Finance & Business World

The Senate on Tuesday finally began considering a bill to extend unemployment benefits by up to 20 weeks.

The legislation would lengthen benefits in all states by 14 weeks. Plus, those that live in states with unemployment greater than 8.5% would receive an additional six weeks. The proposal would be funded by extending a longstanding federal unemployment tax on employers through June 30, 2011.

The extension has been stalled in the Senate as Democratic and Republican leaders try to reach a compromise over several amendments, including extending the $8,000 homebuyer tax credit beyond Nov. 30.

A final vote may not happen until early next week.

The move comes more than a month after the House passed legislation that extends benefits by 13 weeks in high-unemployment states. If the Senate passes its bill, the two must then be reconciled.

Lawmakers have twice lengthened the time people can receive checks to as much as 79 weeks, depending on the state. The average weekly benefit ranges from $197 in Mississippi to $427 in Massachusetts.

Unemployment last month hit a 26-year high of 9 low fee payday advance.8%. Experts expect the rate to top 10%, and are divided over when companies will start hiring again.

Act soon

Pressure is mounting on lawmakers to act soon. Some 7,000 people a day are running out of benefits, according to the National Employment Law Project. Some 1.3 million will exhaust their benefits by year’s end unless an extension is passed.

The White House weighed in on the issue Tuesday, saying that helping unemployed workers also boosts the economy.

"The administration supports providing additional weeks of unemployment benefits to Americans who are suffering from long-term joblessness due to the economic downturn," the White House said in a policy statement. "Millions of Americans want employment but cannot find it, and the administration is committed to supporting these Americans as they look for work and struggle to raise their families and pay their bills." 

Source

Countries need to maintain stimulus programs to help support their economies because a further deterioration of the U.S. housing market and volatile oil prices pose risks to the global recovery, OECD Secretary-General Angel Gurria said.

“It’s very early to stop the stimulus,” the Organization for Economic Cooperation and Development’s Gurria said in an interview with Bloomberg yesterday in Busan, South Korea. The key “question will be when to move from policy-based recovery to self-sustained growth.”

The OECD in September predicted a “modest” recovery for the world’s leading industrialized economies, saying the Group of Seven nations will shrink 3.7 percent this year, rather than the 4.1 percent projected in June. The organization has also said weakness in corporate profits, hiring, incomes and housing markets would slow the subsequent rebound payday advance lender.

“There still are a number of downside risks” to growth, Gurria said in the interview. These include volatility in oil prices, “which can affect some other types of prices, including the price of food.” Governments are still to finish the recapitalization of banks, which “have not yet restarted lending at the natural pace,” he said.

The credit-market meltdown that led to a financial crisis has caused more than $1.6 trillion in losses and writedowns worldwide.

European Central Bank governing council member Christian Noyer said earlier this week banks need to shore up their capital base, recommending restraint in dividend distributions and compensation.

Source

New Zealand Prime Minister John Key said the nation’s currency is overvalued and the central bank is unlikely to raise interest rates this year because inflation is contained.

“The very high exchange rate is helping offset any imported inflation concerns,” Key said in an interview yesterday in Kuala Lumpur. “I would personally be surprised if they raise rates in 2009.”

New Zealand’s central bank, which acts independently of the government, will leave rates unchanged at its review on Oct. 29, according to all eleven economists in a Bloomberg survey. Consumer prices rose 1.3 percent in the third quarter, within the bank’s 1 percent to 3 percent target band. The benchmark rate is already “well above” most of its trading partners, said Key, former head of foreign exchange at Merrill Lynch & Co.

The so-called kiwi’s strength “is a really effective buffer against inflation,” said Dominick Stephens, research economist with Westpac Banking Corp. in Wellington. “That’s the key reason that the Reserve Bank is going to stay on hold over the next few meetings. The hikes will come later than they would have if the exchange rate hadn’t risen so far.”

New Zealand’s official cash rate is 2.5 percent compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nation’s higher- yielding assets and driving up its currency. Key said the New Zealand dollar, which rose to a 15-month high of 76.35 cents last week, is too strong.

Exchange Rate

“We would prefer a lower exchange rate and that would help our exports,” Key said after signing a free trade agreement with Malaysia. “It would certainly help in terms of rebalancing our economy.” He declined to give a New Zealand dollar forecast.

The currency, the best performer among 16 major currencies the past six months, traded at 74.79 U.S. cents at 5:41 p.m. in Wellington, from 74.77 cents in New York yesterday.

