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NH Hoteles Sells 67% of Hotel Lotti in Paris for EU71 Million.NH Hoteles SA (NHH) sold the remaining 67 percent stake of the Paris-based Hotel Lotti to Hotel Costes for 71 million euros with a capital gain of 7.5 million euros, NH said in a regulatory filing today. NH said in February it agreed to sell a 33 percent stake in Hotel Lotti to Hotel Costes for 35 million euros. The total capital gain for NH from the transaction is 11.5 million euros, the company said. To contact the editor responsible for this story: Manuel Baigorri at [email protected] |
Middle East Crude Falls to Discount After Official Prices Raised.Crude oil from the Middle East for sale to Asia fell to a discount against its benchmark after producers raised official selling prices. Lower Zakum, produced by Abu Dhabi National Oil Co., dropped 6 cents to a discount of 3 cents a barrel to its official selling price, according to data compiled by Bloomberg. Qatar Land declined 11 cents to a discount of 8 cents a barrel, Bloomberg data showed. Both grades had their official prices raised this week to the highest against benchmark Dubai since May. The increases came as prompt prices for Dubai have risen compared with later dated supplies, a market situation known as backwardation that suggest demand is greater for immediate shipments. Dubai swaps for December narrowed to a premium of 92 cents a barrel today over January after reaching a two-week high yesterday of 96 cents, according to data from London-based brokers PVM Oil Associates Ltd. Oman crude for immediate loading increased $2.63, or 2.7 percent, to $99.82 a barrel, Bloomberg data showed. Dubai oil for loading in December rose 2.7 percent to $99.24. Murban for spot delivery climbed 2.5 percent to $103.85. Oman futures for December delivery gained 45 cents to $99.95 a barrel on the Dubai Mercantile Exchange at 4:59 p.m. Singapore time, with 1,246 contracts traded. The settlement price was $100.14 at 12:30 p.m. in Dubai. The November Brent-Dubai exchange for swaps, which measures the European marker contract against the Persian Gulf grade, widened 7 cents to $5.12 a barrel, according to data from PVM. The exchange for swaps for December rose 11 cents to $4.22. To contact the reporter on this story: Christian Schmollinger in Singapore at [email protected] To contact the editor responsible for this story: Paul Gordon at [email protected] . |
Natural-Gas Supply Probably Rose 96 Bcf, Bloomberg Users Say.The U.S. Energy Department’s natural- gas inventory report, scheduled for release at 10:30 a.m. in Washington , will show that supplies rose 2.9 percent last week, according to a survey of Bloomberg users. The government’s Natural Gas Storage Report will show that inventories gained 96 billion cubic feet in the week ended Sept. 30 to 3.408 trillion cubic feet, according to the survey. Natural gas for November delivery rose 1.3 cents, or 0.4 percent, to $3.583 per million British thermal units on the New York Mercantile Exchange at 10:20 a.m. Bloomberg compiles the anonymous survey based on estimates by at least 100 users each week. To contact the reporter on this story: Moming Zhou in New York at [email protected] ; To contact the editor responsible for this story: Dan Stets at [email protected] |
Gasoline Gains on ECB’s Debt Crisis Comments, Weaker Dollar.Gasoline gained as the European Central Bank outlined a strategy to shield regional banks from a potential Greek default and the dollar weakened. Futures, in the largest two-day rally since May 10, rose as European Central Bank President Jean-Claude Trichet said the ECB will resume covered-bond purchases and reintroduce year-long loans as the sovereign debt crisis threatens to lock money markets. The U.S. currency erased an earlier gain against the euro, increasing the investment appeal of commodities, and equities reversed losses. “They threw some things on the table for consideration in Europe and you’re looking at some positive runs in the equities,” said Fred Rigolini, vice president of Paramount Options Inc. in New York. Gasoline for November delivery rose 11.68 cents, or 4.6 percent, to settle at $2.686 a gallon on the New York Mercantile Exchange. Prices have gained 7.9 percent in two days. Futures extended gains as Sunoco Inc. shut units at its Marcus Hook refinery near Philadelphia, said two people with knowledge of the maintenance. The maintenance is occurring as gasoline imports last week slipped to the lowest level since at least 2004 and ConocoPhillips idled its Trainer, Pennsylvania, plant while it seeks a buyer. Gasoline imports to the U.S. East Coast fell last week to the lowest level since at least 2004, when the Energy Department began reporting regional data. November futures increased to a 7.75-cent premium over December contracts. ECB Move The European Central Bank’s move to keep euro-area banks afloat is buying governments more time to recapitalize them as Greece edges closer to default. German Chancellor Angela Merkel said policy makers “shouldn’t hesitate” if it turns out financial institutions are undercapitalized. “Some of the fears we saw earlier in the week seem to have abated,” said Gene McGillian , an analyst and broker at Tradition Energy in Stamford, Connecticut. The Standard & Poor’s 500 Index rose 1.2 percent at 2:45 p.m. The dollar lost 0.7 percent against the euro after earlier rising as much as 0.8 percent. “Maybe the downtrend is over but we have to wait for tomorrow’s jobs data,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. Employers added 59,000 workers to payrolls in September and the unemployment rate held at 9.1 percent, according to the median forecast of economists before tomorrow’s jobs report. The Labor department reported today that applications for jobless benefits increased by 6,000 in the week ended Oct. 1 to 401,000. Heating oil for November delivery rose 8.45 cents, or 3 percent, to settle at $2.8611 a gallon, the highest settlement since Sept. 27. Regular gasoline at the pump, averaged nationwide, fell 0.7 cent to $3.392 yesterday, according to AAA data. That’s the cheapest since March 1. To contact the reporter on this story: Barbara J Powell in Dallas at [email protected] To contact the editor responsible for this story: Dan Stets at [email protected] |
Dwarfs Are Better Off Tossed Than Jobless, Florida Republican Workman Says.Jobless dwarfs should have the option of being flung around a barroom for cash rather than standing in the unemployment line, according to one Florida state lawmaker. Representative Ritch Workman, a Melbourne Republican, has introduced a bill to undo a ban on “dwarf-tossing” as part of what he says is his mission to repeal overreaching and outdated laws from Florida’s books. Though the dwarf-tossing measure is not a “jobs bill,” he said, it may put a few people to work in a state where unemployment is 1.6 percentage points above the national average. Dwarf-tossing, a competition in which bar patrons see how far they can throw little people in protective gear, was banned in Florida in 1989 after opponents complained that it was dangerous and dehumanizing. While Workman, a mortgage broker, agrees that the practice is “offensive” and “stupid,” he also thinks the ban keeps willing projectiles from gainful employment. “If this is a job they want and people would pay to see it or participate in it, why in the world would we prohibit it?” Workman said in a telephone interview from Tallahassee. “In my world view, we have the freedom and liberty to do these kinds of things.” Amy Graham, a spokeswoman for Republican Governor Rick Scott , said in an e-mail that his office hadn’t reviewed the legislation “so it wouldn’t be appropriate for us to comment.” House Speaker Dean Cannon generally “supports efforts to remove laws from the books that may no longer be necessary or relevant, however the committee will have to decide if that is the case with this law,” Katie Betta, a spokeswoman, said in an e-mail. Support the Short Dwarfism is a medical or genetic condition that results in an adult height of no more than about 4 feet 10 inches, according to the Little People of America, a national nonprofit organization based in Tustin, California , that supports people of short stature. Workman’s bill would repeal provisions that prohibit holders of liquor licenses “from allowing the exploitation of persons with dwarfism.” Carolyn Fiddler, a spokeswoman for the Democratic Legislative Campaign Committee, said that the bill highlights Republicans’ lack of understanding of what drives employment growth. “It’s a really telling symptom of the larger theme that they push, which is that government is the greatest obstacle to job creation ,” she said in a telephone interview from Washington. “This shows how absurd that notion is.” Question of Humanity Almost 840,000 fewer Floridians are working than when employment in the state peaked in 2007. The unemployment rate in August was 10.7 percent, while the national rate was 9.1 percent. Legislators concerned about out-of-work dwarfs should focus on employment discrimination, said Leah Smith, a spokeswoman for the Little People of America. “There are many, many risks involved” with dwarf tossing, she said in an interview from Lubbock, Texas , adding that dwarfs are susceptible to spine problems. And, she said, “There’s a basic issue of humanity. What other population group would you toss?” To contact the reporter on this story: Simone Baribeau in Miami at [email protected]. To contact the editor responsible for this story: Mark Tannenbaum at [email protected] . |
Jobs Rose From Computers in Parents’ Garage to Technology Icon: Timeline.Steve Jobs was a college dropout who built computers in his parents’ garage in the mid-1970s with a friend, Steve Wozniak. They founded what is now Apple Inc. (AAPL) in 1976 to sell their creations. Apple, based in Cupertino, California, surpassed Microsoft Corp. in 2010 to become the world’s most valuable technology company. A timeline of Jobs’s career follows: Feb. 24, 1955: A boy is born in San Francisco to college graduate students Joanne Carole Schieble and Syrian immigrant Abdulfattah “John” Jandali. Jobs said in a 1997 New York Times Magazine article that he wouldn’t talk about his biological parents, citing privacy. He is adopted by Clara and Paul Jobs, who name him Steven Paul Jobs and raise him in the suburbs of Mountain View and Los Altos, California. 1972: Jobs graduates from Homestead High School, the Cupertino school that is also the alma mater of Wozniak, his future business partner. Jobs enrolls at Reed College in Portland , Oregon , and drops out after one semester. “The minute I dropped out I could stop taking the required classes that didn’t interest me and begin dropping in on the ones that looked interesting,” he said during a June 2005 commencement speech at Stanford University. 1974: Jobs returns to California and works as a designer at Atari Corp., the video-game company. He later travels to India in search of spiritual enlightenment. 1975: Jobs and Wozniak hang out at Homebrew Computer Club, an informal gathering of engineers and hobbyists who swap parts and ideas. The two show off the Apple I and Apple II computers at the club meetings, according to an article written by Wozniak. April 1, 1976: Jobs, Wozniak and Ron Wayne found Apple. Wayne, who worked with Jobs at Atari, gives up his 10 percent share of Apple less than two weeks later. April 16, 1977: Wozniak and Jobs introduce the Apple II, which becomes one of the first successful personal computers. May 1978: Jobs’ girlfriend, Chrisann Brennan, gives birth to a girl, Lisa Brennan-Jobs. Chrisann raises Lisa mainly on her own. Jobs later reconciles with Lisa. Dec. 12, 1980: Apple goes public at $22 a share. Adjusted for splits since then, the initial public offering price is $2.75. Apple closed yesterday at $378.25. February 1982: Jobs, 26, is featured on the cover of Time under the headline, “Striking It Rich, America’s Risk Takers.” He appears on the magazine’s cover more than a half dozen times. January 1983: Apple releases the Lisa, the first commercially sold computer with a graphical user interface. The Lisa, with a price tag of $9,995, is a commercial failure. January 1984: Apple announces the new Macintosh computer with an ad that airs only once, during the Super Bowl. The ad shows a woman throw a hammer at a giant screen as a voice reads, “On January 24, Apple Computer will introduce Macintosh and you’ll see why 1984 won’t be like ‘1984.’” The Mac, which sells for $2,500, becomes the first commercially successful personal computer to have a graphical user interface and mouse. September 1985: After being stripped of responsibilities amid a power struggle with Chief Executive Officer John Sculley and the board, Jobs resigns as chairman. He tells the board: “I’ve been thinking a lot and it’s time for me to get on with my life. It’s obvious that I’ve got to do something. I’m 30 years old,” according to Sculley’s book, “Odyssey: Pepsi to Apple.” Jobs soon starts NeXT Computer Inc., which builds high-powered educational computers. February 1986: Jobs buys George Lucas’s computer-graphics shop for $10 million and renames it Pixar Inc. March 18, 1991: He marries Laurene Powell at a hotel in Yosemite National Park. Their first child, Reed, is born in September, followed by daughters Erin in 1995 and Eve in 1998. February 1993: NeXT decides to stop making computer workstations and lays off more than half of its 540 employees. November 1995: Pixar releases its first feature film, “Toy Story,” which grosses more than $360 million and is nominated for three Oscars. In the same month, the company goes public. Jobs would say in a 1998 BusinessWeek article , “I think Pixar has the opportunity to be the next Disney -- not replace Disney |
Mexico Stocks: America Movil, Aeroportuario del Pacifico, Walmex.The following companies had unusual price changes in Mexico trading. Stock symbols are in parentheses and prices are as of 4 p.m. New York time. The IPC index rose 0.8 percent to 33,279.72. America Movil SAB (AMXL MM), the wireless carrier controlled by billionaire Carlos Slim , fell 1 percent to 14.58 pesos. The company had its recommendation cut to “hold” from “buy” at Banco Santander SA. Grupo Aeroportuario del Pacifico SAB (GAPB MM), the operator of airports in the Pacific and central regions of Mexico, rose 1.7 percent to 45.35 pesos. The company’s passenger traffic increased 3.6 percent in September from a year earlier, according to a filing yesterday with the Mexican stock exchange. Wal-Mart de Mexico SAB (WALMEXV MM), Latin America ’s largest retailer, climbed 1.8 percent to 33.01 pesos ahead of a report on same-store sales. The report, released after the market had closed, showed same-store sales rose 4.2 percent in September from the same month a year earlier. To contact the reporter on this story: Jonathan J. Levin in Mexico City at [email protected] To contact the editor responsible for this story: David Papadopoulos at [email protected] |
Russian Central Bank Hasn’t Started Buying Australian Dollars.Russia ’s central bank hasn’t started investing its reserves in the Australian dollar, Bank Rossii First Deputy Chairman Alexei Ulyukayev said today in an interview with Bloomberg Television in Moscow. To contact the reporter on this story: Caroline Connan in London at [email protected] To contact the editor responsible for this story: Paul Abelsky at [email protected] |
U.K. to Give $460 Million More in Child-Care Help to Part-Timers.The U.K. government will spend an extra 300 million pounds ($460 million) to subsidize child care for part-time workers in an effort to increase incentives for people to find jobs. An extra 80,000 households will be able to claim as much as 300 pounds a week toward child-care costs after the government said it would change the current rule that support is only given to those working more than 16 hours a week. The change will take effect in 2013. “We are determined to help more parents take their first steps into work,” Work and Pensions Secretary Iain Duncan Smith said in an e-mailed statement in London today. “Under the current minimum-hours rule, parents are trapped in state dependency without the child-care support they badly need -- providing yet another barrier to work.” To contact the reporter on this story: Robert Hutton in London at [email protected] To contact the editor responsible for this story: James Hertling at [email protected] . |
Russia Gasoline Prices as of October 3: Summary.Following is a summary of the gasoline weekly prices report from the Federal Service of State Statistics of Russia in Moscow: To contact the reporter on this story: Zoya Shilova in Moscow at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected] |
Shuaa Head of Brokerage, Research Shihabi Said to Have Left.Shuaa Capital PJSC head of brokerage and research, Walid Shihabi, has left the investment bank, said two bankers familiar with the matter, who declined to be identified because the move hasn’t been made public. To contact the reporter on this story: Tamara Walid in Abu Dhabi at [email protected] To contact the editor responsible for this story: Claudia Maedler at [email protected] |
Luxembourg to Take Stake in BIL as Dexia Negotiates Sale.Dexia SA (DEXB) is in exclusive talks to sell its Luxembourg unit to a group of international investors as the Franco-Belgian lender is broken up. The Luxembourg government will take a minority stake in Dexia Banque Internationale a Luxembourg SA, Finance Minister Luc Frieden told reporters today in Luxembourg. Talks are in an advanced stage and should be concluded by the end of the month, he said. Dexia would then review any potential offer, the Brussels- and Paris-based lender said in a separate statement. “Given the systemic character of BIL in Luxembourg, the Luxembourg state will enter as minority shareholder into the capital of this bank,” Frieden said. “We believe very strongly in the future of BIL. This is a project oriented to the future that will give the bank new perspectives.” The disposal is part of Dexia’s planned breakup, with the profitable assets such as Dexia Bank Belgium NV, DenizBank AS, Dexia BIL and the asset-management division being sold to free capital for a so-called bad bank holding Dexia’s troubled assets, leaving little value for shareholders. Belgium plans to nationalize the Belgian bank pending a sale, De Tijd reported today. Dexia fell as much as 16 percent in Brussels trading after Frieden announced the talks to sell BIL, erasing earlier gains. The shares declined 11 cents to 91 cents by 1:11 p.m. local time, for a market value of 1.78 billion euros ($2.38 billion). Sixth-Biggest Bank With assets of 32.3 billion euros and shareholder equity of 1.77 billion euros at the end of last year, BIL ranks as Luxembourg’s sixth-biggest bank, according to an annual report about the Luxembourg banking industry drawn up by KMPG Europe LLP’s subsidiary in the country. Net income at the unit fell 25 percent to 129 million euros last year. Tracking its origins to 1856, which makes it Luxembourg’s oldest bank, BIL offers retail, commercial and private banking services. The bank held about 12.6 billion euros of customer deposits last year, an 11 percent decline from a year earlier and dropping to fifth position, according to the KMPG report. Frieden said he couldn’t reveal the identity of the potential buyer and said the minority stake of the Luxembourg state is still subject to negotiations, adding that he doesn’t expect a transaction to result in a reduction in jobs. With a workforce of 1,854, BIL is the second-biggest employer in the country’s banking industry, after BNP Paribas SA’s unit. To contact the reporter on this story: Stephanie Bodoni in Luxembourg at [email protected] To contact the editor responsible for this story: Anthony Aarons at [email protected] |
S&P 500 Dividend Health, Forecast Changes for Oct. 6.The following table details daily changes in dividend forecasts and dividend health scores for companies in the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. For more information on the methodology, see the note at the bottom of the table. To contact the reporter on this story: Stephen Rose in Washington at [email protected] To contact the editor responsible for this story: Alex Tanzi at [email protected] |
IOI, Malaysian Planters Rise After RHB Upgrades Industry Rating.Malaysian plantation stocks, including IOI Corp., rose in Kuala Lumpur trading after the industry’s rating was upgraded at RHB Capital Bhd. (RHBC) , which said it offered “stable” earnings and “reliable” dividends. IOI rose 1.8 percent to 4.52 ringgit at 9:10 a.m. local time. Kulim Malaysia Bhd. (KUL) added 1.9 percent to 3.17 ringgit. The sector was raised to “overweight” from “neutral,” RHB wrote in a report. To contact the editor responsible for this story: Chan Tien Hin at [email protected] |
Bank of Portugal Quarterly Economic Forecast: Summary.Following is a summary of economic forecasts from the Bank of Portugal ’s quarterly report. * = Percentage of GDP SOURCE: Bank of Portugal To contact the reporter on this story: Harumi Ichikura in London at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected] |
ECB Says Banks Increased Deposits to Highest Since July 2010.The European Central Bank said financial institutions increased overnight deposits to the highest since July 2010. Euro area banks placed 221.4 billion euros ($295 billion) at the Frankfurt-based ECB yesterday, up from 213.2 billion euros yesterday. That’s the highest since July 12, 2010. Financial institutions borrowed 3.2 billion euros at the marginal rate of 2.25 percent, up from 1.4 billion euros the previous day. To contact the reporter on this story: Jeff Black in Frankfurt at [email protected] To contact the editor responsible for this story: Craig Stirling at [email protected] |
Malta August Industrial Producer Prices: Summary.Following is a summary of the August Malta PPI report from the National Statistics Office in Valletta: To contact the reporter on this story: Ainhoa Goyeneche in Madrid at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected] |
U.K. Key Monetary Policy Variables: Summary.Following is a table showing a range of monetary policy indicators for the U.K.: To contact the reporter on this story: Simbarashe Gumbo in Johannesburg at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected] |
Midmorning Negative EPS Surprises for U.S. Companies, Oct. 6.The following U.S. companies reported negative earnings surprises today. This list ranks percent surprises of actual earnings to earnings estimates. Earnings estimates provided by Bloomberg. * - Company in Standard & Poor’s 500 Index To contact the reporter on this story: Wendy Soong in New York at at [email protected]. To contact the editor responsible for this story: Alex Tanzi at at [email protected] |
Freddie Mac to Redeem 2.05% Notes Due 2015.The following issue is being redeemed via the company's call option: Issuer: Freddie Mac Coupon: 2.05 percent Maturity: Oct. 15, 2015 Redemption Amount: $100 million Redemption Price: 100 percent Amount Remaining: Fully Retired Security ID: 3134G1VK7 Effective Date: Oct. 15, 2011 |
