consumption expenditure deflator rose at a
1.9 percent rate, up from 1.7 percent in the third quarter.

Bush vows to go it alone on Iraq
Jan 30
Peter Hartcher in Washington

US President George Bush issued an ultimatum to the United Nations to
join a war against Iraq or be sidelined, as he braced the American
people for battle and sent a sober message to his mobilised troops.

In the most widely watched political set piece of the US yearly
political calendar, Mr Bush used his State of the Union address to
convince a dubious American electorate of the need to use force
against Iraqi President Saddam Hussein.

While a year ago he strung together Iraq, Iran and North Korea in
an "axis of evil", this year he carefully separated the three,
reserving demonisation for the Iraqi leader alone.

A Gallup phone poll of 440 people who watched the speech found that
the President had succeeded in swaying opinion - only 47 per cent
supported military action against Iraq before the speech, but
afterwards, 67 per cent said Mr Bush had made a convincing case.
Thirty per cent said he had not made a convincing case.


Although the main thrust of his address was about disarming Iraq, Mr
Bush also set out new policies such as providing $US15billion
($25.4billion) over five years to help tackle AIDS in Africa and the
Caribbean, and $US1.2billion for research into clean hydrocarbon
fuels for cars.

Mr Bush also spoke about his plan to revive the US economy through a
10-year, $US674billion package of tax cuts, but announced no new
economic measures.

According to the Gallup poll, 58per cent of people who watched the
speech said they found his case for the tax cuts persuasive, while 36
per cent did not.

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Mr Bush said he was sending his Secretary of State, Colin Powell,
before the UN Security Council on February 5 to "present information
and intelligence about Iraq's illegal weapons programs; its attempts
to hide those weapons from inspectors; and its links to terrorist
groups".

He neither declared war nor delivered a deadline to Baghdad, but made
it plain that he would act without the UN if necessary.


"We will consult, but let there be no misunderstanding. If Saddam
Hussein does not fully disarm, for the safety of our people, and for
the peace of the world, we will lead a coalition to disarm him."

Signalling again that he is prepared to launch an attack without the
support of the United Nations, Mr Bush said: "All free nations have a
stake in preventing sudden and catastrophic attack. We are asking
them to join us, and many are doing so. Yet the course of this nation
does not depend on the decisions of others."

Officials said that the speech was the first of several the President
planned over the next couple of weeks to win public support.

The Democrats responded by supporting the confrontation of Mr
Hussein, but asking Mr Bush to do so together with allies and not
alone.

The first half of Mr Bush's speech, devoted to domestic policy,
was "boring, pretty ugly and I'd give him a C minus", said a leading
US political analyst, the publisher of the non-partisan Cook
Political Report, Charlie Cook.

"If the delivery of the whole speech had been as bad as the first
half, there would have been a suicide watch at the White House in the
morning," Mr Cook said.

But the second half, devoted to foreign policy including Iraq and a
the new program to deal with 9million AIDS cases was somewhat better,
Mr Cook said. "I give him a B minus for the second half."

Mr Bush seemed to dismiss the value of the UN inspections, detailing
Mr Hussein's techniques of evasion.

He said Iraqi intelligence officials posed as scientists for the
inspectors to interview. Thousands of Iraqi officials were busy
moving evidence, he claimed.

The President said: "The dictator of Iraq is not disarming. To the
contrary, he is deceiving." He was treating the inspections
with "utter contempt".

The vice-president of the American Arab Anti-Discrimination Committee
in Washington, Khalil Jahshan, said that "his reiterated lack of
faith in the inspection process seemed to make it clear it was just a
ritual we are going through so the US can do whatever it wanted to do
in the first place".

Mr Bush at one point spoke directly to US troops: "Many of you are
assembling in and near the Middle East, and some crucial hours may
lie ahead. In those hours, the success of our cause will depend on
you."

The US has 160,000 troops and four aircraft-carrier battle groups
around Iraq or en route.

He continued: "Sending Americans into battle is the most profound
decision a president can make ... This nation fights reluctantly,
because we know the cost, and we dread the days of mourning that
always come.

"We seek peace. We strive for peace. And sometimes peace must be
defended.

"A future lived at the mercy of terrible threats is no peace at all."

Mr Bush said that "we will bring to the Iraqi people food, and
medicines, and supplies - and freedom".

Mr Jahshan said that "this would go a lot further in the Middle East
if the administration had any sort of performance record of bringing
democracy and peace to the Palestinians or bringing down dictatorial
regimes instead of, on the contrary, supporting them".

JAN 29, 2003
Creative posts better-than-expected earnings
SINGAPORE -- Computer entertainment products maker Creative
Technology said on Wednesday that its net profit in the second
quarter ending December fell 28.20 per cent from the previous year,
but the results still beat market expectations.

Second-quarter net profit totalled US$18.88 million, down from $26.31
million the previous year but ahead of the company's expectations of
$12.8 to $16.8 million and analysts' forecasts of $12.2 to $16
million.

Net profit in the first six months of its 2003 financial year
declined 2.9 per cent to $13.90 million.

The second-quarter results were also a reversal of the $5-million
loss the company incurred in the first quarter.

Sales for the quarter fell 7.4 per cent to $230.94 million in line
with the Singapore firm's guidance. In the half-year to December,
sales dropped 8.9 per cent to $391.56 million.

Mr Craig McHugh, president of Creative unit Creative Labs Inc, said
the company's expansion into digital entertainment products for use
outside the personal computer boosted sales during the Christmas
holidays.

Creative, which turned computers into virtual entertainment centres
with its soundcard series, has also produced digital audio players,
speakers and Web cameras.

But the company said it expected sales to fall to $150 to $170
million in the third quarter due to the economic slump in the US and
Europe and uncertainty in the Middle East.

Earnings per share is forecast at six cents for the third quarter
before special charges, down from 23 cents in the second, Mr McHugh
said.

The company also said it plans to delist its ordinary share from the
Nasdaq exchange in New York as trading volumes there have dwindled to
a fraction of volumes on the Singapore bourse.

Chairman and chief executive Mr Sim Wong Hoo said the company is
likely to realise cost savings in the region of 'seven-digit numbers'
when it delists. -- AFP

01/29 09:40
Dollar Weakens Against Euro, Yen After Bush Says Iraq Defies UN
By Vivianne Rodrigues

New York, Jan. 29 (Bloomberg) -- The dollar fell against the euro for
an 11th day in 12 after President George W. Bush said Iraq has
ignored demands to disarm, raising expectations the U.S. will lead an
attack on the Middle East country.

Demand for the currency slipped after the president said in his State
of the Union address yesterday that he is prepared to strike Iraq
without United Nations backing, a prospect that some investors say is
curbing the appeal of U.S. financial assets.

``People in these uncertain times do not want to have an over-
investment in the U.S.,'' said Anil Agarwal, a currency specialist at
Brown Brothers Harriman & Co. That means the U.S. isn't compensating
for its ``gaping'' current-account deficit with money from abroad,
driving the dollar lower, he said.

