China has allowed a long-standing territorial dispute with India to spill over into the international arena by withholding approval for a multilateral development plan for India.
The unusual friction between Asia’s two largest emerging economies occurred ahead of a board meeting of the Asian Development Bank at the end of last month, when China used its right to postpone approval of the lender’s country partnership strategy for India, outlining ADB lending to India until 2012.
The Chinese did not give a reason for their intervention. But the ADB said Beijing was unhappy that its Indian plan proposed lending to projects in the disputed north-eastern region of Arunachal Pradesh. People familiar with the plan said the projects were for flood management, water supply and sanitation. China and India fought a war in 1962 over disputed territory. China declared victory and then pulled back its troops.
The ADB would not provide the financial details of its India plan ahead of board approval, but India was the biggest recipient of ADB lending last year, with almost $2.9bn (€2.2bn, £1.9bn).
“The ADB has never deferred any loan to India. There is nothing like that [in the past],” said an ADB official in New Delhi
China’s reluctance to approve the country plan for India comes at a time when Beijing is lobbying hard for a larger role in the International Monetary Fund and other international organisations. Analysts said this incident could herald future conflicts once China gains the influence it is seeking in multilateral organisations if future initiatives infringe on what Beijing sees as its interests
“This effort [to block the ADB’s plan for India] is a clear signal to partner countries that China sees partnership as sometimes less important than power projection,” said Russell Moses, a Beijing-based political analyst. “There are powerful officials who have no problem injecting strategic considerations into multilateral financial decisions.”
Some analysts also worry that greater Chinese involvement in institutions such as the IMF could allow it to wield veto powers over rescue packages for countries that did not comply with its political demands, especially over issues such as Tibet and Taiwan.
“Of course this [incident within the ADB] makes some people nervous but at this point it doesn’t seem so unreasonable given the fact this is contested territory,” said David Zweig, director of the Center on China’s Transnational Relations at the Hong Kong University of Science and Technology.
“I’d be much more concerned if this was China blocking a development plan for a country whose leader had recently met the Dalai Lama.”
The ADB said it hoped to reschedule a meeting to approve the Indian plan, but at a yet unspecified date.
Pratibha Patil, India’s president, emphasised India’s claim to Arunachal Pradesh during a three-day visit last week. She said the state was “never far from the centre of the nation’s consciousness"
Saturday, April 11, 2009
Three-fold increase in girls at IIM-A
Ahmedabad: They were a rare sight at India’s premier business schools. The number of women making it to the Indian Institutes of Management never crossed 5%. But this year, women comprise nearly 16% of new students at IIM-Ahmedabad, over three times last year’s figure. Many believe this could transform boardrooms in future. The final admission list based on the Common Admission Test (CAT) and personal interviews was declared on Friday.
The rise in number of women admitted came about because of new admission criteria. From this year, the institute gave weightage to academic performance in Class X as well as Class XII. The result: the higher the marks in school board examinations, the better the chances of getting admission in IIM-A.
Professor in-charge of PGP admissions Satish Deodhar said, ‘‘I have been looking after admissions for the last two years and the absence of women candidates used to bother me, especially when I read that girls were performing better in board examinations.’’
‘‘Apart from the CAT scores, IIMA gave weightage to personal interview and pre-bachelors academic performance. Just this change has given us 50 girls in a batch of 315 students,” he added.
Senior faculty member at IIM-A, Deepti Bhatnagar, who was the first woman fellow at IIM-A, welcomed the shift. ‘‘No candidate is selected based on gender, but news that the batch will have more women candidates is exciting and I hope the trend continues. Women have demonstrated calibre and dedication. They bring a lot of commitment to the job.’’
NEW CATs ON BLOCK
Nearly 16% girl students at IIM-A this year
Three-fold increase as girls cross 5% barrier
Weightage to Class X & XII marks in new admission system
The rise in number of women admitted came about because of new admission criteria. From this year, the institute gave weightage to academic performance in Class X as well as Class XII. The result: the higher the marks in school board examinations, the better the chances of getting admission in IIM-A.
Professor in-charge of PGP admissions Satish Deodhar said, ‘‘I have been looking after admissions for the last two years and the absence of women candidates used to bother me, especially when I read that girls were performing better in board examinations.’’
‘‘Apart from the CAT scores, IIMA gave weightage to personal interview and pre-bachelors academic performance. Just this change has given us 50 girls in a batch of 315 students,” he added.
Senior faculty member at IIM-A, Deepti Bhatnagar, who was the first woman fellow at IIM-A, welcomed the shift. ‘‘No candidate is selected based on gender, but news that the batch will have more women candidates is exciting and I hope the trend continues. Women have demonstrated calibre and dedication. They bring a lot of commitment to the job.’’
NEW CATs ON BLOCK
Nearly 16% girl students at IIM-A this year
Three-fold increase as girls cross 5% barrier
Weightage to Class X & XII marks in new admission system
Four depts spring a surprise, surpass revenue target
Mumbai: Notwithstanding the fears expressed by the state finance minister Dilip Walse-Patil, four key departments—sales tax, stamp duty, excise and transport, have surprisingly managed to surpass the target set by the government.
A few months ago, when Walse-Patil reviewed key departments, he was told that it would not be possible to achieve the target set in March 2008 for the year 2008-2009. In fact, then heads of some of the departments had urged the government to reduce the target.
Subsequently, when Walse-Patil presented his interim budget, he too had expressed fears that there will be a shortfall of at least Rs 2,000 crore against the target. “The turnaround was possible owing to the stringent enforcement of rules and the recovery of fines at all levels,’’ C S Sangitrao, transport and excise secretary told TOI.
Against the target of Rs 2,200 crore, the transport department was able to mobilise Rs 2,234 crore, despite the fact that lesser number of vehicles were sold during the financial year 2008-2009. While 12 lakh motor vehicles were sold in ’06-07, 11.68 lakh in ’07-08, less than 10.5 lakh motor vehicles were sold in ’08-09. To ensure that there was no shortfall in revenue mobilisation, the transport department plugged loopholes, implemented the Motor Vehicle Act more effectively and above all, recovered fines and penalties at all levels. “We strengthened the checkposts further, as a result, we mobilised more revenue,’’ Sangitrao added.
However, it was found that the performance of regional transport officers of Thane, Amravati, Dhule, Nagpur and Kolhapur was dismal especially in relation to the target, he said. “We have issued showcause notices to all these five RTOs and will initiate a departmental probe against them due to their performance,’’ he added.
On the performance of the excise department, Sangitrao said that against the target of Rs 4,300 crore, the department was able to mobilise Rs 4,327 crore. The increased revenue was owing to the rising consumption of Indian-made foreign and country liquor. “We were able to stop the illegal trading of liquor with stricter implementation of excise and prohibition laws. As a result, we were able to surpass the target,’’ he added.
Salex tax commissioner Sanjay Bhatia too confirmed that his department was able to achieve his target. Against the target of Rs 30,489 crore, the department mobilised Rs 33,609 crore. In November 2008, it seemed that in view of the slowdown in the economy, the department would miss the target. However, the sleuths of the sales tax department galvanised its entire network, ensured that the laws were enforced in letter as well as spirit and that absolutely no leniency was shown in any case. “For us, it was a surprise when we achieved the target,’’ a sales tax department official said.
The task of the stamp duty and registration department was difficult as there was a slump in the real estate market. However, against the target of Rs 8,200 crore, the department realised Rs 8327.07 crore. “Our achievement was 101%. However, compared to the previous year, it was less as during 2007-08, we had mobilised 118% of the target,’’ a senior revenue official said.
During the year 2008-09, the department registered 17.82 lakh documents against 18.47 lakh registered last year. “Though fewer documents were registered in the current year, we were able to achieve the target owing to the effective enforcement of rules,’’ he said.
A few months ago, when Walse-Patil reviewed key departments, he was told that it would not be possible to achieve the target set in March 2008 for the year 2008-2009. In fact, then heads of some of the departments had urged the government to reduce the target.
Subsequently, when Walse-Patil presented his interim budget, he too had expressed fears that there will be a shortfall of at least Rs 2,000 crore against the target. “The turnaround was possible owing to the stringent enforcement of rules and the recovery of fines at all levels,’’ C S Sangitrao, transport and excise secretary told TOI.
Against the target of Rs 2,200 crore, the transport department was able to mobilise Rs 2,234 crore, despite the fact that lesser number of vehicles were sold during the financial year 2008-2009. While 12 lakh motor vehicles were sold in ’06-07, 11.68 lakh in ’07-08, less than 10.5 lakh motor vehicles were sold in ’08-09. To ensure that there was no shortfall in revenue mobilisation, the transport department plugged loopholes, implemented the Motor Vehicle Act more effectively and above all, recovered fines and penalties at all levels. “We strengthened the checkposts further, as a result, we mobilised more revenue,’’ Sangitrao added.
However, it was found that the performance of regional transport officers of Thane, Amravati, Dhule, Nagpur and Kolhapur was dismal especially in relation to the target, he said. “We have issued showcause notices to all these five RTOs and will initiate a departmental probe against them due to their performance,’’ he added.
On the performance of the excise department, Sangitrao said that against the target of Rs 4,300 crore, the department was able to mobilise Rs 4,327 crore. The increased revenue was owing to the rising consumption of Indian-made foreign and country liquor. “We were able to stop the illegal trading of liquor with stricter implementation of excise and prohibition laws. As a result, we were able to surpass the target,’’ he added.
Salex tax commissioner Sanjay Bhatia too confirmed that his department was able to achieve his target. Against the target of Rs 30,489 crore, the department mobilised Rs 33,609 crore. In November 2008, it seemed that in view of the slowdown in the economy, the department would miss the target. However, the sleuths of the sales tax department galvanised its entire network, ensured that the laws were enforced in letter as well as spirit and that absolutely no leniency was shown in any case. “For us, it was a surprise when we achieved the target,’’ a sales tax department official said.
The task of the stamp duty and registration department was difficult as there was a slump in the real estate market. However, against the target of Rs 8,200 crore, the department realised Rs 8327.07 crore. “Our achievement was 101%. However, compared to the previous year, it was less as during 2007-08, we had mobilised 118% of the target,’’ a senior revenue official said.
During the year 2008-09, the department registered 17.82 lakh documents against 18.47 lakh registered last year. “Though fewer documents were registered in the current year, we were able to achieve the target owing to the effective enforcement of rules,’’ he said.
As economy flags, vasectomies rise
The pregnant woman showed up at the medical centre in flip-flops and in tears, after walking there to save bus fare. Her boyfriend had lost his job, she told her doctor in Oakland and now—fearing harder times for her family—she wanted to abort what would have been her fourth child.
“This was a desired pregnancy but they re-evaluated expenses and decided not to continue,” said Dr Pratima Gupta. “When I was doing the options counselling, she interrupted me, crying, and said, ‘I just walked here for an hour. I’m sure of my decision.’”
Other doctors are hearing similarly wrenching tales. For many Americans, the recession is affecting their most intimate decisions about sex and family planning. Doctors and clinics are reporting that many women are choosing abortions and even more men are having vasectomies because they cannot afford a child.
The recent anecdotal data, if they hold, would have a historical parallel in the Great Depression, when the birth rate fell sharply.
As this recession continues, it is understandable that more people might hesitate to expand their families. A baby born in 2006—the latest year for which data are available—will cost middle-income parents $260,000 by the time the child reaches 17, according to the Agriculture Department. And that doesn’t include college.
In California, Planned Parenthood says that compared with last year’s first quarter, requests for vasectomies were up more than 30% in the first three months of this year at its clinics in San Diego and Riverside Counties, where 64 of the procedures were done. “The recession has created a new level of urgency among our clients,” said Vince Hall, a spokesman. “We used to have a three- to six-week waiting period. Now men have to wait two-and-a-half months to get an appointment.”
Helping spur demand, he said, might be the fact that unemployed men often qualify for free vasectomies under Family PACT, a California family planning program for low-income households.
On the Upper East Side of Manhattan, where the financial industry’s collapse has compressed many a household budget, Dr Marc Goldstein says he has been performing more vasectomies than usual over the last five months.
Through most of last year, Goldstein, who directs male reproductive medicine and microsurgery at the New York-Presbyterian Hospital/Weill Cornell Medical Center, was performing about six vasectomies a month. Then, in November, the number rose to nine, where it was holding steady through the end of March. “I’ve been in practice for 30 years, and I’ve never seen a spike like this,” Goldstein said. “Many of my clients work in finance and say they feel anxious about the expense of an added child.” NYT & AGENCIES
“This was a desired pregnancy but they re-evaluated expenses and decided not to continue,” said Dr Pratima Gupta. “When I was doing the options counselling, she interrupted me, crying, and said, ‘I just walked here for an hour. I’m sure of my decision.’”
Other doctors are hearing similarly wrenching tales. For many Americans, the recession is affecting their most intimate decisions about sex and family planning. Doctors and clinics are reporting that many women are choosing abortions and even more men are having vasectomies because they cannot afford a child.
The recent anecdotal data, if they hold, would have a historical parallel in the Great Depression, when the birth rate fell sharply.
As this recession continues, it is understandable that more people might hesitate to expand their families. A baby born in 2006—the latest year for which data are available—will cost middle-income parents $260,000 by the time the child reaches 17, according to the Agriculture Department. And that doesn’t include college.
In California, Planned Parenthood says that compared with last year’s first quarter, requests for vasectomies were up more than 30% in the first three months of this year at its clinics in San Diego and Riverside Counties, where 64 of the procedures were done. “The recession has created a new level of urgency among our clients,” said Vince Hall, a spokesman. “We used to have a three- to six-week waiting period. Now men have to wait two-and-a-half months to get an appointment.”
Helping spur demand, he said, might be the fact that unemployed men often qualify for free vasectomies under Family PACT, a California family planning program for low-income households.
On the Upper East Side of Manhattan, where the financial industry’s collapse has compressed many a household budget, Dr Marc Goldstein says he has been performing more vasectomies than usual over the last five months.
Through most of last year, Goldstein, who directs male reproductive medicine and microsurgery at the New York-Presbyterian Hospital/Weill Cornell Medical Center, was performing about six vasectomies a month. Then, in November, the number rose to nine, where it was holding steady through the end of March. “I’ve been in practice for 30 years, and I’ve never seen a spike like this,” Goldstein said. “Many of my clients work in finance and say they feel anxious about the expense of an added child.” NYT & AGENCIES
Friday, April 10, 2009
Showdown Seen Between Banks and Regulators
11th, Mach - 2009
WASHINGTON — As the Obama administration completes its examinations of the nation’s largest banks, industry executives are bracing for fights with the government over repayment of bailout money and forced sales of bad mortgages.
Skip to next paragraph
Enlarge This Image
Ángel Franco/The New York Times
Without being specific, President Obama said his administration would take additional steps to bolster the economy over the next several weeks.
Multimedia
Interactive Graphic
Adding Up the Government’s Total Bailout Tab
Interactive Feature
Tracking the $700 Billion Bailout
Related
Room for Debate: The Economy's 'Green Shoots,' Real or Imagined (April 6, 2009) President Obama emerged from a meeting with his senior economic advisers on Friday to say “what you’re starting to see is glimmers of hope across the economy.” But there were also signs of growing tensions between the White House and the nation’s banks over the next phase of the financial rescue.
Some of the healthier banks want to pay back their bailout loans to avoid executive pay and other restrictions that come with the money. But the banks are balking at the hefty premium they agreed to pay when they took the money.
Jamie Dimon, the chief executive of JPMorgan Chase, and two other executives of large banks raised the issue with President Obama and the Treasury secretary, Timothy F. Geithner, at a meeting two weeks ago.
“This is a source of considerable consternation,” said Camden R. Fine, who attended the White House meeting as president of the Independent Community Bankers, a trade group of 5,000 mostly smaller institutions, many of which are also complaining about the repayment requirements. Meanwhile, the Obama administration wants weaker banks to move more quickly to relieve their balance sheets of the toxic assets, the home loans and mortgage bonds that nobody wants to buy right now. But the banks are resisting because they would have to book big losses.
Finally, there is increasing anxiety in the industry that the administration could use the stress tests of the 19 biggest banks, due to be completed in the next three weeks, to insist on management changes, just as it did with General Motors when officials forced the resignation of its chief executive after examining that company’s books.
