Interview: NYSE
>> some houses bringing down their calls on a number of australian stocks this morning. david tweed will have that for us coming up. but i want to mention that the upscale retailer, david jones, has just reported first-half profit of just under 53 million australian dollars. david, you can’t have reaction yet in the market , it’s not open.
>> it was better than analysts were expecting, bernie, so there could be reaction in the market when it opens. they’ve also forecast 5% to 10% net profit growth for the rest of this year and also for 2006, even though sales growth will be flat and it seems their cost efficiency is what’s driving the profit growth for david jones. one of the things they didn’t do, which i mentioned earlier, they were talking about perhaps doing, u.b.s. was talking about them perhaps doing an $80 million share buyback in the capital management initiative. david jones says it’s still looking at that and has contractual obligations to iron out to be sorted out by the end of november this year. it was better than analysts’ estimates, it looks as if it was a good result and shares could rise when we open. you talked about downgrades of australian stocks. one of the ones you and i have been talking about lately is patrick corporation, which gained control of virgin blue, australia’s second largest airliner. the reason goldman sachs downgraded to neutral was because they’re concerned that―concerned about the strategy that patrick will have to change at virgin blue and they’re also concerned about rising fuel costs. that said, the australian newspaper came out today with a story saying that virgin blue and qantas could increase their charges because of rising fuel costs in australia. jet fuel crisis have also risen 40% since the beginning of the year. the other downgrade is from paperlynx, cut to sell at citigroup. they’re talking about declining prices in europe and concerns about the exchange rate. bernie?
>> in terms of other factors driving the market , you did mention earlier that gold and silver took their biggest drop in just under three months. u.s. dollar-related, really, because the u.s. dollar is going up and rates are going up so the cost in u.s. dollars is going up for these metals, as well. oil prices stabilized even though gas was up on the session. will these drive the stocks in the market ?%
>> probably will. that’s what’s driving the market of late. we were at a record yesterday. rio tinto’s a.d.r.’s were down 2.6% in new york and we saw weakness for b.h.p. billiton so we could see that repeated in the australian market when we open in just under 20 minutes. back to you.
>> we’ll wait for that, 17 minutes, to be exact. david tweed will be back to update us on the actual action. we’ve previewed it a couple of times, what’s going to go on in australia. dell computer is preparing to grow its numbers india. the government removed import taxes there and the world’s largest p.c. maker is betting business will grow very fast. haslinda is following the story and she joins us with more. dell’s market share in this country has trailed rivals like hewlett-packard, compaq, which is somewhat rare for dell because dell has pretty much been hell bent on taking over the world in all their markets . what do they need to do to shift fortunes in india.
>> given that a 10% import dutia will be removed, dell will be more aggressive in selling products at a cheaper price. the company has been importing p.c.’s rather than making them in india, contributing towards higher costs for customers. with lower prices, dell is aiming to grow sales. chief investment officer at credit capital asset management in new delhi -- dell says india represents the graest opportunity and customer contact centers shows that india’s p.c. shipments surged 34% last year, outpacing the 14% rise in asia. dell had 3.5% of the indian market share last year, smaller than hewlett-packard’s 13% and i.b.m.’s 7%. still, one analyst said dell may catch up. it opened a call center this week in india that will hire 1500 people within a year, an indication of the growth the company is expecting.
>> haslinda, the p.c. market in many markets , the united states, for one, the biggest, has become somewhat commoditized and michael dell has talked about the importance of growing china and asia. how important is the asia-pac?
>> dell’s sales in the asia-pacific region increased 26% in the past two years. increased sales will also be important, helping the company meet its goal of $16 billion of annual revenue next year. that’s as growth in the asia-pacific region outstrips gained in the―gains in the u.s.
>> coming up, our interview with the prime minister of singapore, lee hsien loong. we’ll get his views on the economy and china.
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>> this is “bloomberg live” coming to you from hong kong. we are waiting for a release of the latest jobless figures in south korea. we’ll see if there’s a drop when the numbers are released of the on had tuesday, the dollar rallied to its biggest gain against the euro in 2 1/2 months. the hong kong monetary authority chief urging regional central banks don’t cash in dollar reserves for euros. u.s. stocks at six-week lows this morning on concerns that rising inflation will lead the fed to grow more aggressive in raising interest rates. singapore’s new prime minister, seven months into the job, getting ready to put the sing back in singapore, we’ll talk about casino, the economy and more in our exclusive sit-down with the prime minister, also finance minister, lee hsien loong. the south korean unemployment rate for the month of february coming in at 3.5%. 3.5%. this is a one-notch reduction from the three.6 -- 3.6% seasonally adjusted rate we got in january, which was a three-year high. we’re just off three-year highs. the other metrics, quickly here, because that was on a month-on-month comparison. a year-on-year number―this culminates with the g.d.p. report in 29 minutes. 3.5% in february against january 3.6%. for february, 4% against 3.9% year-on-year basis there. either way we look at it, we have a drop on the month-on-month basis. the won, 1,009.50 against the u.s. dollar. of course, the jobless rate precedes the g.d.p. report expected to show the economy grew at its fastest in the last year because of strong exports. the latest poll shows expectations of a 1.1% increase in g.d.p. quarter on quarter. joining us this morning, in ho song, fund manager with kyobo investment trust management, joining us from rainy seoul, south korea. what you do make of the jobless figure, is it good or neutral?
>> simply looking at the figure is not that robust but the fact is that korean recovery is on the way of recovery in terms of domestic demand and we will see in the coming quarters. germany’s rate will be on the same trend.
>> as long as unemployment is still near three-year highs, will people be reluctant to spend? it’s only recently that koreans have started to recover from credit problems they brought on themselves by going on binge spending.
>> household spending is on the repair track. the fact is, korean domestic demand is recovering from the bottom because companies are hitting bottoms and domestic consumption is showing signs of recovery. my point is kind of optimistic.
>> what is the state of exports right now? exports are still driving the economy―companies like posco, hyundai motor continue to do quite well. if the fed, for instance, stops measured rate increases and starts getting more aggressive about spending off inflation, what will that mean to south korea’s export business if the fed starts fending off inflation?
>> my point is that many kinds of leading indicators bottoming out. so external demand―in terms of external demand, there should be no reason of deterioration in terms of the leading indicators bottoming out. so the important thing is that global economy is getting better so i have optimistic view on external demand and on korea’s exports.
>> what are you buying these days? in ho, what are you buying and selling? do you think export stocks have had their run? are you shifting attention to domestic issues, department store, tobacco?%
>> i am still focusing on china-related stocks such as material and shipping, some sectors like that. but in terms of earnings momentum, the tech sectors will get momentum in coming months. i am moving slightly on those sectors.
>> you still like the transports, for instance, samsung heavy, hyundai heavy industries, companies like that, ship builders, for instance?%
>> yes. ship builders. ship building sector has greater momentum in terms of ship prices so that kind of momentum will be continued in coming quarters.
>> what about the tech stocks, samsung electronics? do you think they’re still giving sony a good run?
>> the fact is that tech sector earning condition is not that bad and i guess earnings recovery―i mean, earnings% will be first quarter and we’ll see earnings recovery from the second quarter. so―i will be on buy side on tech sector in near future.
>> appreciate your time and investment advice, song in ho from kyobo investment trust management joining us from seoul, south korea. next on the program, india is making it easier for people like michael dell and importers to sell products there. we’ll learn about dell’s india strategy next with haslinda. later on, our exclusive interview with prime minister and finance minister, lee hsien loong. i asked him why is he looking for both jobs? is that chat coming your way.
