Economy

Armenian Investment is Working

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Increased Investment Opportunities for Armenia

Good news for Armenian investments. According to the country’s parliament chairman, Hovik Abrahamian, attempts are being made to push for investments in the transport and energy sectors throughout the BSEC countries.* As well, the greater cohesion between BSEC member countries, the better for all, especially since this is the current goal of the National Assembly of Armenia. This is bound to lead to an increase in investment opportunities for the country.

Armenia Develops Iranian Energy Cooperation

When Armenia attempts to work with Iran, according to Armen Movisyan (the former country’s Energy Minister), around 80 percent of cooperation between the two countries comes from the energy sector, at an estimated volume of $450 million. If a third transmission is built and a hydroelectric power plant on Araks River, this will further connect the two countries which could also ultimately lead to the goal of establishing a “North – South” transport corridor.

Armenia and Energy Security

According to Sevak Sarukhanyan (Armenia’s Deputy Director of Noravank Foundation), “energy security is the most important issue for Armenia, as the country was probably the first state in CIS and the post-Soviet area to be hit by a severe energy crisis.” The two factors that basically led to this crisis were the closing of the Metasmor nuclear power plant in the late 1980s and the shifting of the country’s energy production to thermal power plants utilizing natural gas and fuel oil.

So it does seem today that there is much work to be done in terms of political and economic cohesion between Armenia and other BSEC countries, as well as Iran. At the end of the day – political affiliations and aspirations aside – most countries want the best for their citizens and that usually means working with neighboring countries to acquiesce the best investments.

*Established in 1992, the BSEC comprises Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine with Austria, Germany, Egypt, Israel, Italy, Poland, Slovakia, Tunisia, France, the Confederation of European Energy Charter and the International Black Sea having observer status.

South Korea ADIA Merger

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In an attempt to escalate investments for the two, the Abu Dhabi Investment Authority (ADIA) is joining up with South Korea, seeking to develop the region’s state-run funds in a global capacity. The latter is known as being “one of the world’s largest sovereign wealth funds.” The National Pension Service (NPS) and Korea Investment Corp (KIC) are set to reap most benefits from this alliance which will enable ADIA to make investments through a South Korean local brokerage.

NPS Credibility

The NPS has some serious credibility. It is the world’s fourth leader in pension funds, standing at over 300 trillion won. But one can always take things further. It is today trying to escalate its overseas investments in the field of resources development.

KIC Financing

Where does the Korea Investment Corporation fit into all this? This organization has only been around for just over five years with the aim of “enhancing sovereign wealth and contribut[ing] to the development of the financial industry by efficiently managing assets entrusted by the Government and the Bank of Korea.” As well, it seeks to keep hold of its long-term purchasing power on its assets and “exceed investment target return” through the investment of “well-diversified, foreign currency denominated assets transacted in the international capital markets.”

ADIA’s Portfolio

ADIA is pretty impressive too. Owned by the Abu Dhabi government, the authority has been in business for over 35 years and is today recognized as a “globally diversified investment institution.” It spans over two-dozen areas, including: fixed income, private equity, infrastructure and equities.

So all in all this merger looks like it’s going to be mutually beneficial to the region and the authority. As soon as there is such a cohesion, it has a much greater possibility of being able to have a much larger and longer-term impact on the global economy.

Earth Hour Good for Japanese Morale

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Earth Hour took place on 26 March between 8 30 and 9 30 pm.  It is a time when people around the globe turn off their lights and make a “commitment to actions that go beyond the hour.”  According to the Earth Hour website, this year “our thoughts are with the people of Japan during this incredibly challenging and sad time for their country.”

Origins of Earth Hour

Earth Hour first emerged in Australia in 2007 as a way of conserving the world’s energy and natural resources which are depleting way too quickly.  This was a great first step but was also then leading to a climate change and is today a global event which is “being observed in more than 134 countries and territories,” coordinated by the World Wide Fund.