The U.S. currency weakened to $1.0857 per euro at 9:32 a.m. in New
York from $1.0818 yesterday, extending its loss to 3.5 percent this
year. As more foreign investors keep their money at home, the dollar
will head toward $1.10 per euro, Agarwal said. The U.S. currency had
its biggest drop in two weeks against the yen, falling to 118.24 yen
from 118.77.

``We will consult, but let there be no misunderstanding -- we will
lead a coalition to disarm'' Iraq, Bush said.

U.K. Prime Minister Tony Blair said today British intelligence shows
links between Iraq and al-Qaeda, as the UN Security Council considers
its response to an arms inspectors' report.

The U.S. economy needs $1.4 billion a day in foreign investment to
offset its current-account deficit and maintain the value of the
dollar. In the first three quarters of 2002, the current-account gap
widened to $367.1 billion, compared with $393.4 billion for all of
2001.

Stocks Decline

As investments from abroad that finance that deficit slowed in the
past year, the U.S. currency shed 21 percent against the euro, 11
percent against the yen and 14 percent against the British pound.

Prospects for the dollar also dimmed as U.S. stocks fell, with the
Standard & Poor's 500 index dropping 1 percent. The S&P 500 is down
2.4 percent this year, after dropping 23 percent last year.

Bush ``did his best to put extreme pressure on Iraq,'' said Scott
Grannis, who helps manage $95 billion in fixed-income investments at
Western Asset Management in Pasadena, California. ``The speech didn't
reduce the threat of a conflict at all.''

Federal Reserve policy makers will probably leave their benchmark
interest rate unchanged at 1.25 percent today, analysts said. Some
economists expect the central bank to shift its outlook and say the
U.S. economy is at risk of weakening further.

John Snow

The slide in the dollar may be limited as U.S. Treasury secretary
nominee John Snow, in his confirmation hearing before the Senate
Finance Committee, said yesterday that ``a strong currency provides a
reliable medium of exchange and serves as a stable store of value
that people choose to hold.''

The comments were his first on the dollar since being nominated in
December to replace Paul O'Neill, and came after the U.S. currency
fell 9.5 percent against the euro and 4.6 percent against the yen in
the past three months.

In other trading, the dollar fell to 1.3507 Swiss francs from 1.3566.
The British pound rose to $1.6466 from $1.6394. The yen was at 128.46
per euro from 128.60.

01/29 09:35
U.S. Stocks Drop on War Concern; General Electric, Kraft Fall
By Justin Baer

New York, Jan. 29 (Bloomberg) -- U.S. stocks fell after President
George W. Bush said Iraq is defying demands to disarm, increasing the
risk of a war that may damp economic growth and curb profits at
companies such as General Electric Co.

``The speech moves us one step closer to war,'' said Tim Ghriskey,
who oversees $100 million in assets as president of Ghriskey Capital
Partners. ``Any armed conflict tends to be a negative for the economy
and the stock market.''

Kraft Foods Inc. sank as the company forecast profit that was lower
than analysts' estimates. Kraft parent Altria Group Inc., the world's
largest tobacco company, and the oil producer ConocoPhillips are
among companies reporting earnings today.

The Standard & Poor's 500 Index fell 5.31, or 0.6 percent, to 853.23
at 9:34 a.m. in New York. The Dow Jones Industrial Average declined
56.01, or 0.7 percent, to 8032.83 and the Nasdaq Composite Index lost
8.67, or 0.7 percent, to 1333.51.

Bush's comments in his State of the Union speech added to concern a
war in Iraq would push up oil prices and prompt consumers and
businesses to spend less. The S&P 500 has shed 2.4 percent in 2003,
erasing a gain of as much as 5.9 percent this year. The index rose
1.3 percent yesterday before Bush spoke.

Intelligence Data

General Electric, whose products range from aircraft engines to light
bulbs, shed 37 cents to $22.78, contributing the most to the decline
in the S&P 500. The company is the second biggest in the world by
market value after Microsoft Corp.

Bush cited intelligence information he said shows Saddam Hussein has
material for chemical agents and recently sought to acquire uranium
and equipment to refine it for nuclear arms. The Iraqi leader has
also been aiding and protecting terrorists, the president said.

Kraft Foods, the largest U.S. food company, slipped $4.46 to $31.65.
The company said stock-based compensation expenses and higher
commodity prices in Latin America may hurt results this year. Kraft
forecast profit of $2.10 to $2.15 a share, less than the average
estimate of $2.25 from analysts polled by Thomson First Call. Altria,
which owns 84 percent of Kraft, fell $1.37 to $37.01 on Instinet
before exchanges opened. The company changed its name from Philip
Morris Cos.

South Asia News
Sun, 26 Jan 2003, 4:01am HKT
Malaysia's Factory Investments Rose 14% in 2002 (Update1)
By David Yong

Kuala Lumpur, Jan. 25 (Bloomberg) -- Malaysia said plans by companies to build
plants and equipment rose by 14 percent in 2002 as a recovery in the domestic
industry and an improvement in exports of electronic equipment helped the
economy expand.

Companies last year submitted plans to invest 18.8 billion ringgit ($4.95
billion) compared with 16.5 billion ringgit a year before, the Ministry of
International Trade and Industry said in a report. Foreign companies accounted
for 11.8 billion ringgit while domestic companies accounted for 7 billion
ringgit.

The recovery in investment helped the economy grow by 3.5 percent in the first
three quarters last year, said Trade and Industry Minister Rafidah Aziz. The
economy is expected to achieve the forecast growth of 4 percent to 5 percent for
2002.

``We are happy with the trend, given the global gloom and doom scenario,''
Rafidah said. ``The numbers are not as important as our success in getting the
right investors for our target industries.''

The recovery in investment hasn't matched the level that peaked at 46.2 billion
ringgit in 2000, as China drew 13 percent more foreign direct investment to a
record $52.7 billion last year. Intel, Nissan Motor Corp. and Samsung
Electronics Co. Ltd. flocked to China to take advantage of abundant labor, low
factory wages and domestic demand.

China Factor

Malaysia isn't alone in facing competition from China. Foreign investments in
Taiwan dropped 36 percent to $3.3 billion last year, as local companies such as
Compal Electronics Inc. added 39 percent more investment to $3.9 billion in the
mainland.

``We are going to face competition (from China) as it comes with better policy
and incentives,'' Rafidah told reporters, declining to say whether the ministry
has targets for 2003.

Prime Minister Mahathir Mohamad will unveil an extra spending package next month
to prevent the Malaysian economy from slowing down. The government forecast the
economy will grow as much as 6.5 percent in 2003.

Rafidah said manufacturing, which accounts for 30 percent of gross domestic
product, expanded by 3.5 percent in the January-to- September period last year.

The government earlier said exports of electronics goods, which make up 56
percent of all exports, rose 5.1 percent to 184 billion ringgit in the first 11
months last year.