Senior officials, recognizing that the next few weeks could prove pivotal for both the industry and the bailout effort, are moving ahead with major plans.
“You will be seeing additional actions by the administration,” Mr. Obama said after the meeting Friday, when the officials discussed the bank stress tests and the new $500 billion to $1 trillion plan that will use public subsidies to encourage private investors to buy mortgage assets.
Attending the session were Mr. Geithner; Sheila C. Bair, the head of the Federal Deposit Insurance Corporation; Lawrence H. Summers, the chairman of the National Economic Council; and other top regulators.
The tension between the industry and the administration is rising as the government’s bailout fund is dwindling, putting the administration in a bind. It is all but certain to need to seek more money from Congress, which wants to see results from existing programs first.
The fund is down to its final $134 billion, according to Treasury officials, and is expected to face new requests for money in the coming weeks to aid tottering banks, the auto industry and possibly insurance companies.
“Between now and Memorial Day we’re going to know a whole lot more about the degree of trouble the banks are in,” said Senator Charles E. Schumer, a New York Democrat who is vice chairman of the Joint Economic Committee. “At the same time, we will begin to have a good initial reading as to how well the administration’s programs are working.”
This month, the nation’s largest banks began announcing their latest quarterly earnings. Some, like Wells Fargo, have released results early to trumpet their profitable first quarter — and possibly to give them leverage in coming negotiations with their regulator.
The immediate concern for the administration is how to get the weaker banks to relieve their books of deteriorating mortgages and mortgage-backed securities
Industry analysts estimate that United States banks alone have more than $1 trillion of such mortgages on their books but have recognized only a small share of the likely losses.
Economists at Goldman Sachs estimated recently that banks were valuing their mortgages at about 91 cents on the dollar, far more than investors are willing to pay for them.
Even though the Treasury Department plans to subsidize the purchases of toxic assets by giving buyers low-cost loans to cover most of their upfront cost, a growing number of analysts warn that many if not most banks will remain reluctant to sell.
“The gap is still very wide,” said Frank Pallotta, a former mortgage trader at Morgan Stanley, now a consultant to institutional investors. “If every bank was forced to sell at the market-clearing price, you’d have only five banks left in the market.”
The stress tests of the banks are aimed at estimating how much each bank would lose if the economic downturn proved even deeper than currently expected.
Government officials do not plan to disclose the results for individual banks but may reveal broad results for the entire industry at the end of the month.
If the test indicates that the losses would leave a bank with too little capital, the bank will have six months to either raise extra money from private investors or get money from the government. Executives at some banks are worried that regulators will start demanding changes in management and strategy, possibly forcing them to merge with stronger institutions.
Treasury officials said they understood that banks had valid reasons for placing higher values on their mortgages than investors, and said they were hoping to avoid major conflicts.
Facing a host of government restrictions — from how much they pay executives to how many foreign citizens they employ — some small banks have returned the bailout money, and some larger ones, including Goldman Sachs, Wells Fargo and Northern Trust, have said they want to do so as quickly as possible.
On Friday, Sun Bancorp of Vineland, N.J., became the sixth bank to exit the program, returning $89.3 million just three months after it received its loan.
Regulators are reluctant to approve the early repayments until banks can show that they have the capital to withstand further erosion in the economy and will not curtail their lending.
Both large and small banks have pressed the Obama administration to make it less costly for them to exit the bailout program by waiving the right to exercise stock warrants the banks had to grant the government in exchange for the loans. At a meeting last month, the chiefs of three of the largest banks separately asked President Obama to direct the Treasury not to exercise the warrants, Mr. Fine said.
Douglas Leech, the founder and chief executive of Centra Bank, a small West Virginia bank that participated in the capital assistance program but returned the money after the government imposed new conditions, said he complained strongly about the Treasury Department’s decision to demand repayment of the warrants. That effectively raised the interest rate he paid on a $15 million loan to an annual rate of about 60 percent, he said.
“What they did is wrong and fundamentally un-American,” he said. “Even though the government told us to take this money to increase our lending, the extra charge meant we had less money to lend. It was the equivalent of a penalty for early withdrawal.”
Stephanie Cutter, a spokeswoman at the Treasury Department, said it did not comment about the participation of specific banks in the plan or their efforts to exit the program.
WASHINGTON — As the Obama administration completes its examinations of the nation’s largest banks, industry executives are bracing for fights with the government over repayment of bailout money and forced sales of bad mortgages.
Skip to next paragraph
Enlarge This Image
Ángel Franco/The New York Times
Without being specific, President Obama said his administration would take additional steps to bolster the economy over the next several weeks.
Multimedia
Interactive Graphic
Adding Up the Government’s Total Bailout Tab
Interactive Feature
Tracking the $700 Billion Bailout
Related
Room for Debate: The Economy's 'Green Shoots,' Real or Imagined (April 6, 2009) President Obama emerged from a meeting with his senior economic advisers on Friday to say “what you’re starting to see is glimmers of hope across the economy.” But there were also signs of growing tensions between the White House and the nation’s banks over the next phase of the financial rescue.
Some of the healthier banks want to pay back their bailout loans to avoid executive pay and other restrictions that come with the money. But the banks are balking at the hefty premium they agreed to pay when they took the money.
Jamie Dimon, the chief executive of JPMorgan Chase, and two other executives of large banks raised the issue with President Obama and the Treasury secretary, Timothy F. Geithner, at a meeting two weeks ago.
“This is a source of considerable consternation,” said Camden R. Fine, who attended the White House meeting as president of the Independent Community Bankers, a trade group of 5,000 mostly smaller institutions, many of which are also complaining about the repayment requirements. Meanwhile, the Obama administration wants weaker banks to move more quickly to relieve their balance sheets of the toxic assets, the home loans and mortgage bonds that nobody wants to buy right now. But the banks are resisting because they would have to book big losses.
Finally, there is increasing anxiety in the industry that the administration could use the stress tests of the 19 biggest banks, due to be completed in the next three weeks, to insist on management changes, just as it did with General Motors when officials forced the resignation of its chief executive after examining that company’s books.
Senior officials, recognizing that the next few weeks could prove pivotal for both the industry and the bailout effort, are moving ahead with major plans.
“You will be seeing additional actions by the administration,” Mr. Obama said after the meeting Friday, when the officials discussed the bank stress tests and the new $500 billion to $1 trillion plan that will use public subsidies to encourage private investors to buy mortgage assets.
Attending the session were Mr. Geithner; Sheila C. Bair, the head of the Federal Deposit Insurance Corporation; Lawrence H. Summers, the chairman of the National Economic Council; and other top regulators.
The tension between the industry and the administration is rising as the government’s bailout fund is dwindling, putting the administration in a bind. It is all but certain to need to seek more money from Congress, which wants to see results from existing programs first.
The fund is down to its final $134 billion, according to Treasury officials, and is expected to face new requests for money in the coming weeks to aid tottering banks, the auto industry and possibly insurance companies.
“Between now and Memorial Day we’re going to know a whole lot more about the degree of trouble the banks are in,” said Senator Charles E. Schumer, a New York Democrat who is vice chairman of the Joint Economic Committee. “At the same time, we will begin to have a good initial reading as to how well the administration’s programs are working.”
This month, the nation’s largest banks began announcing their latest quarterly earnings. Some, like Wells Fargo, have released results early to trumpet their profitable first quarter — and possibly to give them leverage in coming negotiations with their regulator.
The immediate concern for the administration is how to get the weaker banks to relieve their books of deteriorating mortgages and mortgage-backed securities
Industry analysts estimate that United States banks alone have more than $1 trillion of such mortgages on their books but have recognized only a small share of the likely losses.
Economists at Goldman Sachs estimated recently that banks were valuing their mortgages at about 91 cents on the dollar, far more than investors are willing to pay for them.
Even though the Treasury Department plans to subsidize the purchases of toxic assets by giving buyers low-cost loans to cover most of their upfront cost, a growing number of analysts warn that many if not most banks will remain reluctant to sell.
“The gap is still very wide,” said Frank Pallotta, a former mortgage trader at Morgan Stanley, now a consultant to institutional investors. “If every bank was forced to sell at the market-clearing price, you’d have only five banks left in the market.”
The stress tests of the banks are aimed at estimating how much each bank would lose if the economic downturn proved even deeper than currently expected.
Government officials do not plan to disclose the results for individual banks but may reveal broad results for the entire industry at the end of the month.
If the test indicates that the losses would leave a bank with too little capital, the bank will have six months to either raise extra money from private investors or get money from the government. Executives at some banks are worried that regulators will start demanding changes in management and strategy, possibly forcing them to merge with stronger institutions.
Treasury officials said they understood that banks had valid reasons for placing higher values on their mortgages than investors, and said they were hoping to avoid major conflicts.
Facing a host of government restrictions — from how much they pay executives to how many foreign citizens they employ — some small banks have returned the bailout money, and some larger ones, including Goldman Sachs, Wells Fargo and Northern Trust, have said they want to do so as quickly as possible.
On Friday, Sun Bancorp of Vineland, N.J., became the sixth bank to exit the program, returning $89.3 million just three months after it received its loan.
Regulators are reluctant to approve the early repayments until banks can show that they have the capital to withstand further erosion in the economy and will not curtail their lending.
Both large and small banks have pressed the Obama administration to make it less costly for them to exit the bailout program by waiving the right to exercise stock warrants the banks had to grant the government in exchange for the loans. At a meeting last month, the chiefs of three of the largest banks separately asked President Obama to direct the Treasury not to exercise the warrants, Mr. Fine said.
Douglas Leech, the founder and chief executive of Centra Bank, a small West Virginia bank that participated in the capital assistance program but returned the money after the government imposed new conditions, said he complained strongly about the Treasury Department’s decision to demand repayment of the warrants. That effectively raised the interest rate he paid on a $15 million loan to an annual rate of about 60 percent, he said.
“What they did is wrong and fundamentally un-American,” he said. “Even though the government told us to take this money to increase our lending, the extra charge meant we had less money to lend. It was the equivalent of a penalty for early withdrawal.”
Stephanie Cutter, a spokeswoman at the Treasury Department, said it did not comment about the participation of specific banks in the plan or their efforts to exit the program.
Japan’s Bonds Fall a 3rd Week on Optimism Global Crisis Easing
April 11 (Bloomberg) -- Japanese bonds fell for a third week, matching the longest losing streak since June, as stocks rallied worldwide on optimism the worst of the financial turmoil may be over.
Benchmark 10-year yields touched the highest level in almost five months yesterday as the government unveiled an additional stimulus package totaling 15 trillion yen ($150 billion), fueling concern debt sales will increase. Longer- maturity bonds fell more than short-dated ones this week, steepening the so-called yield curve.
“Expectations that the U.S. and Japanese economies may be bottoming out are now growing, spurring euphoria about prospects for stock markets,” said Takeshi Minami, chief economist in Tokyo at Norinchukin Research Institute Ltd. “Benchmark yields may test 1.5 percent.”
The yield on the 10-year bond rose three basis points, or 0.03 percentage point, this week to 1.45 percent, at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price of the 1.3 percent security due in March 2019 slid 0.256 yen to 98.698 yen. The yield touched 1.49 percent yesterday, the highest level since Nov. 18.
Ten-year bond futures for June delivery fell 0.73 this week to 136.68 on the Tokyo Stock Exchange. The difference between five- and 20-year yields, a measure of the yield curve, widened to 1.24 percentage points, matching the most since Dec. 12.
Stocks Gain
Bonds declined as the Nikkei 225 Stock Average gained for a fifth week, the longest winning stretch since May 2008. Local equities followed U.S. shares higher after White House chief economic adviser Lawrence Summers said on April 9 the “free- fall” in the U.S. economy will end soon.
The VIX index of volatility fell to its lowest closing level since September, dropping 6 percent to 36.53 on April 9. The VIX had only surpassed 40 in four periods of its 19-year history before Lehman Brothers Holdings Inc. filed for bankruptcy in September.
“Rising stock prices improve the risk appetite and make investors feel like buying more riskier assets and less bonds,” said Yasuhide Yajima, an economist in Tokyo at NLI Research Institute Ltd. If the Nikkei 225 approaches 10,000, the 10-year bond yield may rise to 1.6 to 1.7 percent, he said.
Daily Gain
Bonds rose yesterday, ending two days of losses, on speculation yields approaching the highest level in five months attracted investors.
“The 1.5 percent mark may continue to serve as an important support line for 10-year bonds,” said Masashi Shimominami, a Tokyo-based market analyst at Mizuho Securities Co., a unit of Japan’s second-largest bank.
The 10-year yield will fall to 1.22 percent by the end of September, according to the weighted forecast of economists and analysts surveyed by Bloomberg News. Should that estimate prove accurate, investors who bought 10-year debt yesterday will make a return of 2.3 percent by Sept. 30.
“Ten-year bonds are now looking attractive,” said Toshiro Yanagiya, general manager of the securities business division at Aozora Bank Ltd. in Tokyo. “The ongoing announcement of quarterly profits in the U.S. may reveal that things are not developing in such a positive way as the market would prefer.”
Profits at S&P 500 companies fell 38 percent on average in the first quarter, according to analysts’ estimates compiled by Bloomberg. The stretch of seven straight quarterly earnings declines is the longest since at least the Great Depression, data compiled by Standard & Poor’s and Bloomberg show.
Debt Supply
Bonds also fell this week on speculation the supply of debt will keep increasing as the government spends more to help the economy emerge from recession.
The government will issue as much as 11 trillion yen of additional debt to pay for Prime Minister Taro Aso’s extra stimulus plans, Chief Cabinet Secretary Takeo Kawamura said on April 9. The Ministry of Finance said in December it plans to boost bond sales by 7 trillion yen to 113.3 trillion yen in the financial year that began on April 1.
Including financial measures and guarantees, the government’s latest stimulus plan will total 57 trillion yen, Aso said at a press conference in Tokyo yesterday. His third package since taking office in September would take total spending to 25 trillion yen.
“Additional bond issuance stemming from the compilation of new pump-priming measures exceeds my expectations,” said Makoto Yamashita, chief Japan interest-rate strategist at Deutsche Securities Inc. in Tokyo.
Deutsche Bank raised its 10-year yield forecast for the next three months to a range from 1.2 to 1.6 percent, from an earlier prediction of between 1 percent and 1.5 percent, Yamashita said.
Benchmark 10-year yields touched the highest level in almost five months yesterday as the government unveiled an additional stimulus package totaling 15 trillion yen ($150 billion), fueling concern debt sales will increase. Longer- maturity bonds fell more than short-dated ones this week, steepening the so-called yield curve.
“Expectations that the U.S. and Japanese economies may be bottoming out are now growing, spurring euphoria about prospects for stock markets,” said Takeshi Minami, chief economist in Tokyo at Norinchukin Research Institute Ltd. “Benchmark yields may test 1.5 percent.”
The yield on the 10-year bond rose three basis points, or 0.03 percentage point, this week to 1.45 percent, at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price of the 1.3 percent security due in March 2019 slid 0.256 yen to 98.698 yen. The yield touched 1.49 percent yesterday, the highest level since Nov. 18.
Ten-year bond futures for June delivery fell 0.73 this week to 136.68 on the Tokyo Stock Exchange. The difference between five- and 20-year yields, a measure of the yield curve, widened to 1.24 percentage points, matching the most since Dec. 12.
Stocks Gain
Bonds declined as the Nikkei 225 Stock Average gained for a fifth week, the longest winning stretch since May 2008. Local equities followed U.S. shares higher after White House chief economic adviser Lawrence Summers said on April 9 the “free- fall” in the U.S. economy will end soon.
The VIX index of volatility fell to its lowest closing level since September, dropping 6 percent to 36.53 on April 9. The VIX had only surpassed 40 in four periods of its 19-year history before Lehman Brothers Holdings Inc. filed for bankruptcy in September.
“Rising stock prices improve the risk appetite and make investors feel like buying more riskier assets and less bonds,” said Yasuhide Yajima, an economist in Tokyo at NLI Research Institute Ltd. If the Nikkei 225 approaches 10,000, the 10-year bond yield may rise to 1.6 to 1.7 percent, he said.
