By BIMAN MUKHERJI and SWANSY AFONSO
NEW DELHI -- India will import 25 to 30 metric tons of gold in April after no imports in the last two months, the president of the Bombay Bullion Association said Friday.
Suresh Hundia said around 10 tons of gold have already been imported this month.
India, which imports around 700 to 800 tons of gold annually, had virtually halted purchases as consumers weren't willing to buy because of high prices.
But prices have been falling globally as a revival in equities markets has prompted many investors to shift out of gold.
Friday, pure spot gold in Mumbai was quoted at 14,160 rupees ($285) per 10 grams, down sharply from 15,725 rupees/10 grams at the beginning of March.
"Although there has been some improvement in physical demand compared with a month ago, it is still around 50% below that of last year," said Daman Prakash, director with trading house MNC Bullion.
He said that initially when prices started declining, big purchases were witnessed, but buying has slowed.
However, with marriages and Akshaya Trithya around the corner, he expects demand to pick up again.
The Hindu festival of Akshaya Trithya, at the end of the month, is considered an auspicious occasion to buy gold, and sales usually surge.
"We could import around 30-35 tons of gold this month," he added.
"Demand from jewelry manufacturers has risen to 150 to 200 kg on a daily basis in Ahmedabad after the fall in prices to 14,000 rupees levels," said Girish Choksi, a bullion trader
At the 15,000 rupees/10 gram level, demand was around 20 kg, he said, adding that as long as prices are below 14,500 rupees, demand will be good.
Saturday, April 18, 2009
Incomplete Reform Agenda Is India's Elephant in the Room
By PAUL BECKETT
Whichever government comes to power in India on June 2, it will be handed, in effect, a very fat folder marked "Unfinished Reform Agenda."
By almost every realistic scenario for how the next government will be formed, that folder is likely to be overlooked, to the frustration and detriment of long-term investors.
Many of those needed changes -- in foreign-investment rules, labor laws, pensions and further privatization of certain industries -- have been on ice for several years because the Congress Party-led government was hamstrung by its left-wing allies.
Even after the Left Front bolted the coalition last summer, because it opposed the U.S.-India nuclear deal, hopeful talk that the government might slip through a few measures before the end of its term basically came to naught.
A new government led by the Congress Party will hardly fare much better. The dire global economic environment and the quasinationalization of financial services in Western countries gives left-wing antireformers in the party all the firepower they need to nix efforts to revive reform measures.
Meanwhile, Congress's key rival, the Bharatiya Janata Party, or BJP, is expected to garner even fewer seats than Congress. So any coalition it forms will be weaker.
There is a less-likely third scenario: a coalition government formed by neither of the national parties but most likely including the Left Front. To this group, market-oriented change is taboo.
True, India is faring better than much of the world, in part because it hasn't thrown open its economy. With global investors less fearful these days, the country's stocks are up 27% in the past month.
But it is worth remembering that even during its best years recently, India's economy effectively maxed out at around 8% annual growth, despite its capacity to expand much faster on a long-term basis. Failure to act on reforms -- especially in increasing employer flexibility and allowing greater foreign investment in retail, banking, media and real estate -- risks consigning India to the status of a nation that is permanently on the verge of realizing its potential.
That would make it a less appealing investment.
Not everyone is pessimistic. Chengalath Jayaram, executive director of Kotak Mahindra Bank, says any new government that doesn't involve the Left Front has a chance at enacting some reforms to keep the liberalization moving slowly forward.
He uses the analogy of a lumbering elephant: It isn't fast, but "once it moves in a particular direction, it rarely reverses course."
Fair enough, but once it stops, it also is very hard to get moving again.
Whichever government comes to power in India on June 2, it will be handed, in effect, a very fat folder marked "Unfinished Reform Agenda."
By almost every realistic scenario for how the next government will be formed, that folder is likely to be overlooked, to the frustration and detriment of long-term investors.
Many of those needed changes -- in foreign-investment rules, labor laws, pensions and further privatization of certain industries -- have been on ice for several years because the Congress Party-led government was hamstrung by its left-wing allies.
Even after the Left Front bolted the coalition last summer, because it opposed the U.S.-India nuclear deal, hopeful talk that the government might slip through a few measures before the end of its term basically came to naught.
A new government led by the Congress Party will hardly fare much better. The dire global economic environment and the quasinationalization of financial services in Western countries gives left-wing antireformers in the party all the firepower they need to nix efforts to revive reform measures.
Meanwhile, Congress's key rival, the Bharatiya Janata Party, or BJP, is expected to garner even fewer seats than Congress. So any coalition it forms will be weaker.
There is a less-likely third scenario: a coalition government formed by neither of the national parties but most likely including the Left Front. To this group, market-oriented change is taboo.
True, India is faring better than much of the world, in part because it hasn't thrown open its economy. With global investors less fearful these days, the country's stocks are up 27% in the past month.
But it is worth remembering that even during its best years recently, India's economy effectively maxed out at around 8% annual growth, despite its capacity to expand much faster on a long-term basis. Failure to act on reforms -- especially in increasing employer flexibility and allowing greater foreign investment in retail, banking, media and real estate -- risks consigning India to the status of a nation that is permanently on the verge of realizing its potential.
That would make it a less appealing investment.
Not everyone is pessimistic. Chengalath Jayaram, executive director of Kotak Mahindra Bank, says any new government that doesn't involve the Left Front has a chance at enacting some reforms to keep the liberalization moving slowly forward.
He uses the analogy of a lumbering elephant: It isn't fast, but "once it moves in a particular direction, it rarely reverses course."
Fair enough, but once it stops, it also is very hard to get moving again.
India May Receive Near Normal Rains, Driving Growth
April 17 (Bloomberg) -- India’s monsoon, critical to the country’s $1.2 trillion economy, will probably be near normal, helping counter the slowest economic growth in six years.
Rains in the June-September rainy season may be 96 percent of the 50-year average, the New Delhi-based India Meteorological Department said. The forecast is among the most widely watched indicator because the country’s 235 million farmers represent about a fifth of its economy.
Adequate rainfall will help sustain the record 4.3 percent average growth in farm output Prime Minister Manmohan Singh has presided over since 2005, raising incomes among the 742 million Indians who live in the countryside. That may help the Congress party-led government, seeking re-election in polls that started yesterday, to fight the slowest growth since March 2003.
“It’s good news coming amid a plethora of bad ones,” said Sonal Varma, a Mumbai-based economist at Nomura Securities Ltd. “The country definitely needs strong rural demand to boost the economy and good rains hold the key to a higher farm output.”
India, the world’s second-biggest grower of rice and wheat, depends on the June-September rains to water its farms because about 60 percent of arable land isn’t irrigated. Farmers rely on the timing of the monsoon to decide which crops to grow. The season typically starts on June 1.
Shares of fertilizer makers and producers of farm chemicals gained in Mumbai. Coromandel Fertilisers Ltd. added 6.5 percent to 106.65 rupees, Chambal Fertilizers and Chemicals Ltd. climbed 0.6 percent to 44.8 rupees and Rallis India Ltd., a producer of hybrid seeds and pesticides, rose 3.5 percent to 547.65.
Turn Around
Premier Singh told editors in New Delhi on April 15 that he expects the economy to begin turning around in September and that, if returned to power, would strive to achieve economic growth of 9 percent to 10 percent. India’s five-phase polls end on May 13, with counting of votes set for May 16.
Asia’s third-biggest economy may have grown at less than 7 percent in the year ended March 31. Gross domestic product may expand by about 6.5 percent in the year started April 1 as the global recession cools exports and saps consumer demand, Montek Singh Ahluwalia, deputy chairman of India’s Planning Commission, said yesterday. Overseas sales make up 15 percent of the economy.
“I don’t think the monsoon will be huge boost because the macro factors are weighing heavily on the economy,” said Bharat K. Rekapalli, a director with Global Financial Markets in the southern city of Hyderabad. “People will wait 30-40 days for a more accurate picture about the monsoon.”
Long-Period Average
Actual rainfall can be five percent more or less than the forecast, the bureau said. It considers rains to be near normal if they are between 96 and 104 percent of the long-range average. Today’s forecast will be updated in June, the bureau said.
Last year, rains were 98 percent of the long-range average, compared with a forecast of 100 percent. In 2007, showers were forecast to be 93 percent of the average, and actual showers were 105 percent of the mean.
The weather agency uses experimental forecasts prepared by agencies including the Indian Institute of Tropical Meteorology and the Centre for Mathematical Modelling & Computer Simulation, and estimates from overseas agencies such as the U.S.-based National Centers for Environmental Prediction and International Research Institute for Climate and Society.
Rains in the June-September rainy season may be 96 percent of the 50-year average, the New Delhi-based India Meteorological Department said. The forecast is among the most widely watched indicator because the country’s 235 million farmers represent about a fifth of its economy.
Adequate rainfall will help sustain the record 4.3 percent average growth in farm output Prime Minister Manmohan Singh has presided over since 2005, raising incomes among the 742 million Indians who live in the countryside. That may help the Congress party-led government, seeking re-election in polls that started yesterday, to fight the slowest growth since March 2003.
“It’s good news coming amid a plethora of bad ones,” said Sonal Varma, a Mumbai-based economist at Nomura Securities Ltd. “The country definitely needs strong rural demand to boost the economy and good rains hold the key to a higher farm output.”
India, the world’s second-biggest grower of rice and wheat, depends on the June-September rains to water its farms because about 60 percent of arable land isn’t irrigated. Farmers rely on the timing of the monsoon to decide which crops to grow. The season typically starts on June 1.
Shares of fertilizer makers and producers of farm chemicals gained in Mumbai. Coromandel Fertilisers Ltd. added 6.5 percent to 106.65 rupees, Chambal Fertilizers and Chemicals Ltd. climbed 0.6 percent to 44.8 rupees and Rallis India Ltd., a producer of hybrid seeds and pesticides, rose 3.5 percent to 547.65.
Turn Around
Premier Singh told editors in New Delhi on April 15 that he expects the economy to begin turning around in September and that, if returned to power, would strive to achieve economic growth of 9 percent to 10 percent. India’s five-phase polls end on May 13, with counting of votes set for May 16.
Asia’s third-biggest economy may have grown at less than 7 percent in the year ended March 31. Gross domestic product may expand by about 6.5 percent in the year started April 1 as the global recession cools exports and saps consumer demand, Montek Singh Ahluwalia, deputy chairman of India’s Planning Commission, said yesterday. Overseas sales make up 15 percent of the economy.
“I don’t think the monsoon will be huge boost because the macro factors are weighing heavily on the economy,” said Bharat K. Rekapalli, a director with Global Financial Markets in the southern city of Hyderabad. “People will wait 30-40 days for a more accurate picture about the monsoon.”
Long-Period Average
Actual rainfall can be five percent more or less than the forecast, the bureau said. It considers rains to be near normal if they are between 96 and 104 percent of the long-range average. Today’s forecast will be updated in June, the bureau said.
Last year, rains were 98 percent of the long-range average, compared with a forecast of 100 percent. In 2007, showers were forecast to be 93 percent of the average, and actual showers were 105 percent of the mean.
The weather agency uses experimental forecasts prepared by agencies including the Indian Institute of Tropical Meteorology and the Centre for Mathematical Modelling & Computer Simulation, and estimates from overseas agencies such as the U.S.-based National Centers for Environmental Prediction and International Research Institute for Climate and Society.
MIND SET Manifesto for our youth Young people must not retreat into cynicism or despair. India’s soul longs for change and its own ‘yes, we can’ gener
Every society is like a ragged army, with some parts running ahead and others lagging behind. In the case of India, a handful of farsighted leaders broke the socialist, isolationist mould to allow India to join the free market. But much lags behind.
The opening for a young people's movement cannot be denied. The question is how to take advantage of this opening.
What I see is idealism tempered by caution. Young people are restless, but they also realize that the old kind of activism (angry protests, labour stoppages, class warfare, etc) does not work in the long run. Moral outrage is still rage. In Cambodia and Burma, Asia has witnessed the horrendous results of morally certain leaders losing their humanity.
On a positive note, the young people I meet are eager to accept that a shift in consciousness is possible. What better country than India to foster such a belief ? Alone in the world, India has been a society where shifts in collective consciousness created enormous change without mass violence. It would be a betrayal of our heritage to add more anger to what already exists in the world.
How, then, can the future be shaped on the basis of consciousness? Several realizations must occur before it can happen:
A shift in consciousness is the most powerful way to create change: This realization will guide a new leadership to first seek personal transformation. The current leadership’s stagnation is rooted in routine, habit, inertia, and class pride. These are all the result of a stagnant consciousness. No one can hope to bring about change with reform or revolution applied from the outside. If we want new wine in new bottles, the consciousness of aspiring leaders must shift.
The role of a leader is to guide a shift that is already occurring:
No one is being asked to invent a new Indian identity — it is already being born. We don't need a new ideology. That route was tragically tested in the 20th century by c o m m u n i s m , fascism, Maoism and other toxic isms. Instead, the young people who will lead are the ones with sensitive antennae, the ones who can sense where the collective consciousness wants to go. That has been Barack Obama's secret and the need he sensed - for more freedom, democratic participation, idealism, and hope for the future - applies to consciousness everywhere.
A new type of activism is needed: Sacred activism is love in action. Love without action is irrelevant. Action without love is meaningless. Our youth must galvanize into leaders who turn love into its most practical products: relationship-building, creative problemsolving and service.
India gained independence under the guidance and inspiration of statesmen, visionaries and philosophers — Nehru, Vallabhai Patel, Gandhi, Radhakrishnan, Tagore, Aurobindo and many others. They were luminaries who considered themselves servants and stewards of civil society. British colonialism and its injustices were the impetus.
Today, the impetus is harder to label and nowhere as visible as a foreign occupation. We must be motivated by looking at ourselves. Jiddu Krishnamurti used to say that the violence in every person was the cause of war. He underlined the words ‘every person’ because he meant each one of us, not just those who openly foment violence.
As we are, so is the world. This spiritual dictum cannot be ignored or bypassed.
Therefore, youth must not retreat to the arrogance of youth, just as it must not retreat into the despair of youth or the cynicism of youth. Instead, the most basic and simple questions must be asked in the privacy of one’s awareness:
• What in me is the cause of the problems I see in the world?
• What change in me can bring about the change I want to see?
We need a revival of true leadership based on self-awareness. People are tired of power-mongering, influence-peddling, cronyism, corruption and bureaucracy. India is regrettably mired in all of these things.
The opening for a young people's movement cannot be denied. The question is how to take advantage of this opening.
What I see is idealism tempered by caution. Young people are restless, but they also realize that the old kind of activism (angry protests, labour stoppages, class warfare, etc) does not work in the long run. Moral outrage is still rage. In Cambodia and Burma, Asia has witnessed the horrendous results of morally certain leaders losing their humanity.
On a positive note, the young people I meet are eager to accept that a shift in consciousness is possible. What better country than India to foster such a belief ? Alone in the world, India has been a society where shifts in collective consciousness created enormous change without mass violence. It would be a betrayal of our heritage to add more anger to what already exists in the world.
How, then, can the future be shaped on the basis of consciousness? Several realizations must occur before it can happen:
A shift in consciousness is the most powerful way to create change: This realization will guide a new leadership to first seek personal transformation. The current leadership’s stagnation is rooted in routine, habit, inertia, and class pride. These are all the result of a stagnant consciousness. No one can hope to bring about change with reform or revolution applied from the outside. If we want new wine in new bottles, the consciousness of aspiring leaders must shift.
The role of a leader is to guide a shift that is already occurring:
No one is being asked to invent a new Indian identity — it is already being born. We don't need a new ideology. That route was tragically tested in the 20th century by c o m m u n i s m , fascism, Maoism and other toxic isms. Instead, the young people who will lead are the ones with sensitive antennae, the ones who can sense where the collective consciousness wants to go. That has been Barack Obama's secret and the need he sensed - for more freedom, democratic participation, idealism, and hope for the future - applies to consciousness everywhere.
A new type of activism is needed: Sacred activism is love in action. Love without action is irrelevant. Action without love is meaningless. Our youth must galvanize into leaders who turn love into its most practical products: relationship-building, creative problemsolving and service.
India gained independence under the guidance and inspiration of statesmen, visionaries and philosophers — Nehru, Vallabhai Patel, Gandhi, Radhakrishnan, Tagore, Aurobindo and many others. They were luminaries who considered themselves servants and stewards of civil society. British colonialism and its injustices were the impetus.
Today, the impetus is harder to label and nowhere as visible as a foreign occupation. We must be motivated by looking at ourselves. Jiddu Krishnamurti used to say that the violence in every person was the cause of war. He underlined the words ‘every person’ because he meant each one of us, not just those who openly foment violence.
As we are, so is the world. This spiritual dictum cannot be ignored or bypassed.
Therefore, youth must not retreat to the arrogance of youth, just as it must not retreat into the despair of youth or the cynicism of youth. Instead, the most basic and simple questions must be asked in the privacy of one’s awareness:
• What in me is the cause of the problems I see in the world?
• What change in me can bring about the change I want to see?
We need a revival of true leadership based on self-awareness. People are tired of power-mongering, influence-peddling, cronyism, corruption and bureaucracy. India is regrettably mired in all of these things.
