Barack Obama is Wall Street's Chosen One
I went over to OpenSecrets.org to get the latest scoop on the fundraising activities of the US presidential candidates. While not totally comprehensive, the site offers a workable picture of the candidates' funding activities. Actually, the title above is kind of misleading for an obvious reason: we cannot be sure whether a particular candidate is given campaign funds because (a) s/he has a favourable disposition towards an interest group or (b) s/he has the best chance of winning. Consider the case of Wall Street. To hedge their bets, Wall Street firms have not placed all their eggs in one basket, contributing to Obama, Clinton, and McCain's respective campaigns. However the relative proportion of allocated funds may reflect preference and/or the belief that there is a frontrunner. Let us begin with Obama:
| 1 | Lawyers/Law Firms | $15,019,030 |
| 2 | Misc Business | $13,412,381 |
| 3 | Retired | $9,206,269 |
| 4 | Securities & Investment | $7,498,503 |
| 5 | Education | $6,314,947 |
As you can see, Wall Street firms are fourth among industry group contributions to Obama's campaign. In terms of outright contributions, Wall Street has made the most to the Obama campaign. Further, four of the top five Obama contributors are Wall Street firms:
| Goldman Sachs | $544,481 |
| University of California | $371,266 |
| Ubs Ag | $363,257 |
| JPMorgan Chase & Co | $353,808 |
| Citigroup Inc | $331,946 |
What about Missus Clinton? Among the remaining Big Three, she comes in second place among Wall Street industry group contributions:
| 1 | Lawyers/Law Firms | $15,425,314 |
| 2 | Misc Business | $8,411,793 |
| 3 | Securities & Investment | $6,971,998 |
| 4 | Retired | $6,937,862 |
| 5 | Real Estate | $6,077,866 |
As for her top five contributors, three are Wall Street bigwigs...
| DLA Piper | $505,200 |
| Goldman Sachs | $445,350 |
| Citigroup Inc | $406,752 |
| Morgan Stanley | $402,845 |
| EMILY's List | $323,567 |
Then there's John McCain. As you all know, he hasn't amassed nearly as much firepower as the Democratic candidates for understandable reasons. By industry group, his top contributors are from:
| 1 | Retired | $9,101,609 |
| 2 | Lawyers/Law Firms | $4,228,737 |
| 3 | Misc Business | $3,892,667 |
| 4 | Securities & Investment | $3,764,664 |
| 5 | Real Estate | $2,915,560 |
McCain hasn't gotten even half as much as either Obama or Clinton from Wall Street. Going by campaign contributions, it appears that the supposedly populist, middle-class loving Democrats are funded more by Wall Street than the more business-friendly (at least in rhetoric) John McCain. Who would have thought his largest contributor base is the AARP set? Go figure. I round it up with the top contributors to McCain's campaign, "only" two of which are [yawn] Wall Street biggies:
| Merrill Lynch | $226,550 |
| Blank Rome LLP | $222,050 |
| Citigroup Inc | $206,102 |
| Greenberg Traurig LLP | $173,837 |
| AT&T Inc | $149,305 |
Based on campaign contributions so far, you could make a case of McCain being the least influenced by the omnipresent Wall Street contribution machine. Visit the OpenSecrets.org site to understand the method they use to trace campaign funds and for periodic updates on the candidates' fundraising activities. Befitting the adage that all politics is local, it is interesting to note that unions and government employee groups loom large in the bigger scheme of things, high-profile Wall Street contributions to presidential candidates aside.
Karl Marx Was All for Free Trade
It never ceases to amaze me that posts on the topic of Karl Marx [1, 2, 3] remain among the most popular ones here since I am hardly an authoritative commentator on Marxist thought. Nevertheless, coming from the school of "give them what they want," I will give Herr Marx the pride of place in this post. Cool Papa Marx rides again. For ideological reasons, Marxist thought plays a larger role in British public discourse and academia than in the States. You must remember that Marx is buried in London, and that a BBC poll in 1999 found he was the most influential thinker of the millennium ahead of Einstein, Newton, and Darwin. Would such a survey have returned similar results in the US of A? I think not.