Apple General Counsel Sewell Becomes Protector of Jobs’s Vision.If Steve Jobs was the creative force that made Apple Inc. (AAPL) ’s products hip, General Counsel Bruce Sewell is the authority in keeping competitors from copying those ideas. Hired from Intel Corp. (INTC) in 2009, Sewell, 52, has led Apple’s fight against mobile devices running Google Inc.’s Android operating system in lawsuits spanning four continents. His biggest role has been in coordinating the Cupertino, California- based company’s legal strategy against Android customers Samsung Electronics Co., Motorola Mobility Holdings Inc. and HTC Corp. (2498) Before Sewell, Apple rarely filed lawsuits, typically only targeting small companies making unapproved accessories for Mac computers or, as with the case against Nokia Oyj (NOK) , retaliating for a suit against it. Then came the iPhone. Jobs unveiled the iPhone in 2007, saying Apple had applied for more than 200 patents for the device and was ready to enforce them. Within six months of being hired in 2009, Sewell put those words into action when the company filed its first pro-active patent-infringement suit against an Android handset maker, seeking an order to ban some phones made by Taoyuan, Taiwan-based HTC from the U.S. Since then, Apple also has sued to stop sales of Samsung’s Galaxy phone and tablets, claiming the products “slavishly” copy the iPhone and iPad. Intel Antitrust Case A 1979 graduate of Lancaster University in the U.K. with a law degree from George Washington University in Washington, D.C., Sewell joined the law firm Brown & Bain in 1986. In 1995, he started at Intel, becoming general counsel a decade later. While at Intel, Sewell was in charge of defending against antitrust cases that accused the Santa Clara , California-based company of giving computer makers discounts in exchange for promises to use Intel chips exclusively. Sewell’s relationship with Apple goes back almost a decade. While at Intel’s business unit, he and Intel’s current chief executive officer, Paul Otellini, led two years of negotiations that prompted Apple to start using Intel microprocessors in its computers. To contact the reporter on this story: Susan Decker in Washington at [email protected] To contact the editors responsible for this story: Kevin Miller at [email protected] ; Allan Holmes at [email protected] |
Dubai Gold ETF Holdings Unchanged at 5,000 Ounces on Oct. 6.Gold holdings in the Dubai Gold exchange-traded fund were unchanged at 5,000 ounces as of Oct. 6, according to figures on the fund’s website. To contact the reporter on this story: Stephen Rose in Washington at [email protected] To contact the editor responsible for this story: Alex Tanzi at [email protected] |
Delphi Financial Said to Exit Race to Acquire Irish Life Unit.Delphi Financial Group Inc. dropped out of the race to acquire Irish Life & Permanent Plc’s life assurance unit as bidders prepare second-round offers within the next two weeks, according to two people with direct knowledge of the matter. The Wilmington, Delaware-based insurer, which specializes in employee benefits for companies, was among five parties short-listed by the Irish Life and its advisers Deutsche Bank AG for the business, three people with knowledge of the situation said Aug. 19. The others were a joint bid by U.S. leveraged- buyout firms JC Flowers & Co. and Apollo Global Management LLC as well as offers from CVC Capital Partners Ltd., the London- based private-equity firm, U.S. insurer Unum Group and Great- West Lifeco Inc.’s Canada Life Ireland, they said. Ireland’s government is forcing the breakup of Irish Life to recoup some of the cost of bailing out the Dublin-based lender’s unprofitable banking unit. The life unit had an embedded value, an estimate of a life insurer’s worth based future profits of existing policyholders, of 1.59 billion euros ($2.1 billion) at the end of June, according to the company. Bernard Kilkelly, vice president of investor relations at Delphi Financial, declined to comment yesterday. Irish Life spokesman Ray Gordon wasn’t available for comment. To contact the reporter on this story: Joe Brennan in Dublin at [email protected] To contact the editor responsible for this story: Edward Evans at [email protected] |
Most Latin America Countries ‘Well-Prepared´ for Crisis, Moody’s Leos Says.Most Latin American nations are well- prepared to confront a worsening debt crisis in Europe and slower growth in the U.S. as China ’s commodities purchases give the region a “minimum” level of economic support, Moody’s said. “We don’t anticipate ratings changes in the region,” said Mauro Leos , senior Latin America analyst for Moody’s, in an interview today in Buenos Aires. “Most countries are well- prepared” after suffering through earlier financial and economic shocks in the 1990s and 2000s, he added. Mexico, Colombia and Central America are likely to be hardest hit by any global slowdown as a result of their close ties to the U.S., Leos said in an interview today in Buenos Aires. Argentina, which hasn’t had access to international debt markets since a 2001 default, and doesn’t have a contingency credit line with the International Monetary Fund , has more limited options to face a global slowdown, Leos said. Growth forecasts for Latin America will likely be lowered through the end of the year and expansions will be below historic trends of about 4 percent in 2012, Leos said. China’s purchases of soybeans, copper, iron ore and other commodities, while stabilizing for the region’s economies, aren’t enough to outweigh a financial crisis in Europe and a U.S. slowdown, he added. Slower Growth The IMF said in a report yesterday that it expects Latin America’s growth to slow to 4.5 percent this year and 4 percent in 2012, compared with a 5 percent expansion in the first half of the year. Mexico, Brazil and Venezuela will lag behind the rest of the region, while Panama will post the fastest expansion of 7.2 percent, the report said. Policy makers in Latin America should be prepared to use interest rate cuts and consider fiscal measures to protect their economies in the event that the global economy stalls, the IMF said. Should recessions in Europe and the U.S. materialize and spill over to Asia, commodity producers in the region may face a “triple shock” from weaker terms of trade, declining exports and tighter global credit markets, the Washington-based lender said. Argentina, which hasn’t had access to international debt markets since a 2001 default on $95 billion of bonds, is less prepared than others in the region to confront an extended slowdown, said Gabriel Torres , Moody’s Argentina analyst. Peru Concerns Latin American nations such as Peru and Uruguay have strengthened institutions and follow more predictable policies that foster longer-term growth, Leos said during a presentation at a Moody’s conference in Buenos Aires. He cited investor concern about Peruvian President Ollanta Humala , a former ally of Venezuelan President Hugo Chavez, before he took office in July, as one example. “The so-called ‘bad’ candidate won in Peru and policies haven’t changed,” Leos said. To contact the reporter on this story: Camila Russo in Buenos Aires at [email protected] To contact the editor responsible for this story: David Papadopoulos at [email protected] |
Treasuries Decline on Speculation European Debt Turmoil Will Be Resolved.Treasuries dropped for a third day as speculation European leaders are stepping up efforts to resolve the sovereign-debt crisis pared refuge demand. Yields on 30-year bonds extended their increase from a two- year low after a report before tomorrow’s U.S. payrolls figures showed initial jobless claims rose less than forecast and Treasury Secretary Timothy F. Geithner said banks have strengthened. The European Central Bank will resume covered-bond purchases and reintroduce year-long loans for financial institutions to avoid a freezing of money markets. “With the slight optimism coming out of Europe , we are seeing some glimmers of what we could expect in the Treasury market if we get some type of reasonable policy response,” said Kevin Flanagan , chief fixed-income strategist in Purchase, New York, at Morgan Stanley Smith Barney. “There is still a lot of global issues to be worked through.” Yields on 30-year bonds increased 10 basis points, or 0.10 percentage point, to 2.95 percent at 5:04 p.m. in New York, according to Bloomberg Bond Trader prices. The 3.75 percent securities maturing in August 2041 fell 2 5/32, or $21.56 per $1,000 face amount, to 115 25/32. Yields slid two days ago to 2.69 percent, the lowest level since January 2009. A drop of almost one point in 10-year notes pushed yields up 10 basis points to 1.99 percent today, compared with a record low 1.6714 percent set on Sept. 23. Two-year yields rose one basis point to 0.26 percent. ‘Bring In Sellers’ “The markets have been pricing in a double dip, and the possibility of us not going down that route will bring in sellers,” said Jason Rogan, director of U.S. government trading in New York at Guggenheim Partners LLC, a brokerage for institutional investors. The Standard & Poor’s 500 Index advanced for a third day, rising 1.8 percent. Crude oil for November delivery increased 3.7 percent to $82.59 a barrel in New York. Geithner told the Senate Banking Committee the nation’s financial firms have strengthened and there’s “absolutely” no chance of another collapse like the fall of Lehman Brothers Holdings Inc. in 2008. U.S. government securities surged last quarter on speculation Greece was heading for a default and as the Federal Reserve announced its plan to replace shorter-term Treasuries with longer maturities to keep borrowing costs low. Yields on 30-year bonds decreased 146 basis points in the third quarter, the most since falling 164 basis points in the last three months of December 2008. Pimco Performance Bill Gross ’s Pacific Investment Management Co. Total Return Fund, the world’s biggest mutual fund, is trailing the Vanguard Intermediate Term Bond Fund, an index fund, as some of the top investors were blindsided by the bond rally. The Fed said on Sept. 21 that it would buy $400 billion of U.S. debt with maturities of six to 30 years through June while selling an equal amount of securities due in three years or less. It sold $8.87 billion of notes maturing from January to July 2012 today under what’s known as Operation Twist. The central bank has an “implicit target” for 10-year note yields of 1.50 percent or less, Dominic Konstam, global head of rates research at Deutsche Bank AG in New York, wrote in a report sent via e-mail yesterday. Mortgage rates in the U.S. have fallen, sending longer-term borrowing costs below 4 percent for the first time on record. The average rate for a 30-year fixed loan dropped to 3.94 percent in the week ended today from 4.01 percent, Freddie Mac said in a statement. That’s the lowest in the McLean, Virginia, company’s records dating to 1971. Jobless Claims Applications for jobless benefits rose to 401,000 in the week ended Oct. 1 from a revised 395,000 in the previous week, the Labor Department reported. The median forecast of 50 economists in a Bloomberg News survey was for an increase to 410,000 from a previously reported 391,000. Nonfarm payrolls climbed by 55,000 workers last month after zero growth in August, according to the median forecast of 91 economists in a Bloomberg News survey before tomorrow’s report from the Labor Department. “The big event of the week is going to be what we see in tomorrow’s jobs data,” said Ian Lyngen , a government bond strategist at CRT Capital Group LLC in Stamford , Connecticut. “The market doesn’t seem to want to take any big bets before that.” The Treasury Department announced today it plans to sell $32 billion of three-year notes, $21 billion of 10-year debt and $13 billion of 30-year bonds in auctions next week. Covered Bonds The ECB will spend 40 billion euros ($53 billion) on covered bonds starting next month and will offer banks two additional unlimited loans of 12- and 13-month durations, ECB President Jean-Claude Trichet said at a press conference in Berlin after policy makers left the benchmark interest rate at 1.50 percent. Trichet will be succeeded by Italy’s Mario Draghi when his eight-year term expires Oct. 31. The Bank of England ’s nine-member Monetary Policy Committee raised the ceiling for debt purchases known as quantitative easing to 275 billion pounds ($421 billion) from 200 billion pounds. That’s the biggest expansion since the first round of stimulus in March 2009. The central bank last announced an increase in its bond program in November 2009, and the purchases ended in early 2010. To contact the reporters on this story: Cordell Eddings in New York at [email protected] ; Susanne Walker in New York at [email protected] To contact the editor responsible for this story: Dave Liedtka at [email protected] |
Russia Says U.S. Approach to NATO Missile Defense System Is ‘Unacceptable’.Russia is alarmed at the U.S. decision to station four ships at a base on Spain’s Atlantic coast as part of an American-led NATO missile defense system, the Foreign Ministry said. The U.S. approach to developing its capability against missile threats in Europe is “unacceptable,” the ministry said in a statement published on its website today. Russia “cannot but be alarmed because already in the first phase it’s leading to a substantial buildup of the U.S. anti- missile capability in Europe,” the ministry said. Spain is the fourth European nation agreeing to participate directly in the Europe-wide missile defense program, intended to protect against attacks from adversaries such as Iran. President Barack Obama pursued U.S. plans for the system in 2009, and the administration has obtained agreements with Poland, Romania and Turkey to host elements of the shield. The Navy cruisers, equipped with Aegis radar, will operate from the Rota naval base in southwestern Spain, a facility built by the U.S. military in the 1950s and used by both countries, giving ready access to the Mediterranean in potential clashes. Russia has warned the U.S.-led plan may provoke a new arms race and upset a strategic balance in the region by threatening its nuclear deterrent capability. President Dmitry Medvedev on May 18 signaled that Russia may quit a nuclear-arms treaty with the U.S. if the two sides can’t reach an agreement on missile defense, provoking a return to Cold War levels of distrust between the countries. Russia wants guarantees that it won’t be targeted by the proposed missile shield. To contact the reporter on this story: Henry Meyer in Moscow at [email protected] To contact the editor responsible for this story: Balazs Penz at [email protected] |
Gambia Sells 101.5 Million Dalasi of T-Bills and Sukuk.Gambia’s central bank sold the following Treasury bills and sukuk at an auction yesterday ($1 = 34.85 dalasi): To contact the reporter on this story: Suwaibou Touray in Banjul via Accra at [email protected]. To contact the editor responsible for this story: Antony Sguazzin at [email protected] . |
Saudi Aramco Raises Light and Medium Oil-Price Premium for Asia to Record.Saudi Arabian Oil Co., the world’s largest crude exporter, set prices for two grades of crude to be sold to Asia at the highest premiums in at least 11 years and cut other for the U.S., Europe and the Mediterranean. The state-owned producer, known as Saudi Aramco, increased the pricing formula for its Arab Light crude to Asia by $1.05 a barrel to $2.70 a barrel above the average price assessment for Oman and Dubai grades, it said in an e-mailed statement yesterday. That is the highest premium in Bloomberg records going back to June 2000. Oman and Dubai assessments published by Platts are used as pricing benchmarks for Middle Eastern oil. Dhahran-based Saudi Aramco raised the price for its Arab Medium variety to $1.15 a barrel over the Oman-Dubai average, according to the statement. That’s also a record based on Bloomberg data and is up from a 30-cent discount to the benchmark in October. Saudi Aramco raised November official selling prices for Arab Heavy crude to refiners in the U.S., the Mediterranean and for loading from the Egyptian port of Sidi Kerir, according to the statement. The company cut the prices for Arab Heavy to Northwest Europe and for its Arab Medium grade to that region and the Mediterranean. Saudi Arabia and other Persian Gulf producers sell the bulk of their oil under long-term contracts. Most of the region’s state oil companies set their crude at a premium or discount to a benchmark price. The following table shows differentials for four regions into which Saudi Aramco sells in relation to benchmark prices, the monthly change and degrees of gravity as defined by the American Petroleum Institute. Prices are in dollars a barrel. To contact the reporters on this story: Anthony DiPaola in Dubai at [email protected] ; Yee Kai Pin in Singapore at [email protected] To contact the editors responsible for this story: Stephen Voss at [email protected] ; Paul Gordon at [email protected] |
Dexia Board Meets as France, Belgium Tussle Over Troubled Assets.Dexia SA (DEXB) ’s board meets today to study options to dismantle the French-Belgian bank that has brought Europe’s sovereign debt crisis to the heart of the region’s financial system. While France and Belgium have rushed to protect their local units, hurdles to an agreement remain as they wrestle over responsibility for assets hit by the crisis that has caused the bank’s short-term funding to evaporate. Dexia’s troubled assets are being folded into a “bad bank” and could amount to as much as 190 billion euros ($254 billion). Rescuing Dexia -- the first victim of the debt crisis at the core of Europe -- has become critical to preventing contagion in the region’s banking industry. Dexia’s balance sheet, with total assets of about 518 billion euros at the end of June, is about the size of the entire banking system in Greece and larger than the combined assets of financial institutions bailed out in Ireland in the last 2 1/2 years. “The governments have to reach a deal this weekend or we’ll see trouble on the interbank market ,” said Michael Rohr, a banking analyst with Silvia Quandt Research GmbH in Frankfurt. “Investors are looking at which banks have large public finance operations like Dexia.” Paris- and Brussels-based Dexia has retail branch networks in two European Union founding nations -- Belgium and Luxembourg |
N.Y. Gasoline Strengthens as Sunoco Plant Said to Shut Units.Gasoline in New York gained as Sunoco Inc. (SUN) was said to shut a reformer and low-sulfur gasoline unit for planned work at the Marcus Hook refinery in Pennsylvania. The units are expected to be offline for 11 to 15 days, said a person with direct knowledge of the maintenance who declined to be identified because the information isn’t public. Another person said the units would be offline between two and four weeks. The premium to New York-traded futures for reformulated, 87-octane gasoline in the New York Harbor region rose 1.25 cents to 13.75 cents a gallon at 11:37 a.m., according to data compiled by Bloomberg. Prompt delivery gained 6.63 cents to $2.7605 a gallon. The Marcus Hook reformer converts naphtha to feedstock for a UDEX unit. The equipment is collectively known as the 17- Plant, according to state’s Department of Environmental Protection. ConocoPhillips (COP) Bayway refinery in New Jersey reported flaring yesterday, according to a filing with state regulators. Imports of gasoline to the region fell 124,000 barrels to 397,000 barrels a day last week, the Energy Department reported yesterday. The shipments were the lowest since at least 2004, when the department began showing regional data. To contact the reporter on this story: Paul Burkhardt in New York at [email protected]. To contact the editor responsible for this story: Dan Stets at [email protected] . |
China Baby-Formula Maker Buying Arsenic Debt Reveals Unsecured Trust Loans.A Chinese baby-formula maker selling imported Australian milk to safety-conscious parents invested in the risky debt of lead, arsenic and cadmium refiners, seeking higher returns for its cash. The uncollateralized investment, sold by a middleman known as a trust, promises to pay Ausnutria Dairy Corp. about double China ’s benchmark savings rate. It’s an example of how companies are undermining government efforts to cool lending that has led to soaring property prices and inflation of 6.2 percent, near a three-year high. Chinese trusts, investment vehicles once championed by Deng Xiaoping , are part of a shadow-banking system that now accounts for about 50 percent of all new loans in the country, according to Fitch Ratings Ltd. They gained prominence after the central bank increased the amount of deposits banks have to keep on hand, limiting what they can lend. Ausnutria is typical of businesses investing in trusts, which make loans at rates as high as 25 percent, spreading the risk of a potential credit crisis. “When companies neglect their core business and start speculating in hot sectors they know nothing about, it’s a sure sign the market is out of whack,” said Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management in Beijing who has advised private-equity funds. Metals, Wine More loosely regulated than banks because they don’t hold deposits, trusts have attracted 3.7 trillion yuan ($582 billion) from investors with promises of high returns. At first, they bought debt from banks seeking to move it off balance sheet. They now invest in everything from metals refining to real estate, even bottles of fine wine. They’re also making loans, circumventing restrictions on lending between individuals and companies. Western banks including Edinburgh-based Royal Bank of Scotland Group Plc (RBS) , London-based Barclays Plc and Morgan Stanley in New York , as well as large Chinese companies such as China National Petroleum Corp., have bought stakes in trusts. Firms listed in Shanghai and Shenzhen have announced at least 100 trust loans this year through September totaling almost 23 billion yuan, according to Bloomberg calculations based on data supplied by Shanghai-based Wind Information Co. The average interest rate was 12 percent. Ausnutria, which expects a return of about 6 percent on its investment after fees and doesn’t hold any collateral against a default, according to company filings, said in an e-mail that the deal is “in the interest of the company’s shareholders.” ‘No Regulations’ Lending by non-bank institutions such as trusts, leasing companies and pawnshops, which accounted for 4 percent of loans in China in 2002, according to estimates by Barclays Plc (BARC) , could rise to 55 percent of the total next year, Fitch estimated in a July report. The ratings firm said all new lending in 2011 will increase to 18 trillion yuan from 16.5 trillion yuan in 2010. “Trusts are facilitating the movements of assets off the balance sheets of banks -- there are no regulations on where it can go,” said Charlene Chu, a Fitch analyst in Beijing who co- wrote the report. “When there aren’t enough guidelines, who knows what’s going into this stuff?” The shadow-banking credit boom could lead to a new pile of bad debt. Almost half the money managed by trusts is invested in infrastructure and real estate projects, according to figures from the China Trustee Association , an industry group. Local governments had 10.7 trillion yuan in debt borrowed through financing vehicles at the end of last year, according to a June report by China’s National Audit Office. Nearly a third of those entities are losing money, according to a study by Beijing-based analysts Zhang Xu at Guosen Securities Co. and Qiao Wei of China Asset Management Co. ‘Domino Effect’ Regulators have tried to curb a real estate boom by raising down payments on home loans and limiting purchases of housing in some cities including Shanghai, where prices have almost quadrupled in the past decade. Trust loans to developers increased 150 percent to 605 billion yuan in June from 235 billion yuan in March 2010, after a clampdown on bank lending, according to a report by UBS AG. (UBSN) The true figure is probably much higher, said Du Jinsong , a Credit Suisse Group AG (CSGN) analyst in Hong Kong , because trusts are bundling new real estate loans with other financing to get around orders from regulators. That leaves trusts vulnerable to defaults by developers under government pressure to ratchet down property prices, which could have a ripple effect on other parts of China’s informal lending system. “If trusts aren’t going to be sustainable, they’ll also stop lending to other industries,” said Du. “It could be the beginning of a domino effect for the whole shadow-financing system in China.” Debt Ratio Rising Lending is rising faster than China’s economy is expanding. The proportion of China’s total debt to gross domestic product, taking into account corporate, local government and household borrowing, increased to 188 percent