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Hong Kong Interests Buy New Zealand Power Firm

A Hong Kong company bought the power network of New Zealand's capital, and South Korea and India faced high inflation rates in April. Claudia Blume in Hong Kong has more on these and other business stories from the Asia-Pacific region.

New Zealand's largest electricity and gas supplier, Vector, has agreed to sell its power network in the capital Wellington to a Hong Kong company. Cheung Kong Infrastructure Holdings, Hong Kong's largest infrastructure company, will pay $615 million for the deal.

Auckland-based Vector said it will use the sale proceeds to pay off some of its more than $2.5 billion in debt. Warren Kyd, chairman of Auckland Energy Consumer Trust, which owns the majority of Vector, says the deal is good news for the company.

"We believe that it's going to strengthen Vector, it's going to do good things for its balance sheet," he said. "These are times of economic uncertainties throughout the world and we believe it fits ourselves very well in these uncertain times."

India's inflation rate has accelerated at its fastest pace in three-and-a-half years, reaching almost 7.6 percent in mid-April. The latest rise was mainly due to higher prices of food and metal products.

Taming inflation has become a top political priority in India, where hundreds of millions of the country's poor have been hit hardest by soaring prices for food and other commodities. The government has taken a number of measures such as banning the export of certain basic staple foods and raising the cash reserves of the Reserve Bank of India.

In South Korea, inflation also accelerated in April. Consumer prices rose at the fastest rate in almost four years, gaining 4.1 percent compared to a year earlier. The main reason for the hike was increased fuel costs.

The Bank of Japan decided to keep interest rates unchanged at half a percentage point, driven by worries about a global slowdown. Japan also announced last week that its industrial output fell by 3.1 percent in March compared to the previous month, reflecting the fragile health of the country's economy.

In other news from Japan, financial institutions in the country lost a total of almost $14.5 billion in the year to March because of the US subprime mortgage crisis. This is according to a report by Japan's Nikkei newspaper. The report says that the country's eight major banking groups alone are likely to post a combined subprime-related loss of more than $8.5 billion.