Speaking of British academia, I am currently reading Capitalism Unleashed: Finance Globalization and Welfare by the late, maybe even great Oxford Marxist economist Andrew Glyn. While most of its content is boilerplate socialism with a few references to modern events thrown in, I came across an absolute stunner of a quote on p. 77 where Marx extols free trade. However, there is a supremely sardonic twist to Marx's idea: Free trade, by extending the contradictions of capitalism to all the ends of the Earth, will only hasten capitalism's demise. (See this earlier post for a Cliff's Notes version of the contradictions of capitalism if you are unfamiliar with the basic idea.) A problem with this line of thought, of course, is that few of us are as convinced as Marx about the internal contradictions of capitalism will bring about its demise. It keeps rolling along.
Of course, a coarse analysis would instead point to the demise of the Iron Curtain as a demonstration of the failure of socialism. Still, those who argue that Lenin's iteration of socialism that soon became a prominent feature of the international political economy was not as Marx intended. The "vanguard of the proletariat," Lenin's bastardized version of Marxist leadership, can in retrospect be seen as reformulating the bourgeoisie with class privileges intact under the rubric of socialism. Nowhere is this more evident than in China's variant, replete with inequality surpassing that in many (nominally) capitalist countries and Party elites. In other words, the failure of Soviet-style communism is not the failure of Marxism as the former was not representative of the latter as described by its principal author. Indeed, the more left-leaning can make an argument that the current time is ripe for making the contradictions of capitalism even more apparent than before.
It is debatable, though, whether the never-ending bliss of paradise (where the grass is green and the girls are pretty) promised by Marx after the overthrow of capitalism's shackles would be any better than what we have now. And, invoking that presumes the tipping point for fomenting the oft-predicted workingman's revolution would soon be upon us. Or, is "The Man" too big and too strong?
Anyway, on to the Marx passage in question. The essay below comes from The Northern Star, a publication of the British Chartist Movement to which Karl Marx was sympathetic to. It is Marx's undelivered speech to a gathering of those endorsing the idea of free trade--The Free Trade Congress in Brussels--in 1847. It is illuminating that today's three main IPE points of view as noted in this blog's FAQs are all in there in full guise--mercantilism (List), liberalism (Smith and Ricardo), and Marxism care of the eponymous author. That modern political-economic debate still mirrors the well-formed thoughts of Marx on the differences among these POV is illuminating, as is his conviction that, yes, the demise of capitalism is nigh. Marx being Marx, he's rather long-winded talking about Protection, Free Trade, and the Working Classes, but the last paragraph below best summarizes why Marx believed that, yes, free trade was a splendid idea. Does revolution await?
There are two sects of protectionists. The first sect, represented in
Protectionists of the first sect, those who conceived the progress of machinery, of division of labour, and of competition, to be irresistible, told the working classes, “At any rate if you are to be squeezed out, you had better be squeezed by your own countrymen, than by foreigners.” Will the working classes for ever bear with this? I think not. Those who produce all the wealth and comforts of the rich, will not be satisfied with that poor consolation. They will require more substantial comforts in exchange for substantial produce. But the protectionists say, “After all, we keep up the state of society as it is at present. We ensure to the working man, somehow or other, the employment he wants. We take care that he shall not be turned out of work in consequence of foreign competition.” So be it. Thus, in the best case, the protectionists avow that they are unable to arrive at anything better than the continuation of the status quo. Now the working classes want not the continuation of their actual condition, but a change for the better. A last refuge yet stands open to the protectionist. He will say that he is not at all adverse to social reform in the interior of a country, but that the first thing to ensure their success will be to shut out any derangement which might be caused by foreign competition. “My system,” he says, “is no system of social reform, but if we are to reform society, had we not better do so within our own country, before we talk about reforms in our relations with other countries?” Very specious, indeed, but under this plausible appearance, there is bid a very strange contradiction. The protectionist system, while it gives arms to the capital of a country against the capital of foreign countries, while it strengthens capital against foreigners, believes that this capital, thus armed, thus strengthened, will be weak, impotent, and feeble, when opposed to labour. Why, that would be appealing to the mercy of capital, as if capital, considered as such, could ever be merciful. Why, social reforms are never carried by the weakness of the strong, but always by the strength of the weak. But it is not at all necessary to insist on this point. From the moment the protectionists agree that social reforms do not necessarily follow from, and that they are not part and parcel of their system, but form quite a distinct question, from that moment they abandon the question, which we discuss.