Hamara Shakespeare lives on in India’s heartland
Shakespeare has made inroads into India’s vast tribal belt. His works are being translated into tribal dialects. In Jharkhand and Orissa, a Santhali translation of ‘A Midsummer Night’s Dream’ is doing well. One-fifth of the 1,000 copies published in 2008 sold in just two months. Likewise, ‘Maya ke Rang’, a Chhattisgarhi translation of the play. Tribals in the state’s Korba district are enthusiastic, believing this, the first Chhattisgarhi translation of a Shakespeare play, is their gateway to English literature. Or so says Mahavir Prasad Chandra, who translated the play even as he did his day job as an operator in the R&D department of Bharat Aluminium Company Ltd.
Poonam Trivedi, who has co-edited ‘India’s Shakespeare: Translation, Interpretation and Performance’ with Dennis Bartholomeusz, agrees that the Bard is now “very much a part of Indian heritage. We have made him our own.”
Trivedi’s book highlights the Bard’s unique connection with India today. ‘The Taming of the Shrew’, says Trivedi, was the first Shakespearean play to be translated into Gujarati. It was performed in Surat as early as 1852.
Shakespeare scholars agree that reinterpreted and localized versions of his plays have made the Bard acceptable right across India. Bollywood has famously done it time and again, notably Gulzar’s ‘Angoor’, which was based on ‘A Comedy of Errors’ and more recently Vishal Bharadwaj’s ‘Omkara’, which was based on ‘Othello’.
Regional theatre has also helped to Indianize the Bard of Avon. A notable example is thespian Habib Tanvir’s Hindi adaptation of ‘A Midsummer Night’s Dream’. It was titled ‘Kamdeo ka Apna, Vasant Ritu ka Sapna’ (1993) and was an improvisation that incorporated Indian theatrical forms such as nautanki. The cast was Chhattisgarhi. Some of these Indian avatars of Shakespeare do exceedingly well. In Kolhapur in the early 90s, ‘Raja Lear’, a Marathi adaptation by poet Vrinda Nabar, played to packed houses.
Marathi theatre director Vijay Kenkre, who has adapted many of the Bard’s plays, says they are often successful because the common man does not find it hard to identify with the stories. The universality of the stories keeps them relevant and contemporary, nearly five centuries after his death. Mumbai-based playwright Ramu Ramanathan, who recently staged ‘Shakespeare and She’, compares the work of the English Bard to the ‘Ramayana’ and ‘Mahabharata’. “Shakespeare is a bit like that. His stories are told and retold and nobody ever gets tired of them. The characters are eternal and that’s why it’s easy to locate them in any situation,” he says.
That must explain the extraordinary success in Mizoram of a production of ‘Hamlet’ by an amateur theatre group. It was a roaring hit. Audio cassettes of the play sold in large numbers. It was a phenomenon that Pankaj Butalia would go on to capture in his 1989 documentary ‘When Hamlet Came to Mizoram’.
Alyque Padamsee, who has directed eight Shakespearean plays, says the Bard’s imagery “grabs the imagination of a director whether in Colaba or Chhattisgarh.”
Small wonder that phrases like a ‘pound of flesh’, ‘what’s in a name’, ‘to be or not to be’ and play titles such as ‘Much Ado About Nothing’ and ‘As You Like It’, have become part of our daily vocabulary. It is not just Indian English but other vernacular languages too that borrow heavily from Shakespeare, sometimes without even knowing the source. K V Narayana, senior fellow at Mysore’s Central Institute of Indian Languages, says, “In Kannada poetry, sonnets were introduced after reading Shakespeare. Similarly, the idea of a black Moor marrying a white woman came from him.”
Several Shakespearean sub-plots have passed into Bollywood without reference to the Bard. The heroine in male disguise, a la ‘The Merchant of Venice’ and young lovers caught between warring families (‘Romeo and Juliet’) regularly feature in Indian cinema. Trivedi, who teaches English at Indraprastha College in Delhi, says, “These motifs have become so much a part of our lives, that not everybody can catch them or even realize where they are coming from.”
The extent of India’s acceptance of ‘Hamara Shakespeare’ can be gauged from the fact that a major thoroughfare in the heart of Kolkata is called Shakespeare Sarani. Padamsee concludes, “He is 500 years old but still alive and kicking.”
THE BARD IN BHARAT
Jungle Me Mangal | A Marathi theatrical adaptation of ‘A Midsummer Night’s Dream’ in tamasha form
Kaliyattam | A Malayalam film based on ‘Othello’. It uses the theatrical tradition of Kaliyattam
Maranayaka Drishtanta | A Kannada adaptation of ‘Macbeth’, performed by the inmates of Mysore jail
Gunasundari Katha | Noted Telugu film director K V Reddi adapted ‘King Lear’ using the folklore format
Nanjudi Kalyana | Kannada film director M S Rajashekar set ‘The Taming of the Shrew’ in modern Karnataka
Bhranti Bilas | Bengali superstar Uttam Kumar starred in this 1963 hit film based on ‘The Comedy of Errors’
Poonam Trivedi, who has co-edited ‘India’s Shakespeare: Translation, Interpretation and Performance’ with Dennis Bartholomeusz, agrees that the Bard is now “very much a part of Indian heritage. We have made him our own.”
Trivedi’s book highlights the Bard’s unique connection with India today. ‘The Taming of the Shrew’, says Trivedi, was the first Shakespearean play to be translated into Gujarati. It was performed in Surat as early as 1852.
Shakespeare scholars agree that reinterpreted and localized versions of his plays have made the Bard acceptable right across India. Bollywood has famously done it time and again, notably Gulzar’s ‘Angoor’, which was based on ‘A Comedy of Errors’ and more recently Vishal Bharadwaj’s ‘Omkara’, which was based on ‘Othello’.
Regional theatre has also helped to Indianize the Bard of Avon. A notable example is thespian Habib Tanvir’s Hindi adaptation of ‘A Midsummer Night’s Dream’. It was titled ‘Kamdeo ka Apna, Vasant Ritu ka Sapna’ (1993) and was an improvisation that incorporated Indian theatrical forms such as nautanki. The cast was Chhattisgarhi. Some of these Indian avatars of Shakespeare do exceedingly well. In Kolhapur in the early 90s, ‘Raja Lear’, a Marathi adaptation by poet Vrinda Nabar, played to packed houses.
Marathi theatre director Vijay Kenkre, who has adapted many of the Bard’s plays, says they are often successful because the common man does not find it hard to identify with the stories. The universality of the stories keeps them relevant and contemporary, nearly five centuries after his death. Mumbai-based playwright Ramu Ramanathan, who recently staged ‘Shakespeare and She’, compares the work of the English Bard to the ‘Ramayana’ and ‘Mahabharata’. “Shakespeare is a bit like that. His stories are told and retold and nobody ever gets tired of them. The characters are eternal and that’s why it’s easy to locate them in any situation,” he says.
That must explain the extraordinary success in Mizoram of a production of ‘Hamlet’ by an amateur theatre group. It was a roaring hit. Audio cassettes of the play sold in large numbers. It was a phenomenon that Pankaj Butalia would go on to capture in his 1989 documentary ‘When Hamlet Came to Mizoram’.
Alyque Padamsee, who has directed eight Shakespearean plays, says the Bard’s imagery “grabs the imagination of a director whether in Colaba or Chhattisgarh.”
Small wonder that phrases like a ‘pound of flesh’, ‘what’s in a name’, ‘to be or not to be’ and play titles such as ‘Much Ado About Nothing’ and ‘As You Like It’, have become part of our daily vocabulary. It is not just Indian English but other vernacular languages too that borrow heavily from Shakespeare, sometimes without even knowing the source. K V Narayana, senior fellow at Mysore’s Central Institute of Indian Languages, says, “In Kannada poetry, sonnets were introduced after reading Shakespeare. Similarly, the idea of a black Moor marrying a white woman came from him.”
Several Shakespearean sub-plots have passed into Bollywood without reference to the Bard. The heroine in male disguise, a la ‘The Merchant of Venice’ and young lovers caught between warring families (‘Romeo and Juliet’) regularly feature in Indian cinema. Trivedi, who teaches English at Indraprastha College in Delhi, says, “These motifs have become so much a part of our lives, that not everybody can catch them or even realize where they are coming from.”
The extent of India’s acceptance of ‘Hamara Shakespeare’ can be gauged from the fact that a major thoroughfare in the heart of Kolkata is called Shakespeare Sarani. Padamsee concludes, “He is 500 years old but still alive and kicking.”
THE BARD IN BHARAT
Jungle Me Mangal | A Marathi theatrical adaptation of ‘A Midsummer Night’s Dream’ in tamasha form
Kaliyattam | A Malayalam film based on ‘Othello’. It uses the theatrical tradition of Kaliyattam
Maranayaka Drishtanta | A Kannada adaptation of ‘Macbeth’, performed by the inmates of Mysore jail
Gunasundari Katha | Noted Telugu film director K V Reddi adapted ‘King Lear’ using the folklore format
Nanjudi Kalyana | Kannada film director M S Rajashekar set ‘The Taming of the Shrew’ in modern Karnataka
Bhranti Bilas | Bengali superstar Uttam Kumar starred in this 1963 hit film based on ‘The Comedy of Errors’
3 IIM-C grads manage BJP’s poll strategies
Kolkata: If you thought Bschool and the BJP don’t go together, think again: at least three IIM-Calcutta graduates are applying their management wizardry to strengthen the saffron stock.
The three are either pursuing political internship or volunteering for the BJP in Mumbai and Delhi. What’s more, none is ruling out an active involvement in politics in future. “If not a fulltime career, I may end up in politics in the future,’’ says Ankur Gattani, a 2008 graduate who runs his own business in Mumbai. “I will have enough in my kitty before I take a plunge into active politics. Moreover, even if parties don’t pay a salary, they take care of a lot of your necessities,’’ Gattani, who is looking after the party’s IT cell in Maharashtra, said.
The three are not fighting the polls, instead they are involved in assisting the party leadership in wooing voters, especially the youth.
Harsh Vardhan Chhaparia has been a member of L K Advani’s communication team at 26 Tughlaq Road. “I research for him, prepare press releases and help in updating the party’s website,’’ Harsh says. The party has found him a bungalow, which he shares with BJP national secretary Sudhendra Kulkarni.
Shubham Singal writes articles and does research work for the BJP website. “In it, we clarify the baseless remarks made against the party. If BJP leaders have been misquoted, we try and set the record straight,’’ Singal says. He believes that in future he might take a sabbatical and contest the polls as an Independent, much like Meera Sanyal, ex-ABN AMRO Bank CEO who is contesting from the Mumbai South seat. These young B-school grads feel that the lack of financial stability is the root of politicians turning corrupt.
SAFFRON SHINING: Ankur (top) runs a business in Mumbai besides looking after the party’s IT cell, while Harsh Vardhan is a member of Advani’s communication team
The three are either pursuing political internship or volunteering for the BJP in Mumbai and Delhi. What’s more, none is ruling out an active involvement in politics in future. “If not a fulltime career, I may end up in politics in the future,’’ says Ankur Gattani, a 2008 graduate who runs his own business in Mumbai. “I will have enough in my kitty before I take a plunge into active politics. Moreover, even if parties don’t pay a salary, they take care of a lot of your necessities,’’ Gattani, who is looking after the party’s IT cell in Maharashtra, said.
The three are not fighting the polls, instead they are involved in assisting the party leadership in wooing voters, especially the youth.
Harsh Vardhan Chhaparia has been a member of L K Advani’s communication team at 26 Tughlaq Road. “I research for him, prepare press releases and help in updating the party’s website,’’ Harsh says. The party has found him a bungalow, which he shares with BJP national secretary Sudhendra Kulkarni.
Shubham Singal writes articles and does research work for the BJP website. “In it, we clarify the baseless remarks made against the party. If BJP leaders have been misquoted, we try and set the record straight,’’ Singal says. He believes that in future he might take a sabbatical and contest the polls as an Independent, much like Meera Sanyal, ex-ABN AMRO Bank CEO who is contesting from the Mumbai South seat. These young B-school grads feel that the lack of financial stability is the root of politicians turning corrupt.
SAFFRON SHINING: Ankur (top) runs a business in Mumbai besides looking after the party’s IT cell, while Harsh Vardhan is a member of Advani’s communication team
Obama picks Indian as US’ first chief tech officer
Washington: US President Barack Obama on Saturday named a Harvardeducated Indian-American to the new post of Chief Technology Officer in an appointment muchawaited by Silicon Valley.
As the country’s first Chief Technology Officer, Aneesh Chopra, 36, will use technology to “improve security, ensure transparency, and lower costs’’, Obama said in his weekly address to the nation.
“In this role, Aneesh will promote technological innovation to help achieve our most urgent priorities—from creating jobs and reducing healthcare costs to keeping our nation secure,’’ the President added.
Chopra, whose background is in health policy, has served as secretary of technology for Virginia. He earned his undergraduate degree from
Johns Hopkins University and a masters in public policy from Harvard University.
Obama said Chopra would work closely with Chief Information Officer Vivek Kundra, who’s responsible for setting technology policy and federal technology spending, which amounts to over $70 billion a year.
The appointment of the relatively unknown Chopra came as something of a surprise in technology circles, where speculation over the past three months had focused on more high-profile candidates. Microsoft’s Bill Gates, Google’s Eric Schmidt and Amazon’s Jeff Bezos were among the top vote-getters in a poll for the best candidate in a tech blog.
Aneesh Chopra, US’ Chief Technology Officer (top), and Vivek Kundra, his information counterpart
As the country’s first Chief Technology Officer, Aneesh Chopra, 36, will use technology to “improve security, ensure transparency, and lower costs’’, Obama said in his weekly address to the nation.
“In this role, Aneesh will promote technological innovation to help achieve our most urgent priorities—from creating jobs and reducing healthcare costs to keeping our nation secure,’’ the President added.
Chopra, whose background is in health policy, has served as secretary of technology for Virginia. He earned his undergraduate degree from
Johns Hopkins University and a masters in public policy from Harvard University.
Obama said Chopra would work closely with Chief Information Officer Vivek Kundra, who’s responsible for setting technology policy and federal technology spending, which amounts to over $70 billion a year.
The appointment of the relatively unknown Chopra came as something of a surprise in technology circles, where speculation over the past three months had focused on more high-profile candidates. Microsoft’s Bill Gates, Google’s Eric Schmidt and Amazon’s Jeff Bezos were among the top vote-getters in a poll for the best candidate in a tech blog.
Aneesh Chopra, US’ Chief Technology Officer (top), and Vivek Kundra, his information counterpart
Friday, April 17, 2009
Asian Stocks Rally for Sixth Week as Recession Con
April 18 (Bloomberg) -- Asian stocks climbed for a sixth week, the longest streak of gains in more than two years, on increasing confidence the worst of the global recession is over.
China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, surged 21 percent on rising Chinese exports and shipping rates. PT Bumi Resources, Asia’s largest exporter of power-station coal, jumped 21 percent in Jakarta as elections strengthened the hold Indonesia’s president has over parliament. JFE Holdings Inc., Japan’s No. 2 steelmaker, soared 22 percent on speculation it won’t make large price cuts and as the government unveiled a record stimulus package.
“We’re probably seeing a bottoming out in the economy,” said Arjuna Mahendran, Singapore-based chief investment strategist for Asia at HSBC Private Bank, which oversees $494 billion in assets. “The second quarter will be good for stocks as corporate earnings should bounce.”
The MSCI Asia Pacific Index rose 2.0 percent this week to 89.69, completing the longest stretch of gains since December 2006. Asian markets have rallied 27 percent since the MSCI benchmark dropped to a six-year low on March 9.
Japan’s Nikkei 225 Stock Average lost 0.6 percent. South Korea’s Kospi index dropped 0.5 percent as brokerages cut recommendations on financial companies. Thailand’s SET Index gained 0.6 percent in a week shortened by new year holidays. The Thai government called a state of emergency following clashes between security forces and protestors in Bangkok.
MSCI’s Asian index plunged by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits.
China Exports
The gauge has rallied 27 percent from a five-year low reached on March 9 amid signs government measures to ease the financial crisis are working. Earnings estimates for companies included in the MSCI benchmark started to rise this month after a year of falling predictions, data compiled by Bloomberg show.
China Cosco jumped 21 percent to HK$7.09 in Hong Kong. China Shipping Container Lines Co., the nation’s No. 2 cargo-box carrier, rose 23 percent. Mitsui O.S.K. Lines Ltd., Japan’s second-biggest bulk shipper, advanced 7.6 percent to 624 yen.
China’s exports rose 39 percent in March from a month earlier, the customs bureau said on April 10, when Hong Kong markets were shut for a holiday. The Baltic Dry Index, a measure of shipping costs for commodities, jumped 13.8 percent this week. The gauge had slumped as much as 94 percent from a May 2008 peak.
Political Stability
China posted a 6.1 percent annualized growth rate for the first quarter, the slowest rate of expansion in nearly a decade. That may mark the bottom for the world’s third-largest economy as a 4 trillion yuan ($585 billion) stimulus package cushions the effects of the global recession. Sun Mingchun, an economist at Nomura Holdings Inc. in Hong Kong, predicts the economy will expand 8 percent this year.
The Jakarta Composite Index surged 12 percent in the week as polls indicated President Susilo Bambang Yudhoyono’s party may double its seats in parliament, lifting speculation he’ll increase investment to boost growth.
“The elections ensure stability,” said Finny Fauzana, a fund manager at PT PNM Investment Management, which oversees about $216 million in assets in Jakarta. “With certainty comes an improved investment climate, which attracts investors.”
