An effort by the Indian regulator to clamp down on a practice in the country’s media of providing advertising and news coverage to publicly listed companies in exchange for shares, bonds and warrants is unlikely to curb the business, industry insiders say.
The Securities and Exchange Board of India has notified the Press Council of India, the watchdog, about what has become one of Indian media’s biggest businesses amid concern that it could be used to influence the price of shares.
“Needless to say, biased and motivated dissemination of information, guided by commercial considerations, can potentially mislead investors in the securities market,” Sebi said.
Sebi ordered that newspapers and television stations put into effect recommendations from the Press Council, including a requirement to disclose any stakes they might have in a company they are reporting on and to publish their portfolio of investments on their websites.
Known as “private treaties”, the business of selling news coverage for shares was pioneered by the Times of India a few years ago, and is now widespread in India’s national and regional press.
The system is seen by some critics as one of the greatest threats to media ethics in India, the world’s biggest democracy.
“The phenomenon of paid news has acquired serious dimensions,” the Press Council said in a report that also looked at how political parties pay media outlets for coverage.
“Today it goes beyond the corruption of individual journalists and media companies and has become pervasive, structured and highly organised.
“In the process, it is undermining democracy in India.”
However, the Press Council’s chairman, Justice Ganendra Narayan Ray, admitted that the body’s only power was to censure an offending journalist or outlet if they violated the guidelines.
An executive at Sebi told the Financial Times that in spite of placing the Press Council order on its website, it had virtually no powers to act on the matter.
Sandeep Parekh, a corporate lawyer and former executive director at Sebi, said the move was toothless.
“I don’t think anybody’s serious about enforcing it, and without enforcement, I don’t think anybody’s going to move,” he said.
It is the stock market that has put the biggest brake on the practice.
The private treaties business boomed when India’s stock market was rising before the global economic crisis struck.
But many of the small and medium-sized companies that listed their shares during this period were hardest hit by the crisis, causing media companies that had entered private treaties with them to suffer losses.
Saturday, September 4, 2010
Goldman Sachs Said to Be Shutting Proprietary-Trading Division
Goldman Sachs Group Inc. is disbanding its principal-strategies business, one of the groups that makes bets with the firm’s own money, to comply with new U.S. rules aimed at curbing risk, two people with knowledge of the decision said.
Wall Street’s most profitable investment bank plans to hold off on announcing the wind-down while the 65 to 70 members of the global unit seek new jobs, the people said, speaking anonymously because the internal discussions about the process are confidential. Some traders and support staff may get roles within the New York-based firm, while a team in Asia may raise money for a new hedge fund, the people said.
“The Dodd-Frank bill caused them to have some damage to the business here and they said it’s done, let’s get rid of it,” Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York, told Bloomberg Television. “They’re saying, ‘We don’t want these people to be worrying about what they’re going to be doing a couple of years from now, we’re just going to get rid of the uncertainty.”
Goldman Sachs, which says about 10 percent of its revenue comes from proprietary trading, is grappling with a provision of the Dodd-Frank financial-overhaul act that prohibits banks from risking capital by betting for their own accounts. JPMorgan Chase & Co. plans to close its prop-trading units in response to the law, signed by President Barack Obama in July. JPMorgan last month told in-house commodities traders in London that they may lose their jobs, a person briefed on the matter said this week.
Four Years
The Dodd-Frank Act allows banks at least four years to bring their proprietary trading into compliance, with a potential extension of as many as three years, according to a time line prepared by Davis Polk & Wardwell LLP, the New York law firm.
“What’s motivating people is that they need to know where they are going, and no one wants to be the last group out the door,” Gary Townsend, president of Hill-Townsend Capital LLC, said on Bloomberg Television. “It’s really the personnel decisions that are driving this to happen sooner rather than later.” Townsend’s Chevy Chase, Maryland-based investment firm specializes in financial companies.
Ed Canaday, a spokesman for Goldman Sachs, said he couldn’t comment. Goldman Sachs posted its biggest one-day percentage gain since May 2009 on Sept. 3, climbing $7.51, or 5.4 percent, to $147.29 in New York Stock Exchange composite trading.
Hedge Fund
Earlier plans for most members of the Principal Strategies group, led by Hong Kong-based Morgan Sze, to leave together and form a hedge fund were shelved, people with knowledge of the matter said. Now Sze, 44, may set up a fund with a smaller team focused on Asia, they said. Employees in London and New York are considering different options, the people said.
The team’s members in New York, led by Bob Howard, are in talks to join another asset-management firm, according to two people.
“It’s a hard capital-raising environment for hedge funds at the moment, even more so for start-ups,” said Don Steinbrugge, managing partner of Agecroft Partners, a Richmond, Virginia-based consulting firm that advises hedge funds and investors. “Only a small percentage of funds will be successful in attracting money and I think Goldman guys will potentially be part of that.”
Goldman Sachs Principal Strategies is housed within the firm’s equities division and traces its roots to the risk arbitrage team once led by Robert Rubin, 72, who later became U.S. Treasury secretary. Alumni of the division who have left to start their own hedge funds include Frank Brosens at Taconic Capital Advisors LLC, Thomas Steyer at Farallon Capital Management, Eric Mindich at Eton Park Capital Management LP, and Dinakar Singh at TPG-Axon Capital Management.
New Funds
In 2007, about half the members of the Goldman Sachs Principal Strategies team, led by Raanan Agus, 42, created a fund called Goldman Sachs Investment Partners that remains housed in the firm’s money-management division. Some traders who stayed in the principal-strategies unit, including its former global head, Pierre-Henri Flamand, 40, and Ali Hedayat, 35, left Goldman Sachs earlier this year to set up a London-based hedge fund called Edoma Capital Partners LLP.
Congress added the prohibition on prop trading to the financial-overhaul package this year after Obama threw his support behind the idea, which had been championed by former Federal Reserve Chairman Paul Volcker, 82. The so-called Volcker rule is an attempt to limit risky trading and investing by depositary institutions after the worst financial crisis since the Great Depression culminated in an unprecedented level of government support for the banking system.
“This is the first of many situations,” Matt McCormick, a banking-industry analyst and portfolio manager at Cincinnati- based Bahl & Gaynor Inc., said today on Bloomberg Television. “We’re going to see other entities unwind their proprietary trading.”
Wall Street’s most profitable investment bank plans to hold off on announcing the wind-down while the 65 to 70 members of the global unit seek new jobs, the people said, speaking anonymously because the internal discussions about the process are confidential. Some traders and support staff may get roles within the New York-based firm, while a team in Asia may raise money for a new hedge fund, the people said.
“The Dodd-Frank bill caused them to have some damage to the business here and they said it’s done, let’s get rid of it,” Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York, told Bloomberg Television. “They’re saying, ‘We don’t want these people to be worrying about what they’re going to be doing a couple of years from now, we’re just going to get rid of the uncertainty.”
Goldman Sachs, which says about 10 percent of its revenue comes from proprietary trading, is grappling with a provision of the Dodd-Frank financial-overhaul act that prohibits banks from risking capital by betting for their own accounts. JPMorgan Chase & Co. plans to close its prop-trading units in response to the law, signed by President Barack Obama in July. JPMorgan last month told in-house commodities traders in London that they may lose their jobs, a person briefed on the matter said this week.
Four Years
The Dodd-Frank Act allows banks at least four years to bring their proprietary trading into compliance, with a potential extension of as many as three years, according to a time line prepared by Davis Polk & Wardwell LLP, the New York law firm.
“What’s motivating people is that they need to know where they are going, and no one wants to be the last group out the door,” Gary Townsend, president of Hill-Townsend Capital LLC, said on Bloomberg Television. “It’s really the personnel decisions that are driving this to happen sooner rather than later.” Townsend’s Chevy Chase, Maryland-based investment firm specializes in financial companies.
Ed Canaday, a spokesman for Goldman Sachs, said he couldn’t comment. Goldman Sachs posted its biggest one-day percentage gain since May 2009 on Sept. 3, climbing $7.51, or 5.4 percent, to $147.29 in New York Stock Exchange composite trading.
Hedge Fund
Earlier plans for most members of the Principal Strategies group, led by Hong Kong-based Morgan Sze, to leave together and form a hedge fund were shelved, people with knowledge of the matter said. Now Sze, 44, may set up a fund with a smaller team focused on Asia, they said. Employees in London and New York are considering different options, the people said.
The team’s members in New York, led by Bob Howard, are in talks to join another asset-management firm, according to two people.
“It’s a hard capital-raising environment for hedge funds at the moment, even more so for start-ups,” said Don Steinbrugge, managing partner of Agecroft Partners, a Richmond, Virginia-based consulting firm that advises hedge funds and investors. “Only a small percentage of funds will be successful in attracting money and I think Goldman guys will potentially be part of that.”
Goldman Sachs Principal Strategies is housed within the firm’s equities division and traces its roots to the risk arbitrage team once led by Robert Rubin, 72, who later became U.S. Treasury secretary. Alumni of the division who have left to start their own hedge funds include Frank Brosens at Taconic Capital Advisors LLC, Thomas Steyer at Farallon Capital Management, Eric Mindich at Eton Park Capital Management LP, and Dinakar Singh at TPG-Axon Capital Management.
New Funds
In 2007, about half the members of the Goldman Sachs Principal Strategies team, led by Raanan Agus, 42, created a fund called Goldman Sachs Investment Partners that remains housed in the firm’s money-management division. Some traders who stayed in the principal-strategies unit, including its former global head, Pierre-Henri Flamand, 40, and Ali Hedayat, 35, left Goldman Sachs earlier this year to set up a London-based hedge fund called Edoma Capital Partners LLP.
Congress added the prohibition on prop trading to the financial-overhaul package this year after Obama threw his support behind the idea, which had been championed by former Federal Reserve Chairman Paul Volcker, 82. The so-called Volcker rule is an attempt to limit risky trading and investing by depositary institutions after the worst financial crisis since the Great Depression culminated in an unprecedented level of government support for the banking system.
“This is the first of many situations,” Matt McCormick, a banking-industry analyst and portfolio manager at Cincinnati- based Bahl & Gaynor Inc., said today on Bloomberg Television. “We’re going to see other entities unwind their proprietary trading.”
Florida’s High-Speed Answer to a Foreclosure Mess
TEN days from now, a four-bedroom house on a cul-de-sac in Middleburg, Fla., is scheduled to be auctioned off at the Clay County courthouse, 25 miles south of Jacksonville.
Margery Golant, a Florida lawyer, says foreclosure law firms and mortgage servers “are practically running the courtrooms.”
A judge who recently took over their foreclosure case has ordered Rodney Waters; his fiancée, Terri Reese; and their four children to leave the home they bought in 2006.
Mr. Waters, a supervisor at a local packaging company and the family’s sole breadwinner, fell behind on his mortgage two years ago after his property taxes jumped unexpectedly. He now owes $264,000 on the house; a similar home down the street sold for $138,500 in February.