“His comments may bolster U.S. dollar buybacks as the New Zealand currency has risen too far and needs adjustment,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA.

Australia’s central bank unexpectedly raised its key lending rate a quarter-point to 3.25 percent on Oct. 6.

New Zealand central bank Governor Alan Bollard, who has kept the official cash rate at a record low since April, last week said a strong currency isn’t an impediment to raising borrowing costs. Rate rises were not likely until ‘the latter part of 2010,” he said Sept. 10.

Trading Bets

Traders are betting Bollard will increase rates by 2.35 percentage points over 12 months, according to a Credit Suisse Group AG index based on swaps trading. The bank may raise rates as early as March, according to two of the economists surveyed by Bloomberg. Nine expect rates will be higher by June 30.

Key, 48, graduated from the University of Canterbury in 1982 and traded currencies for Elderbank and Bankers Trust Corp. before joining Merrill Lynch in Singapore in 1995. He ran the bank’s global foreign exchange trading from London until he returned to New Zealand in 2001.

Historically, the currency has never been “sustainable in the long-term” in the 75 to 80 cent range, Key said. The “difficult, unusual circumstances” make it impossible to predict a level for the currency, he said.

Climb

The kiwi dollar reached 82.13 U.S. cents in February, 2008, the highest since it started trading freely 23 years earlier. It has climbed 50 percent since reaching a six-year low of 48.97 cents on March 4 this year.

“It is not just the New Zealand dollar that is appreciating. You are seeing the same for the Australian dollar, South African rand, Swiss franc,” Key said. “In that regard, it is very difficult for New Zealand to do a lot actually to see our currency trade at lower levels against the U.S. dollar.”

While the New Zealand dollar is “a little bit overvalued” against the U.S. unit, it is undervalued against the currencies of all the country’s major trading partners other than the U.K., Westpac’s Stephens said.

The currency is gaining with global commodity prices and will improve its performance against the Australian dollar, he said. Concerns about U.S. inflation appear overdone and a “bounce upwards” for that currency is also possible next year, he said.

Tackling Deficits

Key, sworn in as New Zealand’s 38th prime minister in November 2008, said he believes his government will be more successful in reducing the country’s deficit. The government’s cash deficit was NZ$8.64 billion ($6.4 billion) in the year ended June 30, its first budget gap in nine years.

“The Treasury in New Zealand would tell you that we’re in for a decade of deficits, but the government is working quite hard to get on top of that,” he said, citing efforts to contain spending and boost public sector efficiency.

Key’s Nationals won New Zealand’s general election last November pledging tax cuts to revive the economy, which grew 0.1 percent in the second quarter, ending the country’s worst recession in three decades. His government is not now proposing any tax increases to plug the deficit. A technical group will present the government with a range of working papers, Key said.

“Whether any will be adopted, it is too early to tell,” he said. “We are at least looking at making sure the base of our tax system is sound.”

The economy began shrinking in the first quarter of last year, curbing company profits and increasing the cost of welfare and unemployment payments.

Net debt increased to NZ$43.36 billion, or 24.1 percent of gross domestic product, as of June 30. By 2014, debt servicing costs will double from 2008 levels to NZ$5 billion and will keep rising, Finance Minister Bill English said on Oct. 17.

Source

The Obama administration’s pay czar is imposing tough cuts on 175 big earners — but many on Wall Street are still on track for a banner payday.

Kenneth Feinberg, appointed the Treasury’s special master for compensation in June, has ultimate say over compensation for the top paid employees at the 7 most bailed-out companies: AIG (AIG, Fortune 500), Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500), General Motors, Chrysler, GMAC and Chrysler Financial.

In a policy announced Thursday, Feinberg demanded salary cuts of up to 90%, and total reductions — including stock and options — of 50%.

But Feinberg’s ruling does not impact other financial firms that are on track to pay out record bonuses, like Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).

Revenue projections for those firms keep rising, and analysts say bonuses will be back on track for another record year following a one-year dive in 2008. Goldman Sachs said last week that it set aside $16.7 billion for salaries, employee stock options and bonuses, which works out to about $526,814 per employee.

"The whole bailout situation has raised a lot of questions about fairness," said Eleanor Bloxham, chief executive of The Value Alliance and Corporate Governance Alliance. "It’s important to have similar rules for everyone, especially as we get into the broader issue of oversight."

