CAIRO — The most important group of religious leaders in Iran called the disputed presidential election and the new government illegitimate on Saturday, an act of defiance against the country’s supreme leader and the most public sign of a major split in the country’s clerical establishment.
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A statement by the group, the Association of Researchers and Teachers of Qum, represents a significant, if so far symbolic, setback for the government and especially the authority of the supreme leader, Ayatollah Ali Khamenei, whose word is supposed to be final. The government has tried to paint the opposition and its top presidential candidate, Mir Hussein Moussavi, as criminals and traitors, a strategy that now becomes more difficult — if not impossible.
“This crack in the clerical establishment, and the fact they are siding with the people and Moussavi, in my view is the most historic crack in the 30 years of the Islamic republic,” said Abbas Milani, director of the Iranian Studies Program at Stanford University. “Remember they are going against an election verified and sanctified by Khamenei.”
The announcement came on a day when Mr. Moussavi released documents detailing a campaign of fraud by the current president’s supporters, and as a close associate of the supreme leader called Mr. Moussavi and former President Mohammad Khatami “foreign agents,” saying they should be treated as criminals. The specific charges of fraud included the printing of millions of extra ballots before the vote.
Since the election, the bulk of the clerical establishment in the holy city of Qum, an important religious and political center of power, has remained largely silent, leaving many to wonder when, or if, the nation’s most senior religious leaders would jump into the controversy that has posed the most significant challenge to the country’s leadership since the Islamic Revolution. With its statement Saturday, the association of clerics — formed under the leadership of the revolution’s founder, Ayatollah Ruhollah Khomeini — came down squarely on the side of the reform movement.
The association includes reformists, but Iranian political analysts describe it as independent, and it did not support any candidate in the recent election. The group had earlier asked for the election to be nullified because so many Iranians objected to the results, but it never directly challenged the legitimacy of the government and, by extension, the supreme leader. The earlier statement also came before the election was certified by the country’s religious leaders, who have since said that opposition to the results must cease.
The clerics’ decision to speak up again is not itself a turning point and could fizzle under pressure from the state, which has continued to threaten its critics. Some seminaries in Qum rely on the government for funds, and Ayatollah Khamenei and the man he has declared the winner of the election, incumbent President Mahmoud Ahmadinejad, have powerful backers there. They also retain the support of the powerful security forces and the elite Revolutionary Guards. In addition, the country’s highest-ranking clerics have yet to speak out individually against the election results.
But the association’s latest statement does give a tactical boost to Mr. Moussavi, Mr. Khatami and the former speaker of Parliament, Mehdi Karroubi, who have been the most vocal in calling the election illegitimate and who, in their attempts to force change, have been hindered by the jailing of many of their influential backers.
While the government could continue vilifying the three as traitors, analysts say it was highly unlikely that the leaders would use the same tactic against the clerical establishment in Qum.
“The significance is that even within the clergy, there are many who refuse to recognize the legitimacy of the election results as announced by the supreme leader,” said an Iranian political analyst who spoke on condition of anonymity for fear of reprisal.
The clerics’ statement chastised the leadership for failing to adequately study complaints of vote rigging and lashed out at the government’s use of force in crushing public protests that drew hundreds of thousands into the streets.
It even directly criticized the Guardian Council, the powerful group of clerics charged with certifying elections.
“Is it possible to consider the results of the election as legitimate by merely the validation of the Guardian Council?” the association said in its statement.
Perhaps more threatening to the supreme leader, the committee called on other clerics to join the fight against the government’s refusal to adequately reconsider the charges of voter fraud. The committee invoked powerful imagery, comparing the 20 protesters killed during demonstrations with the martyrs who died in the early days of the revolution and the war with Iraq, asking other clerics to step in to save what it called “the dignity that was earned with the blood of tens of thousands of martyrs.” In effect, the comparison cast the government as betraying the ideals of the revolution.
“The complaints of other candidates were ignored and people’s protest, which was expressed peacefully, was violently crushed,” the statement said.
The statement was posted on the association’s Web site late Saturday and carried on many other sites, including the Persian BBC, but it was impossible to reach senior clerics in the group to independently confirm its veracity.
The statement was issued after a meeting Mr. Moussavi had with the committee 10 days ago and a decision by the Guardian Council, a body loyal to the supreme leader, to certify the election and declare that all matters concerning the election were closed.
But the defiance has not ended.
With heavy security on the streets, there is a forced calm. But each day, slowly, another link falls from the chain of government control. Last week, in what appeared a coordinated thrust, Mr. Moussavi, Mr. Karroubi and Mr. Khatami all called the new government illegitimate. On Saturday, Mr. Milani of Stanford said, former President Ali Akbar Hashemi Rafsanjani met with families of those who had been arrested, another sign that he was working behind the scenes to keep the issue alive.
“I don’t ever remember in the 20 years of Khamenei’s rule where he was clearly and categorically on one side and so many clergy were on the other side,” Mr. Milani said. “This might embolden other clergy to come forward.”
The committee of clergy was formed in the 1960s. Mr. Milani said that for many years, Ayatollah Khamenei also belonged to the group, and that it has since developed some political clout by backing successful candidates for national office.
As the resistance has continued, so have the government’s attempts to muzzle its critics.
On Saturday, an editorial in a radical right-wing newspaper, Kayhan, that is close to the supreme leader, called for Mr. Moussavi and Mr. Khatami to be treated as criminals and foreign agents. The editorial was written by Hossein Shariatmadari, who was picked by the supreme leader to run the paper and who often knows of actions the government is going to take.
Saturday, July 4, 2009
Indian Railways plans leap into the cyber age
India’s state-owned railways, one of the largest and most profitable networks in the world, plan to leap from the steam to the cyber age with a budget aimed at advancing electronic ticketing and developing 50 world-class stations.
Mamata Banerjee, new railways minister, who presented the budget to parliament on Friday, said the government and private partners would transform big terminuses, including Mumbai, Delhi, Calcutta and Bangalore, to raise them to international standards with shopping, hotels and telecommunications.
EDITOR’S CHOICE
Manager pushes India’s positive story - Jun-28
India reclaims top spot for retail potential - Jun-15
Lex: India - Jun-04
Reliance to test Indian market with IPO - May-24
Indian markets surge on Congress victory - May-18
Tata directors take environmental tour - Apr-19
Indian Railways carries 20m passengers a day and employs 1.4m people. Many stations in big cities are overcrowded and largely uncontrolled, with many passengers camped on the platforms and beside the tracks. Deaths are an everyday occurrence.
Ms Banerjee said the network would expand e-ticketing, introduce automated vending machines and issue SMS updates to travellers to confirm travel plans.
Indian Railways would accelerate the development of its fibre-optic cable network for commercial uses, enlisting the leadership of Sam Pitroda, one of the leading minds behind India’s information technology revolution over the past 20 years.
“Everyone knows that India is changing and changing rapidly. Indian Railways has been trying to keep pace with this change ... [Indians] want better connectivity, more employment opportunities,” Ms Banerjee said.
To modernise its customer service, Indian Railways has already launched a successful internet and telephone booking system, and is considering the introduction of Japanese-style high-speed bullet trains. The rail network of 63,000km of track is supported by a 24-hour call centre service, used by about half a million callers a day.
In spite of the improvements, trains and platforms pose a serious risk to travellers. Alongside the threat of collision and overcrowding, concerns over sanitation run high.
“The minister has mooted a number of projects that will carry the railways to the next technology level,” said Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry. He highlighted plans to develop retail at stations and equip passenger trains with entertainment services.
India’s rail network is one of the few mixed traffic systems, carrying both passengers and freight, in the world that generates a cash surplus. It ranks alongside rail systems in the US and Canada as a cash generator. The network was forecast to earn revenues this year of $18.4bn (€13.2bn, £11.3bn), up 10.6 per cent on last year, on expectations that travellers would shift to rail over air travel.
One leading Delhi-based industrialist said railway ministers had learnt to leave the running of the railways to the operators and to limit their political interference to pet coach-building projects in their constituencies. Ms Banerjee, the leader of the Congress party-aligned Trinamool Congress, is expected to concentrate on ousting the Communists from power in her home state of West Bengal over direct management of railways.
But others were less impressed. Akhileshwar Sahay, an executive at Feedback Ventures, an infrastructure company, was disappointed the budget made “no serious attempt” to adopt innovative financing measures to close the country’s infrastructure gap and encourage greater private sector participation.
“If India has to grow sustainably at 9 per cent, Indian Railways has to change its positioning from ‘Train to nowhere’ to ‘Train to somewhere’,” he said.
Copyright The Financial Times Limited 2009
Mamata Banerjee, new railways minister, who presented the budget to parliament on Friday, said the government and private partners would transform big terminuses, including Mumbai, Delhi, Calcutta and Bangalore, to raise them to international standards with shopping, hotels and telecommunications.
EDITOR’S CHOICE
Manager pushes India’s positive story - Jun-28
India reclaims top spot for retail potential - Jun-15
Lex: India - Jun-04
Reliance to test Indian market with IPO - May-24
Indian markets surge on Congress victory - May-18
Tata directors take environmental tour - Apr-19
Indian Railways carries 20m passengers a day and employs 1.4m people. Many stations in big cities are overcrowded and largely uncontrolled, with many passengers camped on the platforms and beside the tracks. Deaths are an everyday occurrence.
Ms Banerjee said the network would expand e-ticketing, introduce automated vending machines and issue SMS updates to travellers to confirm travel plans.
Indian Railways would accelerate the development of its fibre-optic cable network for commercial uses, enlisting the leadership of Sam Pitroda, one of the leading minds behind India’s information technology revolution over the past 20 years.
“Everyone knows that India is changing and changing rapidly. Indian Railways has been trying to keep pace with this change ... [Indians] want better connectivity, more employment opportunities,” Ms Banerjee said.
To modernise its customer service, Indian Railways has already launched a successful internet and telephone booking system, and is considering the introduction of Japanese-style high-speed bullet trains. The rail network of 63,000km of track is supported by a 24-hour call centre service, used by about half a million callers a day.
In spite of the improvements, trains and platforms pose a serious risk to travellers. Alongside the threat of collision and overcrowding, concerns over sanitation run high.
“The minister has mooted a number of projects that will carry the railways to the next technology level,” said Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry. He highlighted plans to develop retail at stations and equip passenger trains with entertainment services.
India’s rail network is one of the few mixed traffic systems, carrying both passengers and freight, in the world that generates a cash surplus. It ranks alongside rail systems in the US and Canada as a cash generator. The network was forecast to earn revenues this year of $18.4bn (€13.2bn, £11.3bn), up 10.6 per cent on last year, on expectations that travellers would shift to rail over air travel.
One leading Delhi-based industrialist said railway ministers had learnt to leave the running of the railways to the operators and to limit their political interference to pet coach-building projects in their constituencies. Ms Banerjee, the leader of the Congress party-aligned Trinamool Congress, is expected to concentrate on ousting the Communists from power in her home state of West Bengal over direct management of railways.
But others were less impressed. Akhileshwar Sahay, an executive at Feedback Ventures, an infrastructure company, was disappointed the budget made “no serious attempt” to adopt innovative financing measures to close the country’s infrastructure gap and encourage greater private sector participation.
“If India has to grow sustainably at 9 per cent, Indian Railways has to change its positioning from ‘Train to nowhere’ to ‘Train to somewhere’,” he said.
Copyright The Financial Times Limited 2009
Tax Bill Appeals Take Rising Toll on Governments
Homeowners across the country are challenging their property tax bills in droves as the value of their homes drop, threatening local governments with another big drain on their budgets.
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Librado Romero/The New York Times
Peggy Tombro listed her New Jersey house for less than the assessed value, but her taxes are rising.
The requests are coming in record numbers, from owners of $10 million estates and one-bedroom bungalows, from residents of the high-tax enclaves surrounding New York City, and from taxpayers in the Rust Belt and states like Arizona, Florida and California, where whole towns have been devastated by the housing bust.
“It’s worthy of a Dickens story,” said Gus Kramer, the assessor in Contra Costa County, Calif., outside San Francisco. “These people are desperate. They know their home’s gone down in value. They’ve watched their neighborhoods being boarded up. They literally stand in there and say: ‘When can I have my refund check? I need to feed my family. I need to pay my electric bill.’ ”
The tax appeals and reassessments present a new budget nightmare for governments. In a survey conducted by the National Association of Counties, 76 percent of large counties said that falling property tax revenue was significantly affecting their budgets, said Jacqueline Byers, the association’s research director.
Officials in some states say their property tax revenue is falling for the first time since World War II.
The recession has already taken a significant toll on states’ budgets, as rising joblessness, a weak business climate and a drop in consumer demand have cut sharply into receipts from taxes on sales, personal income and business earnings.
The pain at the state level is trickling down to county and local governments. To compensate, about 10 percent of large counties are raising the tax rates associated with home values to minimize the revenue loss, the county association said.
Even so, most counties simply have to absorb the lost revenue. Municipalities are laying off workers, renegotiating labor contracts, freezing salaries and cutting services.
The revenue losses are coming as homeowners prod towns for new assessments, and as municipalities conduct regular revaluations of their real estate. While declining residential values weigh heaviest on many governments, the value of commercial real estate is also sliding as businesses shut down and move out of storefronts or shopping malls.
Property taxes are meted out by a disparate patchwork of cities, towns, counties, and school and fire districts, all with their own rules. Because tax formulas vary widely county to county, not every decrease in assessed values automatically lowers a household’s property taxes.
But officials across the country say there is no question that the number of appeals has risen from the usual trickle to a flood.
In suburban Atlanta, thousands of people lined up at government offices to file their requests for reassessments before a March 31 deadline. In parts of Ohio, appeals have multiplied fivefold. Tax lawyers in the northern suburbs of New York say they have never been so busy, and some towns have hired extra employees to sift through the paperwork and are spending hundreds of thousands of dollars on legal fees to deal with the cases in tax courts.
The call for counties to acknowledge the falling price of homes is loudest in states where taxes are highest, or the housing crisis has hit the hardest.
“We’ve been absolutely getting killed,” said Robert W. Singer, the mayor of Lakewood Township, N.J., and a state senator, whose town is setting aside $2 million to pay tax refunds to homeowners. “We’ve never had this before. Usually they’re undervalued. Now, everyone’s overvalued.”
The appeals are not just coming from individual homeowners. Condominium associations and entire subdivisions are pushing for new tax assessments, as are companies that own office towers, industrial parks and shopping malls.
New Jersey, which has the nation’s highest property taxes, has been besieged by tax appeals from homeowners like Peggy Tombro, whose rambling home in Bound Brook is assessed at a value of $1.8 million but is languishing on the market with an asking price of $1.3 million. Her taxes are increasing to $53,000 a year.
“I don’t know what else to do,” said Ms. Tombro, 63, who has gone back to work selling antiques to pay her tax bill.
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Enlarge This Image
Librado Romero/The New York Times
Peggy Tombro listed her New Jersey house for less than the assessed value, but her taxes are rising.
The requests are coming in record numbers, from owners of $10 million estates and one-bedroom bungalows, from residents of the high-tax enclaves surrounding New York City, and from taxpayers in the Rust Belt and states like Arizona, Florida and California, where whole towns have been devastated by the housing bust.
“It’s worthy of a Dickens story,” said Gus Kramer, the assessor in Contra Costa County, Calif., outside San Francisco. “These people are desperate. They know their home’s gone down in value. They’ve watched their neighborhoods being boarded up. They literally stand in there and say: ‘When can I have my refund check? I need to feed my family. I need to pay my electric bill.’ ”
The tax appeals and reassessments present a new budget nightmare for governments. In a survey conducted by the National Association of Counties, 76 percent of large counties said that falling property tax revenue was significantly affecting their budgets, said Jacqueline Byers, the association’s research director.
Officials in some states say their property tax revenue is falling for the first time since World War II.
The recession has already taken a significant toll on states’ budgets, as rising joblessness, a weak business climate and a drop in consumer demand have cut sharply into receipts from taxes on sales, personal income and business earnings.
The pain at the state level is trickling down to county and local governments. To compensate, about 10 percent of large counties are raising the tax rates associated with home values to minimize the revenue loss, the county association said.
Even so, most counties simply have to absorb the lost revenue. Municipalities are laying off workers, renegotiating labor contracts, freezing salaries and cutting services.
The revenue losses are coming as homeowners prod towns for new assessments, and as municipalities conduct regular revaluations of their real estate. While declining residential values weigh heaviest on many governments, the value of commercial real estate is also sliding as businesses shut down and move out of storefronts or shopping malls.
Property taxes are meted out by a disparate patchwork of cities, towns, counties, and school and fire districts, all with their own rules. Because tax formulas vary widely county to county, not every decrease in assessed values automatically lowers a household’s property taxes.
But officials across the country say there is no question that the number of appeals has risen from the usual trickle to a flood.
In suburban Atlanta, thousands of people lined up at government offices to file their requests for reassessments before a March 31 deadline. In parts of Ohio, appeals have multiplied fivefold. Tax lawyers in the northern suburbs of New York say they have never been so busy, and some towns have hired extra employees to sift through the paperwork and are spending hundreds of thousands of dollars on legal fees to deal with the cases in tax courts.
The call for counties to acknowledge the falling price of homes is loudest in states where taxes are highest, or the housing crisis has hit the hardest.
“We’ve been absolutely getting killed,” said Robert W. Singer, the mayor of Lakewood Township, N.J., and a state senator, whose town is setting aside $2 million to pay tax refunds to homeowners. “We’ve never had this before. Usually they’re undervalued. Now, everyone’s overvalued.”
The appeals are not just coming from individual homeowners. Condominium associations and entire subdivisions are pushing for new tax assessments, as are companies that own office towers, industrial parks and shopping malls.
New Jersey, which has the nation’s highest property taxes, has been besieged by tax appeals from homeowners like Peggy Tombro, whose rambling home in Bound Brook is assessed at a value of $1.8 million but is languishing on the market with an asking price of $1.3 million. Her taxes are increasing to $53,000 a year.
“I don’t know what else to do,” said Ms. Tombro, 63, who has gone back to work selling antiques to pay her tax bill.
Friday, July 3, 2009
India Joins Russia, China in Questioning U.S. Dollar Dominance
July 4 (Bloomberg) -- Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said he is urging the government to diversify its $264.6 billion foreign-exchange reserves and hold fewer dollars.
“The major part of Indian reserves are in dollars -- that is something that’s a problem for us,” Tendulkar, chairman of the Prime Minister’s Economic Advisory Council, said in an interview yesterday in Aix-en-Provence, France, where he was attending an economic conference.
