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Most Asian markets drop as traders brace for Fed hike

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The Federal Reserve's two-day policy meeting concludes on Wednesday
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Asia stocks mostly fell Tuesday as markets brace for a sharp US interest rate hike and similar moves by other central banks as they struggle to control inflation, with traders increasingly worried about another possible recession.

Surging prices, moves to tighten monetary policy, China’s Covid lockdowns, the Ukraine war and a stronger dollar have come together in recent weeks to cause a massive headache for investors, sending them running to the hills.

All eyes are on the conclusion Wednesday of the Federal Reserve’s two-day policy meeting, where it is expected to lift borrowing costs 0.5 percentage points for the first time since 2000.

However, while officials see a hawkish move as necessary to control 40-year high inflation while still allowing for economic growth, there is a growing unease that they could knock the fragile pandemic recovery off course and even cause a recession.

Meanwhile, the policy board is also expected to discuss offloading the trillions of dollars worth of bonds bought to help keep prices subdued in the past, a move known as quantitative easing.

“With a 50 basis point hike… all but certain, the (post meeting) press conference will provide important colour around the prospects of a soft landing, the neutral fed funds rate and balance sheet normalisation,” said SPI Asset Management’s Stephen Innes.

“One question on everyone’s mind: Are 75 basis point increments on the table?”

Forecasts for a swift run-up in rates this year have hammered tech firms who are reliant on debt to fund growth, though dup-buying helped them record a much-needed gain Monday in New York.

However, Asian traders were unable to track the positive lead with liquidity thinned out by public holidays around the region.

Hong Kong returned from a long weekend break to lead the retreat, shedding more than two percent at one point before paring those losses, following a more than four percent surge Friday.

Sydney also fell ahead of an expected interest rate hike by the Reserve Bank of Australia later in the day, while Taipei and Wellington were also down. Still, Seoul edged up slightly.

Tokyo, Shanghai, Mumbai, Singapore and Jakarta were closed.

Investors are also reeling from a sharp slowdown in Chinese activity caused by lockdowns in key parts of the country including financial hub Shanghai, and strict containment in Beijing.

The measures, and leaders’ refusal to shift from their zero-Covid policy, have hamstrung the world’s number two economy and figures in other countries including the United States suggest they are now having a global impact.

The strife in China continues to weigh on oil prices owing to fears about the impact on demand from the biggest crude importer.

That has offset bets on a European Union ban on 

Oil prices edged up as European Union chiefs discuss a possible embargo on shipments from Russia linked to its invasion of Ukraine.

A sanctions plan is being put together by the European Commission that could be put to member states Wednesday, sources, adding that the ban would be introduced over six to eight months to give countries time to diversify their supply.

– Key figures at around 0220 GMT –

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 20,980.03

Tokyo – Nikkei 225: Closed for a holiday

Shanghai – Composite: Closed for a holiday

Euro/dollar: UP at $1.0524 from $1.0506 on Monday

Pound/dollar: UP at $1.2521 from $1.2489

Euro/pound: DOWN at 84.05 pence from 84.09 pence

Dollar/yen: DOWN at 130.05 yen from 130.16 yen

West Texas Intermediate: UP 0.3 percent at $105.46 per barrel

Brent North Sea crude: UP 0.3 percent at $107.90 per barrel

New York – Dow: UP 0.3 percent at 33,061.50 (close)

London – FTSE 100: Closed for a holiday

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Italy’s ‘Motor Valley’ proves fertile ground for supercars

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Industry types and fans flock to Modena to talk business and admire the spectacular cars and bikes around town
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If Tuscany has Chianti, the Italian region of Emilia-Romagna has “Motor Valley”, an area that boasts one of the highest concentrations of luxury sports cars and motorbikes in the world.

The so-called Land of Motors, covering around 1,000 square kilometres of prime agricultural land roughly between Bologna and Modena, is home to Lamborghini and Ferrari, Maserati and Ducati, in addition to less well-known brands.

Every year — with a hiatus for coronavirus — industry types and fans flock to Modena for a weekend to talk business and admire the spectacular cars and bikes displayed around town.