The predicament of the Waters-Reese family is common in Florida today. The state routinely sets new records for foreclosures — in the second quarter, 20.13 percent of its mortgages were delinquent or in foreclosure, a national high, according to the Mortgage Bankers Association. And with housing prices still in a free fall, almost half of all borrowers in Florida owe more on their mortgages than their properties are worth, says CoreLogic, a data firm.
While the Waters-Reese case may not be unusual in Florida, the coming auction of the home is still notable: it will be a result of the Florida Legislature’s new effort to cut the number of foreclosures inching their way through the state’s courts. Earlier this year, Florida earmarked $9.6 million to set up foreclosures-only courts across the state, staffed by retired judges. The goal of the program, which began in July, is to reduce the foreclosures backlog by 62 percent within a year.
No one disputes that foreclosures dominate Florida’s dockets and that something needs to be done to streamline a complex and emotionally wrenching process. But lawyers representing troubled borrowers contend that many of the retired judges called in from the sidelines to oversee these matters are so focused on cutting the caseload that they are unfairly favoring financial institutions at the expense of homeowners.
Lawyers say judges are simply ignoring problematic or contradictory evidence and awarding the right to foreclose to institutions that have yet to prove they own the properties in question.
“Now you show up and you get whatever judge is on the schedule and they have not looked at the file — they don’t even look at the motions,” says April Charney, a lawyer who represents imperiled borrowers at Jacksonville Area Legal Aid. “You get a five-minute hearing. It’s a factory.”
But Victor Tobin, chief judge in the 17th Judicial Circuit, which includes Broward County, defended the effort. “There are more assets devoted to those three foreclosure divisions in Broward than to any other division in the building in terms of case managers and that sort of thing to help the general public,” he said. “The people who come get fully, fully heard.”
In any event, huge numbers of cases are being handled. In an article last week in The Florida Bar News, Belvin Perry Jr., chief judge for the state’s Ninth Judicial Circuit, said that during July, 1,319 cases had been closed by three senior judges in the district’s two counties, Orange and Osceola.
Florida’s foreclosure mess is made murkier by what analysts and lawyers involved in the process say are questionable practices by some law firms that are representing banks. Such tactics, these people say, have drawn out the process significantly, making it extremely lucrative for the lawyers and more draining for troubled homeowners.
Doctored or dubious records presented in court as proof of a bank’s ownership have become such a problem that Bill McCollum, the Florida attorney general, announced last month that his office was investigating the state’s three largest foreclosure law firms representing lenders.
“Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of these law firms,” said Mr. McCollum in an interview. “We’ve had so many complaints that I am confident there is a great deal of fraud here.”
To be sure, adjudicating foreclosure cases is difficult, complicated by multiple transfers of mortgages and notes when a loan is sold, bewildering paperwork submitted by loan servicers and shoddy record-keeping by the many institutions that touched the mortgages during the byzantine securitization process that fueled the housing boom.
Margery Golant, a Florida lawyer, says foreclosure law firms and mortgage servers “are practically running the courtrooms.”
A judge who recently took over their foreclosure case has ordered Rodney Waters; his fiancée, Terri Reese; and their four children to leave the home they bought in 2006.
Mr. Waters, a supervisor at a local packaging company and the family’s sole breadwinner, fell behind on his mortgage two years ago after his property taxes jumped unexpectedly. He now owes $264,000 on the house; a similar home down the street sold for $138,500 in February.
The predicament of the Waters-Reese family is common in Florida today. The state routinely sets new records for foreclosures — in the second quarter, 20.13 percent of its mortgages were delinquent or in foreclosure, a national high, according to the Mortgage Bankers Association. And with housing prices still in a free fall, almost half of all borrowers in Florida owe more on their mortgages than their properties are worth, says CoreLogic, a data firm.
While the Waters-Reese case may not be unusual in Florida, the coming auction of the home is still notable: it will be a result of the Florida Legislature’s new effort to cut the number of foreclosures inching their way through the state’s courts. Earlier this year, Florida earmarked $9.6 million to set up foreclosures-only courts across the state, staffed by retired judges. The goal of the program, which began in July, is to reduce the foreclosures backlog by 62 percent within a year.
No one disputes that foreclosures dominate Florida’s dockets and that something needs to be done to streamline a complex and emotionally wrenching process. But lawyers representing troubled borrowers contend that many of the retired judges called in from the sidelines to oversee these matters are so focused on cutting the caseload that they are unfairly favoring financial institutions at the expense of homeowners.
Lawyers say judges are simply ignoring problematic or contradictory evidence and awarding the right to foreclose to institutions that have yet to prove they own the properties in question.
“Now you show up and you get whatever judge is on the schedule and they have not looked at the file — they don’t even look at the motions,” says April Charney, a lawyer who represents imperiled borrowers at Jacksonville Area Legal Aid. “You get a five-minute hearing. It’s a factory.”
But Victor Tobin, chief judge in the 17th Judicial Circuit, which includes Broward County, defended the effort. “There are more assets devoted to those three foreclosure divisions in Broward than to any other division in the building in terms of case managers and that sort of thing to help the general public,” he said. “The people who come get fully, fully heard.”
In any event, huge numbers of cases are being handled. In an article last week in The Florida Bar News, Belvin Perry Jr., chief judge for the state’s Ninth Judicial Circuit, said that during July, 1,319 cases had been closed by three senior judges in the district’s two counties, Orange and Osceola.
Florida’s foreclosure mess is made murkier by what analysts and lawyers involved in the process say are questionable practices by some law firms that are representing banks. Such tactics, these people say, have drawn out the process significantly, making it extremely lucrative for the lawyers and more draining for troubled homeowners.
Doctored or dubious records presented in court as proof of a bank’s ownership have become such a problem that Bill McCollum, the Florida attorney general, announced last month that his office was investigating the state’s three largest foreclosure law firms representing lenders.
“Thousands of final judgments of foreclosure against Florida homeowners may have been the result of the allegedly improper actions of these law firms,” said Mr. McCollum in an interview. “We’ve had so many complaints that I am confident there is a great deal of fraud here.”
To be sure, adjudicating foreclosure cases is difficult, complicated by multiple transfers of mortgages and notes when a loan is sold, bewildering paperwork submitted by loan servicers and shoddy record-keeping by the many institutions that touched the mortgages during the byzantine securitization process that fueled the housing boom.
Petraeus backs Karzai over corruption
General David Petraeus, the head of US and Nato forces in Afghanistan, defended Hamid Karzai, the country’s president, on Thursday after controversy over Kabul’s stance on corruption.
Speaking to the media at his base in Camp Eggers, near Kabul, Gen Petraeus acknowledged, however, that concerns over sleaze were hindering a counter-insurgency drive in Kandahar and that Nato’s showpiece push in Marjah district faced tough obstacles.
Gen Petraeus described Mr Karzai as “very forthright about corruption” and said the Afghan president’s chief concern was one the US shared: Taliban safe havens in Pakistan.
He was speaking on the day that Robert Gates, US defence secretary, arrived in Kabul for talks with Mr Karzai. The Afghan president had intervened to release Mohammad Zia Salehi, one of his national security advisers, who was arrested in July over claims that he accepted a car in return for favours.
Mr Karzai’s move was widely seen as weakening two US anti-corruption bodies involved in the arrest – the Major Crimes Task Force and the Sensitive Investigative Unit. The Afghan president subsequently ordered a review of their conduct.
Gen Petraeus said: “There clearly was some friction, if you will, over the arrest of the individual who was in the palace. I think frankly those issues, perceptions, have been resolved.”
He had heard Mr Karzai reassure Barack Obama, US president, and John Kerry, chairman of the US Senate foreign relations committee, “that he very much wants to strengthen the organisations involved in that case”.
The general conceded that efforts in Kandahar province – traditional homeland of the Taliban – were affected by a widespread perception that contracts were being awarded on an unclear basis to a limited number of people.
Gen Petraeus added that, having helped produce a counter-insurgency manual, he was now working on “counter-insurgency contracting guidance”. The general offered few specifics about a long-awaited push into Kandahar province, beyond saying it would be a “deliberate campaign”.
US officials had this year emphasised their goal of repelling the Taliban from the areas outside Kandahar city. But they have since tried to play down the prospect of large-scale fighting.
Gen Petraeus said there was “no question that the Taliban is fighting back” in Marjah but questioned the methodology of a June survey that said 99 per cent of respondents in the district saw the military operation as bad for the Afghan people. The small-scale study, by the International Council on Security and Development policy think-tank, has alarmed some US officials.
The general also signalled the prospect of high-level talks with the Taliban. “There have been approaches at very senior level that hold some promise,” he said. Such a process would be led by the Kabul government. Senior US military officials argue that the Taliban is unlikely to come to the table before the tide in the war is turned.
Speaking to the media at his base in Camp Eggers, near Kabul, Gen Petraeus acknowledged, however, that concerns over sleaze were hindering a counter-insurgency drive in Kandahar and that Nato’s showpiece push in Marjah district faced tough obstacles.
Gen Petraeus described Mr Karzai as “very forthright about corruption” and said the Afghan president’s chief concern was one the US shared: Taliban safe havens in Pakistan.
He was speaking on the day that Robert Gates, US defence secretary, arrived in Kabul for talks with Mr Karzai. The Afghan president had intervened to release Mohammad Zia Salehi, one of his national security advisers, who was arrested in July over claims that he accepted a car in return for favours.
Mr Karzai’s move was widely seen as weakening two US anti-corruption bodies involved in the arrest – the Major Crimes Task Force and the Sensitive Investigative Unit. The Afghan president subsequently ordered a review of their conduct.
Gen Petraeus said: “There clearly was some friction, if you will, over the arrest of the individual who was in the palace. I think frankly those issues, perceptions, have been resolved.”
He had heard Mr Karzai reassure Barack Obama, US president, and John Kerry, chairman of the US Senate foreign relations committee, “that he very much wants to strengthen the organisations involved in that case”.
The general conceded that efforts in Kandahar province – traditional homeland of the Taliban – were affected by a widespread perception that contracts were being awarded on an unclear basis to a limited number of people.
Gen Petraeus added that, having helped produce a counter-insurgency manual, he was now working on “counter-insurgency contracting guidance”. The general offered few specifics about a long-awaited push into Kandahar province, beyond saying it would be a “deliberate campaign”.
US officials had this year emphasised their goal of repelling the Taliban from the areas outside Kandahar city. But they have since tried to play down the prospect of large-scale fighting.
Gen Petraeus said there was “no question that the Taliban is fighting back” in Marjah but questioned the methodology of a June survey that said 99 per cent of respondents in the district saw the military operation as bad for the Afghan people. The small-scale study, by the International Council on Security and Development policy think-tank, has alarmed some US officials.
The general also signalled the prospect of high-level talks with the Taliban. “There have been approaches at very senior level that hold some promise,” he said. Such a process would be led by the Kabul government. Senior US military officials argue that the Taliban is unlikely to come to the table before the tide in the war is turned.
