Despite economic predictions casting gloomy shadows on 2012, investors shrugged off S&P’s latest debt downgrades. France and Italy were amongst the countries whose ratings were slashed, but this did not do much to trouble markets. Indeed, France saw its CAC rise 0.9%, while Germany’s DAX rose 1.3% to close at 6,220.01.
In Singapore, strong year-on-year retail growth sales data in November saw markets make positive moves, despite the fact that growth did not meet expectations.
Much of the good news is due to the attention investors are paying to Greece’s debt restructuring. The country’s government is currently in talks with private creditors over potential write offs to Greek debt. The deal, aimed to swap current debt for new, lower obligations are part of the country’s current restructuring efforts. The deal is important as Greece’s seventh tranche of funds are dependant its success. Visit abcnews.com to learn more.
In other news, the war against illegitimate tax havens has reached new heights as the head of Britain’s Labour party, David Miliband, called for all tax loopholes to be closed. The Australian Taxation Office is also in the news, reporting that it would seek out tax evaders as the Australian government looks to recover growing amounts of tax debt. Previous calls over the last 10 years have revealed in excess of AUS$1 billion in withheld assets. These calls come on the heels of similar sentiments voiced last week by the US IRS. Such efforts have placed increasing pressure on governments around the world to co-operate in reigning in fraudulent assets. See relevant article in the Australian regarding this.
This is not the first fight against tax evasion waged by the UK and Australia governments. Neither are the initiatives by the OECD and the US tax department aimed at those using offshore banking and offshore companies as a means of engaging in illegal activities something new. Nevertheless, as we have outlined in other articles, the practice of setting up offshore bank accounts and offshore company registration is not illegal, if structured properly.
And finally, Hong Kong is still hailed as the world’s freest economy according to the latest edition of the Heritage Foundation’s doing business survey. The research praised the former British colony for handing excess tax revenue back to its citizens in the form of a rebate. Singapore was placed second on the list, while Australia, New Zealand and Switzerland rounded out the top five.
Hong Kong, however, continues to see property prices sliding. This week government officials withdrew a tender for a property development and also received less than the expected amount during a property auction. Rumors are abound that property prices will continue to drop, following the trend since 2009. Analysts cite increased borrowing costs and higher taxes as well as government land auctions for the drop in demand.
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