Bumi Resources rose 21 percent to 1,140 rupiah. PT Telekomunikasi Indonesia, the nation’s biggest telephone operator, climbed 12 percent to 7,750 rupiah.
In Tokyo, JFE soared 22 percent to 2,985 yen. Nippon Steel Corp., the global No. 2, rallied 17 percent to 346 yen.
Steel Prices
Japanese mills also agreed with Toyota Motor Corp. to reduce prices by about 15,000 yen ($151) per metric ton for the year, the Asahi newspaper reported. That’s about half the cut that was anticipated, Nomura Holdings Inc. analyst Yuji Matsumoto wrote in a report. Nippon Steel’s operating profit could get a 100 billion yen boost as a result, the analyst wrote.
On April 10, Japan’s Prime Minister Taro Aso unveiled a record 15.4 trillion yen stimulus plan, bringing total supplementary spending to 25 trillion yen, or about 5 percent of the nation’s gross domestic product.
Woori Finance Holdings Co., the largest South Korean financial company, retreated 8.5 percent to 9,110 won after JPMorgan Chase & Co. cut the shares to “underweight” from “neutral,” citing a “downbeat” earnings outlook beyond the first quarter. Hana Financial Group Inc., the owner of South Korea’s fourth-largest bank, lost 11 percent to 21,300 won as it was lowered to “underweight” by HSBC Holdings Plc.
South Korea’s delinquent-loan ratio for lending by domestic banks climbed 0.55 percentage point to 1.46 percent in March, the Financial Supervisory Service said on April 15.
China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, surged 21 percent on rising Chinese exports and shipping rates. PT Bumi Resources, Asia’s largest exporter of power-station coal, jumped 21 percent in Jakarta as elections strengthened the hold Indonesia’s president has over parliament. JFE Holdings Inc., Japan’s No. 2 steelmaker, soared 22 percent on speculation it won’t make large price cuts and as the government unveiled a record stimulus package.
“We’re probably seeing a bottoming out in the economy,” said Arjuna Mahendran, Singapore-based chief investment strategist for Asia at HSBC Private Bank, which oversees $494 billion in assets. “The second quarter will be good for stocks as corporate earnings should bounce.”
The MSCI Asia Pacific Index rose 2.0 percent this week to 89.69, completing the longest stretch of gains since December 2006. Asian markets have rallied 27 percent since the MSCI benchmark dropped to a six-year low on March 9.
Japan’s Nikkei 225 Stock Average lost 0.6 percent. South Korea’s Kospi index dropped 0.5 percent as brokerages cut recommendations on financial companies. Thailand’s SET Index gained 0.6 percent in a week shortened by new year holidays. The Thai government called a state of emergency following clashes between security forces and protestors in Bangkok.
MSCI’s Asian index plunged by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits.
China Exports
The gauge has rallied 27 percent from a five-year low reached on March 9 amid signs government measures to ease the financial crisis are working. Earnings estimates for companies included in the MSCI benchmark started to rise this month after a year of falling predictions, data compiled by Bloomberg show.
China Cosco jumped 21 percent to HK$7.09 in Hong Kong. China Shipping Container Lines Co., the nation’s No. 2 cargo-box carrier, rose 23 percent. Mitsui O.S.K. Lines Ltd., Japan’s second-biggest bulk shipper, advanced 7.6 percent to 624 yen.
China’s exports rose 39 percent in March from a month earlier, the customs bureau said on April 10, when Hong Kong markets were shut for a holiday. The Baltic Dry Index, a measure of shipping costs for commodities, jumped 13.8 percent this week. The gauge had slumped as much as 94 percent from a May 2008 peak.
Political Stability
China posted a 6.1 percent annualized growth rate for the first quarter, the slowest rate of expansion in nearly a decade. That may mark the bottom for the world’s third-largest economy as a 4 trillion yuan ($585 billion) stimulus package cushions the effects of the global recession. Sun Mingchun, an economist at Nomura Holdings Inc. in Hong Kong, predicts the economy will expand 8 percent this year.
The Jakarta Composite Index surged 12 percent in the week as polls indicated President Susilo Bambang Yudhoyono’s party may double its seats in parliament, lifting speculation he’ll increase investment to boost growth.
“The elections ensure stability,” said Finny Fauzana, a fund manager at PT PNM Investment Management, which oversees about $216 million in assets in Jakarta. “With certainty comes an improved investment climate, which attracts investors.”
Bumi Resources rose 21 percent to 1,140 rupiah. PT Telekomunikasi Indonesia, the nation’s biggest telephone operator, climbed 12 percent to 7,750 rupiah.
In Tokyo, JFE soared 22 percent to 2,985 yen. Nippon Steel Corp., the global No. 2, rallied 17 percent to 346 yen.
Steel Prices
Japanese mills also agreed with Toyota Motor Corp. to reduce prices by about 15,000 yen ($151) per metric ton for the year, the Asahi newspaper reported. That’s about half the cut that was anticipated, Nomura Holdings Inc. analyst Yuji Matsumoto wrote in a report. Nippon Steel’s operating profit could get a 100 billion yen boost as a result, the analyst wrote.
On April 10, Japan’s Prime Minister Taro Aso unveiled a record 15.4 trillion yen stimulus plan, bringing total supplementary spending to 25 trillion yen, or about 5 percent of the nation’s gross domestic product.
Woori Finance Holdings Co., the largest South Korean financial company, retreated 8.5 percent to 9,110 won after JPMorgan Chase & Co. cut the shares to “underweight” from “neutral,” citing a “downbeat” earnings outlook beyond the first quarter. Hana Financial Group Inc., the owner of South Korea’s fourth-largest bank, lost 11 percent to 21,300 won as it was lowered to “underweight” by HSBC Holdings Plc.
South Korea’s delinquent-loan ratio for lending by domestic banks climbed 0.55 percentage point to 1.46 percent in March, the Financial Supervisory Service said on April 15.
Japan’s 20-Year Bonds Fall for 6th Week on Stock Gains, Supply
April 18 (Bloomberg) -- Japan’s 20-year bonds completed a sixth weekly decline as a rally in stocks and a government plan to increase debt sales damped demand for the securities.
Twenty-year bonds extended their losing streak to the longest since 2002 after officials said on April 16 the government would sell an extra 17 trillion yen ($171 billion) of debt to pay for Prime Minister Taro Aso’s third stimulus package. Longer-maturity bonds also weakened on speculation primary dealers would cut holdings before the Ministry of Finance sells 900 billion yen of 20-year debt on April 21.
“A rally in stock markets now poses a major downside risk for bonds,” said Yasuhide Yajima, senior economist at NLI Research Institute Ltd. in Tokyo. “If the Nikkei 225 Stock Average can sustain gains above 9,000, yields of 10-year debt may be pushed up to above 1.5 percent.”
The yield on the benchmark 20-year bond rose 1.5 basis points this week to 2.12 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price of the 1.9 percent security due March 2029 fell 0.202 yen to 96.919 yen. A basis point is 0.01 percentage point.
The Nikkei 225 Stock Average gained 1.7 percent yesterday after Toshiba Corp. posted a smaller-than-expected operating loss. The index has risen 12 percent in the last month.
Institutional Buyers
Benchmark 10-year bonds rose for the first time in two days yesterday on speculation institutional investors will increase holdings of government securities for the fiscal year that started April 1.
“Japanese investors are still willing to focus on bonds in times of an economic downturn, and they are likely to purchase debt once yields on 10-year securities come closer to 1.5 percent,” said Tatsuo Ichikawa, a senior strategist at RBS Securities Japan Ltd. in Tokyo. “But as you can see from today’s move, they will not buy in a hurry.”
Ten-year bond futures for June delivery climbed 0.08 yesterday to 136.81 on the Tokyo Stock Exchange yesterday. Ten- year yields declined half a basis point to 1.445 percent.
Meiji Yasuda Life Insurance Co., Japan’s third-largest life insurer, said on April 13 it will boost its domestic bond holdings by 460 billion yen this fiscal year as it reduces its stock investments. Dai-ichi Mutual Life Insurance Co., the third largest, said the following day it will “slightly increase” holdings of yen-denominated bonds this financial year.
Debt Sales
Japan may sell as much as 17 trillion yen of bonds this fiscal year on top of the planned 113.3 trillion yen debt sales already planned, according to two Japanese officials who declined to be identified. The extra sales will include borrowing for Aso’s stimulus package as well as about 6 trillion yen of bonds to fund loans for state-owned financial institutions, they said.
The Ministry of Finance said in December it planned to boost bond sales by 7 trillion yen to 113.3 trillion yen in the financial year that ends on March 31, 2010.
“Including an expected shortfall of tax revenue due to tumbling corporate profits in Japan, additional bond issuance may reach 20 trillion yen this year,” said Hirokata Kusaba, an economist in Tokyo at Mizuho Research Institute Ltd., a unit of Japan’s second-largest banking group. “The anxiety about rising debt sales will continue to weigh on bonds.”
Corporate Credit
Demand for bonds also fell this week on speculation the corporate credit market is improving, said Takeo Okuhara, a fixed-income strategist at Daiwa SB Investments Ltd.
“There are signs that the credit crunch is easing, making it easier for companies to raise funds on their own,” Tokyo- based Okuhara said. “This will bode ill for government debt.”
JPMorgan Chase & Co. on April 16 raised $3 billion in its first dollar-denominated debt sale without the backing of the U.S. government since August.
The Markit iTraxx Japan index of credit-default swaps fell 12.5 basis points to 292.5 basis points yesterday, according to prices from Barclays Capital.
Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality. An increase suggests deteriorating investor perceptions of credit quality and a drop shows improvement.
Yield Curve
Two-year notes rose yesterday as the Tokyo three-month interbank offered rate, or Tibor, a measure of the cost of lending between banks, fell for a 27th day, steepening the so- called yield curve. The difference in yield between two-year notes and 20-year bonds widened to 172.5 basis points yesterday from 153.5 at the end of March.
“The widespread perception that the Bank of Japan will maintain low interest rates will continue to support shorter- dated notes,” Makoto Yamashita, chief Japan interest-rate strategist in Tokyo at Deutsche Securities Inc. “Declines in short-term rates may send yields of 10-year debt back toward 1.3 percent” in the next two weeks, he said.
Investors who bought 10-year bonds yesterday would make a return of 2.2 percent by the end of September should benchmark yields drop to 1.22 percent, the weighted forecast of economists and analysts surveyed by Bloomberg News.
Twenty-year bonds extended their losing streak to the longest since 2002 after officials said on April 16 the government would sell an extra 17 trillion yen ($171 billion) of debt to pay for Prime Minister Taro Aso’s third stimulus package. Longer-maturity bonds also weakened on speculation primary dealers would cut holdings before the Ministry of Finance sells 900 billion yen of 20-year debt on April 21.
“A rally in stock markets now poses a major downside risk for bonds,” said Yasuhide Yajima, senior economist at NLI Research Institute Ltd. in Tokyo. “If the Nikkei 225 Stock Average can sustain gains above 9,000, yields of 10-year debt may be pushed up to above 1.5 percent.”
The yield on the benchmark 20-year bond rose 1.5 basis points this week to 2.12 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price of the 1.9 percent security due March 2029 fell 0.202 yen to 96.919 yen. A basis point is 0.01 percentage point.
The Nikkei 225 Stock Average gained 1.7 percent yesterday after Toshiba Corp. posted a smaller-than-expected operating loss. The index has risen 12 percent in the last month.
Institutional Buyers
Benchmark 10-year bonds rose for the first time in two days yesterday on speculation institutional investors will increase holdings of government securities for the fiscal year that started April 1.
“Japanese investors are still willing to focus on bonds in times of an economic downturn, and they are likely to purchase debt once yields on 10-year securities come closer to 1.5 percent,” said Tatsuo Ichikawa, a senior strategist at RBS Securities Japan Ltd. in Tokyo. “But as you can see from today’s move, they will not buy in a hurry.”
Ten-year bond futures for June delivery climbed 0.08 yesterday to 136.81 on the Tokyo Stock Exchange yesterday. Ten- year yields declined half a basis point to 1.445 percent.
Meiji Yasuda Life Insurance Co., Japan’s third-largest life insurer, said on April 13 it will boost its domestic bond holdings by 460 billion yen this fiscal year as it reduces its stock investments. Dai-ichi Mutual Life Insurance Co., the third largest, said the following day it will “slightly increase” holdings of yen-denominated bonds this financial year.
Debt Sales
Japan may sell as much as 17 trillion yen of bonds this fiscal year on top of the planned 113.3 trillion yen debt sales already planned, according to two Japanese officials who declined to be identified. The extra sales will include borrowing for Aso’s stimulus package as well as about 6 trillion yen of bonds to fund loans for state-owned financial institutions, they said.
The Ministry of Finance said in December it planned to boost bond sales by 7 trillion yen to 113.3 trillion yen in the financial year that ends on March 31, 2010.
“Including an expected shortfall of tax revenue due to tumbling corporate profits in Japan, additional bond issuance may reach 20 trillion yen this year,” said Hirokata Kusaba, an economist in Tokyo at Mizuho Research Institute Ltd., a unit of Japan’s second-largest banking group. “The anxiety about rising debt sales will continue to weigh on bonds.”
Corporate Credit
Demand for bonds also fell this week on speculation the corporate credit market is improving, said Takeo Okuhara, a fixed-income strategist at Daiwa SB Investments Ltd.
“There are signs that the credit crunch is easing, making it easier for companies to raise funds on their own,” Tokyo- based Okuhara said. “This will bode ill for government debt.”
JPMorgan Chase & Co. on April 16 raised $3 billion in its first dollar-denominated debt sale without the backing of the U.S. government since August.
The Markit iTraxx Japan index of credit-default swaps fell 12.5 basis points to 292.5 basis points yesterday, according to prices from Barclays Capital.
Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality. An increase suggests deteriorating investor perceptions of credit quality and a drop shows improvement.
Yield Curve
Two-year notes rose yesterday as the Tokyo three-month interbank offered rate, or Tibor, a measure of the cost of lending between banks, fell for a 27th day, steepening the so- called yield curve. The difference in yield between two-year notes and 20-year bonds widened to 172.5 basis points yesterday from 153.5 at the end of March.
“The widespread perception that the Bank of Japan will maintain low interest rates will continue to support shorter- dated notes,” Makoto Yamashita, chief Japan interest-rate strategist in Tokyo at Deutsche Securities Inc. “Declines in short-term rates may send yields of 10-year debt back toward 1.3 percent” in the next two weeks, he said.
Investors who bought 10-year bonds yesterday would make a return of 2.2 percent by the end of September should benchmark yields drop to 1.22 percent, the weighted forecast of economists and analysts surveyed by Bloomberg News.
Thursday, April 16, 2009
Banking Industry Showing Signs of a Recovery
17th April, 2009
Just three short months ago, many of the nation’s biggest banks were on life support.
Now, a number are showing glimpses of a recovery, aided by a tentative improvement in some corners of the economy and new business picked up from rivals that stumbled in the wake of the financial crisis.
On Thursday, JPMorgan Chase became the latest bank, after Goldman Sachs and Wells Fargo, to announce blockbuster profits in the first quarter. The reports fed a rally in financial stocks that began more than five weeks ago, when Citigroup and Bank of America, two of the banks hit hardest by the crisis, suggested the worst might already be over.
Banks are enjoying a fresh wave of profits from the government’s efforts to nurse the industry back to life. Ultralow interest rates have led flocks of consumers to seek deals on mortgage loans. Investment banking and trading activities are enjoying a bounce from the billions of dollars spent to thaw frozen credit markets. And even before the results of a new health test for the nation’s 19 largest banks are unveiled, those who can flaunt an improvement from their dismal recent performance are quickly trying to free themselves from government money.
But this silver cloud has a dark lining: millions of consumers continue to default on their mortgages, home equity and credit card loans. Corporate loan losses are just starting to pile up. And the residential housing crisis is seeping into commercial real estate with a vengeance: on Thursday, General Growth Properties, one of the nation’s largest mall operators, filed for bankruptcy in one of the biggest such collapses in United States history.
“We are in the eye of the storm,” Gerard Cassidy, a banking analyst at RBC Capital Markets. “The worst is behind us for housing. For commercial real estate and corporate lending, there is still a big dark cloud.”
JPMorgan Chase reported a $2.1 billion profit in the first quarter, besting analysts’ average forecasts. Revenue increased to $25 billion, up 45 percent from $16.9 billion in the period last year.
Still, the results reflected continued turmoil in sectors like credit card services and private equity, businesses that reported losses or steep drops in revenue, reflecting the lingering effects of the recession on consumer spending and the credit markets.
Many banks are preparing for the next rainy stretch, setting aside more money now to cover future loan losses. Regional and community lenders, which are particularly exposed to corporate and real estate loan defaults, are socking away tens of millions of dollars to add to their reserves; big banks like JPMorgan are adding billions. “Times aren’t exactly great as we speak,” Michael J. Cavanagh, the bank’s finance chief, said in a brief interview. “Until home prices stabilize and unemployment peaks, we will continue to be under pressure for losses on our balance sheet.”
As long as interest rates remain low, and the government continues to offer financial support, banks hope to earn enough profit to cushion the blow of some of these looming losses.
The question remains whether the profitability is sustainable if the recession worsens.
Some experts are saying fears of nationalization and bank solvency are subsiding. “What we are recognizing now is that they can produce profits,” Charles Peabody, a financial services analyst at Portales Partners. “The next debate is on the sustainability of those profits.”