Friday, September 3, 2010
Venerable Craft, Modern Practitioner
Robert Ambrosi sweeps into the restaurant kitchen, past sizzling chicken and buttery mashed potatoes, and goes straight for the knives — carving knives and chef’s knives, paring knives and fillet knives, all made dull by clashes with flesh and bone. He picks them up and replaces them with identical twins.
“Any other knives here?” calls Mr. Ambrosi, a 54-year-old scion of a knife-sharpening clan that has spread from a valley in northern Italy to grindstones in cities across North America.
Mr. Ambrosi runs Ambrosi Cutlery with his two sons, Mark, 29, and Jason, 26. Their system is typical of their trade: they rent double sets of knives to meatpackers, butchers, deli workers, restaurant cooks and chefs so that one set is always in use while the other is in the shop being sharpened.
Every week, the company visits more than 800 clients and collects more than 8,000 knives to be replaced with freshly sharpened blades. The service costs $2.50 to $3.50 per knife.
The business started servicing mainly butchers and meatpackers, in territories handed down from father to son. To preserve the business for his children, Mr. Ambrosi expanded it to restaurants and even Yankee Stadium, in some cases deviating from long-held tradition. Many cooks and chefs take personal pride in their knives and their ability to maintain them, and would hesitate to release them to anyone else’s care. But sharpening a knife takes time and skill — and not every chef has both.
A badly sharpened blade “goes flat, and you can never bring the edge back,” said Steven Santoro, the head chef at Fresco by Scotto in Midtown, who uses Ambrosi’s services. Cooks with dull knives will cut themselves, “and it takes twice as long to finish the work.”
Professionals who appreciate Ambrosi’s technique, like Stefan Bahr, the executive chef of Métrazur, in Grand Central Terminal, will even pay out of their own pockets for Ambrosi to sharpen their personal knives. (In Bahr’s case, he is trusting Ambrosi’s with knives that cost $40 to $300.)
At the Meat Hook, a butcher shop in Williamsburg, Brooklyn, Mr. Ambrosi’s son Jason dropped off 13 newly sharpened knives, including an ebony-handled one with a carbon-steel blade and hand-hammered brass star-shaped rivets, produced decades ago by his great-grandfather’s company in upstate New York.
“Those are beautiful knives,” said Tom Mylan, a butcher, who is so enamored of them he has photographed the vintage one for his Facebook page.
It would be hard to find someone more concerned with the beauty of a blade than Mr. Ambrosi, whose hands show a fine crosshatch of cuts on top of old blisters and burns.
A good knife sharpener knows “how to feel it with your fingers, how to see it,” he said. It’s a craft requiring special training, he said, and even then, “some people just don’t have it.”
Most of those who do have it trace their roots to the mountains of northern Italy. Mr. Ambrosi’s grandfather, who came to the United States in the 1920s, hailed from the poor village of Carisolo. The village, with two neighboring towns of Pinzolo and Giustino, produced many of the more than 100 commercial knife sharpeners at work today in North America, sharpeners said.
No one knows why so many of the children of these towns became sharpeners. Most learned the trade in the immigrant networks of the countries where they landed. But today in Pinzolo is a tribute, Monumento al Moleta, Monument to the Knife Sharpener.
At first the immigrants came mainly to New York, but soon their offspring scattered to stake out new routes, a dozen sharpeners across the country said in interviews. Ambrosis with grindstones do business in Connecticut, New Jersey and Ohio, as well as boroughs of New York. The Binellis set up knife-sharpening businesses in Detroit, Chicago and Medford, Mass.; the Maganzinis ended up in and around Boston. The Povinellis set up shop in Buffalo and ventured to North and South Carolina and Arizona; offshoots of the Nella family went to Toronto and Vancouver, as well as Long Island, Seattle and West Jordan, Utah.
Robert Ambrosi’s grandfather traveled the Bronx in a horse-drawn cart with a grindstone powered by a foot pedal, serving, like the other knife sharpeners, mainly butchers and meatpackers.
Mr. Ambrosi’s father used a grindstone fueled by a battery carried in a truck. The battery had to be plugged in each night in the garage to recharge. Then in the 1950s came the great innovation — double sets of knives — that eventually freed the Ambrosis to set up their first shop.
“Any other knives here?” calls Mr. Ambrosi, a 54-year-old scion of a knife-sharpening clan that has spread from a valley in northern Italy to grindstones in cities across North America.
Mr. Ambrosi runs Ambrosi Cutlery with his two sons, Mark, 29, and Jason, 26. Their system is typical of their trade: they rent double sets of knives to meatpackers, butchers, deli workers, restaurant cooks and chefs so that one set is always in use while the other is in the shop being sharpened.
Every week, the company visits more than 800 clients and collects more than 8,000 knives to be replaced with freshly sharpened blades. The service costs $2.50 to $3.50 per knife.
The business started servicing mainly butchers and meatpackers, in territories handed down from father to son. To preserve the business for his children, Mr. Ambrosi expanded it to restaurants and even Yankee Stadium, in some cases deviating from long-held tradition. Many cooks and chefs take personal pride in their knives and their ability to maintain them, and would hesitate to release them to anyone else’s care. But sharpening a knife takes time and skill — and not every chef has both.
A badly sharpened blade “goes flat, and you can never bring the edge back,” said Steven Santoro, the head chef at Fresco by Scotto in Midtown, who uses Ambrosi’s services. Cooks with dull knives will cut themselves, “and it takes twice as long to finish the work.”
Professionals who appreciate Ambrosi’s technique, like Stefan Bahr, the executive chef of Métrazur, in Grand Central Terminal, will even pay out of their own pockets for Ambrosi to sharpen their personal knives. (In Bahr’s case, he is trusting Ambrosi’s with knives that cost $40 to $300.)
At the Meat Hook, a butcher shop in Williamsburg, Brooklyn, Mr. Ambrosi’s son Jason dropped off 13 newly sharpened knives, including an ebony-handled one with a carbon-steel blade and hand-hammered brass star-shaped rivets, produced decades ago by his great-grandfather’s company in upstate New York.
“Those are beautiful knives,” said Tom Mylan, a butcher, who is so enamored of them he has photographed the vintage one for his Facebook page.
It would be hard to find someone more concerned with the beauty of a blade than Mr. Ambrosi, whose hands show a fine crosshatch of cuts on top of old blisters and burns.
A good knife sharpener knows “how to feel it with your fingers, how to see it,” he said. It’s a craft requiring special training, he said, and even then, “some people just don’t have it.”
Most of those who do have it trace their roots to the mountains of northern Italy. Mr. Ambrosi’s grandfather, who came to the United States in the 1920s, hailed from the poor village of Carisolo. The village, with two neighboring towns of Pinzolo and Giustino, produced many of the more than 100 commercial knife sharpeners at work today in North America, sharpeners said.
No one knows why so many of the children of these towns became sharpeners. Most learned the trade in the immigrant networks of the countries where they landed. But today in Pinzolo is a tribute, Monumento al Moleta, Monument to the Knife Sharpener.
At first the immigrants came mainly to New York, but soon their offspring scattered to stake out new routes, a dozen sharpeners across the country said in interviews. Ambrosis with grindstones do business in Connecticut, New Jersey and Ohio, as well as boroughs of New York. The Binellis set up knife-sharpening businesses in Detroit, Chicago and Medford, Mass.; the Maganzinis ended up in and around Boston. The Povinellis set up shop in Buffalo and ventured to North and South Carolina and Arizona; offshoots of the Nella family went to Toronto and Vancouver, as well as Long Island, Seattle and West Jordan, Utah.
Robert Ambrosi’s grandfather traveled the Bronx in a horse-drawn cart with a grindstone powered by a foot pedal, serving, like the other knife sharpeners, mainly butchers and meatpackers.
Mr. Ambrosi’s father used a grindstone fueled by a battery carried in a truck. The battery had to be plugged in each night in the garage to recharge. Then in the 1950s came the great innovation — double sets of knives — that eventually freed the Ambrosis to set up their first shop.
Most Stocks Advance in India on Growth Prospects, Sterlite, Infosys Lead
Most Indian stocks rose, driving the benchmark stock index to a weekly gain, amid expectations local companies will benefit from strengthening economic growth.
Infosys Technologies Ltd., a software exporter that gets two thirds of its sales from North America, advanced to a one- week high. Better-than-expected data from the U.S. and China this week fueled speculation the global economy is recovering. Suzlon Energy Ltd. dropped to the lowest in a week after Reliance Industries Ltd. denied a report that it planned to buy a stake in the wind-turbine maker.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, lost 16.88, or 0.1 percent, to 18,221.43, paring its weekly advance to 1.2 percent. The gauge swung between gains and losses at least 30 times. The S&P CNX Nifty Index on the National Stock Exchange dropped 0.1 percent to 5,479.40. The BSE 200 Index increased 0.1 percent to 2,345.91. About four shares gained for every three that fell on the indexes.
“There is no doubt about India’s growth,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., a Mumbai-based publicly traded equities research provider. “The only concern was over the global recovery, and that’s eased after the latest U.S. data. The overall trend in the stock market is positive.”
Infosys
Infosys rose 0.9 percent to 2,777.45 rupees, its highest close since Aug. 23. Bharti Airtel Ltd., the nation’s largest mobile-phone operator, rose 1.5 percent to 339.25 rupees, a nine-month high. The shares were the best performer on the benchmark stock index this week.
Suzlon Energy dropped 2.4 percent to 50.05 rupees, trimming yesterday’s 10 percent climb after the Zee Business channel report. Reliance, India’s most valuable company, slipped 1.3 percent to 925.7 rupees.
The MSCI Asia Pacific Index rose 2.6 percent this week as reports showed Chinese and U.S. manufacturing, as well as Australia’s economy, expanded faster than economists’ estimated. U.S. initial jobless claims fell, and pending home sales unexpectedly increased.
India’s rupee strengthened to the highest level in two weeks as funds based abroad raised holdings of Indian shares to a record and the government reported the fastest pace of expansion in the second quarter since 2007.
‘Surge in Shares’
“The stronger growth and the surge in shares this week are helping the rupee,” said Sudarshan Bhatt, the Mumbai-based chief foreign-exchange trader at Corporation Bank.
Foreign fund inflows to India’s equities have climbed 60 percent this year, making the Sensex the most expensive benchmark index in Asia and among the BRIC markets that also comprise Brazil, Russia and China. The Sensex trades at 17.4 times estimated profit after extending last year’s biggest rally in 18 years.
Overseas funds bought a net 5.27 billion rupees ($112.4 million) of Indian equities on Sept. 1, raising total investments in the stocks this year to 604.5 billion rupees, according to the nation’s market regulator.
Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years ago in local currency terms, as the biggest advance in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline
Infosys Technologies Ltd., a software exporter that gets two thirds of its sales from North America, advanced to a one- week high. Better-than-expected data from the U.S. and China this week fueled speculation the global economy is recovering. Suzlon Energy Ltd. dropped to the lowest in a week after Reliance Industries Ltd. denied a report that it planned to buy a stake in the wind-turbine maker.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, lost 16.88, or 0.1 percent, to 18,221.43, paring its weekly advance to 1.2 percent. The gauge swung between gains and losses at least 30 times. The S&P CNX Nifty Index on the National Stock Exchange dropped 0.1 percent to 5,479.40. The BSE 200 Index increased 0.1 percent to 2,345.91. About four shares gained for every three that fell on the indexes.
“There is no doubt about India’s growth,” said Kishor Ostwal, managing director of CNI Research (India) Ltd., a Mumbai-based publicly traded equities research provider. “The only concern was over the global recovery, and that’s eased after the latest U.S. data. The overall trend in the stock market is positive.”
Infosys
Infosys rose 0.9 percent to 2,777.45 rupees, its highest close since Aug. 23. Bharti Airtel Ltd., the nation’s largest mobile-phone operator, rose 1.5 percent to 339.25 rupees, a nine-month high. The shares were the best performer on the benchmark stock index this week.
Suzlon Energy dropped 2.4 percent to 50.05 rupees, trimming yesterday’s 10 percent climb after the Zee Business channel report. Reliance, India’s most valuable company, slipped 1.3 percent to 925.7 rupees.
The MSCI Asia Pacific Index rose 2.6 percent this week as reports showed Chinese and U.S. manufacturing, as well as Australia’s economy, expanded faster than economists’ estimated. U.S. initial jobless claims fell, and pending home sales unexpectedly increased.
India’s rupee strengthened to the highest level in two weeks as funds based abroad raised holdings of Indian shares to a record and the government reported the fastest pace of expansion in the second quarter since 2007.
‘Surge in Shares’
“The stronger growth and the surge in shares this week are helping the rupee,” said Sudarshan Bhatt, the Mumbai-based chief foreign-exchange trader at Corporation Bank.
Foreign fund inflows to India’s equities have climbed 60 percent this year, making the Sensex the most expensive benchmark index in Asia and among the BRIC markets that also comprise Brazil, Russia and China. The Sensex trades at 17.4 times estimated profit after extending last year’s biggest rally in 18 years.
Overseas funds bought a net 5.27 billion rupees ($112.4 million) of Indian equities on Sept. 1, raising total investments in the stocks this year to 604.5 billion rupees, according to the nation’s market regulator.
Inflows from overseas reached a record 834.2 billion rupees in 2009, exceeding the high set two years ago in local currency terms, as the biggest advance in 18 years lured foreign funds. They sold a record 529.9 billion rupees of shares in 2008, triggering a record annual decline
India's Services Industry Expands at a Slower Pace in August, PMI Shows
India’s services industry growth cooled in August for a second month after climbing to a two-year high in June, a survey of purchasing executives showed.
The HSBC Holdings Plc and Markit Economics purchasing managers’ index fell to 59.3 from 61.7 in July, according to an e-mailed report today. A reading above 50 indicates an expansion. The index was at 64 in June.
“Service sector activity, which in India accounts for the bulk of economic output, slowed a little last month,” Frederic Neumann, co-head of Asian economic research at HSBC, said in the report. “But monetary officials can hardly afford to relax their guard. Growth remains strong.”
The services gauge expanded for a 16th straight month in August, indicating consumer demand is holding up in Asia’s third-largest economy. Economists including Barclays Plc’s Rahul Bajoria expect the Reserve Bank of India to raise rates for the fifth time this year after the economy expanded 8.8 percent last quarter, the fastest pace in 2 1/2 years, stoking inflation.
“The Reserve Bank of India will remain focused on controlling inflation,” Singapore-based Bajoria, said before the report. He expects the RBI to boost rates by a quarter-point in the next monetary policy announcement on Sept. 16.
Inflation Woes
India’s benchmark wholesale-price inflation rate has stayed around or above 10 percent since January. Food-price inflation accelerated to 10.86 percent in the week to Aug. 21 from 10.05 percent the previous week, according to a statement from the commerce ministry today.
The Reserve Bank’s reverse repurchase rate is 4.5 percent and the repurchase rate is 5.75 percent.
Ten-year government bond yields fell 2 basis points to 7.96 percent at 11:40 a.m. in Mumbai. The Bombay Stock Exchange’s Sensitive Index was little changed at 18,252.73.
Services make up about 55 percent of India’s $1.3 trillion economy.
Rising demand for mobile phones and bank loans provides evidence of growing consumption in the South Asian nation.
Wireless telecommunication firms including Bharti Airtel Ltd. added 11.5 million new customers in July, about 2.5 percent more than the previous month, according to the Cellular Operators Association of India.
Bank lending to businesses and individuals grew 20.14 percent in the two weeks to Aug. 13 from a year earlier, which is near the fastest pace since January 2009, central bank data show.
The HSBC Holdings Plc and Markit Economics purchasing managers’ index fell to 59.3 from 61.7 in July, according to an e-mailed report today. A reading above 50 indicates an expansion. The index was at 64 in June.
“Service sector activity, which in India accounts for the bulk of economic output, slowed a little last month,” Frederic Neumann, co-head of Asian economic research at HSBC, said in the report. “But monetary officials can hardly afford to relax their guard. Growth remains strong.”
The services gauge expanded for a 16th straight month in August, indicating consumer demand is holding up in Asia’s third-largest economy. Economists including Barclays Plc’s Rahul Bajoria expect the Reserve Bank of India to raise rates for the fifth time this year after the economy expanded 8.8 percent last quarter, the fastest pace in 2 1/2 years, stoking inflation.
“The Reserve Bank of India will remain focused on controlling inflation,” Singapore-based Bajoria, said before the report. He expects the RBI to boost rates by a quarter-point in the next monetary policy announcement on Sept. 16.
Inflation Woes
India’s benchmark wholesale-price inflation rate has stayed around or above 10 percent since January. Food-price inflation accelerated to 10.86 percent in the week to Aug. 21 from 10.05 percent the previous week, according to a statement from the commerce ministry today.
The Reserve Bank’s reverse repurchase rate is 4.5 percent and the repurchase rate is 5.75 percent.
Ten-year government bond yields fell 2 basis points to 7.96 percent at 11:40 a.m. in Mumbai. The Bombay Stock Exchange’s Sensitive Index was little changed at 18,252.73.
Services make up about 55 percent of India’s $1.3 trillion economy.
Rising demand for mobile phones and bank loans provides evidence of growing consumption in the South Asian nation.
Wireless telecommunication firms including Bharti Airtel Ltd. added 11.5 million new customers in July, about 2.5 percent more than the previous month, according to the Cellular Operators Association of India.
Bank lending to businesses and individuals grew 20.14 percent in the two weeks to Aug. 13 from a year earlier, which is near the fastest pace since January 2009, central bank data show.
Thursday, September 2, 2010
National Aluminium May Invest $3.8 Billion to Buy Coal Mine in Indonesia
National Aluminium Co., India’s second-largest producer of the metal, may spend $3.8 billion buying a coal mine in Indonesia to secure fuel for its planned power plant in East Kalimantan province.
The company is in talks with Indonesian firms, B.L. Bagra, director of finance at the Bhubaneswar-based National Aluminium, told Bloomberg UTV in an interview today.
National Aluminium plans to spend $4 billion building an aluminum smelter and a coal-fired power plant in East Kalimantan on the Borneo island in a joint venture. The metal maker is expanding overseas to tap rising demand from automakers and builders in emerging markets and China.
National Aluminium, which owns 76 percent of the smelter venture, is also looking for a strategic partner for the project, Bagra said.
Shares rose 0.5 percent to 405.15 rupees at 12:02 p.m. in Mumbai. The benchmark Sensitive Index rose 0.4 percent.
The Indian company is seeking a coal mine with 500 million metric tons of resources that can produce 10 million tons annually starting in 2014, according to an Aug. 31 statement. Sellers have 30 days to submit offers, the statement said.
National Aluminium needs 8 million tons to 10 million tons of coal a year, of which about half will be used to feed the East Kalimantan power plant. The company is seeking fuel with an energy value of more than 5,000 kilocalories a kilogram.
RAK Minerals & Metals Investments, a unit of RAK Investment Authority, holds 24 percent of the Indonesian venture. RAK Minerals is based in the United Arab Emirates.
The company is in talks with Indonesian firms, B.L. Bagra, director of finance at the Bhubaneswar-based National Aluminium, told Bloomberg UTV in an interview today.
National Aluminium plans to spend $4 billion building an aluminum smelter and a coal-fired power plant in East Kalimantan on the Borneo island in a joint venture. The metal maker is expanding overseas to tap rising demand from automakers and builders in emerging markets and China.
National Aluminium, which owns 76 percent of the smelter venture, is also looking for a strategic partner for the project, Bagra said.
Shares rose 0.5 percent to 405.15 rupees at 12:02 p.m. in Mumbai. The benchmark Sensitive Index rose 0.4 percent.
The Indian company is seeking a coal mine with 500 million metric tons of resources that can produce 10 million tons annually starting in 2014, according to an Aug. 31 statement. Sellers have 30 days to submit offers, the statement said.
National Aluminium needs 8 million tons to 10 million tons of coal a year, of which about half will be used to feed the East Kalimantan power plant. The company is seeking fuel with an energy value of more than 5,000 kilocalories a kilogram.
RAK Minerals & Metals Investments, a unit of RAK Investment Authority, holds 24 percent of the Indonesian venture. RAK Minerals is based in the United Arab Emirates.
BP Says Limits on Drilling Imperil Oil Spill Payouts
BP is warning Congress that if lawmakers pass legislation that bars the company from getting new offshore drilling permits, it may not have the money to pay for all the damages caused by its oil spill in the Gulf of Mexico.
The company says a ban would also imperil the ambitious Gulf Coast restoration efforts that officials want the company to voluntarily support.
BP executives insist that they have not backed away from their commitment to the White House to set aside $20 billion in an escrow fund over the next four years to pay damage claims and government penalties stemming from the April 20 explosion of the Deepwater Horizon drilling rig. The explosion killed 11 workers and spewed millions of barrels of oil into the gulf.
The company has also agreed to contribute $100 million to a foundation to support rig workers who have lost their jobs because of the administration’s deepwater drilling moratorium. And it pledged $500 million for a 10-year research program to study the impact of the spill.
But as state and federal officials, individuals and businesses continue to seek additional funds beyond the minimum fines and compensation that BP must pay under the law, the company has signaled its reluctance to cooperate unless it can continue to operate in the Gulf of Mexico. The gulf accounts for 11 percent of its global production.
“If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow,” said David Nagle, BP’s executive vice president for BP America, in an interview. That, he added, “makes it harder for us to fund things, fund these programs.”
The requests keep coming for BP to provide additional money to the Gulf Coast to help mitigate the effects of the spill. This week, Bobby Jindal, the governor of Louisiana, reiterated his request that BP finance a five-year, $173 million program to test, certify and promote gulf seafood.
