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News : International Last Updated: Jul 22, 2013 - 3:33 PM


Markets: GlaxoSmithKline cuts its imprisoned Chinese executives adrift
By Finfacts Team
Jul 22, 2013 - 12:59 PM

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GlaxoSmithKline, the British drugs giant that is Europe's biggest pharmaceutical firm, said today that some of its senior executives appeared to have violated Chinese law, after Chinese officials alleged the company had engaged in bribery and tax crimes.

Abbas Hussain, GSK's London-based president of emerging markets and Asia Pacific, at the weekend met with Chinese officials according to a statement Monday. It added: "Certain senior executives of GSK China who know our systems well, appear to have acted outside of our processes and controls which breaches Chinese law. We have zero tolerance for any behavior of this nature."

The statement also said Hussain that Glaxo supports China's action against corruption in the market and will fully cooperate with authorities in an ongoing investigation.

The statement added that Glaxo will review its business model and cut its prices for Chinese consumers, ensuring its medicines are more affordable to Chinese patients.

Four executives of GSK (China) Investment Co., Ltd. are in custody including Liang Hong, vice president and operations manager.

In an interview last week with Xinhua, the official news agency, Liang, who supervised about 3,000 medical representatives across China to deal with hospitals and doctors, admitted that he had been "in contact with" senior government officials and medical experts.

He said he was authorised to approve an annual budget of up to hundreds of millions of yuan.

The company's finance manager in China, Steve Nechelput, a British national, has been prevented from leaving the country.

Big Pharma firms subject of fraud inquiries in US, China and Japan

Economic View: Annual house price growth returns; Dermot O'Leary, chief economist of Goodbody, comments - - "There have been a number of signs over recent months that after a record fall in prices since 2007, the Irish housing market has entered a stabilisation phase. In this regard, official price data to be released tomorrow may show the first annual rise in prices nationally since January 2008.

There are numerous reasons for this improvement, but the key one is the lack of new supply coming on to the market. This lack of supply can be explained by: (i) the collapse of new construction and; (ii) negative equity, tracker mortgages and an absence of repossessions. In terms of the former, new construction of homes has fallen from an annual total of 90,000 units to below 8,000 this year. Judging by the commencements data so far this year, it will be a long road to get back to a “normal” level of building activity; in the first five months of 2013, just 1,665 units were commenced, with three-quarters of these being one-off units. In other words, the commencement of larger developments is still close to zero.

Given this reality, it is likely that this supply-led price stabilisation will continue nationally, with important regional differences depending on the local supply/demand fundamentals. Along with mortgage credit availability, another important ingredient for a housing recovery is confidence. The return of headlines of prices growing again will surely help in this regard."

Irish Budget 2014: Former IMF official says austerity should be put on ice

Banks: Legal title problems on repossessed properties; Eamonn Hughes and Colm Foley comment - - "Press reports this morning (Irish Times) indicate that the Law Society has written to the Irish Banking Federation and the Irish Mortgage Council highlighting that borrowers are struggling to take out mortgages on repossessed properties because contracts are so restrictive. Unless the situation is resolved, the Society has indicated it will advise solicitors not to act for purchasers of repossessed properties where clients need mortgages.

The Law Society highlights that some of the contracts its conveyancing committee has seen have been “restrictive in the extreme” and it appears that liquidators and receivers appointed by the banks are “issuing blanket refusals to provide information as is reasonable within their possession or procurement”. It adds that banks may not be aware that restrictive contracts are being issued on their behalf. Where a solicitor fails to get the necessary information, it typically qualifies the certificate of title given to the institution providing the loan, with such qualifications often ruling out a mortgage.

The notice from the Law Society highlights that further tweaks to the mortgage process will be required in order to expedite repossessions. However, with the matter now highlighted, we would be of the view that moves will be made to deal with the issue, although this issue points to a further delay in the process that is taking much longer than previously anticipated."

UK public sector borrowing shows little improvement: Conall Mac Coille, chief economist at Davy, comments - - "DAVY VIEW: Stock indices were little changed on Friday. The Euro Stoxx 50 fell 0.1% while the S&P 500rose 0.2%. Poor results from tech stocks held back sentiment. Today, US existing home sales and the Chicago Fed national activity index are the key releases. Friday’s UK public sector borrowing figures showed little progress in reducing the deficit below £120bn. However, some encouraging tax revenue figures suggest that the fledgling UK recovery may have had some positive impact.

Stock markets were little changed on Friday. The Euro Stoxx 50 fell 0.1% while the S&P 500 rose 0.2%. European shares recorded a fourth week of gains, but were flat on Friday as poorer-than-expected results from both Microsoft and Google held back sentiment. The key question facing markets over the past month has been how quickly the Fed will taper back its $85bn monthly asset purchases. Today sees US existing home sales numbers for June, expected to rise to 5.25m in June (a fresh high going back to 2009) and also the Chicago Fed’s national activity index.

Public finances data released on Friday showed UK government borrowing at £8.5bn in June, down sharply from £11.9bn in 2012. However, the fall mainly reflected £3.9bn of profits from the Bank of England’s asset purchases facility (APF). That is the net interest income the bank earns on its gilt purchases over its cost of funding of 0.5%. Excluding the APF, income borrowing was £12.4bn, signalling that there has been little progress in getting the deficit below the £120bn mark.

That said, there are some signs that the fledgling economic recovery is beginning to feed into more buoyant tax revenues. VAT receipts were up 2.2% and income taxes up 9.3% in the first three months of the Budget year 2013/14, compared with the same period in 2012. However, current expenditure grew by 4.6% in the first quarter of the Budget year, well above the 2.2% assumed in the March Budget. So despite some positive signs from revenue growth, George Osborne still has a lot of work to do to get public sector borrowing down."

Asia Markets

The MSCI Asia Pacific Index rose 0.5% Monday.

Japan's Nikkei 225 advanced 0.47%; China's Shanghai Composite added 0.51%; Korea's Kospi index gained 0.48%; Australia's S&P/ASX 200 rose 0.60% in Mumbai, the Bombay Stock Exchange the S&P BSE India Sensex Index climbed 0.11%.

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600 is up 0.03% in mid-afternoon trading Monday.

In Dublin, the ISEQ is up 0.06%.

Elan  has added 0.52%.

European Benchmarks

Irish Share Prices

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies

The euro is trading at $1.3188 and at £0.8600.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Friday, the BDI fell 8 points or 0.70% to 1,138.

Global rebalancing — the tanker scrapyard index?

Crude oil for August 2013 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $108.05 up 1 cent from Friday's close. In London, Brent for August delivery is trading on the International Commodities Exchange at $108.07.The North Sea benchmark accounts for two-thirds of the global market.

Finfacts, July, 15, 2013:  US West Texas Intermediate oil benchmark jumps in July - - margin between WTI and Brent falls.

Gold spot price

The spot price of an oz of gold is trading on the CME in Chicago at $1,332.00, up $28.70 from Fridays closing.

Gold had hit a record high of $1,921.05 a troy ounce on Sept 06, 2011.

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