May 30 (Bloomberg) -- Asian stocks rose for a fourth week in five, driving the MSCI Asia Pacific Index to the highest level in eight months, as U.S. consumer confidence and Japanese production reports spurred hopes for a global economic recovery.
Toyota Motor Corp., which gets 31 percent of its revenue in North America, gained 6.7 percent in Tokyo. PetroChina Co., the nation’s biggest oil producer, advanced 6 percent as crude oil prices surged for a second week. Hang Lung Properties Ltd., Hong Kong’s fifth-biggest builder, surged 16 percent after Hong Kong’s government announced an additional stimulus package.
“Signs of a turnaround are coming through,” said Matt Riordan, who helps manage about $3.1 billion at Paradice Investment Management in Sydney. “People who were initially dismissing this as a bear-market rally are concerned it might be sustainable.”
The MSCI Asia Pacific Index gained 2.7 percent to 102.04, its highest level since Oct. 3. The gauge, which has rallied 45 percent from a five-year low on March 9, briefly pared gains this week after North Korea threatened a military strike in response to South Korea joining a program to seize weapons shipments.
South Korea’s Kospi Index sank 0.6 percent as North Korea tested a nuclear device on May 25 and launched six short-range missiles in defiance of international condemnation.
“The North Korean missile test is providing investors a reality check,” said Roger Groebli, Singapore-based head of market analysis at LGT Capital Management, which oversees about $20 billion. “Valuations in Asia are a little rich.”
Economic Recovery?
The rally since March has driven the average valuation of companies on MSCI’s Asian index to 1.4 times the book value of assets, 17 percent higher from at the end of 2008.
China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, advanced 24 percent after commodity shipping rates rallied. Singapore Petroleum Co. surged 21 percent after PetroChina Co. agreed to buy a stake in the oil refining company. Genting Singapore Plc, which is building a theme park and casino in the city, retreated 9.9 percent after shareholders sold stock at a discount.
Toyota Motor, the world’s biggest automaker, climbed 6.7 percent to 3,810 yen.
The Conference Board said on May 26 that its index of U.S. consumer confidence surged to 54.9, the most in six years. Sentiment was projected to rise to 42.6, according to a Bloomberg News survey of economists.
Yesterday, Japan said industrial output rose 5.2 percent in April, the most in 56 years. India also said its economy grew 5.8 percent in the first quarter, beating the 5 percent increase economists had expected.
Property Stocks Gain
PetroChina gained 6 percent to HK$8.89. Inpex Corp., Japan’s largest oil explorer, jumped 7.7 percent to 771,000 yen. Crude oil for July delivery climbed 7.5 percent in the week to $66.31 a barrel.
“Oil has followed equities primarily because investors have cash on hand on the sidelines,” Victor Shum, a senior principal at Purvin & Gertz Inc., said in Singapore. “They are counting on some of the positive economic indicators, and are placing bets.”
Hang Lung Properties rallied 16 percent to HK$26.20. Hong Kong announced on May 26 tax cuts, fee waivers and spending totaling $2.2 billion to shield people from a recession that’s likely to be the worst on record. Luxury home sales in the city climbed to their highest since June, according to a May 27 report by Centaline Property Agency Ltd.
Baltic Dry
Property stocks in Singapore also rallied after City Developments Ltd., the city’s second-biggest developer, said on May 27 that it has started raising prices at one if its residential projects and that it was looking to speed up the launch of another project to take advantage of rising mass housing demand. City Developments advanced 15 percent to S$9.45.
China Cosco jumped 24 percent to HK$10.60 in Hong Kong. Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line, STX Pan Ocean Co., South Korea’s biggest bulk carrier, both advanced 11 percent. The Baltic Dry Index, which measures the cost of shipping commodities, climbed 25.4 percent to its highest level since Sept. 26, 2008.
Singapore Petroleum surged 21 percent to S$6.08. PetroChina said on May 24 it will buy Keppel Corp.’s 45.5 percent stake in the oil refining company at S$6.25 a share.
Genting Singapore slumped 9.9 percent to 73 Singapore cents. Golden Hope Ltd. and Lakewood Sdn Bhd. sold 854 million shares at 72 Singapore cents each, according to a pricing document sent to investors.
Saturday, May 30, 2009
European Stocks Cap Longest Stretch of Monthly Gains Since 2007
May 30 (Bloomberg) -- European stocks rose for a second week, with the Dow Jones Stoxx 600 Index capping its longest stretch of monthly gains since May 2007, as investors speculated the worst of the global recession is over.
Anglo American Plc and Total SA led commodity producers higher after base metals and crude oil increased. Tesco Plc paced an advance among retailers as investors sought shares of companies whose profits are more closely tied to economic growth. United Internet AG rallied 27 percent after agreeing to buy Freenet AG’s digital subscriber-line business.
The Dow Jones Stoxx 600 Index rose 0.6 percent this week to 208.21. The measure added 4 percent in May, gaining for a third straight month and bringing the rally since March 9 to 32 percent amid optimism the $12.8 trillion pledged by the U.S. government and the Federal Reserve will help to end the first global recession since World War II.
“People are on the lookout for bright spots and every time one appears it serves as a relief,” said Peter Braendle, who oversees about $50 billion at Swisscanto Asset Management in Zurich. “The economic data is no longer as alarming as it used to be. If we see an economic upturn, raw-material producers will continue to be in demand.”
A report on May 29 showed the U.S. economy contracted at a 5.7 percent annual pace in the first quarter, less than the government estimated last month. Sales of existing homes in the U.S. gained in April, the National Association of Realtors said earlier this week.
National Indexes
Other reports showed Japan’s industrial output increased the most since 1953 in April, India’s economy grew more than analysts estimated last quarter, and Poland expanded in the first quarter.
National benchmark indexes rose in 11 of the 18 western European markets. The U.K.’s FTSE 100 climbed 1.2 percent, led by a rally in mining shares. France’s CAC 40 added 1.5 percent and Germany’s DAX advanced 0.5 percent.
Basic-resource stocks posted the steepest gain among 19 industry groups in the Stoxx 600, increasing 4.9 percent.
Anglo American, the world’s fourth-biggest diversified mining company, soared 9.4 percent. Xstrata Plc, the fourth- largest copper producer, added 4.4 percent. Copper advanced for a fifth consecutive month on the London Metal Exchange. LME- monitored stockpiles of copper have fallen 43 percent from a peak at the end of February as China, the world’s largest consumer, bought metal.
‘Vector of Support’
“There is optimism from signs that activity in Asia is taking off,” said Emmanuel Soupre, who helps manage about $18 billion at Neuflize OBC in Paris. “This is welcome and shows that China remains a vector of support. This explains the rebound in raw materials.”
Oil climbed 30 percent in May, the biggest monthly increase since March 1999. Yesterday’s settlement at $66.31 was the highest since Nov. 4 and came after OPEC kept output unchanged.
Total, Europe’s third-largest oil company, rose 2.7 percent. Royal Dutch Shell Plc, the biggest, advanced 1.8 percent. Cairn Energy Ltd., the U.K. explorer operating on six continents, increased 3.9 percent.
Seadrill Ltd. added 8.8 percent after the Norwegian oil-rig company controlled by billionaire John Fredriksen said first- quarter net income was $243.2 million, beating the $148 million average estimate of 10 analysts surveyed by Bloomberg News.
Consumer Confidence
A measure of retailers in the Stoxx 600 rose 1.8 percent. Tesco, the U.K.’s biggest retailer, climbed 4 percent. Metro AG, Germany’s largest, rallied 4.7 percent.
U.K. consumer confidence matched the highest level in almost a year this month as people became more optimistic that they can weather the recession, according to a report on May 29. Conference Board figures earlier this week showed confidence among U.S. consumers in May surged the most in six years.
United Internet, Germany’s third-largest Web-access provider, jumped 27 percent after agreeing to buy Freenet’s digital subscriber-line business for 123 million euros ($174 million) in cash and shares, adding about 700,000 customers.
ITV Plc, the U.K.’s biggest commercial broadcaster, soared 35 percent. Goldman Sachs Group Inc. added the stock to its “conviction buy” list, saying the company is well positioned to benefit from a recovery in the advertising industry. Bank of America Corp. also recommended investors buy the shares.
Wolseley Plc sank 15 percent after the world’s largest supplier of heating and plumbing gear said slumping demand caused pretax profit to fall 80 percent in the nine months through April and warned markets won’t recover this year.
Worst Performers
Construction and material stocks dropped 2.7 percent as a group, the worst performance in the Stoxx 600. Royal BAM Groep NV sank 10 percent after the Dutch builder reported first- quarter earnings that missed analysts’ estimates, caused by a loss at the company’s property division.
Genmab A/S tumbled 19 percent as U.S. regulators said it’s difficult to tell whether the Danish biotechnology company’s experimental Arzerra drug will yield significant health benefits for leukemia patients.
Anglo American Plc and Total SA led commodity producers higher after base metals and crude oil increased. Tesco Plc paced an advance among retailers as investors sought shares of companies whose profits are more closely tied to economic growth. United Internet AG rallied 27 percent after agreeing to buy Freenet AG’s digital subscriber-line business.
The Dow Jones Stoxx 600 Index rose 0.6 percent this week to 208.21. The measure added 4 percent in May, gaining for a third straight month and bringing the rally since March 9 to 32 percent amid optimism the $12.8 trillion pledged by the U.S. government and the Federal Reserve will help to end the first global recession since World War II.
“People are on the lookout for bright spots and every time one appears it serves as a relief,” said Peter Braendle, who oversees about $50 billion at Swisscanto Asset Management in Zurich. “The economic data is no longer as alarming as it used to be. If we see an economic upturn, raw-material producers will continue to be in demand.”
A report on May 29 showed the U.S. economy contracted at a 5.7 percent annual pace in the first quarter, less than the government estimated last month. Sales of existing homes in the U.S. gained in April, the National Association of Realtors said earlier this week.
National Indexes
Other reports showed Japan’s industrial output increased the most since 1953 in April, India’s economy grew more than analysts estimated last quarter, and Poland expanded in the first quarter.
National benchmark indexes rose in 11 of the 18 western European markets. The U.K.’s FTSE 100 climbed 1.2 percent, led by a rally in mining shares. France’s CAC 40 added 1.5 percent and Germany’s DAX advanced 0.5 percent.