We may, therefore, leave them in order to review the effects of Free Trade upon the condition of the working classes. The problem: What will be the influence of the perfect unfettering of trade upon the situation of the working classes, is very easy to be resolved. It is not even a problem. If there is anything clearly exposed in political economy, it is the fate attending the working classes under the reign of Free Trade. All those laws developed in the classical works on political economy, are strictly true under the supposition only, that trade be delivered from all fetters, that competition be perfectly free, not only within a single country, but upon the whole face of the earth. These laws, which A. Smith, Say, and Ricardo have developed, the laws under which wealth is produced and distributed — these laws grow more true, more exact, then cease to be mere abstractions, in the same measure in which Free Trade is carried out. And the master ‘of the science, when treating of any economical subject, tells us every moment that all their reasonings are founded upon the supposition that all fetters, yet existing, are to be removed from trade. They are quite right in following this method. For they make no arbitrary abstractions, they only remove from their reasoning a series of accidental circumstances. Thus it can justly be said, that the economists — Ricardo and others — know more about society as it will be, than about society as it is. They know more about the future than about the present.
If you wish to read in the book of the future, open Smith, Say, Ricardo. There you will find described, as clearly as possible, the condition which awaits the working man under the reign of perfect Free Trade. Take, for instance, the authority of Ricardo, authority than which there is no better. What is the natural normal price of the labour of, economically speaking, a working man? Ricardo replies, “Wages reduced to their minimum — their lowest level.” Labour is a commodity as well as any other commodity. Now the price of a commodity is determined by the time necessary to produce it. What then is necessary to produce the commodity of labour? Exactly that which is necessary to produce the sum of commodities indispensable to the sustenance and the repairing of the wear and tear of the labourer, to enable him to live and to propagate, somehow or other, his race. We are, however, not to believe that the working man will never be elevated above this lowest level, nor that he never will be depressed below it. No, according to this law, the working classes will be for a time more happy, they will have for a time more than the minimum, but this surplus will be the supplement only for what they will have less than the minimum at another time, the time of industrial stagnation. That is to say, that during a certain space of time, which is always periodical, in which trade passes through the circle of prosperity, overproduction, stagnation, crisis — that, taking the average of what the labourer received more, and what he received less, than the minimum, we shall find that on the whole he will have received neither more or less than the minimum; or, in other words, that the working class, as a class, will have conserved itself, after many miseries, many sufferings, and many corpses left upon the industrial battle field. But what matters, that? The class exists, and not only it exists, but it will have increased. This law, that the lowest level of wages is the natural price of the commodity of labour, will realise itself in the same measure with Ricardo’s supposition that Free Trade will become a reality.
We accept every thing that has been said of the advantages of Free Trade. The powers of production will increase, the tax imposed upon the country by protective duties will disappear, all commodities will be sold at a cheaper price. And what, again, says Ricardo? “That labour being equally a commodity, will equally sell at a cheaper price” — that you will have it for very little money indeed, just as you will have pepper and salt. And then, in the same way as all other laws of political economy will receive an increased force, a surplus of truth, by the realisation of Free Trade — in the same way the law of population, as exposed by Malthus, will under the reign of Free Trade develop itself in as fine dimensions as can possibly be desired. Thus you have to choose: Either you must disavow the whole of political economy as it exists at present, or you must allow that under the freedom of trade the whole severity of the laws of political economy will be applied to the working classes. Is that to say that we are against Free Trade? No, we are for Free Trade, because by Free Trade all economical laws, with their most astounding contradictions, will act upon a larger scale, upon a greater extent of territory, upon the territory of the whole earth; and because from the uniting of all these contradictions into a single group, where they stand face to face, will result the struggle which will itself eventuate in the emancipation of the proletarians.Asian Currencies: Peso, Won Lead Weekly Declines on Record Oil
May 24 (Bloomberg) -- The Philippine peso fell this week by the most in two months, leading losses among Asian currencies, on concern record oil prices will quicken inflation and slow economic growth.