Daily Gain
Bonds rose yesterday, ending two days of losses, on speculation yields approaching the highest level in five months attracted investors.
“The 1.5 percent mark may continue to serve as an important support line for 10-year bonds,” said Masashi Shimominami, a Tokyo-based market analyst at Mizuho Securities Co., a unit of Japan’s second-largest bank.
The 10-year yield will fall to 1.22 percent by the end of September, according to the weighted forecast of economists and analysts surveyed by Bloomberg News. Should that estimate prove accurate, investors who bought 10-year debt yesterday will make a return of 2.3 percent by Sept. 30.
“Ten-year bonds are now looking attractive,” said Toshiro Yanagiya, general manager of the securities business division at Aozora Bank Ltd. in Tokyo. “The ongoing announcement of quarterly profits in the U.S. may reveal that things are not developing in such a positive way as the market would prefer.”
Profits at S&P 500 companies fell 38 percent on average in the first quarter, according to analysts’ estimates compiled by Bloomberg. The stretch of seven straight quarterly earnings declines is the longest since at least the Great Depression, data compiled by Standard & Poor’s and Bloomberg show.
Debt Supply
Bonds also fell this week on speculation the supply of debt will keep increasing as the government spends more to help the economy emerge from recession.
The government will issue as much as 11 trillion yen of additional debt to pay for Prime Minister Taro Aso’s extra stimulus plans, Chief Cabinet Secretary Takeo Kawamura said on April 9. The Ministry of Finance said in December it plans to boost bond sales by 7 trillion yen to 113.3 trillion yen in the financial year that began on April 1.
Including financial measures and guarantees, the government’s latest stimulus plan will total 57 trillion yen, Aso said at a press conference in Tokyo yesterday. His third package since taking office in September would take total spending to 25 trillion yen.
“Additional bond issuance stemming from the compilation of new pump-priming measures exceeds my expectations,” said Makoto Yamashita, chief Japan interest-rate strategist at Deutsche Securities Inc. in Tokyo.
Deutsche Bank raised its 10-year yield forecast for the next three months to a range from 1.2 to 1.6 percent, from an earlier prediction of between 1 percent and 1.5 percent, Yamashita said.
Aso’s Stimulus Plan May Spur Economy at ‘Massive’ Future Cost
April 11 (Bloomberg) -- Japan’s record 15.4 trillion ($153 billion) stimulus package may give a short-term boost to the nation’s economy, while leaving it saddled with a debt burden that will smother future growth, economists said.
The plan unveiled yesterday by Prime Minister Taro Aso, who faces elections this year, is aimed at creating jobs in an economy heading for the worst recession since 1945. Equal to 3 percent of gross domestic product, the measures will add to debt that the OECD already forecasts will rise to 197 percent of gross domestic product next year.
“The stimulus will probably prevent Japan from falling apart in the short term, but it will leave a massive bill for the future,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo. “The package doesn’t do anything to promote a sustainable economic recovery.”
The plan does little to address the nation’s liabilities, give its aging citizens confidence in their pension system, or encourage them to spend some of their 1,400 trillion yen in financial assets, according to Kirby Daley, senior strategist at Newedge Group in Hong Kong.
“The fiscal situation of the government is deteriorating faster than anyone imagined,” Daley said in an interview with Bloomberg Television. The government needs to address its debt “so the Japanese consumer feels comfortable that their pension system is viable. They will then start to unlock those savings,” he said.
Financing Package
Finance Minister Kaoru Yosano said the government will sell more than 10 trillion yen of debt to fund the spending on top of 33.3 trillion yen of bonds to be issued this fiscal year. That would take total liabilities to more than 800 trillion yen by March 2010, excluding short-term debt that the Organization for Economic Cooperation and Development uses to calculate its ratio.
The debt burden will be borne by a shrinking population that will be hard pressed to keep the economy growing fast enough in years to come, said John Richards, head debt-market strategist for the Asia-Pacific region at Royal Bank of Scotland Plc in Tokyo.
“The burden of this debt is going to be felt and it’s going to be much worse than people thought,” Richards said. “It’s going to result in higher interest rates and slower growth than Japan can otherwise achieve.”
Weighing Tax Increase
Aso, 68, said the government will consider raising the consumption tax from the current 5 percent once the economy recovers “in order to not leave a huge debt to our children.”
Bond yields are already rising, climbing to the highest in almost five months on April 9 on speculation the supply of debt will keep increasing as the government tries to spend its way out of the recession.
“Yields may rise as the government fails to give confidence that the stimulus package will improve jobs and consumption and boost tax revenue,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Higher government bond yields may lead to higher borrowing costs for companies,” stunting investment and economic growth, Morita said.
Aso pledged to create up to 2 million jobs in the next three years and boost demand by between 40 trillion yen and 60 trillion yen by focusing on industries such as solar power, electric cars and energy-saving consumer electronics.
That compares with the 3.5 million jobs U.S. President Barack Obama pledged to save or create with his $787 billion stimulus package. The 25 trillion yen in total spending announced by Aso since he became prime minister in September is about 5 percent of GDP, a ratio comparable to the U.S. stimulus.
Boost Demand
“Aso is very optimistic” on that jobs creation number when you compare it with Obama’s plan, Daley said. “When you throw $150 billion at an economy in one year, you will see an effect. It will not be long term, nor sustainable.”
The Nikkei 225 Stock Average erased its losses for the year, climbing 2.5 percent for the week after details of the stimulus were leaked by ruling party officials. Economists said the plan would help moderate the economy’s deterioration later this year.
“This new package likely will significantly boost domestic demand, mainly in private consumption and government investment, from the third quarter,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo.
Analysts said that fixing the country’s long-term fiscal problems is the key to stimulating domestic consumption and weaning the country off its export dependence.
Japan’s older generation is reluctant to spend after the government revealed two years ago that it had lost pension records for 50 million people, or more than a third of the entire population. Younger people are growing concerned that the system will have run out of money by the time they retire.
Retirement Worry
A record 84 percent of Japanese are worried about retiring because they say they lack savings, an annual Bank of Japan survey showed in October.
“What households and the elderly need to see in order for them to start spending money is evidence that they don’t have to worry about retirement,” said Shirakawa at Credit Suisse. “The government isn’t providing any relief or convincing plans for the future. It’s all cheap talk by politicians.”
The plan unveiled yesterday by Prime Minister Taro Aso, who faces elections this year, is aimed at creating jobs in an economy heading for the worst recession since 1945. Equal to 3 percent of gross domestic product, the measures will add to debt that the OECD already forecasts will rise to 197 percent of gross domestic product next year.
“The stimulus will probably prevent Japan from falling apart in the short term, but it will leave a massive bill for the future,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo. “The package doesn’t do anything to promote a sustainable economic recovery.”
The plan does little to address the nation’s liabilities, give its aging citizens confidence in their pension system, or encourage them to spend some of their 1,400 trillion yen in financial assets, according to Kirby Daley, senior strategist at Newedge Group in Hong Kong.
“The fiscal situation of the government is deteriorating faster than anyone imagined,” Daley said in an interview with Bloomberg Television. The government needs to address its debt “so the Japanese consumer feels comfortable that their pension system is viable. They will then start to unlock those savings,” he said.
Financing Package
Finance Minister Kaoru Yosano said the government will sell more than 10 trillion yen of debt to fund the spending on top of 33.3 trillion yen of bonds to be issued this fiscal year. That would take total liabilities to more than 800 trillion yen by March 2010, excluding short-term debt that the Organization for Economic Cooperation and Development uses to calculate its ratio.
The debt burden will be borne by a shrinking population that will be hard pressed to keep the economy growing fast enough in years to come, said John Richards, head debt-market strategist for the Asia-Pacific region at Royal Bank of Scotland Plc in Tokyo.
“The burden of this debt is going to be felt and it’s going to be much worse than people thought,” Richards said. “It’s going to result in higher interest rates and slower growth than Japan can otherwise achieve.”
Weighing Tax Increase
Aso, 68, said the government will consider raising the consumption tax from the current 5 percent once the economy recovers “in order to not leave a huge debt to our children.”
Bond yields are already rising, climbing to the highest in almost five months on April 9 on speculation the supply of debt will keep increasing as the government tries to spend its way out of the recession.
“Yields may rise as the government fails to give confidence that the stimulus package will improve jobs and consumption and boost tax revenue,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Higher government bond yields may lead to higher borrowing costs for companies,” stunting investment and economic growth, Morita said.
Aso pledged to create up to 2 million jobs in the next three years and boost demand by between 40 trillion yen and 60 trillion yen by focusing on industries such as solar power, electric cars and energy-saving consumer electronics.
That compares with the 3.5 million jobs U.S. President Barack Obama pledged to save or create with his $787 billion stimulus package. The 25 trillion yen in total spending announced by Aso since he became prime minister in September is about 5 percent of GDP, a ratio comparable to the U.S. stimulus.
Boost Demand
“Aso is very optimistic” on that jobs creation number when you compare it with Obama’s plan, Daley said. “When you throw $150 billion at an economy in one year, you will see an effect. It will not be long term, nor sustainable.”
The Nikkei 225 Stock Average erased its losses for the year, climbing 2.5 percent for the week after details of the stimulus were leaked by ruling party officials. Economists said the plan would help moderate the economy’s deterioration later this year.
“This new package likely will significantly boost domestic demand, mainly in private consumption and government investment, from the third quarter,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo.
Analysts said that fixing the country’s long-term fiscal problems is the key to stimulating domestic consumption and weaning the country off its export dependence.
Japan’s older generation is reluctant to spend after the government revealed two years ago that it had lost pension records for 50 million people, or more than a third of the entire population. Younger people are growing concerned that the system will have run out of money by the time they retire.
Retirement Worry
A record 84 percent of Japanese are worried about retiring because they say they lack savings, an annual Bank of Japan survey showed in October.
“What households and the elderly need to see in order for them to start spending money is evidence that they don’t have to worry about retirement,” said Shirakawa at Credit Suisse. “The government isn’t providing any relief or convincing plans for the future. It’s all cheap talk by politicians.”
Thursday, April 9, 2009
Japan Stocks Rise on U.S. Jobs; Sumitomo Mitsui Set to Slump
April 10 (Bloomberg) -- Japanese stocks rose after fewer Americans sought unemployment insurance and U.S.-based Wells Fargo & Co. reported a record quarterly profit, lifting optimism a recession in the world’s biggest economy is abating.
Sony Corp., which gets a quarter of its sales from the U.S., advanced 4.2 percent as White House chief economic adviser Lawrence Summers said the “free-fall” in the U.S. economy will end soon. Orix Corp., Japan’s top non-bank financial company, climbed 6.8 percent. Nippon Mining Holdings Inc. leapt 8.4 percent on a newspaper report the company’s loss may be less than it forecast. Sumitomo Mitsui Financial Group Inc. was poised to dive after posting its biggest loss in six years.
The Nikkei 225 Stock Average climbed 81.43, or 0.9 percent, to 8,997.49 as of 10:29 a.m. in Tokyo. The broader Topix index rose 6.91, or 0.8 percent, to 848.72. The Nikkei is set for a 2.8 percent advance for this week, a fifth weekly gain, while the Topix is poised to add 1.9 percent.
“Wells Fargo’s results boosted investor confidence in the outlook for the global financial system,” Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion, said in an interview with Bloomberg Television. “Cyclical shares will be broadly bought in Tokyo following the U.S. rally.”
The Nikkei yesterday erased this year’s loss amid expectations Japan’s government will use public money to support the equity market. The price-book ratio on the gauge rebounded yesterday to 1 for the first time since Jan. 9. The Standard & Poor’s 500 Index in the U.S. is still down 5.2 percent on the year.
Electronics, Cars
U.S. first-time claims for unemployment insurance fell by 20,000 to 654,000 in the week to April 4, the Labor Department reported yesterday. That was fewer than the 660,000 economists had estimated.
Sony, the world’s No. 2 maker of consumer electronics, climbed 4.2 percent to 2,585 yen, and its larger competitor Panasonic Corp. added 3 percent to 1,319 yen. Electronics makers as a group were the second-biggest contributor to the Topix’s advance, following car manufacturers.
Honda Motor Co., Japan’s second-largest automaker, gained 2.7 percent to 2,860 yen, while market leader Toyota Motor Corp. added 1.5 percent to 3,970 yen. Isuzu Motors Ltd., the nation’s largest truckmaker, rose 13 percent to 156 yen.
Nomura Holdings Inc. raised Japan’s auto industry to “neutral” from “bearish.” Separately, Morgan Stanley boosted its rating on Isuzu to “overweight” from “equalweight.”
Orix soared 6.8 percent to 4,850 yen, and Aiful Corp., Japan’s largest consumer lender by assets, increased 4.1 percent to 178 yen. Takefuji Corp. added 2.6 percent to 592 yen.
Stress Test
Wells Fargo, the No. 2 U.S. home lender, yesterday said first-quarter net income surged by half because of “strong” revenue from Wachovia Corp., which it acquired last year. The S&P 500 Banks Index leapt by a quarter, the most on record, while the overall market climbed 3.8 percent to a two-month high.
Government stress tests of U.S. banks are likely to indicate most don’t need more taxpayer money, Federal Reserve Bank of Kansas City President Thomas Hoenig said. White House adviser Summers said conditions have eased in the credit markets and that the decline in the U.S. economy will end within the next few months.
Nippon Mining, Japan’s largest copper producer, leapt 8.4 percent to 452 yen. The company may report a net loss of about 42 billion yen for the 12 months ended March 31, less than its 57 billion-yen projection, the Nikkei newspaper said today.
Kawasaki Kisen Kaisha Ltd., Japan’s No. 3 shipping line, advanced 4 percent to 392 yen, while Mitsui O.S.K. Lines Ltd. climbed 4.4 percent to 568 yen. The Baltic Dry Index, a measure of shipping costs for commodities, rose 1 percent yesterday in London, the first gain since March 10.
Bank Slump
Bank shares weighed on the market. Mizuho Financial Group Inc., the nation’s second-largest listed bank, dived 8.2 percent to 201 yen and Mitsubishi UFJ Financial Group Inc., the biggest, slumped 3.1 percent to 506 yen.
Sumitomo Mitsui, Japan’s No. 3 listed bank by assets, wasn’t traded as orders to sell outnumbered those to buy. The lender lost 390 billion yen ($3.88 billion) in the year to March 31, it said yesterday. Analysts had expected a profit. To shore up capital, the company prepared to sell as much as 800 billion yen of common shares.
Nikkei futures expiring in June added 0.8 percent to 9,000 in Osaka and gained 1.1 percent to 8,995 in Singapore.
Sony Corp., which gets a quarter of its sales from the U.S., advanced 4.2 percent as White House chief economic adviser Lawrence Summers said the “free-fall” in the U.S. economy will end soon. Orix Corp., Japan’s top non-bank financial company, climbed 6.8 percent. Nippon Mining Holdings Inc. leapt 8.4 percent on a newspaper report the company’s loss may be less than it forecast. Sumitomo Mitsui Financial Group Inc. was poised to dive after posting its biggest loss in six years.
The Nikkei 225 Stock Average climbed 81.43, or 0.9 percent, to 8,997.49 as of 10:29 a.m. in Tokyo. The broader Topix index rose 6.91, or 0.8 percent, to 848.72. The Nikkei is set for a 2.8 percent advance for this week, a fifth weekly gain, while the Topix is poised to add 1.9 percent.
“Wells Fargo’s results boosted investor confidence in the outlook for the global financial system,” Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $61 billion, said in an interview with Bloomberg Television. “Cyclical shares will be broadly bought in Tokyo following the U.S. rally.”
The Nikkei yesterday erased this year’s loss amid expectations Japan’s government will use public money to support the equity market. The price-book ratio on the gauge rebounded yesterday to 1 for the first time since Jan. 9. The Standard & Poor’s 500 Index in the U.S. is still down 5.2 percent on the year.
Electronics, Cars
U.S. first-time claims for unemployment insurance fell by 20,000 to 654,000 in the week to April 4, the Labor Department reported yesterday. That was fewer than the 660,000 economists had estimated.