Basic-resource stocks posted the steepest gain among 19 industry groups in the Stoxx 600, increasing 4.9 percent.
Anglo American, the world’s fourth-biggest diversified mining company, soared 9.4 percent. Xstrata Plc, the fourth- largest copper producer, added 4.4 percent. Copper advanced for a fifth consecutive month on the London Metal Exchange. LME- monitored stockpiles of copper have fallen 43 percent from a peak at the end of February as China, the world’s largest consumer, bought metal.
‘Vector of Support’
“There is optimism from signs that activity in Asia is taking off,” said Emmanuel Soupre, who helps manage about $18 billion at Neuflize OBC in Paris. “This is welcome and shows that China remains a vector of support. This explains the rebound in raw materials.”
Oil climbed 30 percent in May, the biggest monthly increase since March 1999. Yesterday’s settlement at $66.31 was the highest since Nov. 4 and came after OPEC kept output unchanged.
Total, Europe’s third-largest oil company, rose 2.7 percent. Royal Dutch Shell Plc, the biggest, advanced 1.8 percent. Cairn Energy Ltd., the U.K. explorer operating on six continents, increased 3.9 percent.
Seadrill Ltd. added 8.8 percent after the Norwegian oil-rig company controlled by billionaire John Fredriksen said first- quarter net income was $243.2 million, beating the $148 million average estimate of 10 analysts surveyed by Bloomberg News.
Consumer Confidence
A measure of retailers in the Stoxx 600 rose 1.8 percent. Tesco, the U.K.’s biggest retailer, climbed 4 percent. Metro AG, Germany’s largest, rallied 4.7 percent.
U.K. consumer confidence matched the highest level in almost a year this month as people became more optimistic that they can weather the recession, according to a report on May 29. Conference Board figures earlier this week showed confidence among U.S. consumers in May surged the most in six years.
United Internet, Germany’s third-largest Web-access provider, jumped 27 percent after agreeing to buy Freenet’s digital subscriber-line business for 123 million euros ($174 million) in cash and shares, adding about 700,000 customers.
ITV Plc, the U.K.’s biggest commercial broadcaster, soared 35 percent. Goldman Sachs Group Inc. added the stock to its “conviction buy” list, saying the company is well positioned to benefit from a recovery in the advertising industry. Bank of America Corp. also recommended investors buy the shares.
Wolseley Plc sank 15 percent after the world’s largest supplier of heating and plumbing gear said slumping demand caused pretax profit to fall 80 percent in the nine months through April and warned markets won’t recover this year.
Worst Performers
Construction and material stocks dropped 2.7 percent as a group, the worst performance in the Stoxx 600. Royal BAM Groep NV sank 10 percent after the Dutch builder reported first- quarter earnings that missed analysts’ estimates, caused by a loss at the company’s property division.
Genmab A/S tumbled 19 percent as U.S. regulators said it’s difficult to tell whether the Danish biotechnology company’s experimental Arzerra drug will yield significant health benefits for leukemia patients.
Thursday, May 28, 2009
Asian Stocks Gain on Japan Industrial Production; BHP Advances
May 29 (Bloomberg) -- Asian stocks rose and were poised for the longest streak of monthly gains since the credit crisis began in 2007, as a better-than-forecast report on Japanese industrial production lifted mining and energy stocks.
BHP Billiton Ltd., the world’s biggest mining company and Australia’s top oil producer, gained 2.3 percent as copper prices rose on the Japanese report. Mitsui O.S.K. Lines Ltd. added 4.8 percent after commodity-shipping fees climbed to an eight-month high. Bank of China Ltd., the nation’s third-largest bank, climbed 3.4 percent in Hong Kong after Deutsche Bank AG recommended investors buy the stock.
“People are anticipating a recovery and demand for commodities going up on the back of that.” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “Things are getting less worse. It’s still going to be a rocky road, and there’s always the risk of some sort of shock to the negative.”
The MSCI Asia Pacific Index climbed 0.6 percent to 100.8 as of 1:02 p.m. in Tokyo. The gauge rose 1.5 percent this week, taking its rally from a five-year low on March 9 to 43 percent.
Australia’s S&P/ASX 200 Index increased 1.7 percent. Hong Kong’s Hang Seng Index added 0.5 percent. Japan’s Nikkei 225 Stock Average added 0.1 percent as gains in the yen after the production report dimmed exporters’ earnings prospects.
MSCI’s Asian index has climbed 11 percent in May, its third month of gains and the longest winning streak since Bear Stearns Cos. filed for bankruptcy protection in July 2007 for two hedge funds. India’s Reliance Infrastructure Ltd. and Kotak Mahindra Bank Ltd. surged more than 70 percent this month, leading gains on the gauge amid speculation the government’s election victory will accelerate policies to boost economic growth.
Increased Output
In Sydney, Commonwealth Bank of Australia rose 2.4 percent after the country’s bank lending increased. Singapore’s Chartered Semiconductor Manufacturing Ltd. gained 2.3 percent as the Business Times reported the company received a takeover bid. AirAsia Bhd. climbed 4 percent in Kuala Lumpur after first- quarter profit jumped.
Futures on the Standard & Poor’s 500 Index lost 0.1 percent. The gauge climbed 1.5 percent yesterday as oil prices jumped and a rebound in 10-year Treasuries eased concern record government debt sales will trigger higher borrowing costs.
Copper futures in New York gained as much as 1 percent today after Japan’s Trade Ministry said industrial production advanced 5.2 percent last month from March. Economists had estimated a 3.3 percent increase. Companies said they planned to increase output in May and June as well, the report showed.
‘More Confidence’
U.S. reports this week added to confidence the worst global slowdown since World War II is easing. The Conference Board’s index of consumer confidence showed sentiment surged to the highest since September. Durable goods orders gained 1.9 percent in April, more than some economists expected. Economists also upgraded their forecasts for Chinese economic growth.
BHP rose 2.3 percent to A$34.80. Mitsui & Co., a trading company that gets more than half its profit from commodities, gained 1.8 percent to 1,219 yen.
Toshiba Corp., Japan’s biggest chipmaker, climbed 2.6 percent to 357 yen after NHK television said the company will raise output of flash memory chips.
“The market is gaining more confidence as we haven’t seen bad economic news lately,” said Yoji Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong.
Asian stocks were poised to rise for the fourth time in five weeks as speculation the worst of the recession is over boosted retailers, mining companies and banks. Hong Kong-based property developers had three of the six biggest advances in the MSCI Asia index. Guangzhou R&F Properties Ltd., Sino Land Co. and Shimao Property Holdings Ltd. gained more than 20 percent.
Baltic Dry
The index’s climb since March has driven the average valuation of its companies to 1.4 times the book value of assets, 17 percent higher than at the end of 2008.
Inpex Corp., Japan’s largest oil explorer, climbed 6.8 percent to 774,000 yen. Woodside Petroleum Ltd., Australia’s No. 2 oil company, added 1.4 percent to A$43.58.
Crude oil rose to a six-month high yesterday after the Organization of Petroleum Exporting Countries decided to leave production quotas unchanged. Crude for July delivery rose to $65.08 a barrel in New York, the highest settlement since Nov. 5.
Mitsui O.S.K. jumped 4.8 percent to 674 yen. The Baltic Dry Index, which measures the cost of shipping commodities, gained 4.2 percent yesterday to the highest since Sept. 29.
Pacific Basin Shipping Ltd., which operates bulk cargo ships, surged 12 percent to HK$5.41 in Hong Kong.
Mounting Losses
Bank of China climbed 3.4 percent to HK$3.34. The stock was upgraded to “buy” from “hold” by Deutsche Bank AG on expectation its foray into the international yuan settlement business will boost earnings.
Finance companies accounted for 36 percent of the MSCI Asia Pacific’s advance today. The group is the third-worst performing of 10 industry gauges in the past year as losses from the credit crisis since the start of 2007 swelled to almost $1.5 trillion.
Commonwealth Bank of Australia, the nation’s second-biggest bank by market value, rose 2.4 percent to A$34.78. Australia & New Zealand Banking Group Ltd. climbed 3.3 percent to A$15.88.
Loans provided by banks and other finance companies climbed 0.1 percent in April from the previous month, according to the Reserve Bank of Australia.
Chartered, the world’s third-largest contract chipmaker, gained 2.3 percent to S$2.23. Abu Dhabi’s Advanced Technology Investment Co. offered to buy Chartered shares from Temasek Holdings Pte, which owns a stake of about 60 percent, the Business Times said. Chartered denied the report.
AirAsia, Southeast Asia’s largest low-cost airline, climbed 4 percent to 1.30 ringgit. Profit at Malaysian airline climbed 26 percent in the first quarter from a year earlier to 203.2 million ringgit ($58 million), the company said late yesterday.
Demand in the second quarter “looks good” and the airline won’t slow down its expansion, Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview today.
BHP Billiton Ltd., the world’s biggest mining company and Australia’s top oil producer, gained 2.3 percent as copper prices rose on the Japanese report. Mitsui O.S.K. Lines Ltd. added 4.8 percent after commodity-shipping fees climbed to an eight-month high. Bank of China Ltd., the nation’s third-largest bank, climbed 3.4 percent in Hong Kong after Deutsche Bank AG recommended investors buy the stock.
“People are anticipating a recovery and demand for commodities going up on the back of that.” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “Things are getting less worse. It’s still going to be a rocky road, and there’s always the risk of some sort of shock to the negative.”
The MSCI Asia Pacific Index climbed 0.6 percent to 100.8 as of 1:02 p.m. in Tokyo. The gauge rose 1.5 percent this week, taking its rally from a five-year low on March 9 to 43 percent.
Australia’s S&P/ASX 200 Index increased 1.7 percent. Hong Kong’s Hang Seng Index added 0.5 percent. Japan’s Nikkei 225 Stock Average added 0.1 percent as gains in the yen after the production report dimmed exporters’ earnings prospects.
MSCI’s Asian index has climbed 11 percent in May, its third month of gains and the longest winning streak since Bear Stearns Cos. filed for bankruptcy protection in July 2007 for two hedge funds. India’s Reliance Infrastructure Ltd. and Kotak Mahindra Bank Ltd. surged more than 70 percent this month, leading gains on the gauge amid speculation the government’s election victory will accelerate policies to boost economic growth.