Delhi Saves 296 MW Power

Earth Hour was most effective in India.  During the hour more than a thousand individuals came together to dance away to loud rock numbers from the Indian band Euphoria, in complete darkness!  Lights weren’t needed for the energy to spike.  No one stayed home.  From toddlers to seniors, everyone joined in total cohesion to save electricity during the 8 30 to 9 30 Earth Hour.  According to DU student  Sharmishtha Chatterjee, “…it was very wise on WWF’s part to organize an event like this, where everyone was invited,” since otherwise many people would have just stayed home alone and ignored the event – and the idea – and not turned off their electricity.  Indeed, according to Sheila Dixit Delhi Chief Minister, “the city plunged in darkness for a brighter tomorrow….[with the] hope that Earth Hour sensitizes each one of us for making the shift to a better lifestyle.”

There’s Always One Party Pooper

Unfortunately at any party there’s usually one party pooper.  At this celebration it was clearly Toronto.  Millions of people from 134 countries — from Delhi, India to Heidelberg, Germany — switched off their lights and televisions for the fifth annual Earth Hour on Saturday night to show their support for action on climate change, but Toronto witnessed a measly 5 per cent power drop during the event, marking just 50 percent of the country’s achievements last year.  Nonetheless, it’s still seen as a “success” in the country.

Boost to Azerbaijan’s Investment Options

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Good news is potentially on the horizon for Azerbaijan.  According to experts the country looks set to move from a “stable” to a “positive” status suggesting the country will become “an investment-grade territory” in the very near future.  This is within the backdrop of the country showing general improvements vis-à-vis the government’s fiscal and external positions.  This has been most noted in the country’s acquisition of State Oil Fund of Azerbaijan’s assets.

<h3>Other Great Economic Stats</h3>

Simultaneous to this good financial news for the country is the fact that its government “registered a fiscal surplus of 14 percent of GDP in its consolidated budget,” a substantial change from its figure in 2010 of 30 percent.  Further, the government has been  making investments in other (non-oil based) sectors which are likewise starting to reap benefits with a 7.9 percent jump last year, more than double of the figure for the year before.

<h3>Need for Economic Freedom</h3>

While this of course is all great news for Azerbaijan, the country is still a long way from becoming a true global economic player.  Before that has even a hope of happening, the country  will be forced to engage in some major renovations and liberations of its economic structure.  Further the country’s securities need to be worked on which will take some efforts from its PashaBank vis-à-vis a portfolio diversification.  Because it plans on joining the overseas capital markets, there is an expected 5-y percent worth of profits from operations with securities this year.  Currently the bank’s investment portfolio stands at 31 percent of securities assets (bonds, etc.).  Experts have noted that the country needs to make it a priority to show its interest in “investing in sovereign bonds of foreign countries….particularly in Russia, Ukraine and Central Europe.”

Financial things are a-changing in Azerbaijan, that’s for sure.  But it’s going to take time.  There are a lot of economic factors that are beginning to work well in the country but its deeper political issues (i.e. the required infrastructure reform) is still a subject with which to contend.

Charity Begins at Home for Toshiba

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Charity Begins at Home for Toshiba

Hello Tosh; Gotta Toshiba?

Perhaps it was before your time but Toshiba really nailed it with that 1984 advertising campaign.   It’s funny because way back then it was all about the stereo….how far things have come.  Today Toshiba is still in the news, forever the helpful.  Along with Hitachi, the company had sent “hundreds of staff to provide support at Japan’s stricken Fukushima Daiichi nuclear plant and to carry out checks at the neighboring Daini plant.”  Clearly for Toshiba, charity begins at home.

<h3>Hitachi and Toshiba Make Waves After Quake</h3>

Following the earthquake and tsunami both Toshiba and Hitachi supplied the Daiichi plant with reactors.  Indeed, a 100-man team was sent to the two Fukushima plants from Toshiba and Hitachi sent 120 –man team to the Daiichi plant.  This is in addition to other mega-assistance both companies are sending.

<h3>Japanese Markets Continue to Soar</h3>

Despite everything that’s been going on, Tokyo Electric Power Co., rose 16 percent with Toshiba Corp. increasing 12 percent.  In addition, an additional 11 percent was gained by JX Holdings Inc. with Nippon Steel Corp., gaining a further 7.5 percent.