in the first half of 2011 from 146 percent in 2008, according to analysts at Morgan Stanley. (MS) That’s an indication borrowers aren’t paying off loans as quickly as they’re getting them. “This points to a potentially significant rise in loan delinquencies,” Chu wrote in the Fitch report. The China Banking Regulatory Commission, which oversees trusts, has issued regulations to slow their growth, raising the capital they’re required to keep on hand relative to assets under management. Last year trusts were told to report on risks in their 2011 financial statements. The CBRC didn’t reply to phone calls or e-mails seeking comment. Premier Wen Jiabao called for greater oversight of non-bank loans, including collateral and capital requirements, in order to prevent risks from spreading, the official Xinhua News Agency reported Oct. 5. Ausnutria Deal The structure of Ausnutria’s deal is common to many trust arrangements. The company, based in the southern Chinese city of Changsha, is the country’s 13th-biggest pediatric-formula retailer by market share, according to London-based researcher Euromonitor International. Founded in 2003, Ausnutria listed in Hong Kong six years later. Sales of imported baby milk have climbed since 2008, after domestic formula tainted with the chemical melamine killed at least six children, and could reach 62 billion yuan by the end of this year, according to Euromonitor projections. In April, Ausnutria invested 200 million yuan in Yunnan International Trust Co., according to regulatory filings. The trust, based in Kunming, the capital of Yunnan province, and one-quarter owned by the local government’s finance department, used the money to buy four loans from China Merchants Bank Co., the country’s sixth-largest lender by market value. Two of the loans are to Hunan Nonferrous Metals Corp., a subsidiary of state-owned China Minmetals Corp. that refines lead, cadmium and arsenic. The other loans are to Chenzhou Diamond Tungsten Products Co. and Hunan Bismuth Industry Co. No Collateral After paying 1.5 million yuan in fees to Yunnan International, Ausnutria expects to earn at least 11 million yuan, the company said in filings. In March, Ausnutria netted 10 million yuan after buying loans of Hunan Provincial Expressway Construction and Development Co. in a similar deal with Hunan Trust and Investment Co., the company said. The returns aren’t guaranteed, and Ausnutria doesn’t hold any collateral, according to filings. That raises the question of who’s liable if a borrower defaults and the trust can’t deliver returns to clients. Hunan Nonferrous borrowed money from China Merchants and has no financing arrangements with trusts or Ausnutria, Janice Liu, a spokeswoman for the metals company, said in an e-mail. Parallels to 1907 Ausnutria conducted “a thorough study on the terms of the agreement and assessed the benefits and risks arising from the transaction prior to the investment,” Karl Cheung, a spokesman for the company, wrote in an e-mail to Bloomberg. He said the deal “is in the interest of the company’s shareholders.” He declined further comment. Executives at China Merchants didn’t respond to phone calls, and no one answered the phones at Yunnan International. The rise of trusts in China has parallels to the role they played in the U.S. bank panic of 1907, said Ellis Tallman, an economics professor at Oberlin College in Ohio and a former Federal Reserve Bank of Atlanta vice president. “Historically, there is always a tendency for innovation around financial regulations to get financing to rapidly appreciating assets,” Tallman said. Second Life This is a second life for trusts in China, which trace their origins to 1979, when the government, led at the time by Deng, founded China International Trust and Investment Corp. to attract foreign investment. By the 1990s, there were about 1,000 trusts owned by local governments that speculated in real estate using foreign money. After Guangdong International Trust & Investment Corp. defaulted on a $200 million bond in 1999 -- the first Chinese company to do so since the Communist revolution of 1949 -- Beijing unwound the businesses, and they mostly lay dormant until reforms in 2007. About 60 have been relicensed. One of the reconstituted trusts, Suzhou Trust Co. , was built on the rubble of an investment company owned by the government of Suzhou, an eastern Chinese city. In 2008, Lenovo Group Ltd., maker of ThinkPad laptops, and RBS, Europe ’s seventh-largest bank by market value, bought a 30 percent stake in the restructured trust from the city. “The investment in Suzhou Trust allows RBS to expand into China’s non-banking financial-services sector and broadened our presence in the world’s fastest-growing economy,” Sherry Liu, chairman and chief executive officer of RBS’s China operations said in an e-mail. Spokesmen for Barclays and Morgan Stanley declined to comment on their trust investments. Swelling Deposits In their revived form, trusts can’t take deposits or invest their own money. Instead, they’re supposed to act like asset managers for companies and affluent individuals. The trusts are tapping companies flush with cash following the government’s stimulus lending program, which helped the economy expand 25 percent over two years beginning in 2008. Bank deposits swelled more than twice as fast during the same period, by 53 percent, according to the International Monetary Fund. After China’s regulator imposed lending quotas in 2010, banks started pitching private wealth-management products such the ones being offered by trusts to investors, offering better returns than the government’s 3.5 percent benchmark deposit rate. In some cases, banks distributed loans repackaged by trusts directly to private-banking clients, promising rates of return of as much as 25 percent in text messages , according to trust executives. More Millionaires “Offers at 12 percent or 13 percent were common last year,” said Winston Ni, an entrepreneur in Shanghai who bought a 3 million-yuan stake in a trust that promised a 9 percent yield backed by a mall in Tianjin, a city 70 miles (113 kilometers) southeast of Beijing. The number of Chinese having more than 10 million yuan in investible assets will reach 585,000 this year, almost twice as many as in 2008 when the stimulus started, according to a study by consulting firm Bain & Co. “If you limit what banks can do, there’s still demand for loans,” said Zhang Liwen, president of Suzhou Trust, sitting in an office on the second floor of a cement-and-glass building on a leafy street in Suzhou, 50 miles west of Shanghai. “The market still needs capital.” Zhang presides over an empire that grew to 15.7 billion yuan in assets under management in 2010 from 11 billion yuan in 2009. By mid-2011, the fund added another 7.5 billion yuan, as affluent Chinese and other institutions invested in his products, including loans to businesses. Liquidity Worries Last year, Zhang invested 48.9 percent of Suzhou Trust’s funds in infrastructure, mostly bonds issued by financing vehicles set up by local governments that pay between 7 percent and 10 percent. The trust has since reduced its infrastructure investments and raised its holdings of real estate debt to one- third of the total, Zhang said. Government restrictions make him worry about liquidity, he said. His firm has run stress tests looking at the impact of a 50 percent drop in the value of its real estate holdings. There are signs the real estate market is already cooling. While new-home prices rose in August in all 70 cities monitored by the government, sales volume is falling in Beijing and Shanghai, according to SouFun Holdings Ltd., China’s biggest real estate website, which tracks 20 cities. Hungry for cash, some developers are borrowing at 12 percent to 25 percent, higher than the benchmark lending rate of 6.56 percent, according to regulatory filings. Trusts thrive because the government’s low interest rates discourage banks from lending to the private sector, Tsinghua’s Chovanec said. Wuhan Towers Founder BEA Trust Co., a trust set up by Hong Kong-based Bank of East Asia Ltd. and Founder Group, owner of one of China’s largest computer makers, has raised 40 billion yuan and is lending to real estate developer Wuhan Central Business District City Construction Development Co. at 12 percent. The company is building luxury apartment towers in Wuhan, the capital of Hubei province. The units, fitted with Siemens appliances and Kohler bathroom fixtures, went on sale in August. “Medium-sized property developers appear to have borrowed heavily for short-term and bridge loans,” said Il Houng Lee, the IMF’s senior representative in China. “Property developers’ strains could hit trusts.” Chilling Effect Shares in Chinese developers plunged in Hong Kong trading for two days last month on concern that tightened access to loans will force them to cut prices. Greentown China Holdings Ltd. (3900) , a builder in the eastern province of Zhejiang, has fallen 37 percent since Sept. 21 amid reports by Credit Suisse analysts that the banking regulator was looking into trusts that had loaned the developer 5 billion yuan. Greentown, based in Hangzhou, said it has no trouble financing its loans and that the company hasn’t been questioned by the regulator. “Our reliance on trust loans is not that heavy,” Simon Fung, chief financial officer, said in a phone interview. Any sign of weakness in China’s real estate market could have a chilling effect on trusts and their investors, said Jason Bedford, a manager at KPMG LLP in Beijing. “Imagine that you have a real estate product and suddenly the real estate markets start to plummet,” Bedford said. “What was a liquid product suddenly becomes very illiquid as investors pull out and can’t be replaced.” Bank analysts, including Michael Werner at Sanford C. Bernstein & Co. in Hong Kong, are concerned that a mismatch between trust loans and investments could exacerbate damage if declines in real estate volumes spread. Loans are often for two years or more, while investments are usually for one year. ‘Wealth Destruction’ “It will cause a significant amount of wealth destruction,” Werner said. “The party goes on until someone turns on the lights and you can’t roll over these assets. There will be wealth destruction. The question is how much.” There is no sense of panic at the headquarters of Noah Holdings Ltd. (NOAH) in the Pudong section of Shanghai, where customers sip coffee and browse glossy brochures while sitting on leather and chrome sofas. The firm, listed on the New York Stock Exchange, was founded in 2005 by two former private bankers at Xiangcai Securities, a brokerage in Changsha, where Ausnutria is also based. It offers wealth-management products including those issued by trusts to clients who the company says invested an average of $1.3 million last year. On Noah’s website is a quotation from Chairman and CEO Wang Jingbo: “The world revolves around money, and it makes its own rules.” “Right now is a period of innovation,” Shang Yan Chuang, head of investor relations , said in an interview. “We’re looking for innovation with controlled risk.” To contact the reporter on this story: Shai Oster in Hong Kong at [email protected] To contact the editor responsible for this story: Melissa Pozsgay at [email protected] |
Malaysia Says 2011 Palm Oil Exports May Reach 70 Billion Ringgit.Malaysian palm oil exports may rise to 70 billion ringgit, Plantation Industries and Commodities Minister Bernard Dompok told reporters in Kuala Lumpur today. To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at [email protected] To contact the editor responsible for this story: Barry Porter at [email protected] |
Czech Stocks: AAA Auto, Erste Group, Komercni Banka, New World.The Czech Republic ’s PX stock index climbed the most in almost two weeks, rising 4.2 percent to 937.2 at its 4:28 p.m. close in Prague. The following were among the most active equities in the Czech market today. Stock symbols follow company names. AAA Auto Group NV (AAA) increased 3.3 percent to 17.99 koruna after the Czech used-car dealer said it sold 14.4 percent more vehicles between January and September than a year earlier. Erste Group Bank AG (EBS) of Austria jumped 10 percent to 490.5 koruna. Komercni Banka AS (KOMB) , the Czech unit of Societe Generale SA, rose 5.3 percent to 3,439 koruna. Financial stocks were among the biggest gainers in Europe amid speculation the euro area’s debt crisis will be contained and policy makers will shield banks with capital injections. New World Resources Plc (NWR CP), the biggest coking-coal producer in the Czech Republic, increased 6.1 percent, the most in almost two months, to 131 koruna. Coal futures contracts rose for a second day to $119.6 a metric ton in the Netherlands. To contact the reporter on this story: Krystof Chamonikolas in Prague at [email protected] To contact the editor responsible for this story: Gavin Serkin at [email protected] |
U.S. Northeast, Southwest Warm Next Week, Forecasters Say.The U.S. from the Southwest to the Northeast will be warmer than normal through next week, according to forecasters. Above-average temperatures will take hold from southern California across the U.S. to New England and the Canadian Maritimes, according to 6- to 10-day forecasts from MDA EarthSat Weather and Commodity Weather Group LLC. Temperatures are expected to range least 3 to 8 degrees Fahrenheit (1.6 to 4.4 Celsius) higher than normal, according to the forecasts for Oct. 11 to Oct. 15. Traders use long-range temperature predictions to gauge energy use and market fluctuations. Hot or cold weather can increase demand for heating and cooling, and power plants use about 30 percent of the nation’s gas supplies, according to Energy Department data. The biggest variable in next week’s forecast will be what happens with a storm expected to come out of the Gulf of Mexico , said Matt Rogers , president of Commodity Weather in Bethesda, Maryland. If it combines with another system moving south from Canada , the U.S. East Coast may be cooler because of the rain and clouds. In the 11- to 15-day outlook for Oct. 16 to Oct. 20, both forecasters call for warming in the central and eastern U.S. Gaithersburg, Maryland-based MDA predicts the highest temperatures will spread across the southern Great Plains and into the Ohio Valley, while Rogers sees the warmest weather in central Great Plains and northern Texas. To contact the reporter on this story: Brian K. Sullivan in Boston at [email protected] To contact the editor responsible for this story: Dan Stets at [email protected] |
Hedge Funds Post Worst Performance in More Than a Year on Falling Stocks.Hedge funds slumped 3.2 percent in September, their worst performance in more than a year, as global stocks tumbled amid a worsening European debt crisis and the threat of a U.S. recession. The Bloomberg aggregate hedge-fund index decreased to 119.53 from 123.53 in August, contributing to a decline of 0.9 percent this year. Long-short equity funds, multistrategy funds and macro funds, which bet on global economic trends, fell. “It was one of the worst months we’ve seen since 2008,” said Don Steinbrugge, managing partner of Agecroft Partners LLC, a Richmond, Virginia-based firm that advises hedge funds and investors. “From a hedge-fund manager’s standpoint, there’s a lot of stress to navigate these markets. Any strategy that was exposed to the fixed-income and equity markets generated negative returns.” The MSCI World (MXWO) Index of global stocks tumbled 8.6 percent in September, including dividends, as Greece edged closer to defaulting on its sovereign debt and the cost of insuring western European countries’ loans rose to records. The Federal Reserve said Sept. 21 that there are “significant downside risks” in the U.S. economy , prompting the central bank to announce a $400 billion debt-trading plan to spur growth as the recovery from the worst contraction since the Great Depression falters. Bloomberg’s aggregate index fell the most since May 2010, when funds dropped 4.3 percent. Multistrategy, Macro Multistrategy hedge funds declined 3.1 percent in September and 1.3 percent in 2011. Macro funds decreased 2.4 percent in September and 3.3 percent in the year’s first nine months. Long- short equity funds, whose managers can bet on rising and falling stocks, lost 4.4 percent last month and 2.6 percent this year. “Volatility on the market caused by fears over Europe and recessionary fears here in the U.S. is definitely causing concerns for people,” said Emma Sugarman, head of the U.S. capital-introductions group at BNP Paribas SA in New York , which helps hedge funds meet clients. “Investors will be considering year-end redemptions very carefully.” The main Bloomberg hedge-fund index is weighted by market capitalization and tracks 2,828 funds, 1,411 of which have reported returns for September. The index is down 8.3 percent from its July 2007 peak. Hedge funds, investment pools that can wager on or against any asset, hold about $2 trillion, according to Hedge Fund Research Inc. in Chicago. To contact the reporter on this story: Kelly Bit in New York at [email protected] To contact the editor responsible for this story: Christian Baumgaertel at [email protected] |
Pakistan May Cut Rates to Spur Growth Weakened by Terrorism.Pakistan’s central bank may cut interest rates for a second straight meeting, seeking to revive growth in an economy battered by terrorism and floods. The State Bank of Pakistan will lower the discount rate to 12.5 percent from 13.5, three of 5 economists in a Bloomberg News survey said. The rest predicted a reduction of half a percentage point before the announcement in Karachi tomorrow. A 2 percentage point drop in Pakistan’s inflation rate in the past three months offers Acting Governor Yaseen Anwar scope to join emerging markets from Russia to Brazil in lowering borrowing costs as growth falters in developed nations. A rate cut might help shore up growth prospects in an economy that’s seen growing less than half the pace of fellow South Asian nations India, Bangladesh and Sri Lanka this year. “Slowing inflation and a cut in government borrowing from the central bank have built a strong case for an economic stimulus,” Mustafa Pasha who manages the equivalent of $50 million in bonds as a fund manager at BMA Funds Ltd. in Karachi, said before the rate announcement. “Investors are pricing in an aggressive action in the next meeting.” The Karachi Stock Exchange 100 Index, which has declined 1.5 percent since the start of this year, was little changed at 10:44 a.m. local time. Pakistan’s 10-year government bond yields are trading at 12.6 percent, the highest level after Greece and Venezuela , according to data compiled by Bloomberg. Currency Weakening The Pakistan rupee has weakened 1.7 percent this year and dropped to a record low on Sept. 16, prompting the central bank last month to conduct what it called a “calibrated intervention” to stabilize the currency. The rupee dropped 0.1 percent to 87.25 against the dollar today. A weakening currency will increase import costs and stoke inflationary pressures, limiting the room for the central bank to ease its monetary policy aggressively, said Sayem Ali, a Karachi-based economist at Standard Chartered Plc. Consumer prices rose 10.46 percent in September from a year earlier, after climbing 12.43 percent in July, according to the Federal Bureau of Statistics. Prime Minister Yousuf Raza Gilani ’s government named Anwar, a deputy governor since March 2007, as the central bank’s acting chief after Shahid Kardar quit on July 12. Anwar unexpectedly cut rates in the last policy decision on July 30, almost three weeks after Kardar resigned blaming state spending for fanning prices. Anwar cited the government’s commitment to “zero borrowings” from the central bank as one of the reasons for reducing rates. The federal government paid back 33 billion rupees ($380 million) to the central bank this fiscal year against 238 billion rupees borrowing in the same period a year ago, according to the central bank. Accelerating Growth Policy makers in Pakistan are aiming to boost economic growth to 4.2 percent in the fiscal year ending June 30, from 2.4 percent in the previous year, one of the lowest expansions in the past decade, as the country struggled to cope with floods and militant attacks. Floods in August forced more than one million people from their homes and damaged crops in parts of southern Pakistan still recovering from last year’s worst ever monsoon inundations that devastated the region. Terror attacks in the South Asian nation have killed at least 35,000 people since 2006, according to government estimates. Overseas Investment Foreign direct investment in Pakistan fell 40 percent to $112.4 million in the first two months of the fiscal year that started July 1 from a year earlier. By contrast, India , from which Pakistan was partitioned in 1947 following independence from British rule, got $13.4 billion in the three months through June, a quarterly record. As Pakistan’s relations with the U.S., its biggest donor, frayed since Navy Seals killed al-Qaeda leader Osama bin Laden in a unilateral raid on May 2, China has emerged as a key ally, according to Saleem H. Mandviwalla, the chairman of the government’s Board of Investment. “Pakistani companies badly need a cut in interest rates,” said Saad Khan, an economist at Arif Habib Ltd., in Karachi. “A clear indication from the central bank that it’s on a rate cutting path will help support new investment and expansion.” To contact the reporter on this story: Haris Anwar in Islamabad, Pakistan at [email protected] To contact the editor responsible for this story: Stephanie Phang at [email protected] |
ICE Coffee Stockpiles by Warehouse Location on Oct. 6.Following is a table detailing coffee stockpiles held at port warehouses monitored by the ICE Futures U.S. exchange: To contact the reporter on this story: Mike Sebany in Washington at [email protected] To contact the editor responsible for this story: Alex Tanzi at [email protected] |
Ghana Chamber of Mines Appoints Toni Aubynn as Chief Executive.The Ghana Chamber of Mines named Toni Aubynn as its new chief executive officer, taking over from Joyce Aryee who held the position for 10 years, the Accra-based industry group said. Aubynn, who started Oct. 1, joins the chamber from Tullow Oil Plc’s Ghanaian unit, where he was the director of corporate affairs, the group said in an e-mailed statement today. Prior to that, he spent 12 years with Gold Fields Ghana Ltd. as head of corporate affairs and sustainable development. Ghana is Africa ’s second-largest gold producer after South Africa and also mines reserves of diamonds, bauxite and manganese. To contact the editor responsible for this story: Antony Sguazzin at [email protected] . |