Increased Output
In Sydney, Commonwealth Bank of Australia rose 2.4 percent after the country’s bank lending increased. Singapore’s Chartered Semiconductor Manufacturing Ltd. gained 2.3 percent as the Business Times reported the company received a takeover bid. AirAsia Bhd. climbed 4 percent in Kuala Lumpur after first- quarter profit jumped.
Futures on the Standard & Poor’s 500 Index lost 0.1 percent. The gauge climbed 1.5 percent yesterday as oil prices jumped and a rebound in 10-year Treasuries eased concern record government debt sales will trigger higher borrowing costs.
Copper futures in New York gained as much as 1 percent today after Japan’s Trade Ministry said industrial production advanced 5.2 percent last month from March. Economists had estimated a 3.3 percent increase. Companies said they planned to increase output in May and June as well, the report showed.
‘More Confidence’
U.S. reports this week added to confidence the worst global slowdown since World War II is easing. The Conference Board’s index of consumer confidence showed sentiment surged to the highest since September. Durable goods orders gained 1.9 percent in April, more than some economists expected. Economists also upgraded their forecasts for Chinese economic growth.
BHP rose 2.3 percent to A$34.80. Mitsui & Co., a trading company that gets more than half its profit from commodities, gained 1.8 percent to 1,219 yen.
Toshiba Corp., Japan’s biggest chipmaker, climbed 2.6 percent to 357 yen after NHK television said the company will raise output of flash memory chips.
“The market is gaining more confidence as we haven’t seen bad economic news lately,” said Yoji Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong.
Asian stocks were poised to rise for the fourth time in five weeks as speculation the worst of the recession is over boosted retailers, mining companies and banks. Hong Kong-based property developers had three of the six biggest advances in the MSCI Asia index. Guangzhou R&F Properties Ltd., Sino Land Co. and Shimao Property Holdings Ltd. gained more than 20 percent.
Baltic Dry
The index’s climb since March has driven the average valuation of its companies to 1.4 times the book value of assets, 17 percent higher than at the end of 2008.
Inpex Corp., Japan’s largest oil explorer, climbed 6.8 percent to 774,000 yen. Woodside Petroleum Ltd., Australia’s No. 2 oil company, added 1.4 percent to A$43.58.
Crude oil rose to a six-month high yesterday after the Organization of Petroleum Exporting Countries decided to leave production quotas unchanged. Crude for July delivery rose to $65.08 a barrel in New York, the highest settlement since Nov. 5.
Mitsui O.S.K. jumped 4.8 percent to 674 yen. The Baltic Dry Index, which measures the cost of shipping commodities, gained 4.2 percent yesterday to the highest since Sept. 29.
Pacific Basin Shipping Ltd., which operates bulk cargo ships, surged 12 percent to HK$5.41 in Hong Kong.
Mounting Losses
Bank of China climbed 3.4 percent to HK$3.34. The stock was upgraded to “buy” from “hold” by Deutsche Bank AG on expectation its foray into the international yuan settlement business will boost earnings.
Finance companies accounted for 36 percent of the MSCI Asia Pacific’s advance today. The group is the third-worst performing of 10 industry gauges in the past year as losses from the credit crisis since the start of 2007 swelled to almost $1.5 trillion.
Commonwealth Bank of Australia, the nation’s second-biggest bank by market value, rose 2.4 percent to A$34.78. Australia & New Zealand Banking Group Ltd. climbed 3.3 percent to A$15.88.
Loans provided by banks and other finance companies climbed 0.1 percent in April from the previous month, according to the Reserve Bank of Australia.
Chartered, the world’s third-largest contract chipmaker, gained 2.3 percent to S$2.23. Abu Dhabi’s Advanced Technology Investment Co. offered to buy Chartered shares from Temasek Holdings Pte, which owns a stake of about 60 percent, the Business Times said. Chartered denied the report.
AirAsia, Southeast Asia’s largest low-cost airline, climbed 4 percent to 1.30 ringgit. Profit at Malaysian airline climbed 26 percent in the first quarter from a year earlier to 203.2 million ringgit ($58 million), the company said late yesterday.
Demand in the second quarter “looks good” and the airline won’t slow down its expansion, Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview today.
Infosys CEO Says Demand Won’t Recover Until Mid-2010
May 29 (Bloomberg) -- India’s biggest technology companies won’t see a rebound until mid-2010, said S. Gopalakrishnan, chief executive officer of Infosys Technologies Ltd., the country’s second-largest provider of computer services.
“We hope then that companies will start to spend,” Gopalakrishnan said in an interview in New York.
The company, which is predicting its first drop in annual revenue, gets 90 percent of sales from North American and European customers. Those companies are cutting spending as they cope with the global slump. Gopalakrishnan expects “flat” revenue growth for the industry this year.
Businesses hire Infosys to handle their finance and computer functions in India, where costs are lower. The company ranks behind Tata Consultancy Services Inc. in computer-services revenue.
Indian software companies such as Infosys face a “rocky road” in the next six to 12 months because of the recession, Richard Parower, who manages the global technology fund at J&W Seligman & Co., said last week.
Infosys is investing in emerging markets such as Latin America, China and the Middle East, Gopalakrishnan said.
“We want to reduce our dependence on the developed markets,” he said.
Wipro Ltd., India’s third-largest provider of software services, expects its Middle East business to grow 50 percent this year, Chairman Azim Premji told reporters this week.
European Acquisitions?
Infosys also wants to make acquisitions that build its presence in Europe, where the company gets about a quarter of sales.
Gopalakrishnan plans to go after smaller companies that could easily be tucked into existing operations. He declined to name specific targets. Infosys has about $2 billion in cash.
Revenue in the year ending March 31 will fall at least 3.1 percent to $4.52 billion, the company said last month. Customers remain tentative about spending decisions, Gopalakrishnan said. Infosys is renegotiating prices to attract clients.
“Spending will start when customers are convinced that there is a recovery,” he said. “Right now the focus is on conserving cash and reducing expenses.”
Indian Growth
The company is banking on growth in its home country, he said. The Indian government is increasing investment in technology, which creates more opportunity for the domestic computer-services market, Gopalakrishnan said. The company plans to get as much as 5 percent of revenue from India, up from about 2 percent now.
“The expectation is that they will continue to invest in technology, disproportionate to other markets, because there’s a lot of catching up to do,” he said of India. Gopalakrishnan, 54, helped found the company in 1981.
The Indian economy is “definitely in better shape” after elections this month, he said.
Prime Minister Manmohan Singh’s ruling Congress Party will be able to form a government without needing the support of communist lawmakers, who frustrated plans to entice foreign investment in his first five-year term. The Congress Party won the most seats since 1991 in the election, which ended May 16.
“We expect the reform process to continue,” Gopalakrishnan said.
“We hope then that companies will start to spend,” Gopalakrishnan said in an interview in New York.
The company, which is predicting its first drop in annual revenue, gets 90 percent of sales from North American and European customers. Those companies are cutting spending as they cope with the global slump. Gopalakrishnan expects “flat” revenue growth for the industry this year.
Businesses hire Infosys to handle their finance and computer functions in India, where costs are lower. The company ranks behind Tata Consultancy Services Inc. in computer-services revenue.
Indian software companies such as Infosys face a “rocky road” in the next six to 12 months because of the recession, Richard Parower, who manages the global technology fund at J&W Seligman & Co., said last week.
Infosys is investing in emerging markets such as Latin America, China and the Middle East, Gopalakrishnan said.
“We want to reduce our dependence on the developed markets,” he said.
Wipro Ltd., India’s third-largest provider of software services, expects its Middle East business to grow 50 percent this year, Chairman Azim Premji told reporters this week.
European Acquisitions?
Infosys also wants to make acquisitions that build its presence in Europe, where the company gets about a quarter of sales.
Gopalakrishnan plans to go after smaller companies that could easily be tucked into existing operations. He declined to name specific targets. Infosys has about $2 billion in cash.
Revenue in the year ending March 31 will fall at least 3.1 percent to $4.52 billion, the company said last month. Customers remain tentative about spending decisions, Gopalakrishnan said. Infosys is renegotiating prices to attract clients.
“Spending will start when customers are convinced that there is a recovery,” he said. “Right now the focus is on conserving cash and reducing expenses.”
Indian Growth
The company is banking on growth in its home country, he said. The Indian government is increasing investment in technology, which creates more opportunity for the domestic computer-services market, Gopalakrishnan said. The company plans to get as much as 5 percent of revenue from India, up from about 2 percent now.
“The expectation is that they will continue to invest in technology, disproportionate to other markets, because there’s a lot of catching up to do,” he said of India. Gopalakrishnan, 54, helped found the company in 1981.
The Indian economy is “definitely in better shape” after elections this month, he said.
Prime Minister Manmohan Singh’s ruling Congress Party will be able to form a government without needing the support of communist lawmakers, who frustrated plans to entice foreign investment in his first five-year term. The Congress Party won the most seats since 1991 in the election, which ended May 16.
“We expect the reform process to continue,” Gopalakrishnan said.
India’s Economy Probably Expanded at Slowest Pace in Six Years
May 29 (Bloomberg) -- India’s economy probably grew at the slowest pace in six years last quarter, underscoring the challenge Prime Minister Manmohan Singh faces in his second term.
Asia’s third-largest economy expanded 5 percent in the three months to March 31 after a 5.3 percent gain in the previous quarter, according to the median forecast of 24 economists in a Bloomberg survey. The Central Statistical Organisation will release the data at 11 a.m. today in New Delhi.
Singh made reviving growth his top priority after this month’s resounding re-election and added the task requires more “reform of the economy.” Finance Minister Pranab Mukherjee says he will spend more on roads and ports in July’s budget to help India weather the worst global recession since World War II.
“Reviving growth is vital to make a dent on poverty,” said Shashanka Bhide, chief economist at the New Delhi-based National Council of Applied Economic Research. “Expectations are high from the new government.”
India’s key Sensitive stock index has surged 18 percent since Singh won a clear mandate, on optimism a coalition without communist parties will facilitate plans to sell state assets and allow more foreign investments in insurance and banking.