With good reason: the banking industry has gotten relief from recent changes to accounting rules, which could inflate earnings.
What’s more, a brief moratorium on home foreclosures during the winter will postpone when some banks book losses on a big swath of soured loans.At the same time, banks have benefited from unusually good trading results and low interest rates, which have propped up the value of their mortgage investments.
The official stress test findings, expected to be released on May 4, may help investors sort out the handful of banks that can generate enough earnings to absorb their losses if the economy worsens. Their conclusions may bear little resemblance to banks’ first-quarter results because the stress test is taking a forward-looking view of the banks’ conditions over the next two years. Quarterly earnings reports, by their nature, look back.
Officials involved in the stress test say they expect the results to show that some banks will need to raise fresh capital. A senior administration official emphasized, however, that those banks would not necessarily need new government money. Besides tapping private investors, banks could derive a major source of capital by converting the preferred stock now held by the government into common shares, as Citigroup intends. The Treasury is likely to rely on individual banks to release their results, and officials said they expected banks that need more capital to immediately announce plans for raising it.
But even ahead of the stress test, investors already appear to be rendering verdicts on which banks will emerge as survivors. Goldman Sachs shares are around $121. Citigroup shares, which fell below $1 in March, are trading at just over $4; Bank of America’s shares have rebounded to above $10.
On Tuesday, Goldman Sachs raised $5 billion of fresh capital in anticipation of repaying the government’s investment.
Jamie Dimon, JPMorgan’s chairman and chief executive, was adamant on Thursday that his company would pay back $25 billion as soon as regulators allowed. “Folks, it has become a scarlet letter,” said Mr. Dimon, referring to the taxpayer infusion the bank received in October. “We could pay it back tomorrow,” he said. “We have the money.”
Mr. Dimon added that his bank did not plan to be a buyer or seller in the Treasury’s public-private partnership program to siphon loss-making investments from banks’ books. “We’re certainly not going to borrow from the federal government because we’ve learned our lesson about that," Mr. Dimon said.
Just three short months ago, many of the nation’s biggest banks were on life support.
Now, a number are showing glimpses of a recovery, aided by a tentative improvement in some corners of the economy and new business picked up from rivals that stumbled in the wake of the financial crisis.
On Thursday, JPMorgan Chase became the latest bank, after Goldman Sachs and Wells Fargo, to announce blockbuster profits in the first quarter. The reports fed a rally in financial stocks that began more than five weeks ago, when Citigroup and Bank of America, two of the banks hit hardest by the crisis, suggested the worst might already be over.
Banks are enjoying a fresh wave of profits from the government’s efforts to nurse the industry back to life. Ultralow interest rates have led flocks of consumers to seek deals on mortgage loans. Investment banking and trading activities are enjoying a bounce from the billions of dollars spent to thaw frozen credit markets. And even before the results of a new health test for the nation’s 19 largest banks are unveiled, those who can flaunt an improvement from their dismal recent performance are quickly trying to free themselves from government money.
But this silver cloud has a dark lining: millions of consumers continue to default on their mortgages, home equity and credit card loans. Corporate loan losses are just starting to pile up. And the residential housing crisis is seeping into commercial real estate with a vengeance: on Thursday, General Growth Properties, one of the nation’s largest mall operators, filed for bankruptcy in one of the biggest such collapses in United States history.
“We are in the eye of the storm,” Gerard Cassidy, a banking analyst at RBC Capital Markets. “The worst is behind us for housing. For commercial real estate and corporate lending, there is still a big dark cloud.”
JPMorgan Chase reported a $2.1 billion profit in the first quarter, besting analysts’ average forecasts. Revenue increased to $25 billion, up 45 percent from $16.9 billion in the period last year.
Still, the results reflected continued turmoil in sectors like credit card services and private equity, businesses that reported losses or steep drops in revenue, reflecting the lingering effects of the recession on consumer spending and the credit markets.
Many banks are preparing for the next rainy stretch, setting aside more money now to cover future loan losses. Regional and community lenders, which are particularly exposed to corporate and real estate loan defaults, are socking away tens of millions of dollars to add to their reserves; big banks like JPMorgan are adding billions. “Times aren’t exactly great as we speak,” Michael J. Cavanagh, the bank’s finance chief, said in a brief interview. “Until home prices stabilize and unemployment peaks, we will continue to be under pressure for losses on our balance sheet.”
As long as interest rates remain low, and the government continues to offer financial support, banks hope to earn enough profit to cushion the blow of some of these looming losses.
The question remains whether the profitability is sustainable if the recession worsens.
Some experts are saying fears of nationalization and bank solvency are subsiding. “What we are recognizing now is that they can produce profits,” Charles Peabody, a financial services analyst at Portales Partners. “The next debate is on the sustainability of those profits.”
With good reason: the banking industry has gotten relief from recent changes to accounting rules, which could inflate earnings.
What’s more, a brief moratorium on home foreclosures during the winter will postpone when some banks book losses on a big swath of soured loans.At the same time, banks have benefited from unusually good trading results and low interest rates, which have propped up the value of their mortgage investments.
The official stress test findings, expected to be released on May 4, may help investors sort out the handful of banks that can generate enough earnings to absorb their losses if the economy worsens. Their conclusions may bear little resemblance to banks’ first-quarter results because the stress test is taking a forward-looking view of the banks’ conditions over the next two years. Quarterly earnings reports, by their nature, look back.
Officials involved in the stress test say they expect the results to show that some banks will need to raise fresh capital. A senior administration official emphasized, however, that those banks would not necessarily need new government money. Besides tapping private investors, banks could derive a major source of capital by converting the preferred stock now held by the government into common shares, as Citigroup intends. The Treasury is likely to rely on individual banks to release their results, and officials said they expected banks that need more capital to immediately announce plans for raising it.
But even ahead of the stress test, investors already appear to be rendering verdicts on which banks will emerge as survivors. Goldman Sachs shares are around $121. Citigroup shares, which fell below $1 in March, are trading at just over $4; Bank of America’s shares have rebounded to above $10.
On Tuesday, Goldman Sachs raised $5 billion of fresh capital in anticipation of repaying the government’s investment.
Jamie Dimon, JPMorgan’s chairman and chief executive, was adamant on Thursday that his company would pay back $25 billion as soon as regulators allowed. “Folks, it has become a scarlet letter,” said Mr. Dimon, referring to the taxpayer infusion the bank received in October. “We could pay it back tomorrow,” he said. “We have the money.”
Mr. Dimon added that his bank did not plan to be a buyer or seller in the Treasury’s public-private partnership program to siphon loss-making investments from banks’ books. “We’re certainly not going to borrow from the federal government because we’ve learned our lesson about that," Mr. Dimon said.
New Zealand Inflation Rate Slows to 3% on Recession
April 17 (Bloomberg) -- New Zealand inflation slowed in the year to March as the worst recession in more than three decades curbed consumer demand, adding to signs the central bank will cut interest rates again this month.
Consumer prices rose 3 percent in the year ended March 31, Statistics New Zealand said in Wellington today. Inflation slowed from 3.4 percent in the year to December and matched the median estimate in a Bloomberg News survey of nine economists. From the fourth quarter, prices rose 0.3 percent.
Inflation is easing amid a domestic recession, which began in the first quarter of last year, and as a deepening global slowdown lowers commodity prices. Reserve Bank Governor Alan Bollard has cut the official cash rate by 5.25 percentage points since July to a record low.
“The Reserve Bank will be happy with that number,” said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. “A large cut is warranted given what we’re seeing in the domestic economy and offshore.”
New Zealand’s dollar bought 57.46 U.S. cents at 11:25 a.m. in Wellington from 57.27 cents immediately before the report.
For the first time in 10 years, most companies cut prices in the first quarter, according to a survey by the New Zealand Institute of Economic Research. More firms expected to lower prices in the second quarter.
Room to Cut
Eight of 10 economists surveyed by Bloomberg News say Bollard will lower the official cash rate by a half point to 2.5 percent at his next review on April 30. Two expect a quarter- point reduction.
The Organization for Economic Cooperation and Development said yesterday Bollard has scope to cut borrowing costs as low as 2 percent this year to buoy the economy. The economy may stay in recession throughout 2009, the Paris-based OECD said in its annual survey of New Zealand.
Bollard, who is required to keep annual inflation between 1 percent and 3 percent, said last month that slowing economic growth and falling fuel prices will return inflation to his target range by the middle of 2009.
Inflation had exceeded the target band since the third quarter of 2007. Bollard forecast prices rose 0.4 percent in the first quarter.
Diesel, Gasoline
Inflation is slowing after reaching an 18-year high of 5.1 percent in the year ended Sept. 30, 2008, amid soaring fuel, food and air travel costs.
Fuel prices are now falling. Diesel prices dropped 19 percent and gasoline prices declined 1 percent from the fourth quarter, the statistics agency said today.
International airfares fell 17 percent and overseas package holidays were also cheaper.
The rising cost of food made the biggest contribution to inflation in the quarter, the agency said. Food prices rose 1.2 percent, led by fruit, bread and soft-drinks. Excluding food, consumer prices would have been unchanged.
Bollard’s primary focus is on non-tradable inflation, a core measure of prices that are not influenced by currency fluctuations and fuel.
Non-tradable prices rose 0.7 percent from the fourth quarter, the smallest gain in five quarters. The measure gained 3.8 percent from a year earlier, after rising 4.3 percent in the year to December.
Non-tradables inflation was led by rising rents and power prices. Tobacco prices were buoyed by a rise in taxes and the cost of university education also increased.
Prices associated with owning a home posted the smallest increase in almost eight years. The cost of buying and building a new house was unchanged from the fourth quarter. Local council land taxes were also unchanged.
Tradable prices fell 0.4 percent from the fourth quarter, when they tumbled 2.1 percent.
Consumer prices rose 3 percent in the year ended March 31, Statistics New Zealand said in Wellington today. Inflation slowed from 3.4 percent in the year to December and matched the median estimate in a Bloomberg News survey of nine economists. From the fourth quarter, prices rose 0.3 percent.
Inflation is easing amid a domestic recession, which began in the first quarter of last year, and as a deepening global slowdown lowers commodity prices. Reserve Bank Governor Alan Bollard has cut the official cash rate by 5.25 percentage points since July to a record low.
“The Reserve Bank will be happy with that number,” said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. “A large cut is warranted given what we’re seeing in the domestic economy and offshore.”
New Zealand’s dollar bought 57.46 U.S. cents at 11:25 a.m. in Wellington from 57.27 cents immediately before the report.
For the first time in 10 years, most companies cut prices in the first quarter, according to a survey by the New Zealand Institute of Economic Research. More firms expected to lower prices in the second quarter.
Room to Cut
Eight of 10 economists surveyed by Bloomberg News say Bollard will lower the official cash rate by a half point to 2.5 percent at his next review on April 30. Two expect a quarter- point reduction.
The Organization for Economic Cooperation and Development said yesterday Bollard has scope to cut borrowing costs as low as 2 percent this year to buoy the economy. The economy may stay in recession throughout 2009, the Paris-based OECD said in its annual survey of New Zealand.
Bollard, who is required to keep annual inflation between 1 percent and 3 percent, said last month that slowing economic growth and falling fuel prices will return inflation to his target range by the middle of 2009.
Inflation had exceeded the target band since the third quarter of 2007. Bollard forecast prices rose 0.4 percent in the first quarter.
Diesel, Gasoline
Inflation is slowing after reaching an 18-year high of 5.1 percent in the year ended Sept. 30, 2008, amid soaring fuel, food and air travel costs.
Fuel prices are now falling. Diesel prices dropped 19 percent and gasoline prices declined 1 percent from the fourth quarter, the statistics agency said today.
International airfares fell 17 percent and overseas package holidays were also cheaper.
The rising cost of food made the biggest contribution to inflation in the quarter, the agency said. Food prices rose 1.2 percent, led by fruit, bread and soft-drinks. Excluding food, consumer prices would have been unchanged.
Bollard’s primary focus is on non-tradable inflation, a core measure of prices that are not influenced by currency fluctuations and fuel.
Non-tradable prices rose 0.7 percent from the fourth quarter, the smallest gain in five quarters. The measure gained 3.8 percent from a year earlier, after rising 4.3 percent in the year to December.
Non-tradables inflation was led by rising rents and power prices. Tobacco prices were buoyed by a rise in taxes and the cost of university education also increased.
Prices associated with owning a home posted the smallest increase in almost eight years. The cost of buying and building a new house was unchanged from the fourth quarter. Local council land taxes were also unchanged.
Tradable prices fell 0.4 percent from the fourth quarter, when they tumbled 2.1 percent.
Asian Stocks Climb as Toshiba, JPMorgan Fuel Growth Optimism
April 17 (Bloomberg) -- Asian stocks advanced, with the regional benchmark index heading for its sixth-consecutive weekly gain, as earnings reports from Toshiba Corp. and JPMorgan Chase & Co. lifted confidence the global recession is easing.
Toshiba Corp., Japan’s largest maker of semiconductors, jumped 4.4 percent as it reported a smaller operating loss than it previously forecast. HSBC Holdings Plc, which owns a U.S. mortgage business, climbed 2.6 percent in Hong Kong on optimism banking profits are recovering. Woolworths Ltd., Australia’s largest retailer, gained 3.1 percent in Sydney after reporting better-than-estimated sales.
“Investors are optimistic that we will see better news from the second quarter onwards, said Tat Auyeung, a fund manager at Apex Capital Management in Hong Kong, which oversees $500 million. “Confidence in the market is returning.”
The MSCI Asia Pacific Index added 1.5 percent to 90.26 at 12:04 p.m. in Tokyo, erasing its losses for the year. The gauge has risen 2.6 percent this week, its sixth-consecutive advance, which is the longest winning streak since December 2006.
Japan’s Nikkei 225 Stock Average climbed 2.2 percent to 8,949.55. South Korea’s Kospi index gained 0.8 percent and Australia’s S&P/ASX 200 Index added 1.6 percent. All markets open for trading advanced except China.
Nippon Steel Corp., the world’s No. 2 maker of the alloy, surged 9 percent in Tokyo trading on speculation that price cuts offered to automakers were less than anticipated. Megaworld Corp., the third-largest Philippine builder by market value, advanced 7.8 percent in Manila on higher profit.
Jobless Claims
Futures on the U.S. Standard & Poor’s 500 Index lost 0.4 percent. The gauge gained 1.6 percent yesterday as JPMorgan, the country’s second-largest bank by assets, reported a 10 percent decline in first-quarter earnings to $2.14 billion, or 40 cents a share. That beat the estimate of 32 cents expected by analysts surveyed by Bloomberg.
The MSCI Asia Pacific Index has rallied 27 percent from a more than five-year low reached on March 9 amid signs government measures worldwide to ease the global recession are working. The U.S. Labor Department reported yesterday new jobless claims in the week ended April 11 fell by the fewest since January.
Analysts’ earnings estimates for companies included in the MSCI benchmark started to rise this month after a year of falling predictions, data compiled by Bloomberg show.
Toshiba added 4.4 percent to 332 yen in Tokyo. The operating loss, or sales minus the cost of goods sold and administrative expenses, was 250 billion yen ($2.5 billion), or 11 percent smaller than the company’s previous 280 billion yen loss projection, the company said.
Nokia, Google
Computer-memory chipmakers climbed after prices of the benchmark dynamic random access memory, or DRAM, chips climbed 7.6 percent yesterday to the highest since Oct. 14. Hynix Semiconductor Inc. gained 7.6 percent to 14,250 won, while largest memory chipmaker Samsung Electronics Co. rose 3.1 percent to 599,000 won in Seoul.
Technology shares also rose after Nokia Oyj, the world’s biggest maker of mobile phones, said yesterday that demand was stabilizing. Google Inc., the world’s most popular search engine, said first-quarter profit rose 8.9 percent, exceeding analysts’ estimates.
Finance stocks on the MSCI Asia Pacific Index accounted for 22 percent of the gauge’s advance today. The shares are the third-best performers of the MSCI measure’s 10 industry groups in the past month.
Japanese Steelmakers
HSBC rose 2.6 percent to HK$56.70. Commonwealth Bank of Australia, the nation’s largest mortgage lender, climbed 2.4 percent to A$37.64 in Sydney. Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded bank, added 1.2 percent to 511 yen in Tokyo.
Woolworths advanced 3.1 percent to A$26.36. The retailer’s sales increased to A$12.3 billion ($8.8 billion) in the three months ended April 5 from A$11.6 billion a year earlier, it said in a statement today. That was higher than the 5.7 percent median estimate of analysts in a Bloomberg News survey.
Nippon Steel surged 9 percent to 341 yen. JFE Holdings Inc., Japan’s No. 2 producer, rose 9.4 percent to 2,955 yen.
Japanese mills agreed with Toyota Motor Corp. to reduce prices by about 15,000 yen ($151) per metric ton for the year through March 2010, the Asahi newspaper reported.
That’s half the cut that was anticipated, Yuji Matsumoto, a Nomura Holdings Inc. analyst, wrote in a report. Nippon Steel’s operating profit could see a 100-billion yen boost as a result, Matsumoto said.
In Manila, Megaworld jumped 7.8 percent to 69 centavos after saying profit last year increased 25 percent.
Toshiba Corp., Japan’s largest maker of semiconductors, jumped 4.4 percent as it reported a smaller operating loss than it previously forecast. HSBC Holdings Plc, which owns a U.S. mortgage business, climbed 2.6 percent in Hong Kong on optimism banking profits are recovering. Woolworths Ltd., Australia’s largest retailer, gained 3.1 percent in Sydney after reporting better-than-estimated sales.