Sony, the world’s No. 2 maker of consumer electronics, climbed 4.2 percent to 2,585 yen, and its larger competitor Panasonic Corp. added 3 percent to 1,319 yen. Electronics makers as a group were the second-biggest contributor to the Topix’s advance, following car manufacturers.
Honda Motor Co., Japan’s second-largest automaker, gained 2.7 percent to 2,860 yen, while market leader Toyota Motor Corp. added 1.5 percent to 3,970 yen. Isuzu Motors Ltd., the nation’s largest truckmaker, rose 13 percent to 156 yen.
Nomura Holdings Inc. raised Japan’s auto industry to “neutral” from “bearish.” Separately, Morgan Stanley boosted its rating on Isuzu to “overweight” from “equalweight.”
Orix soared 6.8 percent to 4,850 yen, and Aiful Corp., Japan’s largest consumer lender by assets, increased 4.1 percent to 178 yen. Takefuji Corp. added 2.6 percent to 592 yen.
Stress Test
Wells Fargo, the No. 2 U.S. home lender, yesterday said first-quarter net income surged by half because of “strong” revenue from Wachovia Corp., which it acquired last year. The S&P 500 Banks Index leapt by a quarter, the most on record, while the overall market climbed 3.8 percent to a two-month high.
Government stress tests of U.S. banks are likely to indicate most don’t need more taxpayer money, Federal Reserve Bank of Kansas City President Thomas Hoenig said. White House adviser Summers said conditions have eased in the credit markets and that the decline in the U.S. economy will end within the next few months.
Nippon Mining, Japan’s largest copper producer, leapt 8.4 percent to 452 yen. The company may report a net loss of about 42 billion yen for the 12 months ended March 31, less than its 57 billion-yen projection, the Nikkei newspaper said today.
Kawasaki Kisen Kaisha Ltd., Japan’s No. 3 shipping line, advanced 4 percent to 392 yen, while Mitsui O.S.K. Lines Ltd. climbed 4.4 percent to 568 yen. The Baltic Dry Index, a measure of shipping costs for commodities, rose 1 percent yesterday in London, the first gain since March 10.
Bank Slump
Bank shares weighed on the market. Mizuho Financial Group Inc., the nation’s second-largest listed bank, dived 8.2 percent to 201 yen and Mitsubishi UFJ Financial Group Inc., the biggest, slumped 3.1 percent to 506 yen.
Sumitomo Mitsui, Japan’s No. 3 listed bank by assets, wasn’t traded as orders to sell outnumbered those to buy. The lender lost 390 billion yen ($3.88 billion) in the year to March 31, it said yesterday. Analysts had expected a profit. To shore up capital, the company prepared to sell as much as 800 billion yen of common shares.
Nikkei futures expiring in June added 0.8 percent to 9,000 in Osaka and gained 1.1 percent to 8,995 in Singapore.
Bank of England Vows to Buy Assets to Bolster Lending
10th April-2009
The British central bank said on Thursday that it would fully carry out a £75 billion asset-purchase program during the next two months, seeking to reassure investors that it was committed to steps to revive bank lending.
The Bank of England made the announcement after its Monetary Policy Committee left its main interest rate at 0.5 percent, the level it set in March and the lowest in its three-century history. The bank had been cutting rates since last October, when the rate stood at 5 percent.
Like the Federal Reserve in the United States and the Bank of Japan, which also have set official interest rates at rock-bottom levels, the British monetary authorities have begun unconventional operations, including so-called quantitative easing, to increase lending.
The Monetary Policy Committee voted last month to use the bank’s balance sheet to buy £75 billion, or about $110 billion, of government and company bonds — effectively creating new money.
But investors had been demanding more clarity about the bond purchase plans, after the Bank of England’s governor, Mervyn King, appeared to suggest last month in an address to Parliament that the program might be retired early.
In a terse statement Thursday, the bank said: “The committee noted that since its previous meeting a total of just over £26 billion of asset purchases had been made and that it would take a further two months to complete that program.”
The economic news from Britain remains grim. The central bank’s survey of credit conditions showed last week that financial institutions remained wary of extending credit amid rising mortgage defaults and fear over the economic outlook.
On Tuesday, the Office for National Statistics reported that manufacturing output slumped by 6.5 percent in the December-February period compared with the previous three months. A report Thursday showed March producer prices in check, rising just 2 percent from a year earlier.
“The data of the last week or two suggest we might be past the worst,” Vicky Redwood, an economist at Capital Economics in London, said. “But they also suggest that the U.K. economy is a long way from actual growth.”
Ms. Redwood forecasts the economy will shrink 4 percent this year, and by a further 1 percent in 2010.
As in Spain, the United States and Ireland, Britain’s economy grew rapidly during the years of easy credit, helped along by a frothy property market.
The credit crisis last year and tumbling housing prices have sent the economy into a tailspin, cost millions of Britons their jobs and undermined government finances.
Last week, the European Central Bank lowered its benchmark rate to 1.25 percent, from 1.5 percent, less than was expected.
The British central bank said on Thursday that it would fully carry out a £75 billion asset-purchase program during the next two months, seeking to reassure investors that it was committed to steps to revive bank lending.
The Bank of England made the announcement after its Monetary Policy Committee left its main interest rate at 0.5 percent, the level it set in March and the lowest in its three-century history. The bank had been cutting rates since last October, when the rate stood at 5 percent.
Like the Federal Reserve in the United States and the Bank of Japan, which also have set official interest rates at rock-bottom levels, the British monetary authorities have begun unconventional operations, including so-called quantitative easing, to increase lending.
The Monetary Policy Committee voted last month to use the bank’s balance sheet to buy £75 billion, or about $110 billion, of government and company bonds — effectively creating new money.
But investors had been demanding more clarity about the bond purchase plans, after the Bank of England’s governor, Mervyn King, appeared to suggest last month in an address to Parliament that the program might be retired early.
In a terse statement Thursday, the bank said: “The committee noted that since its previous meeting a total of just over £26 billion of asset purchases had been made and that it would take a further two months to complete that program.”
The economic news from Britain remains grim. The central bank’s survey of credit conditions showed last week that financial institutions remained wary of extending credit amid rising mortgage defaults and fear over the economic outlook.
On Tuesday, the Office for National Statistics reported that manufacturing output slumped by 6.5 percent in the December-February period compared with the previous three months. A report Thursday showed March producer prices in check, rising just 2 percent from a year earlier.
“The data of the last week or two suggest we might be past the worst,” Vicky Redwood, an economist at Capital Economics in London, said. “But they also suggest that the U.K. economy is a long way from actual growth.”
Ms. Redwood forecasts the economy will shrink 4 percent this year, and by a further 1 percent in 2010.
As in Spain, the United States and Ireland, Britain’s economy grew rapidly during the years of easy credit, helped along by a frothy property market.
The credit crisis last year and tumbling housing prices have sent the economy into a tailspin, cost millions of Britons their jobs and undermined government finances.
Last week, the European Central Bank lowered its benchmark rate to 1.25 percent, from 1.5 percent, less than was expected.
SMFG ‘Reality Check’ Hints at Cracks in Bank Capital
April 10 (Bloomberg) -- Sumitomo Mitsui Financial Group Inc. posted an unexpected $3.9 billion loss and announced plans to seek capital, adding to evidence that Japan’s biggest banks may struggle to weather the deepening recession.
The Tokyo-based lender, Japan’s second-largest by market value, yesterday said it may raise as much as 800 billion yen ($8 billion) to restore a balance sheet weakened by bad loans and losses on investments including Barclays Plc. The news came a day after Moody’s Investors Service cut the credit ratings of Mizuho Financial Group Inc. and said the bank may need more cash.
Sumitomo Mitsui, Mizuho and Mitsubishi UFJ Financial Group Inc. plowed a combined $11 billion into ailing Western rivals, fueling speculation that they would seize on the global credit crisis to expand abroad. The banks are now retrenching under the weight of swelling investment losses and a recession that’s pushed bankruptcies in Japan to a six-year high.
“It is now reality-check time for those who thought the Japanese banking system had weathered the storm and was going to be a bastion of strength in the global banking system,” said Kirby Daley, a strategist at Newedge Group in Hong Kong. “Mountains of bad loans, topped with cross-shareholdings and stock portfolios which are in the red, in the current environment makes for a very bad mix.”
Sumitomo Mitsui’s shares didn’t trade at the open of the Tokyo market today as sell orders overwhelmed buy offers. They were poised to drop 14 percent following a 16 percent decline in the company’s American depositary receipts. Mizuho slumped 9.6 percent at 9:40 a.m. in Tokyo, it biggest decline in five months, while Mitsubishi UFJ dropped 3.6 percent.
Bad Loans
The bank, which wrote down 53.2 billion yen on its investment in Barclays, had in October forecast net income of 180 billion yen. The median of six analyst estimates compiled by Bloomberg in the past month was for a 47.6 billion yen profit. Earnings a year earlier totaled 461.5 billion yen.
Bad loan costs at Sumitomo Mitsui reached about 760 billion yen, Takeshi Kunibe, a member of the company’s board, told reporters. The bank also reduced deferred tax assets by about 30 percent to 670 billion yen and will book 220 billion yen in losses on stocks, he said.
“Japanese banks will have to do large-scale capital raisings in the near future,” said Makoto Haga, the president of Wing Asset Management Co., a Tokyo-based hedge fund. “It was a mistake to jump into investments in overseas banks -- now they’re hurting existing shareholders by issuing new stock.”
Dividend Cut
Mitsubishi UFJ, which has raised more than $13 billion in capital since November, poured $9 billion into Morgan Stanley last year. Mizuho, which has raised $4.4 billion of capital since December, invested $1.2 billion in Merrill Lynch & Co. in 2008 before it foundered and was bought by Bank of America Corp.
Sumitomo Mitsui invested 500 million pounds ($737 million) in Barclays in July at a price of 296 pence a share. The London- based bank’s stock slumped 50 percent to 148 pence between then and the end of the Japanese financial year on March 31.
It will cut its dividend 25 percent to 90 yen a share, according to yesterday’s statement. The sale of new stock may dilute the value of existing shares in Sumitomo Mitsui by 30 percent, the company said.
Sumitomo Mitsui’s stock fell 48 percent during the fiscal year, the sixth-biggest drop on the bank index, which declined 39 percent. The Nikkei 225 Stock Average dropped 35 percent during the same period.
‘Bottleneck Issue’
“Japanese banks’ shares won’t look attractive until they sort out the ‘bottleneck’ issue of cross-shareholdings,” said Shinichi Iimura, a Tokyo-based analyst at Merrill Lynch & Co.
Sumitomo Mitsui lends more to smaller companies than its peers and faces greater risk from rising defaults as the recession deepens, according to Macquarie Group Ltd. Bankruptcies among Japan’s listed companies reached 33 last year, a postwar record, according to Tokyo Shoko Research Ltd.
Mizuho has reduced its full-year earnings forecast twice as Japan’s recession deepens amid a record slump in exports. It most recently flagged a profit of 100 billion yen.
Mitsubishi UFJ has also cut its annual net income forecast twice, most recently to 50 billion yen.
The Tokyo-based lender, Japan’s second-largest by market value, yesterday said it may raise as much as 800 billion yen ($8 billion) to restore a balance sheet weakened by bad loans and losses on investments including Barclays Plc. The news came a day after Moody’s Investors Service cut the credit ratings of Mizuho Financial Group Inc. and said the bank may need more cash.
Sumitomo Mitsui, Mizuho and Mitsubishi UFJ Financial Group Inc. plowed a combined $11 billion into ailing Western rivals, fueling speculation that they would seize on the global credit crisis to expand abroad. The banks are now retrenching under the weight of swelling investment losses and a recession that’s pushed bankruptcies in Japan to a six-year high.
“It is now reality-check time for those who thought the Japanese banking system had weathered the storm and was going to be a bastion of strength in the global banking system,” said Kirby Daley, a strategist at Newedge Group in Hong Kong. “Mountains of bad loans, topped with cross-shareholdings and stock portfolios which are in the red, in the current environment makes for a very bad mix.”
Sumitomo Mitsui’s shares didn’t trade at the open of the Tokyo market today as sell orders overwhelmed buy offers. They were poised to drop 14 percent following a 16 percent decline in the company’s American depositary receipts. Mizuho slumped 9.6 percent at 9:40 a.m. in Tokyo, it biggest decline in five months, while Mitsubishi UFJ dropped 3.6 percent.
Bad Loans
The bank, which wrote down 53.2 billion yen on its investment in Barclays, had in October forecast net income of 180 billion yen. The median of six analyst estimates compiled by Bloomberg in the past month was for a 47.6 billion yen profit. Earnings a year earlier totaled 461.5 billion yen.
Bad loan costs at Sumitomo Mitsui reached about 760 billion yen, Takeshi Kunibe, a member of the company’s board, told reporters. The bank also reduced deferred tax assets by about 30 percent to 670 billion yen and will book 220 billion yen in losses on stocks, he said.
“Japanese banks will have to do large-scale capital raisings in the near future,” said Makoto Haga, the president of Wing Asset Management Co., a Tokyo-based hedge fund. “It was a mistake to jump into investments in overseas banks -- now they’re hurting existing shareholders by issuing new stock.”
Dividend Cut
Mitsubishi UFJ, which has raised more than $13 billion in capital since November, poured $9 billion into Morgan Stanley last year. Mizuho, which has raised $4.4 billion of capital since December, invested $1.2 billion in Merrill Lynch & Co. in 2008 before it foundered and was bought by Bank of America Corp.
Sumitomo Mitsui invested 500 million pounds ($737 million) in Barclays in July at a price of 296 pence a share. The London- based bank’s stock slumped 50 percent to 148 pence between then and the end of the Japanese financial year on March 31.
It will cut its dividend 25 percent to 90 yen a share, according to yesterday’s statement. The sale of new stock may dilute the value of existing shares in Sumitomo Mitsui by 30 percent, the company said.
Sumitomo Mitsui’s stock fell 48 percent during the fiscal year, the sixth-biggest drop on the bank index, which declined 39 percent. The Nikkei 225 Stock Average dropped 35 percent during the same period.
‘Bottleneck Issue’
“Japanese banks’ shares won’t look attractive until they sort out the ‘bottleneck’ issue of cross-shareholdings,” said Shinichi Iimura, a Tokyo-based analyst at Merrill Lynch & Co.
Sumitomo Mitsui lends more to smaller companies than its peers and faces greater risk from rising defaults as the recession deepens, according to Macquarie Group Ltd. Bankruptcies among Japan’s listed companies reached 33 last year, a postwar record, according to Tokyo Shoko Research Ltd.
Mizuho has reduced its full-year earnings forecast twice as Japan’s recession deepens amid a record slump in exports. It most recently flagged a profit of 100 billion yen.
Mitsubishi UFJ has also cut its annual net income forecast twice, most recently to 50 billion yen.
Wednesday, April 8, 2009
Australia Jobless Rate Jumps Most in 18 Years as Recession Hits
April 9 (Bloomberg) -- Australia’s unemployment rate jumped by the most in 18 years in March, adding to signs the nation is in its first recession in almost two decades.
The jobless rate rose to a five-year high of 5.7 percent from 5.2 percent, the statistics bureau said in Sydney today. The number of people employed dropped 34,700 from February. The median estimate of 22 economists surveyed by Bloomberg was for a decline of 25,000.
Miners including Rio Tinto Group and Iluka Resources Ltd. are among companies firing workers as the global recession saps demand for raw materials. Australia’s currency fell on speculation today’s report will prompt the central bank to extend a record round of interest-rate cuts that have taken the benchmark to a 49-year low of 3 percent.
“The weak economy is going to impact on the labor market and that will put pressure on the Reserve Bank to cut rates further,” said Brian Redican, senior economist at Macquarie Group Ltd. in Sydney. “Full-time employment has declined 100,000 since November.”
The number of full-time jobs dropped 38,900 in March and part-time employment increased 4,200 today’s report showed.
The Australian dollar fell to 70.77 U.S. cents at 11:50 a.m. in Sydney from 70.92 cents before the report was released. The two-year government bond yield dropped 6 basis points, or 0.06 percentage point, to 2.86 percent.