The sale of stakes in state-run companies such as National Hydroelectric Power Corp. and Oil India Ltd. is vital for Mukherjee to find money to spend without widening a budget deficit that Moody’s Investors Service says has ‘deteriorated.”
Credit Rating
India’s budget shortfall stood at 6 percent of gross domestic product in the year ended March 31, more than double the target. Moody’s has kept India’s local currency long term rating at Ba2, two levels below investment grade while Standard & Poor’s has a BBB- rating on India, the lowest investment grade.
“The unexpected election outcome provides scope for rationalizing spending, pushing ahead with disinvestments and key reforms,” Moody’s said in its annual report yesterday.
For now, Mukherjee said he plans to spend more to stimulate the economy, betting it will help boost tax revenues. He said the election results vindicate the strategy to pursue growth as a tool to improve people’s livelihood. The World Bank estimates three-quarters of Indians live on less than $2 a day.
The 73-year-old Mukherjee returned to the finance ministry after a quarter of a century. As the finance minister in Indira Gandhi’s cabinet from 1982 to 1984, he ran an economy that was almost closed and insulated from the global economy.
Singh, as finance minister between 1991 and 1996, abandoned the Soviet-style state planning and introduced free-market policies that have helped the economy quadruple to $1.2 trillion. Mukherjee said this week he will draft the budget with Singh, renewing a relationship that started in the early 1980s when he appointed Singh as the central bank governor.
‘Game-Changing’
Singh’s election triumph has been a “game-changing” verdict, says Macquarie Group Ltd. economist Rajeev Malik, describing it as a “catalyst in enhancing the evolving global rise of the Indian economy.”
In Singh’s first term between 2004 and 2009, India’s economy grew close to 9 percent on average each year, the fastest pace since independence in 1947, helped by a six-fold surge in foreign direct investments to $38 billion.
General Electric Co. Chief Executive Officer Jeffrey Immelt said yesterday the Indian elections was the best development in the country he’d seen in 20 years and that he was “completely optimistic about India in the long term.”
Foreign Investment
At stake are economic changes blocked by Singh’s erstwhile communist partners such as a bill to raise the foreign investment ceiling for Prudential Plc and other insurers to 49 percent from 26 percent, and other proposed legislation aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. The government also wants to allow global retailers such as Wal-Mart Stores Inc. into India.
Growth may recover from the current quarter ending June 30 as stimulus measures and six interest rate cuts together worth $85 billion, or 7 percent of GDP, begin to filter in the economy, analysts said. The economy may grow 5.2 percent this quarter, according to the median of 10 analysts surveyed by Bloomberg.
Car sales and the production of cement, electricity and refined petroleum are already showing signs of revival. India’s passenger car sales increased 4.2 percent in April from a year earlier, after a 1 percent gain in March. Cement production jumped 10.1 percent in March and electricity output rose 5.9 percent from a year ago, according to government data.
UBS AG raised its growth forecast for India to 6.2 percent in the year ending March 2010, compared with an earlier prediction of 5.2 percent. Standard Chartered economist Anubhuti Sahay said risks to the bank’s 5 percent forecast for the same period were now “to the upside” and Morgan Stanley’s Chetan Ahya raised his estimate to 5.8 percent from 4.4 percent.
The election outcome “is a huge positive surprise and is likely to allow the new government to initiate some long-pending structural reforms,” said Morgan Stanley’s Ahya. “Decisive policy actions will be critical to lift the pace of GDP growth closer to potential.”
Asia’s third-largest economy expanded 5 percent in the three months to March 31 after a 5.3 percent gain in the previous quarter, according to the median forecast of 24 economists in a Bloomberg survey. The Central Statistical Organisation will release the data at 11 a.m. today in New Delhi.
Singh made reviving growth his top priority after this month’s resounding re-election and added the task requires more “reform of the economy.” Finance Minister Pranab Mukherjee says he will spend more on roads and ports in July’s budget to help India weather the worst global recession since World War II.
“Reviving growth is vital to make a dent on poverty,” said Shashanka Bhide, chief economist at the New Delhi-based National Council of Applied Economic Research. “Expectations are high from the new government.”
India’s key Sensitive stock index has surged 18 percent since Singh won a clear mandate, on optimism a coalition without communist parties will facilitate plans to sell state assets and allow more foreign investments in insurance and banking.
The sale of stakes in state-run companies such as National Hydroelectric Power Corp. and Oil India Ltd. is vital for Mukherjee to find money to spend without widening a budget deficit that Moody’s Investors Service says has ‘deteriorated.”
Credit Rating
India’s budget shortfall stood at 6 percent of gross domestic product in the year ended March 31, more than double the target. Moody’s has kept India’s local currency long term rating at Ba2, two levels below investment grade while Standard & Poor’s has a BBB- rating on India, the lowest investment grade.
“The unexpected election outcome provides scope for rationalizing spending, pushing ahead with disinvestments and key reforms,” Moody’s said in its annual report yesterday.
For now, Mukherjee said he plans to spend more to stimulate the economy, betting it will help boost tax revenues. He said the election results vindicate the strategy to pursue growth as a tool to improve people’s livelihood. The World Bank estimates three-quarters of Indians live on less than $2 a day.
The 73-year-old Mukherjee returned to the finance ministry after a quarter of a century. As the finance minister in Indira Gandhi’s cabinet from 1982 to 1984, he ran an economy that was almost closed and insulated from the global economy.
Singh, as finance minister between 1991 and 1996, abandoned the Soviet-style state planning and introduced free-market policies that have helped the economy quadruple to $1.2 trillion. Mukherjee said this week he will draft the budget with Singh, renewing a relationship that started in the early 1980s when he appointed Singh as the central bank governor.
‘Game-Changing’
Singh’s election triumph has been a “game-changing” verdict, says Macquarie Group Ltd. economist Rajeev Malik, describing it as a “catalyst in enhancing the evolving global rise of the Indian economy.”
In Singh’s first term between 2004 and 2009, India’s economy grew close to 9 percent on average each year, the fastest pace since independence in 1947, helped by a six-fold surge in foreign direct investments to $38 billion.
General Electric Co. Chief Executive Officer Jeffrey Immelt said yesterday the Indian elections was the best development in the country he’d seen in 20 years and that he was “completely optimistic about India in the long term.”
Foreign Investment
At stake are economic changes blocked by Singh’s erstwhile communist partners such as a bill to raise the foreign investment ceiling for Prudential Plc and other insurers to 49 percent from 26 percent, and other proposed legislation aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. The government also wants to allow global retailers such as Wal-Mart Stores Inc. into India.
Growth may recover from the current quarter ending June 30 as stimulus measures and six interest rate cuts together worth $85 billion, or 7 percent of GDP, begin to filter in the economy, analysts said. The economy may grow 5.2 percent this quarter, according to the median of 10 analysts surveyed by Bloomberg.
Car sales and the production of cement, electricity and refined petroleum are already showing signs of revival. India’s passenger car sales increased 4.2 percent in April from a year earlier, after a 1 percent gain in March. Cement production jumped 10.1 percent in March and electricity output rose 5.9 percent from a year ago, according to government data.
UBS AG raised its growth forecast for India to 6.2 percent in the year ending March 2010, compared with an earlier prediction of 5.2 percent. Standard Chartered economist Anubhuti Sahay said risks to the bank’s 5 percent forecast for the same period were now “to the upside” and Morgan Stanley’s Chetan Ahya raised his estimate to 5.8 percent from 4.4 percent.
The election outcome “is a huge positive surprise and is likely to allow the new government to initiate some long-pending structural reforms,” said Morgan Stanley’s Ahya. “Decisive policy actions will be critical to lift the pace of GDP growth closer to potential.”
Wednesday, May 27, 2009
Indonesian Stocks Are Upgraded to ‘Overweight’ at BNP
May 28 (Bloomberg) -- Indonesian stocks were raised to “overweight” from “neutral” at BNP Paribas SA, which cited record-low interest rates, a resilient economy and better-than- expected earnings outlook.
The Jakarta Composite index may rise 16 percent to 2,200 based on a 12-month target, BNP said. PT Bank Danamon Indonesia, PT Astra International, PT Indofood Sukses Makmur and PT Ciputra Property are among its preferred stocks, BNP said. The measure closed at 1,892.84 yesterday, a 40 percent gain this year.
BNP’s rating upgrade follows those by JPMorgan Chase & Co. and Credit Suisse Group after a legislative election in April strengthened President Susilo Bambang Yudhoyono’s hold in parliament and raised expectations he will boost economic growth. Southeast Asia’s biggest economy expanded 4.4 percent in the first quarter, the fastest pace in the region.
“The democratic process has become entrenched, which has resulted in a stronger currency and a re-rating in both the bond and equity markets,” BNP’s Jakarta-based analyst Elvira Tjandrawinata wrote in a note today. “The economy is one of the most resilient in the region.”
The Indonesian rupiah has risen 7.2 percent this year, helping to ease inflation to a 16-month low in April. The central bank has cut its key interest rate six times since December to 7.25 percent, the lowest since the measure was introduced in July 2005. Slowing inflation supports purchasing power while lower borrowing costs may spur lending.
The Jakarta Composite fell less than 0.1 percent to 1,892.23 as of 10:04 a.m. local time.
JPMorgan, Credit Suisse and Deutsche Bank AG raised their ratings on Indonesia to “overweight” earlier this month.
The Jakarta Composite index may rise 16 percent to 2,200 based on a 12-month target, BNP said. PT Bank Danamon Indonesia, PT Astra International, PT Indofood Sukses Makmur and PT Ciputra Property are among its preferred stocks, BNP said. The measure closed at 1,892.84 yesterday, a 40 percent gain this year.
BNP’s rating upgrade follows those by JPMorgan Chase & Co. and Credit Suisse Group after a legislative election in April strengthened President Susilo Bambang Yudhoyono’s hold in parliament and raised expectations he will boost economic growth. Southeast Asia’s biggest economy expanded 4.4 percent in the first quarter, the fastest pace in the region.
“The democratic process has become entrenched, which has resulted in a stronger currency and a re-rating in both the bond and equity markets,” BNP’s Jakarta-based analyst Elvira Tjandrawinata wrote in a note today. “The economy is one of the most resilient in the region.”
The Indonesian rupiah has risen 7.2 percent this year, helping to ease inflation to a 16-month low in April. The central bank has cut its key interest rate six times since December to 7.25 percent, the lowest since the measure was introduced in July 2005. Slowing inflation supports purchasing power while lower borrowing costs may spur lending.