<h3>Improving Japanese Stock Market</h3>

The Japanese stock market is improving, with trade figures for today increasing, in the anticipation that the nuclear crisis at the Fukushima nuclear plant is being contained.  As well, the Bank of Japan is not showing any signs of pulling out of its emergency fund provision to “soothe the jittery markets” which also “boosted sentiment,” at around yen 2 trillion into the short-term money market.

The Japanese are clearly banding together.  There is major support from the country’s successful companies and the central bank.  No doubt all this backing will lead to a smooth recovery from Japan’s recent disaster.

 

Japan Returning To Recession?

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Well, if it did it certainly wouldn’t be surprising.  There’s not that much worse than what the country endured last week, with the extent of its earthquake and tsunami.  So why is this enough to make headline news?  Well, because what’s newsworthy is that the country looks set to “become the first Group of Seven member” to go back to that recession status following the easing of the global financial crisis.

Statistics and Truth

Although it is said that there are lies, damned lies and statistics, in Japan’s case it seems like the figures are speaking for themselves.  The G7’s yen sales depreciated the currency the most since September to ¥80.58 per US dollar at Friday’s close in New York.  This is very different to its postwar peak of ¥76.25 on March 17.

European Banks Band Together

The potential problems of Japan’s economy and currency following the country’s disaster have led various European banks to join with the Bank of Japan “in the first co-ordinated intervention by the G7 since the launch of the euro a decade ago.”  It is anticipated that the US Federal Reserve will be joining this effort too.  It is hoped that such action “may help corporate sentimate to recover, a key factor in reviving growth, along with public spending said Takuji Aida, UBS AG economist in Tokyo.

For sure when there is such a strong economic force working together the economic recovery of a country stands a way greater chance than it slumping back into a recession.  And if that is the case, then the global economy faces a far greater likelihood of being able to recover which will benefit everyone.  So let’s hope the European and American banks put their money where their mouth is vis-à-vis Japan’s recovery.

Online Drug Companies Abusing Tsunami Disaster?

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Obama Causing Panic?


There’s always someone who tries to make money from a disaster.  And this time it’s following Japan’s tsunami, with the threat that Americans might be in danger of the nuclear fallout.  This is likely due to the panic President Barack Obama and his top medical official raised which has led to Americans buying drugs for protection.  Although Obama himself was given the assurance that “any harmful radiation from Japan will have dissipated before it reaches Hawaii or the US mainland.”  


So why the panic?  Because everyone likes to be prepared and according to US Surgeon General Regina Benjamin, it is a good idea to buy radiation antidotes “as a precaution,” such as potassium iodine pills which is often able to protect the thyroid gland against cancer and radiation, reducing the amount of iodine the body can absorb.


Drug Suppliers Reap Benefits


So now drug companies are getting wise to how they can make some extra money. Although it seems a bit like black money.  Indeed one drug supplier in America sold 250,000 anti-radiation pills since last Friday, ordering more medicines to meet increasing demand.  Those who haven’t managed to buy them yet are spending extortionate amounts of money by purchasing them on line.  It seems everyone is suffering from Japan’s earthquake and tsunami, but drug companies are taking advantage of what happened.


Brits Try to Escape Too


Brits are now being warned to leave Tokyo and other areas in danger of radiation poisoning.  The country’s Foreign Office is even considering putting on extra planes to ensure all Brits trapped in the country are able to leave on free “rescue flights.”


Asia, America, the whole world, has been affected by Japan’s tsunami.  The question remains, what is one’s host country doing to help, first their own citizens, and second, those working on a recovery plan in Japan?  As the situation changes daily, only time will tell which governments and administrations will really pull their fingers out.  Let’s just hope that in the meantime, entrepreneurs work for the good of the people, rather than trying to exploit them.
 