Singh is preparing to join leaders from the Group of Eight industrialized nations -- the U.S., Japan, Germany, Britain, France, Italy, Canada and Russia -- at a summit in Italy next week which is due to tackle the global economy. China and Brazil will also send representative to the summit.
As the talks have neared, China and Russia have stepped up calls for a rethink of how global currency reserves are composed and managed, underlining a power shift to emerging markets from the developed nations that spawned the financial crisis.
“There should be a system to maintain the stability of the major reserve currencies,” Former Chinese Vice Premier Zeng Peiyan said in a speech in Beijing yesterday, highlighting China’s concerns about a global financial system dominated by the dollar.
Fiscal and current-account deficits must be supervised as “your currency is likely to become my problem,” said Zeng, who is now the head of a research center under the government’s top economic planning agency. The People’s Bank of China said June 26 that the International Monetary Fund should manage more of members’ reserves.
Russian Proposals
Russian President Dmitry Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the dollar’s future as a global reserve currency. Russia’s proposals for the Group of 20 major developed and developing nations summit in London in April included the creation of a supranational currency.
“We will resume” talks on the supranational currency proposal at the G-8 summit in L’Aquila on July 8-10, Medvedev aide Sergei Prikhodko told reporters in Moscow yesterday.
Singh adviser Tendulkar said that big dollar holders face a “prisoner’s dilemma” in terms of managing their holdings. “That’s why I’m telling them to do this,” he said.
He also said that world currencies need to adjust to help unwind trade imbalances that have contributed to the global financial crisis.
“The major imbalances which led to the current situation, the current account surpluses and deficits, have to be addressed,” he said. “Currency adjustment is one thing that suggests itself.”
Emerging-Market Dependence
For all the complaints about the dollar, emerging markets such as India remain dependent on the currency of the U.S., the world’s largest economy and a $2.5 trillion export market. The IMF said June 30 that the share of dollars in global foreign- exchange reserves increased to 65 percent in the first three months of this year, the highest since 2007.
Tendulkar said that the matter needs to be taken up in international talks, and that it emphasizes the need for those talks to go beyond the traditional G-8.
“They can meet if they want to,” he said. “The G-20 has a wider role, has representation of the countries that are likely to lead the recovery process.”
“The major part of Indian reserves are in dollars -- that is something that’s a problem for us,” Tendulkar, chairman of the Prime Minister’s Economic Advisory Council, said in an interview yesterday in Aix-en-Provence, France, where he was attending an economic conference.
Singh is preparing to join leaders from the Group of Eight industrialized nations -- the U.S., Japan, Germany, Britain, France, Italy, Canada and Russia -- at a summit in Italy next week which is due to tackle the global economy. China and Brazil will also send representative to the summit.
As the talks have neared, China and Russia have stepped up calls for a rethink of how global currency reserves are composed and managed, underlining a power shift to emerging markets from the developed nations that spawned the financial crisis.
“There should be a system to maintain the stability of the major reserve currencies,” Former Chinese Vice Premier Zeng Peiyan said in a speech in Beijing yesterday, highlighting China’s concerns about a global financial system dominated by the dollar.
Fiscal and current-account deficits must be supervised as “your currency is likely to become my problem,” said Zeng, who is now the head of a research center under the government’s top economic planning agency. The People’s Bank of China said June 26 that the International Monetary Fund should manage more of members’ reserves.
Russian Proposals
Russian President Dmitry Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the dollar’s future as a global reserve currency. Russia’s proposals for the Group of 20 major developed and developing nations summit in London in April included the creation of a supranational currency.
“We will resume” talks on the supranational currency proposal at the G-8 summit in L’Aquila on July 8-10, Medvedev aide Sergei Prikhodko told reporters in Moscow yesterday.
Singh adviser Tendulkar said that big dollar holders face a “prisoner’s dilemma” in terms of managing their holdings. “That’s why I’m telling them to do this,” he said.
He also said that world currencies need to adjust to help unwind trade imbalances that have contributed to the global financial crisis.
“The major imbalances which led to the current situation, the current account surpluses and deficits, have to be addressed,” he said. “Currency adjustment is one thing that suggests itself.”
Emerging-Market Dependence
For all the complaints about the dollar, emerging markets such as India remain dependent on the currency of the U.S., the world’s largest economy and a $2.5 trillion export market. The IMF said June 30 that the share of dollars in global foreign- exchange reserves increased to 65 percent in the first three months of this year, the highest since 2007.
Tendulkar said that the matter needs to be taken up in international talks, and that it emphasizes the need for those talks to go beyond the traditional G-8.
“They can meet if they want to,” he said. “The G-20 has a wider role, has representation of the countries that are likely to lead the recovery process.”
Asian Stocks Post Weekly Loss on Jobless Figures, Commodities
July 4 (Bloomberg) -- Asian stocks fell this week, the second weekly decline in three, as government data showed job markets are worsening, stoking concern the global economy will recover soon.
Mazda Motor Corp., a Japanese carmaker that exports most of its production, declined 2.8 percent on the week as jobless rates increased in Japan, the U.S. and Europe. Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., dropped 5.4 percent. Indian truckmaker Tata Motors Ltd. plunged 12 percent and Seven & I Holdings Inc. fell 2.7 percent as both reported profit declines. BHP Billiton Ltd., the world’s No. 1 mining company, lost 2.2 percent as oil and copper prices declined.
The MSCI Asia Pacific Index lost 0.8 percent in the past five days, retreating from last weeks 2.2 percent climb. That pared the measure’s record 28 percent in the three months ended June 30 on optimism the global economy is stabilizing.
“We are running out of data points that can boost sentiment, so there’s not much hope for further gains,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co. in Tokyo, which oversees about $5.5 billion. “Stocks are not at reasonable levels when you consider the facts.”
The Asian stock benchmark, which plunged by a record last year as the global economy slipped into recession, has now climbed 47 percent since reaching a more than five-year low on March 9. Stocks on the gauge now trade at 23.5 times estimated earnings, compared with 15 times at the market trough in March and 15.2 for the U.S.’s Standard & Poor’s 500 Index.
Tankan Disappoints
The Bank of Japan’s Tankan survey of manufacturer sentiment rebounded less than estimated, the central bank said on July 1, while government data showed Japan’s unemployment rate reached a five-year high in May. Australia’s exports dropped to a 14-month low, while building approvals declined by the most since 2002, its government said this week.
The Labor Department said yesterday U.S. employers cut 467,000 jobs in June, over 100,000 more than economists had forecast. That pushed the nation’s unemployment rate to 9.5 percent, a level not seen since August 1983. Europe’s unemployment rate also increased to 9.5 percent in May, the highest level since 1999.
Mazda lost 2.8 percent to 242 yen, the lowest since May 22. Sony Corp., maker of the PlayStation 3 game machine, lost 2.4 percent to 2,440 yen, a level not seen since April 3. Li & Fung lost 5.4 percent to HK$20.85 in Hong Kong.
Tata Motors, which owns the Jaguar and Land Rover car brands, plunged 12 percent to 298.5 rupees. The company posted its first annual loss in at least seven years on plunging sales at luxury units amid the global recession.
Lower Commodities
Seven & I plunged 2.7 percent to 2,190 yen. Japan’s biggest retailer said profit dropped 28 percent in the three months ended May 31 as worsening household income and job markets prompted consumers to save money, the company said.
Copper fell on the week on concern a weakening U.S. labor market will damage a recovery in demand for industrial metals. Crude oil declined for a third-straight week.
BHP lost 2.2 percent to A$33.43 in Sydney. Rio Tinto Group, the world’s third-biggest mining company lost 2.8 percent to A$49.60. Inpex Corp., Japan’s biggest petroleum explorer, sank 2.5 percent to 735,000 yen in Tokyo.
Aozora Bank Ltd. and Shinsei Bank Ltd. said this week they are merging to form Japan’s sixth-largest bank with assets of 18 trillion yen ($186 billion) after booking $4 billion in combined losses last year on overseas investments and bad loans.
Their concentration on real estate lending and a shortage of deposits may “become even more serious” after the tie-up, hampering profitability, Credit Suisse Group AG said in a report.
Shinsei tumbled 7 percent to 146 yen on the week, while Aozora lost 6.7 percent to 139 yen.
China Gains
China’s stocks rose, driving the Shanghai Composite Index to a third weekly gain. A government survey showed manufacturing expanded for a fourth month in June, while a report in the China Securities Journal said the nation’s electricity output rose in June, its first monthly advance since October.
China Shenhua Energy Co., the country’s largest coal producer, soared 21 percent to 33.45 yuan in Shanghai. China Coal Energy Co., the second biggest, surged 11 percent to 13.26
Bawang International (Group) Holding Ltd., a herbal shampoo maker that debuted in Hong Kong trading on July 3, jumped 27 percent to HK$3.03. China Qinfa Group Ltd., a coal trader that also had its initial public offering, advanced 6.4 percent to HK$2.68.
“In general there is huge enthusiasm about new IPOs,” Pu Yonghao, chief Asian investment strategist at UBS Wealth Management, told Bloomberg Television. “China has to rely on consumption rather than exports so consumer stocks attract lots of enthusiasm.”
Mazda Motor Corp., a Japanese carmaker that exports most of its production, declined 2.8 percent on the week as jobless rates increased in Japan, the U.S. and Europe. Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., dropped 5.4 percent. Indian truckmaker Tata Motors Ltd. plunged 12 percent and Seven & I Holdings Inc. fell 2.7 percent as both reported profit declines. BHP Billiton Ltd., the world’s No. 1 mining company, lost 2.2 percent as oil and copper prices declined.
The MSCI Asia Pacific Index lost 0.8 percent in the past five days, retreating from last weeks 2.2 percent climb. That pared the measure’s record 28 percent in the three months ended June 30 on optimism the global economy is stabilizing.
“We are running out of data points that can boost sentiment, so there’s not much hope for further gains,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co. in Tokyo, which oversees about $5.5 billion. “Stocks are not at reasonable levels when you consider the facts.”
The Asian stock benchmark, which plunged by a record last year as the global economy slipped into recession, has now climbed 47 percent since reaching a more than five-year low on March 9. Stocks on the gauge now trade at 23.5 times estimated earnings, compared with 15 times at the market trough in March and 15.2 for the U.S.’s Standard & Poor’s 500 Index.
Tankan Disappoints
The Bank of Japan’s Tankan survey of manufacturer sentiment rebounded less than estimated, the central bank said on July 1, while government data showed Japan’s unemployment rate reached a five-year high in May. Australia’s exports dropped to a 14-month low, while building approvals declined by the most since 2002, its government said this week.
The Labor Department said yesterday U.S. employers cut 467,000 jobs in June, over 100,000 more than economists had forecast. That pushed the nation’s unemployment rate to 9.5 percent, a level not seen since August 1983. Europe’s unemployment rate also increased to 9.5 percent in May, the highest level since 1999.
Mazda lost 2.8 percent to 242 yen, the lowest since May 22. Sony Corp., maker of the PlayStation 3 game machine, lost 2.4 percent to 2,440 yen, a level not seen since April 3. Li & Fung lost 5.4 percent to HK$20.85 in Hong Kong.
Tata Motors, which owns the Jaguar and Land Rover car brands, plunged 12 percent to 298.5 rupees. The company posted its first annual loss in at least seven years on plunging sales at luxury units amid the global recession.
Lower Commodities
Seven & I plunged 2.7 percent to 2,190 yen. Japan’s biggest retailer said profit dropped 28 percent in the three months ended May 31 as worsening household income and job markets prompted consumers to save money, the company said.
Copper fell on the week on concern a weakening U.S. labor market will damage a recovery in demand for industrial metals. Crude oil declined for a third-straight week.
BHP lost 2.2 percent to A$33.43 in Sydney. Rio Tinto Group, the world’s third-biggest mining company lost 2.8 percent to A$49.60. Inpex Corp., Japan’s biggest petroleum explorer, sank 2.5 percent to 735,000 yen in Tokyo.
Aozora Bank Ltd. and Shinsei Bank Ltd. said this week they are merging to form Japan’s sixth-largest bank with assets of 18 trillion yen ($186 billion) after booking $4 billion in combined losses last year on overseas investments and bad loans.
Their concentration on real estate lending and a shortage of deposits may “become even more serious” after the tie-up, hampering profitability, Credit Suisse Group AG said in a report.
Shinsei tumbled 7 percent to 146 yen on the week, while Aozora lost 6.7 percent to 139 yen.
China Gains
China’s stocks rose, driving the Shanghai Composite Index to a third weekly gain. A government survey showed manufacturing expanded for a fourth month in June, while a report in the China Securities Journal said the nation’s electricity output rose in June, its first monthly advance since October.
China Shenhua Energy Co., the country’s largest coal producer, soared 21 percent to 33.45 yuan in Shanghai. China Coal Energy Co., the second biggest, surged 11 percent to 13.26
Bawang International (Group) Holding Ltd., a herbal shampoo maker that debuted in Hong Kong trading on July 3, jumped 27 percent to HK$3.03. China Qinfa Group Ltd., a coal trader that also had its initial public offering, advanced 6.4 percent to HK$2.68.
“In general there is huge enthusiasm about new IPOs,” Pu Yonghao, chief Asian investment strategist at UBS Wealth Management, told Bloomberg Television. “China has to rely on consumption rather than exports so consumer stocks attract lots of enthusiasm.”
Japanese Bonds Complete Third Weekly Advance as Stocks Decline
July 4 (Bloomberg) -- Japanese bonds rose for a third week as Asian stocks extended a slide in global shares after the world’s biggest economy lost more jobs last month than economists forecast, spurring demand for government debt.
Benchmark 10-year yields dropped to the lowest level since March as reports this week also showed unemployment in the U.S. and Europe increased, fueling speculation the global slump will be prolonged. Bonds posted the longest stretch of weekly gains in two months on speculation the Bank of Japan will keep interest rates near zero to help counter the deepest recession in half a century.
“The U.S. jobs report meant that we shouldn’t be complacent about the prospects of the global economy,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Co., a unit of France’s third-largest bank. “Stock prices, which were overvalued, now need to undergo a correction, and bonds may see some support in this process.”
The yield on the 10-year bond sold on July 2 fell 7.5 basis points this week to 1.32 percent, the lowest for a benchmark since March 30, in Tokyo, according to Japan Bond Trading Co.
Ten-year bond futures for September delivery rose 0.78 to 138.44 yen at the Tokyo Stock Exchange.
The Nikkei 225 Stock Average declined 0.6 percent yesterday, a third day of losses.
Job Cuts
U.S. employers cut 467,000 jobs last month, after trimming a revised 322,000 positions in May, the U.S. Labor Department said on July 2. Payrolls were forecast to drop by 365,000, according to a Bloomberg News survey of economists. The unemployment rate increased to 9.5 percent, the highest since August 1983.
“The U.S. jobs report suggested the recovery momentum will remain weak,” said Yasunari Ueno, chief market economist in Tokyo at Mizuho Securities Co., a unit of Japan’s second-largest publicly traded lender by assets. “Japan’s 10-year bond yield will decline toward 1 percent.”
Shorter-maturity notes also advanced as signs the global recovery is stalling fueled speculation the Bank of Japan will keep its benchmark rate at 0.1 percent to spur growth.
“As the view is now rife that the policy rate will be left unchanged for the next year or so, bills and shorter-dated notes are likely to continue to draw decent demand,” said Katsutoshi Inadome, a fixed-income strategist in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan’s largest lender.
The yield on the two-year note has declined 6.5 basis points this week to 0.255 percent.
Debt Sales
Gains in bonds were limited by speculation primary dealers will cut holdings before the Ministry of Finance sells 300 billion yen ($3.12 billion) in 40-year debt on July 7.
“As the budget deficit is swelling, investors will eventually start demanding a higher premium to hold government debt,” said Kazuto Uchida, chief economist in Tokyo at Bank of Tokyo Mitsubishi UFJ Ltd., a unit of Japan’s largest lender by market value.
Japan’s total revenue in the year ended March 31 was 718 billion yen less than its expenditure, the first shortfall in seven years, the Finance Ministry said in Tokyo on July 1.
Japan’s public debt, the world’s largest, will balloon to 197 percent of gross domestic product in 2010, according to the Organization for Economic Cooperation and Development.
Primary dealers, which are required to bid at government debt sales, often reduce holdings of bonds before an auction in case prices decline before they can pass on the new securities to investors.
Ten-year bonds completed their second consecutive quarter of losses in the three months ended in June, the longest slide since the six months ended June 2006 as the Ministry of Finance boosted the size of its auctions as part of a plan to increase total debt sales by 15 percent this fiscal year.
Benchmark 10-year yields dropped to the lowest level since March as reports this week also showed unemployment in the U.S. and Europe increased, fueling speculation the global slump will be prolonged. Bonds posted the longest stretch of weekly gains in two months on speculation the Bank of Japan will keep interest rates near zero to help counter the deepest recession in half a century.
“The U.S. jobs report meant that we shouldn’t be complacent about the prospects of the global economy,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Co., a unit of France’s third-largest bank. “Stock prices, which were overvalued, now need to undergo a correction, and bonds may see some support in this process.”
The yield on the 10-year bond sold on July 2 fell 7.5 basis points this week to 1.32 percent, the lowest for a benchmark since March 30, in Tokyo, according to Japan Bond Trading Co.
Ten-year bond futures for September delivery rose 0.78 to 138.44 yen at the Tokyo Stock Exchange.
The Nikkei 225 Stock Average declined 0.6 percent yesterday, a third day of losses.
Job Cuts
U.S. employers cut 467,000 jobs last month, after trimming a revised 322,000 positions in May, the U.S. Labor Department said on July 2. Payrolls were forecast to drop by 365,000, according to a Bloomberg News survey of economists. The unemployment rate increased to 9.5 percent, the highest since August 1983.
“The U.S. jobs report suggested the recovery momentum will remain weak,” said Yasunari Ueno, chief market economist in Tokyo at Mizuho Securities Co., a unit of Japan’s second-largest publicly traded lender by assets. “Japan’s 10-year bond yield will decline toward 1 percent.”
Shorter-maturity notes also advanced as signs the global recovery is stalling fueled speculation the Bank of Japan will keep its benchmark rate at 0.1 percent to spur growth.
“As the view is now rife that the policy rate will be left unchanged for the next year or so, bills and shorter-dated notes are likely to continue to draw decent demand,” said Katsutoshi Inadome, a fixed-income strategist in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan’s largest lender.
The yield on the two-year note has declined 6.5 basis points this week to 0.255 percent.