The Jakarta Composite fell less than 0.1 percent to 1,892.23 as of 10:04 a.m. local time.
JPMorgan, Credit Suisse and Deutsche Bank AG raised their ratings on Indonesia to “overweight” earlier this month.
Japan Retail Sales Fall for Eighth Month on Job Woes
May 28 (Bloomberg) -- Japan’s retail sales fell for an eighth month in April as worsening job prospects and declining wages deterred shoppers.
Sales slid 2.9 percent from a year earlier after decreasing a revised 3.8 percent in March, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted a 3.3 percent drop.
The worst postwar recession is spreading to households, whose outlays account for more than half of the economy. Japan may struggle to return to a sustainable growth path as long as companies from Toyota Motor Corp. to Panasonic Corp. keep cutting jobs to minimize losses.
“Consumer spending is too weak to support a recovery, given the deterioration in the job market,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Japan’s economy will remain fragile in the absence of stronger domestic demand.”
The yen traded at 95.79 per dollar as of 9:37 a.m. in Tokyo from 95.63 before the report. The Nikkei 225 Stock Average fell 0.1 percent.
Sales at large retailers tumbled 6.7 percent as operators of department stores and supermarkets discounted to attract customers, said Shinichiro Kobayashi, director of statistics at the Trade Ministry.
Isetan Mitsukoshi
Isetan Mitsukoshi Holdings, Japan’s biggest department store operator, forecasts a 90 percent decline in profit this fiscal year.
From a month earlier, sales climbed 0.6 percent, the first gain in eight months, as the government began distributing 12,000 yen ($125 to each resident as part of its efforts to stimulate the world’s second-largest economy. Taro Aso’s administration has also slashed highway tolls and on May 15 started to offer incentives for purchasers of environment- friendly televisions, refrigerators and air-conditioners.
The unemployment rate surged 0.4 percentage point to 4.8 percent in March, the biggest increase since 1967, and analysts expect a report this week will show it rose to a five-year high of 5 percent in April. Nikon Corp., the world’s second-biggest maker of cameras used by hobbyists and professionals, will eliminate 1,000 jobs, the company said this week.
The Bank of Japan and the government raised their assessments of the economy for the first time since 2006 this week on signs that exports and production are starting to stabilize. Both pointed to weakness in consumer spending and rising unemployment as risks to a recovery.
Lower Bonuses
Workers at the country’s biggest businesses will have their mid-year bonuses cut by a record 19.4 percent, according to a survey published last week by the Keidanren business group.
Still, consumer confidence rose to a 10-month high in April on optimism that the worst of the recession is over. The $25 trillion yen in stimulus spending and the Nikkei’s 33 percent rebound from a 26-year low in March may also be helping sentiment.
“The mist of uncertainty over Japanese private consumption is thick,” said Masayuki Kichikawa, chief Japan economist at Merrill Lynch & Co. in Tokyo. “It will be tug of war between fiscal stimulus and the deteriorating labor market.”
Sales slid 2.9 percent from a year earlier after decreasing a revised 3.8 percent in March, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted a 3.3 percent drop.
The worst postwar recession is spreading to households, whose outlays account for more than half of the economy. Japan may struggle to return to a sustainable growth path as long as companies from Toyota Motor Corp. to Panasonic Corp. keep cutting jobs to minimize losses.
“Consumer spending is too weak to support a recovery, given the deterioration in the job market,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Japan’s economy will remain fragile in the absence of stronger domestic demand.”
The yen traded at 95.79 per dollar as of 9:37 a.m. in Tokyo from 95.63 before the report. The Nikkei 225 Stock Average fell 0.1 percent.
Sales at large retailers tumbled 6.7 percent as operators of department stores and supermarkets discounted to attract customers, said Shinichiro Kobayashi, director of statistics at the Trade Ministry.
Isetan Mitsukoshi
Isetan Mitsukoshi Holdings, Japan’s biggest department store operator, forecasts a 90 percent decline in profit this fiscal year.
From a month earlier, sales climbed 0.6 percent, the first gain in eight months, as the government began distributing 12,000 yen ($125 to each resident as part of its efforts to stimulate the world’s second-largest economy. Taro Aso’s administration has also slashed highway tolls and on May 15 started to offer incentives for purchasers of environment- friendly televisions, refrigerators and air-conditioners.
The unemployment rate surged 0.4 percentage point to 4.8 percent in March, the biggest increase since 1967, and analysts expect a report this week will show it rose to a five-year high of 5 percent in April. Nikon Corp., the world’s second-biggest maker of cameras used by hobbyists and professionals, will eliminate 1,000 jobs, the company said this week.
The Bank of Japan and the government raised their assessments of the economy for the first time since 2006 this week on signs that exports and production are starting to stabilize. Both pointed to weakness in consumer spending and rising unemployment as risks to a recovery.
Lower Bonuses
Workers at the country’s biggest businesses will have their mid-year bonuses cut by a record 19.4 percent, according to a survey published last week by the Keidanren business group.
Still, consumer confidence rose to a 10-month high in April on optimism that the worst of the recession is over. The $25 trillion yen in stimulus spending and the Nikkei’s 33 percent rebound from a 26-year low in March may also be helping sentiment.
“The mist of uncertainty over Japanese private consumption is thick,” said Masayuki Kichikawa, chief Japan economist at Merrill Lynch & Co. in Tokyo. “It will be tug of war between fiscal stimulus and the deteriorating labor market.”
India Economy Shows Recovery Signs, UBS, Standard Chartered Say
May 28 (Bloomberg) -- India’s economy is showing signs of a rebound as interest-rate cuts encourage spending and foreign investors return, said UBS AG and Standard Chartered Bank.
A “consumption recovery and therefore higher industrial sales should be months away,” Philip Wyatt, a senior economist at UBS in Hong Kong, said in a report yesterday. “Private consumption will lead the Indian economic recovery.”
Asia’s third-biggest economy is forecast to expand 6.2 percent in the year ending March 2010, compared with an earlier prediction of 5.2 percent, UBS said this week. Standard Chartered economist Anubhuti Sahay said in a report yesterday that risks to the bank’s 5 percent forecast for the same period were now “to the upside” and Morgan Stanley raised its estimate to 5.8 percent from 4.4 percent.
Six interest-rate cuts in as many months and fiscal stimulus measures are providing the nation with a kickstart worth almost 7 percent of gross domestic product, according to the central bank. Foreign investors encouraged by Prime Minister Manmohan Singh’s decisive election victory this month are also flocking back to the nation.
“Foreign institutional investors have made a dramatic re- entry into India,” UBS’s Wyatt said. “Net inflows increased from $100 million in March 2009 to $1.3 billion in April 2009.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, has soared 46.3 percent this year amid investor optimism of an economy recovery. The index yesterday gained 520.41, or 3.8 percent, to 14,109.64, the biggest increase since May 18.
‘Signs of Recovery’
India’s rupee has strengthened 5 percent this month, the best performance among the 10 most-traded Asian currencies tracked by Bloomberg.
Economic indicators are starting to show “some early signs of recovery,” Standard Chartered’s Sahay said. The government will release figures for GDP for the three months ended March 31 in New Delhi tomorrow.
Overall manufacturing in India rebounded in April amid a recovery in domestic demand, ABN Amro said in a May 4 report after its Purchasing Managers’ Index increased to 53.3 from 49.5 in March. A reading above 50 indicates a gain in factory output.
Car sales and the production of cement, electricity and refined petroleum are also showing signs of revival. India’s passenger car sales increased 4.2 percent in April from a year earlier, after a 1 percent gain in March. Cement production jumped 10.1 percent in March and electricity output rose 5.9 percent from a year ago, according to government data.
Fiscal Stimulus
“Falling interest rates provide an incentive for people to shift from an attitude of precautionary saving to spending,” UBS’s Wyatt said. “A sustained reduction in interest rates should boost consumption.”
India’s expansion may get further support if next month’s budget includes fresh investment and improves the mechanism for implementing expenditure, Standard Chartered’s Sahay said. The bank expects extra stimulus from the budget at the “lower end” of the government’s initial projection of 0.5 percent to 1 percent of GDP.
Finance Minister Pranab Mukherjee said yesterday that he would unveil the budget in the first week of July and the government would continue to step up spending to support growth.
Mukherjee is aiming to revive India’s GDP to about 9 percent, the average annual pace the country recorded between 2004 and last year. The $1.2 trillion economy probably expanded about 7 percent in the year ended March 31, the 73-year-old finance minister said earlier this week.
Prime Minister Singh’s re-election victory saw his Congress party getting 206 lawmakers of its own. That’s the most since 1991, when Singh as finance minister abandoned Soviet-style state planning and introduced free-market policies that helped India’s economy quadruple in size.
“This outcome is a huge positive surprise and is likely to allow the new government to initiate some long-pending structural reforms,” said Chetan Ahya, an economist at Morgan Stanley in Singapore. “Decisive policy actions will be critical to lift the pace of GDP growth closer to potential.”
A “consumption recovery and therefore higher industrial sales should be months away,” Philip Wyatt, a senior economist at UBS in Hong Kong, said in a report yesterday. “Private consumption will lead the Indian economic recovery.”
Asia’s third-biggest economy is forecast to expand 6.2 percent in the year ending March 2010, compared with an earlier prediction of 5.2 percent, UBS said this week. Standard Chartered economist Anubhuti Sahay said in a report yesterday that risks to the bank’s 5 percent forecast for the same period were now “to the upside” and Morgan Stanley raised its estimate to 5.8 percent from 4.4 percent.
Six interest-rate cuts in as many months and fiscal stimulus measures are providing the nation with a kickstart worth almost 7 percent of gross domestic product, according to the central bank. Foreign investors encouraged by Prime Minister Manmohan Singh’s decisive election victory this month are also flocking back to the nation.
“Foreign institutional investors have made a dramatic re- entry into India,” UBS’s Wyatt said. “Net inflows increased from $100 million in March 2009 to $1.3 billion in April 2009.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, has soared 46.3 percent this year amid investor optimism of an economy recovery. The index yesterday gained 520.41, or 3.8 percent, to 14,109.64, the biggest increase since May 18.