The peso slid for a sixth week after Economic Planning Secretary Augusto Santos said gross domestic product growth in the first quarter probably slowed to as little as 5.2 percent because inflation at a three-year high restrained consumer spending. Oil prices reached $135.09, double what they were a year ago. South Korea's won and Indonesia's rupiah also slumped on demand for dollars to fund oil imports.
``Inflation is definitely weighing on the economic outlook not just in the first quarter but for the rest of the year,'' said Vishnu Varathan, a regional economist at Forecast Singapore Pte. ``That's adding to the peso's weakness.''
The peso fell 1.5 percent this week to 43.465 per dollar in Manila, according to the Bankers Association of the Philippines, the most since the five days ended March 14. The won dropped 0.7 percent to 1,047.65 and the rupiah declined for a third week, to 9,313.
The Philippine economy may grow 6 percent in the first quarter, the slowest pace in six quarters, a survey compiled by Bloomberg News showed before a government report on May 29. Growth was 7.4 percent in the final quarter of 2007.
Central bank Deputy Governor Diwa Guinigundo said this week the economy ``will definitely suffer'' if oil prices remain above $125 a barrel. The country imports almost all of its fuel needs.
`Driving Force'
South Korea's won fell to 1,057.40 on May 21, the lowest since October 2005, on concern oil prices will increase the nation's import bill and slow economic growth. South Korea imports almost all of its oil needs and reported a fourth consecutive current-account deficit in March.
``The driving force of the won's weakness is oil,'' said Kim Hee, a currency dealer at state-run Korea Development Bank in Seoul. ``The market has received hefty orders from importers'' to settle deals in the dollar.
Asia's fourth-largest economy faces difficulties including the recent surge in oil and raw material costs, Vice Finance Minister Choi Joong Kyung said in Seoul yesterday. The economy will grow less than the central bank's forecast of 4.7 percent because of higher oil costs and a global slowdown, Bank of Korea Deputy Governor Kim Byung Hwa said.
Fuel Subsidies
Indonesia's rupiah fell after Energy Minister Purnomo Yusgiantoro said the government will raise domestic fuel prices by an average 29 percent to reduce its subsidies, prompting protests from students and labor unions. Malaysia's ringgit pared a weekly gain after the government said it will also cut subsidies within two months.
``Investors are worried about the inflation outlook, which is why the Indonesian rupiah is weak,'' said Goh Puay Yeong, a currency strategist in Singapore at Barclays Capital, the securities arm of the U.K.'s third-biggest bank. ``Growth will slow.''
Malaysia plans to reduce fuel subsidies within two months, Second Finance Minister Nor Mohamed Yakcop said on May 22.
``The risk to the ringgit and other regional currencies is the spike in inflation from the withdrawal of fuel subsidies,'' said Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. ``There are so-called political costs to these measures.''
The ringgit traded at 3.2175 per dollar in Kuala Lumpur for a 0.5 percent gain on the week, according to Bloomberg data, ending a four-week slump.
Elsewhere, Taiwan's dollar gained 0.5 percent in the five days to NT$30.5, halting a four-week slide. Thailand's baht advanced 0.7 percent to 32.06 against the U.S. currency while the Vietnamese dong fell for a third week to trade at 16,199.
McCain's Doctors Call Republican Candidate Healthy (Update3)
May 23 (Bloomberg) -- John McCain's medical records show the 71-year-old Arizona senator has a strong heart and there is no evidence of the deadly skin cancer removed eight years ago.
The Republican presidential candidate has several health concerns common among septuagenarians. He was treated for an enlarged prostate, underwent cataract surgery, and suffers from arthritis and vertigo, the records show. He takes medication for high cholesterol and had early stage squamous cell cancer and benign growths in his colon removed this year.
McCain, trying to head off any concern among voters about his age and fitness, today allowed a group of reporters to review eight years of records -- 1,173 pages -- from the Mayo Clinic's Phoenix medical center, where his care included surgery in 2000 for the cancer, called melanoma, on his left temple. They also posted summaries on his campaign Web site.
``Senator McCain enjoys excellent health and displays extraordinary energy,'' John D. Eckstein, McCain's personal physician, said in a statement. ``While it is impossible to predict any person's future health, today I can find no medical reason or problems that would preclude Senator McCain from fulfilling all the duties and obligations of president.''