New Projects

Next year may promise to be better, Rafidah said, as the government evaluates a
plan by Dubai Aluminium Ltd. to set up a $2 billion smelter in the East
Malaysian state of Sarawak. Dubai has held talks with Australia's BHP Billiton
Ltd. on the venture.

In 2002, Malaysia drew its single largest investment from German-owned Intec
Elastomers Asia Sdn., which plans to invest 4.7 billion ringgit to produce
synthetic rubber powder. Honda Motor Co. Ltd. built a plant with a Malaysian
partner to assemble its CRV sport-utility vehicles.

Even with the expansion efforts by Intel Corp. and Jabil Circuits Inc.,
investments from U.S. companies fell by half to 1.3 billion ringgit, today's
report showed.

Among Malaysian companies, Mimos Semiconductors Sdn. plans a 925 million ringgit
wafer-making factory while Naza Sdn. will set up a 490 million ringgit plant to
assemble South Korea's KIA cars for export to southeast Asian markets.

South Asia News
Sat, 25 Jan 2003, 1:04pm HKT
Singapore Stocks Fall as City Developments, Chartered Pace Drop
By Chan Sue Ling


Singapore, Jan. 24 (Bloomberg) -- Singapore stocks fell, paced by
City Developments Ltd. and other property stocks on concern office
property values may drop as Keppel Land Ltd. and others write down
the value of their buildings to attract buyers.

The Straits Times Index lost 4.39, or 0.3 percent, to 1360.02 at the
12:30 p.m. lunch break. More than three shares fell for every one
that gained. The benchmark has dropped 0.5 percent this week.

Keppel Land, which last year sold its 70 percent stake in Capital
Square, a 16-story financial district building, said it would take a
S$72 million loss ($41.6 million) on the sale as the price fell a
10th below its book value. Keppel Land shed 1 cent, or 0.9 percent,
to S$1.11.

Some analysts said they will focus on Keppel Land's strategy of
selling more Singapore office buildings at its earnings briefing on
Jan. 27.

City Developments, one of the island's three biggest office
landlords, slumped 10 cents, or 2.3 percent, to S$4.20. CapitaLand
Ltd., Singapore's No. 1 developer by sales, declined 2 cents, or 1.8
percent, to S$1.10.

Computer-related companies, which have U.S.-based clients, also
declined on concern orders for their products may not pick up soon. A
U.S. jobless claims report added to evidence the island's largest
export market is still weak. Initial jobless applications increased
by 18,000 to 381,000 in the week that ended Jan. 18, the Labor
Department said.

Venture Corp., the island's largest electronics maker for companies
such as Hewlett-Packard Co., fell 20 cents, or 1.5 percent, to
S$13.40. Chartered Semiconductor Manufacturing Ltd., whose customers
include Agilent Technologies Inc., slid 2 cents, or 2.5 percent, to
77.5 Singapore cents.

The following stocks rose or fell in the morning session. Stock
symbols are in parentheses after the company names.

Singapore Technologies Engineering Ltd. (STE SP ) was unchanged at
S$1.76 after rising as much as 1.7 percent. The Singapore-based
defense equipment maker said one of its units won a S$81 million ($47
million) contract to build a communications system for Taiwan's
Kaohsiung Rapid Transit Corp. ST Electronics will design, supply and
install the communications system for two subway lines.

Advanced Systems Automation Ltd. (ASA SP ) lost 2 cents, or 10
percent, to 17.5 Singapore cents. The maker of semiconductor
equipment said a group of investors, which it didn't identify,
decided against buying new shares in the company. In December,
Advanced Systems said the group was interested in purchasing about a
22 percent stake in the enlarged share capital of the company.

Design Studio Furniture Manufacturer Ltd. (DSFM SP ) fell 3.5 cents,
or 15 percent, to 19.5 Singapore cents in its first trading day. The
company sold 20 million shares at 23 Singapore cents each. There were

Stratech Systems Ltd. (STRA SP ) gained half a cent, or 6.7 percent,
to 8 Singapore cents. The company, which provides software-related
services, said it won an order for its latest product, which helps
speed up the inspection and clearance of vehicles.

Sunway International Holdings Ltd. (SIHL SP ) jumped 1 cent, or 29
percent, to 4.5 Singapore cents. The company said profit for the year
ended Sept. 30 rose more than fivefold to HK$30 million ($3.9
million) from a year ago.

JAN 25, 2003
Private home prices down 1.8% last year, says URA
This contrasts with an earlier MAS report that said prices would
recover by up to 5%; HDB data shows 0.4% rise in resale flat prices
for the year

By Vladimir Guevarra
PROPERTY REPORTER

PRICES of private homes fell 1.8 per cent last year - in contrast to
an earlier, more bullish report from the Monetary Authority of
Singapore (MAS) that said prices would recover by up to 5 per cent.

Still, analysts said that last year's drop was a dramatic improvement
from the previous year's decline of 11.7 per cent.

And despite the threat of war in Iraq and growing unemployment here,
home- buying sentiment could improve in the second half of this year,
helping prices recover by around 2 per cent.

On a quarterly basis, prices of private homes fell 0.3 per cent in
the last quarter compared to the previous quarter's rise of 0.4 per
cent, data from the Urban Redevelopment Authority (URA) showed.

In its July 2002 macroeconomic review, the MAS said: 'The majority of
analysts place the recovery of private-housing prices at between zero
and 5 per cent for 2002.'

But seven major property consultancies said they did not give their
official estimates to the MAS.

At the time, the average of estimates from five of these
consultancies was closer to the mark, forecasting that prices may
rise by close to 1 per cent.

'I don't know which analysts they got their figures from,' said one
analyst who thought that the MAS report was 'a bit bullish'.

The MAS is expected to explain the difference in the numbers soon.

Knight Frank director of research and consultancy Tay Kah Poh said
the MAS probably based its report on the more positive economic data
in the first half of last year, before the Bali bomb blasts happened
or the Iraq war rhetoric started. 'There were strong hopes at the end
of 2001 of a recovery last year, which never materialised.'

Meanwhile, a poll of six property consultancies by The Straits Times
indicated that private home prices may recover by 2 per cent this
year.

Chesterton International associate director Nicholas Mak said there
may be some 'weakness' in the first half because of uncertainties
posed by a possible Iraq war and a likely rise in job losses here.

But these could be offset by a rise in pent-up demand in the second
half, he added.

In the public housing market, data from the Housing Board (HDB)
yesterday showed resale flat prices were unchanged in the fourth
quarter from the previous quarter.

But they recovered some 0.4 per cent for the year - a marked
improvement from 2001's drop of 8.2 per cent.

ERA Realty president Jack Chua said this showed that HDB resale flat
prices had 'truly bottomed out and that the market is stabilising'.

But things were not as upbeat in the office market, where office
rents plunged 12.3 per cent - worse than the 7.8 per cent drop in
2001.

Analysts attributed this to a supply glut, with some eight million sq
ft of vacant office space in the market.