‘Signs of Recovery’
India’s rupee has strengthened 5 percent this month, the best performance among the 10 most-traded Asian currencies tracked by Bloomberg.
Economic indicators are starting to show “some early signs of recovery,” Standard Chartered’s Sahay said. The government will release figures for GDP for the three months ended March 31 in New Delhi tomorrow.
Overall manufacturing in India rebounded in April amid a recovery in domestic demand, ABN Amro said in a May 4 report after its Purchasing Managers’ Index increased to 53.3 from 49.5 in March. A reading above 50 indicates a gain in factory output.
Car sales and the production of cement, electricity and refined petroleum are also showing signs of revival. India’s passenger car sales increased 4.2 percent in April from a year earlier, after a 1 percent gain in March. Cement production jumped 10.1 percent in March and electricity output rose 5.9 percent from a year ago, according to government data.
Fiscal Stimulus
“Falling interest rates provide an incentive for people to shift from an attitude of precautionary saving to spending,” UBS’s Wyatt said. “A sustained reduction in interest rates should boost consumption.”
India’s expansion may get further support if next month’s budget includes fresh investment and improves the mechanism for implementing expenditure, Standard Chartered’s Sahay said. The bank expects extra stimulus from the budget at the “lower end” of the government’s initial projection of 0.5 percent to 1 percent of GDP.
Finance Minister Pranab Mukherjee said yesterday that he would unveil the budget in the first week of July and the government would continue to step up spending to support growth.
Mukherjee is aiming to revive India’s GDP to about 9 percent, the average annual pace the country recorded between 2004 and last year. The $1.2 trillion economy probably expanded about 7 percent in the year ended March 31, the 73-year-old finance minister said earlier this week.
Prime Minister Singh’s re-election victory saw his Congress party getting 206 lawmakers of its own. That’s the most since 1991, when Singh as finance minister abandoned Soviet-style state planning and introduced free-market policies that helped India’s economy quadruple in size.
“This outcome is a huge positive surprise and is likely to allow the new government to initiate some long-pending structural reforms,” said Chetan Ahya, an economist at Morgan Stanley in Singapore. “Decisive policy actions will be critical to lift the pace of GDP growth closer to potential.”
Tuesday, May 26, 2009
Global Capital Creates Advisory Unit With Ex-UBS
May 27 (Bloomberg) -- Global Leveraged Capital LLC, a private investment firm that oversees $700 million, formed a unit to advise shareholders of ailing companies, pulling together 11 former UBS AG restructuring employees.
Thomas Benninger, 51, co-founder of San Francisco-based Global Capital and former UBS global restructuring head, is chairman of GLC Advisors & Co., the firm said in a statement today. He hired Jeffrey Gelles and J. Soren Reynertson, both former UBS managing directors, as managing general partners, as well as eight other former UBS employees.
“Once we crossed the beginning of the year, the default rates really started to climb,” Benninger said in an interview. “It just made sense for us all to come back together and team up and set up an advisory business as an adjunct to our investment business.”
A total of 117 companies have been unable to meet their debt commitments this year, compared with 30 in the same period a year ago, Standard & Poor’s analysts wrote in a May 15 report. Non-investment grade default rates will probably climb to almost 14 percent by the end of 2009, up from about 1 percent in 2007, GLC Advisors said in the statement.
“A lot of my UBS team was still at UBS,” Benninger said. “I kind of got to pick the A+ players.”
UBS, based in Zurich, cut its bonus pool by 78 percent in January and has amassed more than $53 billion in losses and writedowns. The bank came under pressure from government officials to cut variable pay after the Swiss state provided capital.
Benninger previously worked at Credit Suisse Group AG and Donaldson Lufkin & Jenrette, according to the statement. He co- founded Global Leveraged Capital in December 2005, Benninger said.
Gelles previously worked as managing director and head of restructuring and leveraged finance for technology, media and telecommunications at UBS. Reynertson is a former managing director in the restructuring and leveraged finance group at UBS, the firm said in the statement.
Thomas Benninger, 51, co-founder of San Francisco-based Global Capital and former UBS global restructuring head, is chairman of GLC Advisors & Co., the firm said in a statement today. He hired Jeffrey Gelles and J. Soren Reynertson, both former UBS managing directors, as managing general partners, as well as eight other former UBS employees.
“Once we crossed the beginning of the year, the default rates really started to climb,” Benninger said in an interview. “It just made sense for us all to come back together and team up and set up an advisory business as an adjunct to our investment business.”
A total of 117 companies have been unable to meet their debt commitments this year, compared with 30 in the same period a year ago, Standard & Poor’s analysts wrote in a May 15 report. Non-investment grade default rates will probably climb to almost 14 percent by the end of 2009, up from about 1 percent in 2007, GLC Advisors said in the statement.
“A lot of my UBS team was still at UBS,” Benninger said. “I kind of got to pick the A+ players.”
UBS, based in Zurich, cut its bonus pool by 78 percent in January and has amassed more than $53 billion in losses and writedowns. The bank came under pressure from government officials to cut variable pay after the Swiss state provided capital.
Benninger previously worked at Credit Suisse Group AG and Donaldson Lufkin & Jenrette, according to the statement. He co- founded Global Leveraged Capital in December 2005, Benninger said.
Gelles previously worked as managing director and head of restructuring and leveraged finance for technology, media and telecommunications at UBS. Reynertson is a former managing director in the restructuring and leveraged finance group at UBS, the firm said in the statement.
ANZ to Sell A$2.5 Billion in Shares to Fund Expansion
May 27 (Bloomberg) -- Australia & New Zealand Banking Group Ltd., the nation’s fourth-largest lender, plans to raise A$2.5 billion ($2 billion) selling shares to fund a bid for Royal Bank of Scotland Plc’s Asian assets.
The Melbourne-based bank will sell the shares to institutional investors at A$14.40 each, a 7.5 percent discount to its last traded price, and will not increase the size of the offer, it said in a statement today.
Chief Executive Officer Mike Smith, who joined ANZ after running HSBC Holdings Plc’s Asian operations, is raising funds as Australia’s economy sinks to its first recession in 18 years. ANZ’s up against HSBC and Standard Chartered Plc in its bid for RBS’s Asian assets, which range from trading desks in Australia to bank branches in Pakistan.
“Buying distressed financial assets at a weak point in the market is a good strategy, but you have to have the financial strength to run the business through the remainder of the trough,” said Angus Gluskie, who manages about $260 million at White Funds Management Pty. in Sydney.
The placement has been underwritten by Deutsche Bank AG, JPMorgan Chase & Co. and UBS AG.
The bank will also sell equity to retail shareholders and reserve the right to scale back applications under the share- purchase plan if total demand exceeds A$350 million.
Profit Slump
ANZ last month said profit fell 28 percent to A$1.42 billion in the six months ended March 31, from A$1.96 billion a year earlier. Its credit impairment charge jumped 98 percent to A$1.44 billion, it said at the time.
In today’s statement, ANZ said its charge for credit derivatives losses had declined by about A$400 million after tax since March 31, reflecting lower credit spreads globally and a stronger Australian dollar. That improvement has been “largely offset” by a reduction hedging gains, it said.
ANZ shares, which have rallied 31 percent since a February low, closed at A$15.57 in Sydney yesterday. The stock’s been halted from trading until 10 a.m. tomorrow.
On April 16, ANZ confirmed it had been invited by RBS to participate in the sale process for the lender’s Asian assets.
Obtaining the Edinburgh-based bank’s Asian businesses may help Smith meet a goal of boosting the portion of revenue earned in Asia to 20 percent at a time swelling bad debts squeeze ANZ’s domestic profits.
RBS, Britain’s biggest government-owned bank, this month posted a first-quarter loss after writing down 4.9 billion pounds ($7.8 billion) as credit-market investments soured and bad loans increased in all its markets.
Asia Network
The bank serves more than 30,000 retail and commercial customers in China and is one of the ten biggest foreign-owned wholesale banks in the nation, according to its web site. In India, it serves 1.3 million customers, while in Indonesia, it has 360,000 customers, the web site says.
ANZ’s capital raising is “a positive thing to do,” said Peter Vann, who manages more than $600 million at Constellation Capital Management Ltd. in Sydney. On the RBS bid, Vann said “if it’s a sensible price and the deal stacks up, I’m happy. It’s a good time to buy something, it’s cheap.”
ANZ, which didn’t say which RBS assets it is pursuing, said an acquisition would initially reduce earnings per share before contributing to profit in the medium term.
The share sales would allow ANZ to fund an acquisition of the selected RBS Asia assets while maintaining its Tier 1 capital ratio, a key measure of financial health, above its target range of 7.5 percent to 8.0 percent, it said.
“ANZ’s long-term aspiration is to become a super regional bank focused on Australia, New Zealand and Asia Pacific,” the bank said in the statement.
ANZ in March said it plans to open 20 branches in China by 2012 and is applying for regulatory approval to establish a wholly owned, locally incorporated bank subsidiary in the world’s third-biggest economy.
The Melbourne-based bank will sell the shares to institutional investors at A$14.40 each, a 7.5 percent discount to its last traded price, and will not increase the size of the offer, it said in a statement today.
Chief Executive Officer Mike Smith, who joined ANZ after running HSBC Holdings Plc’s Asian operations, is raising funds as Australia’s economy sinks to its first recession in 18 years. ANZ’s up against HSBC and Standard Chartered Plc in its bid for RBS’s Asian assets, which range from trading desks in Australia to bank branches in Pakistan.
“Buying distressed financial assets at a weak point in the market is a good strategy, but you have to have the financial strength to run the business through the remainder of the trough,” said Angus Gluskie, who manages about $260 million at White Funds Management Pty. in Sydney.
The placement has been underwritten by Deutsche Bank AG, JPMorgan Chase & Co. and UBS AG.
The bank will also sell equity to retail shareholders and reserve the right to scale back applications under the share- purchase plan if total demand exceeds A$350 million.
Profit Slump
ANZ last month said profit fell 28 percent to A$1.42 billion in the six months ended March 31, from A$1.96 billion a year earlier. Its credit impairment charge jumped 98 percent to A$1.44 billion, it said at the time.