BP has already agreed to pay for some measures that exceed its legal obligations. For instance, to help promote tourism in affected regions, it donated $32 million to Florida’s marketing efforts and $15 million each to Louisiana, Mississippi and Alabama.
But the company, which is based in London, now appears to be using such voluntary payments as a bargaining chip with American lawmakers.
BP is particularly concerned about a drilling overhaul bill passed by the House on July 30. The bill includes an amendment that would bar any company from receiving permits to drill on the Outer Continental Shelf if more than 10 fatalities had occurred at its offshore or onshore facilities. It would also bar permits if the company had been penalized with fines of $10 million or more under the Clean Air or Clean Water Acts within a seven-year period.
While BP is not mentioned by name in the legislation, it is the only company that currently meets that description.
The provision was written by Representative George Miller, Democrat of California, who is a strong environmental advocate and a close ally of Nancy Pelosi, the House speaker.
It was specifically designed to punish BP for its past transgressions, including the Deepwater Horizon explosion, and deny the company access to American offshore oil and natural gas.
“The risk of having a dangerous company like BP develop new resources in the gulf is too great,” said Daniel Weiss, Mr. Miller’s chief of staff. “Year after year after year, no matter how many incidents they’re involved in, no matter how many fines they’ve had to pay, they never changed their behavior. BP has no one to blame but themselves.”
BP’s concerns are becoming public as the company begins final preparations for permanently sealing its stricken well. On Thursday, it removed the temporary cap on top of the well, which had earlier been blocked with cement, so that it could replace the blowout preventer. The blowout preventer, a massive piece of equipment whose valves failed to shut down the oil flow after the explosion, is a crucial piece of evidence in the investigation.
Andrew Gowers, a BP spokesman, said that BP had shown good will by going beyond its legal obligations to clean up the spill and compensate those affected.
“We have committed to do a number of things that are not part of the formal agreement with the White House,” he said. “We are not making a direct statement about anything we are committed to do. We are just expressing frustration that our commitments of good will have at least in some quarters been met with this kind of response.”
The company says a ban would also imperil the ambitious Gulf Coast restoration efforts that officials want the company to voluntarily support.
BP executives insist that they have not backed away from their commitment to the White House to set aside $20 billion in an escrow fund over the next four years to pay damage claims and government penalties stemming from the April 20 explosion of the Deepwater Horizon drilling rig. The explosion killed 11 workers and spewed millions of barrels of oil into the gulf.
The company has also agreed to contribute $100 million to a foundation to support rig workers who have lost their jobs because of the administration’s deepwater drilling moratorium. And it pledged $500 million for a 10-year research program to study the impact of the spill.
But as state and federal officials, individuals and businesses continue to seek additional funds beyond the minimum fines and compensation that BP must pay under the law, the company has signaled its reluctance to cooperate unless it can continue to operate in the Gulf of Mexico. The gulf accounts for 11 percent of its global production.
“If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow,” said David Nagle, BP’s executive vice president for BP America, in an interview. That, he added, “makes it harder for us to fund things, fund these programs.”
The requests keep coming for BP to provide additional money to the Gulf Coast to help mitigate the effects of the spill. This week, Bobby Jindal, the governor of Louisiana, reiterated his request that BP finance a five-year, $173 million program to test, certify and promote gulf seafood.
BP has already agreed to pay for some measures that exceed its legal obligations. For instance, to help promote tourism in affected regions, it donated $32 million to Florida’s marketing efforts and $15 million each to Louisiana, Mississippi and Alabama.
But the company, which is based in London, now appears to be using such voluntary payments as a bargaining chip with American lawmakers.
BP is particularly concerned about a drilling overhaul bill passed by the House on July 30. The bill includes an amendment that would bar any company from receiving permits to drill on the Outer Continental Shelf if more than 10 fatalities had occurred at its offshore or onshore facilities. It would also bar permits if the company had been penalized with fines of $10 million or more under the Clean Air or Clean Water Acts within a seven-year period.
While BP is not mentioned by name in the legislation, it is the only company that currently meets that description.
The provision was written by Representative George Miller, Democrat of California, who is a strong environmental advocate and a close ally of Nancy Pelosi, the House speaker.
It was specifically designed to punish BP for its past transgressions, including the Deepwater Horizon explosion, and deny the company access to American offshore oil and natural gas.
“The risk of having a dangerous company like BP develop new resources in the gulf is too great,” said Daniel Weiss, Mr. Miller’s chief of staff. “Year after year after year, no matter how many incidents they’re involved in, no matter how many fines they’ve had to pay, they never changed their behavior. BP has no one to blame but themselves.”
BP’s concerns are becoming public as the company begins final preparations for permanently sealing its stricken well. On Thursday, it removed the temporary cap on top of the well, which had earlier been blocked with cement, so that it could replace the blowout preventer. The blowout preventer, a massive piece of equipment whose valves failed to shut down the oil flow after the explosion, is a crucial piece of evidence in the investigation.
Andrew Gowers, a BP spokesman, said that BP had shown good will by going beyond its legal obligations to clean up the spill and compensate those affected.
“We have committed to do a number of things that are not part of the formal agreement with the White House,” he said. “We are not making a direct statement about anything we are committed to do. We are just expressing frustration that our commitments of good will have at least in some quarters been met with this kind of response.”
Indian Stock Gains to Be Capped on Growth Outlook, HDFC Standard Life Says
Indian stock gains may be limited over the next three to four months as global growth, inflation and valuation concerns prompt investors to avoid riskier assets, HDFC Standard Life Insurance Co. said.
“Our stance remains cautious,” Prasun Gajri, who manages $4.9 billion in assets as chief investment officer at HDFC Standard Life, said in an interview at his Mumbai office today. “I won’t be very aggressive in terms of taking any bets. The growth situation across the world is looking a little bit more alarming than it was two months back.”
Foreign fund inflows to India’s equities have climbed 56 percent this year, making the benchmark stock index the most expensive in Asia and among the BRIC markets that also comprise Brazil, Russia and China. Concern economies in the U.S. and Europe are losing momentum contributed to the steepest drop in three months in the MSCI AC World Index in August.
India’s economy expanded at the fastest pace in 2 1/2 years in the three months through June from a year earlier, and inflation has hovered around or above 10 percent since January. The Reserve Bank of India is under pressure to raise borrowing costs to cool price increases even amid signs a global economic recovery is faltering.
‘Worrisome’ Pace
“We are going a see a fairly extended period of sub-par growth in the western world, especially in the U.S.,” Gajri said. “Once you have such a large engine of growth going at such a slow pace, that’s worrisome. We are avoiding exposure to stocks which are strongly linked to the global economic growth.”
The Bombay Stock Exchange Sensitive Index, or Sensex, trades at 17.4 times estimated profit after last year’s biggest rally in 18 years. The measure added 0.6 last month, when the MSCI AC World Index dropped 3.7 percent as data signaled slowdowns in the U.S., China and Japan. Asian stocks rose today after U.S. manufacturing rose at a faster-than-estimated pace.
The Sensex climbed 0.2 percent to 18,238.31 at the 3:30 p.m. close, its highest in a week. The index had earlier gained as much as 0.8 percent.
In India, “stickier-than-anticipated” inflation, high valuations of local equities and the government’s record share sales may contribute to limiting gains in stocks, Gajri said.
Coal India Ltd., the world’s biggest producer, may raise 150 billion rupees ($3.2 billion) in the nation’s biggest initial public offering in October. The government plans to sell shares in as many as 68 companies to raise 400 billion rupees to fund infrastructure and cut the budget deficit.
‘Play Out Volatility’
Gajri, whose equity assets have almost tripled in the past year, is buying so-called defensive stocks, or companies whose sales are less affected by economic cycles, such as utilities and pharmaceuticals, and oil and gas shares to “play out the short-term volatility.” He declined to identify companies.
Gajri, 38, is betting returns from his holdings in equipment suppliers, asset owners, carmakers, construction, financial and consumer companies will outperform the Sensex during the next year.
“We are focused on the India growth story,” said Gajri. “The consumption theme will surprise us on the upside. The rewards will be good if one is willing to look through the volatile period.”
“Our stance remains cautious,” Prasun Gajri, who manages $4.9 billion in assets as chief investment officer at HDFC Standard Life, said in an interview at his Mumbai office today. “I won’t be very aggressive in terms of taking any bets. The growth situation across the world is looking a little bit more alarming than it was two months back.”
Foreign fund inflows to India’s equities have climbed 56 percent this year, making the benchmark stock index the most expensive in Asia and among the BRIC markets that also comprise Brazil, Russia and China. Concern economies in the U.S. and Europe are losing momentum contributed to the steepest drop in three months in the MSCI AC World Index in August.
India’s economy expanded at the fastest pace in 2 1/2 years in the three months through June from a year earlier, and inflation has hovered around or above 10 percent since January. The Reserve Bank of India is under pressure to raise borrowing costs to cool price increases even amid signs a global economic recovery is faltering.
‘Worrisome’ Pace
“We are going a see a fairly extended period of sub-par growth in the western world, especially in the U.S.,” Gajri said. “Once you have such a large engine of growth going at such a slow pace, that’s worrisome. We are avoiding exposure to stocks which are strongly linked to the global economic growth.”
The Bombay Stock Exchange Sensitive Index, or Sensex, trades at 17.4 times estimated profit after last year’s biggest rally in 18 years. The measure added 0.6 last month, when the MSCI AC World Index dropped 3.7 percent as data signaled slowdowns in the U.S., China and Japan. Asian stocks rose today after U.S. manufacturing rose at a faster-than-estimated pace.
The Sensex climbed 0.2 percent to 18,238.31 at the 3:30 p.m. close, its highest in a week. The index had earlier gained as much as 0.8 percent.
In India, “stickier-than-anticipated” inflation, high valuations of local equities and the government’s record share sales may contribute to limiting gains in stocks, Gajri said.
Coal India Ltd., the world’s biggest producer, may raise 150 billion rupees ($3.2 billion) in the nation’s biggest initial public offering in October. The government plans to sell shares in as many as 68 companies to raise 400 billion rupees to fund infrastructure and cut the budget deficit.
‘Play Out Volatility’
Gajri, whose equity assets have almost tripled in the past year, is buying so-called defensive stocks, or companies whose sales are less affected by economic cycles, such as utilities and pharmaceuticals, and oil and gas shares to “play out the short-term volatility.” He declined to identify companies.
Gajri, 38, is betting returns from his holdings in equipment suppliers, asset owners, carmakers, construction, financial and consumer companies will outperform the Sensex during the next year.
“We are focused on the India growth story,” said Gajri. “The consumption theme will surprise us on the upside. The rewards will be good if one is willing to look through the volatile period.”
Pakistan likely to levy ‘flood tax’
Pakistan’s government is considering a “flood tax” to help pay the billions of dollars it faces in reconstruction costs, a senior finance ministry official has told the Financial Times.
The tax would probably “increase an individual’s income tax bill by up to 10 per cent”, said the official, adding: “It will apply to those in the high-income bracket, probably with annual incomes of over Rps300,000 [$3,500] a year.”