----------------------------------------------------------------------
Copyright @ 2003 Singapore Press Holdings. All rights reserved.

Singapore

Year in Review: 1995

Singapore, the prime exponent of the belief that a free press is
incompatible with "Asian values," remained dangerous ground for
Western publications. During 1995, the International Herald Tribune
was fined twice for publishing articles that criticized the
Singaporean government, however obliquely.

In January, Christopher Lingle, a former professor at the National
University of Singapore, was found guilty of contempt of court for a
Tribune opinion piece in which he ambiguously referred to "intolerant
regimes" in Asia and their "compliant" judiciaries. He was fined
US$7,100--a sum collected from his local assets left behind after he
fled to the United States in October 1994. Other defendants in the
case included the Tribune's publisher and the Singapore-based editor
of its Asia edition, who were fined US$1,725 and US$3,400,
respectively.

Six months later, the Tribune was ordered to pay libel damages of
US$678,000 to Senior Minister Lee Kwan Yew, his son Deputy Prime
Minister Lee Hsien Loong and Prime Minister Goh Chok Tong for
publishing an opinion piece by former Far Eastern Economic Review
editor Philip Bowring that said dynastic politics were evident in
Singapore, despite official claims of bureacratic meritocracy. The
ministers' suit charged Bowring with undermining their authority by
implying that Lee's son owed his position to nepotism and that Goh
was a puppet in the senior minister's hands.

Other foreign publications, including the Far Eastern Economic
Review, the Asian Wall Street Journal and Asiaweek, have periodically
seen their circulation curbed by Singaporean authorities in
retaliation for publishing unflattering reports about the country's
leadership. The government has also strictly limited the amount of
time foreign correspondents are allowed to stay in the country. And
in 1995, authorities began inundating the Internet with pro-
government material in an attempt to counter critical commentary
about Singapore in Internet news groups.

Goh, when questioned by CPJ during a September appearance at Williams
College in Massachusetts, said he supported the right of Singaporeans
to the free flow of information. In a move that generated
considerable controversy on campus, the college awarded Goh an
honorary degree for his role in promoting Singapore's economic growth.

Send inquiries to CPJ's Asia Program.


----------------------------------------------------------------------
----------

Singapore

January 17, 1995

Christopher Lingle LEGAL, ACTION
Richard McClean, International Herald Tribune (Paris) LEGAL, ACTION
Michael Richardson, International Herald Tribune (Singapore) LEGAL,
ACTION
International Herald Tribune (Singapore) LEGAL, ACTION
Singapore Press Holdings LEGAL, ACTION

Lingle, a former senior fellow in European studies at the National
University of Singapore, was found guilty of contempt of court for an
Oct. 7, 1994, opinion piece in the International Herald Tribune
criticizing unnamed "intolerant regimes" in Asia and
their "compliant" judiciaries. Lingle, who fled to the United States
on Oct. 20, 1994, after being interrogated by Singaporean police, was
tried and convicted in absentia. Also found guilty were co-defendants
McClean, publisher and chief executive of the Tribune in Paris;
Richardson, Asia editor for the Tribune; International Herald Tribune
Pte Ltd., the paper's Singapore distributor; and Singapore Press
Holdings Ltd., which prints the paper's local edition. Richardson and
McLean were fined US$3,400 and US$1,725, respectively. The
distributor and printer were ordered to pay US$1,035 each. Lingle
himself was fined US$7,100, an amount that a Singapore court ordered
deducted from his local assets, which were frozen on Feb. 4.

Send inquiries to CPJ's Asia Program.


----------------------------------------------------------------------
----------

Singapore

July 26, 1995

International Herald Tribune LEGAL, ACTION

The Singapore Supreme Court ordered the International Herald Tribune
to pay libel damages of US$678,000 to the country's top three
leaders. The award stemmed from an Aug. 2, 1994, opinion piece by
Philip Bowring, a former editor of the Far Eastern Economic Review,
which said dynastic politics were evident in Singapore "despite
official commitments to bureaucratic meritocracy." Senior Minister
Lee Kwan Yew, his son Deputy Prime Minster Lee Hsien Loong and Prime
Minister Goh Chok Tong sued the paper, charging that it had
undermined their authority by impying that Lee's son owed his post to
nepotism and that Goh was merely a puppet of the senior minister. The
Tribune, which apologized in print for the article, did not contest
liability. CPJ expressed its dismay over the verdict in a letter to
Goh.

Send inquiries to CPJ's Asia Program.

01/24 10:11
Dollar Falls a Record Ninth Day Against the Euro on War Concern
By Heather Bandur


New York, Jan. 24 (Bloomberg) -- The dollar fell for a record ninth
straight day against the euro on concern the U.S. will lead an attack
against Iraq, hurting foreign demand for assets in the world's
biggest economy.

The U.S. currency weakened to a three-year low of $1.08 per euro at
10:09 a.m. in New York from $1.0745 yesterday, and has dropped every
day since Jan. 14, the longest losing streak since the 12-nation
currency started trading four years ago. The dollar lost 1.2 percent
against the euro this week.

A war to disarm Iraq may damp economic growth and make it harder for
the U.S. to attract the $1.4 billion a day in foreign investment it
needs to offset its current-account shortfall, the broadest measure
of international trade, some analysts said.

Many investors have a ``perception that this war won't be good for
the dollar and that it won't be good for the economy,'' said Marc
Chandler, chief currency strategist at HSBC Securities USA Inc. Those
concerns also account for declines in business and consumer
confidence this month, and may weaken the dollar to between $1.10 and
$1.15 per euro in coming months, he said.

Foreign government institutions and central banks reduced their
holdings of U.S. assets by more than 40 percent last week, to $858
billion in the week ended Jan. 22 from $1.5 billion in the previous
seven days, according to Federal Reserve figures.

The Russian Central Bank yesterday said it would reduce its share of
dollar-denominated assets to buy euros, British pounds or Swiss
francs. The bank has ``no less than 50 percent'' of its $48.1 billion
of foreign currency and gold reserves in dollars, Prime-Tass
reported.

Stocks Fall

The five permanent members of the Security Council, the countries
with veto power, are divided over taking action against Iraq. France,
China and Russia want more time for UN arms monitors to complete
their inspections in Iraq, while the U.S. and U.K. are preparing for
military action.

Hans Blix, the UN chief weapons inspector, said the results of the
inspections are a ``mixed bag.'' He is scheduled to detail his
findings to the Security Council on Monday.

Declining U.S. stocks also sapped demand for dollars, analysts said,
as the Standard & Poor's 500 Index dropped 1.7 percent. The threat of
conflict in Iraq is lifting demand for assets that are seen by
investors as less risky in times of political crisis. The price of
gold is at a six-year high.

The dollar gained 0.01 percent against the yen this week amid
speculation Japan will sell its currency to halt its 5.3 percent gain
against the U.S. currency during the past three months. The increase
is threatening Japan's efforts to boost its export-based economy. On
the day, the dollar fell to 117.82 from at 118.15 yen from 118.12.