UniCredit Said to Cut Staff as It Shakes Up Equities Unit.UniCredit SpA (UCG) , Italy ’s biggest bank, is shaking up its equities division as part of an investment banking review to focus on its core markets, three people with knowledge of the matter said. The lender is cutting jobs in its equity brokerage, including sales and derivatives based in London and Milan, said one of the people, who asked not be identified because the plan isn’t public. Among the options the bank is considering is forming ventures with other firms, according to one person. UniCredit’s corporate and investment-banking chief, Jean- Pierre Mustier, who previously ran Societe Generale SA’s investment bank, is reviewing the unit as the company prepares a business plan to be presented by year-end. Part of the strategy is to concentrate the equity business in UniCredit’s four key markets of Germany , Italy, Poland and Austria , said one person. “All banks are reviewing their investment banking in the current environment,” said Wolfram Mrowetz, chairman of investment firm Alisei SIM in Milan, which oversees 200 million euros ($268 million). “This division costs too much. A lot of banks are refocusing on their commercial activity.” Roberto Lazzarotto, global head of equity derivative sales at UniCredit, is leaving the firm, according to a person familiar with the matter. Reached on his mobile, Lazzarotto declined to comment. A spokesman for UniCredit declined to comment. Mustier’s Overhaul Mustier, who joined UniCredit in March, has hired former colleagues Olivier Khayat and Patrick Soulard to increase commissions and market share, particularly in advising on mergers and in managing stock sales. The firm in May combined the debt and equity businesses with merger advice and lending to win more deals. The European sovereign debt crisis will lead banks to rethink their business models, focusing on costs, efficiency and productivity, UniCredit Chief Executive Officer Federico Ghizzoni said in an interview Oct. 4. “Banks have to accept that for the next two to three years their revenue will not grow too much,” he said. “Banks need to be leaner, in their structure and more focused on their core business.” UniCredit rose 3 cents, or 3.8 percent, to 82.6 cents in Milan trading. The stock is down 47 percent this year, valuing the lender at 15.9 billion euros ($21.3 billion). To contact the reporters on this story: Sonia Sirletti in Milan at [email protected] ; Elisa Martinuzzi in Milan at [email protected] ; Francesca Cinelli in Milan at [email protected] To contact the editor responsible for this story: Frank Connelly at [email protected] |
Ecuador September Consumer Price Index by Component.Following are the components of the Sept. consumer price index from the National Statistics and Census Institute in Quito: To contact the reporter on this story: Dominic Carey in Sao Paulo at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected] |
Norway’s Budget Forecasts Lower Petroleum Output Next Year.Norway , the world’s seventh-largest oil exporter that’s struggling to keep up output as fields mature, forecast petroleum production will decline by 1.3 percent next year. Output will slip to 226 million standard cubic meters of oil equivalent from an estimated 229 million cubic meters this year, the government said today in its 2012 national budget. The country is basing its budget revenue on oil prices averaging 588 kroner ($100.5) a barrel this year and 575 kroner a barrel in 2012, according to the document. Gas prices are estimated at 2.05 kroner per cubic meter in 2011 and 2.10 kroner in 2012. “There’s considerable uncertainty regarding gas prices going forward,” the government said in the budget document. “While strong growth is still expected from China and other emerging markets, the forecasts for the U.S. and Europe have been significantly revised down over the summer.” Norway, which is also the world’s second-biggest gas exporter, is facing dwindling production due to maturing fields. Output peaked in 2000 and may drop 6 percent this year to about 1.7 million barrels a day, according to the Norwegian Petroleum Directorate. Recent oil discoveries made by Statoil ASA (STL) and Lundin Petroleum AB (LUPE) , including the Aldous-Avaldsnes find in the North Sea that may be the country’s third-largest, have raised the prospect of extending production. Norway’s oil production, including natural-gas liquids and condensate, is forecast at 120 million cubic meters of oil equivalent this year, 115 million next year and 109 million in 2015, according to today’s budget bill. Gas output is forecast to climb from 109 billion cubic meters in 2011 to 111 billion next year and 112 billion in 2015. ‘Strong Growth’ Petroleum investments are forecast to reach a record 172 billion kroner next year, from an estimated 152 billion kroner in 2011, according to a quarterly survey published last month by Norway’s statistics agency. “It’s uncertain how much of the strong growth can be attributed to prices and volume growth,” the government said. “We anticipate the volume growth in the petroleum investments to be 12.5 percent this year and 11 percent next year.” The nation’s petroleum industry, which accounts for about a quarter of the economy and has shielded the country from the worst of the credit crisis, is forecast to contribute 341 billion kroner in net cash flow to the budget this year and 352 billion kroner in 2012, the government said. To contact the reporter on this story: Marianne Stigset in Oslo at [email protected] To contact the editor responsible for this story: Will Kennedy at [email protected] |
Greek Debt Swap Seen Completed by Middle of December, ANA Report.Greece ’s voluntary debt swap, part of a second financing package for the country, will be completed by mid-December, state-run Athens News Agency reported, without saying how it got the information. Finance Minister Evangelos Venizelos told a meeting of ruling party lawmakers that the debt-swap procedures and the implementation of the July 21 financing agreement were effectively frozen until a German proposal for bigger losses for bondholders is discussed, according to the newswire. To contact the editor responsible for this story: Maria Petrakis at [email protected] |
Putin Will Get Nomination for Presidency in November, RIA Says.Russia ’s ruling United Russia party will nominate Prime Minister Vladimir Putin next month as its candidate in 2012 presidential elections, RIA Novosti reported, citing Boris Gryzlov , the party’s second-ranking official. The congress will probably take place on November 20, the state news service cited Gryzlov as saying today in Tula, central Russia. Putin, 58, said Sept. 24 he’ll seek to return to the presidency in March elections, pushing aside his protégé, Dmitry Medvedev , who replaced him in the Kremlin for four years because of a constitutional ban on three consecutive terms. Two more six-year terms would give Putin 24 years at the helm, making him the longest-serving leader since Josef Stalin. To contact the reporters on this story: Henry Meyer in Moscow at [email protected] To contact the editor responsible for this story: Balazs Penz at [email protected] |
Japan Test Reactor Was Shaken Beyond Design Limit in March Quake.A research reactor operated by the Japan Atomic Energy Agency was shaken beyond its design limits during the earthquake that struck in March and another of the agency’s nuclear facilities was likely damaged in the disaster. The Japan Research Reactor No. 3 in Tokai village, 115 kilometers (71 miles) northeast of Tokyo , was shaken as much as 5.7 times more than its design allowed, the Ministry of Education, Culture, Sports, Science and Technology said in a statement. Parts of the roof of the experimental Japan Materials Testing Reactor building in the agency’s research center in Oarari, 60 kilometers from Tokyo, was damaged, possibly by the quake, the ministry said. No radiation leaks were found at either site, according to the ministry. The magnitude-9 quake and subsequent tsunami on March 11 knocked out power and cooling at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant, causing the worst nuclear accident since Chernobyl 25 years ago. Neither of the Japan Atomic reactors were running when the quake hit, said Kunimi Yoshida, an official involved in nuclear power regulation at the science ministry. Tokai village was the site of an accident in 1999 at a nuclear plant operated by Sumitomo Metal Mining Co.’s unit JCO Co. Two workers were killed by radiation after pouring uranium from a bucket into a processing tank, leading to a chain reaction. To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at [email protected] To contact the editor responsible for this story: Amit Prakash in Singapore at [email protected] |
Springer’s Possible Kronen Bid May Be Blocked, Handelsblatt Says.Axel Springer AG (SPR) ’s possible bid to buy WAZ Media Group’s stake in Kronen Zeitung newspaper could be blocked by the Dichand family, which owns half of Kronen Zeitung, the German newspaper said in a preview of an article for tomorrow’s edition. The family has an option to acquire the WAZ stake and would exert it, Handelsblatt reported, citing Christoph Dichand, publisher and managing director of Kronen Zeitung. To contact the reporter on this story: Karin Matussek in Berlin at [email protected] To contact the editor responsible for this story: Anthony Aarons at [email protected] . |
U.S. State Revenue Gaps May Lead to ‘Widespread’ Cuts, Fitch Ratings Says.U.S. state revenue may fall short of forecasts, which may lead to “widespread” budget cuts, Fitch Ratings said. Most states projected fiscal 2012 revenue before national economic forecasts were revised downward, which may reduce tax collections, Fitch said in a report today. Year-over-year growth didn’t improve in 32 states in August, compared with the previous month, Fitch said. “Although state revenues have shown signs of recovery in 2011, employment performance is far from robust, and trends are not positive,” Fitch said. September’s revenue results “will be a helpful indicator of whether widespread budget adjustments will be needed,” the ratings company said. California Comptroller John Chiang warned in September that the state would need to decide by December whether to “pull the trigger to cut more program funding,” after revenue for the first two months of the fiscal year came in $403.8 million under projections. Florida will likely lower its revenue forecast this month because of slower-than-expected growth and a faltering housing market, Amy Baker , the Legislature’s chief economist, said in an interview Sept. 9. Economists surveyed by Bloomberg in September forecast that the U.S. economy would grow 2.2 percent in 2012, down from January expectations of 3.2 percent, according to the median estimate. The Federal Reserve in June cut its expectations for 2012 growth to a range of 3.3 percent to 3.7 percent from a range of 3.5 to 4.4 percent in January. To contact the reporter on this story: Simone Baribeau in Miami at [email protected]. To contact the editor responsible for this story: Mark Tannenbaum at [email protected] . |
Oil-Tanker Demand Poised to Match Supply by Winter 2012, Owner Teekay Says.Demand for oil tankers will match supply by the Northern Hemisphere’s next winter, lifting charter rates for the vessels, according to Teekay Corp. (TK) , the largest U.S.-listed owner of the ships. “The tanker market is bottoming,” Chief Executive Officer Peter Evensen said in an interview at a conference in London today, adding that the smaller-sized oil tankers which dominate Teekay’s fleet will recover before larger carriers. “We see a recovery in the winter of 2012 going into 2013, when demand catches up with supply.” The global fleet of aframax tankers, which haul 600,000 barrels of crude, will expand 1.6 percent in 2013, compared with 7.5 percent growth for larger suezmaxes, he said. The combined capacity of supertankers that can haul 2 million barrels of oil, known in the industry as very large crude carriers, will rise by 6 percent, the CEO forecast. A world excess of tankers might be curbed by further slowing vessel speeds, Evensen said. Dropping to 12 knots from 14 knots saved as much as 25 metric tons of fuel oil daily, he said. Each ton costs as much as $700, according to Evensen. Lack of Financing Construction of new ships is being delayed because owners are struggling to get finance to pay for them, he said. Teekay, based in Hamilton, Bermuda , is the largest operator in the six- company Bloomberg Tanker Index, with a market value of $1.56 billion. Charter rates for VLCCs loading West African crude for U.S. Gulf Coast ports jumped the most since January 2010 today, according to the Baltic Exchange in London. Costs measured in industry-standard Worldscale terms advanced 23 percent to 62.32 points. Delays in passing through the Turkish Straits are driving up charter rates for smaller tankers that carry crude from Black Sea ports to export markets, said Ben Goggin, a broker at SSY Futures Ltd., a unit of the world’s second-largest shipbroker. That is shrinking supply of larger supertankers and causing freight rates to rise, he said. The straits connect the Black Sea and the Aegean Sea. To contact the reporter on this story: Michelle Wiese Bockmann in London at [email protected] To contact the editor responsible for this story: Alaric Nightingale at [email protected] |
U.S. ECRI Materials Prices Fall at a 19.8% Rate.U.S. industrial prices rose 0.61 percent today, according to the ECRI materials prices daily report. The smoothed annualized growth rate, which is designed to minimize fluctuations, fell 19.8 percent. The index anticipates trends in companies’ pricing power and is thought to be a leading indicator of corporate profits and consumer price changes. SOURCE: Economic Cycle Research Institute To contact the reporter on this story: Chris Middleton in Washington at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected] |
Turkey Stocks: Acibadem, Aselsan, Akenerji, Garanti, Is Girisim.Turkey ’s benchmark ISE National 100 Index (XU100) fell 82.69, or 0.1 percent, to 57,228.53 at the 5:30 p.m. close in Istanbul. The following stocks were active. Symbols are in parentheses. Acibadem Saglik Hizmetleri & Ticaret AS (ACIBD TI), a Turkish hospital chain, plunged 1.60 liras, or 6 percent, to 24.90 liras, its biggest drop since Aug. 8. The company bought 50 percent of a Macedonian hospital complex and related services for 20 million euros ($26.7 million), it said in a statement to the exchange today. Aselsan Elektronik Sanayi & Ticaret AS (ASELS TI), a defense contractor, gained 4 kurus, or 0.6 percent, to 7.28 liras. The company won an $8.1 million contract to provide electronic systems to the Saudi military, it said in a statement to the exchange today. Akenerji Elektrik Uretim AS (AKENR) , a utility jointly owned by the Czech Republic ’s CEZ AS (CEZ) and Turkey’s Akkok Group, added 7 kurus, or 2.4 percent, to 2.94 liras. The company should be sold by the end of the year, Akkok chief executive Mehmet Ali Berkman said in an interview today. Proceeds from the sale of Akenerji will be used to invest in Akkok’s core businesses including Aksa Akrilik Kimya Sanayii (AKSA) AS, the world’s largest producer of synthetic fibers, with which Akkok is planning a 50-50 joint venture with Dow Chemical Co (DOW) , the largest U.S. chemicals manufacturer, for production in Turkey, Berkman said. Aksa shares fell 2 kurus, or 0.4 percent, to 4.80 liras. Is Girisim Sermayesi Yatirim Ortakligi AS (ISGSY) , a venture capital firm part-owned by Turkiye Is Bankasi AS (ISCTR TI), jumped 11 kurus, or 5.5 percent, to 2.13 liras, the highest level since July 19. The company got approval from the antitrust regulator to sell Probil Bilgi Islem Destek & Danismanlik Sanayi & Ticaret AS to Netas Telekomunikasyon AS (NETAS TI), it said in a statement to the exchange today. Netas shares gained 1 lira, or 0.7 percent, to 150.50 liras. Turkiye Garanti Bankasi AS (GARAN) , Turkey’s biggest listed bank, fell 10 kurus, or 1.5 percent, to 6.66 liras. Mehmet Sezgin, general manager of Garanti’s credit card unit, said the bank was giving up efforts to stem loan growth as authorities signaled a reluctance to enforce curbs. Garanti will probably grow its loans more than 25 percent this year and about 23 percent in 2012, Sezgin said in an interview. To contact the reporter on this story: Benjamin Harvey in Istanbul at [email protected] To contact the editor responsible for this story: Gavin Serkin at [email protected] |
Thai Central Bank Should Cut Interest Rates, Kittiratt Says.The Bank of Thailand should lower the nation’s interest rates to help business operators coping with the flooding impact, according to Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong. Business leaders have asked the government to offer loans with low interest rates to help those affected by the floods, he told reporters today in Bangkok after meeting with representatives from the Federation of Thai Industries. “The first thing we should do is the central bank should cut interest rates,” Kittiratt said. “This is the message I want to convey to them.” To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at [email protected] To contact the editor responsible for this story: Daniel Ten Kate at [email protected] |
Australian Construction Index Falls to Lowest Since February ’09.A gauge of Australia ’s building industry showed the weakest reading since February 2009 as new orders sank to a record low. The construction performance index dropped 2.1 points to 30 in September, according to a survey by the Australian Industry Group and the Housing Industry Association released in Sydney today. The result was the 16th consecutive month under 50, the dividing line between expansion and contraction. The Reserve Bank of Australia this week left its benchmark interest rate unchanged at 4.75 percent, citing a “softer” labor market and consumers who are “more concerned about the possibility of unemployment rising.” The RBA signaled less concern about wage pressure from a mining investment boom and said there’s more scope to cut rates if necessary. “The construction sector continues to struggle in the face of subdued demand and low levels of investor and consumer confidence,” said Peter Burn, director of public policy at the Australian Industry Group. “Lower interest rates would assist in reigniting demand for housing and commercial construction.” New orders slid 0.6 point to 23.9, the lowest level since the series began in 2005, and a gauge of employment fell 2.6 points to 32.3 last month, the report showed. Construction of houses plunged 5.5 points to 24.1 and apartments dropped 4.2 points to 21. To contact the reporter on this story: Michael Heath in Sydney at [email protected] To contact the editor responsible for this story: Stephanie Phang at [email protected] |
Steve Jobs Biography Release Date Moved Up to Oct. 24 by Simon & Schuster.CBS Corp. (CBS) ’s Simon & Schuster book- publishing unit moved up the release date of the biography of Apple Inc. (AAPL) co-founder Steve Jobs, who died yesterday. The authorized biography by Walter Isaacson, titled “Steve Jobs,” will be released on Oct. 24, according to Adam Rothberg, a spokesman for Simon & Schuster. The publisher first intended to publish the book in February, later moved it up to late November and then decided on October after the iconic entrepreneur passed away yesterday. The book is already the best-selling title on Amazon.com Inc. and number three on the Barnes & Noble Inc.’s website. It can be pre-ordered for $17.88 at both online retailers. Isaacson, a former managing editor for Time magazine and currently the chief executive officer of the Aspen Institute , has written best-selling biographies of Benjamin Franklin and Albert Einstein. To contact the reporter on this story: Edmund Lee in New York at [email protected] To contact the editor responsible for this story: Peter Elstrom at [email protected] |
Rubber Gains for Third Day as U.S. Data Improve Demand Outlook.Rubber advanced for a third day as better-than-expected U.S. economic data buoyed the outlook for demand, and Malaysia supported Thailand ’s move to set a minimum price for the commodity used in tires. March-delivery rubber climbed as much as 1.4 percent to 308.7 yen per kilogram ($4,020 a metric ton) before settling at 308.2 yen on the Tokyo Commodity Exchange. U.S. companies added 91,000 workers after an 89,000 gain in August, ADP Employer Services said yesterday. The median forecast in a Bloomberg survey called for the addition of 75,000. The Institute for Supply Management ’s non-manufacturing index fell to 53 from 53.3 in August, still higher than the median forecast of 75 economists surveyed by Bloomberg. Stocks rallied. “Better-than-expected U.S. jobs data triggered gains in equities and rubber,” Gu Jiong, an analyst at Yutaka Shoji Co. Ltd., said by phone from Tokyo. So-called resistance, or clusters of sell orders, is at 310 yen, he said. The U.S. is the fourth-largest consumer of natural rubber after China, the European Union and India , according to the Singapore-based International Rubber Study Group. Rubber also rebounded from last quarter’s 15 percent loss as Thailand, the largest producer and exporter, set a minimum price for the commodity at 120 baht ($3.86) a kilogram yesterday. Malaysia, Indonesia and Vietnam agree on the need for a benchmark price as fellow members of the International Tripartite Rubber Council, Bernard Dompok, the Malaysian minister for plantation industries and commodities, told reporters in Kuala Lumpur today. Old Trees Thailand is also considering cutting down aging trees to counter the price slump. The measures will help to put a floor under prices, with support at 300 yen, Gu at Yutaka Shoji said. The Thai cash price increased to 127.25 baht ($4.09) a kilogram today from 126.25 baht yesterday, the Rubber Research Institute of Thailand said on its website. Heavy rain since July 25 has caused flooding in 59 of the country’s 77 provinces, and 28 of them remain submerged, the Department of Disaster Prevention and Mitigation said today. Excessive rains disrupt tapping, leading to lower latex output. Toyo Tire & Rubber Co., Japan ’s fourth-biggest tire maker, expects profit to rise at least 30 percent next year on production expansion in China and the U.S. as it rebounds from the effects of Japan’s March 11 disaster, President Kenji Nakakura said in an interview. The company, which supplies Toyota Motor Corp. and Volkswagen’s Audi AG, forecasts profit will fall 37 percent to 7.7 billion yen this year after Japan’s record earthquake disrupted auto-parts supply chains and the yen hovers at a postwar high against the dollar. To contact the reporters on this story: Chanyaporn Chanjaroen in Singapore at [email protected] ; Aya Takada at [email protected] To contact the editor responsible for this story: James Poole at [email protected] |
BlackRock’s iShares Targets Individual Investors (Audio).BlackRock Inc., the world's largest money manager, is looking to its iShares unit to attract more financial advisers and individual investors in the so-called retail market. Bloomberg Radio's Catherine Cowdery reports on Exchange Traded Funds. (Source: Bloomberg) Running time 01:19 |