Debt Sales
Gains in bonds were limited by speculation primary dealers will cut holdings before the Ministry of Finance sells 300 billion yen ($3.12 billion) in 40-year debt on July 7.
“As the budget deficit is swelling, investors will eventually start demanding a higher premium to hold government debt,” said Kazuto Uchida, chief economist in Tokyo at Bank of Tokyo Mitsubishi UFJ Ltd., a unit of Japan’s largest lender by market value.
Japan’s total revenue in the year ended March 31 was 718 billion yen less than its expenditure, the first shortfall in seven years, the Finance Ministry said in Tokyo on July 1.
Japan’s public debt, the world’s largest, will balloon to 197 percent of gross domestic product in 2010, according to the Organization for Economic Cooperation and Development.
Primary dealers, which are required to bid at government debt sales, often reduce holdings of bonds before an auction in case prices decline before they can pass on the new securities to investors.
Ten-year bonds completed their second consecutive quarter of losses in the three months ended in June, the longest slide since the six months ended June 2006 as the Ministry of Finance boosted the size of its auctions as part of a plan to increase total debt sales by 15 percent this fiscal year.
Thursday, July 2, 2009
Australia Faces the ‘Full Brunt’ of Global Recession
July 3 (Bloomberg) -- Australia’s economy, which has so far skirted the global recession, may stall after reports showed exports dropped to a 14-month low, bank lending fell and home- building approvals declined by the most since 2002.
Australia was one of few major economies including China and India to grow in the first quarter as government cash handouts and record interest-rate cuts stoked consumer spending. Gross domestic product expanded 0.4 percent from the previous three months, in contrast to a 3.8 percent decline in Japan and a 1.4 percent contraction in the U.S.
This week’s reports suggest the global recession is biting as stimulus efforts fade, which may prompt the central bank to cut interest rates. Reserve Bank Governor Glenn Stevens said last month that slower growth and inflation give him scope to reduce borrowing costs if it helps secure “a durable upswing.”
“The full brunt of the deepest and most synchronized post- war global recession has yet to fully bear down on Australia,” said Su-Lin Ong, Sydney-based senior economist at RBC Capital Markets. “Export income, the terms of trade and business investment are all set to move substantially lower in 2009.”
The benchmark S&P/ASX 200 stock index dropped 1.8 percent to 3,806.5 at 10:11 a.m. in Sydney. Australia’s dollar slipped 0.2 percent to 79.26 U.S. cents, headed for its biggest weekly decline against its U.S. counterpart in seven weeks.
Economy Flatlines
The local currency fell 1.8 percent yesterday after a government report showed exports slumped 5 percent in May from April, widening the trade deficit to A$556 million ($448 million). Economists surveyed by Bloomberg expected a A$125 million shortfall.
Imports of capital goods, which include trucks and machinery, tumbled 14 percent, a sign businesses are cutting capital spending, yesterday’s report showed.
“As Australia’s GDP flatlines and unemployment climbs, the central bank may have to cut interest rates,” said Annette Beacher, senior strategist at TD Securities Ltd. in Singapore.
All 20 economists surveyed by Bloomberg News prior to this week’s economic reports forecast Stevens would leave the overnight cash rate target unchanged at 3 percent on July 7. The central bank reduced the benchmark by 4.25 percentage points between September and April to a 49-year low.
Lower prices for coal and iron ore have damped a mining boom that has driven Australia’s 17 years of economic expansion. BHP Billiton Ltd., the world’s biggest mining company, and Rio Tinto Group have cut output, fired workers and reduced capital expenditure in response to the slowdown in world demand.
‘Reality Check’
“The numbers this week provide a reality check for markets that continue to price in interest-rate hikes in early 2010,” RBC Capital Market’s Ong said.
Traders expect Australia’s overnight cash rate target will be 42 basis points higher in 12 months, a Credit Suisse Group AG index based on interest-rate swaps showed at 10:15 p.m. in Sydney. Earlier this week, the index was pricing in 63 basis points in rate increases in a year.
Further signs of weakness in the economy include a July 1 report that showed approvals to build or renovate houses and apartments fell 12.5 percent in May from April, the biggest drop since November 2002. The decline was led by apartments, which tumbled 43.6 percent.
Lending by Australian financial institutions slipped 0.1 percent in May, led by a 0.7 percent decline in borrowing by companies, the central bank said this week. Sales of newly built homes slumped 5.7 percent from April, the first drop this year, the Housing Industry Association reported on June 30.
Spending Rises
Still, there was evidence this week of strength in a key area of the Australian economy. Retail sales increased 1 percent in May, twice as much as economists estimated, buoyed by spending at department stores and restaurants. The services industry expanded for the first time in 15 months in June, according to an index today from Commonwealth Bank of Australia and the Australian Industry Group.
Consumer spending rose 0.6 percent in the first quarter, accounting for three-quarters of the Australian economy’s growth in the period.
The S&P/ASX 200 stock index climbed 10 percent in the three months ended June 30, the first increase in seven quarters, on optimism of a recovery. Retailers David Jones Ltd. and JB Hi-Fi Ltd. have both raised their profit forecasts in recent weeks because of a pickup in sales.
The government has distributed A$12 billion in cash handouts to households this year. Adding to stimulus measures, Treasurer Wayne Swan allocated A$22 billion in his May budget to upgrade roads, railways, ports and hospitals over four years.
“Arguably there is still some pain ahead, but clearly Australia has been faring much better than other developed economies,” Rod Pearse, chief executive officer of Sydney-based Boral Ltd., Australia’s largest seller of building materials, said in a speech last week. The government’s “significant” stimulus will provide support to the building industry, he added.
Australia was one of few major economies including China and India to grow in the first quarter as government cash handouts and record interest-rate cuts stoked consumer spending. Gross domestic product expanded 0.4 percent from the previous three months, in contrast to a 3.8 percent decline in Japan and a 1.4 percent contraction in the U.S.
This week’s reports suggest the global recession is biting as stimulus efforts fade, which may prompt the central bank to cut interest rates. Reserve Bank Governor Glenn Stevens said last month that slower growth and inflation give him scope to reduce borrowing costs if it helps secure “a durable upswing.”
“The full brunt of the deepest and most synchronized post- war global recession has yet to fully bear down on Australia,” said Su-Lin Ong, Sydney-based senior economist at RBC Capital Markets. “Export income, the terms of trade and business investment are all set to move substantially lower in 2009.”
The benchmark S&P/ASX 200 stock index dropped 1.8 percent to 3,806.5 at 10:11 a.m. in Sydney. Australia’s dollar slipped 0.2 percent to 79.26 U.S. cents, headed for its biggest weekly decline against its U.S. counterpart in seven weeks.
Economy Flatlines
The local currency fell 1.8 percent yesterday after a government report showed exports slumped 5 percent in May from April, widening the trade deficit to A$556 million ($448 million). Economists surveyed by Bloomberg expected a A$125 million shortfall.
Imports of capital goods, which include trucks and machinery, tumbled 14 percent, a sign businesses are cutting capital spending, yesterday’s report showed.
“As Australia’s GDP flatlines and unemployment climbs, the central bank may have to cut interest rates,” said Annette Beacher, senior strategist at TD Securities Ltd. in Singapore.
All 20 economists surveyed by Bloomberg News prior to this week’s economic reports forecast Stevens would leave the overnight cash rate target unchanged at 3 percent on July 7. The central bank reduced the benchmark by 4.25 percentage points between September and April to a 49-year low.
Lower prices for coal and iron ore have damped a mining boom that has driven Australia’s 17 years of economic expansion. BHP Billiton Ltd., the world’s biggest mining company, and Rio Tinto Group have cut output, fired workers and reduced capital expenditure in response to the slowdown in world demand.
‘Reality Check’
“The numbers this week provide a reality check for markets that continue to price in interest-rate hikes in early 2010,” RBC Capital Market’s Ong said.
Traders expect Australia’s overnight cash rate target will be 42 basis points higher in 12 months, a Credit Suisse Group AG index based on interest-rate swaps showed at 10:15 p.m. in Sydney. Earlier this week, the index was pricing in 63 basis points in rate increases in a year.
Further signs of weakness in the economy include a July 1 report that showed approvals to build or renovate houses and apartments fell 12.5 percent in May from April, the biggest drop since November 2002. The decline was led by apartments, which tumbled 43.6 percent.
Lending by Australian financial institutions slipped 0.1 percent in May, led by a 0.7 percent decline in borrowing by companies, the central bank said this week. Sales of newly built homes slumped 5.7 percent from April, the first drop this year, the Housing Industry Association reported on June 30.
Spending Rises
Still, there was evidence this week of strength in a key area of the Australian economy. Retail sales increased 1 percent in May, twice as much as economists estimated, buoyed by spending at department stores and restaurants. The services industry expanded for the first time in 15 months in June, according to an index today from Commonwealth Bank of Australia and the Australian Industry Group.
Consumer spending rose 0.6 percent in the first quarter, accounting for three-quarters of the Australian economy’s growth in the period.
The S&P/ASX 200 stock index climbed 10 percent in the three months ended June 30, the first increase in seven quarters, on optimism of a recovery. Retailers David Jones Ltd. and JB Hi-Fi Ltd. have both raised their profit forecasts in recent weeks because of a pickup in sales.
The government has distributed A$12 billion in cash handouts to households this year. Adding to stimulus measures, Treasurer Wayne Swan allocated A$22 billion in his May budget to upgrade roads, railways, ports and hospitals over four years.
“Arguably there is still some pain ahead, but clearly Australia has been faring much better than other developed economies,” Rod Pearse, chief executive officer of Sydney-based Boral Ltd., Australia’s largest seller of building materials, said in a speech last week. The government’s “significant” stimulus will provide support to the building industry, he added.
Asian Stocks Slump on U.S., Europe Unemployment, 7-11 Earnings
July 3 (Bloomberg) -- Asian stocks fell for a third day as a drop in profit at Seven & I Holdings Co., Japan’s largest retailer, and worsening job markets in the U.S. and Europe fanned doubts the global economy will recover soon.
Seven & I tumbled 6.3 percent after saying profit dropped 28 percent last quarter. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 bulk shipper, sank 3.4 percent amid speculation global trade will suffer after unemployment reached 9.5 percent in both the U.S. and Europe. BHP Billiton Ltd., the world’s biggest mining company, declined 2.7 percent as oil and metals dropped.
“People expected a drastic improvement in the U.S. job market, which turned out to be too optimistic,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages about $13 billion. “Household spending won’t recover anytime soon. Consumers are flocking to discounted products and that may damage the economy through deflation.”
The MSCI Asia Pacific Index lost 0.8 percent to 102.12 as of 11:26 a.m. in Tokyo. The gauge has slipped 1.5 percent this week, the second time in three weeks it has retreated.
Japan’s Nikkei 225 Stock Average fell 1 percent to 9,774.83. Benchmarks throughout the region fell, led by a 1.5 percent slump by Vietnam’s Ho Chi Minh Stock Index.
The MSCI Asia soared a record 28 percent in the three months ended June 30 on optimism the global economy is stabilizing. The surge has driven the price of stocks on the measure to 23.4 times estimated earnings, compared with 15 times at the market trough in March and 15.2 for the U.S.’s Standard & Poor’s 500 Index.
Job Cuts
Sundance Resources Ltd. led declines on Australia’s S&P/ASX 200 Index after the ore-exploration company said its chairman was stepping down. Orix Corp., Japan’s biggest non-bank lender, surged 6 percent even after saying it would sell 100 billion yen ($1 billion) in new shares.
In New York, the S&P 500 slumped 2.9 percent after the Labor Department said U.S. employers cut 467,000 jobs in June, over 100,000 more than economists had forecast. That pushed the nation’s unemployment rate to 9.5 percent, a level not seen since August 1983. Futures on the S&P 500 lost 0.1 percent today.
“The U.S. unemployment data confirms that the economy remains very fragile at the moment,” said Jason Teh, who helps manage more than $2.5 billion at Investors Mutual Ltd. in Sydney. “The sustainability of the share market recovery has to be confirmed by further improving economic fundamentals.”
Europe’s unemployment rate also increased to 9.5 percent in May, the highest level since 1999. Jean-Claude Trichet, the European Central Bank governor, said the bank will maintain interest rates at 1 percent for coming months.
‘State of Crisis’
Seven & I plunged 6.3 percent to 2,160 yen. The retailer said yesterday profit dropped 28 percent in the three months ended May 31. Worsening household income and job markets prompted consumers to save money, the company said.
Rival retailer Aeon Co. declined 3.7 percent to 901 yen. Isetan Mitsukoshi Holdings Ltd., Japan’s largest department- store operator, slumped 4.9 percent to 950 yen. The company said on July 1 sales fell 10.3 percent in June.
Yoshimasa Hayashi, who was appointed as Japan’s Economy and Fiscal Policy Minister on July 1, said yesterday the nation may slip back into deflation and that the economy is “in a state of crisis.”
Today marks the first three-day slump in MSCI’s Asian gauge since April 28 as economic reports this week pointed to stalled recovery in the region. The Bank of Japan’s Tankan survey of manufacturer sentiment rebounded less than estimated in June, while government data showed Japan’s unemployment rate reached a five-year high in May. Australia’s exports dropped to a 14-month low, while building approvals declined by the most since 2002.
Oil, Metals, Shipping
The job reports raised concern demand for materials will wane. Crude oil tumbled 3.7 percent to $66.73 a barrel in New York, the lowest settlement since June 3, and extended its decline today. A gauge of six metals in London dropped 1.2 percent. The Baltic Dry Index, a measure of shipping costs for commodities, lost 1.8 percent to a three-week low.
Mitsui O.S.K. slumped 3.4 percent to 590 yen. BHP lost 2.7 percent to A$33.37. Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, dropped 3.3 percent to A$3.55.
Chinatrust Financial Holding Co., Taiwan’s biggest credit- card issuer, surged 4.1 percent to NT$21.50, after the China Times reported China may open its credit card market to Taiwanese banks, citing Liu Mingkang, Chairman of the China Banking Regulatory Commission.
Electricity Output
Huaneng Power International Inc., the listed unit of China’s largest power group, rose 0.5 percent to 7.85 yuan. The nation’s electricity output gained 3.6 percent in June, the first monthly increase since October, the China Securities Journal reported today, citing China State Grid Corp.
Sundance Resources, which is seeking to build a $3.3 billion iron ore project in Camaroon, plunged 6.3 percent to 15 Australian cents. Chairman George Jones will retire on Aug. 31 and be replaced by non-executive director Geoff Wedlock, the company said.
Orix jumped 6 percent to 5,820 yen in Tokyo. The company will sell 18 million new shares in two sales, using the proceeds to repay debt and the rest for investment and loans, the company said yesterday.
“Orix’s financial position is very healthy,” said Shiro Yoshioka, an analyst at Japaninvest KK in Tokyo. “Orix is probably preparing to expand its business, which could boost profit.”
Seven & I tumbled 6.3 percent after saying profit dropped 28 percent last quarter. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 bulk shipper, sank 3.4 percent amid speculation global trade will suffer after unemployment reached 9.5 percent in both the U.S. and Europe. BHP Billiton Ltd., the world’s biggest mining company, declined 2.7 percent as oil and metals dropped.
“People expected a drastic improvement in the U.S. job market, which turned out to be too optimistic,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages about $13 billion. “Household spending won’t recover anytime soon. Consumers are flocking to discounted products and that may damage the economy through deflation.”
The MSCI Asia Pacific Index lost 0.8 percent to 102.12 as of 11:26 a.m. in Tokyo. The gauge has slipped 1.5 percent this week, the second time in three weeks it has retreated.
Japan’s Nikkei 225 Stock Average fell 1 percent to 9,774.83. Benchmarks throughout the region fell, led by a 1.5 percent slump by Vietnam’s Ho Chi Minh Stock Index.
The MSCI Asia soared a record 28 percent in the three months ended June 30 on optimism the global economy is stabilizing. The surge has driven the price of stocks on the measure to 23.4 times estimated earnings, compared with 15 times at the market trough in March and 15.2 for the U.S.’s Standard & Poor’s 500 Index.
Job Cuts
Sundance Resources Ltd. led declines on Australia’s S&P/ASX 200 Index after the ore-exploration company said its chairman was stepping down. Orix Corp., Japan’s biggest non-bank lender, surged 6 percent even after saying it would sell 100 billion yen ($1 billion) in new shares.
In New York, the S&P 500 slumped 2.9 percent after the Labor Department said U.S. employers cut 467,000 jobs in June, over 100,000 more than economists had forecast. That pushed the nation’s unemployment rate to 9.5 percent, a level not seen since August 1983. Futures on the S&P 500 lost 0.1 percent today.
“The U.S. unemployment data confirms that the economy remains very fragile at the moment,” said Jason Teh, who helps manage more than $2.5 billion at Investors Mutual Ltd. in Sydney. “The sustainability of the share market recovery has to be confirmed by further improving economic fundamentals.”
Europe’s unemployment rate also increased to 9.5 percent in May, the highest level since 1999. Jean-Claude Trichet, the European Central Bank governor, said the bank will maintain interest rates at 1 percent for coming months.
‘State of Crisis’
Seven & I plunged 6.3 percent to 2,160 yen. The retailer said yesterday profit dropped 28 percent in the three months ended May 31. Worsening household income and job markets prompted consumers to save money, the company said.
Rival retailer Aeon Co. declined 3.7 percent to 901 yen. Isetan Mitsukoshi Holdings Ltd., Japan’s largest department- store operator, slumped 4.9 percent to 950 yen. The company said on July 1 sales fell 10.3 percent in June.
Yoshimasa Hayashi, who was appointed as Japan’s Economy and Fiscal Policy Minister on July 1, said yesterday the nation may slip back into deflation and that the economy is “in a state of crisis.”
Today marks the first three-day slump in MSCI’s Asian gauge since April 28 as economic reports this week pointed to stalled recovery in the region. The Bank of Japan’s Tankan survey of manufacturer sentiment rebounded less than estimated in June, while government data showed Japan’s unemployment rate reached a five-year high in May. Australia’s exports dropped to a 14-month low, while building approvals declined by the most since 2002.
Oil, Metals, Shipping
The job reports raised concern demand for materials will wane. Crude oil tumbled 3.7 percent to $66.73 a barrel in New York, the lowest settlement since June 3, and extended its decline today. A gauge of six metals in London dropped 1.2 percent. The Baltic Dry Index, a measure of shipping costs for commodities, lost 1.8 percent to a three-week low.