Bloxham said compensation is a concern at every financial institution. Executives who are paid in large dollar amounts regardless of company performance could be inclined to make riskier bets.

The more than 600 companies that have received capital investments from the $700 billion bailout are subject to executive compensation curbs, including limits on perks and golden parachutes.

No bailout, no pay regulation … yet. Companies like Goldman and JPMorgan, which have paid the government back the billions of dollars in bailout funds they received from taxpayers, are no longer under the scrutiny of Treasury.

For those companies and others that never received TARP funds, lawmakers are examining other ways of regulating executive pay. A "Say on Pay" bill that would give shareholders the ability to issue a non-binding statement on executive compensation passed a House vote in August and is likely to land on President Obama’s desk in the coming months.

Financial firms have largely agreed executive compensation needs to be more closely aligned with performance, but almost all have said that they can handle the issue themselves.

"From my view, I’m a capitalist, I think it should be left to us," John Mack, chief executive of Morgan Stanley, told CNNMoney last week.

Others argue regulators need to have an even heavier hand in companies’ executive compensation decisions, especially since the government has played an important role in the success of those companies.

Even financial firms that have paid their TARP loans back are still benefiting from the bailout, as many of their counterparties are are able to do business with them thanks in large part to taxpayers’ capital investments.

"From a TARP perspective they paid their money back," bailout overseer Neil Barofsky told CNN on Wednesday. "I think there’s a frustration that they’re the beneficiaries of other government programs that have let these companies rely on cheap profits."

In a report released Wednesday, Barofsky said that market behavior and performance has been positively impacted by the massive infusions of government capital. As a result, banks are getting healthier, financial stocks are soaring, and bonuses are expected to hit a record in 2009.

Bloxham, for one, believes the government should have a role in restricting wildly out-of-whack pay packages. She suggests the SEC and the Fed should draft enforceable guidelines for executive compensation at companies that ensure businesses are not engaging in practices that could bring the whole financial system down.

Why only seven. The official reason is that the Treasury Department gave Feinberg the power to regulate pay at any of the companies that have received "extraordinary assistance" beyond the more than 600 firms that have gotten capital investments from taxpayers.

To be sure, those companies are a good start. AIG is probably the most reviled company in the world. Bank of America is under investigation for lying to its shareholders about bonuses. Once mighty Citigroup is in the process of splitting its business in two. And the automakers went through very public bankruptcies.

Some experts believe that the government is trying to make an example of these seven firms, hoping that others will fall in line.

"The government is trying to use these guys as examples for what other companies should do," said Ken Raskin head the executive compensation practice at White & Case. "Every layman has heard about these companies and most want to see government action on them."

"But to do the same for another 100 companies would be, perhaps, an insurmountable task," he added.

Raskin believes that Feinberg’s authority should end with the seven top banks, as the government would otherwise be perceived as overstepping its bounds, especially for companies that are not TARP recipients.  

Source

Nobel laureate Paul Krugman said China is devaluing its currency and undermining the global economic recovery by “stealing” jobs that otherwise would have gone to nations that aren’t growing as quickly.

By pursuing a weak-currency policy, China is siphoning demand away from other nations including poor countries, Krugman wrote in an article titled “The Chinese Disconnect” in the New York Times.

“In normal times, I’d be among the first to reject claims that China is stealing other peoples’ jobs, but right now it’s the simple truth,” the Princeton University professor said.

U.S. officials have been “extremely cautious” about confronting China on the issue, an approach that “makes little sense,” he said.

While the dollar has fallen 14 percent against the euro and 7 percent versus the yen since mid-March, China’s authorities have kept their currency little changed.

The U.S. economy would benefit if China began selling its “dollar hoard,” which Krugman says is currently worth about $2.1 trillion, because it would make American exports more competitive.

“With the world economy still in a precarious state, beggar-thy-neighbor policies by major players can’t be tolerated,” Krugman said. “Something must be done about China’s currency.”

Source

India should maintain an “accommodative” monetary policy until the economy recovers and inflation flares up, a top aide to the prime minister said, highlighting political pressures on the central bank to keep interest rates unchanged next week.

“The stance of monetary policy will have to change from its highly accommodative position,” said Chakravarthy Rangarajan, economic adviser to Prime Minister Manmohan Singh. “But that has to wait and that will depend on the growth performance of the economy and also inflationary pressures.”

Governor Duvvuri Subbarao said earlier this month that there is consensus within the Reserve Bank of India on the need to boost policy rates, while there is no agreement on the timing of such a move. The central bank’s next monetary policy statement is due to be released on Oct. 27 in Mumbai.