Rio, Caterpillar
With the Organization for Economic Cooperation and Development forecasting the steepest economic contraction in more than 50 years across its member nations, demand for resources has slowed from the world’s biggest shipper of iron ore and coal, forcing mining companies to fire workers.
Rio Tinto will cut 705 jobs at projects in Queensland state, the world’s third largest mining company said on April 7.
Iluka, the world’s biggest zircon producer, said the same day it will curtail production of the material by 20 percent this year, cutting 135 jobs at its Western Australia operations.
Caterpillar Inc., the world’s largest construction and mining equipment maker, will fire 280 workers in Burnie, Tasmania, the Age newspaper reported on April 7.
Jobs advertised in newspapers and on the Internet dropped in March for an 11th month, slumping 8.5 percent from February, a report showed on April 6. Advertisements fell a record 44.6 percent from a year earlier.
More than half of Australia’s mining and resource companies will fire staff in the next 12 months after the economy shrank 0.5 percent in the fourth quarter, the first decline in eight years, according to a survey of 118 companies released last month by the Australian Mines and Metals Association. The central bank says the economy will contract this year.
Interest Rates
To stoke domestic demand, Reserve Bank of Australia Governor Glenn Stevens cut the benchmark interest rate by a record 4.25 percentage points to 3 percent between September and this week. The government also is spending A$42 billion ($30 billion) on cash handouts to households and on infrastructure.
Australia’s mortgage rates are now at “very low levels by historical standards” and, along with a surge in government spending, will provide a significant boost to the economy, Stevens said on April 7.
Home-loan approvals rose in February for a fifth month and consumer confidence jumped in April by the most since August last year, reports showed yesterday, stoking speculation the Reserve Bank’s cycle of interest-rate cuts may be nearing an end.
Traders have reduced bets on the size of future rate cuts, according to a Credit Suisse Group index based on swaps trading.
Traders forecast the overnight cash rate target will be 4 basis points lower in 12 months, the index showed at 11:50 a.m. today in Sydney. Prior to this week’s rate decision, they were tipping 49 basis points in cuts, and at the start of April they expected 64 basis points. A basis point is 0.01 percentage point.
The participation rate, which measures the labor force as a percentage of the population aged over 15, was unchanged at 65.5 percent, today’s report showed.
The jobless rate rose to a five-year high of 5.7 percent from 5.2 percent, the statistics bureau said in Sydney today. The number of people employed dropped 34,700 from February. The median estimate of 22 economists surveyed by Bloomberg was for a decline of 25,000.
Miners including Rio Tinto Group and Iluka Resources Ltd. are among companies firing workers as the global recession saps demand for raw materials. Australia’s currency fell on speculation today’s report will prompt the central bank to extend a record round of interest-rate cuts that have taken the benchmark to a 49-year low of 3 percent.
“The weak economy is going to impact on the labor market and that will put pressure on the Reserve Bank to cut rates further,” said Brian Redican, senior economist at Macquarie Group Ltd. in Sydney. “Full-time employment has declined 100,000 since November.”
The number of full-time jobs dropped 38,900 in March and part-time employment increased 4,200 today’s report showed.
The Australian dollar fell to 70.77 U.S. cents at 11:50 a.m. in Sydney from 70.92 cents before the report was released. The two-year government bond yield dropped 6 basis points, or 0.06 percentage point, to 2.86 percent.
Rio, Caterpillar
With the Organization for Economic Cooperation and Development forecasting the steepest economic contraction in more than 50 years across its member nations, demand for resources has slowed from the world’s biggest shipper of iron ore and coal, forcing mining companies to fire workers.
Rio Tinto will cut 705 jobs at projects in Queensland state, the world’s third largest mining company said on April 7.
Iluka, the world’s biggest zircon producer, said the same day it will curtail production of the material by 20 percent this year, cutting 135 jobs at its Western Australia operations.
Caterpillar Inc., the world’s largest construction and mining equipment maker, will fire 280 workers in Burnie, Tasmania, the Age newspaper reported on April 7.
Jobs advertised in newspapers and on the Internet dropped in March for an 11th month, slumping 8.5 percent from February, a report showed on April 6. Advertisements fell a record 44.6 percent from a year earlier.
More than half of Australia’s mining and resource companies will fire staff in the next 12 months after the economy shrank 0.5 percent in the fourth quarter, the first decline in eight years, according to a survey of 118 companies released last month by the Australian Mines and Metals Association. The central bank says the economy will contract this year.
Interest Rates
To stoke domestic demand, Reserve Bank of Australia Governor Glenn Stevens cut the benchmark interest rate by a record 4.25 percentage points to 3 percent between September and this week. The government also is spending A$42 billion ($30 billion) on cash handouts to households and on infrastructure.
Australia’s mortgage rates are now at “very low levels by historical standards” and, along with a surge in government spending, will provide a significant boost to the economy, Stevens said on April 7.
Home-loan approvals rose in February for a fifth month and consumer confidence jumped in April by the most since August last year, reports showed yesterday, stoking speculation the Reserve Bank’s cycle of interest-rate cuts may be nearing an end.
Traders have reduced bets on the size of future rate cuts, according to a Credit Suisse Group index based on swaps trading.
Traders forecast the overnight cash rate target will be 4 basis points lower in 12 months, the index showed at 11:50 a.m. today in Sydney. Prior to this week’s rate decision, they were tipping 49 basis points in cuts, and at the start of April they expected 64 basis points. A basis point is 0.01 percentage point.
The participation rate, which measures the labor force as a percentage of the population aged over 15, was unchanged at 65.5 percent, today’s report showed.
Google Executive Leaves For Venture Capital Firm Accel
9th April- 2009
Sukhinder Singh CassidyThe flight of executives from Google continues.
Sukhinder Singh Cassidy, Google’s top sales executive for Asia-Pacific and Latin America, is leaving the company to join Accel, the venture capital firm. Her departure follows the exit of Tim Armstrong, the top sales executive for North America, less than a month ago. Ms. Singh Cassidy was reported to be one of the candidates to replace Mr. Armstrong, who left to become chief executive officer of AOL. But the job went to Dennis Woodside, who led Google’s sales organization in Great Britain, Google’s second largest market after the United States.
Ms. Singh Cassidy said in an interview that she did not seek Mr. Armstrong’s job and that her decision to leave has nothing to do with his departure. “The timing was very coincidental and there was no talk internally about me taking Tim’s job,” she said. “The reality is that I was always pretty clear in my ambition and desire to one day take the step of running my own company and pretty transparent in talking with Google about that.”
Ms. Singh Cassidy will be a C.E.O.-in-residence at Accel, the venture firm behind Facebook, MetroPCS and Baidu. She will evaluate new investments, work with companies in Accel’s digital media and advertising portfolio and eventually start a new company or run one of Accel’s portfolio companies. Accel is currently investing a $520 million fund in early-stage start-ups and a $480 million fund in late-stage companies.
Ms. Singh Cassidy will be valuable to Accel because her experience ranges from founding a start-up to running a multi-billion dollar business at Google, said Theresia Gouw Ranzetta, a partner at Accel, in an interview. “She’s the rare executive in the Internet that scales all the way from starting a company to running a large, sizable Internet company,” Ms. Gouw Ranzetta said.
Ms. Singh Cassidy first worked with Accel in 1999 as co-founder of Yodlee, an online banking company in which Accel invested. She joined Google in 2003 as the first general manager of Google Local & Maps.
In a statement, Eric Schmidt, Google’s chief executive, called Ms. Singh Cassidy “an ambitious, entrepreneurial executive who has a proven track record of building successful operations.” He said: “We wish her only the best as she pursues her passion to lead and run her own company.”
Google’s Latin American director, Gonzalo Alonso, also recently left the company. He joined Globant, a software development and maintenance outsourcing company headquartered in Argentina.
Sukhinder Singh CassidyThe flight of executives from Google continues.
Sukhinder Singh Cassidy, Google’s top sales executive for Asia-Pacific and Latin America, is leaving the company to join Accel, the venture capital firm. Her departure follows the exit of Tim Armstrong, the top sales executive for North America, less than a month ago. Ms. Singh Cassidy was reported to be one of the candidates to replace Mr. Armstrong, who left to become chief executive officer of AOL. But the job went to Dennis Woodside, who led Google’s sales organization in Great Britain, Google’s second largest market after the United States.
Ms. Singh Cassidy said in an interview that she did not seek Mr. Armstrong’s job and that her decision to leave has nothing to do with his departure. “The timing was very coincidental and there was no talk internally about me taking Tim’s job,” she said. “The reality is that I was always pretty clear in my ambition and desire to one day take the step of running my own company and pretty transparent in talking with Google about that.”
Ms. Singh Cassidy will be a C.E.O.-in-residence at Accel, the venture firm behind Facebook, MetroPCS and Baidu. She will evaluate new investments, work with companies in Accel’s digital media and advertising portfolio and eventually start a new company or run one of Accel’s portfolio companies. Accel is currently investing a $520 million fund in early-stage start-ups and a $480 million fund in late-stage companies.
Ms. Singh Cassidy will be valuable to Accel because her experience ranges from founding a start-up to running a multi-billion dollar business at Google, said Theresia Gouw Ranzetta, a partner at Accel, in an interview. “She’s the rare executive in the Internet that scales all the way from starting a company to running a large, sizable Internet company,” Ms. Gouw Ranzetta said.
Ms. Singh Cassidy first worked with Accel in 1999 as co-founder of Yodlee, an online banking company in which Accel invested. She joined Google in 2003 as the first general manager of Google Local & Maps.
In a statement, Eric Schmidt, Google’s chief executive, called Ms. Singh Cassidy “an ambitious, entrepreneurial executive who has a proven track record of building successful operations.” He said: “We wish her only the best as she pursues her passion to lead and run her own company.”
Google’s Latin American director, Gonzalo Alonso, also recently left the company. He joined Globant, a software development and maintenance outsourcing company headquartered in Argentina.
Asian Stocks Rise on Stimulus Hopes, Japanese Machinery Orders
April 9 (Bloomberg) -- Asian stocks rose for the first time in three days, led by automakers and electronics companies, on prospects for additional stimulus spending and an unexpected increase in Japanese machinery orders.
Denso Corp., Japan’s largest auto parts maker, climbed 3.7 percent as U.S. automakers said the Treasury will guarantee payments to suppliers. Toyota Motor Corp., which owns 23 percent of Denso, gained 2.1 percent amid optimism Japan will increase the amount it’s spending to revive the world’s second-largest economy. BHP Billiton Ltd., the world’s biggest mining company, rose 1.7 percent in Sydney on higher metal and oil prices.
“As signs of an economic recovery come into view, additional support measures will boost investor confidence,” Mitsushige Akino, who oversees the equivalent of $615 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.
The MSCI Asia Pacific Index rose 1.5 percent to 86.05 at 10:09 a.m. in Tokyo, snapping its two-day, 2.6 percent decline. The gauge has fallen 3.9 percent this year, extending last year’s 43 percent slump as the deepening recession decimated corporate earnings.
Japan’s Nikkei 225 Stock Average jumped 2.1 percent to 8,771.04. South Korea’s Kospi index added 2.1 percent. All markets open for trading advanced except New Zealand.
Futures on the Standard & Poor’s 500 Index rose 0.7 percent. The gauge rose 1.2 percent in New York yesterday as the Treasury said it may give funds to life insurers.
Bigger Stimulus
The MSCI Asia Pacific Index has climbed 20 percent from a five-year low reached on March 9 as governments from the U.S. to Japan widened measures to unfreeze credit markets and ease the global recession. Almost two-thirds of equities in the region have risen in the year to yesterday, according to Bloomberg data.
Japan’s ruling Liberal Democratic Party will propose the government implement a 15.4 trillion ($154 billion) stimulus package to help revive the economy, according to a document obtained by Bloomberg News. Prime Minister Taro Aso indicated this week he wanted to spend at least 10 trillion yen.
Orders for Japanese machinery, an indicator of capital investment in the next three to six months, climbed 1.4 percent in January from January, the Cabinet Office said today in Tokyo. The median estimate of 28 economists surveyed by Bloomberg was for a 6.9 percent drop.
Denso climbed 3.7 percent to 2,260 yen as Detroit-based General Motors Corp. and Chrysler LLC said yesterday that they will get financial aid from the U.S. Treasury to guarantee payments to their parts suppliers.
Oil, Metals Advance
Takata Corp., a Japanese seatbelt maker that supplies GM, gained 5.6 percent to 957 yen. Truck manufacturer Isuzu Motors Ltd., another GM supplier, jumped 6.4 percent to 134 yen. Toyota rose 2.1 percent to 3,830 yen.
BHP added 1.7 percent to A$32.33. A measure of six metals rose 0.7 percent in London yesterday, its second day of gains. Crude oil for May delivery added 1.4 percent to $50.07 a barrel in New York yesterday.
Inpex Corp., Japan’s largest oil explorer, rose 1 percent to 710,000 yen. Woodside Petroleum Ltd., Australia’s second- largest oil producer, gained 1.7 percent to A$38.82.
Denso Corp., Japan’s largest auto parts maker, climbed 3.7 percent as U.S. automakers said the Treasury will guarantee payments to suppliers. Toyota Motor Corp., which owns 23 percent of Denso, gained 2.1 percent amid optimism Japan will increase the amount it’s spending to revive the world’s second-largest economy. BHP Billiton Ltd., the world’s biggest mining company, rose 1.7 percent in Sydney on higher metal and oil prices.
“As signs of an economic recovery come into view, additional support measures will boost investor confidence,” Mitsushige Akino, who oversees the equivalent of $615 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television.
The MSCI Asia Pacific Index rose 1.5 percent to 86.05 at 10:09 a.m. in Tokyo, snapping its two-day, 2.6 percent decline. The gauge has fallen 3.9 percent this year, extending last year’s 43 percent slump as the deepening recession decimated corporate earnings.
Japan’s Nikkei 225 Stock Average jumped 2.1 percent to 8,771.04. South Korea’s Kospi index added 2.1 percent. All markets open for trading advanced except New Zealand.
Futures on the Standard & Poor’s 500 Index rose 0.7 percent. The gauge rose 1.2 percent in New York yesterday as the Treasury said it may give funds to life insurers.
Bigger Stimulus
The MSCI Asia Pacific Index has climbed 20 percent from a five-year low reached on March 9 as governments from the U.S. to Japan widened measures to unfreeze credit markets and ease the global recession. Almost two-thirds of equities in the region have risen in the year to yesterday, according to Bloomberg data.
Japan’s ruling Liberal Democratic Party will propose the government implement a 15.4 trillion ($154 billion) stimulus package to help revive the economy, according to a document obtained by Bloomberg News. Prime Minister Taro Aso indicated this week he wanted to spend at least 10 trillion yen.
Orders for Japanese machinery, an indicator of capital investment in the next three to six months, climbed 1.4 percent in January from January, the Cabinet Office said today in Tokyo. The median estimate of 28 economists surveyed by Bloomberg was for a 6.9 percent drop.
Denso climbed 3.7 percent to 2,260 yen as Detroit-based General Motors Corp. and Chrysler LLC said yesterday that they will get financial aid from the U.S. Treasury to guarantee payments to their parts suppliers.
Oil, Metals Advance
Takata Corp., a Japanese seatbelt maker that supplies GM, gained 5.6 percent to 957 yen. Truck manufacturer Isuzu Motors Ltd., another GM supplier, jumped 6.4 percent to 134 yen. Toyota rose 2.1 percent to 3,830 yen.
BHP added 1.7 percent to A$32.33. A measure of six metals rose 0.7 percent in London yesterday, its second day of gains. Crude oil for May delivery added 1.4 percent to $50.07 a barrel in New York yesterday.
Inpex Corp., Japan’s largest oil explorer, rose 1 percent to 710,000 yen. Woodside Petroleum Ltd., Australia’s second- largest oil producer, gained 1.7 percent to A$38.82.
Tuesday, April 7, 2009
India Charges 9 After Inquiry of Outsourcing Company
8, April-2009
NEW DELHI — India’s Central Bureau of Investigation concluded its investigation of the outsourcing company Satyam Computer Services on Tuesday, and charged nine people including auditors from PricewaterhouseCoopers with forgery and fraud.