If elected, McCain would be the oldest person inaugurated as president for a first term. While majorities of voters say a candidate's age doesn't matter, 12 percent said in a February Bloomberg News/Los Angeles Times poll that they felt McCain is too old for the job.
Counterbalance
For McCain, the focus on his age ``will need to be counterbalanced with an aggressive campaign style and an agenda of issues that fills the space,'' said Republican strategist Scott Reed, who managed the 1996 presidential campaign of Bob Dole, the oldest presidential nominee at age 73.
McCain regularly makes jokes about his age, as do television comedians. As an indication that he recognizes the subject may be an issue for some voters, McCain also points to the vigor of his 96-year-old mother and his own hikes in the Grand Canyon.
Illinois Senator Barack Obama, the frontrunner for the Democratic nomination is 46, and New York Senator Hillary Clinton, Obama's rival, is 60. Neither has released health records.
``Age should not be a limiting factor in this day and age,'' Eckstein said on a conference call with reporters.
Regular Check-Ups
McCain gets regular checks at the Mayo Clinic for signs of a return of the cancer, called melanoma, which remains his biggest personal health challenge.
``It's one of those tumors that can come back at any time, said Margaret Kemeny, a cancer surgeon and professor at Mt. Sinai School of Medicine in New York, who wasn't involved in his treatment. ``It sounds like everything is fine with Senator McCain, but you never outgrow the risk of it coming back.''
The 10-year survival rate for patients with melanomas like McCain's is about 64 percent, according to the Journal of Clinical Oncology. There is nothing McCain can do to prevent a recurrence, which could be deadly because it would signal that the cancer had already spread, Kemeny said.
In addition to the invasive tumor removed in 2000, doctors excised early stage melanomas from McCain's left shoulder in 1993, from his left arm in 2000 and from his nose in 2002.
Release Timing
Until today, the McCain campaign hadn't allowed reporters to review his post-1999 medical records. At a resort hotel near Scottsdale, Arizona, the campaign staff made documents available for study by a group of reporters who regularly cover the candidate. They prohibited any copies from being made. Shortly afterward, summaries were posted on the Internet.
The information was released on the Friday before the Memorial Day holiday weekend. The records were made available at ``the earliest possible time,'' taking into account the schedules of McCain and his team of Mayo physicians, said Victor Trastek, chief executive officer of the Mayo Clinic in Arizona, in a statement.
Among the items noted, McCain was a two-pack a day smoker for 25 years, quitting in 1980, according to the records. He currently takes aspirin and vitamins each day, medication to lower his cholesterol, and Claritin when needed for allergies. He also has a prescription for Ambien, a sleeping pill from Sanofi-Aventis SA, to help him rest while traveling.
The candidate is just over 5 feet 9 inches tall and weighs 164 pounds, his records show. He is a ``very infrequent'' drinker.
Joint Health
He may eventually need a joint replacement for his shoulders or knees because of osteoarthritis, the most common form of the degenerative disease that affects 46.5 million Americans, the records show. McCain's problems stem from trauma during the time he was imprisoned in Vietnam, and limit the motion of his shoulders and arms.
He survived brutal treatment as a prisoner of war in North Vietnam for 5 1/2 years after his Navy jet fighter was shot down in 1967. He suffered fractured bones in his arms and one leg when he was captured and other serious injuries during his imprisonment.
In August 2000, Mayo Clinic doctors removed from McCain's left temple the invasive melanoma measuring 2 centimeters wide and one-fifth of a centimeter deep. While the campaign said the tumor was ``small,'' Kemeny said experts not involved in McCain's care had different impressions.
``That is not a small melanoma,'' Kemeny said. ``It's an intermediate-grade melanoma, and it can kill you.''
Tumor Removal
The Mayo Clinic doctors removed the tumor and the standard 2 centimeters surrounding it as a margin of safety, injecting dye at the tumor site to see which lymph nodes it migrated to. Doctors tested 34 lymph nodes, the saliva-producing gland and the tissue around the tumor that was removed and found no signs of lingering cancer, according to the records.
The surgeons said they took the precaution of removing nearby lymph nodes and part of a saliva gland located between his left ear and jaw bone. The procedure left the senator with scarring and swelling that remains visible on the side of his face.