A second finance ministry official confirmed the plan, saying: “A flood tax is actively under consideration and is likely to be imposed.”
However, the proposal is likely to be controversial, given that it aims to tap the country’s relatively small community of taxpayers, while there has been no attempt to clamp down on widespread tax evasion.
Less than 1 per cent of Pakistan’s population of 180m pays income tax.
A range of powerful figures, from landowners to business people, remains outside the tax-collection net.
Shaukat Tarin, the former finance minister, whose resignation in February was widely believed to have been prompted by policy differences with Pakistan’s rulers, warned that a flood tax on taxpayers could backfire.
“Why should only a small segment of society be forced to pay the bill? The annual loss in public sector companies is Rps300bn. Why should this loss not be curtailed first through reforms to save money for flood relief?” said Mr Tarin in a Financial Times interview.
He added: “The government must first tighten its belt.”
Abdul Hafeez Shaikh, Pakistan’s finance minister, is in Washington negotiating with the International Monetary Fund either to ease restrictions on an existing $10bn loan or to agree a loan with easier conditions.
Stabilising the economy has become a more urgent challenge for the Pakistani government as economists predict a rise in inflation during the financial year to June 2011, while overall economic growth is expected to drop sharply and the government’s fiscal deficit to rise.
“The economic picture is becoming increasingly difficult,” said Muhammad Suhail of Karachi’s Topline securities, an equity investment brokerage house.
Politicians from the ruling Pakistan People’s party have given warning that measures considered essential by some economists, such as clamping down on tax evaders, were unlikely to be introduced by the government.
The tax would probably “increase an individual’s income tax bill by up to 10 per cent”, said the official, adding: “It will apply to those in the high-income bracket, probably with annual incomes of over Rps300,000 [$3,500] a year.”
A second finance ministry official confirmed the plan, saying: “A flood tax is actively under consideration and is likely to be imposed.”
However, the proposal is likely to be controversial, given that it aims to tap the country’s relatively small community of taxpayers, while there has been no attempt to clamp down on widespread tax evasion.
Less than 1 per cent of Pakistan’s population of 180m pays income tax.
A range of powerful figures, from landowners to business people, remains outside the tax-collection net.
Shaukat Tarin, the former finance minister, whose resignation in February was widely believed to have been prompted by policy differences with Pakistan’s rulers, warned that a flood tax on taxpayers could backfire.
“Why should only a small segment of society be forced to pay the bill? The annual loss in public sector companies is Rps300bn. Why should this loss not be curtailed first through reforms to save money for flood relief?” said Mr Tarin in a Financial Times interview.
He added: “The government must first tighten its belt.”
Abdul Hafeez Shaikh, Pakistan’s finance minister, is in Washington negotiating with the International Monetary Fund either to ease restrictions on an existing $10bn loan or to agree a loan with easier conditions.
Stabilising the economy has become a more urgent challenge for the Pakistani government as economists predict a rise in inflation during the financial year to June 2011, while overall economic growth is expected to drop sharply and the government’s fiscal deficit to rise.
“The economic picture is becoming increasingly difficult,” said Muhammad Suhail of Karachi’s Topline securities, an equity investment brokerage house.
Politicians from the ruling Pakistan People’s party have given warning that measures considered essential by some economists, such as clamping down on tax evaders, were unlikely to be introduced by the government.
Wednesday, September 1, 2010
Bombs kill 18 at Shia procession in Lahore
At least 18 people were killed and more than 100 wounded in the Pakistani city of Lahore on Wednesday when three bombs exploded amid a procession of Shia Muslims.
Witnesses said that in one attack, a suicide bomber blew himself up in a crowd – the type of attack that Pakistani Taliban militants have claimed in the past.
“According to my information, 18 people are dead and over 100 injured,” Sajjad Bhutto, a government official in Lahore, the capital of Punjab province, told state-run Pakistan Television.
Another government official said: “I would be surprised if the death toll doesn’t climb further.”
Soon after the blasts, a mob set fire to a police station and several vehicles. People also beat policemen, witnesses said.
Pro-Taliban Sunni militants frequently attack Shia Muslims as part of a campaign to destabilise the government.
The attacks came after a lull in violence of more than a month while Pakistan has battled floods that have devastated large parts of the country. But for the past two weeks, intelligence officials have raised the alarm that Taliban militants were believed to be preparing to renew their bombing campaign.
A Pakistani intelligence official from Islamabad told the Financial Times that the attacks appeared to have been carried out by the Tehreek-e-Taliban Pakistan, the main umbrella organisation of Taliban militants who have fought the country’s security forces for almost a decade.
“The Taliban have a history of wanting to target the Shia Muslims. This was a day of large gatherings to commemorate the death anniversary of Imam Ali,” said the official.
A renewal of Taliban-related violence also poses a fresh challenge to Pakistan’s efforts to attract international assistance and aid workers to the country to help with relief work for up to 20m people affected by the floods.
Last month, a UN official said any threat of militant attacks targeting relief workers “will probably come as a major setback to efforts for resettling the flood victims”.
Meanwhile, US prosecutors have charged the leader of the Pakistani Taliban, Hakimullah Mehsud, over a plot that resulted in the deaths of seven CIA employees at an American base in Afghanistan last December, the US Justice Department said on Wednesday.
Mr Mehsud, believed to be in the tribal areas of Pakistan, was accused of conspiracy to kill Americans overseas and conspiracy to use a weapon of mass destruction.
Witnesses said that in one attack, a suicide bomber blew himself up in a crowd – the type of attack that Pakistani Taliban militants have claimed in the past.
“According to my information, 18 people are dead and over 100 injured,” Sajjad Bhutto, a government official in Lahore, the capital of Punjab province, told state-run Pakistan Television.
Another government official said: “I would be surprised if the death toll doesn’t climb further.”
Soon after the blasts, a mob set fire to a police station and several vehicles. People also beat policemen, witnesses said.
Pro-Taliban Sunni militants frequently attack Shia Muslims as part of a campaign to destabilise the government.
The attacks came after a lull in violence of more than a month while Pakistan has battled floods that have devastated large parts of the country. But for the past two weeks, intelligence officials have raised the alarm that Taliban militants were believed to be preparing to renew their bombing campaign.
A Pakistani intelligence official from Islamabad told the Financial Times that the attacks appeared to have been carried out by the Tehreek-e-Taliban Pakistan, the main umbrella organisation of Taliban militants who have fought the country’s security forces for almost a decade.
“The Taliban have a history of wanting to target the Shia Muslims. This was a day of large gatherings to commemorate the death anniversary of Imam Ali,” said the official.
A renewal of Taliban-related violence also poses a fresh challenge to Pakistan’s efforts to attract international assistance and aid workers to the country to help with relief work for up to 20m people affected by the floods.
Last month, a UN official said any threat of militant attacks targeting relief workers “will probably come as a major setback to efforts for resettling the flood victims”.
Meanwhile, US prosecutors have charged the leader of the Pakistani Taliban, Hakimullah Mehsud, over a plot that resulted in the deaths of seven CIA employees at an American base in Afghanistan last December, the US Justice Department said on Wednesday.
Mr Mehsud, believed to be in the tribal areas of Pakistan, was accused of conspiracy to kill Americans overseas and conspiracy to use a weapon of mass destruction.
Maker of Botox Settles Inquiry
Allergan, the maker of Botox, agreed on Wednesday to pay $600 million to settle charges that it illegally promoted and sold the drug through 2005 for unapproved uses like treating headaches.
That settlement, the latest in a continuing Justice Department crackdown on off-label drug promotion by pharmaceutical companies, comes with an unusual postscript. In recent months, the Food and Drug Administration has been seriously weighing approval of Botox for treatment of chronic migraines, a remedy that has been cited as beneficial in new studies and which was ratified last month in Britain.
The charges of illegal marketing cover the first half of this decade, before the F.D.A.’s review.
The settlement also represents the latest in a series of prominent deals by drug makers to resolve criminal and civil allegations, and it closely follows news that the federal government has expanded an investigation into the overseas practices of several big pharmaceutical companies involving suspected bribery of foreign officials.
In this case, the government’s civil complaint said that Allergan had “illegally, vigorously and, without any thought to the possible negative health effects to which it subjected patients, promoted” Botox for uses that had not been deemed safe and effective by the F.D.A.
The company developed and put in place a wide-ranging marketing program, according to the complaint, that included paying kickbacks to doctors to induce them to prescribe Botox for conditions — like pain and severe spasms in the limbs of children with cerebral palsy — not included in the drug’s label.
Federal prosecutors also accused the company of teaching doctors how to get reimbursement from Medicare and Medicaid for off-label uses by putting in the codes for an approved treatment.
Allergan denied the kickback and fraud allegations, Caroline Van Hove, a spokeswoman for the company, wrote in an e-mail, calling the claims totally unproven civil accusations.
In the settlement, Allergan agreed to plead guilty to one criminal misdemeanor charge and to pay $375 million to the government for misbranding Botox, through promotions for unapproved uses.
Additionally, Allergan agreed to pay $225 million to resolve civil charges that it had caused false claims to be submitted to Medicare, Medicaid and other government health programs, although the company denied those allegations.
“With cases like this one, we hope to put an end to the practice in the pharmaceutical industry known as off-label marketing,” Sally Quillian Yates, the United States attorney for the Northern District of Georgia, said in a phone interview Wednesday.
Her office and other government agencies began investigating the company’s marketing efforts in 2007 after a whistle-blower filed a lawsuit in Atlanta. “When pharmaceutical companies ignore the F.D.A.’s approval process and market their drugs for off-label indications,” she said, “they remove the safety net and assurance of efficacy provided by the F.D.A.’s rigorous review.”
Once the F.D.A. has approved a drug for a particular use, doctors are permitted to prescribe that drug for other conditions when they deem it medically appropriate. But it is illegal for pharmaceutical companies to market drugs for unapproved uses.
In a statement Wednesday, Allergan said it agreed that its marketing from 2000 to 2005 had resulted in the use of Botox for unapproved uses, including the treatment of headache, pain, spasticity and juvenile cerebral palsy.
During the time period covered by the settlement, the F.D.A. approved Botox as a treatment for four medical conditions — crossed eyes, involuntary blinking, involuntary neck muscle contractions and excessive underarm sweating. It was also approved for the cosmetic use of smoothing vertical wrinkles between the eyebrows.
Karen Riley, a spokeswoman for the F.D.A., said she could not comment specifically on the agency’s pending review of Botox as a potential migraine treatment.
Allergan has also entered into a five-year corporate integrity agreement with the government under which the company will be required to publish information about its payments to doctors. The agreement also required Allergan to drop its First Amendment lawsuit against the F.D.A., in which it had claimed free speech protections when giving doctors information about unapproved uses of Botox. Five whistle-blowers will be awarded a total of $38.7 million out of the settlement.
A news release from the Justice Department on Wednesday said that Allergan had “made it a top corporate priority to maximize sales of Botox” for unapproved uses.