Mitsui O.S.K. slumped 3.4 percent to 590 yen. BHP lost 2.7 percent to A$33.37. Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, dropped 3.3 percent to A$3.55.
Chinatrust Financial Holding Co., Taiwan’s biggest credit- card issuer, surged 4.1 percent to NT$21.50, after the China Times reported China may open its credit card market to Taiwanese banks, citing Liu Mingkang, Chairman of the China Banking Regulatory Commission.
Electricity Output
Huaneng Power International Inc., the listed unit of China’s largest power group, rose 0.5 percent to 7.85 yuan. The nation’s electricity output gained 3.6 percent in June, the first monthly increase since October, the China Securities Journal reported today, citing China State Grid Corp.
Sundance Resources, which is seeking to build a $3.3 billion iron ore project in Camaroon, plunged 6.3 percent to 15 Australian cents. Chairman George Jones will retire on Aug. 31 and be replaced by non-executive director Geoff Wedlock, the company said.
Orix jumped 6 percent to 5,820 yen in Tokyo. The company will sell 18 million new shares in two sales, using the proceeds to repay debt and the rest for investment and loans, the company said yesterday.
“Orix’s financial position is very healthy,” said Shiro Yoshioka, an analyst at Japaninvest KK in Tokyo. “Orix is probably preparing to expand its business, which could boost profit.”
India May Increase Annual Bond Sale Target by 10%, Survey Shows
July 3 (Bloomberg) -- India may raise its annual bond-sale target by 10 percent to a record in next week’s budget to fund a widening deficit as it spends more to revive the economy, a Bloomberg News survey showed.
Borrowing in the year ending March 31 may increase to 4 trillion rupees ($83.4 billion) from a previous estimate of 3.62 trillion rupees, according to the median forecast in a survey of 17 economists and investors. Finance Minister Pranab Mukherjee, who will present the budget on July 6, is facing the prospect of declining revenue amid the deepest economic slump since 2003.
Prime Minister Manmohan Singh, who won a second term in May, is spending more on infrastructure and poverty-alleviation programs to revive growth in Asia’s third-biggest economy. India’s budget shortfall may widen to a 19-year high of 6.5 percent of gross domestic product, according to Standard & Poor’s. Failure to rein in the budget gap will hurt the nation’s sovereign ratings, Moody’s Investors Service and S&P have said.
“The government must borrow more simply because it’s increasing expenditure at a time when revenue is shrinking,” said Prasanna Ananthasubramaniam, chief economist at ICICI Securities Primary Dealership Ltd. in Mumbai, who predicts bond sales will be raised to 4.34 trillion rupees, the highest estimate in the survey. All but one of the participants said the government will increase its debt target.
Growth Versus Rating
The Reserve Bank of India has forecast the $1.2 trillion economy will expand 6 percent in the current financial year, the slowest pace since 2003. Sustaining economic growth is a “higher priority at this moment” than sovereign ratings, Finance Secretary Ashok Chawla said on May 27. S&P, which currently rates Indian debt the lowest investment grade, cut its outlook to negative from stable in February.
Economic expansion may accelerate to as much as 7.75 percent this year amid signs of a “bottoming out” in the U.S. and harvests benefiting from monsoon rains, the finance ministry said in the annual Economic Survey released yesterday. Growth could be as little as 6.25 percent if there are delays in a U.S. revival, the report said.
India’s budget deficit widened to 6.2 percent of GDP last fiscal year, or 3.3 trillion rupees, the government said on May 29. That was the highest since 1991.
The benchmark 10-year bond yield has added 1.64 percentage points this year, the biggest advance in at least a decade, to 6.89 percent, according to data compiled by Bloomberg. Indian bonds are the worst performers this year among the 10 Asian local-currency debt markets outside Japan, with a 3.7 percent loss, according to indexes compiled by HSBC Holdings Plc.
‘Signs of Recovery’
Revenue from planned asset sales and savings on energy subsidies following a fuel-price increase this week may help the government raise funds without the need to borrow more, said Krishnamurthy Harihar, treasurer in Mumbai at the Indian unit of FirstRand Ltd., South Africa’s second-largest financial services company. He is the only participant in the survey who said the government may stick to its current debt-sale plan.
“I belong to a minority that believes the government will take its time before resorting to raising the bond target,” he said. “Also, there are signs of a recovery in the economy and that means tax inflows can only get better.”
India may raise more than 242 billion rupees from the sale of third-generation mobile telephone licenses, the Financial Times reported on June 21, citing people it didn’t name. The government is considering selling 10 percent of Bharat Heavy Electricals Ltd., the nation’s biggest power equipment maker, Heavy Industries Minister Vilasrao Deshmukh said last month.
The South Asian nation this week raised the price of gasoline by four rupees (8 cents) a liter and diesel by two rupees. Gasoline in New Delhi will be costlier by 9.8 percent after the first increase in fuel prices in more than a year.
CONTRIBUTOR Estimated borrowings
(trillion rupees)
Andhra Bank 4.00
Aviva Life Insurance Co. 3.90
Axis Bank Ltd. 4.10
Bank of Maharashtra 4.20
DBS Cholamandalam Asset Management 3.90
FirstRand Ltd. 3.62
HDFC Bank Ltd. 4.00
HSBC Holdings Plc 4.00
IDBI Gilts Ltd. 4.00
ING Investment Management 4.10
ICICI Securities Primary Dealership 4.34
Kotak Mahindra Bank Ltd. 3.80
Mirae Asset Global Investments 3.90
Securities Trading Corp. of India 4.10
Standard Chartered Plc 4.20
Sundaram BNP Paribas Asset Management 4.20
YES Bank Ltd. 3.90
Borrowing in the year ending March 31 may increase to 4 trillion rupees ($83.4 billion) from a previous estimate of 3.62 trillion rupees, according to the median forecast in a survey of 17 economists and investors. Finance Minister Pranab Mukherjee, who will present the budget on July 6, is facing the prospect of declining revenue amid the deepest economic slump since 2003.
Prime Minister Manmohan Singh, who won a second term in May, is spending more on infrastructure and poverty-alleviation programs to revive growth in Asia’s third-biggest economy. India’s budget shortfall may widen to a 19-year high of 6.5 percent of gross domestic product, according to Standard & Poor’s. Failure to rein in the budget gap will hurt the nation’s sovereign ratings, Moody’s Investors Service and S&P have said.
“The government must borrow more simply because it’s increasing expenditure at a time when revenue is shrinking,” said Prasanna Ananthasubramaniam, chief economist at ICICI Securities Primary Dealership Ltd. in Mumbai, who predicts bond sales will be raised to 4.34 trillion rupees, the highest estimate in the survey. All but one of the participants said the government will increase its debt target.
Growth Versus Rating
The Reserve Bank of India has forecast the $1.2 trillion economy will expand 6 percent in the current financial year, the slowest pace since 2003. Sustaining economic growth is a “higher priority at this moment” than sovereign ratings, Finance Secretary Ashok Chawla said on May 27. S&P, which currently rates Indian debt the lowest investment grade, cut its outlook to negative from stable in February.
Economic expansion may accelerate to as much as 7.75 percent this year amid signs of a “bottoming out” in the U.S. and harvests benefiting from monsoon rains, the finance ministry said in the annual Economic Survey released yesterday. Growth could be as little as 6.25 percent if there are delays in a U.S. revival, the report said.
India’s budget deficit widened to 6.2 percent of GDP last fiscal year, or 3.3 trillion rupees, the government said on May 29. That was the highest since 1991.
The benchmark 10-year bond yield has added 1.64 percentage points this year, the biggest advance in at least a decade, to 6.89 percent, according to data compiled by Bloomberg. Indian bonds are the worst performers this year among the 10 Asian local-currency debt markets outside Japan, with a 3.7 percent loss, according to indexes compiled by HSBC Holdings Plc.
‘Signs of Recovery’
Revenue from planned asset sales and savings on energy subsidies following a fuel-price increase this week may help the government raise funds without the need to borrow more, said Krishnamurthy Harihar, treasurer in Mumbai at the Indian unit of FirstRand Ltd., South Africa’s second-largest financial services company. He is the only participant in the survey who said the government may stick to its current debt-sale plan.
“I belong to a minority that believes the government will take its time before resorting to raising the bond target,” he said. “Also, there are signs of a recovery in the economy and that means tax inflows can only get better.”
India may raise more than 242 billion rupees from the sale of third-generation mobile telephone licenses, the Financial Times reported on June 21, citing people it didn’t name. The government is considering selling 10 percent of Bharat Heavy Electricals Ltd., the nation’s biggest power equipment maker, Heavy Industries Minister Vilasrao Deshmukh said last month.
The South Asian nation this week raised the price of gasoline by four rupees (8 cents) a liter and diesel by two rupees. Gasoline in New Delhi will be costlier by 9.8 percent after the first increase in fuel prices in more than a year.
CONTRIBUTOR Estimated borrowings
(trillion rupees)
Andhra Bank 4.00
Aviva Life Insurance Co. 3.90
Axis Bank Ltd. 4.10
Bank of Maharashtra 4.20
DBS Cholamandalam Asset Management 3.90
FirstRand Ltd. 3.62
HDFC Bank Ltd. 4.00
HSBC Holdings Plc 4.00
IDBI Gilts Ltd. 4.00
ING Investment Management 4.10
ICICI Securities Primary Dealership 4.34
Kotak Mahindra Bank Ltd. 3.80
Mirae Asset Global Investments 3.90
Securities Trading Corp. of India 4.10
Standard Chartered Plc 4.20
Sundaram BNP Paribas Asset Management 4.20
YES Bank Ltd. 3.90
Wednesday, July 1, 2009
Asia Bankers Expect IPO Revival as Stock Swings Ease
July 2 (Bloomberg) -- Asian initial public offerings, which accounted for the lowest proportion of share sales in at least 10 years during the first half, may be poised to take off as smaller stock swings make it easier for companies to tap equity markets.
IPOs made up 10 percent of the $33 billion of stock offerings in Asia, excluding Japan and mainland China, according to data compiled by Bloomberg. The decline in IPOs occurred as investors sold stakes in Chinese banks and financial companies raised funds in rights offerings, more than tripling the overall value of equity sales from the second half of 2008.
Stock-market gyrations that made it harder for companies to complete IPOs are easing, said bankers, including Justin Haik at Morgan Stanley in Hong Kong. The benchmark for U.S. stock market volatility closed June 29 below where it was just before Lehman Brothers Holdings Inc. filed for bankruptcy Sept. 15.
“The IPO market will start to get pretty active,” said Kester Ng, Asia-Pacific head of equity capital and derivatives markets at JPMorgan Chase & Co. in Hong Kong. “A lot of companies that put IPOs on the shelf for the last 18 months have started working.”
The Chicago Board Options Exchange Volatility Index, which measures the cost to insure against losses in the Standard & Poor’s 500 Index, dropped 67 percent through June 30 from a Nov. 20 peak. A measure of the volatility of the MSCI Asia Pacific Index has fallen to the lowest since Sept. 4, according to Bloomberg data.
Billion-Dollar Deals
IPOs in Asia outside Japan dwindled to $3.36 billion in the six months ended June 30 from $14.3 billion a year earlier, the slowest half since 2003, Bloomberg data show.
As many as 100 companies may be reviving Hong Kong IPO plans after the equities rout delayed sales scheduled for 2008, said Jonathan Penkin, Goldman Sachs Group Inc.’s Hong Kong-based head of equity capital markets in Asia outside Japan. The city was the largest IPO market in the region.
Haik, a managing director in Morgan Stanley’s global capital markets group, expects at least five IPOs worth more than $1 billion each in Asia during the next six to 12 months. China Zhongwang Holdings Ltd.’s $1.3 billion sale in April was the only one to surpass that mark in the first half.
American International Group Inc.’s Asian life insurance unit may raise as much as $8 billion in an IPO during next year’s first quarter.
IPOs in Hong Kong and China may raise $39 billion in 2009, accounting firm Ernst & Young LLP said last month. China’s securities regulator lifted a moratorium last month on public offerings, after the benchmark Shanghai Composite Index climbed more than 40 percent in the first five months. Overseas investors are restricted from buying shares in mainland China.
Bank Sell-off
Shareholders, including Goldman Sachs, Bank of America Corp., UBS AG and Royal Bank of Scotland Group Plc, sold a combined $10.8 billion worth of stock in Bank of China Ltd., China Construction Bank Corp. and Industrial & Commercial Bank of China Ltd. in the period, increasing the value of deals.
U.S. and European banks, which initially bought into the Chinese lenders in 2005 and 2006, rushed to sell after lockup periods on their holdings expired, helping them restore finances hobbled by credit market losses.
“People needed to repair balance sheets,” said Steve Barg, Asia head of global capital markets at UBS in Hong Kong.
The sales attracted hedge fund and mutual fund managers that boosted cash holdings late last year in preparation for investor redemptions that didn’t materialize, Barg said.
Chinese Buyers
Last year’s equities rout thinned the ranks of private banks and Hong Kong billionaires buying IPOs. Private banks representing wealthy individuals are less willing to buy new shares than they were in 2006 and 2007, when booming markets drove stock offerings in Asia to records, said JPMorgan’s Ng.
Chinese investors are playing a bigger role, said Jason Cox, Hong Kong-based head of Asia-Pacific equity capital markets at Bank of America Merrill Lynch. In Hong Kong, Chinese funds and companies account for as much as 30 percent of institutional orders for IPOs, up from less than 10 percent in 2006, he said.
Lower price expectations among companies mulling IPOs may draw more investors to sales, said Goldman’s Penkin.
361 Degrees International Ltd., a Chinese maker and distributor of sportswear, priced a $233 million IPO in Hong Kong last month at 8.7 times estimated profit for the year to June 2010. Anta Sports Products Ltd., which competes against 361 Degrees, trades at 16 times estimated 2010 earnings, according to Bloomberg data. Anta Sports went public in July 2007.
“Issuers’ expectations on price have come down from what it was last year,” Penkin said. “The valuation gap has closed a little.”
Stock swings posed another complication earlier this year for investment bankers who were trying to value companies about to go public, Haik said.
“If you catch the wrong week, all of a sudden you can end up having launched the deal at this price, yet the comparable companies have dropped 20 to 30 percent,” he said. “The company you are trying to IPO all of sudden looks expensive relative to the peer group.”
IPOs made up 10 percent of the $33 billion of stock offerings in Asia, excluding Japan and mainland China, according to data compiled by Bloomberg. The decline in IPOs occurred as investors sold stakes in Chinese banks and financial companies raised funds in rights offerings, more than tripling the overall value of equity sales from the second half of 2008.
Stock-market gyrations that made it harder for companies to complete IPOs are easing, said bankers, including Justin Haik at Morgan Stanley in Hong Kong. The benchmark for U.S. stock market volatility closed June 29 below where it was just before Lehman Brothers Holdings Inc. filed for bankruptcy Sept. 15.
“The IPO market will start to get pretty active,” said Kester Ng, Asia-Pacific head of equity capital and derivatives markets at JPMorgan Chase & Co. in Hong Kong. “A lot of companies that put IPOs on the shelf for the last 18 months have started working.”
The Chicago Board Options Exchange Volatility Index, which measures the cost to insure against losses in the Standard & Poor’s 500 Index, dropped 67 percent through June 30 from a Nov. 20 peak. A measure of the volatility of the MSCI Asia Pacific Index has fallen to the lowest since Sept. 4, according to Bloomberg data.
Billion-Dollar Deals
IPOs in Asia outside Japan dwindled to $3.36 billion in the six months ended June 30 from $14.3 billion a year earlier, the slowest half since 2003, Bloomberg data show.
As many as 100 companies may be reviving Hong Kong IPO plans after the equities rout delayed sales scheduled for 2008, said Jonathan Penkin, Goldman Sachs Group Inc.’s Hong Kong-based head of equity capital markets in Asia outside Japan. The city was the largest IPO market in the region.
Haik, a managing director in Morgan Stanley’s global capital markets group, expects at least five IPOs worth more than $1 billion each in Asia during the next six to 12 months. China Zhongwang Holdings Ltd.’s $1.3 billion sale in April was the only one to surpass that mark in the first half.
American International Group Inc.’s Asian life insurance unit may raise as much as $8 billion in an IPO during next year’s first quarter.
IPOs in Hong Kong and China may raise $39 billion in 2009, accounting firm Ernst & Young LLP said last month. China’s securities regulator lifted a moratorium last month on public offerings, after the benchmark Shanghai Composite Index climbed more than 40 percent in the first five months. Overseas investors are restricted from buying shares in mainland China.
Bank Sell-off
Shareholders, including Goldman Sachs, Bank of America Corp., UBS AG and Royal Bank of Scotland Group Plc, sold a combined $10.8 billion worth of stock in Bank of China Ltd., China Construction Bank Corp. and Industrial & Commercial Bank of China Ltd. in the period, increasing the value of deals.
U.S. and European banks, which initially bought into the Chinese lenders in 2005 and 2006, rushed to sell after lockup periods on their holdings expired, helping them restore finances hobbled by credit market losses.
“People needed to repair balance sheets,” said Steve Barg, Asia head of global capital markets at UBS in Hong Kong.
The sales attracted hedge fund and mutual fund managers that boosted cash holdings late last year in preparation for investor redemptions that didn’t materialize, Barg said.
Chinese Buyers
Last year’s equities rout thinned the ranks of private banks and Hong Kong billionaires buying IPOs. Private banks representing wealthy individuals are less willing to buy new shares than they were in 2006 and 2007, when booming markets drove stock offerings in Asia to records, said JPMorgan’s Ng.
Chinese investors are playing a bigger role, said Jason Cox, Hong Kong-based head of Asia-Pacific equity capital markets at Bank of America Merrill Lynch. In Hong Kong, Chinese funds and companies account for as much as 30 percent of institutional orders for IPOs, up from less than 10 percent in 2006, he said.
Lower price expectations among companies mulling IPOs may draw more investors to sales, said Goldman’s Penkin.
361 Degrees International Ltd., a Chinese maker and distributor of sportswear, priced a $233 million IPO in Hong Kong last month at 8.7 times estimated profit for the year to June 2010. Anta Sports Products Ltd., which competes against 361 Degrees, trades at 16 times estimated 2010 earnings, according to Bloomberg data. Anta Sports went public in July 2007.
“Issuers’ expectations on price have come down from what it was last year,” Penkin said. “The valuation gap has closed a little.”
Stock swings posed another complication earlier this year for investment bankers who were trying to value companies about to go public, Haik said.