``McCain chose to have a really aggressive approach and to ensure that he had no melanoma,'' said Lynn Schuchter, a professor at the University of Pennsylvania's Abramson Cancer Center. Melanoma experts debate whether the more extensive surgery was done because the cancer had spread, not as a preventative measure.
``He's eight years out, and he's done great from that melanoma,'' Schuchter said.
Since then, McCain has been in good health, according to the campaign.
McCain has regularly dealt with medical issues that crop up with age. In July 2000, he had trouble walking steadily and experienced a sensation of seasickness. The condition, deemed positional vertigo, developed when he turned or stood rapidly and eased as the day progressed. He had abnormal results on a blood sugar test, kidney stones and cysts, and the removal of several less-lethal basal and squamous cell skin cancers over the years, his doctors said.
Japan's Bonds Fall on Inflation, Yields Rise to Nine-Month High
May 24 (Bloomberg) -- Japan's 10-year bonds fell for a second week, pushing yields to the highest in more than nine months, as investors cut their holdings of debt on concern inflation will accelerate.
Benchmark bonds declined for a second day yesterday as the Bank of Japan said in minutes of its April meeting that consumers' inflation expectations rose as the prices of daily necessities increased. The difference in yield between 10-year conventional bonds and inflation-protected debt widened to the most since November, showing traders expect consumer-price gains to quicken. Inflation erodes the purchasing power of the fixed payments from debt.
``We're in a selling spiral,'' said Maki Shimizu, a fixed- income analyst in Tokyo at UBS Securities Japan Ltd., one of the 26 primary dealers required to bid at government debt sales. ``There is selling pressure in the market'' because of the ``highlighted inflation concerns.''
The yield on the 1.7 percent bond due March 2018 rose 4 basis points last week to 1.73 percent according to Japan Bond Trading Co., the nation's largest interdealer debt broker. The price fell 0.336 yen to 99.748 yen. The yield touched 1.755 percent yesterday, the highest since Aug. 9.
Yields on five-year notes gained 2 basis points for the week to 1.30 percent and 10-year bond futures for June delivery fell 0.36 to 134.35 on the Tokyo Stock Exchange. A basis point is 0.01 percentage point.
Oil, Breakeven Rate
Oil prices reached a record $135.09 a barrel in New York on May 22, pushing up import costs in Japan, the world's third- largest consumer of the fuel. The price of the commodity has more than doubled over the past year.
The difference between yields on 10-year inflation-linked bonds and those on regular notes widened to as much as 46 basis points yesterday, the most in six months, reflecting growing expectations for inflation over the next decade. The spread was 19 basis points a month ago.
Japan's consumer prices excluding fresh food climbed at an annual rate of 1.2 percent in March, the fastest in a decade, the statistics bureau said last month. Prices may have gained 1 percent in April according to a Bloomberg News survey before the bureau releases the data on May 30.
Ten-year yields near a nine-month high will attract buyers as increasing commodity prices damp economic growth, said Akihiko Inoue, an analyst at Mizuho Investors in Tokyo,
`Oversold'
``Bonds look to be oversold,'' Inoue said. ``Rising oil will hurt corporate earnings, sentiment and consumption, providing a reason to buy bonds on dips.''
Confidence among manufacturers fell to a five-year low in May, a Reuters Tankan survey showed this week. The diffusion index of sentiment declined to minus 2 this month from 1 in April, Reuters said on its Web site on May 19. A negative number means pessimists outnumber optimists.
Oil and food costs ``are making monetary and macroeconomic policies more difficult,'' Finance Minister Fukushiro Nukaga said May 20.
Ten-year yields may fall to as low as 1.60 percent by the end of June, Inoue said. His prediction is higher than the 1.43 percent weighted average forecast in a Bloomberg News survey of analysts and economists.
Benchmark bonds also fell this week on speculation rising commodity prices will spur investors to seek higher yielding assets such as stocks.
Prefer Stocks
``Significant attention is paid to inflation now, and under the current environment, money tends to move to higher-yielding assets rather than bonds,'' said Takeo Okuhara, a senior economist and debt strategist in Tokyo at Daiwa Institute of Research Ltd., a unit of the nation's second-largest brokerage.