“This is part of a departmentwide and administrationwide effort to really crack down on health care fraud,” Tony West, assistant attorney general for the civil division of the Justice Department, said in a phone interview Wednesday.
Last year, for example, Eli Lilly pleaded guilty to one misdemeanor charge and paid $1.41 billion to settle criminal and civil charges that it had improperly marketed an antipsychotic drug for elderly patients with dementia.
Also last year, Pfizer paid $2.3 billion to settle criminal and civil charges that it had illegally marketed the painkiller Bextra and other products. In April, AstraZeneca agreed to pay $520 million to settle federal investigations into the marketing of Seroquel, a schizophrenia drug; in settling, the company denied charges that it had marketed the drug for unapproved uses.
The Justice Department contended that Allergan’s promotions included paying doctors $1,500 each to listen to presentations on off-label uses and sending sales representatives to visit specialists who would not ordinarily administer Botox for any of the approved applications.
Medicaid paid about $76.5 million for Botox treatments from 2002 to 2006, much of it for unapproved uses of the drug, according to the government’s civil complaint. The complaint cited an Allergan presentation from 2004, for example, indicating that 86 percent of Botox treatments reimbursed by Medicaid were for children, primarily for cerebral palsy, an unapproved use, the complaint said.
Several years later, the F.D.A. issued a public advisory saying that it had received reports of serious medical problems — including hospitalization and death — related to the use of botulinum toxin drugs like Botox, particularly in treating severe spasms in children with cerebral palsy. Last year, the agency required all botulinum toxins to carry “black box” labels warning that the drug can spread from the injection site, with the potential to cause difficulties breathing or swallowing.
That settlement, the latest in a continuing Justice Department crackdown on off-label drug promotion by pharmaceutical companies, comes with an unusual postscript. In recent months, the Food and Drug Administration has been seriously weighing approval of Botox for treatment of chronic migraines, a remedy that has been cited as beneficial in new studies and which was ratified last month in Britain.
The charges of illegal marketing cover the first half of this decade, before the F.D.A.’s review.
The settlement also represents the latest in a series of prominent deals by drug makers to resolve criminal and civil allegations, and it closely follows news that the federal government has expanded an investigation into the overseas practices of several big pharmaceutical companies involving suspected bribery of foreign officials.
In this case, the government’s civil complaint said that Allergan had “illegally, vigorously and, without any thought to the possible negative health effects to which it subjected patients, promoted” Botox for uses that had not been deemed safe and effective by the F.D.A.
The company developed and put in place a wide-ranging marketing program, according to the complaint, that included paying kickbacks to doctors to induce them to prescribe Botox for conditions — like pain and severe spasms in the limbs of children with cerebral palsy — not included in the drug’s label.
Federal prosecutors also accused the company of teaching doctors how to get reimbursement from Medicare and Medicaid for off-label uses by putting in the codes for an approved treatment.
Allergan denied the kickback and fraud allegations, Caroline Van Hove, a spokeswoman for the company, wrote in an e-mail, calling the claims totally unproven civil accusations.
In the settlement, Allergan agreed to plead guilty to one criminal misdemeanor charge and to pay $375 million to the government for misbranding Botox, through promotions for unapproved uses.
Additionally, Allergan agreed to pay $225 million to resolve civil charges that it had caused false claims to be submitted to Medicare, Medicaid and other government health programs, although the company denied those allegations.
“With cases like this one, we hope to put an end to the practice in the pharmaceutical industry known as off-label marketing,” Sally Quillian Yates, the United States attorney for the Northern District of Georgia, said in a phone interview Wednesday.
Her office and other government agencies began investigating the company’s marketing efforts in 2007 after a whistle-blower filed a lawsuit in Atlanta. “When pharmaceutical companies ignore the F.D.A.’s approval process and market their drugs for off-label indications,” she said, “they remove the safety net and assurance of efficacy provided by the F.D.A.’s rigorous review.”
Once the F.D.A. has approved a drug for a particular use, doctors are permitted to prescribe that drug for other conditions when they deem it medically appropriate. But it is illegal for pharmaceutical companies to market drugs for unapproved uses.
In a statement Wednesday, Allergan said it agreed that its marketing from 2000 to 2005 had resulted in the use of Botox for unapproved uses, including the treatment of headache, pain, spasticity and juvenile cerebral palsy.
During the time period covered by the settlement, the F.D.A. approved Botox as a treatment for four medical conditions — crossed eyes, involuntary blinking, involuntary neck muscle contractions and excessive underarm sweating. It was also approved for the cosmetic use of smoothing vertical wrinkles between the eyebrows.
Karen Riley, a spokeswoman for the F.D.A., said she could not comment specifically on the agency’s pending review of Botox as a potential migraine treatment.
Allergan has also entered into a five-year corporate integrity agreement with the government under which the company will be required to publish information about its payments to doctors. The agreement also required Allergan to drop its First Amendment lawsuit against the F.D.A., in which it had claimed free speech protections when giving doctors information about unapproved uses of Botox. Five whistle-blowers will be awarded a total of $38.7 million out of the settlement.
A news release from the Justice Department on Wednesday said that Allergan had “made it a top corporate priority to maximize sales of Botox” for unapproved uses.
“This is part of a departmentwide and administrationwide effort to really crack down on health care fraud,” Tony West, assistant attorney general for the civil division of the Justice Department, said in a phone interview Wednesday.
Last year, for example, Eli Lilly pleaded guilty to one misdemeanor charge and paid $1.41 billion to settle criminal and civil charges that it had improperly marketed an antipsychotic drug for elderly patients with dementia.
Also last year, Pfizer paid $2.3 billion to settle criminal and civil charges that it had illegally marketed the painkiller Bextra and other products. In April, AstraZeneca agreed to pay $520 million to settle federal investigations into the marketing of Seroquel, a schizophrenia drug; in settling, the company denied charges that it had marketed the drug for unapproved uses.
The Justice Department contended that Allergan’s promotions included paying doctors $1,500 each to listen to presentations on off-label uses and sending sales representatives to visit specialists who would not ordinarily administer Botox for any of the approved applications.
Medicaid paid about $76.5 million for Botox treatments from 2002 to 2006, much of it for unapproved uses of the drug, according to the government’s civil complaint. The complaint cited an Allergan presentation from 2004, for example, indicating that 86 percent of Botox treatments reimbursed by Medicaid were for children, primarily for cerebral palsy, an unapproved use, the complaint said.
Several years later, the F.D.A. issued a public advisory saying that it had received reports of serious medical problems — including hospitalization and death — related to the use of botulinum toxin drugs like Botox, particularly in treating severe spasms in children with cerebral palsy. Last year, the agency required all botulinum toxins to carry “black box” labels warning that the drug can spread from the injection site, with the potential to cause difficulties breathing or swallowing.
Tata Motors Plans to Sell World's Cheapest Car Nano in Asia, Latin America
Tata Motors Ltd., the Indian owner of Jaguar and Land Rover, plans to begin selling its $2,500 Nano hatchback car overseas, Chairman Ratan Tata said.
The company plans to sell the world’s cheapest car in countries in Africa, Latin America and members of the Association of Southeast Asian Nations, Ratan Tata said at the company’s annual general meeting today. Tata Motors spends on average 30 billion rupees ($641 million) a year on new products and plants, he said, responding to a shareholder question.
Ratan Tata, who urged the company to think “out of the box,” to sell more Nanos, said the company may also offer a diesel version and a bigger three-cylinder petrol engine and consider variants that run on alternative fuels like compressed natural gas. Tata Motors plans to build 20,000 cars a month, Prakash M. Telang, the head of Tata Motor’s India operations, said Aug. 10.
Tata Motors returned to a profit in the fiscal year ended in March after its luxury unit had a pretax profit and sales gained amid economic growth. The company earlier this year opened a dedicated plant in June to build the Nano in Sanand, Gujarat, with capacity to make 250,000 cars a year
Tata Motors was little changed at 1,010.75 rupees in Mumbai today. The shares have gained 30 percent this year.
Fire Probe
Ratan today also said the company is conducting detailed investigations in Nanos that caught fire. The company reported Aug. 27 that a third Nano car had caught fire in New Delhi and said it was investigating the incident.
Tata has sold more than 50,000 Nanos since the company began deliveries of the car in July 2009. A 20-member internal team and an independent forensics expert found that one previous fire involved a foreign object igniting while in contact with a hot exhaust system, while the other showed evidence of a ruptured fuel line, Tata said on May 21.
A subsequent program to inspect all Nano cars already sold was carried out to “to allay concerns by owners” and wasn’t a recall, Tata said at the time.
Tata Motors also plans to expand the capacity of its Dharwar plant in Karnataka that makes its Ace light trucks, Ratan said today at the meeting.
The company plans to sell the world’s cheapest car in countries in Africa, Latin America and members of the Association of Southeast Asian Nations, Ratan Tata said at the company’s annual general meeting today. Tata Motors spends on average 30 billion rupees ($641 million) a year on new products and plants, he said, responding to a shareholder question.
Ratan Tata, who urged the company to think “out of the box,” to sell more Nanos, said the company may also offer a diesel version and a bigger three-cylinder petrol engine and consider variants that run on alternative fuels like compressed natural gas. Tata Motors plans to build 20,000 cars a month, Prakash M. Telang, the head of Tata Motor’s India operations, said Aug. 10.
Tata Motors returned to a profit in the fiscal year ended in March after its luxury unit had a pretax profit and sales gained amid economic growth. The company earlier this year opened a dedicated plant in June to build the Nano in Sanand, Gujarat, with capacity to make 250,000 cars a year
Tata Motors was little changed at 1,010.75 rupees in Mumbai today. The shares have gained 30 percent this year.
Fire Probe
Ratan today also said the company is conducting detailed investigations in Nanos that caught fire. The company reported Aug. 27 that a third Nano car had caught fire in New Delhi and said it was investigating the incident.
Tata has sold more than 50,000 Nanos since the company began deliveries of the car in July 2009. A 20-member internal team and an independent forensics expert found that one previous fire involved a foreign object igniting while in contact with a hot exhaust system, while the other showed evidence of a ruptured fuel line, Tata said on May 21.
A subsequent program to inspect all Nano cars already sold was carried out to “to allay concerns by owners” and wasn’t a recall, Tata said at the time.
Tata Motors also plans to expand the capacity of its Dharwar plant in Karnataka that makes its Ace light trucks, Ratan said today at the meeting.
India seeks access to Skype and Google data
India is extending a crackdown on BlackBerry to other e-mail and internet communications providers, including Skype and Google, a senior government official said on Wednesday.
G.K. Pillai, home secretary, said the government was sending notices to the two internet companies asking them to set up servers in India so that Indian intelligence agencies can monitor e-mail and chat conversations on their systems.
“They have to install servers in India,” Mr Pillai told reporters in New Delhi on Wednesday, adding that “this applies to all”.
The comments come after the expiry of a deadline this week for Research in Motion, the Canadian maker of BlackBerry handsets, to provide security agencies with access to corporate e-mail traffic on its networks.