“Given the present signs of inflationary pressures, we have to act earlier than the U.S. and European economies” on interest rates, Rangarajan said today.

The Reserve Bank has kept borrowing costs at record lows after cutting its repurchase rate six times between October 2008 and April 2009 to help shield the economy from the global recession. The central bank left its key rates unchanged in July’s policy statement.

“In the short-term, managing inflationary risks, particularly food-price inflation, is the biggest challenge to be faced by our policy makers,” Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said at a news conference in New Delhi today.

Faster Inflation

The Economic Advisory Council forecast inflation to accelerate to around 6 percent by March 2010, more than the central bank’s 5 percent year-end estimate payday loans. The council also said India’s economy may expand 6.5 percent in the year through March, slower than the 8.7 percent average growth of the previous four years.

India’s economic growth is likely to slow in the current fiscal year due to the impact of the global recession and a reduction in farm output due to the weakest rains in almost four decades, Rangarajan said.

Total food grain production is likely to decline by 11 million tons in the current year to 223 million tons, compared with 234 million tons last year, the council said in a report. That will put pressure on food supplies, it said.

Rangarajan said stimulus measures introduced to protect India’s $1.2 trillion economy from the impact of the global recession must continue until the end of March 2010.

Interest-rate cuts and government tax reductions have together provided a stimulus worth more than 12 percent of India’s gross domestic product, according to central bank estimates.

“The stance of monetary policy will have to be calibrated taking into account growth prospects and the inflationary pressures,” Rangarajan said.

Overseas inflows into stocks may rise to $24.1 billion in the year to March and India may get foreign direct investment worth $36.9 billion. The council expects export orders worth $188.9 billion in the current year.

Source

New Zealand’s central bank will need to respond to increasing inflation pressure and raise interest rates in March, according to the nation’s biggest non-government fund manager.

“The odds are building for an earlier tightening,” Jason Wong, head of investment strategy at AMP Capital Investors Ltd., told reporters in Wellington today. “Come March, when you’ve had another 8 percent increase in house prices and some positive GDP and retail sales data, we can’t see the Reserve Bank sitting on their hands at that point.”

Reserve Bank Governor Alan Bollard has held the official cash rate unchanged at a record-low 2.5 percent since April and said on Sept. 10 he didn’t expect to raise the benchmark until “the latter part” of 2010. Two of 11 economists surveyed by Bloomberg News expect he will increase the rate in March and nine say it will be higher by June 30.

House prices have gained 7.9 percent since a low point in January, according to Real Estate Institute figures.

Consumer prices rose more than expected in the third quarter while non-tradable inflation, a core measure of prices that are not influenced by currency fluctuations and fuel, gained 1 percent, according to the report published on Oct. 15.

“If I was Bollard I’d be starting to nudge rates higher even though the inflation outlook for the next 12 months is okay,” said Wong, who helps manage NZ$10.8 billion ($8 billion) of stocks, bonds and property. “You want to start to take away that upward pressure on the housing market.”

Currency Gains

Wong says it wouldn’t be appropriate to raise rates this year because the New Zealand dollar’s 37 percent gain against the U.S. dollar in the past six months will curb inflation over the next year. Bollard’s focus is on inflation in a two-to-three year period, he said.

Bollard should also remove indications that borrowing costs could be lower at the next review on Oct. 29.

“Indicating rates could fall is not credible so they need to change the tone a little bit,” Wong said.

New Zealand’s strengthening currency is affecting some exporters, while other companies are able to benefit because the cost of imported goods is reduced, Wong said. The currency rose to 75.76 U.S. cents today, nearing a 15-month high.

There is nothing to suggest the currency is going to suddenly reverse its gains, and it could move higher, he said. It reached a 23-year high of 81.3 cents in February 2008.

Commodity prices are supporting the New Zealand dollar while the U.S. dollar “has got a lot going against it,” Wong said. “Were the Australian dollar to go to parity, then clearly we are going to go above 80 cents.” The Australian dollar was trading at 92.95 U.S. cents at 1:40 p.m. in Sydney.

New Zealand companies, who for years were used to the local currency fluctuating above and below 60 U.S. cents, may have to get used to something higher, Wong said. “Seventy may be the new 60.”

Source

Luxembourg’s Jean-Claude Juncker, who heads the group of euro-area finance ministers, warned that further gains by the European currency could threaten the region’s recovery from the deepest recession in six decades.

