Traders raced to price in the depreciation expectations after an unexpectedly sharp change in the official daily reference rate for dollar-yuan trading. Monday’s big drop follows signs that the slowdown in China’s economy is intensifying. Two separate purchasing managers’ indexes, which gauge business activity, showed a decline to record lows.

Allowing the yuan to weaken significantly against the dollar could help exporters, which have been battered by the Chinese currency’s appreciation as well as by slumping global demand and rising costs. A move to bolster exports could also mitigate rising unemployment in China and help avert social unrest.

But a sharply devalued yuan would be risky for China, potentially aggravating trade tensions with the U.S. and Europe, and increasing the prices of many imported goods in China. That could crimp domestic spending power at a time when Beijing says it wants to shift its economy toward domestic consumption.

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“That growth is gone,” he said. “Can the government make it up with something else? It’s going to be tough.”

By value, retail sales rose 0.3 percent in October from a year earlier to HK$20.8 billion ($2.7 billion), the government said today on its Web site, after gaining a revised 7 percent in September. That was less than the 3.4 percent median estimate of 12 economists surveyed by Bloomberg News.

Hong Kong has tumbled into its first recession since 2003 on weaker exports and domestic demand. The Hang Seng Index of shares has almost halved this year and luxury home prices have fallen 17.7 percent since June, according to the Centaline Property Agency Ltd.

“The outlook is more pessimistic,” said Joanne Yim, chief economist at Hang Seng Bank Ltd. in Hong Kong. “Sharp corrections in the stock and property markets have reduced wealth and damped consumer sentiment and spending.”

More than 172 million shoppers nationwide were out prowling for deals during the three-day weekend, according to the National Retail Federation’s 2008 Black Friday Weekend survey, conducted by BIGresearch. That is up from 147 million shoppers last year.

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Chief Executive Officer Chen Xiao will be acting chairman of Gome, which is “unconnected” to the probe, China’s biggest electronics retailer by stores said today. Huang and Chief Financial Officer Zhou Ya Fei, who was also replaced, are being investigated for “certain suspected economic crime,” Gome said in a Hong Kong stock exchange filing.

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The new measures came three weeks after Hong Kong’s flagship airline and Asia’s No. 3 carrier issued a profit warning due to slumping revenue and losses from hedging jet fuel costs.

Cathay Pacific will park two Boeing 747-400BCF freighters in California in January for a year and reduce cargo flights to Australia, North America and Europe, chief executive Tony Tyler told reporters at a media briefing.

‘We expect to post a more than $1 billion current account surplus this month and in December, too,’ Finance Minister Kang Man-soo said in a speech ahead of a government risk management meeting.

‘We expect a surplus next year

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The gargantuan efforts — one to finance loans for consumers, and a bigger one to push down home mortgage rates — were the latest but probably not the last of the federal government’s initiatives to absorb the shocks that began with losses on subprime mortgages and have spread to every corner of the economy.

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“It’s a good time to further internationalize renminbi business,” Yam said today in Beijing after meetings with Chinese government officials. “For example, we can expand the renminbi bond issuances in Hong Kong, extending them to more buyers and issuing institutions and allowing the volume of the bonds to be more market-oriented.”

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The average U.S. rate for a 30-year fixed mortgage ended the day at about 5.5 percent after falling to as low as 5.25 percent, according to Bankrate Inc. It was 6.38 percent this morning, North Palm Beach, Florida-based Bankrate said, based on a wider sampling than the so-called overnight rate published on its Web site.

The Fed said it will purchase mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae, a government agency that insures bonds. Today’s lower rates indicate the central bankers may have achieved their goal of bringing liquidity to mortgage markets, said Neal Soss, chief economist at Credit Suisse Group in New York and a former aide to Fed chief Paul Volcker.

“These are not the assets that have caused all the trouble — these are quality mortgages that have been orphaned because investors have been reluctant to part with cash,” Soss said in an interview. “The government stepping in to buy them up may hasten the day when we finally find a bottom in housing.”

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The company will issue a statement to clarify “their views on the rumors,” said Courtney Shike of Brunswick Group LLC, which has been hired by Gome to handle public relations. Gome spokeswoman Erika Xu, who declined to comment when contacted by e-mail today, said a statement will be issued through the Hong Kong stock exchange. Calls today to Huang’s wife Lisa Du, and Chief Financial Officer Zhou Yafei weren’t answered.

Gome’s Huang, 39, became China’s youngest self-made billionaire after building a single appliance outlet into the nation’s biggest electronics retailer by stores. Huang was detained and questioned by police over alleged “market manipulation,” Caijing magazine said in a report on its Web site today.