“If you catch the wrong week, all of a sudden you can end up having launched the deal at this price, yet the comparable companies have dropped 20 to 30 percent,” he said. “The company you are trying to IPO all of sudden looks expensive relative to the peer group.”
Tech Mahindra to Raise Satyam Stake to 44% to Tighten Control
July 2 (Bloomberg) -- Tech Mahindra Ltd. plans to raise its stake in Satyam Computer Services Ltd. to about 44 percent as it tightens control and reorganizes the Indian software-services provider following a $1 billion fraud.
The company may buy new Satyam stock after receiving “no significant” acceptances from shareholders for an 11.5 billion rupee ($240 million) tender offer, Chief Financial Officer Sonjoy Anand said in a telephone interview yesterday. Spending the same amount on new shares would raise Tech Mahindra’s stake to “a little less than 44 percent” from 31 percent, he said.
Satyam would gain funds as it seeks to retain clients and win new orders following former Chairman Ramalinga Raju’s January admission that he overstated assets by $1 billion. The software provider’s shares have jumped 55 percent since Tech Mahindra agreed to buy control of the company from a state- appointed board on April 13.
“They are showing more commitment,” said Tarun Sisodia, a Mumbai-based analyst at Anand Rathi Financial Services Ltd. “Down the line, if they merge Satyam with Tech Mahindra, the money will come back.”
Satyam rose 3.2 percent yesterday to close at 73.25 rupees in Mumbai trading. Tech Mahindra climbed 2.1 percent to 747.55 rupees, while the benchmark Sensitive Index gained 1.1 percent.
The number of shares tendered and accepted in the offer that expired yesterday is insignificant, Anand said. The figures will be disclosed on or about July 8, Tech Mahindra said in a statement to the Bombay Stock Exchange yesterday.
The company may buy new Satyam stock after receiving “no significant” acceptances from shareholders for an 11.5 billion rupee ($240 million) tender offer, Chief Financial Officer Sonjoy Anand said in a telephone interview yesterday. Spending the same amount on new shares would raise Tech Mahindra’s stake to “a little less than 44 percent” from 31 percent, he said.
Satyam would gain funds as it seeks to retain clients and win new orders following former Chairman Ramalinga Raju’s January admission that he overstated assets by $1 billion. The software provider’s shares have jumped 55 percent since Tech Mahindra agreed to buy control of the company from a state- appointed board on April 13.
“They are showing more commitment,” said Tarun Sisodia, a Mumbai-based analyst at Anand Rathi Financial Services Ltd. “Down the line, if they merge Satyam with Tech Mahindra, the money will come back.”
Satyam rose 3.2 percent yesterday to close at 73.25 rupees in Mumbai trading. Tech Mahindra climbed 2.1 percent to 747.55 rupees, while the benchmark Sensitive Index gained 1.1 percent.
The number of shares tendered and accepted in the offer that expired yesterday is insignificant, Anand said. The figures will be disclosed on or about July 8, Tech Mahindra said in a statement to the Bombay Stock Exchange yesterday.
Asian Stocks Advance on Commodities, China Growth Speculation
July 2 (Bloomberg) -- Asian stocks climbed on speculation China’s economy will avoid the recession of global counterparts and as higher commodities prices drove gains by resource shares.
Newcrest Mining Ltd., Australia’s largest gold producer, rose 2.8 percent after the precious metal halted a two-day slide. Nickel producer Pacific Metals Co. jumped 5.6 percent as Merrill Lynch & Co. boosted its share price target citing Chinese demand. Ping An Insurance (Group) Co., China’s No. 2 insurer, surged 5.8 percent after a brokerage upgrade. Shinsei Bank Ltd. and Aozora Bank Ltd. led Japanese banks lower after agreeing to a merger.
“Investors are feeling the global economy is getting better, but the hazy outlook means they can’t totally buy into this recovery story,” said Mitsushige Akino, who oversees the equivalent of $522 million at Ichiyoshi Investment Management Co. “We have no reason to sell but no definitive clue to buy.”
The MSCI Asia Pacific Index advanced 0.5 percent to 103.63 as of 12:09 p.m. in Tokyo. The benchmark rallied 15 percent in the first six months of this year, outpacing gains by benchmark indexes in the U.S. and Europe. Companies in Asia traded at 23.5 times their estimated net income yesterday.
Japan’s Nikkei 225 Stock Average was little-changed at 9,940.12. Shares elsewhere in the region advanced, except in South Korea, Singapore and Vietnam. Hong Kong’s Hang Seng Index jumped 1.6 percent after the market was closed yesterday for a holiday.
Futures on the Standard & Poor’s 500 Index lost 0.1 percent in trading today after the measure advanced 0.4 percent in New York yesterday. The Institute for Supply Management said yesterday its factory index rose in June for a sixth month to 44.8, still below the 50 threshold that divides expansion and contraction.
China Insurers
A report from ADP Employer Services weighed on U.S. equities as it showed more Americans lost their jobs last month than economists had estimated.
“Though some may say employment is a lagging indicator, it affects household income and consumer spending,” said Ichiyoshi’s Akino.
A gauge of six metals in London jumped 2.9 percent yesterday, the most since June 24. Gold futures snapped a two- day drop, climbing 1.5 percent in New York.
Chinese Insurers
Newcrest gained 2.8 percent to A$31.12. Pacific Metals jumped 5.6 percent to 772 yen after Merrill Lynch analyst Takashi Enomoto lifted his price estimate on the stock by 20 percent saying steel production in China is boosting nickel demand. China Petroleum & Chemical Corp., also known as Sinopec, climbed 1.9 percent to HK$6.02 after Merrill resumed coverage of the company with a “buy” recommendation.
Ping An gained 5.8 percent to HK$55.55. The stock was raised to “outperform” from “in-line” by Peter O’Brien at Cazenove Asia Ltd. The insurance industry should benefit from investment deregulation and ongoing growth in demand for insurance as China ages.
China Life Insurance Co., the nation’s biggest, gained 2.6 percent to HK$29.25. China Insurance International Holdings Co., the country’s biggest insurer in overseas markets, rose 4 percent to HK$17.06 and is O’Brien’s top pick, he wrote.
China’s manufacturing expanded for a fourth month in June, a government survey showed yesterday. China’s economy may keep improving in the third and fourth quarters, enabling the nation to meet its 8 percent economic growth target for this year, central bank Governor Zhou Xiaochuan said this week.
Real Estate Exposure
Shinsei, the former Long Term Credit Bank of Japan which collapsed in 1998, lost 4.5 percent to 150 yen, while Aozora, controlled by Cerberus Capital Management LP, slumped 4.6 percent to 144 yen. The companies agreed to combine yesterday at a 1-to-1 ratio in a deal that will create Japan’s sixth-largest lender.
“We believe there are risks that once the two banks merge, common financial problems such as the concentrated exposure to the real estate sector and the insufficiency of deposits may become even more serious,” Shinichi Ina, an analyst at Credit Suisse Group AG, wrote in a report.
Electronics retailer K’s Holdings Corp. climbed 5.5 percent to 2,515 yen. The retailer likely saw a 40 percent jump in profit last quarter as the Japanese government’s incentive program for the purchase of low-emission appliances increased sales, the Nikkei newspaper reported. Yamada Denki Co., Japan’s largest electronics retailer, rose 2.7 percent to 5,820 yen.
Hitachi Ltd. surged 4.4 percent to 311 yen. The company plans to expand its production capacity for lithium-ion batteries by more than 600 percent by “next autumn,” the Nikkei said today.
Newcrest Mining Ltd., Australia’s largest gold producer, rose 2.8 percent after the precious metal halted a two-day slide. Nickel producer Pacific Metals Co. jumped 5.6 percent as Merrill Lynch & Co. boosted its share price target citing Chinese demand. Ping An Insurance (Group) Co., China’s No. 2 insurer, surged 5.8 percent after a brokerage upgrade. Shinsei Bank Ltd. and Aozora Bank Ltd. led Japanese banks lower after agreeing to a merger.
“Investors are feeling the global economy is getting better, but the hazy outlook means they can’t totally buy into this recovery story,” said Mitsushige Akino, who oversees the equivalent of $522 million at Ichiyoshi Investment Management Co. “We have no reason to sell but no definitive clue to buy.”
The MSCI Asia Pacific Index advanced 0.5 percent to 103.63 as of 12:09 p.m. in Tokyo. The benchmark rallied 15 percent in the first six months of this year, outpacing gains by benchmark indexes in the U.S. and Europe. Companies in Asia traded at 23.5 times their estimated net income yesterday.
Japan’s Nikkei 225 Stock Average was little-changed at 9,940.12. Shares elsewhere in the region advanced, except in South Korea, Singapore and Vietnam. Hong Kong’s Hang Seng Index jumped 1.6 percent after the market was closed yesterday for a holiday.
Futures on the Standard & Poor’s 500 Index lost 0.1 percent in trading today after the measure advanced 0.4 percent in New York yesterday. The Institute for Supply Management said yesterday its factory index rose in June for a sixth month to 44.8, still below the 50 threshold that divides expansion and contraction.
China Insurers
A report from ADP Employer Services weighed on U.S. equities as it showed more Americans lost their jobs last month than economists had estimated.
“Though some may say employment is a lagging indicator, it affects household income and consumer spending,” said Ichiyoshi’s Akino.
A gauge of six metals in London jumped 2.9 percent yesterday, the most since June 24. Gold futures snapped a two- day drop, climbing 1.5 percent in New York.
Chinese Insurers
Newcrest gained 2.8 percent to A$31.12. Pacific Metals jumped 5.6 percent to 772 yen after Merrill Lynch analyst Takashi Enomoto lifted his price estimate on the stock by 20 percent saying steel production in China is boosting nickel demand. China Petroleum & Chemical Corp., also known as Sinopec, climbed 1.9 percent to HK$6.02 after Merrill resumed coverage of the company with a “buy” recommendation.
Ping An gained 5.8 percent to HK$55.55. The stock was raised to “outperform” from “in-line” by Peter O’Brien at Cazenove Asia Ltd. The insurance industry should benefit from investment deregulation and ongoing growth in demand for insurance as China ages.
China Life Insurance Co., the nation’s biggest, gained 2.6 percent to HK$29.25. China Insurance International Holdings Co., the country’s biggest insurer in overseas markets, rose 4 percent to HK$17.06 and is O’Brien’s top pick, he wrote.
China’s manufacturing expanded for a fourth month in June, a government survey showed yesterday. China’s economy may keep improving in the third and fourth quarters, enabling the nation to meet its 8 percent economic growth target for this year, central bank Governor Zhou Xiaochuan said this week.
Real Estate Exposure
Shinsei, the former Long Term Credit Bank of Japan which collapsed in 1998, lost 4.5 percent to 150 yen, while Aozora, controlled by Cerberus Capital Management LP, slumped 4.6 percent to 144 yen. The companies agreed to combine yesterday at a 1-to-1 ratio in a deal that will create Japan’s sixth-largest lender.
“We believe there are risks that once the two banks merge, common financial problems such as the concentrated exposure to the real estate sector and the insufficiency of deposits may become even more serious,” Shinichi Ina, an analyst at Credit Suisse Group AG, wrote in a report.
Electronics retailer K’s Holdings Corp. climbed 5.5 percent to 2,515 yen. The retailer likely saw a 40 percent jump in profit last quarter as the Japanese government’s incentive program for the purchase of low-emission appliances increased sales, the Nikkei newspaper reported. Yamada Denki Co., Japan’s largest electronics retailer, rose 2.7 percent to 5,820 yen.
Hitachi Ltd. surged 4.4 percent to 311 yen. The company plans to expand its production capacity for lithium-ion batteries by more than 600 percent by “next autumn,” the Nikkei said today.
Tuesday, June 30, 2009
Coal India Seeks Faster Approvals, Imports, Overseas Miners
July 1 (Bloomberg) -- Coal India Ltd., the world’s biggest coal producer, wants mining approvals sped up to help it boost production to meet a widening supply shortfall that is forcing more imports, Chairman Partha Bhattacharyya said.
Faster consent will allow the company to increase output by 10 percent, above its target of 7.5 percent, from a current production of 404 million metric tons a year, Bhattacharyya said in an interview. Domestic output has failed to meet demand, particularly from power generation, requiring the nation to increase imports by an average 10 percent to 15 percent a year.
“Increasing coal production capacity is not the same as adding to power generation capacity because you need so many other things,” Bhattacharyya said in New Delhi on June 15. “Coal in India is found in forests and places that are inhabited by tribes. Mining disturbs both.”
India, the world’s second fastest-growing major economy after China, aims to add 13,000 megawatts of new capacity annually, President Pratibha Patil said in parliament on June 4. More power is needed to cut outages that last as long as 8 hours in peak summer months in the capital. The country’s surge in power use has created a gap in coal production meeting demand from generators, Bhattacharyya said.
“If power generation capacity has to increase at a rate of 7 to 8 percent, maybe it can be managed,” he said. “But if it is to increase at 20 percent, I don’t think coal for that can come from indigenous sources.”
Overseas Partners
Coal India is taking steps to boost production, he said. It will seek to join with foreign companies to develop underground mines, Bhattacharyya said. Coal India, which mines more coal than Peabody Energy Corp. and China Shenhua Energy Co., the top coal producers in the U.S. and China, was created in 1975 from nationalized companies and has concentrated on less-complicated open-cast mining.
Environmental approvals to prospect for more reserves is a process that can take as long as seven years in India, Bhattacharyya said.
The constraints of coal production are forcing companies to seek reserves overseas. Coal India is looking at importing 4 million tons of coal this year.
NTPC Ltd., India’s biggest electricity generator, plans to import 12.5 million tons. Both state-owned companies are also scouting for overseas mines. In 2007, Tata Power Co., which is building a 4,000-megawatt plant in western India, bought a 30 percent stake in two coal mining units owned by Indonesia’s PT Bumi Resources, Asia’s third-largest coal miner. The $4.14 billion plant will run on coal from the Indonesian mines.
Imports Jump
India’s coal imports will more than double to 100 million tons by 2012 from 40 million tons, estimates Kaamil Fareed, a senior trading manager at the Coal & Oil Group, which supplies coal in India and Pakistan.
Coal India also plans to revive old mines to meet power plant demand for the fuel.
The company has identified 18 old underground mines with total reserves of 1.6 billion tons to increase output. These mines were abandoned by Coal India because of difficulties such as water-logging and fire. Coal India short-listed ArcelorMittal, the world’s biggest steelmaker, and nine other companies to develop its abandoned mines, Bhattacharya said yesterday.
Coal India has favored open-cast pits over underground mines, he said, as the majority of proved reserves were at depths of less than 300 meters (984 feet). “We know that we have a shortcoming in planning underground mines because we kept on doing better and better in open cast,” Bhattacharya said. “But underground has been ignored.”
Going Underground
Coal India lost the skill of underground mining because of its preference for the open-cast method, said Ashok Dhillon, chief executive officer at Canasia Power Corp., a Canadian company that has been trying to build a power plant in northern India for 15 years amid a lack of coal supplies.
“While they are one of the largest producers in the world by sheer volume, they are not the most expert of miners,” Dhillon said. “There may be reserves that Coal India finds difficult to get at but other international mining companies would find relatively easy to mine.”
The company has identified seven coal blocks where underground mines with a capacity of between 2 million tons and 5 million tons can be set up. The planning and development of the mines will be outsourced to international companies.
Faster consent will allow the company to increase output by 10 percent, above its target of 7.5 percent, from a current production of 404 million metric tons a year, Bhattacharyya said in an interview. Domestic output has failed to meet demand, particularly from power generation, requiring the nation to increase imports by an average 10 percent to 15 percent a year.
“Increasing coal production capacity is not the same as adding to power generation capacity because you need so many other things,” Bhattacharyya said in New Delhi on June 15. “Coal in India is found in forests and places that are inhabited by tribes. Mining disturbs both.”
India, the world’s second fastest-growing major economy after China, aims to add 13,000 megawatts of new capacity annually, President Pratibha Patil said in parliament on June 4. More power is needed to cut outages that last as long as 8 hours in peak summer months in the capital. The country’s surge in power use has created a gap in coal production meeting demand from generators, Bhattacharyya said.
“If power generation capacity has to increase at a rate of 7 to 8 percent, maybe it can be managed,” he said. “But if it is to increase at 20 percent, I don’t think coal for that can come from indigenous sources.”
Overseas Partners
Coal India is taking steps to boost production, he said. It will seek to join with foreign companies to develop underground mines, Bhattacharyya said. Coal India, which mines more coal than Peabody Energy Corp. and China Shenhua Energy Co., the top coal producers in the U.S. and China, was created in 1975 from nationalized companies and has concentrated on less-complicated open-cast mining.
Environmental approvals to prospect for more reserves is a process that can take as long as seven years in India, Bhattacharyya said.
The constraints of coal production are forcing companies to seek reserves overseas. Coal India is looking at importing 4 million tons of coal this year.
NTPC Ltd., India’s biggest electricity generator, plans to import 12.5 million tons. Both state-owned companies are also scouting for overseas mines. In 2007, Tata Power Co., which is building a 4,000-megawatt plant in western India, bought a 30 percent stake in two coal mining units owned by Indonesia’s PT Bumi Resources, Asia’s third-largest coal miner. The $4.14 billion plant will run on coal from the Indonesian mines.
Imports Jump
India’s coal imports will more than double to 100 million tons by 2012 from 40 million tons, estimates Kaamil Fareed, a senior trading manager at the Coal & Oil Group, which supplies coal in India and Pakistan.
Coal India also plans to revive old mines to meet power plant demand for the fuel.
The company has identified 18 old underground mines with total reserves of 1.6 billion tons to increase output. These mines were abandoned by Coal India because of difficulties such as water-logging and fire. Coal India short-listed ArcelorMittal, the world’s biggest steelmaker, and nine other companies to develop its abandoned mines, Bhattacharya said yesterday.
Coal India has favored open-cast pits over underground mines, he said, as the majority of proved reserves were at depths of less than 300 meters (984 feet). “We know that we have a shortcoming in planning underground mines because we kept on doing better and better in open cast,” Bhattacharya said. “But underground has been ignored.”
Going Underground
Coal India lost the skill of underground mining because of its preference for the open-cast method, said Ashok Dhillon, chief executive officer at Canasia Power Corp., a Canadian company that has been trying to build a power plant in northern India for 15 years amid a lack of coal supplies.
“While they are one of the largest producers in the world by sheer volume, they are not the most expert of miners,” Dhillon said. “There may be reserves that Coal India finds difficult to get at but other international mining companies would find relatively easy to mine.”