The Nikkei 225 Stock Average gained 0.2 percent yesterday, a second day of gains. Japan's bonds often move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.71 with the Nikkei in the past month, according to data compiled by Bloomberg. A value of 1 would mean the two moved in lockstep.
Japanese bonds handed investors a loss of about 0.93 percent during the past month. The Nikkei returned a gain of 3.2 percent in the same period, including reinvested dividends.
Asia Stocks Drop This Week on Credit Loss, Fuel-Cost Concerns
May 24 (Bloomberg) -- Asian stocks fell this week, dragging the benchmark index to its biggest weekly decline in three months, on concern widening credit losses and rising fuel costs will hurt company earnings.
Macquarie Group Ltd., Australia's largest securities company, declined after saying a 16-year streak of rising profits may be ending. Korean Air Lines Co. slipped as prices of crude oil and jet fuel climbed to records.
``The credit-crunch concern hasn't totally gone away,'' said Marc Desmidt, Tokyo-based chief investment officer at BlackRock Japan Co., whose parent has about $1 trillion in assets. ``There's an ongoing debate on the direction of oil prices, and so far the bulls have it right.''
The MSCI Asia Pacific Index lost 2.1 percent to 150.54 this week. Financial stocks declined 4.4 percent, the most among the index's 10 industry groups, while energy companies rose 0.7 percent, the only group that gained.
Japan's Nikkei 225 Stock Average retreated 1.5 percent to 14,012.20. Benchmarks around the region fell in most markets. China's CSI 300 Index had its worst week in five. Pakistan's KSE 100 Index tumbled 8.8 percent after the central bank raised interest rates to tame inflation at a 25-year high. Vietnam's VN Index slumped for 15 days straight to its lowest since August 2006.
The MSCI Asia Pacific is down 4.6 percent this year amid speculation mounting credit losses and a slowdown in the U.S. economy will hurt profit growth. Banks and brokerages worldwide have declared $382.6 billion of losses and writedowns tied to credit-market investments.
`Very Challenging'
Macquarie Group tumbled 12 percent to A$58.40 in Sydney after Nicholas Moore, who takes over as chief executive officer today, said repeating the record A$1.8 billion ($1.7 billion) fiscal-year profit reported this week will be ``challenging.'' Morgan Stanley cut its share-price forecast, citing ``slowing momentum'' in earnings.
Mitsubishi UFJ Financial Group Inc., Japan's largest bank by value, dropped 7.2 percent to 1,012 yen. The Tokyo-based company said it expects weaker economic growth to slow lending.
``The growth outlook for banks is still very challenging,'' said Daphne Roth, Singapore-based vice president of equity research at ABN Amro Private Bank, which oversees $20 billion of Asian assets. ``There's still some uncertainty over how well capital markets will do.''
Jet-Fuel Prices
Korean Air, which reported a first-quarter loss because of higher fuel costs and a weaker local currency, dropped 9.8 percent in Seoul this week to 48,100 won. Qantas Airways Ltd., Australia's largest carrier, lost 7.5 percent to A$3.35 in Sydney. Cathay Pacific Airways Ltd., Hong Kong's biggest airline, retreated 8.1 percent to HK$15.20. Fuel accounts for about 31 percent of the airline's net operating costs.
The price of jet fuel has doubled in the past 12 months.
Woodside Petroleum Ltd., Australia's second-largest oil and gas producer, advanced 6.7 percent to A$67.45 in Sydney. CNPC (Hong Kong) Ltd., a unit of China's largest oil company, soared 12 percent to HK$4.34 in Hong Kong.
Oil reached a record $135.09 a barrel in New York on May 22 on speculation rising demand, led by China and India, may outstrip supply increases.
China's CSI 300 slipped 6.6 percent in the past five days, the biggest drop in five weeks, amid concerns record oil prices and the earthquake that slammed Sichuan province on May 12 will hurt corporate earnings.
Sichuan Hongda Chemical Industry Co., China's third-largest zinc producer, tumbled 20 percent to 28.89 yuan. It resumed trading on May 20 after a five-day halt. The company said the earthquake killed 74 employees and caused a loss of 387.7 million yuan ($56 million).
``The earthquake has further weakened market sentiment, prompting investors to sell first as they gauge the real loss it has caused to the economy,'' said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai, which manages about $850 million.
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