In today’s statement, ANZ said its charge for credit derivatives losses had declined by about A$400 million after tax since March 31, reflecting lower credit spreads globally and a stronger Australian dollar. That improvement has been “largely offset” by a reduction hedging gains, it said.
ANZ shares, which have rallied 31 percent since a February low, closed at A$15.57 in Sydney yesterday. The stock’s been halted from trading until 10 a.m. tomorrow.
On April 16, ANZ confirmed it had been invited by RBS to participate in the sale process for the lender’s Asian assets.
Obtaining the Edinburgh-based bank’s Asian businesses may help Smith meet a goal of boosting the portion of revenue earned in Asia to 20 percent at a time swelling bad debts squeeze ANZ’s domestic profits.
RBS, Britain’s biggest government-owned bank, this month posted a first-quarter loss after writing down 4.9 billion pounds ($7.8 billion) as credit-market investments soured and bad loans increased in all its markets.
Asia Network
The bank serves more than 30,000 retail and commercial customers in China and is one of the ten biggest foreign-owned wholesale banks in the nation, according to its web site. In India, it serves 1.3 million customers, while in Indonesia, it has 360,000 customers, the web site says.
ANZ’s capital raising is “a positive thing to do,” said Peter Vann, who manages more than $600 million at Constellation Capital Management Ltd. in Sydney. On the RBS bid, Vann said “if it’s a sensible price and the deal stacks up, I’m happy. It’s a good time to buy something, it’s cheap.”
ANZ, which didn’t say which RBS assets it is pursuing, said an acquisition would initially reduce earnings per share before contributing to profit in the medium term.
The share sales would allow ANZ to fund an acquisition of the selected RBS Asia assets while maintaining its Tier 1 capital ratio, a key measure of financial health, above its target range of 7.5 percent to 8.0 percent, it said.
“ANZ’s long-term aspiration is to become a super regional bank focused on Australia, New Zealand and Asia Pacific,” the bank said in the statement.
ANZ in March said it plans to open 20 branches in China by 2012 and is applying for regulatory approval to establish a wholly owned, locally incorporated bank subsidiary in the world’s third-biggest economy.
Japan Exports Fall at Slower Pace as Recession Eases
May 27 (Bloomberg) -- Japan’s export slump moderated in April, helping the country post an unexpected trade surplus and adding to signs the worst recession since World War II is easing.
Shipments abroad fell 39.1 percent from a year earlier, after dropping 45.5 percent in March and a record 49.4 percent in February, the Finance Ministry said today in Tokyo. From a month earlier, exports rose 1.9 percent, a second straight gain.
Exports to the U.S., China and Europe all fell at the slowest pace this year, adding weight to Bank of Japan Governor Masaaki Shirakawa’s contention that the economy will resume growing this quarter. U.S. consumer confidence jumped the most in six years, a report showed yesterday, and China’s $586 billion stimulus plan is spurring demand for Japanese machinery.
“Exports are getting back on a sustainable growth path, and that’s good news because they’re the sole pillar of support for the economy,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “The overall economy will probably remain stagnant as there is no help from consumer spending and business investment.”
The Nikkei 225 Stock Average rose 1.7 percent at 12:31 p.m. in Tokyo. The yen traded at 95.46 per dollar from 95.27 before the report was published. Japan’s currency has gained 3.3 percent this month, threatening to exacerbate losses forecast this year by exporters including Toyota Motor Corp.
Imports Fall
Imports fell 35.8 percent from a year earlier, the ministry said, and the trade surplus narrowed 85 percent to 69 billion yen ($725 million). Economists predicted a deficit of 55 billion yen and a drop in exports of 42 percent.
Shipments to the U.S. fell 46.3 percent last month, less than March’s 51.4 percent decline. Exports to China dropped 25.8 percent, moderating from 31.6 percent, and sales to Europe slid 45.4 percent from 56.1 percent.
Goldman Sachs Group Inc. last week raised its ratings of construction equipment-makers Hitachi Construction Machinery Co. and Komatsu Ltd., citing the prospect of increased sales to China, where the stimulus package is driving building investment. Nissan Motor Co. said last month that sales of passenger cars in China rose 36 percent in March.
Toyota’s U.S. sales had a “slight uptick” this month, indicating that the market may have reached its bottom, Jim Lentz, president of the automaker’s U.S. sales unit, said last week. Rival Honda Motor Corp. plans to boost output at domestic factories and increase shipments this quarter as U.S. dealerships clear inventories, the Wall Street Journal reported.
Production Rebound
Industrial production probably rose 3.3 percent in April from a month earlier, the biggest jump in at least six years, economists expect a Trade Ministry report will show on May 29. Output climbed in March for the first time in six months.
Gross domestic product shrank at a record 15.2 percent annual pace last quarter. Governor Shirakawa said this week that while the economy may resume growing in the current quarter, any recovery will “inevitably be mild.”
At their April 30 meeting, a few Bank of Japan board members said additional policy measures weren’t necessary amid signs that the economy will recover, albeit gradually and after “some time,” minutes showed today. The central bank has been buying corporate debt to channel funds to companies since it cut the benchmark interest rate to 0.1 percent in December.
Extraordinary Measures
“Financial-market conditions are much better now, so it’s natural for the BOJ to think about ending its extraordinary measures for helping companies,” said Morita at Barclays.
Exports across Asia have been mixed. While shipments abroad fell at a slower pace in Taiwan and South Korea last month from March, Singapore and China suffered bigger drops.
Two quarters of record contractions in GDP have shrunk the Japanese economy to its 2003 size. Even as declines in overseas shipments moderate, Japan is exporting little more than half as much as last year and producing a third less. The recession, while moderating, is spreading to consumers as companies fire workers and cut wages to minimize losses.
“Exports and industrial production have stabilized, but this only gets the economy out of the emergency room,” said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo.
Shipments abroad fell 39.1 percent from a year earlier, after dropping 45.5 percent in March and a record 49.4 percent in February, the Finance Ministry said today in Tokyo. From a month earlier, exports rose 1.9 percent, a second straight gain.
Exports to the U.S., China and Europe all fell at the slowest pace this year, adding weight to Bank of Japan Governor Masaaki Shirakawa’s contention that the economy will resume growing this quarter. U.S. consumer confidence jumped the most in six years, a report showed yesterday, and China’s $586 billion stimulus plan is spurring demand for Japanese machinery.
“Exports are getting back on a sustainable growth path, and that’s good news because they’re the sole pillar of support for the economy,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “The overall economy will probably remain stagnant as there is no help from consumer spending and business investment.”
The Nikkei 225 Stock Average rose 1.7 percent at 12:31 p.m. in Tokyo. The yen traded at 95.46 per dollar from 95.27 before the report was published. Japan’s currency has gained 3.3 percent this month, threatening to exacerbate losses forecast this year by exporters including Toyota Motor Corp.
Imports Fall
Imports fell 35.8 percent from a year earlier, the ministry said, and the trade surplus narrowed 85 percent to 69 billion yen ($725 million). Economists predicted a deficit of 55 billion yen and a drop in exports of 42 percent.
Shipments to the U.S. fell 46.3 percent last month, less than March’s 51.4 percent decline. Exports to China dropped 25.8 percent, moderating from 31.6 percent, and sales to Europe slid 45.4 percent from 56.1 percent.
Goldman Sachs Group Inc. last week raised its ratings of construction equipment-makers Hitachi Construction Machinery Co. and Komatsu Ltd., citing the prospect of increased sales to China, where the stimulus package is driving building investment. Nissan Motor Co. said last month that sales of passenger cars in China rose 36 percent in March.
Toyota’s U.S. sales had a “slight uptick” this month, indicating that the market may have reached its bottom, Jim Lentz, president of the automaker’s U.S. sales unit, said last week. Rival Honda Motor Corp. plans to boost output at domestic factories and increase shipments this quarter as U.S. dealerships clear inventories, the Wall Street Journal reported.
Production Rebound
Industrial production probably rose 3.3 percent in April from a month earlier, the biggest jump in at least six years, economists expect a Trade Ministry report will show on May 29. Output climbed in March for the first time in six months.
Gross domestic product shrank at a record 15.2 percent annual pace last quarter. Governor Shirakawa said this week that while the economy may resume growing in the current quarter, any recovery will “inevitably be mild.”
At their April 30 meeting, a few Bank of Japan board members said additional policy measures weren’t necessary amid signs that the economy will recover, albeit gradually and after “some time,” minutes showed today. The central bank has been buying corporate debt to channel funds to companies since it cut the benchmark interest rate to 0.1 percent in December.
Extraordinary Measures
“Financial-market conditions are much better now, so it’s natural for the BOJ to think about ending its extraordinary measures for helping companies,” said Morita at Barclays.
Exports across Asia have been mixed. While shipments abroad fell at a slower pace in Taiwan and South Korea last month from March, Singapore and China suffered bigger drops.
Two quarters of record contractions in GDP have shrunk the Japanese economy to its 2003 size. Even as declines in overseas shipments moderate, Japan is exporting little more than half as much as last year and producing a third less. The recession, while moderating, is spreading to consumers as companies fire workers and cut wages to minimize losses.
“Exports and industrial production have stabilized, but this only gets the economy out of the emergency room,” said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo.
Monday, May 25, 2009
Bank of America Expands Japan Equities, Hires Staff
May 26 (Bloomberg) -- Bank of America Corp., the largest U.S. bank, said it is hiring staff from global rivals including Citigroup Inc. and Goldman Sachs Group Inc. to expand its equity sales business in Japan.
Akira Ushida joined the company’s Merrill Lynch & Co. unit today from Citigroup, while Douglas Butcher, a former Morgan Stanley employee, started as a managing director last week, according to an internal memo obtained by Bloomberg News. Hiroyuki Kurosu from UBS AG joined in March and Chiho Adachi from Goldman in April, the memo said.
Merrill is shifting to commission-based business from proprietary trading to reduce investment risk and secure stable sources of income. The change, backed by Bank of America’s global markets head, Thomas Montag, comes as banks including HSBC Holdings Plc reduce equity-related operations in Japan.
“This down environment is the time to invest and build market share,” Patrick Hogan, Merrill Lynch Japan Securities Co.’s global institutional sales chief, said in an interview yesterday, confirming the appointments. “We are renewing our focus on Japanese domestic financial firms, whose assets have been much more stable versus their foreign counterparts.”