The company has identified seven coal blocks where underground mines with a capacity of between 2 million tons and 5 million tons can be set up. The planning and development of the mines will be outsourced to international companies.
India lambasts ‘pernicious’ US carbon tariffs
India’s newly-installed environment minister on Tuesday lambasted US climate-change legislation that would allow the imposition of import tariffs on goods from countries that do not take sufficient steps to control carbon emissions.
Jairam Ramesh, who took over the environment portfolio after recent elections, was adamant that New Delhi would not agree to binding emissions targets as part of global climate-change negotiations.
EDITOR’S CHOICE
In depth: Climate change - Mar-31
Border taxes linked to cap-and-trade laws - Jun-29
Clive Crook: Obama is choosing to be weak - Jun-28
Editorial Comment: Cap-and-trade mess - Jun-28
Annan and Geldof launch climate campaign - Jun-26
White House lobbies wavering lawmakers - Jun-26
“India will not accept any emissions targets – period. It is the bottom line; a non-negotiable stand,” he said on Tuesday. “This is not something that India is going to budge on, under any circumstances.”
Binding emissions targets for developing countries are not part of the United Nations negotiations, instead countries such as India are being asked to draw up “national action plans”. These set out how they will attempt to curb emissions and encourage clean energy.
The US House of Representatives on Friday backed a “border adjustment tax” to equalise carbon emissions charges between domestic production and imports from countries that do not cap emissions. The legislation has yet to be passed in the Senate, where it is expected to face tough opposition.
However, Mr Ramesh denounced as “pernicious” the US effort to impose “trade penalties” on countries that do not match its carbon reduction efforts.
“We reject the use of climate as a non-tariff barrier,” he said. “And we categorically reject any attempt to introduce climate change as an issue at the [World Trade Organisation].”
He warned that the intellectual property rights regime protecting green technologies woudl have to be addressed. Many are in the private domain – and thus expensive for developing countries.
With 1.1bn people – roughly a sixth of the world’s population – India has one of the lowest per capita emission levels, with 1.2 tonnes per head, about 4.6 per cent of total global emissions. “India has not polluted – we are bearing the brunt of global climate change caused by the developed countries and we are being asked to curb emissions,” he said. “I find this ludicrous.”
However, India’s carbon emissions are expected to rise sharply in the future, especially as the country tries to meet its power deficit through the rapid development of generating capacity. India uses about 450m tonnes of highly-polluting coal for power generation each year, a figure that Mr Ramesh said would rise to about 1bn tonnes in less than a decade.
“There is no running away from our karma – without coal, we have no economic future,” he said.
He said India needed access to new technologies – including clean coal – to help reduce the environmental impact of its dependence on coal and to deal with other climate change issues.
Jairam Ramesh, who took over the environment portfolio after recent elections, was adamant that New Delhi would not agree to binding emissions targets as part of global climate-change negotiations.
EDITOR’S CHOICE
In depth: Climate change - Mar-31
Border taxes linked to cap-and-trade laws - Jun-29
Clive Crook: Obama is choosing to be weak - Jun-28
Editorial Comment: Cap-and-trade mess - Jun-28
Annan and Geldof launch climate campaign - Jun-26
White House lobbies wavering lawmakers - Jun-26
“India will not accept any emissions targets – period. It is the bottom line; a non-negotiable stand,” he said on Tuesday. “This is not something that India is going to budge on, under any circumstances.”
Binding emissions targets for developing countries are not part of the United Nations negotiations, instead countries such as India are being asked to draw up “national action plans”. These set out how they will attempt to curb emissions and encourage clean energy.
The US House of Representatives on Friday backed a “border adjustment tax” to equalise carbon emissions charges between domestic production and imports from countries that do not cap emissions. The legislation has yet to be passed in the Senate, where it is expected to face tough opposition.
However, Mr Ramesh denounced as “pernicious” the US effort to impose “trade penalties” on countries that do not match its carbon reduction efforts.
“We reject the use of climate as a non-tariff barrier,” he said. “And we categorically reject any attempt to introduce climate change as an issue at the [World Trade Organisation].”
He warned that the intellectual property rights regime protecting green technologies woudl have to be addressed. Many are in the private domain – and thus expensive for developing countries.
With 1.1bn people – roughly a sixth of the world’s population – India has one of the lowest per capita emission levels, with 1.2 tonnes per head, about 4.6 per cent of total global emissions. “India has not polluted – we are bearing the brunt of global climate change caused by the developed countries and we are being asked to curb emissions,” he said. “I find this ludicrous.”
However, India’s carbon emissions are expected to rise sharply in the future, especially as the country tries to meet its power deficit through the rapid development of generating capacity. India uses about 450m tonnes of highly-polluting coal for power generation each year, a figure that Mr Ramesh said would rise to about 1bn tonnes in less than a decade.
“There is no running away from our karma – without coal, we have no economic future,” he said.
He said India needed access to new technologies – including clean coal – to help reduce the environmental impact of its dependence on coal and to deal with other climate change issues.
Indian Share Placements Face Slump After Best Quarter in Six
July 1 (Bloomberg) -- Housing Development & Infrastructure Ltd.’s $350.3 million sale of shares to institutional investors capped the best quarter in six for Indian companies raising funds from such offerings.
It may also mark the peak of investor appetite for so- called qualified institutional placements as fund managers balk at prices. GMR Infrastructure Ltd. scrapped a $500 million sale yesterday after cutting the amount sought by 80 percent. At least 40 companies led by JSW Steel Ltd. have said they plan to raise more than a combined 350 billion rupees ($7.3 billion) after Indian stocks had their biggest quarterly gain in 17 years.
“There is not enough money available for everything and at any price,” said Vetri Subramaniam, head of equity funds at Religare Asset Management Co., who oversees $158 million in assets in Mumbai. “You need to give value to get people to put in money.”
Developers Indiabulls Real Estate Ltd. and Unitech Ltd. led Indian companies in raising 55 billion rupees from Qualified Institutional Placements, or QIPs, during the second quarter, the most since a record 130 billion rupees was raised in the three months ended Dec. 31, 2007, according to Bloomberg data.
“QIP has become a mechanism to access the market quickly and efficiently,” Saurabh Agrawal, head of investment banking at DSP Merrill Lynch Ltd., said in an interview in Mumbai.
The securities regulator began allowing companies to sell shares through the QIP process in May 2006 following complaints that domestic stock sales took too long to complete, forcing companies to raise money overseas. The pricing formula for the QIPs was changed by the regulator in August 2008 to bring the sale price closer to the market value of the shares.
Pipeline of Deals
Parsvnath Developers Ltd., billionaire Anil Ambani’s Reliance Communications Ltd., Omaxe Ltd. and Ansal Properties & Infrastructure Ltd. are among the companies that have said they may raise funds from QIPs, according to filings made to the Bombay Stock Exchange during the quarter.
GMR, a builder of ports and roads, scrapped its proposed offering “in light of the existing market conditions.” It didn’t provide additional details in a statement to the Bombay Stock Exchange yesterday. The company had earlier cut the amount it was seeking to $100 million after failing to win enough investors for a larger sale, a person familiar with the matter said, declining to be identified.
“Somehow or the other, it was not happening today, so we have decided to call it off rather than dilute the value,” GMR spokesman Vijay Vancheswar said yesterday in an interview. “It is a question of time. We don’t need money desperately.”
Sensex Rally Crimped
India’s Sensitive Index fell 2 percent yesterday, paring the benchmark’s quarterly gain to 49 percent, on concern the proposed stock sales will sap demand for existing shares.
Still, investors bought $150 million of shares from Bajaj Hindusthan Ltd., India’s biggest sugar producer, this week, as well as $110 million from Sobha Developers Ltd. and $100 million from Hindustan Construction Co. The board of Hindalco Industries Ltd. yesterday approved plans to raise as much as $500 million by selling shares to institutional investors.
“There’s a lot of investor appetite,” said DSP’s Agrawal. “The market leaders would be able to go out and raise money,” ensuring success for about half the companies that have gotten approval to raise funds, he said.
It may also mark the peak of investor appetite for so- called qualified institutional placements as fund managers balk at prices. GMR Infrastructure Ltd. scrapped a $500 million sale yesterday after cutting the amount sought by 80 percent. At least 40 companies led by JSW Steel Ltd. have said they plan to raise more than a combined 350 billion rupees ($7.3 billion) after Indian stocks had their biggest quarterly gain in 17 years.
“There is not enough money available for everything and at any price,” said Vetri Subramaniam, head of equity funds at Religare Asset Management Co., who oversees $158 million in assets in Mumbai. “You need to give value to get people to put in money.”
Developers Indiabulls Real Estate Ltd. and Unitech Ltd. led Indian companies in raising 55 billion rupees from Qualified Institutional Placements, or QIPs, during the second quarter, the most since a record 130 billion rupees was raised in the three months ended Dec. 31, 2007, according to Bloomberg data.
“QIP has become a mechanism to access the market quickly and efficiently,” Saurabh Agrawal, head of investment banking at DSP Merrill Lynch Ltd., said in an interview in Mumbai.
The securities regulator began allowing companies to sell shares through the QIP process in May 2006 following complaints that domestic stock sales took too long to complete, forcing companies to raise money overseas. The pricing formula for the QIPs was changed by the regulator in August 2008 to bring the sale price closer to the market value of the shares.
Pipeline of Deals
Parsvnath Developers Ltd., billionaire Anil Ambani’s Reliance Communications Ltd., Omaxe Ltd. and Ansal Properties & Infrastructure Ltd. are among the companies that have said they may raise funds from QIPs, according to filings made to the Bombay Stock Exchange during the quarter.
GMR, a builder of ports and roads, scrapped its proposed offering “in light of the existing market conditions.” It didn’t provide additional details in a statement to the Bombay Stock Exchange yesterday. The company had earlier cut the amount it was seeking to $100 million after failing to win enough investors for a larger sale, a person familiar with the matter said, declining to be identified.
“Somehow or the other, it was not happening today, so we have decided to call it off rather than dilute the value,” GMR spokesman Vijay Vancheswar said yesterday in an interview. “It is a question of time. We don’t need money desperately.”
Sensex Rally Crimped
India’s Sensitive Index fell 2 percent yesterday, paring the benchmark’s quarterly gain to 49 percent, on concern the proposed stock sales will sap demand for existing shares.
Still, investors bought $150 million of shares from Bajaj Hindusthan Ltd., India’s biggest sugar producer, this week, as well as $110 million from Sobha Developers Ltd. and $100 million from Hindustan Construction Co. The board of Hindalco Industries Ltd. yesterday approved plans to raise as much as $500 million by selling shares to institutional investors.
“There’s a lot of investor appetite,” said DSP’s Agrawal. “The market leaders would be able to go out and raise money,” ensuring success for about half the companies that have gotten approval to raise funds, he said.
In 2nd Quarter, Markets Revived but Pessimism Remained
The good news is that Wall Street finished its best quarter in years on Tuesday — part of a dizzy spree that lifted the broad market 35 percent since early March.
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Today's Business With Jack Healy on the Stock Market's Performance
The not-so-good news? It would take almost three more rallies like that to push the Dow Jones industrial average back to 14,000 and return markets to where they were before the financial crisis. On Wall Street — where exuberance, irrational and otherwise, is usually an art form — there is a nagging fear that the market is again losing its footing.
Despite signs that this downturn is easing, many Americans are more downbeat about the economy now than they were when the stock rally began. Unemployment is rising. Home prices are falling. Many corporate earnings are still weak.
“Less-worse isn’t the same as better,” said Barry Ritholtz, chief executive of FusionIQ, a research firm. “We want to see ‘good.’ In order to grow profits, in order for earnings to increase, in order for corporate America to start hiring and spending, we need to see greener shoots. So far that hasn’t really happened.”
If consumers continue to guard their money and banks sustain more losses from foreclosures, credit card defaults and losses in commercial real estate, analysts say that stock markets will face huge obstacles to growth that could keep investors in the doldrums for many more months.
Yet by almost any measure, the second quarter was one for the record books. The Standard & Poor’s 500-stock index was up 15.2 percent in the second quarter. The Dow Jones industrials gained 11 percent in the quarter, while the Nasdaq composite index soared 20 percent.
Many blue-chip stocks posted spectacular gains. Bank of America soared 94 percent. American Express gained 71 percent. Microsoft was up 29 percent.
But some analysts sense the euphoria is tempered. Markets ended basically flat for the month of June, pulled in different directions by economic figures showing improvement and those revealing unexpected weakness.
Trading on Tuesday underscored those wobbles. The Dow Jones average fell 82.38 points, or 0.97 percent, to 8,447. The broader S.& P. 500 slid 7.91 points, or 0.85 percent, to 919.32. Gains in some technology shares kept losses on the Nasdaq to 9.02 points, or 0.49 percent. It declined to 1,835.04.
The Treasury’s 10-year note fell 14/32, to 96 20/32. The yield, which moves in the opposite direction from the price, rose 3.53 percent, from 3.48 percent Monday.
Bullish forecasters say the S.& P. 500, which is up 1.8 percent for 2009, will continue to rise as the economy bottoms out, and close the year at 1,050 or 1,100. But bears say that taxpayer aid is still holding up the financial system, and they warn that investors who expect better returns may be in for a bitter disappointment.
“We feel like we’re entitled to go back up again,” said David Tice, a prominent Wall Street bear. “We went from the telecom bubble to the Internet bubble to the corporate finance bubble to the real estate bubble. Now each of those has broken. We have never been more convinced that the worst is not yet over.”
Some analysts say that stocks may simply rise and fall fitfully in the months — or years — to come without making broader progress, as they did from the mid-1960s to the mid-’70s. And they say that investors who once bought and held stocks or pieces of index funds and rode them higher will need to devise different investment strategies.
“The market is going to be range-bound for this year and going into next year,” said Mary Ann Bartels, head of technical and market analysis at Bank of America/Merrill Lynch. “Is the market still investable? Our answer is yes.”
Some investors say energy companies and basic-materials producers will lead the markets as commodity prices rise. Others like technology firms, emerging markets or any company that offers a dividend and is not steeped in debt.
Unemployment is at 9.4 percent, and economists expect it will rise to 9.6 percent when the Labor Department releases its June employment figures on Thursday. Private wages and salaries are continuing to fall, and Americans are saving more money as they try to hedge against job losses.
All of which, say some analysts, could mean slower growth in consumer spending, corporate earnings and stock prices in the months to come.
“We’d all like our stocks to go up,” said Mr. Tice, the bear. “But now’s the time to defend ourselves.”
Skip to next paragraph
Multimedia
Graphic
Today's Business With Jack Healy on the Stock Market's Performance
The not-so-good news? It would take almost three more rallies like that to push the Dow Jones industrial average back to 14,000 and return markets to where they were before the financial crisis. On Wall Street — where exuberance, irrational and otherwise, is usually an art form — there is a nagging fear that the market is again losing its footing.
Despite signs that this downturn is easing, many Americans are more downbeat about the economy now than they were when the stock rally began. Unemployment is rising. Home prices are falling. Many corporate earnings are still weak.
“Less-worse isn’t the same as better,” said Barry Ritholtz, chief executive of FusionIQ, a research firm. “We want to see ‘good.’ In order to grow profits, in order for earnings to increase, in order for corporate America to start hiring and spending, we need to see greener shoots. So far that hasn’t really happened.”
If consumers continue to guard their money and banks sustain more losses from foreclosures, credit card defaults and losses in commercial real estate, analysts say that stock markets will face huge obstacles to growth that could keep investors in the doldrums for many more months.
Yet by almost any measure, the second quarter was one for the record books. The Standard & Poor’s 500-stock index was up 15.2 percent in the second quarter. The Dow Jones industrials gained 11 percent in the quarter, while the Nasdaq composite index soared 20 percent.
Many blue-chip stocks posted spectacular gains. Bank of America soared 94 percent. American Express gained 71 percent. Microsoft was up 29 percent.
But some analysts sense the euphoria is tempered. Markets ended basically flat for the month of June, pulled in different directions by economic figures showing improvement and those revealing unexpected weakness.
Trading on Tuesday underscored those wobbles. The Dow Jones average fell 82.38 points, or 0.97 percent, to 8,447. The broader S.& P. 500 slid 7.91 points, or 0.85 percent, to 919.32. Gains in some technology shares kept losses on the Nasdaq to 9.02 points, or 0.49 percent. It declined to 1,835.04.
The Treasury’s 10-year note fell 14/32, to 96 20/32. The yield, which moves in the opposite direction from the price, rose 3.53 percent, from 3.48 percent Monday.
Bullish forecasters say the S.& P. 500, which is up 1.8 percent for 2009, will continue to rise as the economy bottoms out, and close the year at 1,050 or 1,100. But bears say that taxpayer aid is still holding up the financial system, and they warn that investors who expect better returns may be in for a bitter disappointment.
“We feel like we’re entitled to go back up again,” said David Tice, a prominent Wall Street bear. “We went from the telecom bubble to the Internet bubble to the corporate finance bubble to the real estate bubble. Now each of those has broken. We have never been more convinced that the worst is not yet over.”
Some analysts say that stocks may simply rise and fall fitfully in the months — or years — to come without making broader progress, as they did from the mid-1960s to the mid-’70s. And they say that investors who once bought and held stocks or pieces of index funds and rode them higher will need to devise different investment strategies.
“The market is going to be range-bound for this year and going into next year,” said Mary Ann Bartels, head of technical and market analysis at Bank of America/Merrill Lynch. “Is the market still investable? Our answer is yes.”
Some investors say energy companies and basic-materials producers will lead the markets as commodity prices rise. Others like technology firms, emerging markets or any company that offers a dividend and is not steeped in debt.
Unemployment is at 9.4 percent, and economists expect it will rise to 9.6 percent when the Labor Department releases its June employment figures on Thursday. Private wages and salaries are continuing to fall, and Americans are saving more money as they try to hedge against job losses.
All of which, say some analysts, could mean slower growth in consumer spending, corporate earnings and stock prices in the months to come.
“We’d all like our stocks to go up,” said Mr. Tice, the bear. “But now’s the time to defend ourselves.”
Monday, June 29, 2009
Reliance Industries, Wockhardt, Unitech: India Equity Preview
June 30 (Bloomberg) -- The following companies may have unusual price changes in India trading. Stock symbols are in parentheses and share prices are as of June 29 close.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 21.10, or 0.1 percent, to 14,785.74. The S&P CNX Nifty Index on the National Stock Exchange added 0.4 percent to 4,390.95. The BSE 200 Index increased 0.7 percent to 1,811.79. SGX Nifty futures for July delivery advanced 0.8 percent to 4,424 at 10:19 a.m. in Singapore today.