European Stocks Climb for Second Day; BNP Paribas, Natixis Rally.European stocks rose for a second day amid speculation policy makers will reach agreement to contain the sovereign-debt crisis and as the Bank of England expanded its bond-purchase program. BNP Paribas (BNP) SA, Credit Agricole SA (ACA) and Natixis surged after Le Figaro said the French government is working on a contingency plan to take stakes in the country’s lenders. BHP Billiton Ltd. (BHP) , the world’s biggest mining company, rallied 5.9 percent as metal prices increased. SABMiller Plc (SAB) surged 7 percent after a report the brewer is in talks to be bought by Anheuser-Busch InBev NV. (ABI) The Stoxx Europe 600 Index climbed 2.7 percent to 230.27 at the 4:30 p.m. close in London. The benchmark gauge has gained 5.9 percent over the past two days as investors speculated that euro-area policy makers are working on plans to boost bank capital. “The market optimism may be explained by new initiatives that have emerged as part of efforts to quell both the sovereign debt and the banking crises,” said Stephane Ekolo, chief European strategist at Market Securities in London. “The bond- purchase announcement was a good move by the Bank of England as the economy still faces downside risks stemming from the sovereign-debt crisis.” National benchmark indexes rose in every western-European markets except Denmark. France’s CAC 40 Index advanced 3.4 percent and the U.K.’s FTSE 100 Index rose 3.7 percent. Germany’s DAX Index added 3.2 percent. Bank Recapitalization Plans Stocks extended gains as European Commission President Jose Barroso said in a video question-and-answer session that the commission is proposing coordinated action to recapitalize banks. German Chancellor Angela Merkel said that the euro area will only use its rescue fund as a last resort to save banks and that investors may have to take deeper losses as part of a Greek rescue. Merkel’s comments, her most explicit on banks’ role in fighting the debt crisis since the spillover from Greece began to threaten France and Italy, followed talks with Barroso in Brussels. European banks need the region’s regulators to help with financing to prevent the debt crisis from worsening, said UniCredit SpA Chief Executive Officer Federico Ghizzoni in an interview. Asset Purchases The Bank of England expanded its bond-purchase plan as government budget cuts and Europe ’s debt crisis jeopardize Britain’s economic recovery. The nine-member Monetary Policy Committee raised the ceiling for so-called quantitative easing to 275 billion pounds ($423 billion) from 200 billion pounds. Only 11 of 32 economists in a Bloomberg News survey had forecast an increase in asset purchases. European stocks briefly pared gains after European Central Bank President Jean-Claude Trichet said the euro-area economy faces “intensified downside risks.” The ECB kept its benchmark rate unchanged at 1.5 percent, as predicted by 41 of 52 economists in a Bloomberg News survey. In the U.S., a report showed that claims for unemployment benefits rose less than forecast last week to a level that shows companies may be starting to slow the pace of dismissals. Applications for jobless benefits increased by 6,000 in the week ended Oct. 1 to 401,000, Labor Department figures showed today. Economists had predicted 410,000 claims, according to the median estimate in a Bloomberg News survey. Credit Agricole , Natixis (KN) Credit Agricole climbed 5.3 percent to 5.44 euros, while BNP surged 8.6 percent to 32.03 euros. Shares of Natixis surged 9 percent to 2.51 euros. France’s state-holding agency is working on a plan, involving two or three unnamed banks, Le Figaro said, citing a person familiar with the matter that it didn’t identify. A French government official, who declined to be named because he’s not authorized to speak to the press, rejected the report, calling it false. A gauge of commodity companies jumped 5.5 percent for the best performance among the 19 industry groups in the Stoxx 600. BHP rallied 5.9 percent to 1,882 pence. Rio Tinto Group, the world’s second-largest mining company, increased 7.6 percent to 3,126.5 pence. Copper, lead, nickel and tin rose in London. SABMiller, AB InBev SABMiller, the maker of Peroni and Grolsch beer, soared 7 percent to 2,247.5 pence for its biggest gain since November 2008. Brazilian news website IG reported that AB InBev, the world’s largest brewer, has held talks to acquire the company for about $80 billion. Nigel Fairbrass , a spokesman for London-based SABMiller, and Marianne Amssoms, a spokeswoman for Leuven, Belgium-based AB InBev, declined to comment on the report. Atos SA rallied 8.1 percent to 34.64 euros. Chief Executive Officer Thierry Breton confirmed the French computer-services company’s targets for 2011 and 2013 in an interview with French newspaper Les Echos. The company will be debt free by June 30, 2012, Breton said. UBS AG (UBSN) gained 4.5 percent to 10.97 Swiss francs after Switzerland’s biggest bank said Francois Gouws and Yassine Bouhara resigned as co-heads of global equities following last month’s $2.3 billion loss from unauthorized trading. Eurofins Scientific (ERF) SA surged 9.4 percent to 59.20 euros. The company predicted adjusted earnings before interest, taxes, depreciation and amortization of as much as 145 million euros ($194 million) in 2011. Hays Plc (HAS) , the London-based recruiting company, rallied 7.4 percent to 72.55 pence. The company said net fees rose 21 percent in the quarter ended September 30. Dexia Shares Tumble Dexia SA (DEXB) sank 17 percent to 84.5 euro cents for the largest plunge on the Stoxx 600 before trading in the lender’s shares was suspended at the request of the regulator. Luxembourg’s Finance Minister, Luc Frieden, said an international investor is ready to take over Dexia Banque Internationale a Luxembourg SA. Qatari Investment Authority, the country’s sovereign-wealth fund, may be part of a group of international investors looking to buy the Luxembourg banking unit of Dexia, Les Echos reported, without saying where it got the information. Belgium will nationalize Dexia Bank Belgium NV pending a sale, De Tijd reported on its website, citing unnamed sources. Dexia needs to sell its Belgian banking unit to free capital for its so-called bad bank, according to De Tijd. To contact the reporter on this story: Adria Cimino in Paris at [email protected] To contact the editor responsible for this story: Andrew Rummer at [email protected] |
Dallas Fed Third-Quarter Agricultural Credit Survey.Following is a summary of credit conditions at agricultural banks in Texas, southern New Mexico and northern Louisiana based on a third-quarter survey by the Federal Reserve Bank of Dallas: To contact the reporter on this story: Mike Sebany in Washington at [email protected] To contact the editor responsible for this story: Alex Tanzi at [email protected] |
Indonesia Bonds Withstand Worst Capital Flight: Chart of the Day.Indonesian bonds, Asia ’s best performer in 2011, are withstanding a record sell-off by foreigners as central bank support for the market spurs demand from domestic investors. The CHART OF THE DAY shows the 10-year sovereign yield has fallen 54 basis points from a three-month high on Sept. 22, even as overseas funds cut holdings by an unprecedented 29 trillion rupiah ($3.2 billion) last month. Local buyers, including Bank Indonesia , bought an estimated 22 trillion rupiah of the notes, according to the finance ministry. “Even if the crisis in Europe and financial-market conditions worsen, it’s unlikely that selling pressure will overwhelm Indonesia’s bond market,” Jens Lauschke, fixed-income strategist at DBS Group Holdings Ltd., said in an interview in Singapore yesterday. “As domestic entities did not boost positions the past two years, they have substantial capacity to absorb the bonds sold by foreign entities.” Indonesian bonds have returned 13.2 percent so far this year, the best performance among 10 Asian local-currency debt markets tracked by HSBC Holdings Plc. While international investors accelerated sales last month as Europe’s debt crisis and a U.S. slowdown damped appetite for riskier assets, domestic demand led by the central bank is rising. Bank Indonesia will continue to purchase government debt to stabilize the rupiah, Hendar, the central bank’s director of monetary policy, said in a mobile-phone text message on Oct. 3. Foreign reserves eased $10 billion last month from a record $124.6 billion in August, the bank reported yesterday. The previous biggest sell-off of Indonesian bonds, when the global financial crisis prompted foreigners to withdraw 12.7 trillion rupiah in October 2008, boosted the 10-year yield by more than seven percentage points to 21 percent, the highest since at least 2003. Ten-year yields fell to an all-time low of 6.45 percent on Sept. 9, a day after Bank Indonesia kept its benchmark rate unchanged at 6.75 percent for a seventh month, citing easing inflation. To contact the reporters on this story: Lilian Karunungan in Singapore at [email protected] ; Yumi Teso in Bangkok at [email protected] To contact the editor responsible for this story: Sandy Hendry at [email protected] |
NYC’s Assumed Return Rate on Pension Funds ‘Unrealistic,’ Bloomberg Says.New York ’s 8 percent assumed rate of return on its pension investments is so unrealistic that the city may have to spend even more than the $1 billion it has in reserve for its retirement plans , Mayor Michael Bloomberg said. Officials are waiting for chief actuary Robert North to recommend how much the city can expect to reap on its pension assets, which were valued at $120 billion as of June 30. North hasn’t issued a recommendation in more than a year. A lower assumed rate would mean the city would have to contribute more to shore up its five pension plans. “We keep talking to the actuary; I would have thought by now he would have made a decision,” Bloomberg told reporters during a news conference in Manhattan today. “The more you see returns in the stock market or in the debt market being negative or zero, the more unrealistic an 8 percent assumption is.” Pension costs have increased to $8.5 billion this year -- including the reserve -- from $1.5 billion in 2002, when Bloomberg first took office, representing almost 13 percent of the $66 billion budget for fiscal 2012. Each quarter-point drop in the assumed rate of return would cost New York at least $350 million to be set aside to pay benefits, said Marc LaVorgna , a mayoral spokesman. The stress on New York City’s budget has been shared by cities and states around the nation as investment returns plummet, life expectancies lengthen and governments remain obligated to pay benefits for public employees. U.S. public pension funds have 76.1 percent of the assets required to pay retirement benefits, according to a survey of 215 plans by the Washington-based National Conference on Public Employee Retirement Systems released in June. The plans surveyed held about $900 billion and covered 7.6 million workers. Calpers Move The New York State Retirement System last year reduced its assumed rate to 7.5 percent from 8 percent, upon the recommendation of its actuary. The California Public Employees’ Retirement System , the nation’s largest pension fund, retained its assumed 7.75 percent return rate in March even after the fund’s actuaries recommended lowering it to 7.5 percent. Calpers then lost $20 billion from June 30 to Sept. 26, as its value fell to $218.6 billion. Calpers Chief Investment Officer Joe Dear predicted it would “be tough this year and maybe for the next few years” to earn the assumed rate as a weak U.S recovery and the deepening debt crisis in Europe weigh on global equities. The Standard & Poor’s 500 index of stocks has fallen 8 percent this year. Waiting Game Actuaries calculate the assumed rate of return on pension investments over a prolonged period -- 15 years for Calpers -- to blunt the impact that annual swings may have on the amount of money the fund charges taxpayers to finance retirement benefits for government workers. In an interview today, North said he would finish his study by the end of November and present his findings in December. He declined to say what the assumed rate of return would be. Any change in the rate must be approved by the state Legislature. In December, North said the new proposal would “likely result in significantly greater employer costs.” Bloomberg must present next year’s preliminary budget to the City Council by February, and the mayor and council must approve a final spending plan by the end of the 2012 fiscal year on June 30. The city’s current financial plan contains projected budget deficits of about $5 billion in each of the next two years. “A realistic rate of return would be lower than 7 percent, compounding our problem,” Bloomberg said today. Such a drop in the expected rate of return would cost the city at least $1 billion it hasn’t anticipated, LaVorgna said. “We are staring into the abyss of $5 billion deficits going forward without more of a problem from the pension system,” Bloomberg said. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP. To contact the reporter on this story: Henry Goldman in New York City Hall at [email protected] ; To contact the editor responsible for this story: Mark Tannenbaum at [email protected] |
Reed Elsevier CFO Mark Armour Will Step Down Next Year.Mark Armour, the chief financial officer for publisher Reed Elsevier Plc (REL) for the past 15 years, will retire from that position and the board at the end of 2012. The board has begun a search for Armour’s replacement that will consider internal and external candidates, the London-based company said in a statement today. As finance chief, Armour helped implement a cost-cutting program that led Reed Elsevier to sell off pieces of its trade publishing unit, including all of its U.S. publishing operations except Variety magazine, as it refocused the business on faster- growing electronic data offerings. Reed Elsevier publishes magazines and information on the medical and scientific professions and the legal and business-to-business industries, and it maintains the LexisNexis database. “It is right to announce my planned retirement now in order to give the company sufficient time to appoint my successor,” Armour said in a statement. “During my time at Reed Elsevier the company has been transformed from a broad- based traditional print publisher into a leading provider of online professional business information.” Survived Shake-Up Armour, 57, stayed on at the company after a management shakeup in 2009 that brought in Chief Executive Officer Erik Engstrom. Engstrom’s predecessor, Ian Smith , had lasted eight months in the job before resigning amid an economic slowdown that crimped revenue from ads and promotions decline. In the first half of the year, Reed Elsevier reported declining sales on currency swings and divestitures. Earnings, adjusted to exclude acquisitions and other charges, rose to 22.3 pence per share from 21.3 pence a year earlier, a figure that beat analysts’ estimates at the time. Most analysts are advising investors to purchase the stock, with 19 buy ratings from 27 analysts, according to a Bloomberg survey. Armour owns almost 250,000 shares of Reed Elsevier, according to Bloomberg data, valuing his stake in the company at about 1.23 million pounds ($1.9 million) at yesterday’s closing price. Armour, a Cambridge graduate, is also a board member of brewer SABMiller Plc. (SAB) Reed Elsevier rose 9.3 pence, or 1.9 percent, to 505.5 pence in London trading at 11:05 a.m. The stock had declined 8.4 percent this year before today. To contact the reporter on this story: Amy Thomson in London at [email protected] To contact the editor responsible for this story: Kenneth Wong at [email protected] |
Apple’s Steve Jobs Dies At 56.Click 1 <go> to see photos of Steve Jobs or {EXT5<GO>} the special show page on this story. To contact the editor responsible for this slideshow: Maria Wood Tel [email protected] |
Schiller Poised to Be Apple’s Top Pitchman in Post-Jobs Era.Apple Inc. (AAPL) called on Phil Schiller to stand in for Steve Jobs at the 2009 Macworld conference after the then-chief executive officer went on medical leave. Later that year, with Jobs still out, Schiller unveiled the iPhone 3GS. Now that Jobs is gone, Schiller is likely to become the company’s primary pitchman. Schiller, vice president for worldwide product marketing, has been the second-most-public face at Cupertino, California- based Apple for years. He’s been a fixture in Jobs’s keynotes, demonstrating new products and playing the comic sidekick. Behind the scenes, he has run the marketing empire that hones and promotes the company’s products. Schiller, 50, has always been willing to take a body blow for Apple. In 1999, he took a feet-first high dive into a mat holding an Apple laptop as part of a stunt during a Jobs MacWorld speech. He has been one of a handful of Apple executives involved in the detailed process leading to Jobs’s keynote appearances, including sitting through repeated rehearsals by executives from other companies invited to showcase their products on stage. Apple has drawn so much limelight that Schiller has become something of a high-technology celebrity himself, including a site called Schillermania devoted to his appearances. His on-stage shtick usually involves self-deprecating humor. At his MacWorld appearance in January 2009 in Jobs’s traditional slot, Schiller started off his speech by saying, “I can’t tell you how much I appreciate you all showing up,” drawing laughter and applause. Trusted Lieutenant Inside Apple, he was one of Jobs’s most trusted lieutenants. He is responsible for many of the company’s memorable product slogans and for singing the praises of Apple products, from Macs to the App Store , to the media. As head of developer relations, he’s also helped build Apple’s vast system of partners, from applications developers to makers of iPhone accessories. When Apple came under fire in 2010 from developers who felt the company was arbitrarily refusing to approve certain apps, he wrote a public memo clarifying Apple’s policies. In 2009 he defended Apple’s control of its App Store to Businessweek magazine, saying the company had “built a store for the most part that people can trust.” Schiller is a devoted fan of Boston College ’s hockey team. After graduating from the school in 1982 with a Bachelor of Science degree in biology, he worked as a programmer at Massachusetts General Hospital. He worked at Apple in the late 1980s before leaving in 1993. After working as a marketing executive at FirePower Systems Inc. and Macromedia Inc., Schiller rejoined Apple in 1997, when Jobs was a consultant to the company and had not yet returned as CEO. To contact the reporters on this story: Peter Burrows in San Francisco at [email protected] ; Dina Bass in Seattle at [email protected] To contact the editor responsible for this story: Tom Giles at [email protected] |
Vestas Wind Systems Gets 129 Megawatt Turbine Order in Sweden.Vestas Wind Systems A/S said it received a firm and unconditional order for 43 units of the V112-3.0 megawatt turbine for Sweden. To contact the editor responsible for this story: Christian Wienberg at [email protected] |
Euro Weakens Against Dollar as ECB Keeps Interest Rate at 1.5%.The euro stayed lower against the dollar and the yen after the European Central Bank left its benchmark interest rate at 1.5 percent. The euro weakened against 13 of its 16 major peers tracked by Bloomberg. The central bank’s decision to leave the refinancing rate on hold was in line with the median forecast of 52 economists in a Bloomberg News survey. ECB President Jean- Claude Trichet will hold a press conference at 2.30 p.m. in Berlin. At the central bank’s previous monetary policy meeting on Sept. 8, he said downside risks to the euro area’s economic outlook had intensified. ``The ECB's decision to leave rates on hold shouldn't surprise the market,'' said Jeremy Stretch , executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. ``Attention now turns to Trichet's press conference for any announcement of more non-standard measures to try to alleviate the depth of the sovereign-debt crisis.'' The euro fell 0.4 percent to $1.3290 at 12:48 p.m. in London. It fell to $1.3146 on Oct. 4, the weakest since Jan. 13. The 17-nation common currency depreciated 0.7 percent to 101.84 yen. It dropped to as low as 100.76 on Oct. 4, the weakest since June 2001. The euro depreciated 1.5 percent to $1.3882 on Sept. 8 when the ECB kept its main interest rate at 1.5 percent. It fell 1.2 percent to 107.59 yen that day. The Frankfurt-based central bank raised rates twice this year, by 25 basis points in April and July. It last reduced interest rates in May 2009, when it cut its key rate to a record low 1 percent. The euro-area inflation rate jumped to 3 percent last month from 2.5 percent in August, the European Union’s statistics office in Luxembourg said on Sept. 30 in an initial estimate. That’s the biggest annual increase in consumer prices since October 2008. Economists had projected inflation to hold at 2.5 percent. The central bank’s inflation ceiling rate is 2 percent. “The sharp increase in inflation last month underlines the difficulties facing the central bank,” CIBC’s Stretch said. To contact the reporter on this story: Keith Jenkins in London at [email protected] To contact the editor responsible for this story: Daniel Tilles at [email protected] |
Foxconn’s Woo Comments on the Passing of Apple’s Steve Jobs.Louis Woo, Chairman of Foxconn Technology Group’s retail unit and an assistant to Foxconn Chairman and Founder Terry Gou, comments on the passing of Steve Jobs. Woo, based in Shanghai , worked for Apple for 12 years before moving to Foxconn, the manufacturer of Apple’s iPhone and iPad. Foxconn trades in Taipei as Hon Hai Precision Industry Co. “As someone who has worked for Apple and has been a fan of Apple for many years, this is really very saddening news. It’s like someone from the family has passed away. “He’s changed the way that we use technology for so many years, and defined the way technology can better be used, and better be applied to our day to day use. “He’s more than a trailblazer. He defined what technology is supposed to be. We’ll all miss him, and there won’t be another Steve Jobs , that’s for sure.” To contact the reporter on this story: Tim Culpan in Taipei at [email protected] To contact the editor responsible for this story: Young-Sam Cho at [email protected] . |
Airbus Extends 2011 Lead Over Boeing in Jet Orders, Deliveries.Airbus SAS has delivered more planes and taken more orders this year than U.S. rival Boeing Co. (BA) , edging within reach of a record after introducing its upgraded single-aisle jet, the A320neo. Airbus has won 1,038 net aircraft orders, after 141 cancellations during the first nine months, the Toulouse, France-based company said today in a statement. That includes 918 neos, which offer more fuel-efficient engines than the existing A320 family. Airbus’s record tally for net new orders was in 2007, with contracts for 1,341. An order today from Qantas Airways Ltd. (QAN) for 110 A320s, will be included in the October listing. Combined with the prospect of additional orders at the Dubai Air Show in November, that put Airbus in reach of topping its previous high. Boeing has won 426 net orders this year, which are listed today on the Chicago-based planemaker’s website and exclude 105 canceled contracts. Cancellations are generally for planes ordered some years ago, though they are counted against the current-year order tally. The net orders are up from 392 in the same period of 2010. For deliveries, Airbus has handed over 374 planes this year, including 296 single-aisle aircraft, 62 widebodies, and 16 A380s. Airbus, a unit of European Aeronautic, Defence & Space Co., aims to deliver about 530 planes this year, including about 25 of its double-decker A380s. The next A380 delivery is to China Southern Airlines Co., set for next week. Airbus Order Competition Airbus has topped Boeing’s deliveries every year since 2003, and that trend continued in the first three quarters of this year. Boeing handed over 349 aircraft through September, including 281 single-aisle 737s, 14 767s, 53 of its most- profitable 777s and its very first 787 Dreamliner, according to a statement today. The company forecasts deliveries of between 485 to 495 planes in 2011. In the third quarter, deliveries rose to 127 from 124 a year earlier. Planemakers get about 40 percent of their payments from customers upon delivery. While Airbus has booked 918 firm orders from 14 customers for its A320neo since offering the plane last December, Boeing hasn’t yet won any firm contracts for its new 737 MAX. The company has said it has 496 preliminary commitments from five customers. Boeing announced in August that it planned to build the 737 variant, with new engines, and has been working to complete its configuration. “We continue to work a number of details,” Marc Birtel , a Boeing spokesman, said yesterday. “These commitments will book once those details are finalized, but we are not able to speculate on when that will be.” To contact the reporters on this story: Andrea Rothman in Paris at [email protected] ; Susanna Ray in Seattle at To contact the editors responsible for this story: Benedikt Kammel at [email protected] ; Ed Dufner at [email protected] |
