European stocks this week posted their second-steepest weekly drop in six years as a worse-than-expected slump in the UK economy and disappointing forecasts from Renault SA, Air France-KLM Group and OC Oerlikon Corp spurred speculation that earnings expectations were too high.
HSBC Holdings PLC and Barclays PLC, the biggest UK banks, fell 13 percent as a 0.5 percent decline in second-quarter GDP signaled Britain may be in the grip of its first recession since 1991. Renault lost 22 percent, Air France declined 20 percent and Oerlikon declined 24 percent. ABB Ltd, the world’s largest builder of electricity grids, declined 23 percent on orders that missed analysts’ estimates.
Europe’s Dow Jones STOXX 600 Index lost 7.2 percent this week to 198.82, the lowest since June 2003. The retreat was the second-biggest since July 2002, after a 22 percent slump two weeks ago.
The STOXX 600 has retreated 45 percent this year as a freeze in credit markets sparked by US$659 billion of asset writedowns and credit losses at banks raised concern that the global economy is headed for a recession. The benchmark is valued at 8.3 times the reported earnings of companies in the index, the lowest since Bloomberg began tracking the data in 2002.
National benchmark indexes fell in all 18 western European markets except Iceland, with Germany’s DAX sinking 10 percent. France’s CAC 40 dropped 4.1 percent, while the UK’s FTSE 100 retreated 4.4 percent. About US$30 trillion of market value has been erased from global equities this year, with about a third of the decline coming this month, Bloomberg data show.
The UK is the first of the G7 nations to announce GDP figures for the third quarter. The IMF predicts the world’s advanced economies will grow at the slowest pace since 1982 next year as the US falters.
HSBC declined 13 percent. Morgan Stanley lowered earnings estimates for the lender on concern its Asian operations face the same turmoil roiling financial markets in Europe and America.
Barclays declined 13 percent after the bank was lowered to “neutral” from “buy” at UBS AG, which said earnings and dividends may be hurt as it shores up capital amid a slowing economy.
The thaw in lending that began earlier this month after policy makers pumped cash into money markets and governments bailed out banks may be faltering as the global economy slides into a recession.
The London interbank offered rate, or LIBOR, that banks charge for overnight loans in dollars, climbed 7 basis points to 1.28 percent on Friday, the British Bankers’ Association said. It gained for the first time in 10 days on Thursday. The comparable rate for UK pounds jumped 19 basis points to 4.75 percent.
Renault declined 22 percent. France’s second-largest carmaker cut its full-year profit and sales goals after third-quarter revenue fell 2.2 percent amid a slump in auto demand.
PSA Peugeot Citroen, Europe’s second-biggest carmaker, cut its full-year earnings target and said production will be slashed by 30 percent following a “collapse” in the global car market. The shares lost 11 percent.
Daimler AG, the world’s second-biggest maker of luxury cars, also cut its full-year earnings forecast, sending the shares down 13 percent.
Earnings at the 66 companies in the STOXX 600 tracked by Bloomberg that reported profits since last month sank by an average of 19 percent, Bloomberg data show. Analysts expect profit for companies in Europe’s STOXX 600 to decline 4.4 percent this year, down from 11 percent growth predicted at the start of the year, according to projections compiled by Bloomberg.
Taiwan aims to open 18 representative offices and seven Taiwan Tourism Information Centers worldwide by next year to attract international visitors, the Tourism Administration said on Saturday. The agency has so far opened three representative offices abroad this year and would open two more before the end of the year, it said. It has also already opened information centers in Jakarta, Mumbai and Paris, and is to open one in Vancouver next month and in Manila in December, it said. Next year, it would also open offices in Amsterdam, Dubai and Sydney, it added. While the Cabinet did not mention international tourists in its
EYES AT SEA: Many marine enthusiasts have expressed interest in volunteering for coastal patrols, which would help identify stowaways and illegal fishing, the CGA said Six thousand coastal patrol volunteers are to be recruited for 159 inspection offices to enhance the nation’s response to “gray zone” conflicts, Coast Guard Administration (CGA) sources said yesterday. Volunteer teams would be established to increase the resilience of coastal defense systems in the wake of two unlawful entries attempted by Chinese over the past three months, Ocean Affairs Council Minister Kuan Bi-ling (管碧玲) said. A former Chinese navy captain drove a motorboat into the Tamsui River (淡水河) in Taipei on the eve of the Dragon Boat Festival in June, while another Chinese man sailed in a rubber boat into the Houkeng
NEXT LEVEL: The defense ministry confirmed that a video released last month featured personnel piloting new FPV drone systems being developed by the Armaments Bureau Taipei and Washington are pushing for their drone companies to work together to establish a China-free supply chain, the Financial Times reported on Friday. A delegation of high-level executives and US government officials were yesterday to arrive in Taipei to discuss with their Taiwanese counterparts collaboration on drone technology procurement and development, the report said. The executives represent 26 US manufacturers of drone and counter-drone systems, while the officials are from the US Department of Commerce and the US Department of Defense’s Defense Innovation Unit, along with Dev Shenoy, principal director for microelectronics in the Office of the Under Secretary of Defense
‘ANONYMOUS 64’: A national security official said that it is an attempt by China to increase domestic anti-Taiwanese sentiment and inflame cross-strait tensions The Ministry of National Defense’s (MND) Information, Communications and Electronic Force Command (ICEFCOM) yesterday denied accusations by China that it had undermined regional security by carrying out cyberattacks against targets in China, adding instead that Beijing was responsible for raising tensions and undermining regional peace. The Chinese Ministry of State Security on WeChat accused a hacker group called “Anonymous 64” of targeting China, Hong Kong and Macau starting earlier this year through frequent cyberattacks. The group carried out cyberattacks to seize control of Web sites, outdoor electronic billboards and video-on-demand platforms in China, Hong Kong and Macau, it said, adding the hackers’