Among those on show this year was a Pagani Huayra, a futuristic hypercar produced just a few kilometres away in Pagani’s base at San Cesario sul Panaro, where vehicles are made to measure — and start at a cool 2.6 million euros ($2.8 million).

Christopher Pagani, the son of the founder and communications chief, told AFP it takes between eight and nine months to manufacture a car, with customers normally waiting two years between order and delivery.

“In 2022 we are producing some 40 to 45 cars. They are all special because every customer has the opportunity to get in touch with us, visit us, and go on this journey,” he said.

In the factory — dubbed the “workshop” — a few dozen mostly young people work in the hushed and ordered environment of a science lab.

For the brand, weight is everything and they use 40 different types of carbon fibre, as well as titanium and aluminium to make the car as light as possible.

But Pagani said talks were underway with clients about a potential electric version, even if would be heavier due to the battery, as part of a trend towards greener vehicles.

– Best place to be –

Pagani’s father, Horacio, founded the company in 1998 after working at Lamborghini, another of Italy’s top luxury brands based in the area.

According to legend, Ferruccio Lamborghini, the wealthy owner of a tractor factory, turned his hand to sports cars in the 1950s after complaining about the Ferraris he owned.

Enzo Ferrari is said to have told him that if he didn’t like what he made, he should go and build his own.

Ferrari’s Maranello site is located outside Modena, while the region also boasts Dallara, which provides cars for IndyCar racing in the United States, and motorbike firm Energica. 

“The success dates a long way back, it is the fruit of several generations,” said Andrea Corsini, who handles transport, infrastructure and tourism for the Emilia Romagna region.

The name “Motor Valley” alludes to California’s Silicon Valley, where a grouping of tech companies drew talent and cash.

Here, manufacturers found a ready skills base among farmers who, in the immediate aftermath of World War II, had to learn to repair their own machinery.

Today, the area comprises 16,000 companies, four racing tracks, six training centres, and employs more than 90,000 people, according to think tank Riparte l’Italia.

“In terms of job opportunities and contacts with companies, this is the best place to be,” said 24-year-old Emilio, studying car engineering in the south of Italy, who came to Modena for the weekend.

The sector records a turnover of 16 billion euros a year, of which seven billion is in exports, and is in good health, with Bugatti, Ferrari, Lamborghini, Bentley and Porsche all posting record results in 2021.

It was also here that Bugatti produced in the early 1990s its celebrated B110 GT, sold for a staggering 500 million lire (around 260,000 euros at the time).

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Japan tax official arrested over Covid-19 aid fraud

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Reports said the alleged fraudsters had stolen a total of 200 million yen ($1.54 million)
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A Japanese tax official was arrested over his alleged involvement in a fraud ring that recruited 200 people to steal $1.5 million of Covid-19 aid, media and police said Thursday.

The 24-year-old and his friends are accused of convincing people to apply for government subsidies for business owners through deception, according to public broadcaster NHK and other outlets.

They reportedly lured around 200 participants — mostly university and high-school students — through a messaging app, promising that the money would be invested in cryptocurrency.

A Tokyo police spokesman told AFP a “24-year-old public servant” was arrested Wednesday “for fraudulently obtaining money under the name of virus subsidies”, along with a 22-year-old who worked for an unnamed company.

Reports said the alleged fraudsters are suspected of stealing a total of 200 million yen ($1.54 million), but the initial arrests are for a smaller amount of around one million yen, with the rest under investigation.

Five other people, all in their 20s, have also reportedly been arrested over the case.

The scheme’s mastermind may still be on the loose, however, with police chasing a man in his 30s who left Japan for Dubai in February, according to the Yomiuri Shimbun daily.

It is not the first time Japan has seen scandals over financial aid for people struggling during the pandemic.

Last month, a man given $360,000 in error was arrested after saying he gambled away the money online, while this week, three family members were reportedly arrested for illegally receiving 960 million yen in Covid-19 aid. The father is on a wanted list after fleeing to Indonesia.