“Investors are optimistic that we will see better news from the second quarter onwards, said Tat Auyeung, a fund manager at Apex Capital Management in Hong Kong, which oversees $500 million. “Confidence in the market is returning.”
The MSCI Asia Pacific Index added 1.5 percent to 90.26 at 12:04 p.m. in Tokyo, erasing its losses for the year. The gauge has risen 2.6 percent this week, its sixth-consecutive advance, which is the longest winning streak since December 2006.
Japan’s Nikkei 225 Stock Average climbed 2.2 percent to 8,949.55. South Korea’s Kospi index gained 0.8 percent and Australia’s S&P/ASX 200 Index added 1.6 percent. All markets open for trading advanced except China.
Nippon Steel Corp., the world’s No. 2 maker of the alloy, surged 9 percent in Tokyo trading on speculation that price cuts offered to automakers were less than anticipated. Megaworld Corp., the third-largest Philippine builder by market value, advanced 7.8 percent in Manila on higher profit.
Jobless Claims
Futures on the U.S. Standard & Poor’s 500 Index lost 0.4 percent. The gauge gained 1.6 percent yesterday as JPMorgan, the country’s second-largest bank by assets, reported a 10 percent decline in first-quarter earnings to $2.14 billion, or 40 cents a share. That beat the estimate of 32 cents expected by analysts surveyed by Bloomberg.
The MSCI Asia Pacific Index has rallied 27 percent from a more than five-year low reached on March 9 amid signs government measures worldwide to ease the global recession are working. The U.S. Labor Department reported yesterday new jobless claims in the week ended April 11 fell by the fewest since January.
Analysts’ earnings estimates for companies included in the MSCI benchmark started to rise this month after a year of falling predictions, data compiled by Bloomberg show.
Toshiba added 4.4 percent to 332 yen in Tokyo. The operating loss, or sales minus the cost of goods sold and administrative expenses, was 250 billion yen ($2.5 billion), or 11 percent smaller than the company’s previous 280 billion yen loss projection, the company said.
Nokia, Google
Computer-memory chipmakers climbed after prices of the benchmark dynamic random access memory, or DRAM, chips climbed 7.6 percent yesterday to the highest since Oct. 14. Hynix Semiconductor Inc. gained 7.6 percent to 14,250 won, while largest memory chipmaker Samsung Electronics Co. rose 3.1 percent to 599,000 won in Seoul.
Technology shares also rose after Nokia Oyj, the world’s biggest maker of mobile phones, said yesterday that demand was stabilizing. Google Inc., the world’s most popular search engine, said first-quarter profit rose 8.9 percent, exceeding analysts’ estimates.
Finance stocks on the MSCI Asia Pacific Index accounted for 22 percent of the gauge’s advance today. The shares are the third-best performers of the MSCI measure’s 10 industry groups in the past month.
Japanese Steelmakers
HSBC rose 2.6 percent to HK$56.70. Commonwealth Bank of Australia, the nation’s largest mortgage lender, climbed 2.4 percent to A$37.64 in Sydney. Mitsubishi UFJ Financial Group Inc., Japan’s largest publicly traded bank, added 1.2 percent to 511 yen in Tokyo.
Woolworths advanced 3.1 percent to A$26.36. The retailer’s sales increased to A$12.3 billion ($8.8 billion) in the three months ended April 5 from A$11.6 billion a year earlier, it said in a statement today. That was higher than the 5.7 percent median estimate of analysts in a Bloomberg News survey.
Nippon Steel surged 9 percent to 341 yen. JFE Holdings Inc., Japan’s No. 2 producer, rose 9.4 percent to 2,955 yen.
Japanese mills agreed with Toyota Motor Corp. to reduce prices by about 15,000 yen ($151) per metric ton for the year through March 2010, the Asahi newspaper reported.
That’s half the cut that was anticipated, Yuji Matsumoto, a Nomura Holdings Inc. analyst, wrote in a report. Nippon Steel’s operating profit could see a 100-billion yen boost as a result, Matsumoto said.
In Manila, Megaworld jumped 7.8 percent to 69 centavos after saying profit last year increased 25 percent.
Wednesday, April 15, 2009
Singapore steps in to foster media sector
By Sumathi Bala
Published: April 16 2009 02:10 | Last updated: April 16 2009 02:10
Singapore’s ambition to be a leading media centre received a boost recently, when Koei entertainment, a Japanese game developer, announced plans to expand its operations there.
Four years since establishing a studio in the city-state, Koei is hoping to add up to 60 staff over the next two years.
EDITOR’S CHOICE
Careers Asia: Taiwan’s workers opt for more qualifications - Apr-02.Careers Asia: Lucky country feeling the employment pinch - Mar-26.Careers Asia: Philippines jumps to help its workers abroad - Mar-19.Careers Asia: Macao’s casino jobs are no longer a safe bet - Mar-12.Careers Asia: Huge tasks for Afghanistan stability advisers - Feb-26.Careers Asia: South Korea starts a round of belt-tightening - Feb-19..“The company has achieved its business objectives,” says Keiko Erikawa, founder and chairman emeritus of Koei.
“But we want to move ahead. I will not be satisfied until we further strengthen the development capabilities of the studio, both in quantity and in quality.
“Our objective is to groom a pool of talented and passionate developers who want to do Singapore proud and work relentlessly towards creating best-selling titles targeted at the global audience.”
The company is on a recruitment drive, welcoming even fresh graduates and will be sending recruits to Japan for specialised training.
Like Koei, several other leading media companies are ramping up their operations in the city-state. Ubisoft of France, which employs 70 people in Singapore, expects to increase its staff to 300 in the near term.
The company is reported to be looking for talented programmers, graphic artists, animators and game designers.
In terms of private sector training, many organisations are offering a wide range of opportunities to hone skills.
For instance, Lucasfilm’s animation studio in Singapore – its first venture outside the US – has been running apprenticeship programmes to train artists and engineers.
The new media industries, which include game developers, animators and other related digital specialists, are projected to generate 10,000 jobs and more than S$10bn in value by 2015.
These developments bode well for Singapore, as they provide a silver lining to an otherwise grim job market, which has seen lay-offs and hiring freezes as a result of the global slowdown.
Lee Boon Yang, minister of information, communications and the arts (MICA) made the case at a recent media event.
“Despite the recession and retrenchments, demand for creative talent remains robust, with companies still on the lookout for good staff,” he said
Policymakers say there are plenty of opportunities for those seeking a career in the media. In the near term, 300 skilled jobs and more than 400 apprenticeships are on offer within the creative industries.
Another 450 jobs will come over the next one to two years for start-ups within the interactive and digital media sector.
Moreover, up to 6,000 individuals are expected to receive media training this year.
Christopher Chia, chief executive of the Media Development Authority (MDA), says: “The whole idea is really a continuum of skills, from very experienced people who need to upgrade to people thinking of moving into the sector.
“So it’s a matter of conversion skills as well.”
In spite of the promising opportunities in the media, the tough economic climate has put a damper on business ventures. Increasingly risk-averse investors, for instance, have become less willing to finance media projects.
This has prompted policymakers to intervene to stimulate the market. The government announced last month that it would provide an unprecedented S$250m to help promising local media companies, such as documentary producers, music groups and video game developers, fund their projects.
The amount, which is much larger than the S$180m injected last year, underscores the commitment by the authorities to sustain the media sector amid the economic downturn, explains the MDA.
The authorities hope the cash injection will offset the expected dip in revenue faced over the next year or two.
The money would be used to co-fund 200 to 300 new projects over the course of the year, with the aim of creating 2,000 jobs and strengthening the industry.
Under the scheme, smaller high-risk research and development ideas could receive outright grants. For large-scale productions such as feature films, the government will co-invest and share in the receipts if the production makes money.
Financing aside, the MDA is also facilitating efforts to help the media industry in other ways, from holding training workshops to matchmaking film producers with suitable foreign film distributors.
Unlike other export-oriented industries, such as manufacturing and retail, whose fortunes are closely tied to the volatility and fluctuations of the global economy, Singapore’s media sector has been a source of steady growth. The sector has expanded from S$3.8bn in 2002 to an estimated S$5.28bn in 2008.
Compound annual growth from 1996 to 2006 was 8 per cent, against 5.2 per cent for the overall economy, according to the MDA. The sector employs almost 60,000 people.
Perhaps more importantly, the government initiatives are reflective of Singapore’s aim to rely less on conventional sectors. Developing new engines of growth bolsters against downturns.
In these difficult times, the media sector is a bright spot in a gloomy job market.
.Copyright The Financial Times Limited 2009
Published: April 16 2009 02:10 | Last updated: April 16 2009 02:10
Singapore’s ambition to be a leading media centre received a boost recently, when Koei entertainment, a Japanese game developer, announced plans to expand its operations there.
Four years since establishing a studio in the city-state, Koei is hoping to add up to 60 staff over the next two years.
EDITOR’S CHOICE
Careers Asia: Taiwan’s workers opt for more qualifications - Apr-02.Careers Asia: Lucky country feeling the employment pinch - Mar-26.Careers Asia: Philippines jumps to help its workers abroad - Mar-19.Careers Asia: Macao’s casino jobs are no longer a safe bet - Mar-12.Careers Asia: Huge tasks for Afghanistan stability advisers - Feb-26.Careers Asia: South Korea starts a round of belt-tightening - Feb-19..“The company has achieved its business objectives,” says Keiko Erikawa, founder and chairman emeritus of Koei.
“But we want to move ahead. I will not be satisfied until we further strengthen the development capabilities of the studio, both in quantity and in quality.
“Our objective is to groom a pool of talented and passionate developers who want to do Singapore proud and work relentlessly towards creating best-selling titles targeted at the global audience.”
The company is on a recruitment drive, welcoming even fresh graduates and will be sending recruits to Japan for specialised training.
Like Koei, several other leading media companies are ramping up their operations in the city-state. Ubisoft of France, which employs 70 people in Singapore, expects to increase its staff to 300 in the near term.
The company is reported to be looking for talented programmers, graphic artists, animators and game designers.
In terms of private sector training, many organisations are offering a wide range of opportunities to hone skills.
For instance, Lucasfilm’s animation studio in Singapore – its first venture outside the US – has been running apprenticeship programmes to train artists and engineers.
The new media industries, which include game developers, animators and other related digital specialists, are projected to generate 10,000 jobs and more than S$10bn in value by 2015.
These developments bode well for Singapore, as they provide a silver lining to an otherwise grim job market, which has seen lay-offs and hiring freezes as a result of the global slowdown.
Lee Boon Yang, minister of information, communications and the arts (MICA) made the case at a recent media event.
“Despite the recession and retrenchments, demand for creative talent remains robust, with companies still on the lookout for good staff,” he said
Policymakers say there are plenty of opportunities for those seeking a career in the media. In the near term, 300 skilled jobs and more than 400 apprenticeships are on offer within the creative industries.
Another 450 jobs will come over the next one to two years for start-ups within the interactive and digital media sector.
Moreover, up to 6,000 individuals are expected to receive media training this year.
Christopher Chia, chief executive of the Media Development Authority (MDA), says: “The whole idea is really a continuum of skills, from very experienced people who need to upgrade to people thinking of moving into the sector.
“So it’s a matter of conversion skills as well.”
In spite of the promising opportunities in the media, the tough economic climate has put a damper on business ventures. Increasingly risk-averse investors, for instance, have become less willing to finance media projects.
This has prompted policymakers to intervene to stimulate the market. The government announced last month that it would provide an unprecedented S$250m to help promising local media companies, such as documentary producers, music groups and video game developers, fund their projects.
The amount, which is much larger than the S$180m injected last year, underscores the commitment by the authorities to sustain the media sector amid the economic downturn, explains the MDA.
The authorities hope the cash injection will offset the expected dip in revenue faced over the next year or two.
The money would be used to co-fund 200 to 300 new projects over the course of the year, with the aim of creating 2,000 jobs and strengthening the industry.
Under the scheme, smaller high-risk research and development ideas could receive outright grants. For large-scale productions such as feature films, the government will co-invest and share in the receipts if the production makes money.
Financing aside, the MDA is also facilitating efforts to help the media industry in other ways, from holding training workshops to matchmaking film producers with suitable foreign film distributors.
Unlike other export-oriented industries, such as manufacturing and retail, whose fortunes are closely tied to the volatility and fluctuations of the global economy, Singapore’s media sector has been a source of steady growth. The sector has expanded from S$3.8bn in 2002 to an estimated S$5.28bn in 2008.
Compound annual growth from 1996 to 2006 was 8 per cent, against 5.2 per cent for the overall economy, according to the MDA. The sector employs almost 60,000 people.
Perhaps more importantly, the government initiatives are reflective of Singapore’s aim to rely less on conventional sectors. Developing new engines of growth bolsters against downturns.
In these difficult times, the media sector is a bright spot in a gloomy job market.
.Copyright The Financial Times Limited 2009
Asian Stocks Climb as Fed Fuels Growth Optimism; Honda Gains
April 16 (Bloomberg) -- Asian stocks climbed, lifting the regional benchmark index to the highest in more than three months, as a U.S. Federal Reserve survey stoked optimism that the world’s largest economy is recovering.
Honda Motor Co., which gets 51 percent of sales in North America, gained 2.6 percent as almost half of the regions surveyed in the Fed’s Beige Book said the economic decline is moderating. Hitachi Ltd. rose 3.8 percent after NEC Electronics Corp., Japan’s third-biggest chipmaker, said it’s in talks to merge with Hitachi’s Renesas Technology Corp. affiliate.
The MSCI Asia Pacific Index advanced 2.1 percent 90.83 at 10:30 a.m. in Tokyo, wiping out its losses for 2009. The gauge, which is set to close at the highest level since Jan. 7, has rallied 29 percent from a five-year low reached on March 9.
“The Beige Book gave some indication that the deterioration of the U.S. economy is easing and shows that there is some positive macroeconomic news starting to emerge,” Juichi Wako, a strategist at Tokyo-based Nomura Securities Co., said in an interview with Bloomberg Television.
Japan’s Nikkei 225 Stock Average jumped 3 percent to 9,007.92, while South Korea’s Kospi index climbed 2.8 percent and Australia’s S&P/ASX 200 Index gained 1.2 percent. All markets open for trading advanced.
Futures on the Standard & Poor’s 500 Index added 0.7 percent. The gauge rose 1.3 percent in New York yesterday after credit card provider American Express Co. said bad loans increased at a slower pace in March.
Fed Survey
U.S. stocks accelerated gains after the Fed’s Beige Book said that five of 12 Fed district banks “noted a moderation in the pace of decline.” Retail sales showed a “slight improvement” in some regions, and there was a “scattered pickup” in home buying, the survey said.
Honda rose 2.6 percent to 2,795 yen in Tokyo. Toyota Motor Corp., the world’s largest automaker, added 1.6 percent to 3,860 yen. Japanese carmakers also advanced after Nikkei English News said U.S. inventories for the country’s three largest producers have fallen by about 20 percent in the past month.
The five-week rally in the MSCI Asia Pacific Index has driven the average valuation of companies on the gauge trade to 18 times reported earnings, the highest since November 2007.
Investors in 10 countries grew less concerned that stocks will keep falling, according to Bloomberg’s Professional Global Confidence Survey. It was the first unanimous improvement in the gauge since it began 17 months ago.
Semiconductor Venture
Global stocks rebounded from the lowest levels in more than a decade on speculation government stimulus from the U.S. to Japan will end the global recession. China is scheduled to release data today on gross domestic product for the first quarter, industrial production and retail sales.
Hitachi rose 3.8 percent to 325 yen. Mitsubishi Electric Corp. rose 4.6 percent to 526 yen. Shino Inokuma, a spokeswoman for NEC Electronics, said the company is considering a merger with Renesas, a semiconductor venture between Hitachi and Mitsubishi Electric, to improve competitiveness.
NEC Electronics shares had yet to trade, though were being bid for at 930 yen, 12 percent above yesterday’s close.
Inokuma was responding to a Nikkei newspaper report that NEC Electronics and Renesas seek to reach an agreement this month and merge by April 2010. The merger would create Japan’s biggest chipmaker with annual sales of more than 1.2 trillion yen ($12 billion), Nikkei said.
Honda Motor Co., which gets 51 percent of sales in North America, gained 2.6 percent as almost half of the regions surveyed in the Fed’s Beige Book said the economic decline is moderating. Hitachi Ltd. rose 3.8 percent after NEC Electronics Corp., Japan’s third-biggest chipmaker, said it’s in talks to merge with Hitachi’s Renesas Technology Corp. affiliate.
The MSCI Asia Pacific Index advanced 2.1 percent 90.83 at 10:30 a.m. in Tokyo, wiping out its losses for 2009. The gauge, which is set to close at the highest level since Jan. 7, has rallied 29 percent from a five-year low reached on March 9.
“The Beige Book gave some indication that the deterioration of the U.S. economy is easing and shows that there is some positive macroeconomic news starting to emerge,” Juichi Wako, a strategist at Tokyo-based Nomura Securities Co., said in an interview with Bloomberg Television.
Japan’s Nikkei 225 Stock Average jumped 3 percent to 9,007.92, while South Korea’s Kospi index climbed 2.8 percent and Australia’s S&P/ASX 200 Index gained 1.2 percent. All markets open for trading advanced.