“If it didn’t suspend its shares, people would sell out today because the risk is too great,” Keith Li, Hong Kong-based vice president of research at CIMB-GK Securities (HK) Ltd., said by phone today. “Everyone will imagine the worst scenario.”

Huang may have manipulated shares of Shandong Jintai Group Co., a Chinese drugmaker that is controlled by his brother, Huang Junqin, Beijing-based Caijing reported.

While Gome will release its third-quarter results as scheduled today, it has canceled a planned post-earnings analyst call, Shike said.

Earlier Investigation

Eagle Property, indirectly owned by Huang, was earlier investigated by the government in a probe that ended in January 2007, according to Gome. In a previous report, Caijing said the investigation involved the illegal borrowing of at least 1.3 billion yuan ($190.3 million) from Bank of China’s Beijing branch and the subsequent failure to repay the loan.

Gome halted its Hong Kong-traded shares and Shandong Jintai also stopped its Shanghai-traded shares today. Gome’s stock dropped 3 percent to HK$1.12 last Friday, extending its 77 percent decline this year, compared with a 54 percent slide for the benchmark Hang Seng Index.

Suning Appliance Co., Gome’s rival, rose as much as 9 percent today to 15.99 yuan.

Huang was worth $2.7 billion after selling $300 million of shares this year, according to Forbes Asia.

Hurun Inc. on Oct. 7 ranked Huang the country’s richest man, worth $6.3 billion. Huang has topped Hurun’s China rich list three times in the past five years.

The figure, reported by state television Sunday, represents an avalanche of proposals by local leaders for new roads, airports, railways and other facilities. There was no word on how many might go ahead. But the announcement reflected the government’s focus on assuring companies and consumers about the scale of its response as it tries to shield China from a global slowdown by revving up domestic spending.

“People worry about China’s ability to support growth. By showing this number, the government certainly has demonstrated its ability to put together investment projects to hold up growth,” said Citigroup economist Yiping Huang.

King will pay $37 a share in cash for Alpharma in a deal the boards of both companies approved, according to a statement from both companies today. The amount is the same King had previously offered in a hostile takeover bid after Alpharma had rejected it as too low.

Alpharma’s chief executive officer, Dean Mitchell, said his board determined the combination “is in the best interest in our shareholders and provides them with immediate access” to the increased value of Alpharma, according to today’s statement.

About 73 percent of shares of Alpharma, of Bridgewater, New Jersey, had been tendered as of Nov. 21, the expiration date of the offer from King, of Bristol, Tennessee. The offer was extended to Dec. 19.

King and Alpharma are among a half dozen drugmakers racing to introduce the first long-acting painkillers that are resistant to traditional methods of abuse.

Alpharma’s morphine pill Embeda last week won the endorsement of a U.S. advisory panel. The drug appears less susceptible to abuse than existing long-acting drugs for chronic pain, Food and Drug Administration advisers said. King’s abuse- resistant drug, Remoxy, received a similar review by the panel.

Credit Suisse and Wachovia Securities are financial advisers to King, while Dewey & LeBoeuf LLP is legal counsel. Alpharma is being advised by Banc of America Securities LLC on the financial side. Simpson Thacher & Bartlett LLP is legal counsel.

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Light, sweet crude for January delivery was up $1.04 at $50.97 a barrel in premarket electronic trading. The contract fell 51 cents Friday to settle at $49.93 a barrel.

The advance comes after the U.S. government announced plans Sunday to inject another $20 billion into Citigroup and guarantee losses on more than $300 billion in bank’s troubled assets

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KUALA LUMPUR: The global economic and financial crisis has brought to the fore an underlying reality not sufficiently acknowledged — the emergence of China as a major world power whose weight is a critical factor in the international system, said Malaysia Airlines chairman Tan Sri Dr Munir Majid.

“There has been a strategic shift in the global balance of both hard and soft power. This must be recognised and made implicit in all the efforts toward stabilisation and economic recovery, including the critical stewardship of the global economic and financial system,” he said during a plenary session of the Global China Business Meeting in Barcelona yesterday. A statement quoting his remarks at the session was released here yesterday.

Dr Munir, who is also senior visiting fellow at the London School of Economics and Political Science, argued that the major economies needed hard cash to finance the trillions of dollars that are being thrown at the economic and financial crisis to achieve stabilisation and turnaround.

“China is not going to throw in good money after bad or just sit back to see its dollar stock of investments fall in value in domestic currency terms against underlying economies, currencies and returns that are weak and deteriorating,” Dr Munir declared.

His advice was that China must be brought into play in addressing global structural imbalances — twin deficits, consumption and savings, and not just asked to come up with money and to expand domestic consumption.

At the same time, he added, China has to be directly involved in the setting of standards in financial regulations. — Bernama

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