FIFA Whistleblower Chuck Blazer to Quit CONCACAF Role at End of This Year.Chuck Blazer, the soccer official whose corruption complaints led to a senior FIFA colleague being banned for life, will step down as general secretary of the Confederation of North, Central American and Caribbean Association Football at the end of this year. Blazer, 66, said in a e-mailed statement that he’ll end his two-decade tenure with CONCACAF, one of soccer’s six regional confederations, on Dec. 31. He’ll continue as a member of FIFA’s executive committee and intends to “pursue other career opportunities” in the sport. “I’ve been doing this 21 years and that’s a long time,” Blazer said yesterday in a telephone interview. “I’ll keep my position on the FIFA executive committee. I’m elected until the middle of 2013 and I have no intention of walking away from the sport. I’m not leaving football, just this job.” Blazer, an American, alerted soccer’s governing body in May to allegations that CONCACAF president Jack Warner and Asian confederation chief Mohamed bin Hammam offered Caribbean delegates $40,000 each in bribes in Bin Hammam’s abortive bid to become FIFA president. Bin Hammam, a Qatari, subsequently was given a life ban from soccer. Trinidad & Tobago’s Warner, Blazer’s former boss at CONCACAF, quit the sport in June after being suspended pending an investigation into the bribery claims. Bin Hammam denies the allegation. At the time of Warner’s resignation, FIFA closed all ethics committee procedures against him, saying “the presumption of innocence is maintained.” Revenue Rose Zurich-based FIFA has been dealing with corruption allegations for most of the past year. At one point, one-third of its executive committee, a 24-member decision-making panel, was either under investigation or suspended amid graft claims linked to the vote for the 2018 and 2022 World Cups and the presidential election. Blazer, during whose tenure CONCACAF revenue rose to $40 million from $140,000, said he was proud to have helped expose corruption within soccer. “I’m the guy who turned around and said enough of this,” Blazer told Bloomberg News. “I consider it a unique mark in my career of turning round and saying there’s a right way and a wrong way to do things, and I choose the right way.” To contact the reporter on this story: Dan Baynes in Sydney at [email protected] To contact the editor responsible for this story: Christopher Elser at [email protected] |
Constellation Gains After Profit Tops Analysts’ Estimates.Constellation Brands Inc. (STZ) , the world’s largest wine company, rose the most in almost two months after reporting second-quarter profit that topped analysts’ estimates, helped by sales in North America. Constellation advanced $1.68, or 9 percent, to $20.40 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest gain since Aug. 9. The shares had declined 7.9 percent this year. Chief Executive Officer Robert Sands sold the company’s Australian and U.K. wine operations this year to focus on the North American unit. The overseas wine businesses were unprofitable in the year-ago period, according to Tim Ramey , an analyst for D.A. Davidson & Co. in Lake Oswego , Oregon. “The stars are aligning,” Ramey said today in a note. Constellation has generated “impressive” cash flow “and put this cash to work creating significant value for shareholders.” Constellation’s free cash flow totaled $478 million in the six months ended in August, up from $263 million in the same period last year. The cash will help Constellation pay debt while buying back shares, Sands said today on a conference call. Net income rose 78 percent to $162.7 million, or 76 cents a share, from $91.3 million, or 43 cents, a year ago, the Victor, New York-based company said today in a statement. Excluding restructuring charges and other items, profit of 77 cents beat the 66-cent average of 9 analysts’ estimates compiled by Bloomberg. Full-Year Forecast The company’s brands include Robert Mondavi and Clos Du Bois wines. Revenue fell 20 percent to $690.2 million, primarily because of the sale of its Australian and U.K. wine business. Sales in North America rose 5 percent. With stock repurchases and a tax-rate benefit, profit in fiscal 2012 will be as much as $2.10 a share. Excluding those items, Constellation reiterated its previous projection of a maximum of $2 a share on a conference call today. Analysts predicted $1.96, the average of 10 estimates compiled by Bloomberg. To contact the reporters on this story: James Callan in New York at [email protected] ; Duane D. Stanford in Atlanta at [email protected] To contact the editor responsible for this story: Robin Ajello at [email protected] |
Crude Oil Caps Biggest Two-Day Gain in Seven Months on ECB Stimulus Plans.Crude oil rose, capping the biggest two-day rally since February, after European Central Bank President Jean-Claude Trichet announced a bond-purchase program to stimulate economic growth. Futures advanced 3.7 percent as Trichet said at a press conference in Berlin that the ECB will resume covered-bond purchases and one-year loans for banks as the sovereign debt crisis threatens to spread. Oil dropped earlier as Trichet said that the euro-area economy faces “intensified downside risks.” “The market was whipsawed on the Trichet statements,” said Phil Flynn , vice president of research at PFGBest in Chicago. “We initially moved lower but then rebounded because the ECB will be adding more liquidity. Stimulus is bullish for both demand and the price.” Crude oil for November delivery rose $2.91 to settle at $82.59 a barrel on the New York Mercantile Exchange. Futures have climbed 9.1 percent since Oct. 4, the biggest two-day gain since Feb. 22-23. Prices are down 10 percent this year. Brent oil for November settlement increased $3, or 2.9 percent, to end the session at $105.73 a barrel on the London- based ICE Futures Europe exchange. Crude began rising from a one-year low yesterday when the U.S. Energy Department reported U.S. stockpiles fell 4.68 million barrels to 336.3 million last week. Days of supply fell to 22.2, equaling the lowest level since 2008. Gasoline inventories declined 1.14 million barrels to 213.7 million. Berlin Meeting The ECB will spend 40 billion euros ($53.8 billion) on covered bonds from next month and offer banks two additional unlimited loans of 12- and 13-month durations, Trichet said. “They are concerned about slowing growth and inflation, so they decided against cutting interest rates and went ahead with quantitative easing,” said Addison Armstrong , director of market research at Tradition Energy in Stamford, Connecticut. Trichet spoke as German Chancellor Angela Merkel held talks in Berlin with International Monetary Fund chief Christine Lagarde , World Bank President Robert Zoellick and Angel Gurria of the Organization for Economic Cooperation and Development, among others. Trichet is due to join the discussions later. European Union officials are working on plans to increase bank capital, Antonio Borges, the IMF’s European department head, said yesterday in Brussels. Merkel said she’s ready to discuss recapitalizing banks at this month’s EU summit. “There’s increasing optimism that the Europeans will find a way out of the debt crisis,” said Peter Beutel , president of trading advisory company Cameron Hanover Inc. in New Canaan , Connecticut. Fed Signals The Bank of England unexpectedly expanded its bond-purchase program to 275 billion pounds ($421 billion) from 200 billion pounds after keeping its key rate at a record low of 0.5 percent. Eleven of 32 economists in a Bloomberg News survey predicted an increase in asset purchases. Federal Reserve Chairman Ben S. Bernanke signaled Oct. 4 that he’ll push forward with further expansion of monetary stimulus if needed. He said the Fed’s remaining tools to boost growth include giving more information about its pledge to keep interest rates low at least through mid-2013, reducing the rate paid on banks’ reserve deposits and buying more securities. “If you see the Europeans solve some of their problems and if the U.S. skirts a recession, which we expect to be the case, you are setting up a tougher environment in the market,” said David Greely , head of energy research at Goldman Sachs Group Inc. in New York. “Volatility should increase.” The Standard & Poor’s 500 Index rose 1.8 percent to 1,164.97 at 4:03 p.m. in New York and the Dow Jones Industrial Average increased 1.7 percent to 11,123.33. The dollar dropped 0.6 percent to $1.3427 per euro. A weaker dollar bolsters the appeal of commodities as an alternative investment. U.S. Employment Prices also climbed after claims for U.S. unemployment benefits rose less than forecast. Applications for jobless benefits increased by 6,000 to 401,000 last week, Labor Department figures showed. Economists projected 410,000 claims, according to the median estimate in a Bloomberg News survey. The monthly average dropped to the lowest level since August. Employers added 59,000 workers to payrolls in September and the unemployment rate held at 9.1 percent, according to the median forecast of economists before the Labor Department’s monthly jobs report tomorrow. “Tomorrow’s monthly jobs number is going to have a serious impact on the market,” Beutel said. U.S. consumer confidence last week capped the worst quarterly performance in more than two years, when the country was in a recession. The Bloomberg Consumer Comfort Index rose to minus 50.2, from the prior period’s minus 53 that was the second-lowest level on record. The gauge averaged minus 48.4 last quarter, the weakest since the first three months of 2009. “Since economic growth concerns remain and the data is mixed there will continue to be a great deal of volatility in the market,” said Jason Schenker, the president of Prestige Economics, an energy advisory company in Austin, Texas. Oil volume in electronic trading on the Nymex was 700,572 contracts as of 3:15 p.m. in New York. Volume totaled 648,839 contracts yesterday. Open interest was 1.43 million contracts. To contact the reporter on this story: Mark Shenk in New York at [email protected] To contact the editor responsible for this story: Dan Stets at [email protected] |
Discount, Kardan, Ormat Industries, Teva: Israeli Equity Preview.The following stocks may rise or fall in Israeli markets. Stock symbols are in parentheses after company names and prices are from the last close unless otherwise stated. The TA-25 Index gained 1.7 percent to 1,038.50 in Tel Aviv. Israel Chemicals Ltd. (ICL) : Prices for corn are rising on speculation that the crop in the U.S., the largest exporter, may be smaller than forecast. The shares of the company which extracts minerals from the Dead Sea to make fertilizer and potash, climbed 1.2 percent 39.75 shekels. Israel Discount Bank Ltd. (DSCT) : The country’s third- largest bank started implementing an early retirement plan for about 500 employees, or about 11 percent of its workforce, TheMarker reported, without saying where it got the information. The shares jumped 3.1 percent to 5.412 shekels. Kardan Israel Ltd. (KRIS) : Kardan NV (KRNV IT) completed the spinoff of its 74 percent stake in the real-estate company. Kardan Israel advanced 7.5 percent to 4.058 shekels. Kardan NV (KRNV) fell 1.3 percent to 9.462 shekels. Ormat Industries (ORMT) Ltd: The developer of the geothermal projects named Avner Shacham as chairman. Ormat gained 3.3 percent to 22.33 shekels. Teva Pharmaceutical Industries Ltd. (TEVA) : The world’s biggest generic-drugmaker was accused by lawyers at a Nevada trial of putting profit ahead of safety of colonoscopy patients who received its Propofol anesthetic from reused vials. Teva rose 0.2 percent to 133.30 shekels. To contact the reporter on this story: Gwen Ackerman in Jerusalem at [email protected] To contact the editor responsible for this story: Claudia Maedler at [email protected] |
BOE Has 40% Probability of QE Increase Today, Deutsche Bank Says.The probability of the Bank of England expanding its so-called quantitative easing program today is about 40 percent, according to Deutsche Bank AG. “Our official call remains for no additional QE today,” London-based Deutsche Bank economist George Buckley said in an e-mailed note to clients. “However, there are sizable risks to this view.” “To put a number on this, we’d argue about 40 percent,” he said. “Market participants probably think that the risks are even higher than this for more QE today.” “Assuming no move from the Monetary Policy Committee today, we expect the bank to sanction 50 billion pounds of QE at the November meeting, to be conducted over the following three months,” Buckley said. To contact the reporter on this story: Scott Hamilton in London at [email protected] To contact the editor responsible for this story: Svenja O’Donnell at [email protected] |
S. Korea Knowledge Minister Seeks Power-Price Increase.South Korean Knowledge Economy Minister Choi Joong Kyung said he will try to raise electricity prices to “realistic” levels to avoid surges in demand. Choi made the comment at a parliamentary hearing in Seoul today. To contact the editor responsible for this story: Sangim Han at [email protected] |
Hong Kong to Keep ‘Close Watch’ on Short-Selling, K.C. Chan Says.The Hong Kong government will continue to keep a “close watch” on short-selling of securities, K.C. Chan, secretary for financial services and the Treasury, said today. “Shorting activities are so far relatively normal,” Chan said at the listing ceremony of Citic Securities Co. To contact the reporter on this story: Fox Hu in Hong Kong at [email protected] To contact the editor responsible for this story: Marco Lui at [email protected] |
Santiago Subway Operator Sells 21-Year Inflation-Linked Bonds.Empresa de Transporte de Pasajeros Metro SA, operator of Santiago’s subway system, sold $219 million of inflation-linked bonds due in 2032 priced to yield 4 percent, according to data published by the Santiago exchange. To contact the reporters on this story: Sebastian Boyd in Santiago at [email protected] ; Eduardo Thomson in Santiago at [email protected] To contact the editor responsible for this story: David Papadopoulos at [email protected] |
SNB Foreign Currency Reserves Climb to Record.The Swiss central bank’s currency holdings rose to a record last month after policy makers imposed a franc cap to help exporters and fight deflation threats. The reserves, calculated according to standards by the International Monetary Fund , jumped to 282.4 billion francs ($305 billion) at the end of September from 253.4 billion francs in the previous month, the Zurich-based Swiss National Bank said on its website today. SNB President Philipp Hildebrand has pledged to defend the franc ceiling of 1.20 versus the euro with the “utmost determination” by purchasing “unlimited quantities” of currencies if needed. Alexander Koch , an economist at UniCredit SpA (UCG) in Munich, said any worsening of the euro-region’s debt crisis would force policy makers into “massive purchases.” “The latest increase in foreign-currency reserves does not imply that the SNB had to purchase euros to a large extent,” Koch said in an e-mailed note today. “It cannot, however, be ruled out that the market will still test the minimum exchange rate in the coming weeks and months.” The franc depreciated after the report, trading at 1.2375 versus the euro at 9:45 a.m. in Frankfurt , down 0.4 percent on the day. It was at 92.77 centimes versus the dollar. Switzerland’s currency, considered a haven in times of turmoil, appreciated to a record 1.00749 against the euro on Aug. 9 amid speculation euro-area governments would be unable to contain the debt crisis. The franc hasn’t strengthened beyond 1.20 per euro since the limit was imposed. Today’s figures include both changes in foreign-currency swaps as well as increases in currency holdings as a result of direct franc sales, making it impossible to calculate the amount spent on intervention. To contact the reporter on this story: Klaus Wille in Zurich at [email protected] ; To contact the editor responsible for this story: Craig Stirling at [email protected] ; |
Hotel New Grand Parent Announces Planned FY Dividend of 5.00 Yen.Hotel New Grand (9720) announced full-year parent dividend estimates for the period to Nov. 30. Figures are in yen. ================================================================================ Forecast Previous Dividend ================================================================================ Full-Year Dividend 5.00 5.00 1st-Half Dividend N/A 0.00 2nd-Half Dividend 5.00 5.00 ================================================================================ To contact the editor responsible for this story: Teo Chian Wei at +81-3-3201-3623 or [email protected] |
Trichet Says Not ‘Appropriate’ for ECB to Leverage EFSF.European Central Bank President Jean- Claude Trichet comments on monetary policy and the region’s debt crisis. He made the remarks at a press conference in Berlin today after the ECB kept its key interest rate at 1.5 percent. On leveraging the euro-area’s bailout fund, the European Financial Stability Facility: “The Governing Council does not consider it appropriate that the ECB leverage the EFSF.” “The governments have the capacity to leverage.” “We indeed are calling on governments, when they take over the EFSF, to leverage themselves with the maximum amount of power to ensure their own financial stability.” “Our message is very, very strong. It was our duty to pass messages. We do not substitute for other institutions, to governments, to parliaments; we are only passing messages.” “It is our duty to tell what we see.” On Greece: “It is a work in progress. We call for all decisions to be implemented, fully, expeditiously, both by Greece and Europe as a whole.” On European banks’ capital needs: “We have not ourselves devised an amount of money that would be necessary.” “What counts is that each particular financial institution is up and running with the appropriate credibility.” “Do all what is necessary.” “I have confidence in the EBA to implement what is necessary.” On Mario Draghi: “He knows better than anyone how we work. He took all the decisions with us. He doesn’t need any advice from anyone. He is dedicated to our primary mandate as we all are.” On Juergen Stark’s resignation: “I have the most esteem and respect for him. He has taken the decision for personal reasons. I have immense friendship for Juergen.” “ Juergen Stark is devoted to Europe.” On Ireland: “The ECB and the euro system have been very, very forthcoming vis-a-vis Ireland. Ireland did a good job, and the credibility of Ireland is visibly improving month after month.” On refinancing operations: “The Governing Council has decided to conduct two longer- term refinancing operations, one with a maturity of approximately 12 months in October and the other with a maturity of approximately 13 months in December. The operations will be conducted as fixed-rate tender procedures with full allotment. The rate in both operations will be fixed at the average rate of the main refinancing operations over the life of the respective LTRO, and interest will be paid when each operation matures. These operations will be conducted in addition to the regular and special-term refinancing operations, which remain unaffected.” “The Governing Council has also decided to continue conducting its MROs as fixed-rate tender procedures with full allotment for as long as necessary, and at least until the end of the sixth maintenance period of 2012 on 10 July 2012. This procedure will also remain in use for the euro system’s special- term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed, and at least until the end of the sixth maintenance period.” “The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time.” “In addition, the Governing Council has decided to conduct the three-month LTROs to be allotted on 25 January, 29 February, 28 March, 25 April, 30 May and 27 June 2012 as fixed-rate tender procedures with full allotment. The rates in these three-month operations will be fixed at the average rate of the MROs over the life of the respective LTRO.” “Furthermore, the Governing Council has decided to launch a new covered bond purchase program, CBPP2. The program will have the following modalities: the purchases will be for an intended amount of 40 billion euros; the purchases will have the capacity to be conducted in the primary and secondary markets and will be carried out by means of direct purchases; the purchases will start in November 2011 and are expected to be fully implemented by the end of October 2012. Further details on the modalities of CBPP2 will be announced after the Governing Council meeting of 3 November 2011.” “The provision of liquidity and the allotment modes for refinancing operations will continue to ensure that euro area banks are not constrained on the liquidity side. All the non- standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature.” On monetary policy: “Based on its regular economic and monetary analyses, the Governing Council decided to keep the key ECB interest rates unchanged. Inflation has remained elevated and incoming information has confirmed our view that inflation is likely to remain above 2 percent for the months ahead but to decline thereafter.” “At the same time, the underlying pace of monetary expansion continues to be moderate. Ongoing tensions in financial markets and unfavorable effects on financing conditions are likely to dampen the pace of economic growth in the euro area in the second half of this year. The economic outlook remains subject to particularly high uncertainty and intensified downside risks. At the same time, short-term interest rates remain low. It remains essential for monetary policy to maintain price stability over the medium term, thereby ensuring a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2 percent over the medium term. Such anchoring is a prerequisite for monetary policy to make its contribution toward supporting economic growth and job creation in the euro area.” On financial markets and the response of governments: “With financial market uncertainty remaining high, all governments need to take decisive and frontloaded action to bolster public confidence in the sustainability of government finances. All euro area governments need to show their inflexible determination to fully honor their own individual sovereign signature as a key element in ensuring financial stability in the euro area as a whole. Countries under joint EU- IMF adjustment programs as well as those particularly vulnerable to financial market conditions need to unambiguously implement all announced measures for fiscal consolidation and the strengthening of domestic fiscal frameworks, and they need to stand ready to take any additional measures that may become necessary owing to the evolution of their situation.” To contact the reporters on this story: Jana Randow in Frankfurt at [email protected] ; Jeff Black in Frankfurt at [email protected] To contact the editor responsible for this story: Craig Stirling at [email protected] |
Mobius Targets Infrastructure as Nigeria Sells Stakes.Mark Mobius is targeting Nigeria ’s roads, bridges and electricity generation as the government of Africa ’s most-populous nation brings in private investors to help develop the country’s infrastructure. Mobius, who oversees about $34 billion in emerging-market assets as executive chairman of Templeton Asset Management Ltd.’s Emerging Markets Group, has $180 million invested in Nigeria and is looking opening an office in Lagos, he said in an interview on CNBC Africa in Lagos today. Nigeria’s government plans to sell 70 percent stakes in 11 power-distribution companies as part of a program to end its monopoly over the country’s electricity industry, the Bureau of Public Enterprises said on Sept. 20. “They have power shortages here in the capital,” Mobius said. “You see the demand is tremendous. It’s a sign of growth; it’s a sign of demand and that means tremendous opportunity.” Templeton Frontier Markets Fund has investments in Nigerian banks including First Bank of Nigeria Plc and Zenith Bank Plc (ZENITHBA) , according to data compiled by Bloomberg. Mobius sees more opportunity in the sector as it continues to consolidate, he said today in the CNBC interview. Banks Cheap Central Bank of Nigeria Governor Lamido Sanusi in 2009 fired the chief executive officers of eight of the nation’s lenders, pumped the equivalent of $4 billion into ailing institutions and set up an entity to buy bad debts. Sanusi, 50, has reduced the number of banks from as many as 89 in 2005 as he started a clean-up of the industry. Nigeria’s 10 largest banks trade at an average price-to- book ratio of 0.95, down from 1.31 as of December 2010. “The opportunity is bigger than most markets because of valuations,” Mobius said. Frontier markets including Nigeria were not as affected by the debt crisis in the U.S. and Europe because of strong domestic consumption, Mobius said. South African companies expanding into the continent will also be considered for further investment, Mobius said. These include Johannesburg-based MTN Group Ltd. (MTN) , Africa’s largest mobile-phone operator, which earns 44 percent of its revenue from West and Central Africa, including Nigeria. “We were disappointed by South African companies that were not willing to go north, but now they are changing,” Mobius said. “We will be looking at companies like MTN.” To contact the reporter on this story: Stephen Gunnion in Johannesburg at [email protected] To contact the editor responsible for this story: Gavin Serkin at [email protected] |