Overseas investors bought a net 6.73 billion rupees ($138.70 million) of Indian stocks on June 26, increasing their total investment in equities this year to $4.94 billion, the Securities & Exchange Board of India said on its Web site.
Dredging Corp of India Ltd. (DCIL IN): The country’s biggest dredger of ports said it will pay a dividend of five rupees a share, in a statement to the National Stock Exchange yesterday. The stock gained 2.4 percent to 498.75 rupees.
Nestle India Ltd. (NEST IN): The unit of the world’s biggest food company was rated “overweight” in new coverage at HSBC Holdings Plc. The stock rose 2.7 percent to 1,920.15 rupees.
Gujarat Alkalies & Chemicals Ltd. (GALK IN): The Indian maker of caustic soda yesterday reported fourth-quarter profit of 215.8 million rupees, compared with 183.5 million rupees a year earlier. The shares gained 1 percent to 104.85 rupees.
Reliance Industries Ltd. (RIL IN): India’s most valuable company may file an appeal with the Supreme Court on its gas pricing and supply dispute with Reliance Natural Resources Ltd. (RNR IN) on July 6, NDTV Profit reported yesterday, without saying where it got the information. Reliance Industries gained 2.9 percent to 2,087 rupees. Reliance Natural Resources fell 0.6 percent to 90.9 rupees.
Reliance Communications Ltd. (RCOM IN): AT&T Inc. may acquire a stake in India’s second-largest mobile-phone operator, ET Now television channel reported yesterday without saying where it got the information. Reliance Communications fell 1.7 percent to 307.10 rupees before the report.
Sterlite Industries India Ltd. (STLT IN): The nation’s biggest copper producer said it will get a 61.5 billion rupee ($1.28 billion) loan from a consortium of lenders led by State Bank of India for a 2,400 mega-watt power project, in an e- mailed statement. The shares gained 5.2 percent to 645.70 rupees.
Suzlon Energy Ltd. (SUEL IN): India’s largest wind-turbine maker said it may sell all or part of its stake in unit Hansen Transmissions International NV to cut some of its debt amounting to $2.5 billion. The stock slid 5.2 percent to 117.10 rupees.
Unitech Ltd. (UT IN): India’s second-biggest real-estate developer said it allotted 227.5 million warrants convertible into an equal number of shares to Harsil Projects Pvt, in a statement to the Bombay Stock Exchange. Unitech rose 3.7 percent to 85.30 rupees.
Wockhardt Ltd. (WPL IN): The Indian drugmaker seeking to reorganize its debt said yesterday it will restructure $108 million of bonds and sell more non-core businesses in the next three-to-six months. The stock advanced 1.2 percent to 144.10 rupees.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, rose 21.10, or 0.1 percent, to 14,785.74. The S&P CNX Nifty Index on the National Stock Exchange added 0.4 percent to 4,390.95. The BSE 200 Index increased 0.7 percent to 1,811.79. SGX Nifty futures for July delivery advanced 0.8 percent to 4,424 at 10:19 a.m. in Singapore today.
Overseas investors bought a net 6.73 billion rupees ($138.70 million) of Indian stocks on June 26, increasing their total investment in equities this year to $4.94 billion, the Securities & Exchange Board of India said on its Web site.
Dredging Corp of India Ltd. (DCIL IN): The country’s biggest dredger of ports said it will pay a dividend of five rupees a share, in a statement to the National Stock Exchange yesterday. The stock gained 2.4 percent to 498.75 rupees.
Nestle India Ltd. (NEST IN): The unit of the world’s biggest food company was rated “overweight” in new coverage at HSBC Holdings Plc. The stock rose 2.7 percent to 1,920.15 rupees.
Gujarat Alkalies & Chemicals Ltd. (GALK IN): The Indian maker of caustic soda yesterday reported fourth-quarter profit of 215.8 million rupees, compared with 183.5 million rupees a year earlier. The shares gained 1 percent to 104.85 rupees.
Reliance Industries Ltd. (RIL IN): India’s most valuable company may file an appeal with the Supreme Court on its gas pricing and supply dispute with Reliance Natural Resources Ltd. (RNR IN) on July 6, NDTV Profit reported yesterday, without saying where it got the information. Reliance Industries gained 2.9 percent to 2,087 rupees. Reliance Natural Resources fell 0.6 percent to 90.9 rupees.
Reliance Communications Ltd. (RCOM IN): AT&T Inc. may acquire a stake in India’s second-largest mobile-phone operator, ET Now television channel reported yesterday without saying where it got the information. Reliance Communications fell 1.7 percent to 307.10 rupees before the report.
Sterlite Industries India Ltd. (STLT IN): The nation’s biggest copper producer said it will get a 61.5 billion rupee ($1.28 billion) loan from a consortium of lenders led by State Bank of India for a 2,400 mega-watt power project, in an e- mailed statement. The shares gained 5.2 percent to 645.70 rupees.
Suzlon Energy Ltd. (SUEL IN): India’s largest wind-turbine maker said it may sell all or part of its stake in unit Hansen Transmissions International NV to cut some of its debt amounting to $2.5 billion. The stock slid 5.2 percent to 117.10 rupees.
Unitech Ltd. (UT IN): India’s second-biggest real-estate developer said it allotted 227.5 million warrants convertible into an equal number of shares to Harsil Projects Pvt, in a statement to the Bombay Stock Exchange. Unitech rose 3.7 percent to 85.30 rupees.
Wockhardt Ltd. (WPL IN): The Indian drugmaker seeking to reorganize its debt said yesterday it will restructure $108 million of bonds and sell more non-core businesses in the next three-to-six months. The stock advanced 1.2 percent to 144.10 rupees.
N.Z. Reserve Bank Plans Focus on Inflation Amid Recovery
June 30 (Bloomberg) -- New Zealand’s central bank said it will focus on inflation risks over the next year as the global economy recovers from recession.
“An enormous challenge looms in inflationary risks once confidence returns to normal in global markets when there is so much liquidity around,” the bank said in its annual “statement of intent” released in Wellington today. “We will be focused on these risks as we consider the likely nature of a recovery.”
Governor Alan Bollard has cut the benchmark interest rate to a record low to kick-start an economy in its worse recession in more than three decades. He said on June 11 that inflation, which he is required to keep between 1 percent and 3 percent, would ease sharply this year, giving him scope to keep borrowing costs low until late 2010.
Consumer prices will rise just 1.2 percent in the year ending March 31, 2010, and 2.3 percent in the following year, the central bank forecast.
The statement is published annually, outlining the central bank’s plans across all its roles including financial-market regulation and prudential supervision.
While New Zealand is in its sixth quarter of recession, it has “got off remarkably lightly so far compared with larger northern hemisphere economies,” the central bank said.
“Financial aftershocks still rock our markets, with New Zealand dollar investments swinging in and out of favor as market appetite for risk fluctuates,” it said. “How long recovery will take is uncertain, though it is likely that it will be some significant time before economic activity returns to robust and healthy levels.”
“An enormous challenge looms in inflationary risks once confidence returns to normal in global markets when there is so much liquidity around,” the bank said in its annual “statement of intent” released in Wellington today. “We will be focused on these risks as we consider the likely nature of a recovery.”
Governor Alan Bollard has cut the benchmark interest rate to a record low to kick-start an economy in its worse recession in more than three decades. He said on June 11 that inflation, which he is required to keep between 1 percent and 3 percent, would ease sharply this year, giving him scope to keep borrowing costs low until late 2010.
Consumer prices will rise just 1.2 percent in the year ending March 31, 2010, and 2.3 percent in the following year, the central bank forecast.
The statement is published annually, outlining the central bank’s plans across all its roles including financial-market regulation and prudential supervision.
While New Zealand is in its sixth quarter of recession, it has “got off remarkably lightly so far compared with larger northern hemisphere economies,” the central bank said.
“Financial aftershocks still rock our markets, with New Zealand dollar investments swinging in and out of favor as market appetite for risk fluctuates,” it said. “How long recovery will take is uncertain, though it is likely that it will be some significant time before economic activity returns to robust and healthy levels.”
Japanese jobless data jumps to new high
Published: June 30 2009 05:25 | Last updated: June 30 2009 05:25
TOKYO, June 30 – Japan’s jobless rate rose to a new 5-1/2-year high in May and job availability sank to record low but government stimulus efforts prompted a modest rise in household spending, reinforcing forecasts the economy will return to growth in the current quarter.
But the jobs data suggests any recovery is likely to be tempered by sluggish domestic demand, even as the country’s export industries start to recover from a sharp downturn in the global economy.
”No one expects that the labour market is improving yet. Labour indicators are always lagging indicators to the business cycle and we are still in a very early stage of recovery so probably the deterioration of the labour market continues but at a more moderate pace,” said Masamichi Adachi, a senior economist at JP Morgan.
Although some leading economic indicators, such as industrial output, have rebounded in recent months many companies are expected to keep cutting costs on wages to churn out profits even under weaker demand.
As they stop hiring, the jobs-to-applicants ratio slid to 0.44, meaning about four jobs were available for every nine applicants. It was the lowest reading since the data started in 1963 and below a median market forecast of 0.45.
The seasonally adjusted unemployment rate rose to 5.2 per cent – the highest since September 2003 and in line with the market forecast – from 5.0 per cent in April.
Economists expect the jobless rate to rise beyond a postwar peak of 5.5 per cent, hurting domestic consumption, which had seen a limited recovery even during the boom years as the population ages.
The number of employed people sank by 1.36 million from a year earlier, a record rate, as both manufacturers and the service sector cut staff, an official said.
”Even though industrial output is rebounding, that won’t help boost employment as the level of production is at low levels,” he told a briefing.
But household spending unexpectedly rose 0.3 per cent in May from a year earlier in price-adjusted real terms, when economists on average forecast for a decline of 1.6 per cent.
Economists warn against reading too much into the government consumption data, which they say has sampling flaws, but the uptick follows government stimulus such as a one-off cash payments to each household and subsidies on energy efficient products.
”Consumption is looking likely to escape the direct impact of the high jobless rate, thanks to the impact of government measures to promote environmentally friendly cars and consumer electronics, which apparently helped boost household spending in May,” said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management.
The rebound in consumption bolstered expectations that the world’s second-largest economy will climb out of recession in April-June after four straight quarters of contraction, Japan’s longest spell of contraction on record.
Economists polled by Reuters forecast growth of 0.4 per cent expected in April-June.
Still, consumer prices started falling even after stripping out the impact of cheaper energy prices, with so-called core-core index falling 0.5 per cent in May, the biggest fall in two years, reflecting persistently weak domestic consumption.
The spectre of deflation is likely to keep the Bank of Japan from seeking an exit from easy monetary stance in the near future, economists also said.
TOKYO, June 30 – Japan’s jobless rate rose to a new 5-1/2-year high in May and job availability sank to record low but government stimulus efforts prompted a modest rise in household spending, reinforcing forecasts the economy will return to growth in the current quarter.
But the jobs data suggests any recovery is likely to be tempered by sluggish domestic demand, even as the country’s export industries start to recover from a sharp downturn in the global economy.
”No one expects that the labour market is improving yet. Labour indicators are always lagging indicators to the business cycle and we are still in a very early stage of recovery so probably the deterioration of the labour market continues but at a more moderate pace,” said Masamichi Adachi, a senior economist at JP Morgan.
Although some leading economic indicators, such as industrial output, have rebounded in recent months many companies are expected to keep cutting costs on wages to churn out profits even under weaker demand.
As they stop hiring, the jobs-to-applicants ratio slid to 0.44, meaning about four jobs were available for every nine applicants. It was the lowest reading since the data started in 1963 and below a median market forecast of 0.45.
The seasonally adjusted unemployment rate rose to 5.2 per cent – the highest since September 2003 and in line with the market forecast – from 5.0 per cent in April.
Economists expect the jobless rate to rise beyond a postwar peak of 5.5 per cent, hurting domestic consumption, which had seen a limited recovery even during the boom years as the population ages.
The number of employed people sank by 1.36 million from a year earlier, a record rate, as both manufacturers and the service sector cut staff, an official said.
”Even though industrial output is rebounding, that won’t help boost employment as the level of production is at low levels,” he told a briefing.
But household spending unexpectedly rose 0.3 per cent in May from a year earlier in price-adjusted real terms, when economists on average forecast for a decline of 1.6 per cent.
Economists warn against reading too much into the government consumption data, which they say has sampling flaws, but the uptick follows government stimulus such as a one-off cash payments to each household and subsidies on energy efficient products.
”Consumption is looking likely to escape the direct impact of the high jobless rate, thanks to the impact of government measures to promote environmentally friendly cars and consumer electronics, which apparently helped boost household spending in May,” said Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management.
The rebound in consumption bolstered expectations that the world’s second-largest economy will climb out of recession in April-June after four straight quarters of contraction, Japan’s longest spell of contraction on record.
Economists polled by Reuters forecast growth of 0.4 per cent expected in April-June.
Still, consumer prices started falling even after stripping out the impact of cheaper energy prices, with so-called core-core index falling 0.5 per cent in May, the biggest fall in two years, reflecting persistently weak domestic consumption.
The spectre of deflation is likely to keep the Bank of Japan from seeking an exit from easy monetary stance in the near future, economists also said.
Sunday, June 28, 2009
India’s Economic Survey to Be Presented on July 2: Week Ahead
June 29 (Bloomberg) -- India’s Economic Survey for the year ended March 31 will be presented in parliament on July 2 as the government prepares to unveil the budget for this fiscal year next week.
India’s Finance Minister Pranab Mukherjee will present the survey, which states the nation’s economic performance during the last fiscal year, in parliament.
The railway budget for the fiscal year ending March 31 will be presented on July 3. The budget session of parliament will be held from July 2 to Aug. 7.
India will announce May trade figures on July 1 in New Delhi as the worst global recession since the Great Depression hurts demand for the nation’s jewelry, clothing and other products.
Exports fell the most in at least 14 years in April. Overseas shipments dropped 33.2 percent from a year earlier to $10.74 billion. That was the biggest decline since at least April 1995, when Bloomberg data began. Exports slid 33 percent in March. The nation’s exports, which account for about 15 percent of the economy, grew 3.4 percent to $168.7 billion in the year ended March 31, missing a $200 billion target.
India’s new Trade Minister Anand Sharma said in May that the government is likely to announce steps to help exporters in the budget.
Hindalco Industries Ltd., India’s biggest aluminum producer, will announce tomorrow earnings for the quarter ended March 31. The company may post a profit, excluding unit Novelis, of 2.03 billion rupees ($42 million) in the three-month period, according to a median estimate in a Bloomberg survey of analysts. Hindalco posted a profit of 10.8 billion rupees, which includes a one-time gain, in the year-earlier quarter.
Stocks
India’s benchmark Bombay Stock Exchange Sensitive Index, or Sensex, rose 1.7 percent, its highest in two weeks, in the week ended June 26. The Sensex gained on optimism increased state spending and the economic recovery may spur demand.
Jaiprakash Associates Ltd., the biggest builder of dams, and Larsen & Toubro Ltd., the largest engineering company, were among the biggest gainers. Jaiprakash advanced 11 percent, while Larsen & Toubro added 7.6 percent.
The rupee posted a fourth week of losses on speculation local importers sold the currency to buy foreign exchange required to settle month-end payments. The currency was poised for the first monthly drop since February as the nation’s refiners may have stepped up dollar purchases to pay for shipments of crude oil, which is set for a fifth month of gains.
Rupee, Bonds
The rupee declined 0.1 percent last week to 48.12 per dollar in Mumbai, according to data compiled by Bloomberg. The currency is Asia’s second-worst performer this month, with a 2.2 percent loss that trimmed this quarter’s gains to 5.2 percent.
Indian bonds rose for a second week, their best run in two months, on speculation borrowing costs around the world will remain low after the U.S. Federal Reserve held interest rates near zero earlier last week.
The yield on the most traded securities fell to the lowest since June 10 as banks, the biggest buyers of government debt, invested surplus cash in fixed-income securities.
The yield on the 6.07 percent note due May 2014 slid 14 basis points last week to 6.50 percent in Mumbai, according to the central bank’s trading system. A basis point is 0.01 percentage point.
Event Date
FICCI session with UCO Bank’s S.K. Goel June 29
FICCI session with Corporation Bank June 30
Hindalco earnings June 30
Indian Oil Corp. golden jubilee in Delhi June 30
Aviation Outlook conference in Mumbai June 30-July 1
Trade figures July 1
Economic Survey July 2
Railway Budget July 3
India’s Finance Minister Pranab Mukherjee will present the survey, which states the nation’s economic performance during the last fiscal year, in parliament.
The railway budget for the fiscal year ending March 31 will be presented on July 3. The budget session of parliament will be held from July 2 to Aug. 7.
India will announce May trade figures on July 1 in New Delhi as the worst global recession since the Great Depression hurts demand for the nation’s jewelry, clothing and other products.
Exports fell the most in at least 14 years in April. Overseas shipments dropped 33.2 percent from a year earlier to $10.74 billion. That was the biggest decline since at least April 1995, when Bloomberg data began. Exports slid 33 percent in March. The nation’s exports, which account for about 15 percent of the economy, grew 3.4 percent to $168.7 billion in the year ended March 31, missing a $200 billion target.
India’s new Trade Minister Anand Sharma said in May that the government is likely to announce steps to help exporters in the budget.
Hindalco Industries Ltd., India’s biggest aluminum producer, will announce tomorrow earnings for the quarter ended March 31. The company may post a profit, excluding unit Novelis, of 2.03 billion rupees ($42 million) in the three-month period, according to a median estimate in a Bloomberg survey of analysts. Hindalco posted a profit of 10.8 billion rupees, which includes a one-time gain, in the year-earlier quarter.
Stocks
India’s benchmark Bombay Stock Exchange Sensitive Index, or Sensex, rose 1.7 percent, its highest in two weeks, in the week ended June 26. The Sensex gained on optimism increased state spending and the economic recovery may spur demand.
Jaiprakash Associates Ltd., the biggest builder of dams, and Larsen & Toubro Ltd., the largest engineering company, were among the biggest gainers. Jaiprakash advanced 11 percent, while Larsen & Toubro added 7.6 percent.
The rupee posted a fourth week of losses on speculation local importers sold the currency to buy foreign exchange required to settle month-end payments. The currency was poised for the first monthly drop since February as the nation’s refiners may have stepped up dollar purchases to pay for shipments of crude oil, which is set for a fifth month of gains.
