monday THE Bank for International Settlements says Hong Kong's credit crunch appears to be easing. In a quarterly report, the bank says lending in the second quarter in Hong Kong fell just 5 per cent to US$522.3 billion, compared with a first-quarter 9 per cent drop. SOUTH Korea's Tong Il Group, controlled by the Reverend Sun Myung Moon's Unification Church, announces it will apply to put four listed subsidiaries into receivership. The four companies: Tong Il Heavy Industries, Hankook Titanium, Il Sung Construction and Il Shin Stone, account for 70 per cent of the group's sales. JOYCE Boutique Holdings raises $32.3 million by diluting its shares 20 per cent and selling that amount to Italian fashion and media group Partecipazioni Industriali. The ailing up-market retailer says the deal - its second this year - would allow it to strengthen its finances while creating opportunities for more co-operation. tuesday BANK of East Asia chairman David Li Kwok-po warns bad loans in Hong Kong could more than double during the next 12 months. Speaking after the Hong Kong General Chamber of Commerce Business Summit, he says non-performing loans could rise to between 6 and 6.5 per cent of total loans in a worst-case scenario. THE stock exchange names its proposed second board the growth enterprises market (Gem) and says it will open in the fourth quarter of next year. The exchange says it is looking for 20 to 30 high-quality companies to form the first batch of listings. Gem working group chairman Lo Ka-shui says: 'They will establish the reputation of the Gem. Failures in the early phase would be disastrous.' The Gem will have lower listing requirements but tougher disclosure requirements than the main board, aiming to allow medium-sized enterprises to raise funds. IN its staff newsletter, Cathay Pacific says: 'It is continuing to be a tough year - October's passenger revenues do not look encouraging.' The revenues had fallen 24 per cent short of Cathay's internal targets. wednesday CATHAY Pacific withdraws from talks on taking control of bankrupt Philippines Airlines (PAL). Cathay says the talks ended after it became clear 'a number of major differences' - including management control and a PAL's post-restructuring value - could not be resolved. The breakdown in talks spells bad news for President Joseph Estrada, whose office has been trying to smooth a deal between the two airlines. Cathay says 'the positions taken by the parties involved and the overall complexity of the situation' meant critical issues could not be resolved. A REPORT by the World Bank, Global Economic Prospects and Developing Countries 1998-99, says growth rates in developing countries will fall to their lowest levels since the Latin American debt crisis in the 1980s. The bank says wide-ranging liberalisation of financial systems - such as fully flexible exchange rates and free movement of capital - is not always desirable. It also forecasts gross domestic product growth in the developing world will fall to 0.4 per cent this year from 3.2 per cent. thursday JARDINE Matheson Holdings ends its 50 per cent joint-venture partnership with British bank Robert Fleming Holdings in the Jardine Fleming Bank. Jardine Matheson says it will sell the stake in Hong Kong's oldest merchant bank for GBP40 million (about HK$515.52 million) and a 10.7 per cent holding in Robert Fleming. The whole deal is worth about GBP180 million. Jardine Matheson said the move was not a vote of no-confidence in Asian markets but part of a drive to globalise its financial services. The Hong Hong-based multinational strenuously denies it is 'selling out' of Jardine Fleming, pointing out it was not a cash deal but an exchange of ownership involving cash and shares that would give it a sizeable stake in Jardine Fleming's parent company. THE 11 European countries set for monetary union cut interest rates. Germany, France, Ireland, Spain, the Netherlands, Italy, Portugal, Austria, Finland and Belgium, which controls Luxembourg's monetary policy, reduced their rates almost simultaneously. The move comes only weeks before the euro is due to be launched. After the cuts, Europe's markets rally on the news with Paris and London gaining 2 per cent on the day. ANALYSTS say Hongkong Bank's pay freeze next year could put a lid on salary levels among all 79,000 bank workers. Clarion Capital banking analyst Zuhair Khan says: 'It would make it easier for other banks. Wage freezes are, of course, unpopular. Employers don't generally want to be the first to do it.' friday MOODY'S Investors Service reaffirms its sovereignty credit rating for the mainland's first bond issue in more than a year, giving the sale a much-needed lift. However, it also cuts the long-term foreign-currency debt rating of the country's two policy banks and others, citing the banking sector's worsening financial situation. JAPAN'S Economic Planning Agency head Taichi Sakaiya warns his country's economy, the second-largest in the world, is still firmly stuck in its worst post-war recession and will not grow next year. The previous day his agency had said the Japanese economy had shrunk for a record fourth consecutive quarter in the three months to September. THE prime lending rate for mortgages is reduced 0.25 per cent to 9.25 per cent, giving the property market its second boost in a week. The cut is the third in quick succession and the fourth this year, and comes after the Hong Kong Association of Banks reduced the saving deposits rate by the same amount to 4.5 per cent. However, while it is good news for the property sector, the effect on the wider economy is expected to be limited.