Skip to next paragraph
Add to Portfolio
Satyam Computer Services Ltd
Go to your Portfolio »
After a 45-day investigation, the bureau said it was charging six people from Satyam Computer Services, two suspended auditors from PricewaterhouseCoopers and an outside adviser with “criminal conspiracy, cheating, cheating by personification, forgery of valuable security, forgery for the purpose of cheating, using a forged document as genuine, falsification of accounts and for causing disappearance of evidence.”
Satyam, one of India’s top outsourcing companies, has been struggling since its chairman admitted in January that he had faked some $1 billion on the company’s balance sheet and inflated operating margins. India’s government and regulators have been under pressure to bring charges quickly to prevent customers from deserting the country’s crucial outsourcing industry.
The bureau said that charges were filed against Satyam founders and brothers B. Rama Raju and B. Ramalinga Raju, as well as the company’s former chief financial officer Srinivas Vadlamani, and three other Satyam employees from the finance division. It was not known if those three people have also left the company.
Satyam’s two auditors from PricewaterhouseCoopers — S. Gopalakrishnan and Talluri Srinivas — were also charged, as was B. Suryanarayana Raju, the director of SRSR Advisory Services, who is the brother of the co-founders.
PricewaterhouseCoopers said in a statement it was “surprised and disappointed” that the bureau had pressed charges against the two partners who audited Satyam, and that it had found no “evidence of criminal wrongdoing on the part of either partner.”
The fraud perpetrated by Mr. Raju and others at Satyam “was designed to and did circumvent PW India’s audit process” PricewaterhouseCoopers said, and the auditors were victims of that fraud.
Several lawsuits have been filed by Satyam investors against PricewaterhouseCoopers, saying that the auditor should have noticed the fraud.
The bureau, akin to the F.B.I. in the United States, completed the investigation in a “record time of 45 days” it asserted in a statement, and filed a 300-page charge sheet citing 433 witnesses.
NEW DELHI — India’s Central Bureau of Investigation concluded its investigation of the outsourcing company Satyam Computer Services on Tuesday, and charged nine people including auditors from PricewaterhouseCoopers with forgery and fraud.
Skip to next paragraph
Add to Portfolio
Satyam Computer Services Ltd
Go to your Portfolio »
After a 45-day investigation, the bureau said it was charging six people from Satyam Computer Services, two suspended auditors from PricewaterhouseCoopers and an outside adviser with “criminal conspiracy, cheating, cheating by personification, forgery of valuable security, forgery for the purpose of cheating, using a forged document as genuine, falsification of accounts and for causing disappearance of evidence.”
Satyam, one of India’s top outsourcing companies, has been struggling since its chairman admitted in January that he had faked some $1 billion on the company’s balance sheet and inflated operating margins. India’s government and regulators have been under pressure to bring charges quickly to prevent customers from deserting the country’s crucial outsourcing industry.
The bureau said that charges were filed against Satyam founders and brothers B. Rama Raju and B. Ramalinga Raju, as well as the company’s former chief financial officer Srinivas Vadlamani, and three other Satyam employees from the finance division. It was not known if those three people have also left the company.
Satyam’s two auditors from PricewaterhouseCoopers — S. Gopalakrishnan and Talluri Srinivas — were also charged, as was B. Suryanarayana Raju, the director of SRSR Advisory Services, who is the brother of the co-founders.
PricewaterhouseCoopers said in a statement it was “surprised and disappointed” that the bureau had pressed charges against the two partners who audited Satyam, and that it had found no “evidence of criminal wrongdoing on the part of either partner.”
The fraud perpetrated by Mr. Raju and others at Satyam “was designed to and did circumvent PW India’s audit process” PricewaterhouseCoopers said, and the auditors were victims of that fraud.
Several lawsuits have been filed by Satyam investors against PricewaterhouseCoopers, saying that the auditor should have noticed the fraud.
The bureau, akin to the F.B.I. in the United States, completed the investigation in a “record time of 45 days” it asserted in a statement, and filed a 300-page charge sheet citing 433 witnesses.
Japan Stocks Fall on Earnings Concern, Oil; Shin-Etsu Drops
April 8 (Bloomberg) -- Japanese stocks fell after Daiwa Securities Group Inc. reported writedowns on investments and Shin-Etsu Chemical Co. posted lower-than-forecast profit, rekindling concern the global recession will weigh on earnings.
Daiwa, Japan’s No. 2 brokerage, lost 4.7 percent after saying its losses on securities holdings caused an annual loss. Shin-Etsu, the world’s largest maker of silicon wafers, dropped 4.6 percent. Kobe Steel Ltd. dived 4.2 percent after announcing its first annual loss in seven years. Inpex Corp. sank 2.6 percent after crude prices dropped.
“Results were surely poor for the fiscal year ended last month, but the market has priced that in to some degree,” said Yumi Nishimura, assistant manager at Daiwa Securities SMBC Co. in Tokyo. “Investors are awaiting profit forecasts companies are soon to disclose.”
The Nikkei 225 Stock Average declined 179.07, or 2 percent, to 8,653.78 as of 9:48 a.m. in Tokyo. The broader Topix index fell 13.96, or 1.7 percent, to 818.64, with four stocks sinking for each that rose.
Through yesterday, the Nikkei had risen by a quarter from its 26-year low on March 10, narrowing this year’s loss to 0.3 percent. The dividend yield on the Nikkei’s members dropped to 2.45 percent as of April 6, the lowest level since Jan. 9, according to index compiler Nikkei Inc.
Daiwa, Japan’s No. 2 brokerage, dived 4.7 percent to 490 yen, while market leader Nomura Holdings Inc. slid 1.4 percent to 573 yen. Daiwa yesterday said it wrote down the value of its securities holdings by 17.4 billion yen ($173 million), which brought about a full-year loss for the 12 months to March 31.
South Korean Supplier
Shin-Etsu dropped 4.6 percent to 4,730 yen. The company’s full-year net income was 13 percent lower than its forecast owing to the global economic slump, Shin-Etsu said yesterday in a preliminary earnings report.
Kobe Steel, Japan’s fourth-largest steelmaker, dropped 4.2 percent to 137 yen. The company yesterday announced its first annual loss in seven years because of lower sales of metals and construction equipment. Its annual net loss was 32 billion yen, compared with 88.9 billion yen in profit a year earlier, the company said in a preliminary earnings report.
Nippon Steel Corp., the world’s No. 2 mill, fell 1.7 percent to 286 yen, and smaller rival JFE Holdings Inc. declined 2.9 percent to 2,330 yen.
South Korea’s Posco yesterday said it won a steel contract from Sony Corp. for liquid-crystal display televisions. The Pohang, South Korea-based steelmaker became the first non- Japanese supplier of the metal to Sony.
Inpex, Japan’s biggest oil explorer, retreated 2.6 percent to 709,000 yen, and closest competitor Japan Petroleum Exploration Co. slid 3.1 percent to 4,030 yen. Crude oil for May delivery fell for a fourth day today, losing as much as 2.1 percent to $48.14 a barrel.
Nikkei futures expiring in June retreated 2.3 percent to 8,660 in Osaka and slumped 2.3 percent to 8,665 in Singapore.
Daiwa, Japan’s No. 2 brokerage, lost 4.7 percent after saying its losses on securities holdings caused an annual loss. Shin-Etsu, the world’s largest maker of silicon wafers, dropped 4.6 percent. Kobe Steel Ltd. dived 4.2 percent after announcing its first annual loss in seven years. Inpex Corp. sank 2.6 percent after crude prices dropped.
“Results were surely poor for the fiscal year ended last month, but the market has priced that in to some degree,” said Yumi Nishimura, assistant manager at Daiwa Securities SMBC Co. in Tokyo. “Investors are awaiting profit forecasts companies are soon to disclose.”
The Nikkei 225 Stock Average declined 179.07, or 2 percent, to 8,653.78 as of 9:48 a.m. in Tokyo. The broader Topix index fell 13.96, or 1.7 percent, to 818.64, with four stocks sinking for each that rose.
Through yesterday, the Nikkei had risen by a quarter from its 26-year low on March 10, narrowing this year’s loss to 0.3 percent. The dividend yield on the Nikkei’s members dropped to 2.45 percent as of April 6, the lowest level since Jan. 9, according to index compiler Nikkei Inc.
Daiwa, Japan’s No. 2 brokerage, dived 4.7 percent to 490 yen, while market leader Nomura Holdings Inc. slid 1.4 percent to 573 yen. Daiwa yesterday said it wrote down the value of its securities holdings by 17.4 billion yen ($173 million), which brought about a full-year loss for the 12 months to March 31.
South Korean Supplier
Shin-Etsu dropped 4.6 percent to 4,730 yen. The company’s full-year net income was 13 percent lower than its forecast owing to the global economic slump, Shin-Etsu said yesterday in a preliminary earnings report.
Kobe Steel, Japan’s fourth-largest steelmaker, dropped 4.2 percent to 137 yen. The company yesterday announced its first annual loss in seven years because of lower sales of metals and construction equipment. Its annual net loss was 32 billion yen, compared with 88.9 billion yen in profit a year earlier, the company said in a preliminary earnings report.
Nippon Steel Corp., the world’s No. 2 mill, fell 1.7 percent to 286 yen, and smaller rival JFE Holdings Inc. declined 2.9 percent to 2,330 yen.
South Korea’s Posco yesterday said it won a steel contract from Sony Corp. for liquid-crystal display televisions. The Pohang, South Korea-based steelmaker became the first non- Japanese supplier of the metal to Sony.
Inpex, Japan’s biggest oil explorer, retreated 2.6 percent to 709,000 yen, and closest competitor Japan Petroleum Exploration Co. slid 3.1 percent to 4,030 yen. Crude oil for May delivery fell for a fourth day today, losing as much as 2.1 percent to $48.14 a barrel.
Nikkei futures expiring in June retreated 2.3 percent to 8,660 in Osaka and slumped 2.3 percent to 8,665 in Singapore.
Asian Stocks Fall for Second Day on Renewed Earnings Concern
April 8 (Bloomberg) -- Asian stocks fell for a second day, led by mining and finance companies, on renewed concern the global recession will weigh on earnings.
Alumina Ltd. slumped 4 percent in Sydney after Alcoa Inc., its U.S. partner, reported a second quarterly loss. Daiwa Securities Group Inc., Japan’s second-biggest brokerage, slid 5.3 percent after writing down the value of its securities holdings. Inpex Corp., Japan’s largest oil explorer, sank 2.8 percent after crude oil futures dropped.
The MSCI Asia Pacific Index lost 1.2 percent to 85.68 at 10:23 a.m. in Tokyo. Yesterday’s 0.4 percent drop snapped a four-day advance that had taken valuations on the stock gauge to the highest since Nov. 30, 2007. The gauge has fallen 4.4 percent this year, adding to last year’s record 43 percent slump as the deepening recession decimated corporate earnings.
“Investors are awaiting profit forecasts companies are soon to disclose,” said Yumi Nishimura, assistant manager at Daiwa Securities SMBC Co. in Tokyo.
Japan’s Nikkei 225 Stock Average slipped 1.8 percent to 8,673.94. Australia’s S&P/ASX 200 Index fell 1.6 percent and South Korea’s Kospi Index lost 1.2 percent. All markets open for trading advanced, except Taiwan, which was little changed.
Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, sank 2.2 percent in Tokyo, after Bank of America Corp. said rival Caterpillar Inc. will post a wider-than-expected quarterly loss. Kobe Steel Ltd., Japan’s fourth-largest steelmaker, lost 4.2 percent after announcing its first annual loss in seven years.
Securities Loss
Futures on the Standard & Poor’s 500 Index lost 0.3 percent as Alcoa, the largest U.S. aluminum producer, reported a second- straight quarterly loss amid lower demand for the metal used in automobiles and appliances. The S&P 500 slumped 2.4 percent yesterday.
Alumina dropped 4 percent to A$1.435. The company owns 40 percent of a venture with Alcoa that is the world’s biggest producer of alumina.
Daiwa fell 5.3 percent to 487 yen in Tokyo. The company said it will report an annual loss after it wrote down the value of its securities holdings by 17.4 billion yen ($173 million). Nomura Holdings Inc., Japan’s top brokerage, declined 1 percent to 575 yen.
Inpex fell 2.8 percent to 708,000 yen in Tokyo. BHP Billiton Ltd., the world’s largest miner and Australia’s largest oil producer, dropped 1.9 percent to A$32.09 in Sydney. Crude oil in New York fell 2 percent to $48.17 a barrel in after-hours trading, the fourth-straight day of declines.
Kobe Steel
Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, fell 2.2 percent to 1,180 yen in Tokyo. Caterpillar Inc., the world’s biggest construction-equipment maker, will post a loss of 23 cents a share, Andrew Obin, a Bank of America analyst, wrote in a note to clients yesterday. Obin had previously estimated a loss of about 11 cents.
Kobe Steel dipped 4.2 percent to 137 yen. The company said its annual net loss was 32 billion yen, compared with 88.9 billion yen in profit a year earlier.
Kawasaki Kisen Kaisha Ltd., Japan’s third-largest shipping line, fell 4.1 percent to 349 yen in Tokyo. The company may have missed its full-year pretax profit forecast, Nikkei English News said, without citing anyone.
Alumina Ltd. slumped 4 percent in Sydney after Alcoa Inc., its U.S. partner, reported a second quarterly loss. Daiwa Securities Group Inc., Japan’s second-biggest brokerage, slid 5.3 percent after writing down the value of its securities holdings. Inpex Corp., Japan’s largest oil explorer, sank 2.8 percent after crude oil futures dropped.
The MSCI Asia Pacific Index lost 1.2 percent to 85.68 at 10:23 a.m. in Tokyo. Yesterday’s 0.4 percent drop snapped a four-day advance that had taken valuations on the stock gauge to the highest since Nov. 30, 2007. The gauge has fallen 4.4 percent this year, adding to last year’s record 43 percent slump as the deepening recession decimated corporate earnings.
“Investors are awaiting profit forecasts companies are soon to disclose,” said Yumi Nishimura, assistant manager at Daiwa Securities SMBC Co. in Tokyo.
Japan’s Nikkei 225 Stock Average slipped 1.8 percent to 8,673.94. Australia’s S&P/ASX 200 Index fell 1.6 percent and South Korea’s Kospi Index lost 1.2 percent. All markets open for trading advanced, except Taiwan, which was little changed.
Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, sank 2.2 percent in Tokyo, after Bank of America Corp. said rival Caterpillar Inc. will post a wider-than-expected quarterly loss. Kobe Steel Ltd., Japan’s fourth-largest steelmaker, lost 4.2 percent after announcing its first annual loss in seven years.
Securities Loss
Futures on the Standard & Poor’s 500 Index lost 0.3 percent as Alcoa, the largest U.S. aluminum producer, reported a second- straight quarterly loss amid lower demand for the metal used in automobiles and appliances. The S&P 500 slumped 2.4 percent yesterday.
Alumina dropped 4 percent to A$1.435. The company owns 40 percent of a venture with Alcoa that is the world’s biggest producer of alumina.
Daiwa fell 5.3 percent to 487 yen in Tokyo. The company said it will report an annual loss after it wrote down the value of its securities holdings by 17.4 billion yen ($173 million). Nomura Holdings Inc., Japan’s top brokerage, declined 1 percent to 575 yen.
Inpex fell 2.8 percent to 708,000 yen in Tokyo. BHP Billiton Ltd., the world’s largest miner and Australia’s largest oil producer, dropped 1.9 percent to A$32.09 in Sydney. Crude oil in New York fell 2 percent to $48.17 a barrel in after-hours trading, the fourth-straight day of declines.
Kobe Steel
Komatsu Ltd., the world’s No. 2 maker of earthmoving equipment, fell 2.2 percent to 1,180 yen in Tokyo. Caterpillar Inc., the world’s biggest construction-equipment maker, will post a loss of 23 cents a share, Andrew Obin, a Bank of America analyst, wrote in a note to clients yesterday. Obin had previously estimated a loss of about 11 cents.
Kobe Steel dipped 4.2 percent to 137 yen. The company said its annual net loss was 32 billion yen, compared with 88.9 billion yen in profit a year earlier.
