Stern Hu formally arrested, CommBank profit falls: Economy roundup

Prosecutors in China have now formally arrested the four Rio Tinto employees accused of espionage, the Xinhua news agency has reported.

Stern Hu and three colleagues, Liu Caikui, Ge Minqiang and Wang Yong, are now suspected of “using improper means to obtain commercial secrets about our country’s steel businesses”.??The employees have been arrested under Article 219 of the Chinese criminal code, which states that “Whoever engages in one of the following activities involving commercial secrets and brings significant losses to persons possessing the rights to those commercial secrets is to be sentenced to not more than three years of fixed-term imprisonment”.

“The commercial secrets referred to in this article are technical information and operational information unknown to the public that can bring economic gains to their rightful owners… and are kept as secrets by their legitimate owners.”

The Australian share market has opened flat today after negative results in the US, where investors are waiting for a wave of economic data from the Government and private entities.

The benchmark S&P/ASX200 index was up 5.9 points or 0.14% to 4337.9 at 12.00 AEST. The Australian dollar lost ground, moving back to US82c.

NAB shares lost 0.4% to $25.91, with ANZ also losing 0.9% to $19.51. Westpac gained 1.4% to $23.34, while Commonwealth Bank gained 2.1% despite some disappointing financial results.

Commonwealth Bank profits decline

The bank announced full year cash earnings declined 7% to $4.42 billion due to increased expenses over the year, and predicted further declines in credit growth during 2010.

“The Australian economy has been more resilient than many had predicted a year ago and it is pleasing to see that there is some evidence of the beginnings of an economic recovery and improvements in business and consumer confidence but there are still significant risks on the downside,” chief executive Ralph Norris said in a statement.

“Overall credit growth in Australia is expected to slow through 2010 and economic conditions are likely to remain challenging for the group and many of its customers in the coming year.”
Norris said the outlook for the economy will remain uncertain throughout the remainder of the year and 2010.

Meanwhile, property firm Stockland has recorded a full year loss of $1.8 billion, down from a $704.6 million profit in the pervious year.

“It has been a tough year and our FY09 results reflect the challenges we faced,” managing director Matthew Quinn said in a statement. The company has modified the value of its investment properties down to $1.13 billion.

“Throughout the year we have focussed on debt reduction, streamlining our business and driving cost and operational efficiencies to ensure we come out of the downturn in a strong position,” Quinn said.

“There are signs the economic downturn in Australia may not be as bad as expected and recent trading results in our business reflect increased consumer and business confidence.” he said.

Swan says Australia could still face recession

Meanwhile, in Parliament Federal Treasurer Wayne Swan has said Australia could still face a recession despite good news in recent economic data.

“Many could still lose their jobs or will enter the labour market but not be able to find work as a result of the global recession,” Swan said. His comments come after the NAB monthly business survey and the Dun & Bradstreet business expectations survey found businesses are more optimistic about the economy.

Swan said the data will have “obvious implications” for the Government’s official forecasts, but said there is still “the possibility of future negative quarters of growth”.

In the US, stocks fell after Rochdale Securities analyst Richard Bove released a pessimistic statement about the future of the banking industry. Investors are also nervous about financial results from large retailers, including J.C. Penny’s and Wal-Mart.

The Dow Jones industrial average closed down 96.28 points, or 1.03%, to 9,241.67.