Rupee, Bonds
The rupee declined 0.1 percent last week to 48.12 per dollar in Mumbai, according to data compiled by Bloomberg. The currency is Asia’s second-worst performer this month, with a 2.2 percent loss that trimmed this quarter’s gains to 5.2 percent.
Indian bonds rose for a second week, their best run in two months, on speculation borrowing costs around the world will remain low after the U.S. Federal Reserve held interest rates near zero earlier last week.
The yield on the most traded securities fell to the lowest since June 10 as banks, the biggest buyers of government debt, invested surplus cash in fixed-income securities.
The yield on the 6.07 percent note due May 2014 slid 14 basis points last week to 6.50 percent in Mumbai, according to the central bank’s trading system. A basis point is 0.01 percentage point.
Event Date
FICCI session with UCO Bank’s S.K. Goel June 29
FICCI session with Corporation Bank June 30
Hindalco earnings June 30
Indian Oil Corp. golden jubilee in Delhi June 30
Aviation Outlook conference in Mumbai June 30-July 1
Trade figures July 1
Economic Survey July 2
Railway Budget July 3
U.K. Financial Firms Plan to Eliminate 13,000 Jobs, CBI Says
June 29 (Bloomberg) -- U.K. financial services companies may cut 13,000 jobs in the third quarter even as they expressed rising optimism for the first time in two years, Britain’s biggest business lobby group said.
“Conditions still remain rough but there are signs of some improvement expected in the coming months,” according to Ian McCafferty, the Confederation of British Industry’s chief economic adviser at a press conference in London. Profits, employment and investment remain “on a downward trend,” he said.
The rate of job cuts is slowing, the group’s quarterly financial services survey showed. Financial services companies cut about 17,000 jobs in the first quarter and probably shed 15,000 in the second quarter, said the CBI.
The Bank of England last week said financial institutions remain vulnerable to further shocks. British banks told the survey that revenue declined in the second quarter at the fastest rate since March 1991. Lenders are less optimistic “about the overall business situation” than when they were surveyed in the first quarter, the survey said.
“The rising level of bad debts are a further worry for the industry,” said McCafferty.
Concerns about bank funding were the highest since the survey was introduced in 1989, the CBI said.
“Wholesale funding is still very tight,” said John Hitchins, U.K. banking leader of PricewaterhouseCoopers LLC, which conducted the survey with the CBI. There is “intense competition” for retail deposits, he added.
Insurer Optimism
For the financial services industry as a whole, revenue is expected to rise for the first time next quarter following seven quarters of declines, the CBI said.
Insurance companies are the most optimistic about growth in the three months starting July 1, while customer-owned lenders, known as building societies, anticipate revenue and profitability will “stabilize”. Securities traders and investment managers expect an improvement in their business to be “short-lived,” said the CBI.
The CBI surveyed 73 financial-services companies, including banks, building societies, insurers, brokers and fund managers from May 20 to June 3. The CBI represents about 240,000 companies that employ one-third of Britain’s private sector workforce.
“Conditions still remain rough but there are signs of some improvement expected in the coming months,” according to Ian McCafferty, the Confederation of British Industry’s chief economic adviser at a press conference in London. Profits, employment and investment remain “on a downward trend,” he said.
The rate of job cuts is slowing, the group’s quarterly financial services survey showed. Financial services companies cut about 17,000 jobs in the first quarter and probably shed 15,000 in the second quarter, said the CBI.
The Bank of England last week said financial institutions remain vulnerable to further shocks. British banks told the survey that revenue declined in the second quarter at the fastest rate since March 1991. Lenders are less optimistic “about the overall business situation” than when they were surveyed in the first quarter, the survey said.
“The rising level of bad debts are a further worry for the industry,” said McCafferty.
Concerns about bank funding were the highest since the survey was introduced in 1989, the CBI said.
“Wholesale funding is still very tight,” said John Hitchins, U.K. banking leader of PricewaterhouseCoopers LLC, which conducted the survey with the CBI. There is “intense competition” for retail deposits, he added.
Insurer Optimism
For the financial services industry as a whole, revenue is expected to rise for the first time next quarter following seven quarters of declines, the CBI said.
Insurance companies are the most optimistic about growth in the three months starting July 1, while customer-owned lenders, known as building societies, anticipate revenue and profitability will “stabilize”. Securities traders and investment managers expect an improvement in their business to be “short-lived,” said the CBI.
The CBI surveyed 73 financial-services companies, including banks, building societies, insurers, brokers and fund managers from May 20 to June 3. The CBI represents about 240,000 companies that employ one-third of Britain’s private sector workforce.
Japan’s Factory Output Rises 5.9%, Third Monthly Gain
June 29 (Bloomberg) -- Japan’s industrial output rose for a third month in May as companies rebuilt inventories and the economy started to climb out of its deepest postwar recession.
Production increased 5.9 percent from a month earlier, the Trade Ministry said today in Tokyo, matching a gain in April that was the fastest since 1953. Economists surveyed by Bloomberg predicted a 7 percent increase, and factories were still producing 29.5 percent less than in May last year.
Manufacturers forecast output will advance this month and next, albeit at a slower pace, and economists expect the Bank of Japan’s Tankan survey this week to show sentiment among large manufacturers rebounded from a record low. The figures provide the latest evidence that the world recession is moderating as central banks flood their economies with cash and governments spend $2.2 trillion to prop up demand.
“Today’s data suggest companies are clearing inventories steadily and now the biggest focus is shifting to what happens after the inventory adjustment is completed,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “We have yet to see a pickup in final demand, which is crucial for Japan’s economy to sustain a recovery.”
A separate ministry report showed retail sales fell 2.8 percent in May from a year earlier, a ninth monthly decline, as a worsening job market forced households to cut back. Sales were unchanged from April.
Stocks Rise
The Nikkei 225 Stock Average added 0.4 percent at the lunch break in Tokyo, taking its gains to 41 percent from a 26- year low on March 10. Rengo Co., the nation’s biggest maker of cardboard boxes, surged 5.9 percent. The yen traded at 95.56 per dollar from 95.19 before the reports were published.
Production has risen for three months running, following a five-month losing streak that left about half of the country’s factory capacity sitting idle as of April. The largest output increase on record was 7.9 percent in March 1953, near the end of the Korean War.
Gains in production will slow to 3.1 percent in June and 0.9 percent next month, the ministry said, indicating that the inventory restocking may soon run its course. “Momentum is gradually fading,” said Muto at Sumitomo Mitsui.
The Organization for Economic Cooperation and Development raised its forecast for its 30 member nations for the first time in two years last week, and reports showed the U.S. economy is pulling out of its slump. Consumer spending advanced for the first time in three months in May and household sentiment rose to the highest level since February 2008.
Tankan Survey
An index of sentiment among large manufacturers will climb for the first time in a year to minus 43 from a record low of minus 58, economists predict the Tankan will show on July 1. A negative number means pessimists still outnumber optimists.
Japan’s economy is likely to grow at a 2.3 percent annual pace this quarter, according to economists surveyed by Bloomberg, following the previous period’s record 14.2 percent contraction.
China’s 4 trillion yuan ($586 billion) in government spending is feeding demand for Japan’s heavy equipment, autos and materials. China this year surpassed the U.S. as Japan’s biggest export customer.
“The impact of China’s infrastructure building has started to emerge,” Taizo Kayata, senior executive officer in charge of China operations at Komatsu Ltd., Japan’s biggest maker of construction equipment. Kayata said Chinese sales probably grew between 10 percent and 20 percent in June.
U.S., Europe
Still, rising unemployment in the U.S. and Europe may limit the rebound for Japan’s manufacturers. Nissan Motor Co. Chief Executive Officer Carlos Ghosn said last week that the U.S. market isn’t recovering. The company, which is forecasting its second annual loss, cut domestic production by 36 percent in May from a year earlier.
Job and wage cuts will probably curtail spending by Japanese consumers, which makes up more than half of the economy. Reports tomorrow are expected to show the unemployment rate rose to 5.2 percent in May and wages slid for a 12th month, extending their longest losing streak in five years, according to economists surveyed by Bloomberg.
Panasonic Corp., the world’s largest maker of plasma televisions, last week said it will reduce the annual salaries of its 10,000 managers this year.
“Consumer spending will remain weak for a while as long as the deterioration in the job market and wages continues,” said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo. “Japan’s recovery will be very weak.”
Production increased 5.9 percent from a month earlier, the Trade Ministry said today in Tokyo, matching a gain in April that was the fastest since 1953. Economists surveyed by Bloomberg predicted a 7 percent increase, and factories were still producing 29.5 percent less than in May last year.
Manufacturers forecast output will advance this month and next, albeit at a slower pace, and economists expect the Bank of Japan’s Tankan survey this week to show sentiment among large manufacturers rebounded from a record low. The figures provide the latest evidence that the world recession is moderating as central banks flood their economies with cash and governments spend $2.2 trillion to prop up demand.
“Today’s data suggest companies are clearing inventories steadily and now the biggest focus is shifting to what happens after the inventory adjustment is completed,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “We have yet to see a pickup in final demand, which is crucial for Japan’s economy to sustain a recovery.”
A separate ministry report showed retail sales fell 2.8 percent in May from a year earlier, a ninth monthly decline, as a worsening job market forced households to cut back. Sales were unchanged from April.
Stocks Rise
The Nikkei 225 Stock Average added 0.4 percent at the lunch break in Tokyo, taking its gains to 41 percent from a 26- year low on March 10. Rengo Co., the nation’s biggest maker of cardboard boxes, surged 5.9 percent. The yen traded at 95.56 per dollar from 95.19 before the reports were published.
Production has risen for three months running, following a five-month losing streak that left about half of the country’s factory capacity sitting idle as of April. The largest output increase on record was 7.9 percent in March 1953, near the end of the Korean War.
Gains in production will slow to 3.1 percent in June and 0.9 percent next month, the ministry said, indicating that the inventory restocking may soon run its course. “Momentum is gradually fading,” said Muto at Sumitomo Mitsui.
The Organization for Economic Cooperation and Development raised its forecast for its 30 member nations for the first time in two years last week, and reports showed the U.S. economy is pulling out of its slump. Consumer spending advanced for the first time in three months in May and household sentiment rose to the highest level since February 2008.
Tankan Survey
An index of sentiment among large manufacturers will climb for the first time in a year to minus 43 from a record low of minus 58, economists predict the Tankan will show on July 1. A negative number means pessimists still outnumber optimists.
Japan’s economy is likely to grow at a 2.3 percent annual pace this quarter, according to economists surveyed by Bloomberg, following the previous period’s record 14.2 percent contraction.
China’s 4 trillion yuan ($586 billion) in government spending is feeding demand for Japan’s heavy equipment, autos and materials. China this year surpassed the U.S. as Japan’s biggest export customer.
“The impact of China’s infrastructure building has started to emerge,” Taizo Kayata, senior executive officer in charge of China operations at Komatsu Ltd., Japan’s biggest maker of construction equipment. Kayata said Chinese sales probably grew between 10 percent and 20 percent in June.
U.S., Europe
Still, rising unemployment in the U.S. and Europe may limit the rebound for Japan’s manufacturers. Nissan Motor Co. Chief Executive Officer Carlos Ghosn said last week that the U.S. market isn’t recovering. The company, which is forecasting its second annual loss, cut domestic production by 36 percent in May from a year earlier.
Job and wage cuts will probably curtail spending by Japanese consumers, which makes up more than half of the economy. Reports tomorrow are expected to show the unemployment rate rose to 5.2 percent in May and wages slid for a 12th month, extending their longest losing streak in five years, according to economists surveyed by Bloomberg.
Panasonic Corp., the world’s largest maker of plasma televisions, last week said it will reduce the annual salaries of its 10,000 managers this year.
“Consumer spending will remain weak for a while as long as the deterioration in the job market and wages continues,” said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo. “Japan’s recovery will be very weak.”
U.A.E. Plans to Back Bank Bond Sales, Al-Suwaidi Says
June 28 (Bloomberg) -- The United Arab Emirates plans to guarantee bank bond sales, intensifying efforts to shore up the financial system after pledging 120 billion dirhams ($33 billion) to boost liquidity in the Arab world’s second biggest economy.
The proposed law, which would allow the government to guarantee bonds, medium-term notes, syndicated loans and commercial paper, is expected to be discussed this week and will “give banks an extra arm to extend credit,” central bank Governor Sultan Bin Nasser al-Suwaidi said in an interview in Basel, Switzerland today.
Banks in the U.A.E. faced a shortage of funds as the global financial crisis blocked their access to foreign borrowings and local liquidity dried up as foreign investors speculating on a currency revaluation withdrew money. The gap between commercial bank loans and deposits in the U.A.E. rose to 110 billion dirhams in March, before falling to 91 billion dirhams, al- Suwaidi said on May 7.
Residential real-estate prices in Dubai, the second largest emirate in the U.A.E, have halved since their peak, leaving banks exposed to non-performing loans. Home values may drop another 20 percent this year, Deutsche Bank AG said on June 10.
“Although it is not really a monetary policy instrument it can be viewed as an instrument that would enable the expansion of credit,” al-Suwaidi said. If the law is passed this week it may be put into action within four weeks.
Market Reaction
Dubai’s stock exchange was closed when news of al-Suwaidi’s statement was reported. The Dubai Financial Market’s index of bank stocks fell 57 percent in the fourth quarter of last year and lost a further 4.9 percent since then. Abu Dhabi’s bank index lost 40 percent in the fourth quarter and has risen 8.5 percent since then.
“We’ll need to see the details, but it sounds like a very significant broadening of already extensive government support for the local banking sector,” Simon Williams, chief regional economist at HSBC Holdings Plc in Dubai, said by e-mail.
The U.A.E. said on Oct. 12 that it would guarantee all local bank deposits and interbank loans. The central bank created a 50 billion dirham ($13.6 billion) credit facility in September and on Oct. 14 said it would pump a further 70 billion dirham into the banking industry. The central bank cut its key repurchase rate by one percentage point since the start of the crisis to stimulate lending.
Lending Portfolios
“The U.A.E. central bank and local banks are bracing for a challenging second half of the year, particularly regarding asset-quality deterioration and the management of the lending portfolios,” Alia Moubayed, a senior economist at Barclays Capital, said in a June 19 report. Non-performing loans are expected to increase in the third and fourth quarters and into next year, Moubayed said.
The Abu Dhabi government said on Feb. 4 that it would support five of its local banks by buying $4.36 billion in bonds. The action raised concern among investors that the same measures would not be offered to Dubai.
Abu Dhabi, the largest of the seven emirates that make up the U.A.E., issued $3 billion of bonds to fund companies hurt by the credit crisis on April 1. Abu Dhabi’s issue followed the Dubai government’s $20 billion bond issue, half of which was bought by the U.A.E. central bank. The second tranche will be issued by the end of the year.
The Abu Dhabi government bond sale set the benchmark for Abu Dhabi-based companies such as Mubadala Development Co., a state-owned investment firm that followed with the sale of $1.75 billion of 5- and 10-year notes.
A public debt law is also under way that limits the amount of debt the federal government and local governments can take to 45 percent and 15 percent of gross domestic product respectively.
“With this mechanism, we hope to have an articulated reduction of financial institutions and other corporate exposure or borrowings from international markets. We learned from the crisis that we can’t rely on borrowing from international capital markets,” al-Suwaidi said.
The proposed law, which would allow the government to guarantee bonds, medium-term notes, syndicated loans and commercial paper, is expected to be discussed this week and will “give banks an extra arm to extend credit,” central bank Governor Sultan Bin Nasser al-Suwaidi said in an interview in Basel, Switzerland today.
Banks in the U.A.E. faced a shortage of funds as the global financial crisis blocked their access to foreign borrowings and local liquidity dried up as foreign investors speculating on a currency revaluation withdrew money. The gap between commercial bank loans and deposits in the U.A.E. rose to 110 billion dirhams in March, before falling to 91 billion dirhams, al- Suwaidi said on May 7.
Residential real-estate prices in Dubai, the second largest emirate in the U.A.E, have halved since their peak, leaving banks exposed to non-performing loans. Home values may drop another 20 percent this year, Deutsche Bank AG said on June 10.
“Although it is not really a monetary policy instrument it can be viewed as an instrument that would enable the expansion of credit,” al-Suwaidi said. If the law is passed this week it may be put into action within four weeks.
Market Reaction
Dubai’s stock exchange was closed when news of al-Suwaidi’s statement was reported. The Dubai Financial Market’s index of bank stocks fell 57 percent in the fourth quarter of last year and lost a further 4.9 percent since then. Abu Dhabi’s bank index lost 40 percent in the fourth quarter and has risen 8.5 percent since then.
“We’ll need to see the details, but it sounds like a very significant broadening of already extensive government support for the local banking sector,” Simon Williams, chief regional economist at HSBC Holdings Plc in Dubai, said by e-mail.
The U.A.E. said on Oct. 12 that it would guarantee all local bank deposits and interbank loans. The central bank created a 50 billion dirham ($13.6 billion) credit facility in September and on Oct. 14 said it would pump a further 70 billion dirham into the banking industry. The central bank cut its key repurchase rate by one percentage point since the start of the crisis to stimulate lending.
Lending Portfolios
“The U.A.E. central bank and local banks are bracing for a challenging second half of the year, particularly regarding asset-quality deterioration and the management of the lending portfolios,” Alia Moubayed, a senior economist at Barclays Capital, said in a June 19 report. Non-performing loans are expected to increase in the third and fourth quarters and into next year, Moubayed said.
The Abu Dhabi government said on Feb. 4 that it would support five of its local banks by buying $4.36 billion in bonds. The action raised concern among investors that the same measures would not be offered to Dubai.
Abu Dhabi, the largest of the seven emirates that make up the U.A.E., issued $3 billion of bonds to fund companies hurt by the credit crisis on April 1. Abu Dhabi’s issue followed the Dubai government’s $20 billion bond issue, half of which was bought by the U.A.E. central bank. The second tranche will be issued by the end of the year.
The Abu Dhabi government bond sale set the benchmark for Abu Dhabi-based companies such as Mubadala Development Co., a state-owned investment firm that followed with the sale of $1.75 billion of 5- and 10-year notes.
A public debt law is also under way that limits the amount of debt the federal government and local governments can take to 45 percent and 15 percent of gross domestic product respectively.
“With this mechanism, we hope to have an articulated reduction of financial institutions and other corporate exposure or borrowings from international markets. We learned from the crisis that we can’t rely on borrowing from international capital markets,” al-Suwaidi said.
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