Intesa Signals More Cost Cuts to Meet Targets, Merrill Says.Intesa Sanpaolo SpA (ISP) Chief Executive Officer Corrado Passera indicated the bank will impose “more aggressive” cost reductions to offset bad-debt provisions, according to a note from Bank of America Corp. (BAC) “Passera reconfirmed the 2011, 2013 and 2015 targets, although there looks to be an adjustment between more aggressive cost cuts offsetting provisions, with evidence of this in the third quarter,” according to a note obtained by Bloomberg News and e-mailed to clients by Bank of America Merrill Lynch, which hosted Passera at a conference in London today. An Intesa spokesman declined to comment. The Milan-based bank, whose stock has lost a third of its value this year as Europe ’s debt crisis spread to Italy , is shedding jobs and reducing costs to strengthen its finances. Intesa’s five-year plan, approved in April, targets net income of 4.2 billion euros ($5.6 billion) by 2013 and 5.6 billion euros in 2015. Intesa isn’t interested in combining with smaller Italian lenders, Bank of America Merrill Lynch cited Passera as saying. Passera also confirmed that he expects to maintain a core tier 1 ratio, a measure of financial strength, at 10 percent for the rest of the business plan, the brokerage said. Asked about a possible plan to recapitalize European banks, Passera indicated that “if the problem is sovereign debt, cure this and not the consequences of the sovereign debt,” the note said. To contact the reporters on this story: Sonia Sirletti in Milan at [email protected] ; Francesca Cinelli at [email protected]. To contact the editor responsible for this story: Frank Connelly at [email protected] |
Bank of England Corporate Bond Sale Operation.Following is a summary of the asset purchase facility corporate bond secondary market scheme sale operation from the Bank of England in London: SOURCE: Bank of England To contact the reporter on this story: Barbara Sladkowska in Warsaw at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected] |
NewGold ETF Holdings Decrease 16 Ounces on Oct. 5.Gold holdings in the NewGold exchange- traded fund decreased 15.726 ounces to 1,432,037 ounces as of Oct. 5, according to figures on the fund’s website. To contact the reporter on this story: Stephen Rose in Washington at [email protected] To contact the editor responsible for this story: Alex Tanzi at [email protected] |
Army Corps Bribery Defendants to Remain in U.S. Custody.Two U.S. Army Corps of Engineers officials charged with bribery were ordered to be held in U.S. custody pending a trial. The two were among four charged in a conspiracy case. To contact the editor responsible for this story: John Pickering at [email protected] |
Mauritius Plans ‘Rainy Day Fund’ in 2012 Budget, Le Defi Says.Mauritius’s Finance Minister Xavier Luc Duval plans to announce the creation of a “Rainy Day Fund” in his budget speech for 2012, Le Defi Quotidien reported, citing the minister. The fund will aim to help strategic segments of the economy, and support employment and growth, the Port Louis-based newspaper said. To contact the reporter on this story: Kamlesh Bhuckory in Port Louis via Johannesburg at 1933 or [email protected] To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at [email protected] |
Emlak Konut Buys Land in Istanbul for 46.2 Million Liras.Emlak Konut Gayrimenkul Yatirim Ortakligi AS (EKGYO) , the Turkish property developer owned by the state housing fund, bought land in Istanbul’s Basaksehir district for 46.2 million liras ($25 million) plus value-added tax. Emlak Konut will develop projects on properties totaling 223,250 square meters, it said in a statement to the Istanbul Stock Exchange today. To contact the editor responsible for this story: Aydan Eksin at [email protected] |
Solarhybrid, Solar Millennium Agree Buy of Solar Power Projects.Solarhybrid AG (SHL) , Solar Millennium AG (S2M) signed conditional contracts on the potential purchase of project companies with a pipeline of 2.25 gigawatts belonging to Solar Millennium in the United States. The agreements are subject to finalization of advanced due dilligence projects in the U.S. To contact the editor responsible for this story: Mariajose Vera at [email protected] |
Decade’s Housing Growth Near Historic U.S. Low Even in Boom.The biggest housing boom in the last 30 years was offset by the sharpest slump in a generation, ensuring that the growth in residential units during the last decade remained at lows not seen since the Great Depression, the U.S. Census Bureau said today. The number of homes, apartments and condominiums added in the decade grew 15.9 million to 131.7 million, a 13.6 percent growth rate. Almost 90 percent of the growth occurred between 2000 and 2007. There were 2.1 million housing starts in 2005. Last year, there were 587,000, Census figures show. “This is unprecedented,” said Patrick Newport , an IHS Global Insight economist in Boston. “We just overbuilt by far. We’ve never seen anything like this.” The growth rate was slightly higher than the 13.3 percent registered between 1990 and 2000. It was less than half the 28.7 percent recorded during the 1980s, when the maturing baby boom generation added 19.7 million homes, and barely half the 23.2 percent growth registered during the 1940s. The nation’s rate of homeownership dropped to 65.1 percent, down 1.1 percentage point from 66.2 percent in 2000. The Census Bureau said it was the sharpest drop since the 1930s. Even with the drop, the percentage of homeowners was the second-highest since the government began recording home ownership figures in the 1890s, the government said. Seven-County Cluster Seven of the nation’s 3,142 counties accounted for 10 percent of the new housing units. Maricopa County, Arizona , added 389,000 homes during the decade, followed by Harris County, Texas , which added 301,000, and Clark County , Nevada, which increased its count by 281,000. Some of those counties are now mired in the housing crisis, with empty blocks of overbuilt homes and no buyers. Three U.S. counties doubled their housing stock. The number of Sumter County homes in central Florida grew 110 percent. Teton County, Idaho, boosted its number of homes by 108 percent, and Kendall County, Illinois , a Chicago suburb, grew by 107 percent. The number of vacant homes grew almost one-third to 15 million, or 11.4 percent of all housing units, up from 10.4 million in 2000. Some of the areas that were hardest hit by the nation’s foreclosure crisis registered only small changes in the percentage of homeowners and renters. The number of renters grew in San Bernadino County, California , to 37.4 percent from 35.5 percent. Maricopa, also hit hard, had its renter percentage climb to 35.5 percent from 32.5 percent. Lost Housing Almost 500 counties lost housing units. St. Bernard Parish, Louisiana , lost 37 percent, or 9,996 homes, after Hurricane Katrina struck the Gulf Coast in 2005. Neighboring Orleans County lost 25,195 homes, or 11.7 percent of its housing units. McDowell County, West Virginia, formerly home to an integrated mining operation for U.S. Steel, lost 2,260 homes, or 16.7 percent of its housing stock. “It became a bubble because the government encouraged home ownership,” Newport said. “And banks made it very easy to borrow money.” To contact the reporter on this story: Frank Bass in Washington at [email protected] To contact the editor responsible for this story: Flynn McRoberts at [email protected] |
NBA Debt Rating Put on Fitch Watch List as Labor Dispute Threatens Season.The National Basketball Association ’s credit rating may be cut if the season is canceled over a labor dispute with players, Fitch Ratings said. The firm, which rates about $2.3 billion in leaguewide debt, watch-listed its BBB+ ratings on the NBA’s $957 million revolving credit facility and its $1.34 billion in senior notes due through 2020, saying there’s “a strong likelihood” that the ongoing lockout will result in missed games. “If the season is canceled, downward rating action may be warranted,” Fitch said in a report. The NBA locked its players out on July 1 when the two sides were unable to agree on a new collective bargaining agreement. Following failed negotiations with the National Basketball Players Association two days ago, NBA Deputy Commissioner Adam Silver announced the cancellation of the entire preseason and said the NBA would wipe out the first two weeks of the regular season if an agreement in principle wasn’t reached by Oct. 10. The season is scheduled to start on Nov. 1. The two sides are negotiating over how to split money from a league that had about $4.3 billion in revenue last season. NBA Commissioner David Stern has said the league’s 30 teams collectively lost $300 million during that period. Fitch also placed a negative watch on the BBB+ rating of $234 million in bonds backing Los Angeles ’s Staples Center, the BBB- rating of $46.7 million in bonds paying for Denver’s Pepsi Center and various private ratings on about $500 million in other NBA arena debt. NBA arenas have reserve funds that will pay debt service for at least one year, Fitch said, and arenas with other anchor tenants and strong local economies may not experience significant financial impacts from lost games. “Other arenas that have fewer other events, weaker local economic conditions and less ability to generate other revenues will likely experience greater financial pressure,” the firm said. To contact the reporter on this story: Aaron Kuriloff in New York at [email protected]. Mason Levinson in New York at =617-5697 or [email protected]. To contact the editor responsible for this story: Michael Sillup at [email protected] . |
Mumbai Financial Hub Needs Homes to Meet Demand From Bankers Like Pandit.Mumbai ’s new Bandra Kurla financial district, already home to India ’s biggest stock exchange and international banks such as Citigroup Inc. (C) and UBS AG, is missing a key ingredient: sufficient housing to meet demand. Citigroup, UBS and JPMorgan Chase & Co. (JPM) led an exodus of finance companies from the old Nariman Point financial hub in south Mumbai to escape double midtown-Manhattan rents for crumbling four-decade-old buildings. That’s fueling demand for high-end homes in an area where more than 3 million square feet of office space have been built and another 4 million square feet are planned, according to broker Jones Lang LaSalle India. Citigroup Chief Executive Officer Vikram Pandit and Mihir Doshi, Credit Suisse Group AG (CSGN) ’s India head, are among those who have prepaid for homes in the first residential tower being built in the Bandra Kurla business center in the north of the city, according to people with knowledge of the sales who asked not to be identified as the purchases were private. “The Bandra Kurla complex has a lot of potential, but has been untapped as a residential hub,” said Ramesh Nair, managing director for western India at Jones Lang LaSalle. “Many expats and CEOs whose offices have moved here would prefer to stay in this vicinity because of proximity to their offices and because their children are enrolled in schools in the area.” Demand for housing inside the 370-hectare (914-acres) development, home to the National Stock Exchange of India Ltd. and the market regulator, and in the Bandra East neighborhood surrounding it, is rising as employees seek to cut commuting times of two hours or more in the city of 18 million people that spreads across 440 square kilometers (170 square miles). Falling Prices Prices in central Mumbai, where more than 10 million square feet of premium homes are being built, have declined as much as 15 percent from the peak earlier this year, developer Orbit Corp. said in August. Apartments in Signature Island , where Pandit and Doshi bought, have doubled on a per-square-foot basis over four years to about 40,000 rupees, said Kamal Khetan, chairman of Sunteck Realty Ltd. (SRIN) , the Mumbai-based developer with a majority stake in the project that is expected to be completed by March. They are selling for as much as $10 million each and range from 7,000 square feet to 11,000 square feet. Thirty of the 80 apartments at Signature Island were sold as of March, according to a company presentation. Only nine were sold between October 2009 and March, and Khetan said about half have now been sold, without giving an exact figure. “Under these market conditions, luxury housing is always the most difficult to sell,” said Bhaskar Chakraborty, an analyst at Mumbai-based brokerage IIFL Ltd. Bandra Kurla “has good infrastructure and potential, but apartments will only sell at the right price point.” ‘Lower Affordability’ Apartments outside the complex in Bandra East are selling for between 15,000 rupees and 18,000 rupees a square foot, so homes within the complex can command a maximum premium of 20 percent to 25 percent, Chakraborty said. Mumbai home sales in August dropped to a 27-month low as higher interest rates and prices close to a record crimped demand, brokerage Prabhudas Lilladher Pvt. said in a Sept. 19 report. Registered sales declined 25 percent to 4,611 units from a year earlier, it said. Residential sales in the city dropped to a 30-month low in the quarter ended June, according to Liases Foras Real Estate Rating & Research Pvt. “The lack of sales suggests that prices will correct across Mumbai by between 15 percent and 20 percent with premium housing being the worst hit as land costs in such projects can contribute to as much as 70 percent of total costs,” said Pankaj Kapoor, founder of Liases Foras. The Bombay Stock Exchange’s Realty Index gained 3.9 percent as of 10:40 a.m. local time, paring this year’s loss to 39 percent. The benchmark Sensitive Index added 3.1 percent. Sunteck’s shares rose 2.6 percent to the highest in five months. Billionaire’s Playground Signature Island apartments can be viewed by invitation only and are targeted at senior company executives and businessmen, said Sunteck’s Khetan in an interview in Mumbai. Some of the buyers feature in the Forbes list of Indian billionaires, he said, refusing to disclose their names. Demand from wealthy buyers will drive up residential property prices in the area because they are still trailing commercial prices, said Khetan. In Manhattan in New York and in cities such as Hong Kong and Singapore , residential projects in a business district tend to command premiums, he said. “Our assumption is simple: If there is limited supply in a central business district and if one markets well in a niche segment, the prices of residential should at least match commercial prices if not surpass them by two-to-three times,” he said. Expensive Offices Units at NCPA Apartment, the only residential building within the Nariman Point business area, sell for 100,000 rupees a square foot, according to Jones Lang LaSalle. Mumbai is among the 10 most expensive office locations in the world, with an average rent of 51.08 pounds ($80) per square foot a year, according to Knight Frank LLP. Bandra Kurla, built on low-lying marshland on either side of the Mithi River, was developed as south Mumbai became too congested, forcing the city to expand northward. It has emerged as the home of industries such as banking and finance, the diamond trade, insurance, consulting firms, and the sales and marketing operations of software companies, which moved out of dilapidated buildings in Nariman Point. The Bharat Diamond Bourse, the world’s biggest exchange for spot trading of the gems, is in Bandra Kurla, and the U.S. Consulate General is moving to the area from south Mumbai. A Sofitel hotel will open in November and the area is home to an international school run by Nita Ambani, wife of billionaire Mukesh Ambani , and the American School of Bombay. Choosing Rooms Today, the suburbs of North Mumbai are made up of sprawling residential enclaves, high-tech corporate parks, nightclubs and restaurants, multiplexes, malls and international hotel chains, as well as the domestic and international airports. Sunteck is allowing buyers at Signature Island to choose the number of rooms they want in their apartments. Five to six parking spaces are provided for each apartment. The facilities will include a temperature controlled swimming pool, an international spa brand and an exclusive club. The project, being developed by Sunteck and Piramal Sunteck Realty Pvt., a joint venture with Ajay Piramal Group, went on sale in 2007, two years before construction began. The developer won the bid for the 1.7-acre plot in a government auction in 2006, paying 10,000 rupees a square foot. It started sales at 21,000 rupees in 2007 and four years later is selling them at almost double that, Khetan said. Sunteck bid for another two plots in 2008 paying more than 32,000 rupees a square foot, three times the reserve price set by the Mumbai Metropolitan Region Development Authority , responsible for the development of Mumbai city. “Despite the strong probability of a correction of residential property prices in many parts of Mumbai, locations such as Bandra East are likely to see significant appreciation on the back of demand for office space in the area,” said Sanjay Dutt, chief executive officer for business at Jones Lang LaSalle. To contact the reporter on this story: Pooja Thakur in Mumbai at [email protected] To contact the editor responsible for this story: Andreea Papuc at [email protected] |
Blumenthal Wins Michelin Star as U.K. Pub Gets Second.Dinner by Heston Blumenthal and Pollen Street Social won stars today as the two new London restaurants were recognized in the Michelin Guide to U.K. and Ireland, which for the first time gave a second star to a pub. The Hand & Flowers, in Marlow, about an hour west of London, charges 16.50 pounds ($25.26) for a three-course set lunch by chef Tom Kerridge that yesterday was crispy pig’s head with Provencal garnish; Cornish whiting fritter with braised Puy lentils; and blackberry fool with mint sauce. “The Hand & Flowers won its stars for the food,” Rebecca Burr, editor of the guide, said today in a telephone interview. “It doesn’t matter if you are in a country pub or a Mayfair restaurant. Tom’s got a fine touch. He’s one of the greatest chefs in the country and he’s got his feet on the ground.” There was also a second star for Restaurant Sat Bains, in the English Midlands, where the tasting menu costs 95 pounds. Bains is one of the country’s most respected chefs among his peers. He cooked at Fortnum & Mason for the day on Oct. 3 as part of the London Restaurant Festival. Ramsay Disciple Dinner and Pollen Street Social have reaped awards since opening this year. Dinner is the British brasserie of Blumenthal, the owner of the Fat Duck, which holds three stars. The head chef is Ashley Palmer-Watts. Pollen Street belongs to Jason Atherton, who created Maze for Gordon Ramsay before splitting with his mentor. Pied a Terre lost the second star it first won in 1996 following the departure of chef Shane Osborn. Also in London, Bingham Restaurant at Bingham Hotel gave up its star, as did Tom Aikens , which is closed for refurbishment. There are no new three-star restaurants in London, which has two, compared with seven in New York. Two establishments near London also hold three stars. Burr took over as editor following the retirement of Derek Bulmer. Internationally, the guides will also have a new director, New York-born Michael Ellis, who has been named to succeed Jean-Luc Naret, who has resigned. Three stars mean exceptional cuisine, worth a special journey; two stars are for excellent cooking, worth a detour; one star denotes a very good restaurant in its category. Various criteria are used: food quality, preparation and flavors; the chef’s personality as revealed through the cuisine; value for money; and consistency over time and across the menu. Michelin & Cie. is the world’s second-biggest tiremaker, after Bridgestone Corp. It produced its first guide in August 1900, distributed free of charge (until 1920) and intended for chauffeurs. The guide contained practical information, including street maps and tips on using and repairing tires. “The Michelin Guide to Great Britain and Ireland 2012” will be available in bookshops from tomorrow, priced at 14.99 pounds (17.99 euros in Ireland). Here are the awards. (N means new): TWO STARS: London: Le Gavroche Helene Darroze at the Connaught Hibiscus The Ledbury Marcus Wareing at the Berkeley The Square Rest of the U.K. and Ireland: Andrew Fairlie at Gleneagles, Auchterarder Midsummer House, Cambridge Gidleigh Park, Chagford Le Champignon Sauvage, Cheltenham Patrick Guilbaud, Dublin Whatley Manor (The Dining Room), Malmesbury Hand and Flowers, Marlow N Restaurant Sat Bains, Nottingham N Le Manoir aux Quat’Saisons, Oxford Restaurant Nathan Outlaw, Rock ONE STAR: London: Amaya Apsleys Arbutus L’Autre Pied Benares Chapter One Chez Bruce Club Gascon Dinner by Heston Blumenthal N Galvin La Chapelle Galvin at Windows Gauthier Soho Glasshouse Greenhouse Hakkasan Hakkasan Mayfair N Harwood Arms Kai Kitchen W8 La Trompette Locanda Locatelli Maze Murano Nobu Berkeley St Nobu (Park Lane) North Road N Petersham Nurseries Cafe Petrus Pied a Terre Pollen Street Social N Quilon Rasoi Rhodes Twenty Four Rhodes W1 River Cafe St John Semplice Seven Park Place Sketch (The Lecture Room & Library) Tamarind Texture Umu Viajante Wild Honey Yauatcha Zafferano New one-star restaurants outside London: Black Swan , Olstead Butchers Arms, Eldersfield Castle Terrace, Edinburgh The Checkers, Montgomery Coworth Park, Ascot Driftwood, Portscatho Glenapp Castle, Ballantrae Martin Wishart at Loch Lomond The Pass, Horsham Sir Charles Napier, Chinnor Tassili (at Grand Hotel), Jersey/St Helier New winners of Bib Gourmand for value in London: Azou, Hammersmith Barrafina, Soho Brawn, Bethnal Green Da Polpo, Covent Garden Fox and Grapes, Wimbledon Jose, Bermondsey Kateh, Mayfair Koya, Soho Opera Tavern, Covent Garden St John Bread and Wine, Spitalfields Sushi Say, Willesden Green Triphal, Southfields Trishna, Marylebone |
Barroso Says EU Plans Proposal on Bank Corporate Responsibility.European Commission President Jose Barroso said the commission would propose to hold leaders personally accountable for wrong-doing at financial firms. “We are thinking about putting some kind of personal responsibility to leaders of financial institutions for some wrong-doing that they may cause to the society,” Barroso said today in a video question-and-answer session. “We are going to criminalize, to propose the criminalization of some acts,” he said without giving details on which activities would be covered. To contact the editor responsible for this story: Jones Hayden at [email protected] |
U.S. August LoanPerformance Home Price Index by City.Following is the 12-month transaction based price changes for single family homes in large U.S. metropolitan areas from LoanPerformance. Source: First American LoanPerformance HPI To contact the reporter on this story: Alex Tanzi in Washington at [email protected] To contact the editor responsible for this story: Marco Babic at [email protected] |