Price of Tsunami in Japan With a Potentially Crumbling California

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<h3>Tsunami is Costly Vis-à-vis Dollars and Death</h3>
As Japan still faces a disaster that seems to keep continuing, the financial impact is slowly being assessed.  It is thought that the country will be facing tens of millions of dollars worth of damage as well as continuing fatalities, the latest being when 25 year old Dustin Weber was swept away and has not been found, as he turned his back to the surging sea.
<h3>How is California Coping?</h3>
Now there is talk of what is going to be with California.  Crescent City seems to be most affected as the  north part of the state is being impacted by roiling the waters.  According to Josh Zulliger, (warden at the California Department of Fish and Game), “there are three-foot waves still coming in here.”  It is not surprising that it is Crescent City that is being impacted the most since it is known for being a very vulnerable area vis-à-vis tsunamis probably due to its underwater ridge offshore  as well as the shape of the harbor that “effectively bounces waves directly back into the line of incoming waves.”
So the boats are sinking in California.  Everyone has been so focused (naturally) on Japan following the earthquake and tsunami, that California hasn’t been in the press much recently.  But the waves ultimately sent over “an eight-foot swell into the enclosed harbor here, smashing dozens of boats.”  Clearly Japan’s disaster is having a worldwide impact, not just on markets and the economy, but also more directly on people and the potential danger to their lives.

California now has to find a way to pick up the pieces.  Japan has their own – greater – problems that will no doubt take a very long time (and lots of capital) to fix.  But it seems like the west is being affected too and places like Crescent City need to find their own resources to get back to normal as well.  The lesson from this is thus clear:  such an earthquake and tsunami is not just restricted to Japan, or even Asia, but will have a worldwide boomerang effect, especially on an already volatile global economy.

Market Mess in Japan? Too Soon to Tell

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Not surprisingly following Japan’s crazy earthquake and tsunami, the financial markets are in a sate of panic.  Finance leaders in the country are trying to calm the situation as the nuclear power crisis continued to worsen matters.  With an estimation according to Bank Credit Suisse of a loss of $171 billion, it’s no great shock that there is this panic. But the question being asked is how much do economists really need to panic?  According to Finance Minister Yoshihiko Noda said that it’s just too soon to make this kind of assessment vis-à-vis the economy.

Major Japanese Companies Close

When a country’s primary companies start to close down, there’s not likely to be a surge of confidence in the markets. Unfortunately since Friday’s travesties, Panasonic, Sony and Toyota Motor Co. have closed their production facilities.  As well, nuclear power plants have shut temporarily due to the possibility of reactors overheating.

Japan’s Biggest Crisis Since WWII

The earthquake and tsunami are being hailed as the country’s largest crisis since World War II.  Stock markets plummeted over 14 percent as the Fukushima nuclear power plant encountered two explosions. PM Naoto Kan didn’t have much to add, other than give out a warning that radioactivity levels had become ‘significantly’ higher.  This could lead to a cost of anywhere between 3 and 5 percent of output, which is extremely significant for a country that rates as the world’s third biggest economy.

Clearly Japan is going to take a long time to recover from last week’s events.  The question just remains, how much this will cost and what it will mean for the future of the country’s markets?  Only time will tell.

 

Japan’s Economy: Where to Now, with Failed Fukushima Power Plant?

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Following Japan’s “monstrous earthquake” (the largest in the region for over 1,200 years; seventh largest ever in the world), the country’s Fukushima power plant failed which has led to “fears of serious accident.”  But experts have said that there isn’t a risk to human health from the low radiation.  The crisis in Japan is no doubt escalating following Friday’s earthquake and tsunami ; a situation which isn’t being helped by the failure of another emergency cooling system at a different reactor.


Energy Fuels Japan’s Economy


Energy has always been a major source of economic sustenance for all countries.  But for Japan it is even more the case.  This is for the following reasons:  less than  half a percent of Japan’s crude oil supply is accrued from domestic sources; the country has to import more than 80 percent of all its major energy needs;  and added to this fact is the issue that Japan is home to very few domestic sources of uranium, natural gas or coal.  In spite of this, the country has managed to develop its economy into the second largest in the world.  It has managed to decrease its dependability on crude oil since the oil crises’ in the 1970s by instead using a mixture of energy resources, one of these being nuclear power.


Which Way Forward Following Tsunami


So the question that will be asked when things start to calm down a little in Japan, is what is the way forward for Japan’s economy following the impact of the tsunami and the failed Fukushima Power Plant.  It would be doubly devastating if the incredible work that has been done on bringing Japan to the forefront of global economic success were to be undone because of this crisis. Only time will tell what direction the country – and especially the economy – will be taking.