Futures on the Standard & Poor’s 500 Index added 0.7 percent. The gauge rose 1.3 percent in New York yesterday after credit card provider American Express Co. said bad loans increased at a slower pace in March.
Fed Survey
U.S. stocks accelerated gains after the Fed’s Beige Book said that five of 12 Fed district banks “noted a moderation in the pace of decline.” Retail sales showed a “slight improvement” in some regions, and there was a “scattered pickup” in home buying, the survey said.
Honda rose 2.6 percent to 2,795 yen in Tokyo. Toyota Motor Corp., the world’s largest automaker, added 1.6 percent to 3,860 yen. Japanese carmakers also advanced after Nikkei English News said U.S. inventories for the country’s three largest producers have fallen by about 20 percent in the past month.
The five-week rally in the MSCI Asia Pacific Index has driven the average valuation of companies on the gauge trade to 18 times reported earnings, the highest since November 2007.
Investors in 10 countries grew less concerned that stocks will keep falling, according to Bloomberg’s Professional Global Confidence Survey. It was the first unanimous improvement in the gauge since it began 17 months ago.
Semiconductor Venture
Global stocks rebounded from the lowest levels in more than a decade on speculation government stimulus from the U.S. to Japan will end the global recession. China is scheduled to release data today on gross domestic product for the first quarter, industrial production and retail sales.
Hitachi rose 3.8 percent to 325 yen. Mitsubishi Electric Corp. rose 4.6 percent to 526 yen. Shino Inokuma, a spokeswoman for NEC Electronics, said the company is considering a merger with Renesas, a semiconductor venture between Hitachi and Mitsubishi Electric, to improve competitiveness.
NEC Electronics shares had yet to trade, though were being bid for at 930 yen, 12 percent above yesterday’s close.
Inokuma was responding to a Nikkei newspaper report that NEC Electronics and Renesas seek to reach an agreement this month and merge by April 2010. The merger would create Japan’s biggest chipmaker with annual sales of more than 1.2 trillion yen ($12 billion), Nikkei said.
Jhunjhunwala, India’s Buffett, Says Avoid Market Post Election
April 16 (Bloomberg) -- Rakesh Jhunjhunwala, ranked a billionaire by Forbes magazine last year for his holdings of Indian stocks, says investors should avoid the markets after nationwide elections until a new government is formed.
Voters go to the polls today in a five-stage election across the world’s biggest democracy before counting begins on May 16. The Bombay Stock Exchange Sensitive Index plunged 11 percent on May 17, 2004, the most in more than a decade, as investors feared a government formed by Sonia Gandhi’s Congress Party and communist allies would slow the pace of reforms.
“My advice is to stay away from the markets between May 16 and May 30 as there will be volatility in the markets post elections,” Jhunjhunwala, 48, said in an interview in his Mumbai office yesterday.
The markets more than tripled since 2004, before dropping 52 percent last year after a global credit crisis wiped out more than $30 trillion from the value of global equities.
Prime Minister Manmohan Singh’s Congress Party-led United Progressive Alliance is competing with the main opposition Bharatiya Janata Party-led National Democratic Alliance and a group of communist and regional parties known as the third front.
“It’s a very closely fought election,” Jhunjhunwala said. “It’s a triangular contest and to predict the result would be very difficult.”
Jhunjhunwala said even though some forecasters are predicting a third front-led government, he expects either the Congress or the BJP will get 150 to 170 seats and will lead formation of the government. About 714 million voters are eligible to elect 543 lawmakers to the Lok Sabha, or lower house of parliament.
Bear Market Rally?
Indian stocks, laggards among the world’s biggest emerging- market economies in the first quarter, recovered to post the steepest returns the past month as investors snapped up the cheapest shares in 13 years.
The benchmark index, also known as the Sensex, climbed 38 percent since falling to its lowest level this year on March 9. The advance beat increases among equity benchmark indexes for Brazil, Russia and China, the biggest developing economies.
“The pace, breadth and volume of the market suggest this could be more than a bear market rally,” said Jhunjhunwala, who has pictures of investors including Warren Buffett on the walls of his Mumbai office.
Buffett of India
Forbes named Jhunjhunwala the Buffett of India after he turned a $100 investment into $1 billion over two decades. He predicted Indian stocks would fall two months before the Sensex peaked in January 2008, and the benchmark measure has gained 17 percent since his Dec. 11 prediction of a bull run. The MSCI Asia Pacific Index rose 1 percent during that time.
The Sensex has crossed its 200-day moving average and if it remains above that level over the next 10 to 15 days, the rally may be sustained, he said. Still, he doesn’t see the markets forming new lows. The moving average is a technical tool used by some analysts to predict the direction of the market.
Investments by Indian insurance companies will be the biggest drivers of the equity market, Jhunjhunwala said. Insurers could invest about $50 billion a year in the next two- three years, he said.
“The scope for disappointment is not much,” Jhunjhunwala said. “There are no positive expectations from the election results. Markets may not tank this time round even if the result is something that the market may not like.”
For Related News and Information:
Voters go to the polls today in a five-stage election across the world’s biggest democracy before counting begins on May 16. The Bombay Stock Exchange Sensitive Index plunged 11 percent on May 17, 2004, the most in more than a decade, as investors feared a government formed by Sonia Gandhi’s Congress Party and communist allies would slow the pace of reforms.
“My advice is to stay away from the markets between May 16 and May 30 as there will be volatility in the markets post elections,” Jhunjhunwala, 48, said in an interview in his Mumbai office yesterday.
The markets more than tripled since 2004, before dropping 52 percent last year after a global credit crisis wiped out more than $30 trillion from the value of global equities.
Prime Minister Manmohan Singh’s Congress Party-led United Progressive Alliance is competing with the main opposition Bharatiya Janata Party-led National Democratic Alliance and a group of communist and regional parties known as the third front.
“It’s a very closely fought election,” Jhunjhunwala said. “It’s a triangular contest and to predict the result would be very difficult.”
Jhunjhunwala said even though some forecasters are predicting a third front-led government, he expects either the Congress or the BJP will get 150 to 170 seats and will lead formation of the government. About 714 million voters are eligible to elect 543 lawmakers to the Lok Sabha, or lower house of parliament.
Bear Market Rally?
Indian stocks, laggards among the world’s biggest emerging- market economies in the first quarter, recovered to post the steepest returns the past month as investors snapped up the cheapest shares in 13 years.
The benchmark index, also known as the Sensex, climbed 38 percent since falling to its lowest level this year on March 9. The advance beat increases among equity benchmark indexes for Brazil, Russia and China, the biggest developing economies.
“The pace, breadth and volume of the market suggest this could be more than a bear market rally,” said Jhunjhunwala, who has pictures of investors including Warren Buffett on the walls of his Mumbai office.
Buffett of India
Forbes named Jhunjhunwala the Buffett of India after he turned a $100 investment into $1 billion over two decades. He predicted Indian stocks would fall two months before the Sensex peaked in January 2008, and the benchmark measure has gained 17 percent since his Dec. 11 prediction of a bull run. The MSCI Asia Pacific Index rose 1 percent during that time.
The Sensex has crossed its 200-day moving average and if it remains above that level over the next 10 to 15 days, the rally may be sustained, he said. Still, he doesn’t see the markets forming new lows. The moving average is a technical tool used by some analysts to predict the direction of the market.
Investments by Indian insurance companies will be the biggest drivers of the equity market, Jhunjhunwala said. Insurers could invest about $50 billion a year in the next two- three years, he said.
“The scope for disappointment is not much,” Jhunjhunwala said. “There are no positive expectations from the election results. Markets may not tank this time round even if the result is something that the market may not like.”
For Related News and Information:
Tuesday, April 14, 2009
Rio’s Albanese Gets ‘Last Chance’ With China Bailout
April 15 (Bloomberg) -- Tom Albanese’s proposed bailout of Rio Tinto Group by Aluminum Corp. of China may be his last chance to hold on as chief executive officer.
He’s having trouble convincing shareholders and regulators that the $19.5 billion cash injection, which includes the sale of stakes in some assets and a convertible bond issue, is the best way to slash Rio’s $38.9 billion of debt. Rio shareholders will meet today in London to vote on proposals including the appointment of directors and their remuneration.
Albanese and Rio, the world’s third-biggest mining company, are under attack from Australian politicians because the plan would hand partial ownership of some mines and plants to a state-owned Chinese firm. Rio’s No. 3 shareholder is calling for an alternate proposal. The 51-year-old CEO angered investors with the acquisition of Alcan Inc., which caused Rio’s debt to balloon 19-fold in 2007, and his decision to spurn an offer worth as much as $194 billion from BHP Billiton Ltd. last year.
“This would have to be Tom Albanese’s last chance,” said John Wong, a fund manager with CQS UK LLP in London, who doesn’t own Rio shares. CQS manages the New City Natural Resources Fund. “I am surprised management has stayed as long as they have. They really haven’t done a good job for shareholders.”
When London-based Rio unveiled the Chinalco accord on Feb. 12, Albanese described it as “the best financial solution” to reduce debt. Rio already has plans to cut spending by half, sell more assets and fire 14,000 workers to lower borrowings by $10 billion this year. Rio must repay $8.9 billion of Alcan-related debt this year and $10 billion in 2010.
‘Best Solution’
“Chinalco was the best solution for the company and that remains the case,” said Christina Mills, a spokeswoman for Rio in London. Albanese, who was raised in New Jersey and studied mining at the University of Alaska before joining Rio in 1993, has the “full support of the board,” Mills said.
The cost of insuring against Rio defaulting on its five- year bonds increased 2.1 percent since the agreement was announced. The credit default swaps more than quadrupled in the past year to 620.3 basis points as of April 13. Rio shares have lost 57 percent in the past year and closed at 2,500 pence in London yesterday. The Bloomberg Europe Metals & Mining Index, which includes Rio and 12 other companies, dropped 55 percent in the same period.
Bond Markets
Rio sold $3.5 billion of debt for capital management and refinancing, the company said today in a statement to the Australian stock exchange. “With the bond markets open for business, it makes sense for us to take advantage of the opportunity,” Chief Financial Officer Guy Elliott said.
Legal & General Group Plc, Rio’s third-largest investor, with 4.6 percent of the stock, in February called for an alternative proposal that could be considered by all shareholders. The Association of British Insurers, representing 400 institutional investors, said it was “deeply concerned” by the deal because it ignored shareholders apart from Chinalco.
Beijing-based Chinalco, the country’s largest aluminum producer, is Rio’s biggest shareholder. The conversion of the bonds would double its stake to 18 percent.
A boardroom disagreement over the issue led to the resignation of Chairman-Elect Jim Leng in February, forcing Paul Skinner to stay on longer than planned. Jan du Plessis, who joined Rio in September as a non-executive director, will become chairman on April 20.
Australian Approval
Rio still needs approval from investors and Australia’s Foreign Investment Review Board. The FIRB last month rejected a A$2.6 billion ($1.9 billion) bid from China’s state-owned China Minmetals Corp. for zinc producer OZ Minerals Ltd. because the deal includes a mine in South Australia located close to a weapons-testing site. The proposed Chinalco transaction triggered a Senate inquiry into foreign ownership rules.
“A failed deal is more seismic than implying just a funding shortfall,” said Michael Rawlinson, head of mining and energy at brokerage Liberum Capital Ltd. in London. “The board’s preferred strategy would be in tatters, leaving it in a very vulnerable position.”
The biggest acquisition by Albanese’s predecessor Leigh Clifford was the A$3 billion purchase of Australian iron ore producer North Ltd. in 2000. In contrast, after less than three months as CEO, Albanese sanctioned Rio buying Alcan for $38.1 billion, its biggest-ever acquisition.
“Rio had a reputation as being fairly conservative and less nimble in M&A,” said Nick Hatch, an analyst at ING Groep NV in London who has a “hold” recommendation on the stock.
‘Grave Errors’
At the time of the Alcan bid, aluminum prices had doubled over the course of a five-year rally. Since trading at a record in July last year, the metal has plunged 54 percent on the London Metal Exchange. As much as 70 percent of the global aluminum industry is unprofitable, Svein Richard Brandtzaeg, CEO of Norwegian producer Norsk Hydro ASA, said last month.
“Management have made two grave and fundamental errors in the Alcan deal and then pushing away the BHP offer,” said Frank Lucas, a director of London-based fund manager and advisor Loeb Aron & Co., which holds Rio shares. “They put their own jobs before the interests of shareholders.”
As a result of those decisions, Albanese and Rio are “selling off their crown jewels at the bottom of the market to get themselves out of trouble,” CQS’s Wong said.
Door Open
Still, Rio has left the door open to other options. CFO Elliott said last month Rio had a “Plan B” should shareholders or regulators reject the Chinalco proposal. Rio would consider selling shares, bonds or more assets. It would also look at rescheduling debt, or a combination of the four options, he said.
Rio has a contingency plan for an $8 billion share sale in case the Chinalco deal falls through, the Sunday Times said April 5.
The accord with Chinalco “offers around double the amount we could raise from a rights issue, significant premia, strategic benefits and stability for potentially two years of uncertain economic conditions,” Rio spokeswoman Mills said.
A rights offer combined with a rapid round of asset sales would have found favor among investors, said Ian Henderson, who manages $7 billion in natural-resource assets including Rio shares at JPMorgan Chase & Co.’s asset-management unit in London.
“Many investors would have preferred a rights issue, but they were not given the choice,” Henderson said. “The Chinalco deal is less palatable because if you own Rio Tinto it’s because you want to own the mines, not have portions of them sold off.”
He’s having trouble convincing shareholders and regulators that the $19.5 billion cash injection, which includes the sale of stakes in some assets and a convertible bond issue, is the best way to slash Rio’s $38.9 billion of debt. Rio shareholders will meet today in London to vote on proposals including the appointment of directors and their remuneration.
Albanese and Rio, the world’s third-biggest mining company, are under attack from Australian politicians because the plan would hand partial ownership of some mines and plants to a state-owned Chinese firm. Rio’s No. 3 shareholder is calling for an alternate proposal. The 51-year-old CEO angered investors with the acquisition of Alcan Inc., which caused Rio’s debt to balloon 19-fold in 2007, and his decision to spurn an offer worth as much as $194 billion from BHP Billiton Ltd. last year.
“This would have to be Tom Albanese’s last chance,” said John Wong, a fund manager with CQS UK LLP in London, who doesn’t own Rio shares. CQS manages the New City Natural Resources Fund. “I am surprised management has stayed as long as they have. They really haven’t done a good job for shareholders.”
When London-based Rio unveiled the Chinalco accord on Feb. 12, Albanese described it as “the best financial solution” to reduce debt. Rio already has plans to cut spending by half, sell more assets and fire 14,000 workers to lower borrowings by $10 billion this year. Rio must repay $8.9 billion of Alcan-related debt this year and $10 billion in 2010.
‘Best Solution’
“Chinalco was the best solution for the company and that remains the case,” said Christina Mills, a spokeswoman for Rio in London. Albanese, who was raised in New Jersey and studied mining at the University of Alaska before joining Rio in 1993, has the “full support of the board,” Mills said.
The cost of insuring against Rio defaulting on its five- year bonds increased 2.1 percent since the agreement was announced. The credit default swaps more than quadrupled in the past year to 620.3 basis points as of April 13. Rio shares have lost 57 percent in the past year and closed at 2,500 pence in London yesterday. The Bloomberg Europe Metals & Mining Index, which includes Rio and 12 other companies, dropped 55 percent in the same period.
Bond Markets
Rio sold $3.5 billion of debt for capital management and refinancing, the company said today in a statement to the Australian stock exchange. “With the bond markets open for business, it makes sense for us to take advantage of the opportunity,” Chief Financial Officer Guy Elliott said.
Legal & General Group Plc, Rio’s third-largest investor, with 4.6 percent of the stock, in February called for an alternative proposal that could be considered by all shareholders. The Association of British Insurers, representing 400 institutional investors, said it was “deeply concerned” by the deal because it ignored shareholders apart from Chinalco.
Beijing-based Chinalco, the country’s largest aluminum producer, is Rio’s biggest shareholder. The conversion of the bonds would double its stake to 18 percent.
A boardroom disagreement over the issue led to the resignation of Chairman-Elect Jim Leng in February, forcing Paul Skinner to stay on longer than planned. Jan du Plessis, who joined Rio in September as a non-executive director, will become chairman on April 20.
Australian Approval
Rio still needs approval from investors and Australia’s Foreign Investment Review Board. The FIRB last month rejected a A$2.6 billion ($1.9 billion) bid from China’s state-owned China Minmetals Corp. for zinc producer OZ Minerals Ltd. because the deal includes a mine in South Australia located close to a weapons-testing site. The proposed Chinalco transaction triggered a Senate inquiry into foreign ownership rules.
“A failed deal is more seismic than implying just a funding shortfall,” said Michael Rawlinson, head of mining and energy at brokerage Liberum Capital Ltd. in London. “The board’s preferred strategy would be in tatters, leaving it in a very vulnerable position.”
The biggest acquisition by Albanese’s predecessor Leigh Clifford was the A$3 billion purchase of Australian iron ore producer North Ltd. in 2000. In contrast, after less than three months as CEO, Albanese sanctioned Rio buying Alcan for $38.1 billion, its biggest-ever acquisition.
“Rio had a reputation as being fairly conservative and less nimble in M&A,” said Nick Hatch, an analyst at ING Groep NV in London who has a “hold” recommendation on the stock.