Japanese Exports

``Fears Japan may sell still exist,'' said Tsutomu Soma, senior
manager of foreign-exchange trading at Mizuho Corporate Bank in Hong
Kong.

Finance Minister Masajuro Shiokawa said yesterday that ``the
government shouldn't intervene in the currency markets for its own
interests.'' Asked about the comments, Hiroshi Watanabe, head of the
Ministry of Finance's international bureau said, ``what Shiokawa said
was that we should not try to move the yen to a specific level.''

Japan cut its forecast for export growth in December to 2 percent in
the fiscal year starting April 1, from a projected 5.4 percent this
year. Exports, which account for 10 percent of the economy, expanded
0.6 percent in the third quarter, from 5.9 percent.

Signs the U.S. economy is weakening may curb demand for the dollar,
analysts said. Consumer confidence this month fell to the lowest
since October, and the number of workers filing new claims for state
unemployment benefits rose for the first week in three in the week
ended Saturday.

U.S. Growth

On Thursday, a government report is expected to show the economy grew
at a 1 percent rate in the fourth quarter, according to the median
forecast of economists surveyed by Bloomberg News. That compares with
previous estimates of 4 percent.

``The economic data isn't helping,'' said Osman Wahid, a currency
analyst at J.P. Morgan Chase & Co in London.

Declines in the dollar may be limited in coming days, based on the
relative strength index, a gauge of trading momentum used to identify
possible turning points in a currency's price. It shows the dollar at
20.691 against the euro. A figure below 30 usually indicates the
trend is close to stalling.

The dollar has lost 9 percent against the euro over the past three
months.

In other trading, the dollar was at 1.3580 Swiss francs, from 1.3632
late yesterday. The British pound bought $1.6288 from $1.6224.

STATE CONTROL OF THE MEDIA IN SINGAPORE IS SO COMPLETE that few dare
challenge the system and there is no longer much need for the ruling
party to arrest or harass journalists. Even foreign correspondents
have learned to be cautious when reporting on Singapore, since the
government has frequently hauled the international press into court
to face lengthy and expensive libel suits.

The ruling People's Action Party (PAP) controls most local media,
through its close ties with Singapore Press Holdings, whose newspaper
monopoly ended only in 2000, and through state ownership of most
broadcast media. Strict press licensing requirements make it
impossible for independent newspapers to emerge, and journalists have
been taught to think of themselves not as critics but as partners of
the state in "nation-building."

Satellite television dishes are banned for all but a handful of
users, and cable television is a state monopoly. While the Internet
has been censored only half-heartedly, the government has been
aggressive in promoting its own sites to disseminate information
about state policies and procedures.

In response to calls for more diverse media voices in the country, a
handful of new free tabloid newspapers were launched during the year.
These publications, which look but do not read like free alternative
newspapers in the United States, were also controlled by corporations
affiliated with the government.

In an apparent effort to create the illusion of free competition,
Singapore Press Holdings received permission to run TV and radio
stations. This was hardly a risky move for the government, since the
company's chief executive used to head the Singapore internal
security agency, and its board chairman is an ex-cabinet minister and
close confidant of former prime minister Lee Kuan Yew. Meanwhile, the
state-owned broadcasting giant Media Corporation of Singapore, was
awarded a license to publish one of the free newspapers, Today. In
August, The Straits Times, Singapore's leading daily, described this
shuffling of a stacked deck as a "newspaper war."

Previously, public speaking without a license was banned everywhere
in the country. In September, authorities allowed a Hyde Park-style
Speaker's Corner to open in a local park. There seemed to be little
public interest in the handful of eager speakers at the new venue,
however.

Lee Kuan Yew, the architect of what many critics have called
Singapore's "nanny state," remained the object of fawning praise in
local media. In a volume of memoirs published in October, Lee argued
that the authoritarian system he created, which closed independent
newspapers and jailed some journalists after independence in 1959,
was more responsive to the needs of his people than the flawed
democracies in other Asian countries.

"I said I did not accept that a newspaper owner had the right to
print whatever he liked," Lee wrote of a 1971 appearance at the
International Press Institute's annual assembly in Helsinki. "Unlike
Singapore's ministers, he and his journalists were not elected. My
final words to the conference were: 'Freedom of the press, freedom of
the news media, must be subordinated to the overriding needs of
Singapore, and to the primacy of purpose of an elected government.'"
In 2000, this unfortunate view continued to guide Singapore's media
policy.

Bad timing at Singapore Airlines
Tan Hwee Ann Bloomberg News
Thursday, January 16, 2003
http://www.iht.com/articles/83571.html

New CEO to take over as fuel costs soar and demand wanes

SINGAPORE Chew Choon Seng capped a three-decade career at Singapore
Airlines Ltd. by being named this week as its next chief executive.
The timing could have been better: Airlines have lost $19 billion on
overseas routes in the past two years, fuel prices are surging and
cut-price rivals are thriving.

The 56-year-old mechanical engineer inherits a drive to keep
expanding abroad as competition heats up closer to home. His task:
turn the carrier into "a global group of airlines and airline-related
companies," a spokesman, Rick Clements, said.

Chew, who earned a degree from Imperial College in London, does not
have much to build on. Now head of finance, he takes over from Cheong
Choong Kong after his aborted attempts to buy stakes in India,
Taiwan, Australia and South Africa. Virgin Blue Airlines, the cut-
rate Australian carrier, meanwhile, said Thursday it would buy as
many as 50 planes capable of flying to Singapore and other Asian
destinations.

"They've tried to tread where few others have, and taking equity in
other airlines has been rather tough worldwide," said Peter Harbison,
managing director at the Centre for Asia Pacific Aviation in Sydney,
about Singapore Airlines. "In the meantime, they have got to make
sure their share price holds up and they make profits."

Singapore Air's earnings tumbled 61 percent in the year ended in
March to 632 million Singapore dollars ($365 million), its lowest
annual profit since 1988. Its shares are down 15 percent in the past
year, in line with a 17 percent decline in Singapore's benchmark
Straits Times Index.

But profits have been improving, thanks to stronger demand for travel
and cargo that has helped offset a 32 percent increase in jet-fuel
prices. Earnings quintupled in the first half of the carrier's
current financial year, and the airline is expected to earn 1.2
billion dollars for the full year, according to Thomson First Call.

Chew, who declined an interview request, will carry on his
predecessor's "vision" to expand. "The same strategy will be
pursued," Clements said.

Chew's experience in finance will help the airline cope with rising
costs and a potential slip in revenue should a war in Iraq curb
travel demand, analysts said. The new chief executive has held
management positions with the carrier in Tokyo, Rome, Sydney, Los
Angeles and London.

"He's definitely going to have his eye on the bottom line," said John
Casey, an analyst at DBS Vickers Singapore Pte. "He will do whatever
is needed to contain costs."