Kawasaki Kisen Kaisha Ltd., Japan’s third-largest shipping line, fell 4.1 percent to 349 yen in Tokyo. The company may have missed its full-year pretax profit forecast, Nikkei English News said, without citing anyone.
Monday, April 6, 2009
Satyam Officers Had Help in Fraud, Investigators Told
7, March, 2009
Top executives at the large Indian outsourcing company Satyam Computer Services did not act alone when they committed a multibillion-dollar fraud that left the business struggling for survival: They apparently tapped a team in the company’s finance department to help them.
Skip to next paragraph
Add to Portfolio
* Satyam Computer Services Ltd
Go to your Portfolio »
Several managers and about 10 junior staff members in the finance department of the company created a paper trail to cover up the fraud, the former chief financial officer told investigators over the weekend.
This team fabricated and prepared false documents like sales invoices, bank statements and bank confirmations, the former chief executive, Srinivas Vadlamani, told India’s top accounting body. He said that he also had taken part in the fraud.
Mr. Vadlamani, who is now in jail, said that he had tried several times to resist the instructions to commit the fraud but that he could not because of a “master-servant relationship.”
His description indicates that the “scam had occurred owing to a carefully crafted fraud by creating normal trails and backup support documents and records,” the Institute of Chartered Accountants of India said in a statement Monday. The accounting body said it had questioned Mr. Vadlamani in its effort to determine whether Satyam’s auditing firm, PricewaterhouseCoopers, had been involved in the fraud.
Two of the global accounting firm’s auditors have been arrested in connection with the Satyam fraud. Neither the auditors nor the company’s independent directors were involved in the fraud, the former chief financial officer told his questioners. The Indian accounting group’s president, Prakash Agarwal, said the interrogation had “vindicated his belief about the credibility of the auditing profession.”
In January, B. Ramalinga Raju, the Satyam chairman, shocked Indian markets and his company’s hundreds of global customers when he said he had faked operating margins at the company and falsified its books.
At the time, Mr. Raju said he had acted without the knowledge of the company’s board and many top managers. He has been jailed.
The former finance chief’s statement comes as the government and a new board are trying to sell a majority stake in Satyam. Several companies are planning to bid for a 51 percent stake.
A winner is to be announced next week.
Even before Mr. Vadlamani’s description of events was made public Monday, analysts were questioning whether all of the eight potential bidders looking at Satyam would actually name a price. “We believe that some of the key bidders will exit discussions quickly,” Forrester Research said in a report Friday.
As Mr. Vadlamani’s account of events became public, the Central Bureau of Investigation said three additional people from the finance department had been arrested. They were identified as G. Ramakrishna, a vice president; Srisailam Chetkuru, an assistant manager; and Danthuluri Venkatpati Raju, a senior manager; it was not clear whether he was related to the chief executive.
At its apex, Satyam served more than a third of the Fortune 500 companies; its clients have included General Electric, General Motors, Nestlé and the United States government. It asserted it had a work force of 53,000.
Satyam’s market capitalization on the New York Stock Exchange was $7 billion at the end of May 2008; it is now around $835 million.
Next Article in Business (11 of 44) »
Read the complete New York Times Electronic Edition on computer, just as
Top executives at the large Indian outsourcing company Satyam Computer Services did not act alone when they committed a multibillion-dollar fraud that left the business struggling for survival: They apparently tapped a team in the company’s finance department to help them.
Skip to next paragraph
Add to Portfolio
* Satyam Computer Services Ltd
Go to your Portfolio »
Several managers and about 10 junior staff members in the finance department of the company created a paper trail to cover up the fraud, the former chief financial officer told investigators over the weekend.
This team fabricated and prepared false documents like sales invoices, bank statements and bank confirmations, the former chief executive, Srinivas Vadlamani, told India’s top accounting body. He said that he also had taken part in the fraud.
Mr. Vadlamani, who is now in jail, said that he had tried several times to resist the instructions to commit the fraud but that he could not because of a “master-servant relationship.”
His description indicates that the “scam had occurred owing to a carefully crafted fraud by creating normal trails and backup support documents and records,” the Institute of Chartered Accountants of India said in a statement Monday. The accounting body said it had questioned Mr. Vadlamani in its effort to determine whether Satyam’s auditing firm, PricewaterhouseCoopers, had been involved in the fraud.
Two of the global accounting firm’s auditors have been arrested in connection with the Satyam fraud. Neither the auditors nor the company’s independent directors were involved in the fraud, the former chief financial officer told his questioners. The Indian accounting group’s president, Prakash Agarwal, said the interrogation had “vindicated his belief about the credibility of the auditing profession.”
In January, B. Ramalinga Raju, the Satyam chairman, shocked Indian markets and his company’s hundreds of global customers when he said he had faked operating margins at the company and falsified its books.
At the time, Mr. Raju said he had acted without the knowledge of the company’s board and many top managers. He has been jailed.
The former finance chief’s statement comes as the government and a new board are trying to sell a majority stake in Satyam. Several companies are planning to bid for a 51 percent stake.
A winner is to be announced next week.
Even before Mr. Vadlamani’s description of events was made public Monday, analysts were questioning whether all of the eight potential bidders looking at Satyam would actually name a price. “We believe that some of the key bidders will exit discussions quickly,” Forrester Research said in a report Friday.
As Mr. Vadlamani’s account of events became public, the Central Bureau of Investigation said three additional people from the finance department had been arrested. They were identified as G. Ramakrishna, a vice president; Srisailam Chetkuru, an assistant manager; and Danthuluri Venkatpati Raju, a senior manager; it was not clear whether he was related to the chief executive.
At its apex, Satyam served more than a third of the Fortune 500 companies; its clients have included General Electric, General Motors, Nestlé and the United States government. It asserted it had a work force of 53,000.
Satyam’s market capitalization on the New York Stock Exchange was $7 billion at the end of May 2008; it is now around $835 million.
Next Article in Business (11 of 44) »
Read the complete New York Times Electronic Edition on computer, just as
Bank of Japan May Pause Policy on Signs Economic Decline Easing
April 7 (Bloomberg) -- The Bank of Japan may refrain from introducing new policy steps today for the first time in seven months amid signs the economy’s deterioration is moderating.
Governor Masaaki Shirakawa and his colleagues will keep the overnight lending rate at 0.1 percent, according to 25 of 26 economists surveyed by Bloomberg News. The decision is expected by early afternoon in Tokyo.
Japan’s major manufacturers expect to become less pessimistic in three months, the first improvement since 2006, after sentiment plunged to a record low in March, the central bank’s Tankan survey showed last week. The policy board will examine Prime Minister Taro Aso’s stimulus package due this month before deciding whether to add to its program of buying government and corporate debt, analysts said.
“The central bank will wait and see how the government’s fiscal stimulus program develops,” said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo. “Though there are some positive signs, the Bank of Japan will remain on the alert.”
The Bank of Japan has taken action every month since Lehman Brothers Holdings Inc.’s bankruptcy in September made banks worldwide reluctant to lend. Borrowing costs have fallen since December, when the bank cut the key rate to 0.1 percent and redirected its policy toward buying commercial paper and corporate bonds to spur lending and revive credit markets.
Falling Rates
The difference between three-month commercial paper rated A1 against government financing bills of the same maturity was 19.8 basis points yesterday, down from 141 on Dec. 16. The Tokyo three-month interbank offered rate, or Tibor, a measure of the cost of lending between banks, has fallen from a decade high since the BOJ started offering banks unlimited collateral- backed loans in December.
Executives at large manufacturers expect an index of their confidence will improve to minus 51 in June from a record low of minus 58 in March, the Tankan showed last week. A separate Trade Ministry survey last month indicated companies planned to increase production in March and April to replenish inventories that they managed to get rid of even as exports collapsed.
Still, managers said in the Tankan survey that they have too many workers, indicating unemployment already at a three- year high is likely to climb further. Companies planned to cut investment by the most since 2002, and both large and small firms reported the most difficult access to funding in a decade.
Cutting Costs
“Though the pace of the economy’s plunge is clearly easing, it’s still difficult to confirm any sign of a recovery” that’s sustainable, said Naka Matsuzawa, chief strategist at Nomura Securities Co. in Tokyo. “Companies will step up cost-cutting efforts from now on.”
Some analysts said the BOJ may today decide to further broaden the range of collateral it accepts from banks to encourage lending. The bank may start taking municipal bonds sold privately, the Nikkei newspaper reported yesterday.
“Companies continue to struggle to borrow, and that’s the Bank of Japan’s biggest focus now,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo and a former BOJ official who isn’t related to the central bank governor.
The policy board might face renewed pressure to expand its asset-purchasing programs in May, when companies report earnings for the year ended March 31 that may show a bleaker economic outlook and drive down the stock market, according to Masaaki Kanno, chief economist at JPMorgan Chase & Co. in Tokyo.
“In the next month, we will probably see manufacturers’ profits plunging and their cash flow evaporating,” said Kanno, who used to work at the central bank.
Government Debt
The bank may step up its government debt purchases in coming months to help fund stimulus measures, according to Ryutaro Kono, chief economist at BNP Paribas in Tokyo.
The central bank increased its monthly purchases to 1.8 trillion yen ($18.1 billion) last month from 1.4 trillion yen. Shirakawa said there’s “very limited” room to escalate the program further.
“Though the governor signaled his reluctance, we expect the bank to buy more government debt in tandem with the expansion of fiscal spending,” Kono said.
Finance Minister Kaoru Yosano said yesterday that the government aims to outline stimulus measures by April 10 that exceed 2 percent of gross domestic product. That would be higher than the 10 trillion yen Prime Minister Aso pledged to spend in two packages since taking office in September.
Shirakawa will speak at a press conference at 3:30 p.m., following the bank’s announcement.
Governor Masaaki Shirakawa and his colleagues will keep the overnight lending rate at 0.1 percent, according to 25 of 26 economists surveyed by Bloomberg News. The decision is expected by early afternoon in Tokyo.
Japan’s major manufacturers expect to become less pessimistic in three months, the first improvement since 2006, after sentiment plunged to a record low in March, the central bank’s Tankan survey showed last week. The policy board will examine Prime Minister Taro Aso’s stimulus package due this month before deciding whether to add to its program of buying government and corporate debt, analysts said.
“The central bank will wait and see how the government’s fiscal stimulus program develops,” said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo. “Though there are some positive signs, the Bank of Japan will remain on the alert.”
The Bank of Japan has taken action every month since Lehman Brothers Holdings Inc.’s bankruptcy in September made banks worldwide reluctant to lend. Borrowing costs have fallen since December, when the bank cut the key rate to 0.1 percent and redirected its policy toward buying commercial paper and corporate bonds to spur lending and revive credit markets.
Falling Rates
The difference between three-month commercial paper rated A1 against government financing bills of the same maturity was 19.8 basis points yesterday, down from 141 on Dec. 16. The Tokyo three-month interbank offered rate, or Tibor, a measure of the cost of lending between banks, has fallen from a decade high since the BOJ started offering banks unlimited collateral- backed loans in December.
Executives at large manufacturers expect an index of their confidence will improve to minus 51 in June from a record low of minus 58 in March, the Tankan showed last week. A separate Trade Ministry survey last month indicated companies planned to increase production in March and April to replenish inventories that they managed to get rid of even as exports collapsed.
Still, managers said in the Tankan survey that they have too many workers, indicating unemployment already at a three- year high is likely to climb further. Companies planned to cut investment by the most since 2002, and both large and small firms reported the most difficult access to funding in a decade.
Cutting Costs
“Though the pace of the economy’s plunge is clearly easing, it’s still difficult to confirm any sign of a recovery” that’s sustainable, said Naka Matsuzawa, chief strategist at Nomura Securities Co. in Tokyo. “Companies will step up cost-cutting efforts from now on.”
Some analysts said the BOJ may today decide to further broaden the range of collateral it accepts from banks to encourage lending. The bank may start taking municipal bonds sold privately, the Nikkei newspaper reported yesterday.
“Companies continue to struggle to borrow, and that’s the Bank of Japan’s biggest focus now,” said Hiromichi Shirakawa, chief economist at Credit Suisse Group AG in Tokyo and a former BOJ official who isn’t related to the central bank governor.
The policy board might face renewed pressure to expand its asset-purchasing programs in May, when companies report earnings for the year ended March 31 that may show a bleaker economic outlook and drive down the stock market, according to Masaaki Kanno, chief economist at JPMorgan Chase & Co. in Tokyo.
“In the next month, we will probably see manufacturers’ profits plunging and their cash flow evaporating,” said Kanno, who used to work at the central bank.
Government Debt
The bank may step up its government debt purchases in coming months to help fund stimulus measures, according to Ryutaro Kono, chief economist at BNP Paribas in Tokyo.
The central bank increased its monthly purchases to 1.8 trillion yen ($18.1 billion) last month from 1.4 trillion yen. Shirakawa said there’s “very limited” room to escalate the program further.
“Though the governor signaled his reluctance, we expect the bank to buy more government debt in tandem with the expansion of fiscal spending,” Kono said.
Finance Minister Kaoru Yosano said yesterday that the government aims to outline stimulus measures by April 10 that exceed 2 percent of gross domestic product. That would be higher than the 10 trillion yen Prime Minister Aso pledged to spend in two packages since taking office in September.
Shirakawa will speak at a press conference at 3:30 p.m., following the bank’s announcement.
Asian Stocks Drop on Commodities, Bank Loss Concern; Rio Slumps
April 7 (Bloomberg) -- Asian stocks fell for the first time in five days, led by mining and bank shares, on lower commodity prices and concern loan losses will swell at financial companies.
Rio Tinto Group, the world’s third-largest mining company, slumped 9.2 percent in Sydney on speculation of a share sale. Mizuho Financial Group Inc., which invested $1.2 billion in Merrill Lynch & Co., sank 2 percent, after Mike Mayo, an analyst at Calyon Securities, said U.S. banks’ loan losses may exceed Great Depression levels. Telstra Corp., Australia’s largest phone company, rose 2.2 percent on a government plan to build a high-speed Internet network.
The MSCI Asia Pacific Index lost 0.3 percent to 86.83 at 9:09 a.m. in Tokyo, following a four-day, 7.6 percent advance that took valuations to the highest since Nov. 30, 2007. Through yesterday, the gauge surged 23 percent from a more than five- year low reached on March 9, amid speculation governments worldwide will succeed in efforts to revive growth.
“The rally got a bit ahead of itself,” said Hugh Dive, who helps manage about $3 billion a Investors Mutual Ltd. in Sydney. “When you ask companies if they can see any light at the end of the tunnel, the answer is still no.”
Japan’s Nikkei 225 Stock Average slipped 0.6 percent to 8,805.64. Australia’s S&P/ASX 200 Index fell 1.2 percent. All markets open for trading declined.
Futures on the Standard & Poor’s 500 Index dropped 0.1 percent. The gauge slid 0.8 percent yesterday, led by financial companies. Mayo recommended selling U.S. bank shares, saying that government actions “might not help as much as expected.”
Rio Tinto Group, the world’s third-largest mining company, tumbled 9.2 percent to A$53.67, extending yesterday’s 2.2 percent drop. The company has made plans for an $8 billion share sale in case its accord for an investment in Aluminum Corp. of China falls through, the Sunday Times reported this week without citing anyone.
Rising Valuation
BHP Billiton Ltd., the world’s biggest mining company, slumped 3.2 percent to A$32.90. Crude oil for May delivery dropped 2.8 percent to settle at $51.05 a barrel in New York yesterday, while copper slumped 2.1 percent for the first drop in five days. Gold slid 2.7 percent.
The stock rally in the past month had lifted the average valuation of companies on the MSCI Asia Pacific Index yesterday to 18 times reported profit, the highest since Nov. 30, 2007, data compiled by Bloomberg show.
Finance stocks, which accounted for 36 percent of the drop today, are the worst performers of 10 industry groups on the MSCI Asia Pacific Index in the past year as losses from the credit crisis swelled to $1.29 trillion.
Mizuho dropped 2 percent to 200 yen. National Australia Bank Ltd. fell 2.6 percent to A$22.99.
Telstra rose 2.2 percent to A$3.28 after the Australian government said it will join with private partners to spend A$43 billion ($30.5 billion) over the next 8 years to build a high- speed Internet network.
