WCA January 2008

From the americas

the Pacific, there are few players, and prices are seen as unusually high. He added that there is a glut of cable- laying ships, so the cost of building a new link to Asia has come down. As to rivalry on the home front, Mr Hansell observed that a Google cable would again pit the company against Verizon, which has fought Google’s approach to the new wireless spectrum auction in the United States. Verizon is part of a group of Asian carriers that is building a $500 million cable between the US and China. Newly energised US computer maker Dell enlists help in China Dell Inc, the American computer manufacturer and tech- nology company, has signed a deal with Gome Electrical Appliances Holding, the largest electronics retailer in China, for the sale of Dell products there. Dell (Round Rock, Texas) also said it will staff some of the more than 700 Gome stores selling personal computers across China. Dell began selling its latest line of PCs and notebooks in about 50 major metropolitan Gome stores in early October, and said it would ‘significantly’ expand its effort to win over the Chinese consumer into the early part of this year. Writing in Computer Business Review (25 th September), Rhonda Ascierto noted that Dell’s new vigour in one of the world’s fastest-growing economies is part of founder Michael Dell’s larger turnaround strategy for his company, which in 2006 lost its market-share leadership to Hewlett- Packard Co. In their most recent fiscal quarters, HP (Palo Alto, California) reported growth in revenue for its PC business of 13%, compared with 3% for Dell. In China, Dell will face competition from the country’s number-one PC maker Lenovo Group, the company that bought IBM’s struggling PC business for $1.25 billion; and HP, the second-largest PC maker in the country. Dell’s retail effort in China, taken together with its recent deals in Japan and Russia, reflects the intensified global competition in the PC industry. Market researcher IDC forecasts that PC shipments in the US will grow just 2.7% this year, while international shipments will rise 14.2%. Ms Ascierto wrote: “US-based PC maker Gateway for years has been struggling to keep afloat, and [in August] agreed to be bought by Taiwanese rival Acer for $710 million. Acer, which is currently the fourth-largest PC maker, said the acquisition would push its brand beyond Taiwan and displace Lenovo in the number-three market slot.”

of the technology stock bubble, amounting to a compound annual increase of 15%. But he also observed that, in the current world environment, this is not a particularly impressive showing. In fact, Mr Norris said, “Nearly every other stock market in the world has done better.” (‘Strong Gains in US, Except by Comparison,’ 13 th October) Of the 83 countries for which records of a major stock index were available, the American share price increase in the five years from 9 th October 2002 was better than those of only four small Caribbean or Latin American countries. And South America produced three of the six best-performing markets during the period, in Peru, Brazil, and Colombia. Peru’s annual gain of 87.5% was the best in the world. That all 83 markets around the world had an increase was attributed to the strength of the global economy and the willingness of investors from around the world to pour money into markets, many of them new, on every continent but Antarctica. This has reconfigured the markets at the top. Of the Group of 7 traditional industrial powers, only Germany made it into the top half of markets, ranking 39 th with a 34.3% annual gain. Japan and Britain joined the US in the bottom ten. Some notable annual stock-market gains over the five- year period were: Russian RTS Index, 43.8%; Shanghai composite index in China, 32.6%; Ukraine, 83.7%; and Bulgaria, 77.1%. The market that came in 24 th – between Norway and Austria – is Vietnam, where the Ho Chi Minh index rose at an annual rate of 42.6%. While these results indicate the extent to which stock market capitalism has been embraced around the world, Mr Norris pointed out that many of the national stock markets are still very small; even a small infusion of foreign capital can drive them up quickly. The Ho Chi Minh index has only 118 companies, many worth less than $1 million. Mr Norris also observed that the weak US dollar, in which the changes are shown, tends to enhance the returns in many countries. He wrote: “Markets in Britain and Italy, for example, doubled in terms of dollars, but not in pounds or euros.” Despite their public commitment to a strong dollar, officials in Washington seemed not unduly concerned as the dollar has neared record lows against the euro and weakened considerably against several other major currencies. The cheaper dollar benefits American exporters by making their products more competitive in many parts of the world. And, while a weak dollar usually makes imports more expensive, import prices have remained in check as foreign producers keep their prices low to retain market share in the United States. More worrying for the US than the weak dollar is the chronic issue of China’s tethering its currency to the dollar as its trade surplus swells further. Late last year, China’s foreign reserves had been climbing at a pace of $40 billion a month – twice as fast as in 2006. To keep the yuan from rising beyond a relatively narrow range, China’s central bank has stepped up its already huge purchases of dollar-denominated securities. ❖

Finance

International investors push the world’s stock markets past the US Writing in the ‘Off the Charts’ business column in the New York Times , Floyd Norris noted strong growth in the American stock market over the five years since the bursting

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Wire & Cable ASIA – January/February 2008