“I’m not too worried about the euro’s current level,” Juncker told a press conference today in Luxembourg, where he serves as premier and Treasury minister. “However, if the euro were to continue in the direction it did in the last few weeks, there’s a risk that there’ll be an exchange rate that could slow down economic recovery in Europe.”

The euro has risen 15 percent against the dollar in the past seven months, eroding export returns for European companies just as the region is starting to recover from the global slump. European Central Bank President Jean-Claude Trichet yesterday said it is “extremely important” that U.S. authorities pursue policies supporting a strong dollar and called excessive currency volatility “an enemy” of global economic stability.

The euro this week reached a 14-month peak against the dollar and Goldman Sachs Group Inc. yesterday projected that the European currency will advance to $1.55 in the next three to six months before retreating to $1.35 a year from now. The euro was down 0.4 percent at $1.4890 at 6:04 p.m. in London today, still up more than 10 percent in the past 12 months.

“I could become concerned at a certain juncture” in the euro’s rate against the dollar, Juncker told journalists today. “Don’t ask me where this juncture is exactly.” Juncker said the euro-area finance ministers will discuss the currencies at their next regular meeting, on Oct. 19 in Luxembourg.

Monday’s Meeting

Juncker said he “would suppose that in the course of Monday’s meeting we’ll address the subject together with the president of the European Central Bank.” The ministers also discussed the euro at their previous meeting, two weeks ago in Gothenburg, Sweden.

“We’ll tell you after the meeting if there’s something new to be said, a kind of extension to the normal poem,” Juncker said. “But I guess the poem will stay as the poem was,” adding that “we don’t like excessive volatility in exchange rates and disorderly movements.”

That echoed the view of Group of Seven finance chiefs, who met in Istanbul on Oct. 3. “Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” the G-7 ministers and central bankers said in a statement after the meeting, repeating language they used in April.

Source

European consumer prices fell for a fourth month in September as energy prices dropped and companies cut jobs and reduced costs to weather the global economic slump.

Prices in the 16-nation euro region declined 0.3 percent from a year earlier after falling 0.2 percent in August, the European Union statistics office in Luxembourg said today. The September drop matched an initial estimate released on Sept. 30.

Lower energy costs have helped to push down consumer prices just as companies are reducing spending to survive the worst recession in at least six decades. Job cuts have pushed Europe’s unemployment rate to a 10-year high. European Central Bank President Jean-Claude Trichet said on Oct. 8 that the economy will recover “at a gradual pace” with inflation seen turning positive “in the coming months.”

“Economic activity is unlikely to be strong enough to generate significant inflationary pressures for some considerable time,” said Howard Archer, chief European economist at IHS Global Insight in London. “There is a compelling case for the ECB to retain an accommodative stance for many months to come.”

Energy prices slid 11 percent in September from a year earlier, according to today’s report, while the transport industry showed a 3.7 percent drop. Housing prices declined 1.6 percent, while food dropped 1.3 percent in the year.

Core Inflation

The core inflation rate, which excludes volatile energy and food costs, fell to 1.2 percent in September from 1.3 percent in the previous month, the report showed. That was the lowest since February 2006.

The ECB expects euro-area inflation to average about 0.4 percent this year and around 1.2 percent in 2010. The Frankfurt- based central bank aims to keep inflation just below 2 percent over the medium term.

Companies may gain more leeway to pass on costs with the economy gathering strength. European confidence in the economic outlook increased to a one-year high last month and a gauge of euro-area manufacturing and services industries showed a stronger expansion than initially estimated.

Confidence in the world economy increased for a third month in October, a Bloomberg survey of users on six continents showed yesterday. The Bloomberg Professional Global Confidence Index rose to a record 61.7. In Germany, Europe’s largest economy, business sentiment is at a 12-month high.

Consumer-Electronics Maker

Royal Philips Electronics NV, Europe’s largest consumer- electronics maker, yesterday unexpectedly reported a profit for the latest quarter after the Amsterdam-based company eliminated jobs and lowered costs. Rome-based Bulgari SpA, the world’s third-largest jeweler, said on Oct. 9 that sales improved over the past three to four months.

The ECB has purchased covered bonds, provided banks with unlimited cash over 12 months and earlier this month kept its benchmark rate at a record low of 1 percent to stimulate lending. The central bank last month raised its economic forecasts to predict a contraction of around 4.1 percent this year and an expansion of about 0.2 percent in 2010.