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Stern South African childhood fuelled Musk’s ambition, says father

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'I was a strict father,' says Errol Musk
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Elon Musk knows how to dominate a news cycle, but for all the coverage of the world’s richest man, the tech billionaire’s early life in apartheid-era South Africa remains sketchy.

Amid Musk’s roller-coaster pursuit of Twitter, his father Errol Musk told AFP in an interview that he had tried to raise his sons “as South African boys”, instilling in them the same discipline he learnt in the military.

“I was a strict father. My word was the law. They learnt from me,” the 76-year-old said.

He said that even as a pre-schooler, Elon had set his sights on becoming the wealthiest man alive, crediting that uber-macho “South African boy” upbringing with driving his ambition.

“It’s part of the way we lived, the way I lived. We strove to be the best we could,” he told AFP in an interview from his home in the quaint oceanside town of Langebaan, 120 kilometres (70 miles) from Cape Town.

“I strove to be the best in the type of business that I was in,” the retired engineer and property developer said.

“It’s sort of our make-up. So we sort of expect that.”

Musk was born in Pretoria on June 28, 1971, to Errol and Maye, a Canadian model and dietitian who grew up in South Africa. 

He was the oldest of three children, closely followed in age by his brother Kimbal and sister Tosca.

He left South Africa at the height of apartheid to avoid the unpopular army draft.

After his parents’ acrimonious divorce, Elon decided to live with his father — taking an overnight train alone when he moved in.

“I go down to Johannesburg Station and there was this little Elon, beaming face, come up on the train by himself, nine years old,” his father recalled.

Yet Elon has said on numerous occasions that he had an unhappy childhood.

As an adult, father and son suffered a major split when Errol had a child in 2017 with a stepdaughter four decades his junior.

“Elon thought that was not very good. From my point of view, I take life as it comes,” the elder Musk said.

But he says their relationship has since improved. 

“We care about each other,” Errol said.

– ‘Typically Elon’ –

Errol says his son has always been unusual — long before his controversial outbursts on Twitter.

As a child, Elon spoke without a filter, played pranks and often joined adult conversations, he recalled.

“Even as young as four years old, he would tend to sit with adult people,” said Errol.

He recounted one occasion when “one man said to him, ‘Hey little chap, why don’t you join the kids and run around?’ And he’d say, ‘No, I prefer to listen to you’.”

When young Elon announced that he planned to be a millionaire, his father remembered, another adult scoffed at the boy.

He remembered “this man laughing, holding his drink and cigarette and saying, ‘When you grow up you’ll see. It’s not like that… you’re going to be disappointed’.”

Elon responded, “‘Well, I think you’re stupid’,” said Errol.

“That’s typically Elon,” said the father.

He also recalled a time when Elon made a hurtful comment to a schoolmate about his father’s suicide.

The boy pushed Elon down a staircase at school, injuring him so badly he had to be hospitalised.

When he heard what had happened, Errol wanted to defend his son.

“But I realised Elon overstepped the mark with this little boy. I had to drop it,” he said.

After that incident, Errol moved Elon to the prestigious Pretoria Boys High School.

One of the school’s ex-headmasters confirmed to AFP that Elon had donated one million rand ($64,500, 60,000 euros) to his alma mater.

– ‘Very caring’ –

The donation was organised through Musk’s assistant. That’s also how his father communicates with him.

During the interview with AFP, Errol received what he said was an email from Elon offering to pay for recent eye surgery.

“Elon is a very caring person. He really means it when he says that he wants to save humanity. This is not a slogan or some sort of pitch. This is real.”

Errol recalls his 70th birthday as another example of Elon’s generosity.

“I’m a South African man. I’m not concerned about my birthday. But it was very nice,” said Errol.

Unbeknown to him, Elon had invited a bunch of his celebrity friends, including Hollywood stars.

During the lunch, they discussed his support for former US president Donald Trump.

“They all had a good laugh at that, and how could I be so stupid as to support Trump?”

That was his last physical interaction with his son, six years ago. They rarely speak on the phone — something he says is not unusual. 

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