At the same time, though, discount airlines in Asia may start eroding
market share. The $3.1 billion of Boeing Co. purchases announced by
Virgin Blue, the airline based in Brisbane, Australia, that is part-
owned by Richard Branson, would triple the carrier's fleet. The new
737 planes can fly nonstop to places like Singapore and Samoa.

In Malaysia, the no-frills carrier Air Asia also is planning to
expand its fleet. It will add regional routes by the first quarter of
2004, its chief executive, Tony Fernandes, said Wednesday.

"Singapore Air will have to decide on how to deal with these low-cost
carriers," said Mark Tan, an analyst at UOB Asset Management who once
worked at the Singapore carrier. "Investors who have met Air Asia
management have been very impressed."

Singapore Air's expansion into Australia and New Zealand, meanwhile,
has stumbled. Under Cheong, the airline bought a quarter of Air New
Zealand Ltd., only to write off the investment after the collapse of
Ansett Holdings Ltd., the Australian unit of Air Zealand.

Cheong says the carrier may start a new airline in Australia, a $5.8
billion market.

While investors and analysts say Singapore Air's expansion plans
remain a question mark, Chew's experience may help.

"He's the best choice," said Peggy Mak, an analyst at UOB-Kay Hian
Research. "He understands all the mistakes they have made, and will
have learned from them, especially with regards to future
acquisitions."

Copyright © 2003 the International Herald Tribune All Rights Reserved

Dow Jones & Reuters
------------------------------------------------------------------------
Heard in Asia: As a NatSteel Suitor Backs Out, Investors Weigh Their Options
awsj000020021210dycb0000f
By Sara Webb and Trish Saywell
854 Words
11 December 2002
The Asian Wall Street Journal
M1
English
(Copyright (c) 2002, Dow Jones & Company, Inc.)

Singapore -- IS THE BATTLE for NatSteel over now? Don't bet on it.

Two Singapore-based businessmen, hotelier Ong Beng Seng and asset
trader Oei Hong Leong, have been fighting over the Singapore company
since October. The government-linked steel miller has steel mills in
China, Singapore, Malaysia, Vietnam and the Philippines, and it is
sitting on a pile of cash following the sale of two major assets that
raised S$586.6 million (US$332.5 million). The battle has attracted a
lot of attention partly because it is rare to see two Asian businessmen
publicly scrapping over control of a company.


Investors must decide by Dec. 23 whether to accept a general offer of
S$2.05 for each of their NatSteel shares from a consortium called 98
Holdings. That group is led by Mr. Ong and includes Standard Chartered
private equity investors and the government's investment arm, Temasek
Holdings, which has an interest in NatSteel. The group has amassed just
less than 30% of NatSteel, and it needs more than a 50% stake to control
the company. The offer is conditional on more than 50% acceptances.

Investors had hoped Mr. Oei, who is sitting on 29.8% of NatSteel,
would make a competing bid, but late Monday he announced he doesn't
intend to make an offer for the remaining NatSteel shares. Still, some
analysts predict Mr. Oei will play a significant role in NatSteel's
future. For a start, Mr. Oei wants a say in what NatSteel does with its
cash kitty, and he wants the company to dispose of its noncore assets.
And some investors are hoping he will make a general offer in the
future. Also Monday, Mr. Oei said he won't accept Mr. Ong's offer for
his stake.

All the speculation about a bidding war for NatSteel has helped drive
the price of the shares above S$2 each from about S$1 in January, making
it one of the best-performing Singapore stocks this year. The shares
closed Tuesday at S$2.04 each, down one Singapore cent and below the Ong
group's offer price.

Fears that the whole deal may be scuttled probably explains why
NatSteel shares have slipped, said John Yap, executive director with UOB
Kay Hian Pte. in Singapore. Developments of the past few days have left
many investors wondering who will end up controlling the company and
what role Mr. Oei will play.

Mr. Oei is one of about 30 children of Indonesian patriarch Eka Tjipta
Widjaja, who founded the Sinar Mas Group. Mr. Oei's father sent him to
China at the age of 12 to be educated, but when the Cultural Revolution
broke out in 1968, Mr. Oei was sent to the countryside, where he learned
to sing revolutionary songs with the Red Guards.

Mr. Oei then made his name as an asset trader in Singapore, China and
Hong Kong. In 1980, he acquired a small detergent maker in Singapore
called United Industrial Corp., which became his takeover vehicle for
Singaporean assets. During the early 1990s, he moved to Hong Kong and
embarked on an ambitious plan to acquire mainland Chinese assets. His
main investment vehicle was China Strategic Holdings, which invested in
mainland companies producing beer, tires, automotive parts and
packaging.

"His thinking process is influenced by his early days in China," says
Wee Sin Tho, a Kuala Lumpur executive who worked with Mr. Oei for
several years in Singapore. "He's different from those who have gone to
college."

Mr. Oei has declined to be interviewed about his intentions regarding
NatSteel. Late Monday, Mr. Oei's family company, Sanion Enterprises,
issued a statement to the Singapore Exchange, saying the company "does
not currently intend to make a general offer for NatSteel." Sanion also
said it has no intention of accepting the offer from Mr. Ong's
consortium for its NatSteel shares, and it said it would call a special
general meeting to vote on the appointment of nine additional directors
to the NatSteel board.

Sanion also proposed NatSteel's board consider making a cash
distribution to shareholders of S$1.55 a share. Sanion said NatSteel
should focus on its core steel business and "pursue discussions with
parties from . . . China with a view to identifying strategic
partner[s], so as to focus on the Chinese market."

So, what should investors do now? "The outcome of this bidding war is
uncertain, so [it is] better to lock in the profits," says Sebastian
Heng, an analyst covering NatSteel at BNP Paribas Peregrine in
Singapore.

However, some analysts and investors predict shareholders will hang on
for a better offer or the prospect of a generous cash dividend if Mr.
Oei has his way. "I don't think the S$2.05 offer is very attractive, and
I don't think shareholders will go for it," says Sheree Tan, a fund
manager at Morley Fund Management in Singapore.

---

Pang Ai Lin of Dow Jones Newswires contributed to this article.




------------------------------------------------------------------------
For assistance, contact Factiva Customer Service by visiting
http://www.factiva.com/customerservice/ and selecting Ask A Question via e-mail
or CallMe.
------------------------------------------------------------------------
(c) 2003 Dow Jones Reuters Business Interactive, LLC. Trading as Factiva.
All Rights Reserved.

COMPANIES & FINANCE ASIA-PACIFIC - State capitalism faces scrutiny in Singapore.
ftft000020021204dyc40009r
By JOHN BURTON.
596 Words
04 December 2002
Financial Times
28
English
(c) 2002 Financial Times Limited. All Rights Reserved

COMPANIES & FINANCE ASIA-PACIFIC - State capitalism faces scrutiny in
Singapore - Local business believes government-linked companies are
outmoded and crowd out the private sector, says John Burton.


Inderjit Singh knows what it is like competing against Singapore Inc.