With some of the region’s largest companies including Royal Dutch Shell Plc and Bayerische Motoren Werke AG cutting jobs, consumers may remain reluctant to boost spending, which could curb the recovery. The jobless rate is currently at 9.6 percent, the highest in a decade.

“Companies are still cutting costs and are not yet able to push through higher prices,” said Christoph Weil, an economist at Commerzbank AG in Frankfurt. “There’s no inflation pressure anytime soon.”

ECB council member Christian Noyer said on Oct. 13 that the “moment hasn’t arrived” for the ECB to start withdrawing unconventional measures. Trichet said earlier this month that it would be “premature today to think that the crisis has been overcome and conquered in a sustainable manner.”

The statistics office will publish an estimate for October consumer prices on Oct. 30.

Source

Henderson Land Development Co. said it sold a duplex apartment in Hong Kong for a record price, hours after city Chief Executive Donald Tsang signaled the government may release more land to deflate a property bubble.

The apartment, on the 68th floor of Henderson’s 39 Conduit Road development, fetched HK$439 million ($57 million), or HK$88,000 a square foot excluding parts of the building shared by all residents, the company controlled by billionaire Lee Shau-kee said today. Henderson said it may ask HK$100,000 per square foot for two penthouses on the 88th floor.

Last year, the fewest apartments were completed since at least 1972. Prices, especially for luxury homes, have rallied in 2009 on record-low interest rates and an influx of money from China. The government is Hong Kong’s biggest provider of land and has altered supply to support or depress prices.

“The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in purchasing a home and the possibility of a property bubble,” Tsang said in his annual policy address.

Tsang, 65, said his administration will closely monitor “market changes” and may direct the Urban Renewal Authority and subway operator MTR Corp., both controlled by the government, to bring readily-available building sites to market.

Tsang, Hong Kong’s leader since 2005, may be concerned the luxury-market boom will fuel wider price increases, Centaline Property Agency Ltd. analyst Wong Leung-sing said.

‘Social Issue’

“He’s more concerned whether mass-market housing prices would get pulled up by the momentum in the luxury market,” Wong said. “If that happens, it’ll become a social issue.”

Instead of changing the government’s land-sales system, Tsang is more likely to have the MTR speed up the sale of suburban land, Wong said. The MTR develops sites around its stations in ventures with developers and uses the proceeds to help pay railway construction costs.

The city’s Hang Seng Property Index, which includes six companies, climbed 1.6 percent today, taking this year’s gain to 66 percent. The benchmark Hang Seng Index rose almost 2 percent and has advanced 52 percent this year to a 14-month high.

Billionaire Owners

Hong Kong, where property companies owned by billionaires including Henderson’s Lee and Cheung Kong (Holdings) Ltd.’s Li Ka-shing account for about 10 percent of the benchmark stock index, stopped supplying new land in 2002 during a seven-year property rout. The government started a new system of land auctions in 2004, after prices stabilized.

Hong Kong brokers typically count a portion of the common areas when they price properties. On that basis, the price for the 6,158 square-foot (572 square-meter) home on Conduit Road came to the equivalent of HK$71,280 a square foot, according to Thomas Lam, Henderson’s general manager for sales.

One Hyde Park in London set the previous record of 6,000 pounds (HK$74,318 or $9,590) a square foot, Lam said at a press conference in Hong Kong today.

Sun Hung Kai Properties Ltd., the world’s largest developer by market value, last month raised the asking price of two penthouses in Hong Kong by 50 percent to a record HK$75,000 a square foot, including a share of common areas in the building, as demand surges for luxury apartments.

Housing completions in Hong Kong have been lower than initial government projections in the past two years. Builders finished 8,780 units, fewer than the forecast 10,980 last year, and 10,470 in 2007 against the forecast 12,740, the Rating and Valuation Department said in March. It then estimated completions at 14,740 for this year.

Policy Changes

Tsang announced policy changes aimed at promoting the redevelopment of old industrial buildings, which have fallen into disuse as companies use cheaper factories in China instead.

Hong Kong is determined to improve air quality and will promote the use of electric cars and energy-saving light bulbs, according to Tsang.

While Shanghai has been designated by China as a center for financial services and trade — two of Hong Kong’s main industries — the development of the two cities can be cooperative, Tsang said. For example, Hong Kong can help China develop its offshore yuan business.

Hong Kong’s economy will keep improving this year, Tsang said.

Source