‘Grave Errors’
At the time of the Alcan bid, aluminum prices had doubled over the course of a five-year rally. Since trading at a record in July last year, the metal has plunged 54 percent on the London Metal Exchange. As much as 70 percent of the global aluminum industry is unprofitable, Svein Richard Brandtzaeg, CEO of Norwegian producer Norsk Hydro ASA, said last month.
“Management have made two grave and fundamental errors in the Alcan deal and then pushing away the BHP offer,” said Frank Lucas, a director of London-based fund manager and advisor Loeb Aron & Co., which holds Rio shares. “They put their own jobs before the interests of shareholders.”
As a result of those decisions, Albanese and Rio are “selling off their crown jewels at the bottom of the market to get themselves out of trouble,” CQS’s Wong said.
Door Open
Still, Rio has left the door open to other options. CFO Elliott said last month Rio had a “Plan B” should shareholders or regulators reject the Chinalco proposal. Rio would consider selling shares, bonds or more assets. It would also look at rescheduling debt, or a combination of the four options, he said.
Rio has a contingency plan for an $8 billion share sale in case the Chinalco deal falls through, the Sunday Times said April 5.
The accord with Chinalco “offers around double the amount we could raise from a rights issue, significant premia, strategic benefits and stability for potentially two years of uncertain economic conditions,” Rio spokeswoman Mills said.
A rights offer combined with a rapid round of asset sales would have found favor among investors, said Ian Henderson, who manages $7 billion in natural-resource assets including Rio shares at JPMorgan Chase & Co.’s asset-management unit in London.
“Many investors would have preferred a rights issue, but they were not given the choice,” Henderson said. “The Chinalco deal is less palatable because if you own Rio Tinto it’s because you want to own the mines, not have portions of them sold off.”
Australian, N.Z. Dollars Fall 2nd Day as U.S. Economy Falters
April 15 (Bloomberg) -- The Australian and New Zealand dollars slid for a second day as government reports showed U.S. retail sales and producer prices unexpectedly fell, puncturing optimism that the worst of the global slump is ending.
The currencies weakened against the yen as Asian stocks declined for the first time in five days, reducing appetite for higher-yielding assets. Goldman Sachs Group Inc., which sold $5 billion in shares, dropped 12 percent as Standard & Poor’s said the bank’s better-than-estimated earnings may not be sustainable.
“The Aussie and the kiwi had a strong run up the past few days and it’s not too surprising they are correcting a little especially after softer U.S. retail sales last night and softer U.S. stocks,” said Richard Grace, chief currency strategist at Commonwealth Bank of Australia in Sydney. “Commodities are also softer in Asian trading this morning. Those reasons are good enough catalysts for traders to take some profit.”
Australia’s dollar weakened to 71.91 U.S. cents as of 11:13 a.m. in Sydney, from 72.39 cents yesterday. It declined 0.8 percent to 71.05 yen. New Zealand’s currency fell to 57.92 U.S. cents from 58.32 cents. It fell 0.8 percent to 57.23 yen.
Retail sales in the U.S. unexpectedly dropped in March for the first time in three months, declining 1.1 percent, the Commerce Department said yesterday in Washington. The Labor Department said wholesale prices fell last month, indicating that deflation risks remain.
‘A Hammer Blow’
The figures served to temper optimism the world’s largest economy has passed through the worst of its recession, even as Federal Reserve Chairman Ben S. Bernanke said there were “tentative signs that the sharp decline” in the economy was easing. He cited “progress” in stabilizing financial markets, which he said was critical to a sustainable recovery, he said
“U.S. March retail sales were a hammer blow to those who had begun to turn optimistic after recent less-than-horrible economic news,” David Watt, senior currency strategy in Toronto at RBC Capital Markets, wrote yesterday in a note to clients. “Although Goldman had set tongues aflutter with their early earnings release, the aftertaste was rather unpleasant.” while speaking at Morehouse College in Atlanta yesterday.
A leading Australian economic index fell in February at the sharpest pace since 1982. The index, a gauge of future economic growth, dropped 0.3 percent to 248.6 points from 249.4 in January, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. The index shrank at an annualized rate of 5.1 percent.
“I expect the Australian dollar to go lower in the next week or so, possibly going under 70 to the U.S. dollar before heading higher again,” Grace said.
Stocks Decline
The MSCI Asia Pacific Index lost 0.7 percent to 88.91, snapping a four-day, 5.6 percent advance. The Australian S&P/ASX 200 Index lost 0.15 percent, ending two days of gains, while the New Zealand benchmark Top 50 index fell 0.2 percent.
“We’re seeing a dampening of the positive equity sentiment that was growing since the beginning of March where people were thinking that the world economy may have been reaching a bottom,” said Imre Speizer, a market strategist in Wellington at Westpac Banking Corp. “That optimism was getting a bit stretched and the current pullback is a cautious signal the bear-market rally may be coming to an end.”
Australian bonds rose for the first time in three days. The yield on the benchmark 10-year note declined one basis point, or 0.01 percentage point, to 4.60 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security maturing March 2019 rose 0.1, or A$1 per A$1,000 face amount, to 105.12.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, slid to 3.77 percent from 3.80 percent yesterday.
The currencies weakened against the yen as Asian stocks declined for the first time in five days, reducing appetite for higher-yielding assets. Goldman Sachs Group Inc., which sold $5 billion in shares, dropped 12 percent as Standard & Poor’s said the bank’s better-than-estimated earnings may not be sustainable.
“The Aussie and the kiwi had a strong run up the past few days and it’s not too surprising they are correcting a little especially after softer U.S. retail sales last night and softer U.S. stocks,” said Richard Grace, chief currency strategist at Commonwealth Bank of Australia in Sydney. “Commodities are also softer in Asian trading this morning. Those reasons are good enough catalysts for traders to take some profit.”
Australia’s dollar weakened to 71.91 U.S. cents as of 11:13 a.m. in Sydney, from 72.39 cents yesterday. It declined 0.8 percent to 71.05 yen. New Zealand’s currency fell to 57.92 U.S. cents from 58.32 cents. It fell 0.8 percent to 57.23 yen.
Retail sales in the U.S. unexpectedly dropped in March for the first time in three months, declining 1.1 percent, the Commerce Department said yesterday in Washington. The Labor Department said wholesale prices fell last month, indicating that deflation risks remain.
‘A Hammer Blow’
The figures served to temper optimism the world’s largest economy has passed through the worst of its recession, even as Federal Reserve Chairman Ben S. Bernanke said there were “tentative signs that the sharp decline” in the economy was easing. He cited “progress” in stabilizing financial markets, which he said was critical to a sustainable recovery, he said
“U.S. March retail sales were a hammer blow to those who had begun to turn optimistic after recent less-than-horrible economic news,” David Watt, senior currency strategy in Toronto at RBC Capital Markets, wrote yesterday in a note to clients. “Although Goldman had set tongues aflutter with their early earnings release, the aftertaste was rather unpleasant.” while speaking at Morehouse College in Atlanta yesterday.
A leading Australian economic index fell in February at the sharpest pace since 1982. The index, a gauge of future economic growth, dropped 0.3 percent to 248.6 points from 249.4 in January, Westpac Banking Corp. and the Melbourne Institute said in Sydney today. The index shrank at an annualized rate of 5.1 percent.
“I expect the Australian dollar to go lower in the next week or so, possibly going under 70 to the U.S. dollar before heading higher again,” Grace said.
Stocks Decline
The MSCI Asia Pacific Index lost 0.7 percent to 88.91, snapping a four-day, 5.6 percent advance. The Australian S&P/ASX 200 Index lost 0.15 percent, ending two days of gains, while the New Zealand benchmark Top 50 index fell 0.2 percent.
“We’re seeing a dampening of the positive equity sentiment that was growing since the beginning of March where people were thinking that the world economy may have been reaching a bottom,” said Imre Speizer, a market strategist in Wellington at Westpac Banking Corp. “That optimism was getting a bit stretched and the current pullback is a cautious signal the bear-market rally may be coming to an end.”
Australian bonds rose for the first time in three days. The yield on the benchmark 10-year note declined one basis point, or 0.01 percentage point, to 4.60 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security maturing March 2019 rose 0.1, or A$1 per A$1,000 face amount, to 105.12.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, slid to 3.77 percent from 3.80 percent yesterday.
Asian Stocks Decline on U.S. Retail Sales, Yen; Advantest Falls
April 15 (Bloomberg) -- Asian stocks dropped for the first time in five days after U.S. retail sales unexpectedly declined and the stronger yen dimmed the earnings outlook for Japan’s electronics and auto companies.
Canon Inc., which generates more than half of sales from U.S. and Europe, declined 2.6 percent in Tokyo as the yen rose against the dollar and the euro. Advantest Corp., the world’s biggest maker of equipment used to test memory chips, sank 2.6 percent after Intel Corp., the world’s largest chipmaker, reported lower earnings.
“The situation in the U.S., combined with the stronger yen, point to losses in the local market today,” said Hiroichi Nishi, general manager at Nikko Cordial Securities Co., in an interview with Bloomberg Television. “From a technical perspective, investors may be thinking now is a good time to sell.”
The MSCI Asia Pacific Index lost 0.6 percent to 89.00 at 10:01 a.m. in Tokyo, snapping a four-day, 5.6 percent advance. The gauge rallied 26 percent from a five-year low reached on March 9 amid speculation government stimulus efforts worldwide will succeed in easing the global financial crisis.
Japan’s Nikkei 225 Stock Average dropped 0.9 percent to 8,761.24, while South Korea’s Kospi index fell 0.6 percent. All markets open for trading declined except Australia.
Futures on the U.S. Standard & Poor’s 500 Index dropped 0.6 percent. The gauge slid 2 percent yesterday after the government said the country’s retail sales fell 1.1 percent in March, compared with the 0.3 percent increase economists in a Bloomberg survey had estimated. Prices paid to U.S. producers dropped 1.2 percent, a separate government report showed.
‘Economic Progress’
President Barack Obama said yesterday that his economic- stimulus package and plans to rescue banks and bolster housing are starting to “generate signs of economic progress.” Still, he warned of “pitfalls” ahead.
Canon, the world’s largest maker of digital cameras, fell 2.6 percent to 3,030 yen in Tokyo. Toyota Motor Corp., the world’s largest automaker, lost 0.5 percent to 3,780.
The yen climbed to as high as 98.74 against the dollar from 99.79 at the close of trading in Tokyo yesterday. Japan’s currency gained as much as 2.1 percent versus the euro. A stronger yen erodes the value of sales generated overseas.
Advantest dropped 2.6 percent to 1,543 yen after Intel said first-quarter profit fell 55 percent because of slowing computer demand and signaled sales won’t recover in the current period. Intel shares lost 5.6 percent in extended trading.
Samsung Electronics Co., the world’s largest maker of computer-memory chips, dipped 1 percent to 569,000 won in Seoul.
The MSCI Asia Pacific Index’s rally in the past five weeks has driven the average valuation of companies on the gauge to 18 times reported profit, the highest since Nov. 7, 2007.
Canon Inc., which generates more than half of sales from U.S. and Europe, declined 2.6 percent in Tokyo as the yen rose against the dollar and the euro. Advantest Corp., the world’s biggest maker of equipment used to test memory chips, sank 2.6 percent after Intel Corp., the world’s largest chipmaker, reported lower earnings.
“The situation in the U.S., combined with the stronger yen, point to losses in the local market today,” said Hiroichi Nishi, general manager at Nikko Cordial Securities Co., in an interview with Bloomberg Television. “From a technical perspective, investors may be thinking now is a good time to sell.”
The MSCI Asia Pacific Index lost 0.6 percent to 89.00 at 10:01 a.m. in Tokyo, snapping a four-day, 5.6 percent advance. The gauge rallied 26 percent from a five-year low reached on March 9 amid speculation government stimulus efforts worldwide will succeed in easing the global financial crisis.
Japan’s Nikkei 225 Stock Average dropped 0.9 percent to 8,761.24, while South Korea’s Kospi index fell 0.6 percent. All markets open for trading declined except Australia.
Futures on the U.S. Standard & Poor’s 500 Index dropped 0.6 percent. The gauge slid 2 percent yesterday after the government said the country’s retail sales fell 1.1 percent in March, compared with the 0.3 percent increase economists in a Bloomberg survey had estimated. Prices paid to U.S. producers dropped 1.2 percent, a separate government report showed.
‘Economic Progress’
President Barack Obama said yesterday that his economic- stimulus package and plans to rescue banks and bolster housing are starting to “generate signs of economic progress.” Still, he warned of “pitfalls” ahead.
Canon, the world’s largest maker of digital cameras, fell 2.6 percent to 3,030 yen in Tokyo. Toyota Motor Corp., the world’s largest automaker, lost 0.5 percent to 3,780.
The yen climbed to as high as 98.74 against the dollar from 99.79 at the close of trading in Tokyo yesterday. Japan’s currency gained as much as 2.1 percent versus the euro. A stronger yen erodes the value of sales generated overseas.
Advantest dropped 2.6 percent to 1,543 yen after Intel said first-quarter profit fell 55 percent because of slowing computer demand and signaled sales won’t recover in the current period. Intel shares lost 5.6 percent in extended trading.
Samsung Electronics Co., the world’s largest maker of computer-memory chips, dipped 1 percent to 569,000 won in Seoul.
The MSCI Asia Pacific Index’s rally in the past five weeks has driven the average valuation of companies on the gauge to 18 times reported profit, the highest since Nov. 7, 2007.
Sunday, April 12, 2009
Satyam Poised to Name Winning Bidder Today to Regain Confidence
April 13 (Bloomberg) -- Satyam Computer Services Ltd. will announce the winning bidder for a controlling stake in itself today, a step toward assuring the future of the company at the center of India’s biggest corporate fraud inquiry.
U.S. billionaire Wilbur Ross and India’s Larsen & Toubro Ltd. are among parties that may seek to acquire what was once the country’s fourth-largest software-services provider. Satyam will disclose the auction’s result at 9 a.m. Mumbai time.
The sale aims to restore investor confidence and stem client defections at Satyam after former Chairman Ramalinga Raju said he inflated assets by more than $1 billion. The buyer gets control of about 50,000 employees servicing customers including Cisco Systems Inc. and Nestle SA.
“The price you are paying is really for the contracts and the employees,” said Kimberly Caughey, senior equity analyst at Fort Pitt Capital Group Inc. in Pittsburgh. “It’s costly to acquire new people through the regular HR mechanism, but to be able to do it in one fell swoop, I think that’s a real win.”
Satyam rose 3.5 percent to 47.25 rupees on April 9, valuing the company at 31.8 billion rupees ($637 million). The company has lost $1.8 billion of its market value since Raju’s admission.
If the highest bid is less than 10 percent greater than other offers, an open auction will be held to determine the winner, Satyam said April 2. The company will seek government approval of the new investor on April 15 and may hold a press conference by the end of this week, Chairman Kiran Karnik said yesterday.
Likely Bidders
Larsen, India’s biggest engineering company, hired Nomura Holdings Inc. and Citigroup Inc. to advise on a possible bid, a company executive who declined to be identified said last month. Larsen, Satyam’s largest shareholder with a 12 percent stake, sees Satyam as a way of expanding unit L&T Infotech, Chairman A.M. Naik said in January.
Ross, who last week described the software provider as “an interesting company” in a Bloomberg television interview, said he was barred by Indian rules from talking about any interest in buying the company.
Cognizant Technology Solutions Corp., a Teaneck, New Jersey-based software-provider, may team up with Ross for a bid, the Business Standard reported April 4, citing a banker familiar with the developments.
Withdrawn Rating
Indian software-service provider Tech Mahindra Ltd., partly owned by BT Group Plc, last month expressed its interest to bid for Satyam, prompting Fitch Ratings to withdraw its debt rating on the company.
Raju’s disclosure triggered probes including inquiries by India’s Serious Fraud Office and markets regulator and several lawsuits by investors in the U.S.
Concerns over lawsuits and lack of financial information prompted IGate Corp. to pull out from the bidding process last month. Satyam financial statements are being reviewed by KPMG and Deloitte Touche Tohmatsu after Satyam’s former auditor, the Indian affiliate of PricewaterhouseCoopers LLP, said in January its audit reports on the software maker were no longer reliable.
Satyam may fail to sell a stake because a lack of financial data and legal liabilities may deter buyers, the Financial Express reported April 7, citing a Forrester Research Inc. note to clients.
Criminal Investigation
India’s Central Bureau of Investigation on April 7 filed charges against founder Raju for his role in the fraud. The charges include criminal conspiracy and falsification of accounts, and carry a maximum penalty of life in prison, CBI Deputy Inspector General V.V. Lakshmi Narayana said at the time. Raju’s brother and former managing director, Rama Raju, and two partners at Price Waterhouse were among nine people charged.
Satyam has lost outsourcing contracts from about 46 customers to rivals such as International Business Machines Corp., Tata Consultancy Services Ltd. and Wipro Ltd., Economic Times reported March 17, citing an unidentified person familiar with the developments.
The United Nations said March 23 it will terminate its existing contracts with Satyam. In January, State Farm Mutual Automobile Insurance Co., the largest home and auto insurer in the U.S., canceled its order in the wake of the accounting scandal. Still, Cisco, the world’s largest maker of networking equipment, won’t scrap its contract with Satyam, Chief Executive Officer John Chambers said on Feb. 12.
Satyam may have also lost employees to customers and rivals. Bank of America Corp. may have hired as many as 300 people from Satyam, the Business Standard newspaper reported April 1, citing some of the employees without identifying them.