Merrill will target Japanese asset management companies, life insurers and banks to increase trading volume, as well as clients from Sydney to Singapore, said Hogan, 40.
Trend Reverse
HSBC, Europe’s biggest bank, is shutting down its stock- research and trading businesses in Japan. About 40 people from the equity business will lose their jobs, two people familiar with the dismissals said on April 24.
Bank of America’s expansion in Japan is “a reversal of the trend, and a unique move,” said Katsunobu Komizo, the chief executive of Executive Search Partners Co., a Tokyo-based financial consulting firm. “Japanese banks and insurers are still pessimistic on Japan stocks as of today.”
Global investor confidence in Japanese stocks improved in May from April, according to a Bank of America survey of 220 fund mangers, who oversee $617 billion in the U.S., Europe and Asia, including Japan.
Net underweighting of Japanese shares -- or money managers whose holdings of the nation’s stocks are below benchmarks -- improved to -31 percent in May from -36 percent in April, the survey showed. Investors wishing to be most underweight Japanese shares shrank to -7 percent from -18 percent, the survey found.
“The worst is probably over,” Hogan said. “In six months and 12 months the economy and market will be better.”
Akira Ushida joined the company’s Merrill Lynch & Co. unit today from Citigroup, while Douglas Butcher, a former Morgan Stanley employee, started as a managing director last week, according to an internal memo obtained by Bloomberg News. Hiroyuki Kurosu from UBS AG joined in March and Chiho Adachi from Goldman in April, the memo said.
Merrill is shifting to commission-based business from proprietary trading to reduce investment risk and secure stable sources of income. The change, backed by Bank of America’s global markets head, Thomas Montag, comes as banks including HSBC Holdings Plc reduce equity-related operations in Japan.
“This down environment is the time to invest and build market share,” Patrick Hogan, Merrill Lynch Japan Securities Co.’s global institutional sales chief, said in an interview yesterday, confirming the appointments. “We are renewing our focus on Japanese domestic financial firms, whose assets have been much more stable versus their foreign counterparts.”
Merrill will target Japanese asset management companies, life insurers and banks to increase trading volume, as well as clients from Sydney to Singapore, said Hogan, 40.
Trend Reverse
HSBC, Europe’s biggest bank, is shutting down its stock- research and trading businesses in Japan. About 40 people from the equity business will lose their jobs, two people familiar with the dismissals said on April 24.
Bank of America’s expansion in Japan is “a reversal of the trend, and a unique move,” said Katsunobu Komizo, the chief executive of Executive Search Partners Co., a Tokyo-based financial consulting firm. “Japanese banks and insurers are still pessimistic on Japan stocks as of today.”
Global investor confidence in Japanese stocks improved in May from April, according to a Bank of America survey of 220 fund mangers, who oversee $617 billion in the U.S., Europe and Asia, including Japan.
Net underweighting of Japanese shares -- or money managers whose holdings of the nation’s stocks are below benchmarks -- improved to -31 percent in May from -36 percent in April, the survey showed. Investors wishing to be most underweight Japanese shares shrank to -7 percent from -18 percent, the survey found.
“The worst is probably over,” Hogan said. “In six months and 12 months the economy and market will be better.”
Euro Falls After Moody’s Downgrades Outlook on Bulgarian Banks
May 26 (Bloomberg) -- The euro fell for the first time in seven days against the dollar after Moody’s Investors Service downgraded its rating outlook for two Bulgarian banks, reviving concern over the health of the European banking system.
The 16-nation currency also weakened versus the yen after Germany’s financial regulator said the debt of the country’s banks will blow up “like a grenade” unless they participate in the government’s bad bank plan, the Telegraph reported, citing an official. The South Korean won declined for a second day versus the dollar on concern North Korea will conduct more nuclear tests after the communist state said it successfully held an underground explosion yesterday.
“No country across the globe can maintain a AAA rating,” said Yuichiro Harada, senior vice president of the foreign- exchange division in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest banking group. “The credit-rating issue will continue to dominate the market and currencies or countries which are targets of speculation may come under pressure.”
The euro dropped to $1.3980 as of 11:52 a.m. in Tokyo, from $1.4017 yesterday in New York. It climbed as high as $1.4051 on May 22, the strongest since Jan. 2. The single currency weakened to 132.43 yen from 132.92 yen. The dollar was at 94.71 yen from 94.83 yen.
The won weakened for a second day versus the dollar, declining 0.8 percent to 1,260.75, according to Seoul Money Brokerage Services Ltd.
Credit Rating
The euro dropped for the first time in four days versus the yen after Moody’s said it placed the financial-strength ratings of DSK Bank AD and First Investment Bank Ltd. on review for possible downgrade due to “the likely deterioration of the Bulgarian operating environment.” DSK Bank is rated D+ and First Investment is ranked at D.
German banks have 200 billion euros ($280 billion) of bad debts, Jochen Sanio, president of Germany’s BaFin said last week after the regulator released its annual report, according to the Telegraph. Write-offs may reach 816 billion euros, twice the total reserves of the country’s financial institutions, the newspaper reported, citing an internal memo at the regulator’s office.
“That report over the German debt situation isn’t helping sentiment toward the euro,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a part of the world’s largest interbank broker.
Korean Won
The won extended its decline from the highest in seven months against the dollar and South Korea’s benchmark stock index slumped for a fourth day after Yonhap News Agency reported South Korea isn’t ruling out the possibility the North will conduct further nuclear tests.
“This kind of news may trigger a knee-jerk reaction among those short-term players who wanted to buy Asian currencies,” said Taisuke Tanaka, managing director and foreign-exchange strategist in Tokyo at Nomura Securities Co., a unit of Japan’s largest securities broker. “But given the fact that most Asian countries enjoy huge current-account surpluses, this type of event won’t change the overall international capital flow.”
The impact on South Korea’s financial markets from North Korea’s nuclear test will be “limited,” Vice Finance Minister Hur Kyung Wook said today, adding the authorities are prepared to act if needed.
The 16-nation currency also weakened versus the yen after Germany’s financial regulator said the debt of the country’s banks will blow up “like a grenade” unless they participate in the government’s bad bank plan, the Telegraph reported, citing an official. The South Korean won declined for a second day versus the dollar on concern North Korea will conduct more nuclear tests after the communist state said it successfully held an underground explosion yesterday.
“No country across the globe can maintain a AAA rating,” said Yuichiro Harada, senior vice president of the foreign- exchange division in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest banking group. “The credit-rating issue will continue to dominate the market and currencies or countries which are targets of speculation may come under pressure.”
The euro dropped to $1.3980 as of 11:52 a.m. in Tokyo, from $1.4017 yesterday in New York. It climbed as high as $1.4051 on May 22, the strongest since Jan. 2. The single currency weakened to 132.43 yen from 132.92 yen. The dollar was at 94.71 yen from 94.83 yen.
The won weakened for a second day versus the dollar, declining 0.8 percent to 1,260.75, according to Seoul Money Brokerage Services Ltd.
Credit Rating
The euro dropped for the first time in four days versus the yen after Moody’s said it placed the financial-strength ratings of DSK Bank AD and First Investment Bank Ltd. on review for possible downgrade due to “the likely deterioration of the Bulgarian operating environment.” DSK Bank is rated D+ and First Investment is ranked at D.
German banks have 200 billion euros ($280 billion) of bad debts, Jochen Sanio, president of Germany’s BaFin said last week after the regulator released its annual report, according to the Telegraph. Write-offs may reach 816 billion euros, twice the total reserves of the country’s financial institutions, the newspaper reported, citing an internal memo at the regulator’s office.
“That report over the German debt situation isn’t helping sentiment toward the euro,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a part of the world’s largest interbank broker.
Korean Won
The won extended its decline from the highest in seven months against the dollar and South Korea’s benchmark stock index slumped for a fourth day after Yonhap News Agency reported South Korea isn’t ruling out the possibility the North will conduct further nuclear tests.
“This kind of news may trigger a knee-jerk reaction among those short-term players who wanted to buy Asian currencies,” said Taisuke Tanaka, managing director and foreign-exchange strategist in Tokyo at Nomura Securities Co., a unit of Japan’s largest securities broker. “But given the fact that most Asian countries enjoy huge current-account surpluses, this type of event won’t change the overall international capital flow.”
The impact on South Korea’s financial markets from North Korea’s nuclear test will be “limited,” Vice Finance Minister Hur Kyung Wook said today, adding the authorities are prepared to act if needed.
Daiichi Sankyo Shares Climb After Unit’s Chief Quits
May 26 (Bloomberg) -- Daiichi Sankyo Co., Japan’s third- biggest drugmaker, climbed for a second session in Tokyo trading after its unprofitable Indian unit’s chief executive officer resigned as part of efforts to turn around the company.
Daiichi Sankyo rose 3 percent to 1,800 yen as of the 11 a.m. break on the Tokyo Stock Exchange, headed for the biggest two- day gain since April 2. The benchmark Nikkei 225 Stock Average dropped 0.9 percent.
The Japanese drugmaker, which bought a controlling stake in Ranbaxy Laboratories Ltd. last year, said on May 24 that Malvinder Singh quit as head of the unit and was replaced by Atul Sobti, formerly chief operating officer. Ranbaxy is forecasting an annual loss and battling a ban on some of its drugs in the U.S.
The management change reflects the “sense of crisis” by Daiichi Sankyo and spurred optimism the business may turn around, Yo Mizuno, an analyst at Daiwa Institute of Research Ltd., said by phone today. Mizuno rates the stock “outperform.”
Daiichi Sankyo rose 3 percent to 1,800 yen as of the 11 a.m. break on the Tokyo Stock Exchange, headed for the biggest two- day gain since April 2. The benchmark Nikkei 225 Stock Average dropped 0.9 percent.
The Japanese drugmaker, which bought a controlling stake in Ranbaxy Laboratories Ltd. last year, said on May 24 that Malvinder Singh quit as head of the unit and was replaced by Atul Sobti, formerly chief operating officer. Ranbaxy is forecasting an annual loss and battling a ban on some of its drugs in the U.S.
The management change reflects the “sense of crisis” by Daiichi Sankyo and spurred optimism the business may turn around, Yo Mizuno, an analyst at Daiwa Institute of Research Ltd., said by phone today. Mizuno rates the stock “outperform.”
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