When head of United Test (Utac), a local semiconductor testing company,
he had to contend with state-run Singapore Technologies Assembly Test
Services (Stats).

Stats enjoyed a clear advantage. Both Utac and Stats vied for orders
from customers of Chartered Semiconductor, a sister company of Stats,
which meant that "a lot of business got channelled from Chartered to
Stats", according to Mr Singh.

The experience has helped make Mr Singh a prominent critic of
Singapore's government-linked companies (GLCs), in spite of being a
member of parliament with the city-state's long-ruling People's Action
party (PAP), which has promoted the model of state capitalism.

Critics like Mr Singh contend that state-owned companies are crowding
out the private sector because they have easier access to capital and
enjoy other competitive advantages.

Although state capitalism has proved successful in developing Singapore
into a first-rank economy over the past 30 years, it is becoming
outmoded as the island nation shifts away from manufacturing, Mr Singh
says. "If you take the same approach towards the creation of a
knowledge-based economy, it will be a disaster."

With Singapore struggling to avoid a double-dip recession, the recent
performance of the GLCs is under increased scrutiny.

"The GLCs have to learn how to compete in a tougher environment. They
have grown too comfortable. They don't have the survival thinking that
small companies have had to adopt," says Mr Singh.

Stats is one example of the problems the GLCs are confronting. The
company has suffered six consecutive quarters of losses and a falling
share price.

By contrast, unlisted Utac, which Mr Singh left in February 2001 to
pursue new technology ventures, has grown to be the world's
ninth-largest provider of chip-testing services, according to Gartner
Dataquest.

Mr Singh admits that entrenched interests will resist changing the way
the economy works.

"The middle layers of the bureaucracy are slowing things down," while
the PAP is split between those who favour the present model and those
wanting to encourage the growth of entrepreneurial companies, he says.

However, senior government officials realise the need for change,
according to Mr Singh, who is a deputy government whip for the PAP in
parliament.

He hopes the recent appointment of Ho Ching, a business executive and
wife of Singapore's deputy prime minister and finance minister, as
managing director of Temasek Holdings, the state holding company, will
lead to reforms.

"Ho Ching has a clear vision. I think we will start seeing changes once
she completes the restructuring of the Temasek team. She favours a more
market-oriented approach and wants to bring in people from the private
sector to improve shareholder value."

Mr Singh believes Temasek should quickly get out of marginal businesses
and focus on strategic companies, such as Singapore Airlines and port
operator PSA.

3i, a UK venture capital and private equity fund, estimates that there
are more than 1,500 non-core businesses that the GLCs could sell.

3i has invested in Mr Singh's new venture, Infiniti Solutions, a chip
design and testing company. But the hand of the government remains
pervasive. EDBI, the venture arm of the government's Economic
Development Board, is also an investor.

London Edition 1.

Whither Singapore Inc?

1,002 words
30 November 2002
The Economist
English
(c) The Economist Newspaper Limited, London 2002. All rights reserved

Face value

Singapore's unique brand of capitalism needs an overhaul. Will Ho
Ching do the right thing?

UNDER Ho Ching's father-in-law, Lee Kuan Yew, Singapore rose, to use
his own phrase, "from third world to first". How did Mr Lee achieve
this? He would say it was by consistently ignoring intellectual fads.
One such, in the 1970s, held that multinational companies exploited
poor countries; Mr Lee busily courted multinationals. Another (to
which this newspaper subscribes) suggests that the private sector is
usually better than the public sector at running businesses. Mr Lee
made sure that the government owned Singapore's biggest companies. In
this respect, Singapore was different from Asia's other "tigers".
Hong Kong grew rich as a bastion of laisser faire; in Taiwan and
South Korea, government may have guided, but rarely owned.

Leaving aside one or two small hiccups, Singapore did well with its
brand of "state capitalism", at least until the Asian crisis of 1997.
Then came a short-lived recovery and another recession. Last year,
Singapore's economy shrank by 2%; last week the government lowered
its estimate for growth this year to only 2%. Lee Hsien Loong, who is
Singapore's deputy prime minister and finance minister as well as
being Lee Kuan Yew's elder son and Ho Ching's husband, has repeatedly
lamented Singapore's lack of entrepreneurialism. An awareness is
sinking in among the island's ruling elite that a model that turned a
swamp into a metropolis may not work as well when it comes to turning
the metropolis into a citadel of the "knowledge economy". An
unprecedented gloom has descended on Singapore Inc.

Ho Ching is the woman chosen to clear the gloom. In May, she was
appointed to the helm of Temasek, a government holding company that
is the most concrete expression of Singapore Inc. Temasek owns (in
effect) controlling stakes in 20 of Singapore's biggest companies and
many smaller ones.

Ms Ho is spectacularly well connected. Quite apart from her powerful
father-in-law and husband, her brother-in-law, Lee Hsien Yang, also
happens to run Singapore Telecommunications (SingTel), Temasek's and
Singapore's largest company. In August, Bloomberg, a news agency, ran
an article ascribing her prominence to nepotism. The Lees' lawyers
rang, and Bloomberg retracted the offending article and paid hefty
damages.

Her qualifications are certainly not to be sneezed at. A Stanford-
educated engineer, she ably ran Temasek's defence conglomerate for a
decade. But the strongest argument for putting someone like Ms Ho in
charge of reforming Singapore Inc is precisely those family
connections. A trusted insider is more likely to break down the
barriers to change in this small country than an outsider would be.
That does not, of course, guarantee that she will do this. Asking Ms
Ho her plans is not an option, since she declines to grant interviews
to foreign newspapers. Temasek's new charter, published in July, is
not helpful either. Using ambiguous jargon
("rationalise", "consolidate", "strategic development"), it says that
the government will keep some companies, allow others to find foreign
partners, perhaps divest a few, start a few others, and so on. All
possibilities are covered.

Looking at what Temasek's companies have actually been doing is more
confusing still. This month, for instance, battle raged over one
listed Temasek-controlled company: NatSteel, a steel maker. It
appeared to be settled only after another Temasek company - DBS, a
bank - agreed to sell its stake in NatSteel to a tycoon backed by the
government. Other Temasek companies have botched share offerings,
made staff changes, and so on. But as to overall direction, nobody is
any the wiser.

Assuming that she plans to do something eventually, is Ms Ho still
getting ready for action? Or has she yet to decide what to do? In
broad terms, she has only two options, beyond inaction. She can try
to become a sort of Singaporean Jack Welch - an analogy actually used
in the local press - and run the Temasek stable rather as legend says
he ran GE, boosting profits and creating winners. Or she might become
a Singaporean Margaret Thatcher, breaking up Temasek and liberating
the corporate sector from its government shackles.

