Business News

In this week's Business News: The Czech Republic leads the EU in the percentage of plastic packaging being recycled; Friday’s early trading saw the Prague bourse slump by 14 percent; the head of one of the companies building a new Hyundai factory in Northern Moravia has accused the company of cutting corners in construction; the seemingly endless Czech housing boom appears finally to be slowing down, according to experts in the industry; Czech trust funds are in their worst condition since the terrorist attacks of 9/11 and Czech anti-corruption police have accused a representative of a money-exchange company in Prague of laundering five billion crowns.

Czechs lead EU in plastic recycling

The Czech Republic leads the EU in the percentage of plastic packaging being recycled, according to the EU’s statistics body Eurostat. In 2006, Czechs recycled 44 percent of so-called Polyethylene terephthalate or PET plastics – the kind used for most basic grocery packaging. The figures are three percent higher than that of Germany, long considered to be the EU champion in recycling. The Czech Republic’s towns and cities have long had systems in place where people can deposit plastics as well as paper, glass and even milk cartons for recycling. In fact, these schemes have proven to be profitable for those that run them, as the materials are sold for a profit to recycling plants. According to EKO-KOM, a Czech company that co-ordinates recycling, 98 percent of Czechs have access to recycling bins, far exceeding current EU targets. However, the country still lags behind in terms of total recycled household waste – about a fifth is recycled compared to Austria and Germany which recycles roughly sixty percent.

Prague bourse fluctuates along with global markets

Photo: CTK

Friday’s early trading saw the Prague bourse slump by 14 percent, wiping out a slight recovery in stocks on Thursday. Trading has been volatile all week as global markets express unease over the financial crisis sweeping the world. CME, Erste Bank and Orco were the greatest losers losing about twenty percent of their stock value. Some media reports are already labelling the performance as “Black Friday” with Prague stocks faring the worst in the entire central European region. The Prague bourse has been declining all week long, with panic buying leading to volatility and large slumps in share prices. On Thursday, an announcement that interest rates would be cut appeared to calm the markets, which rose by almost 2 percent, but Friday’s trading suggests the long-term impact of the global turmoil is yet to recede.

Hyundai accused of building on the cheap

The head of one of the companies building a new Hyundai factory in Northern Moravia has accused the company of cutting corners in construction. Štefan Valíček, head of the Slovak company Kovo has publicly stated that the company used low-quality construction materials and that one of the factories could even collapse as a result. Hyundai has stated that it will investigate the claims, and if they are found to be false, sue Mr Valíček for spreading false rumours. Trial production is set to begin at the plant in November, although a full inspection of the site must still be undertaken by the authorities before a permit is granted and full production begins. The process is expected to take up to six months.

Czechs losing interest in purchasing flats

The seemingly endless Czech housing boom appears finally to be slowing down, according to experts in the industry. This year has seen a 30 percent decrease in Czechs seeking new apartments, while the long-term trend of property value increase also appears to be flat-lining. Some analysts are predicting a crisis as the global economic situation worsens, with property values falling by as much as twenty percent, according to experts. The largest decreases in value are expected to be in apartments that dot the outskirts of Prague, with areas in other parts of the country that have avoided recent price hikes affected less. The Czech Republic is having to come to terms with the prospect of lower economic growth than has been forecast, meaning lower take-home wages and a concurrent decline in the amount that people are willing to spend on new homes – plus a likely credit squeeze that makes getting mortgages more difficult. Meanwhile, those that are currently building new properties hopeful of riding the property boom, are likely to be disproportionately affected by the predicted decline, analysts say.

Trust funds lose eight billion crowns in September

Czech trust funds are in their worst condition since the terrorist attacks of 9/11, says the Czech daily Mladá Fronta Dnes. New figures show that in September, Czech trust funds lost around eight billion crowns in total. Trust funds, or unit trusts are a form of open-ended investment that are closely tied to the value of assets and are used by banks and share-traders to invest money. Several Czech companies such as Sporotrend (part of Česká Spořitelna) or ING International have lost a sizable chunk of their trust fund value in recent months as a result of the global financial crisis, with many funds having investments in foreign banks including those in Iceland, which are now in trouble.

Man accused of laundering five billion crowns

Фото: Штепанка Будкова

Czech anti-corruption police have accused a representative of a money-exchange company in Prague of laundering five billion crowns. Specifically, the 32-year-old, believed to be of Egyptian origin is accused of laundering more than 5.3 billion crowns gained through criminal activities, and transferring the money into bank accounts in China and Vietnam. The company involved is called “AktivChange” and police have said that they suspected money laundering activities have been happening there since 2005. Reportedly several people have been arrested in relation to the alleged crimes.