Hermes Fund Sees Biggest Raw-Material Rebound in Gold, Grains: Commodities.Corn, wheat and gold will beat other raw materials this quarter as crop yields drop and Europe ’s debt crisis stokes demand for bullion, said David Hemming, who helps oversee a fund that returned 20 times the average this year. Corn may rally 19 percent to $7.25 a bushel, wheat may climb 21 percent to $7.50 a bushel and gold may gain 12 percent to $1,850 an ounce by December, said the London-based fund manager for Hermes Investment Management Ltd. He advises on allocations in the $130 million DB Platinum V Hermes Absolute Return Commodity Fund, a mutual fund which made 12 percent in the first eight months. That compares with a mean return of 0.6 percent across commodity hedge funds tracked by HedgeFund.net. Commodities entered a bear market last month after tumbling more than 20 percent from this year’s peak in April, on concern that slowing growth will curb demand. While consumption of everything from copper to oil and silver fell in 2008 during the worst slump since World War II, demand for gold and corn grew. “The biggest potential is the grains,” said Hemming, 30. Gold is “a good hedge against any run in the European sovereign debt and banks, and any macro-driven routs in the U.S.” The Standard & Poor’s GSCI gauge of 24 commodities fell 4.6 percent this year with sugar, wheat, natural gas and oil among the decliners. Gold was the best performer. Equities, Bonds The MSCI All-Country World Index of global equities lost 14 percent this year, while Treasuries maturing in 10 years or more returned 28 percent, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. European policy makers are working to halt a debt crisis and avoid a default among euro members that may be led by Greece. Investors withdrew $1.08 billion from commodity funds in the week to Sept. 28, the most in more than a month, according to data from EPFR Global, a Cambridge, Massachusetts-based research company. Money managers cut combined net-long positions, or bets on higher prices, across 18 U.S. commodity futures and options by 26 percent in the week to Sept. 27 to the lowest since July 2010, Commodity Futures Trading Commission data show. Corn fell 23 percent to $5.925 on the Chicago Board of Trade last month, the biggest drop in at least five decades. Futures tumbled on speculation that prices which reached a three-year high in June would crimp exports, spur livestock farmers to switch to other feeds and curb demand from refiners who use the grain to make ethanol. The U.S. Department of Agriculture forecast Sept. 12 that global stockpiles will shrink for a third year, driving inventories to a five-year low. Yield Forecast “While the recent selloff has tempered our price expectations, it has also done nothing to ration demand,” said Hemming, who helps manage about $1.7 billion in five commodity funds for Hermes. The next USDA estimates, scheduled to be released on Oct. 12, will probably show more cuts in yield and acreage forecasts, he said. The return of La Nina, a period of cooling equatorial waters in the Pacific Ocean , may mean dry weather in parts of the U.S. and South America and lower yields, Hemming said. Argentine farmers began planting corn in September and sowing starts this month in Brazil. Weather patterns are within “weak La Nina-like territory,” Australia ’s Bureau of Meteorology said in a report Sept. 27. Most Bullish Corn is trading at a 3.5 percent discount to wheat, which can also be used as a livestock feed, compared with a premium of more than 5 percent in June, data compiled by Bloomberg show. That’s still above the average discount of 27 percent over the past five years. Wheat declined 31 percent since reaching a 2 1/2-year high of $9.1675 a bushel in February. Speculators are their most bearish on the grain since June 2010, holding a net- short position of 36,215 contracts, CFTC data show. Wheat futures may climb if money managers close out short positions, said Hemming. Wheat fell 23 percent last month, the biggest drop since 1974. Combined inventories of corn, wheat and barley will decline for a second consecutive year by the end of this season, reaching the lowest since 2008, according to U.S. Department of Agriculture data compiled by Bloomberg. Hermes’s absolute return fund makes bets on the direction of prices and also changes in the relative value of different commodities or settlement dates, said Hemming, who worked at State Street Global Advisors Inc. before joining Hermes in 2006. Absolute Return Hemming also helps manage the $85 million DB Platinum V Hermes Enhanced Beta Commodity Fund, which returned 8.2 percent in the first eight months. The fund, together with the absolute return fund, is part of a venture with Frankfurt-based Deutsche Bank AG, Germany ’s biggest bank. Hemming additionally helps manage $1.5 billion through Hermes Commodities Index Strategy, Hermes Commodities Index Plus Strategy and Hermes Commodities Alpha Strategy. The Absolute Return Commodity Fund and the Enhanced Beta Commodity Fund comply with UCITS III, or Undertakings for Collective Investment in Transferable Securities, which means retail investors in Europe can place money with them. Gold dropped 14 percent since reaching a record $1,921.15 on Sept. 6 as investors sold the metal to cover losses in other markets. Holdings in exchange-traded products backed by bullion fell 3.7 percent since reaching an all-time high of 2,299.8 metric tons in August, data compiled by Bloomberg show. Hemming’s forecast for prices echoes bets in options on futures traded on the Comex exchange in New York , where the most widely held contract gives the holder the right to buy gold at $2,000 by November. Goldman Sachs Group Inc., which is advising clients to buy December futures, predicts $1,860 in 12 months, according to an Oct. 4 report. Silver, Platinum The metal’s 16 percent advance this year compares with a 3.1 percent gain for silver, the precious metal most used in industry. Platinum, used in autocatalysts and jewelry, fell 15 percent and is on track for its worst year since 2008. The International Monetary Fund said last month that European lenders face as much as 300 billion euros ($400 billion) of credit risks because of the debt crisis. Banks were the second-worst performing group in the Stoxx Europe 600 Index this year, behind basic-resources companies, losing 34 percent. “We look to be long gold because of our concerns surrounding Europe, because the problems don’t look to have been solved in a meaningful way,” Hemming said. To contact the reporters on this story: Chanyaporn Chanjaroen in Singapore at [email protected] ; Tony C. Dreibus in London at [email protected] To contact the editors responsible for this story: James Poole at [email protected] ; Claudia Carpenter at [email protected] |
Trichet Says ‘Credibility of Ireland Is Visibly Improving’.European Central Bank President Jean- Claude Trichet said the “credibility of Ireland is visibly improving.” The ECB has “been very, very forthcoming” in helping Ireland, Trichet said at a press conference in Berlin today. To contact the reporter on this story: Joe Brennan in Dublin at [email protected] To contact the editor responsible for this story: Finbarr Flynn at [email protected] |
Central Banks in Europe Extend Global Drive to Prevent a Renewed Recession.Europe ’s leading central banks returned to crisis-fighting mode, expanding a push by global monetary-policy makers to support economies and financial markets while fiscal authorities struggle to act. The European Central Bank , after a meeting yesterday in Berlin, said it would reintroduce purchases of covered bonds and yearlong loans for banks to support markets rattled by the region’s sovereign-debt crisis. In London, the Bank of England boosted its asset-purchase program by more than a third to 275 billion pounds ($424 billion) in a bid to avert a new recession in the U.K. International central bankers are softening their anti- inflation stances or reviving programs to keep financial systems liquid as they race to keep slumping growth from turning into a full-fledged contraction. The Federal Reserve has eased policy two months in a row, while central banks in Malaysia and South Korea have refrained from raising rates as they focus on maintaining growth over damping price increases. “There has been a recent shift in central banking across the world, in the West toward easing and in emerging markets putting tightening on hold with an option to ease if necessary,” said Gerard Lyons , London-based chief economist at Standard Chartered Bank. The fiscal and monetary policy “cupboard is almost bare in the West, so pressure is on the central banks to do more of the heavy lifting.” Australia ’s central bank signaled Oct. 4 it has scope to lower the highest benchmark interest rate among developed economies if necessary as inflation pressures ease. Turkey and Russia stepped up sales of foreign-currency reserves this week. Risk Aversion “We have a substantial increase in risk aversion, and that is affecting flows into the emerging markets and their economies,” said Ted Truman, a former Fed official and assistant Treasury secretary, who’s now a senior fellow at the Peterson Institute for International Economics in Washington. “Many of their currencies are weakening, and there’s a recognition that the global economy which they live off of is slowing down.” Brazil plans moderate interest-rate reductions after a surprise cut Aug. 31 to 12 percent, a government official familiar with monetary policy said this week on condition of anonymity. Last week, Israel’s central bank lowered its benchmark rate for the first time in 2 1/2 years, to 3 percent. The Fed said last month it would replace $400 billion of short-term debt in its portfolio with longer-term Treasuries in a program dubbed Operation Twist. In August, the central bank said its benchmark interest rate would probably stay near zero through at least mid-2013, amending previous language for a less-specific “extended period.” Additional Easing Additional easing may be in the offing. JPMorgan Chase & Co. (JPM) economists last week forecast the average interest rate of developed economies, weighted for gross domestic product, will fall to 0.62 percent by the end of the year from 0.80 percent. In emerging markets, it will drop to 5.80 percent from 5.93 percent. “We’re going to see further measures,” said Tim Drayson, a global economist at Legal & General Investment Management in London. “There’s clearly more scope for the Fed for going to QE3, and the ECB can cut rates,” he said, referring to a third round of quantitative easing, or large-scale asset purchases. The euro reversed losses after the ECB’s rate decision to rise 0.7 percent to $1.3437 at 5 p.m. in New York. The pound lost 0.1 percent against the dollar to $1.5445. The Standard & Poor’s 500 Index of stocks rose 1.8 percent to 1,164.97 at 4 p.m. Final Meeting ECB President Jean-Claude Trichet , overseeing his final monetary-policy decision before retiring, said at a Berlin press conference yesterday that the central bank will spend 40 billion euros ($54 billion) on covered bonds starting next month and will offer banks two additional unlimited loans of 12 and 13- month durations. He also said the ECB will continue to lend banks as much money as they need in its regular refinancing operations at least until July 2012. Policy makers left the benchmark interest rate at 1.5 percent, where it’s been since July 7. With inflation accelerating to 3 percent last month, the ECB is resisting calls to reverse this year’s two quarter-point rate increases even amid speculation a recession is impending, Greece edges toward default and investors express concern about potential European bank losses. The ECB is the first line of support for markets as European governments piece together a new plan to solve their region’s debt strains. ‘Intensified Downside Risks’ “Ongoing tensions in financial markets and unfavorable effects on financing conditions are likely to dampen the pace of economic growth in the euro area in the second half of this year,” Trichet said. There are “intensified downside risks” to the economic outlook, he said. The Bank of England ’s nine-member Monetary Policy Committee, led by Governor Mervyn King , raised the ceiling for so-called quantitative easing from 200 billion pounds. That’s the biggest expansion since the first round of stimulus in March 2009. Only 11 of 32 economists in a Bloomberg News survey predicted an increase in asset purchases. The central bank acted a day after a report showed Europe’s second-biggest economy grew less than previously estimated in the quarter through June. The pledge to buy the most bonds since the depths of the credit crisis shows King and his colleagues are prioritizing the recovery over the threat from inflation, which is running more than double the central bank’s target. The onus to boost expansion is on Bank of England as the nation’s government remains committed to delivering the toughest fiscal squeeze since World War II. Vietnam , Kenya Not every country is considering easier monetary policy. Vietnam’s central bank yesterday said it would lift its refinancing rate by a percentage point to 15 percent. The Central Bank of Kenya raised its benchmark interest rate this week by four percentage points to 11 percent. Other emerging market central banks have room to join developed economies in providing stimulus if growth falters, said Lyons at Standard Chartered Bank. The People’s Bank of China has raised interest rates five times and increased the reserve requirement nine times in the past 12 months, slowing growth in the world’s second-largest economy behind the U.S. To contact the reporter on this story: Scott Lanman in Washington at [email protected] ; Simon Kennedy in London at [email protected]. To contact the editor responsible for this story: Christopher Wellisz at [email protected] ; Craig Stirling at [email protected] . |
CDC Seeks State Guarantee for Dexia’s French Lending, Echos Says.Caisse des Depots et Consignations, seeking to keep its AAA rating, is asking the French government to guarantee a portfolio of Dexia SA (DEXB) ’s municipal lending that the state-owned bank may take over, Les Echos reported, without saying where it got the information. The investment committee of CDC’s supervisory commission, chaired by lawmaker Michel Bouvard, met yesterday and is opposing a plan to take over Dexia’s French municipal-lending business, Les Echos said. The plan would see CDC buying 70 percent of Dexia Municipal Agency, or DexMa, Dexia’s refinancing unit which carries about 80 billion euros ($107 billion) of lending to local governments, Les Echos said. To contact the editor responsible for this story: David Whitehouse at [email protected] |
Geithner Says Europe Debt Crisis Poses Risk to Global Growth.U.S. Treasury Secretary Timothy F. Geithner will tell lawmakers that the European financial crisis is increasing the risks to global growth, according to testimony prepared for delivery tomorrow. “Our direct financial exposure to those governments and their financial institutions is quite small, but Europe is so large and so closely integrated with the U.S. and world economies that a severe crisis in Europe could cause significant damage by undermining confidence and weakening demand,” Geithner says in testimony to the House Financial Services Committee. Geithner calls for a more “powerful financial backstop” for European banks and government borrowers, one that is “conditioned on policy actions that credibly address the underlying causes of concern.” His remarks, obtained by Bloomberg News, come in testimony for hearings before the House Financial Services Committee and Senate Banking Committee on the previously released annual report of the Financial Stability Oversight Council. The FSOC next meets on Oct. 11. He calls on Congress to take steps to strengthen the U.S. economy and makes a pitch for President Barack Obama’s $447 billion jobs plan. To contact the reporters on this story: Cheyenne Hopkins at [email protected] ; Phil Mattingly in Washington at [email protected]. To contact the editor responsible for this story: Christopher Wellisz at [email protected] |
Emerging Stocks Rise Most in Week; Russia, Brazil Shares Gain.Emerging-market stocks rose, driving the benchmark index to its biggest gain in a week, after U.S. unemployment claims rose less than forecast and as optimism grew Europe will step up measures to contain its debt crisis. The MSCI Emerging Markets Index climbed 3.3 percent to 864.08 as of 4:30 p.m. in New York , its biggest advance since Sept. 27. Brazil’s Bovespa Index jumped the most in a month while Chile’s benchmark surged the most in two months. The Kospi Index (KOSPI) in South Korea rose 2.6 percent. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong rose 5.8 percent and the Micex Index added 4.2 percent in Moscow. Reports of jobless claims at a level that shows the pace of dismissals may be slowing and rising fuel demand eased concern the U.S. economic recovery is in jeopardy. The European Central Bank said today it will resume covered-bond purchases and reintroduce yearlong loans for banks as the sovereign debt crisis threatens to lock money markets. “The market is reacting positively to all this news and sentiment is slightly better now,” Choo Swee Kee, who manages about $220 million as chief investment officer of TA Investment Management Bhd., said in a phone interview from Kuala Lumpur. “The European authorities are trying whatever measures to save their economy with as little cost as possible.” A two-day gain helped cut the losses in the MSCI emerging market gauge this month to 1.9 percent, compared with a 1.8 percent increase in the MSCI World (MXWO) Index. Stocks in the emerging-market gauge are traded at 9.8 times trailing earnings, versus 12 for equities in developed nations. Brazil, Eastern European Stocks In Brazil, oil producer Petroleo Brasileiro SA advanced 3.5 percent and miner Vale SA, the benchmark index’s heaviest- weighted stocks, added 1.6 percent, as improving outlook for Europe’s banking industry and the U.S. employment data buoyed commodity prices. OAO Lukoil, Russia ’s second-biggest oil producer, rose 2.6 percent and KGHM Polska Miedz SA (KGH) , Poland’s only copper producer, rallied 6.6 percent as the WIG20 Index increased 1.3 percent in Warsaw. BHP Billiton Ltd., the world’s largest mining company, gained 3.2 percent in Johannesburg, helping drive up the FTSE/JSE Africa All Share Index by 1.4 percent. Lan Airlines SA, Latin America ’s largest airline by market value jumped 4.4 percent in Chilean trading after Spain ’s antitrust regulator approved without conditions its planned acquisition of Brazil ’s TAM SA, which climbed 2.1 percent in Sao Paulo. Emerging-Market Currencies The Brazilian real strengthened 2.9 percent versus the dollar, the best performance among 25 emerging-market currencies tracked by Bloomberg. The Chilean peso followed with a 2.1 percent gain. The Turkish lira appreciated 1.2 percent against the dollar after the central bank sold $1.1 billion in two days of record-breaking auctions, depleting reserves in an attempt to stem the currency’s slide. European Central Bank President Jean-Claude Trichet said the ECB will resume covered-bond purchases and reintroduce year- long loans for banks as the sovereign debt crisis threatens to lock money markets. The ECB will spend 40 billion euros ($54 billion) on covered bonds starting next month and will offer banks two additional unlimited loans of 12 and 13-month durations, Trichet said at a press conference in Berlin today after policy makers left the benchmark interest rate at 1.5 percent. The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps fell 16 basis points to 337. Samsung, LG Samsung Electronics Co., the world’s second-largest maker of mobile phones, rose 1.5 percent and LG Electronics Inc. (066570) , the third-biggest, jumped 6.3 percent in Seoul , on speculation they will gain market share from Apple Inc., whose former Chief Executive Officer Steve Jobs died. Hong Kong-listed Chinese property stocks surged after Deutsche Bank AG said it sees “emerging” value in developers. Agile Property Holdings Ltd. (3383) climbed 20 percent in Hong Kong trading. The stock has sunk 60 percent over the past six months. China Overseas Land & Investment Ltd. (688) , the biggest Chinese developer listed in Hong Kong, climbed 17 percent. Markets in mainland China and India were shut today. The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 19 basis points, or 0.19 percentage point, to 458, according to JPMorgan Chase & Co. (JPM) ’s EMBI Global Index. To contact the reporters on this story: Chan Tien Hin in Kuala Lumpur at [email protected] ; Jason Webb in London at [email protected] To contact the editor responsible for this story: Darren Boey at [email protected] |
Zurich Announces Senior Management Changes at Santander Unit.Zurich Financial AG said it appointed Javier Lorenzo as general manager of its Madrid-based joint venture with Banco Santander SA, which will be named Zurich Santander Insurance America, S.L. Francois Facon will become chief financial officer, Bernardino Gomez will be chief operating officer and Raul Vargas will be head of proposition management, Zurich said in an e- mailed statement. To contact the editor responsible for this story: Leigh Baldwin at [email protected] |
Dutch Central Bank Sold 1,100 Metric Tons of Gold Since 1991.The Dutch central bank has sold 1,100 metric tons of gold since 1991 to bring its reserves in line with that of other important gold-owning nations, Finance Minister Jan Kees de Jager said. The Dutch central bank stopped lending out gold in 2008, De Jager wrote today in response to questions from a lawmaker. Former Dutch central bank governor Nout Wellink in March said the bank holds 612 metric tons of gold and has no plans to sell. To contact the editor responsible for this story: Jurjen van de Pol at [email protected] |
Australian, N.Z. Dollars Appreciate for a Third Day as Stocks Advance.The Australian and New Zealand dollars rose for a third day versus the U.S. currency as global stocks rallied, increasing demand for higher-yielding assets. Both South Pacific currencies were supported after the European Central Bank said it will reintroduce loans to banks in an effort to buoy crisis-ridden markets. The Standard & Poor’s 500 Index rose for a third day and commodities advanced. “The crazy jigsaw that is the European debt debacle is starting to see a plan bubbling around in the background and that should be positive for risk,” said Chris Weston , an institutional dealer at IG Markets in Melbourne. Australia’s dollar rose 0.4 percent to 96.97 U.S. cents at 11:36 a.m. in New York, from 96.59 yesterday, when it rose 0.9 percent. The currency fetched 74.25 yen from 74.17. New Zealand’s dollar added 0.2 percent to 76.78 U.S. cents after advancing 0.8 percent to 76.62 yesterday. It rose 0.1 percent to 58.82 yen. The MSCI World (MXWO) index of stocks rose 1.8 percent and the S&P 500 Index (SPX) climbed 0.8 percent. The Thomson Reuters/Jefferies CRB Index of raw materials advanced 0.9 percent. ECB officials left their benchmark rate at 1.5 percent, as predicted by 41 of 52 economists in a Bloomberg News survey. President Jean-Claude Trichet said the ECB will resume covered- bond purchases and reintroduce year-long loans for banks as the sovereign-debt crisis threatens to freeze money markets. To contact the reporter on this story: Candice Zachariahs in Sydney at [email protected] To contact the editor responsible for this story: Rocky Swift at [email protected] |
German 10-Year Bonds Stay Lower as ECB Keeps Rate at 1.5 Percent.German 10-year bonds stayed lower after the European Central Bank kept its main interest rate unchanged at 1.5 percent. The yield on the bund, the euro area’s benchmark government debt security, was two basis points higher at 1.86 percent as of 12:49 p.m. in London. The yield on two-year notes was two basis points lower at 0.48 percent. To contact the reporter on this story: Paul Dobson in London at [email protected] To contact the editor responsible for this story: Daniel Tilles at [email protected] |
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