Rio Tinto Group, the world’s third-largest mining company, slumped 9.2 percent in Sydney on speculation of a share sale. Mizuho Financial Group Inc., which invested $1.2 billion in Merrill Lynch & Co., sank 2 percent, after Mike Mayo, an analyst at Calyon Securities, said U.S. banks’ loan losses may exceed Great Depression levels. Telstra Corp., Australia’s largest phone company, rose 2.2 percent on a government plan to build a high-speed Internet network.
The MSCI Asia Pacific Index lost 0.3 percent to 86.83 at 9:09 a.m. in Tokyo, following a four-day, 7.6 percent advance that took valuations to the highest since Nov. 30, 2007. Through yesterday, the gauge surged 23 percent from a more than five- year low reached on March 9, amid speculation governments worldwide will succeed in efforts to revive growth.
“The rally got a bit ahead of itself,” said Hugh Dive, who helps manage about $3 billion a Investors Mutual Ltd. in Sydney. “When you ask companies if they can see any light at the end of the tunnel, the answer is still no.”
Japan’s Nikkei 225 Stock Average slipped 0.6 percent to 8,805.64. Australia’s S&P/ASX 200 Index fell 1.2 percent. All markets open for trading declined.
Futures on the Standard & Poor’s 500 Index dropped 0.1 percent. The gauge slid 0.8 percent yesterday, led by financial companies. Mayo recommended selling U.S. bank shares, saying that government actions “might not help as much as expected.”
Rio Tinto Group, the world’s third-largest mining company, tumbled 9.2 percent to A$53.67, extending yesterday’s 2.2 percent drop. The company has made plans for an $8 billion share sale in case its accord for an investment in Aluminum Corp. of China falls through, the Sunday Times reported this week without citing anyone.
Rising Valuation
BHP Billiton Ltd., the world’s biggest mining company, slumped 3.2 percent to A$32.90. Crude oil for May delivery dropped 2.8 percent to settle at $51.05 a barrel in New York yesterday, while copper slumped 2.1 percent for the first drop in five days. Gold slid 2.7 percent.
The stock rally in the past month had lifted the average valuation of companies on the MSCI Asia Pacific Index yesterday to 18 times reported profit, the highest since Nov. 30, 2007, data compiled by Bloomberg show.
Finance stocks, which accounted for 36 percent of the drop today, are the worst performers of 10 industry groups on the MSCI Asia Pacific Index in the past year as losses from the credit crisis swelled to $1.29 trillion.
Mizuho dropped 2 percent to 200 yen. National Australia Bank Ltd. fell 2.6 percent to A$22.99.
Telstra rose 2.2 percent to A$3.28 after the Australian government said it will join with private partners to spend A$43 billion ($30.5 billion) over the next 8 years to build a high- speed Internet network.
Sunday, April 5, 2009
Australian, N.Z. Dollars Gain on Expectation Equities to Rise
April 6 (Bloomberg) -- The Australian and New Zealand dollars advanced as futures markets signaled regional equities will rise after U.S. stocks posted the longest stretch of weekly gains since 2007.
New Zealand’s currency rose to the highest since January after March U.S. job losses were close to the median forecast, indicating the worst of the global recession may be over. Gains in the South Pacific currencies may be limited before tomorrow’s meeting of the Reserve Bank of Australia where 14 economists expect no change in the benchmark rate, four are calling for a 25 basis point cut and five forecast a 50 basis point reduction, according to a Bloomberg News survey.
“Markets are reading the payrolls data to say possibly the worst is behind us so the risk-appetite support for the Aussie is still there,” said Amy Auster, head of foreign-exchange and international economics research at Australia & New Zealand Banking Group Ltd. in Melbourne. “If the RBA stays on hold the Aussie may easily reach October highs, if they cut 25 or 50 basis points it will struggle to maintain momentum.”
Australia’s currency rose 0.2 percent to 71.67 U.S. cents as of 8:22 a.m. in Sydney from 71.51 cents late in New York yesterday. The currency advanced 0.4 percent to 72.01 yen.
New Zealand’s dollar gained 1.3 percent to 59.30 U.S. cents, the strongest since Jan. 9, from 58.57 in New York. It bought 59.33 yen from 58.76.
The Australian dollar may reach as high as 73.15 U.S. cents this week if the central bank stays on hold, or it may decline to 68.50 cents if policy makers lower borrowing costs.
Benchmark interest rates are 3.25 percent in Australia and 3 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency-market moves may erase profits.
Interest Rates
Traders are betting the RBA will lower the benchmark borrowing rate by 25 basis points to 3 percent, according to a Credit Suisse Group index based on swaps trading. The Reserve Bank of New Zealand will lower rates 50 basis points when it meets April 30, a separate poll of economists shows.
Australia’s home-loan approvals probably rose 2 percent in February, according to a survey of economists before the statistics bureau reports the data on April 8. The unemployment rate in March likely advanced to a five-year high of 5.4 percent, according to a separate survey. That report is due on April 9.
Futures traders increased their bets the Australian dollar will gain against the U.S. dollar, figures from the Washington- based Commodity Futures Trading Commission show.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the Australian dollar compared with those on a drop -- so-called net longs -- was 11,287 on March 31, compared with net longs of 8,413 a week earlier.
New Zealand’s currency rose to the highest since January after March U.S. job losses were close to the median forecast, indicating the worst of the global recession may be over. Gains in the South Pacific currencies may be limited before tomorrow’s meeting of the Reserve Bank of Australia where 14 economists expect no change in the benchmark rate, four are calling for a 25 basis point cut and five forecast a 50 basis point reduction, according to a Bloomberg News survey.
“Markets are reading the payrolls data to say possibly the worst is behind us so the risk-appetite support for the Aussie is still there,” said Amy Auster, head of foreign-exchange and international economics research at Australia & New Zealand Banking Group Ltd. in Melbourne. “If the RBA stays on hold the Aussie may easily reach October highs, if they cut 25 or 50 basis points it will struggle to maintain momentum.”
Australia’s currency rose 0.2 percent to 71.67 U.S. cents as of 8:22 a.m. in Sydney from 71.51 cents late in New York yesterday. The currency advanced 0.4 percent to 72.01 yen.
New Zealand’s dollar gained 1.3 percent to 59.30 U.S. cents, the strongest since Jan. 9, from 58.57 in New York. It bought 59.33 yen from 58.76.
The Australian dollar may reach as high as 73.15 U.S. cents this week if the central bank stays on hold, or it may decline to 68.50 cents if policy makers lower borrowing costs.
Benchmark interest rates are 3.25 percent in Australia and 3 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency-market moves may erase profits.
Interest Rates
Traders are betting the RBA will lower the benchmark borrowing rate by 25 basis points to 3 percent, according to a Credit Suisse Group index based on swaps trading. The Reserve Bank of New Zealand will lower rates 50 basis points when it meets April 30, a separate poll of economists shows.
Australia’s home-loan approvals probably rose 2 percent in February, according to a survey of economists before the statistics bureau reports the data on April 8. The unemployment rate in March likely advanced to a five-year high of 5.4 percent, according to a separate survey. That report is due on April 9.
Futures traders increased their bets the Australian dollar will gain against the U.S. dollar, figures from the Washington- based Commodity Futures Trading Commission show.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the Australian dollar compared with those on a drop -- so-called net longs -- was 11,287 on March 31, compared with net longs of 8,413 a week earlier.
HSBC Raises $17.7 Billion in U.K.’s Largest-Ever Rights Offer
April 6 (Bloomberg) -- HSBC Holdings Plc, Europe’s biggest bank, raised about $17.7 billion as investors bought 97 percent of the U.K.’s largest-ever rights offer.
HSBC sold the shares to existing investors for 254 pence each, 41 percent less than the close on April 3 in London. HSBC on March 2 said it would seek the money after its North American operation posted a 2007 pretax loss of $15.5 billion.
The London-based bank is now “well-positioned for the uncertain economic environment and for growth opportunities,” HSBC said in an e-mailed statement yesterday. HSBC will use the money to increase capital and finance acquisitions that fit with its strategy of expansion in emerging markets.
While HSBC has set aside about $53 billion to cover bad loans during the past three years, it has avoided taking U.K. government funding, unlike rivals Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.
“This staves off by a very long way the day when they would have to go cap in hand to the government,” said Alan Beaney, who helps manage about $2 billion at Principal Investment Management in Sevenoaks, southeast England. “The real question is have they raised enough?”
The transaction lifts HSBC’s Tier 1 capital ratio, a key gauge of a bank’s financial strength, to 9.8 percent from 8.3 percent, within the company’s target range of 7.5 percent to 10 percent.
HSBC said it met with more than 350 institutional investors to promote the sale, which was taken up by more than 98 percent of its investors based in Hong Kong. Billionaire Li Ka-shing and Hong Kong investors are underwriting at least $1.1 billion of the offering, which closed on April 3 in London.
Share Performance
HSBC fell 5.3 percent to 434.5 pence in London on April 3. The shares have declined 42 percent during the past year, giving the company a market value of 52.8 billion pounds ($78.3 billion), bigger than RBS, Lloyds and Barclays Plc combined.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. were lead underwriters for HSBC. BNP Paribas SA, Credit Suisse Group AG, RBS, Citigroup Inc., Societe Generale SA, Intesa Sanpaolo SpA, Nomura and ING Groep NV, also underwrote the offering, according to a note sent to clients and obtained by Bloomberg.
HSBC sold the shares to existing investors for 254 pence each, 41 percent less than the close on April 3 in London. HSBC on March 2 said it would seek the money after its North American operation posted a 2007 pretax loss of $15.5 billion.
The London-based bank is now “well-positioned for the uncertain economic environment and for growth opportunities,” HSBC said in an e-mailed statement yesterday. HSBC will use the money to increase capital and finance acquisitions that fit with its strategy of expansion in emerging markets.
While HSBC has set aside about $53 billion to cover bad loans during the past three years, it has avoided taking U.K. government funding, unlike rivals Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.
“This staves off by a very long way the day when they would have to go cap in hand to the government,” said Alan Beaney, who helps manage about $2 billion at Principal Investment Management in Sevenoaks, southeast England. “The real question is have they raised enough?”
The transaction lifts HSBC’s Tier 1 capital ratio, a key gauge of a bank’s financial strength, to 9.8 percent from 8.3 percent, within the company’s target range of 7.5 percent to 10 percent.
HSBC said it met with more than 350 institutional investors to promote the sale, which was taken up by more than 98 percent of its investors based in Hong Kong. Billionaire Li Ka-shing and Hong Kong investors are underwriting at least $1.1 billion of the offering, which closed on April 3 in London.
Share Performance
HSBC fell 5.3 percent to 434.5 pence in London on April 3. The shares have declined 42 percent during the past year, giving the company a market value of 52.8 billion pounds ($78.3 billion), bigger than RBS, Lloyds and Barclays Plc combined.
Goldman Sachs Group Inc. and JPMorgan Chase & Co. were lead underwriters for HSBC. BNP Paribas SA, Credit Suisse Group AG, RBS, Citigroup Inc., Societe Generale SA, Intesa Sanpaolo SpA, Nomura and ING Groep NV, also underwrote the offering, according to a note sent to clients and obtained by Bloomberg.
Asian Stocks Advance on Bernanke Comments; Mizuho, Nissan Gain
April 6 (Bloomberg) -- Asian stocks rose for a fourth day, led by finance and mining companies, after U.S. Federal Reserve Chairman Ben S. Bernanke said policies to unfreeze credit markets are working.
Mizuho Financial Group Inc., Japan’s second-largest publicly traded lender, climbed 2.9 percent in Tokyo. Nissan Motor Co. added 2.4 percent as Merrill Lynch & Co. boosted its price estimate on the company and the yen weakened to a five-month low. Panasonic Corp., the world’s biggest maker of consumer electronics, jumped 4.3 percent after Nomura Holdings Inc. raised the shares to “buy.”
“The comments by Fed officials are boosting confidence in the efficacy of the response to the financial crisis,” Tomochika Kitaoka, a strategist at Mizuho Securities Co., said in an interview with Bloomberg Television.
The MSCI Asia Pacific Index gained 0.6 percent to 87.29 as of 9:37 a.m. in Tokyo, paring its drop this year to 2.6 percent. The MSCI Asia Index has rallied 24 percent from a more than five-year low reached on March 9.
Japan’s Nikkei 225 Stock Average jumped 1.6 percent to 8,886.87. South Korea’s Kospi Index rose 0.9 percent even after North Korea launched a rocket yesterday that flew over Japan. The S&P/ASX 200 Index gained 0.1 percent in Australia, where clocks turned back an hour over the weekend for the end of daylight savings. All markets open for trading advanced.
Futures on the U.S. Standard & Poor’s 500 Index added 0.3 percent. The measure gained 1 percent on April 3, as the VIX index, an index of market volatility known as Wall Street’s “fear gauge,” fell below 40 for the first time since January, indicating traders are becoming more confident about the market advance.
Rising Valuations
“Relieving disruptions in credit markets and restoring the flow of credit to households and businesses are essential if we are to see, as I expect, the gradual resumption of sustainable economic growth,” Bernanke said the same day. “So far the programs are having the intended effect.”
The four-week stock rally has boosted the average valuation of companies on the MSCI Asia Pacific Index to 18 times reported profit, the highest since Nov. 30, 2007, according to data compiled by Bloomberg.
North Korea launched a Taepodong-2 rocket yesterday purportedly to orbit a communications satellite. The United Nation’s Security Council adjourned yesterday without agreeing to additional sanctions on North Korea called for by Japan and the U.S.
Japanese exporters climbed after the yen weakened to a five-month low against the dollar and the euro, as last week’s worldwide equities rally added to speculation that the global financial crisis is easing. A weaker yen boosts the value of overseas sales for Japanese companies.
Mizuho Financial Group Inc., Japan’s second-largest publicly traded lender, climbed 2.9 percent in Tokyo. Nissan Motor Co. added 2.4 percent as Merrill Lynch & Co. boosted its price estimate on the company and the yen weakened to a five-month low. Panasonic Corp., the world’s biggest maker of consumer electronics, jumped 4.3 percent after Nomura Holdings Inc. raised the shares to “buy.”
“The comments by Fed officials are boosting confidence in the efficacy of the response to the financial crisis,” Tomochika Kitaoka, a strategist at Mizuho Securities Co., said in an interview with Bloomberg Television.
The MSCI Asia Pacific Index gained 0.6 percent to 87.29 as of 9:37 a.m. in Tokyo, paring its drop this year to 2.6 percent. The MSCI Asia Index has rallied 24 percent from a more than five-year low reached on March 9.
Japan’s Nikkei 225 Stock Average jumped 1.6 percent to 8,886.87. South Korea’s Kospi Index rose 0.9 percent even after North Korea launched a rocket yesterday that flew over Japan. The S&P/ASX 200 Index gained 0.1 percent in Australia, where clocks turned back an hour over the weekend for the end of daylight savings. All markets open for trading advanced.
Futures on the U.S. Standard & Poor’s 500 Index added 0.3 percent. The measure gained 1 percent on April 3, as the VIX index, an index of market volatility known as Wall Street’s “fear gauge,” fell below 40 for the first time since January, indicating traders are becoming more confident about the market advance.
Rising Valuations
“Relieving disruptions in credit markets and restoring the flow of credit to households and businesses are essential if we are to see, as I expect, the gradual resumption of sustainable economic growth,” Bernanke said the same day. “So far the programs are having the intended effect.”
The four-week stock rally has boosted the average valuation of companies on the MSCI Asia Pacific Index to 18 times reported profit, the highest since Nov. 30, 2007, according to data compiled by Bloomberg.
North Korea launched a Taepodong-2 rocket yesterday purportedly to orbit a communications satellite. The United Nation’s Security Council adjourned yesterday without agreeing to additional sanctions on North Korea called for by Japan and the U.S.
Japanese exporters climbed after the yen weakened to a five-month low against the dollar and the euro, as last week’s worldwide equities rally added to speculation that the global financial crisis is easing. A weaker yen boosts the value of overseas sales for Japanese companies.
Subscribe to:
Posts (Atom)
Posts