Satyam’s contracts and software engineers may still make it an interesting target, Fort Pitt’s Caughey said.
“It all goes back to the basic business,” she said. “If the basic business is run soundly and they have good engineers working for them, it’s something that” a rival should pursue.
U.S. billionaire Wilbur Ross and India’s Larsen & Toubro Ltd. are among parties that may seek to acquire what was once the country’s fourth-largest software-services provider. Satyam will disclose the auction’s result at 9 a.m. Mumbai time.
The sale aims to restore investor confidence and stem client defections at Satyam after former Chairman Ramalinga Raju said he inflated assets by more than $1 billion. The buyer gets control of about 50,000 employees servicing customers including Cisco Systems Inc. and Nestle SA.
“The price you are paying is really for the contracts and the employees,” said Kimberly Caughey, senior equity analyst at Fort Pitt Capital Group Inc. in Pittsburgh. “It’s costly to acquire new people through the regular HR mechanism, but to be able to do it in one fell swoop, I think that’s a real win.”
Satyam rose 3.5 percent to 47.25 rupees on April 9, valuing the company at 31.8 billion rupees ($637 million). The company has lost $1.8 billion of its market value since Raju’s admission.
If the highest bid is less than 10 percent greater than other offers, an open auction will be held to determine the winner, Satyam said April 2. The company will seek government approval of the new investor on April 15 and may hold a press conference by the end of this week, Chairman Kiran Karnik said yesterday.
Likely Bidders
Larsen, India’s biggest engineering company, hired Nomura Holdings Inc. and Citigroup Inc. to advise on a possible bid, a company executive who declined to be identified said last month. Larsen, Satyam’s largest shareholder with a 12 percent stake, sees Satyam as a way of expanding unit L&T Infotech, Chairman A.M. Naik said in January.
Ross, who last week described the software provider as “an interesting company” in a Bloomberg television interview, said he was barred by Indian rules from talking about any interest in buying the company.
Cognizant Technology Solutions Corp., a Teaneck, New Jersey-based software-provider, may team up with Ross for a bid, the Business Standard reported April 4, citing a banker familiar with the developments.
Withdrawn Rating
Indian software-service provider Tech Mahindra Ltd., partly owned by BT Group Plc, last month expressed its interest to bid for Satyam, prompting Fitch Ratings to withdraw its debt rating on the company.
Raju’s disclosure triggered probes including inquiries by India’s Serious Fraud Office and markets regulator and several lawsuits by investors in the U.S.
Concerns over lawsuits and lack of financial information prompted IGate Corp. to pull out from the bidding process last month. Satyam financial statements are being reviewed by KPMG and Deloitte Touche Tohmatsu after Satyam’s former auditor, the Indian affiliate of PricewaterhouseCoopers LLP, said in January its audit reports on the software maker were no longer reliable.
Satyam may fail to sell a stake because a lack of financial data and legal liabilities may deter buyers, the Financial Express reported April 7, citing a Forrester Research Inc. note to clients.
Criminal Investigation
India’s Central Bureau of Investigation on April 7 filed charges against founder Raju for his role in the fraud. The charges include criminal conspiracy and falsification of accounts, and carry a maximum penalty of life in prison, CBI Deputy Inspector General V.V. Lakshmi Narayana said at the time. Raju’s brother and former managing director, Rama Raju, and two partners at Price Waterhouse were among nine people charged.
Satyam has lost outsourcing contracts from about 46 customers to rivals such as International Business Machines Corp., Tata Consultancy Services Ltd. and Wipro Ltd., Economic Times reported March 17, citing an unidentified person familiar with the developments.
The United Nations said March 23 it will terminate its existing contracts with Satyam. In January, State Farm Mutual Automobile Insurance Co., the largest home and auto insurer in the U.S., canceled its order in the wake of the accounting scandal. Still, Cisco, the world’s largest maker of networking equipment, won’t scrap its contract with Satyam, Chief Executive Officer John Chambers said on Feb. 12.
Satyam may have also lost employees to customers and rivals. Bank of America Corp. may have hired as many as 300 people from Satyam, the Business Standard newspaper reported April 1, citing some of the employees without identifying them.
Satyam’s contracts and software engineers may still make it an interesting target, Fort Pitt’s Caughey said.
“It all goes back to the basic business,” she said. “If the basic business is run soundly and they have good engineers working for them, it’s something that” a rival should pursue.
Asian Stocks Advance on Japan Stimulus, China Money Supply
April 13 (Bloomberg) -- Asian stocks climbed for a third day after Japanese Prime Minister Taro Aso announced a record stimulus plan and a record level of loans in China caused a surge in the nation’s money supply.
Fuji Heavy Industries Ltd., the maker of Subaru cars, rose 2.7 percent as Japan’s proposal is set to provide subsidies for new car purchases. Hyundai Motor Co., South Korea’s largest automaker, jumped 4.5 percent. Audio-visual equipment maker Pioneer Corp., which has tripled in the last month, soared 12 percent. New lending in China rose to a record 1.89 trillion yuan ($277 billion) in March, helping the M2 measure of money supply expand 25.5 percent.
“Compared to previous packages it’s quite well targeted,” Richard Okuno, managing executive director at Rheos Capital Works Inc. in Tokyo, said in an interview with Bloomberg television, referring to Aso’s stimulus plan. “It’s certainly quite a lot of money.”
The MSCI Asia Pacific Index climbed 0.3 percent to 88.22 as of 9:39 a.m. in Tokyo, the highest since Jan. 12. The index has rallied 25 percent since dropping to a more than five-year low on March 9.
Japan’s Nikkei 225 Stock Average reversed an early decline to add 0.4 percent to 8,996.05, while South Korea’s Kospi index added 0.9 percent. Markets were closed in New York on April 10 for the Good Friday holiday. Hong Kong, Australia and New Zealand will be closed today.
Thailand, where anti-government protests forced the cancellation of the Association of Southeast Asian Nations summit and prompted Prime Minister Abhisit Vejjajiva to declare a state of emergency, will be closed until April 16 for New Years holidays.
New Stimulus
On April 10, Japan’s Aso announced his third stimulus plan since taking office, which will total 56.8 trillion yen ($566 billion) after adding financial measures and guarantees. The proposal includes a 1.6 trillion yen investment in low-carbon technology, 1.9 trillion yen on employment measures and 370 billion yen for subsidies of new car purchases.
China’s banks, which are mostly state-owned, have already met the bulk of the government’s target of at least 5 trillion yuan of new loans this year. The People’s Bank of China said the government’s stimulus package is showing initial results and it will continue to ensure sufficient liquidity after new loans surged sixfold to a record in March.
Toyota Motor Corp. added 0.5 percent to 2,830 yen even after a Nikkei newspaper report yesterday it may report a second-straight operating loss in the year ending March 31, 2010. Toyota’s operating loss likely expanded to about 500 billion yen in the fiscal year just ended, from a forecast 450 billion yen, the newspaper said.
Nippon Sheet Glass Co. added 1.7 percent to 297 yen after the Sunday Telegraph said the company may cut more jobs at U.K. glassmaker Pilkington amid declining demand from clients in the automotive and construction industries.
Fuji Heavy Industries Ltd., the maker of Subaru cars, rose 2.7 percent as Japan’s proposal is set to provide subsidies for new car purchases. Hyundai Motor Co., South Korea’s largest automaker, jumped 4.5 percent. Audio-visual equipment maker Pioneer Corp., which has tripled in the last month, soared 12 percent. New lending in China rose to a record 1.89 trillion yuan ($277 billion) in March, helping the M2 measure of money supply expand 25.5 percent.
“Compared to previous packages it’s quite well targeted,” Richard Okuno, managing executive director at Rheos Capital Works Inc. in Tokyo, said in an interview with Bloomberg television, referring to Aso’s stimulus plan. “It’s certainly quite a lot of money.”
The MSCI Asia Pacific Index climbed 0.3 percent to 88.22 as of 9:39 a.m. in Tokyo, the highest since Jan. 12. The index has rallied 25 percent since dropping to a more than five-year low on March 9.
Japan’s Nikkei 225 Stock Average reversed an early decline to add 0.4 percent to 8,996.05, while South Korea’s Kospi index added 0.9 percent. Markets were closed in New York on April 10 for the Good Friday holiday. Hong Kong, Australia and New Zealand will be closed today.
Thailand, where anti-government protests forced the cancellation of the Association of Southeast Asian Nations summit and prompted Prime Minister Abhisit Vejjajiva to declare a state of emergency, will be closed until April 16 for New Years holidays.
New Stimulus
On April 10, Japan’s Aso announced his third stimulus plan since taking office, which will total 56.8 trillion yen ($566 billion) after adding financial measures and guarantees. The proposal includes a 1.6 trillion yen investment in low-carbon technology, 1.9 trillion yen on employment measures and 370 billion yen for subsidies of new car purchases.
China’s banks, which are mostly state-owned, have already met the bulk of the government’s target of at least 5 trillion yuan of new loans this year. The People’s Bank of China said the government’s stimulus package is showing initial results and it will continue to ensure sufficient liquidity after new loans surged sixfold to a record in March.
Toyota Motor Corp. added 0.5 percent to 2,830 yen even after a Nikkei newspaper report yesterday it may report a second-straight operating loss in the year ending March 31, 2010. Toyota’s operating loss likely expanded to about 500 billion yen in the fiscal year just ended, from a forecast 450 billion yen, the newspaper said.
Nippon Sheet Glass Co. added 1.7 percent to 297 yen after the Sunday Telegraph said the company may cut more jobs at U.K. glassmaker Pilkington amid declining demand from clients in the automotive and construction industries.
China Central Bank Pledges Sufficient Liquidity for Economy
April 13 (Bloomberg) -- China’s central bank said it will ensure sufficient liquidity to sustain economic growth, damping speculation regulators may seek to restrain credit after new loans jumped sixfold to a record in March.
The People’s Bank of China “will implement moderately loose monetary policy and maintain the continuity and stability of policy,” the central bank said on its Web site yesterday. It pledged “ample liquidity” to “ensure money supply and loan growth meet economic development needs.”
The statement indicated that reviving growth remains China’s priority amid concern that the credit boom will lead to bad debts and asset bubbles. The world’s third-largest economy, while showing better-than-expected performance in the first quarter, still faces “great difficulties,” Premier Wen Jiabao told reporters in Thailand on April 11.
“It’s likely that the authorities will not change their stimulative policy at least for another month,” said Stephen Green, head of China research at Standard Chartered Plc in Shanghai. “This means fast loan growth will continue. The longer this goes on, though, the bigger the risk of asset bubbles developing becomes.”
New loans rose to 1.89 trillion yuan ($277 billion) in March, the central bank said April 11. M2, the broadest measure of money supply, grew 25.5 percent, the most since Bloomberg began compiling data in 1998 and more than the 21.5 percent median estimate in a survey of 12 economists.
Stimulus Effect
China’s industrial production climbed 8.3 percent from a year earlier in March and consumer demand grew “relatively rapidly” in the first quarter, adding to signs the government’s 4 trillion yuan stimulus plan is taking effect, Wen was cited as saying by the official Xinhua News Agency.
The government has pushed banks to lend in support of the stimulus, implemented after the global recession led to a collapse in exports that dragged economic growth to the weakest pace in seven years. China’s lending boom contrasts with the struggle in the U.S. to rid banks of illiquid assets and efforts by central banks from Switzerland to Japan to unfreeze credit.
China’s banks, which are mostly state-owned, have already met the bulk of the government’s target of at least 5 trillion yuan of new loans this year. Lending may top that level by as much as 3 trillion yuan, according to JPMorgan Chase & Co.
“The biggest dangers to China’s economy and financial system come from within, not from outside,” Jiang Zhenghua, former vice chairman of China’s parliamentary standing committee, said at a conference in Beijing April 11. “The biggest of these hidden dangers is the degree of bad loans in China.”
Bad Loans
Commercial banks’ bad-loan ratio was 2.45 percent at the end of 2008, according to the regulator. The ratio was more than 20 percent in 2003, before the government completed a cleanup of the banking system that cost more $500 billion.
The China Banking Regulatory Commission asked all banks to raise bad debt provisions to 150 percent of outstanding non- performing loans to be “prudent,” Chairman Liu Mingkang said in Beijing last month.
In yesterday’s statement, the central bank pledged to prevent loans from going to high energy-consuming or polluting enterprises or to industries where there is overcapacity. It also reiterated support for loans to the agricultural sector, as well as to small- and medium-sized companies.
“The lending numbers are extraordinarily strong and there must be concerns about the impact on overall loan quality, the potential for new asset-price bubbles, and whether these funds can all be allocated to investment projects in an efficient manner,” said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong. “When you are throwing around so much money so quickly, some of it is bound to be wasted.”
Deepening Crisis
The Shanghai Composite Index has climbed 34 percent this year, the second-best performer of 88 benchmark gauges tracked by Bloomberg, fueling concern that some of the increase in lending has been used for speculation.
“Some of the money has gone to the property market, some to the stock market,” said Kevin Lai, an economist with Daiwa Institute of Research in Hong Kong. “It is not what the central bank wants to see.”
Wen cited a month-on-month rebound in trade and gains in stocks and property transactions as evidence the stimulus is working, in an interview at the aborted Association of Southeast Asian Nations meeting, according to Xinhua. Signs of recovery also include a 26.5 percent jump in urban fixed-asset investment in the first two months.
Vigilance is still needed as the global financial crisis is continuing to deepen and spread, Xinhua cited Wen as saying.
China’s economic growth slowed to 6.8 percent in the fourth quarter. First-quarter data is due to be released April 16.
The People’s Bank of China “will implement moderately loose monetary policy and maintain the continuity and stability of policy,” the central bank said on its Web site yesterday. It pledged “ample liquidity” to “ensure money supply and loan growth meet economic development needs.”
The statement indicated that reviving growth remains China’s priority amid concern that the credit boom will lead to bad debts and asset bubbles. The world’s third-largest economy, while showing better-than-expected performance in the first quarter, still faces “great difficulties,” Premier Wen Jiabao told reporters in Thailand on April 11.
“It’s likely that the authorities will not change their stimulative policy at least for another month,” said Stephen Green, head of China research at Standard Chartered Plc in Shanghai. “This means fast loan growth will continue. The longer this goes on, though, the bigger the risk of asset bubbles developing becomes.”
New loans rose to 1.89 trillion yuan ($277 billion) in March, the central bank said April 11. M2, the broadest measure of money supply, grew 25.5 percent, the most since Bloomberg began compiling data in 1998 and more than the 21.5 percent median estimate in a survey of 12 economists.
Stimulus Effect
China’s industrial production climbed 8.3 percent from a year earlier in March and consumer demand grew “relatively rapidly” in the first quarter, adding to signs the government’s 4 trillion yuan stimulus plan is taking effect, Wen was cited as saying by the official Xinhua News Agency.
The government has pushed banks to lend in support of the stimulus, implemented after the global recession led to a collapse in exports that dragged economic growth to the weakest pace in seven years. China’s lending boom contrasts with the struggle in the U.S. to rid banks of illiquid assets and efforts by central banks from Switzerland to Japan to unfreeze credit.
China’s banks, which are mostly state-owned, have already met the bulk of the government’s target of at least 5 trillion yuan of new loans this year. Lending may top that level by as much as 3 trillion yuan, according to JPMorgan Chase & Co.
“The biggest dangers to China’s economy and financial system come from within, not from outside,” Jiang Zhenghua, former vice chairman of China’s parliamentary standing committee, said at a conference in Beijing April 11. “The biggest of these hidden dangers is the degree of bad loans in China.”
Bad Loans
Commercial banks’ bad-loan ratio was 2.45 percent at the end of 2008, according to the regulator. The ratio was more than 20 percent in 2003, before the government completed a cleanup of the banking system that cost more $500 billion.
The China Banking Regulatory Commission asked all banks to raise bad debt provisions to 150 percent of outstanding non- performing loans to be “prudent,” Chairman Liu Mingkang said in Beijing last month.
In yesterday’s statement, the central bank pledged to prevent loans from going to high energy-consuming or polluting enterprises or to industries where there is overcapacity. It also reiterated support for loans to the agricultural sector, as well as to small- and medium-sized companies.
“The lending numbers are extraordinarily strong and there must be concerns about the impact on overall loan quality, the potential for new asset-price bubbles, and whether these funds can all be allocated to investment projects in an efficient manner,” said Brian Jackson, senior strategist at Royal Bank of Canada in Hong Kong. “When you are throwing around so much money so quickly, some of it is bound to be wasted.”
Deepening Crisis
The Shanghai Composite Index has climbed 34 percent this year, the second-best performer of 88 benchmark gauges tracked by Bloomberg, fueling concern that some of the increase in lending has been used for speculation.
“Some of the money has gone to the property market, some to the stock market,” said Kevin Lai, an economist with Daiwa Institute of Research in Hong Kong. “It is not what the central bank wants to see.”
Wen cited a month-on-month rebound in trade and gains in stocks and property transactions as evidence the stimulus is working, in an interview at the aborted Association of Southeast Asian Nations meeting, according to Xinhua. Signs of recovery also include a 26.5 percent jump in urban fixed-asset investment in the first two months.
Vigilance is still needed as the global financial crisis is continuing to deepen and spread, Xinhua cited Wen as saying.
China’s economic growth slowed to 6.8 percent in the fourth quarter. First-quarter data is due to be released April 16.
Subscribe to:
Posts (Atom)
Posts