The Welch approach would require management genius. Many of
Singapore's companies certainly could use a bit of that. Stern
Stewart, a consultancy, recently calculated a "wealth added index"
for Singapore's companies. This compares returns generated with those
said to be expected by the market. The index found that a few Temasek
companies, notably Singapore Airlines, have rewarded their
shareholders well. Others, such as the oil company, land developer,
telecoms operator, shipping line, semiconductor maker and hotel firm,
have disappointed. A brilliant manager, with a more aggressive, hands-
on approach than has been used of late, could turn them all around.

A time for boldness

One advantage of the Thatcherite approach, which requires less
management genius, is that it is so much simpler. It would also be
much bolder, breaking with Singapore's tradition. Ms Ho and her
family know of the criticism that the present structure stifles
entrepreneurship. A common joke in Singapore is that working for
Temasek companies is like doing national service.

They must also have become aware of the pariah factor that comes with
government ownership. The only way for Singapore's top firms to
prosper is to expand beyond their tiny home market, regionally or
even globally. But government ownership deters many potential foreign
partners. Lee Hsien Yang's SingTel is a prime example. It was
defeated in takeover attempts in Hong Kong and Malaysia, in large
part for this reason.

Only a fool underestimates this family. Mr Lee senior was bold in his
time. The second generation (not least Ms Ho) might yet be as
courageous. But the true test will be whether it realises that the
most productive thing that it can do is to break up the Singapore Inc
that it has inherited.

OUCH! The nasty year in the share market took its toll on Central Provident Fund
(CPF) members.

  Roughly four in five either lost money or barely broke even with their unit
trusts and other CPF-approved investments.

  Only 22 per cent of CPF members came out with a net profit, but the majority of
these 148,000 fortunate few pocketed relatively small amounts of less than
$5,000 each.

  In fact, their average net profit worked out to a dismal $873, compared with
$1,062 the year before, $1,758 in 2000 and a hefty $7,256 in 1999.

  The figures are after taking out the interest their money would have earned if
it was just left in their CPF Ordinary Accounts earning a risk-free 2.5 per cent
a year.

  Clearly, last year most people would have been better off doing just that,
going by the figures released by the CPF Board yesterday.

  But before you opt for this route, consider these words from online fund
distributor Fundsupermart.com executive chairman Lim Chung Chun: '2002 was the
worst year for the global equity market since 1974. But don't give up on
equities now simply because of the bad experience of the last three years.'

  He said that global equities look quite attractive now, particularly shares in
Asia, excluding Japan.

  First Principal Financial business development manager Ong Peng Kiat, had this
advice: Don't time the market.

  'Dish out your investments in different portions over time to take advantage of
the different opportunities and give it time to grow.'

  Another reason for not just sitting it out in the Ordinary Account is that
recent changes to CPF investment guidelines mean new opportunities to reap
better returns:

From September, members have at last been able to put their retirement savings
into unit trusts and other instruments denominated in foreign currencies.

  This means top-performing offshore unit trusts and privately managed pension
plans can be sold directly to CPF investors;

Another new product that got the go-ahead was real estate investment trusts; and

Navigator Investment Services set up an administrative service last month that
does not impose a front-end sales charge - the single biggest factor in unit
trust investments.

  That could be a consideration for those 508,500 CPF investors who lost money
last year after taking into account CPF's accrued interest.



  Last call to take out profits



    CANNY CPF investors who managed to defy the tough market, take note: This is
the final year you can withdraw profits from your investments, after netting off
the CPF interest of 2.5 per cent per annum.

    For the year to Sept 30, 2002, 50 per cent of members' net realised gains can
be withdrawn at any time until Sept 30 this year.

    The 50 per cent withdrawal also applies to profits realised in previous
financial years which were not withdrawn by last September.
IP Address:198.240.141.48

By Jake Lloyd-Smith in Singapore.
616 words
14 January 2003
South China Morning Post
6
English
(c) 2003 South China Morning Post Publishers Limited, Hong Kong. All
rights reserved.

Singapore's political leaders have long had a fondness for targeting
their opponents and the media with defamation lawsuits when they feel
that they have been maligned. Now one of the city-state's biggest
businesses is taking a similar tack.

DBS Group, the state-linked financial group, and its main subsidiary,
DBS Bank, are suing international magazine BusinessWeek for comments
published last year that examined trends and changes among government-
linked companies.

Last week the magazine's lawyers indicated that their client would
contest the case, according to a document filed with Singapore's High
Court on Thursday. According to a November 27 writ of summons - seen
by the South China Morning Post yesterday - DBS Group and DBS Bank
are demanding that the magazine and its publisher, United States-
based McGraw-Hill, pay aggravated damages for the comments, plus
legal costs.

DBS Group and its subsidiary also want the magazine served with a
restraining order that prevents it from publishing the same or
similar comments in future.

The DBS writ names as defendants Michael Shari, BusinessWeek's
Singapore bureau chief, and its editor-in-chief, Stephen Shepard.

The writ alleges that a September 9 article in the magazine's Asian
edition - "Stirring Up Singapore Inc" - "injured (the plaintiffs')
credit and reputation" and brought DBS Group and DBS Bank
into "public scandal, odium and contempt". It added that the article
was "riddled with factual inaccuracies".

The article reported on the appointment in May of Ho Ching to a
powerful new role at Temasek Holdings, the government's main domestic
investment agency. Ms Ho is a high-profile businesswoman, who is also
married to Deputy Prime Minister Lee Hsien Loong.

The BusinessWeek report looked at changes at some Temasek companies
in the months following Ms Ho's appointment, including an ultimately
abortive bid by senior executives at state-linked NatSteel to buy
their own company.

The allegedly defamatory statements centre on the relationship
between Temasek and DBS Group and DBS Bank. In particular, they
focused on an alleged offer of loan financing to NatSteel's
management for the buyout bid from the banking group.

Temasek was involved with many aspects of the drawn out battle for
NatSteel, which was taken over last week by investment consortium 98
Holdings.

Temasek was a direct shareholder in NatSteel, plus an indirect
shareholder in NatSteel through DBS Group. It is also an equity
holder in 98 Holdings.

During the takeover battle both Temasek and DBS sold their NatSteel
stakes to 98 Holdings, although there is no suggestion that either of
them acted improperly.

The role played in Singapore by Temasek is a sensitive topic in the
city-state.

Ms Ho's appointment also generated extensive media discussion due in
part to her membership of Singapore's most important family. Mr Lee,
her husband, is expected to succeed Goh Chok Tong as prime minister,
while his father and Ms Ho's father-in-law, Lee Kuan Yew, is the
country's Senior Minister.

Included in the Temasek stable are some of Singapore's best known
companies including DBS Group, flag-carrier Singapore Airlines and
defence conglomerate Singapore Technologies.

The plaintiffs' writ said that DBS Group and DBS Bank had written to
BusinessWeek in September asking for a withdrawal of the statements
and an apology. The magazine's lawyers replied in two letters the
following month.

In the separate reply dated last Thursday, the magazine's lawyers
said their clients would "deny each and every allegation made in the
statement of claim" by DBS Group and DBS Bank.

DBS Group and BusinessWeek representatives did not offer separate
comment yesterday.