The government gave RIM a 60-day reprieve but warned that it would have to set up a server within India during this period.
India is concerned that encrypted communications, such as BlackBerry’s corporate e-mail and chat services, could be used by terrorists to plot strikes such as those in Mumbai in 2008.
However, analysts believe the government was forced to back down from its earlier threat to close down BlackBerry services by August 31 amid concern this would disrupt the Commonwealth Games, to be held in Delhi next month.
Google and Skype said on Wednesday they had yet to receive any notices from the government, according to agencies.
RIM’s shares fell to a 17-month low on Tuesday, closing at C$45.70 in Toronto. The stock has fallen more than 18 per cent in August amid concerns over security issues in India and the Middle East.
India is the world’s fastest growing mobile phone market, with more than 600m subscribers and between 10m and 20m new users signing up to its networks every month.
The trouble at RIM has already led competitors, notably Nokia, to take their own measures to ease Indian government concerns.
Nokia said that it would install a server in India to handle communications from its messaging service by November.
“Any communication through the telecom networks should be accessible to the law enforcement agencies and all telecom service providers including third parties have to comply with this,” the home affairs ministry said on Monday.
However, analysts doubt whether RIM or other providers of encrypted communications would technically be able to meet the government’s demands.
G.K. Pillai, home secretary, said the government was sending notices to the two internet companies asking them to set up servers in India so that Indian intelligence agencies can monitor e-mail and chat conversations on their systems.
“They have to install servers in India,” Mr Pillai told reporters in New Delhi on Wednesday, adding that “this applies to all”.
The comments come after the expiry of a deadline this week for Research in Motion, the Canadian maker of BlackBerry handsets, to provide security agencies with access to corporate e-mail traffic on its networks.
The government gave RIM a 60-day reprieve but warned that it would have to set up a server within India during this period.
India is concerned that encrypted communications, such as BlackBerry’s corporate e-mail and chat services, could be used by terrorists to plot strikes such as those in Mumbai in 2008.
However, analysts believe the government was forced to back down from its earlier threat to close down BlackBerry services by August 31 amid concern this would disrupt the Commonwealth Games, to be held in Delhi next month.
Google and Skype said on Wednesday they had yet to receive any notices from the government, according to agencies.
RIM’s shares fell to a 17-month low on Tuesday, closing at C$45.70 in Toronto. The stock has fallen more than 18 per cent in August amid concerns over security issues in India and the Middle East.
India is the world’s fastest growing mobile phone market, with more than 600m subscribers and between 10m and 20m new users signing up to its networks every month.
The trouble at RIM has already led competitors, notably Nokia, to take their own measures to ease Indian government concerns.
Nokia said that it would install a server in India to handle communications from its messaging service by November.
“Any communication through the telecom networks should be accessible to the law enforcement agencies and all telecom service providers including third parties have to comply with this,” the home affairs ministry said on Monday.
However, analysts doubt whether RIM or other providers of encrypted communications would technically be able to meet the government’s demands.
Tuesday, August 31, 2010
Currency-Trading Growth Slowed Amid Crisis, BIS Says
Sept. 1 (Bloomberg) -- Growth in foreign-exchange trading slowed in the three years through April as heightened price swings after the credit markets seized up lowered the appetite for risk, a Bank for International Settlements survey showed.
Trading increased 20 percent to $4 trillion a day on average, the BIS said in the poll, which is released every three years. Growth lagged the 72 percent, three-year expansion recorded in the last survey, published in 2007, which was partly fueled by “low levels of financial market volatility and of risk aversion, and expansion in the activity of hedge funds,” the Basel, Switzerland-based BIS said today.
Asia-Pacific currencies accounted for 35.9 percent of average daily foreign-exchange trading, the most since the Basel, Switzerland-based BIS started compiling the surveys in 1998, up from 33 percent in 2007. That is also the first increase since the 2001 figures, the BIS said today.
Implied volatility on options for major exchange rates averaged 12.25 percent in the three years through April 1, compared with about 9 percent between April 2004 and the end of March 2007, according to a JPMorgan Chase & Co. measure that tracks the dollar against the euro and the currencies of Japan, Australia, Canada, Switzerland, and the U.K. The volatility index, based on three-month options, surged to 26.6 percent in October 2008 as Lehman Brothers Holdings Inc. collapsed.
“Since the crisis it’s just been complete chaos, and volatility has gone to extreme levels from all-time lows pre- crisis,” said Kevin Rodgers, London-based global head of foreign-exchange derivatives at Deutsche Bank AG, the world’s largest currency trader. “Though it has come off, it remains historically high. The market is a very much jumpier, less- liquid place than it was pre-crisis.”
Financial Turmoil
The BIS was formed in 1930 and acts as a central bank for the world’s monetary authorities. Its Central Bank Survey of Foreign Exchange and Derivatives Market Activity is based on data from 53 institutions.
The single European currency surged to a record against the dollar in 2008 and then plunged in the wake of Lehman’s failure. The euro recovered through most of 2009 before sliding again this year as Greece’s budget crisis triggered speculation that monetary union may not survive.
This month, the yen has jumped to a 15-year high against the dollar, while the Swiss franc has soared to a record against the euro as investors sought havens amid deepening pessimism about the global economy.
Britain maintained its position as the biggest global foreign-exchange hub, with U.K.-based banks increasing their share of the market to 36.7 percent from 34.6 percent in 2007. The U.S. had an 18 percent share, followed by Japan, Singapore, Switzerland, Hong Kong and Australia.
Dollar’s Share
The dollar was used in a smaller proportion of foreign- exchange transactions. Some 85 percent of currency trades in the three-year period involved the dollar, down from a 90 percent peak in the BIS’s 2001 survey. Europe’s single currency increased its portion by 2 percentage points to 39 percent, while emerging-market currencies also gained market share, led by the Turkish lira and the Korean won.
Currency-trading growth over the past three years was paced by a 48 percent jump in so-called spot transactions, where trades are settled in cash almost immediately, as opposed to transactions for future delivery.
U.K. Turnover
Spot trading accounted for 37 percent of total foreign- exchange turnover, the report said. Transactions involving central banks, hedge funds, pension funds, mutual funds and insurance companies rose by 42 percent to $1.9 trillion, according to the report.
Average daily turnover in the U.K. rose 25 percent to $1.85 trillion, the Bank of England said in a separate statement. The increase was driven by a 108 percent surge in spot transactions, which account for 38 percent of turnover.
Currency trading in Japan climbed by 26 percent on average in April compared with the same month of 2007, the Bank of Japan said. Average daily foreign-exchange transactions in Japan increased to $301.3 billion in April, up from $238.4 billion in the previous survey, the bank said in Tokyo.
Singapore, the Asia’s biggest foreign-exchange center after Tokyo, had average daily turnover of $266 billion in April, compared with $242 billion previously, the Monetary Authority of Singapore said in a statement.
Aussie Dollar
Australia’s foreign-exchange market has continued to expand, with the Australian dollar now the fifth most-traded currency, according to the Reserve Bank of Australia.
“Investors are beginning to see currencies as assets, like commodities and stocks,” said Kuniyuki Hirai, manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender. “I expect foreign-exchange trading to continue to increase in Asia and other commodity-rich places, where rapid growth draws investor attention.”
Trading increased 20 percent to $4 trillion a day on average, the BIS said in the poll, which is released every three years. Growth lagged the 72 percent, three-year expansion recorded in the last survey, published in 2007, which was partly fueled by “low levels of financial market volatility and of risk aversion, and expansion in the activity of hedge funds,” the Basel, Switzerland-based BIS said today.
Asia-Pacific currencies accounted for 35.9 percent of average daily foreign-exchange trading, the most since the Basel, Switzerland-based BIS started compiling the surveys in 1998, up from 33 percent in 2007. That is also the first increase since the 2001 figures, the BIS said today.
Implied volatility on options for major exchange rates averaged 12.25 percent in the three years through April 1, compared with about 9 percent between April 2004 and the end of March 2007, according to a JPMorgan Chase & Co. measure that tracks the dollar against the euro and the currencies of Japan, Australia, Canada, Switzerland, and the U.K. The volatility index, based on three-month options, surged to 26.6 percent in October 2008 as Lehman Brothers Holdings Inc. collapsed.
“Since the crisis it’s just been complete chaos, and volatility has gone to extreme levels from all-time lows pre- crisis,” said Kevin Rodgers, London-based global head of foreign-exchange derivatives at Deutsche Bank AG, the world’s largest currency trader. “Though it has come off, it remains historically high. The market is a very much jumpier, less- liquid place than it was pre-crisis.”
Financial Turmoil
The BIS was formed in 1930 and acts as a central bank for the world’s monetary authorities. Its Central Bank Survey of Foreign Exchange and Derivatives Market Activity is based on data from 53 institutions.
The single European currency surged to a record against the dollar in 2008 and then plunged in the wake of Lehman’s failure. The euro recovered through most of 2009 before sliding again this year as Greece’s budget crisis triggered speculation that monetary union may not survive.
This month, the yen has jumped to a 15-year high against the dollar, while the Swiss franc has soared to a record against the euro as investors sought havens amid deepening pessimism about the global economy.
Britain maintained its position as the biggest global foreign-exchange hub, with U.K.-based banks increasing their share of the market to 36.7 percent from 34.6 percent in 2007. The U.S. had an 18 percent share, followed by Japan, Singapore, Switzerland, Hong Kong and Australia.
Dollar’s Share
The dollar was used in a smaller proportion of foreign- exchange transactions. Some 85 percent of currency trades in the three-year period involved the dollar, down from a 90 percent peak in the BIS’s 2001 survey. Europe’s single currency increased its portion by 2 percentage points to 39 percent, while emerging-market currencies also gained market share, led by the Turkish lira and the Korean won.
Currency-trading growth over the past three years was paced by a 48 percent jump in so-called spot transactions, where trades are settled in cash almost immediately, as opposed to transactions for future delivery.
U.K. Turnover
Spot trading accounted for 37 percent of total foreign- exchange turnover, the report said. Transactions involving central banks, hedge funds, pension funds, mutual funds and insurance companies rose by 42 percent to $1.9 trillion, according to the report.
Average daily turnover in the U.K. rose 25 percent to $1.85 trillion, the Bank of England said in a separate statement. The increase was driven by a 108 percent surge in spot transactions, which account for 38 percent of turnover.
Currency trading in Japan climbed by 26 percent on average in April compared with the same month of 2007, the Bank of Japan said. Average daily foreign-exchange transactions in Japan increased to $301.3 billion in April, up from $238.4 billion in the previous survey, the bank said in Tokyo.
Singapore, the Asia’s biggest foreign-exchange center after Tokyo, had average daily turnover of $266 billion in April, compared with $242 billion previously, the Monetary Authority of Singapore said in a statement.
Aussie Dollar
Australia’s foreign-exchange market has continued to expand, with the Australian dollar now the fifth most-traded currency, according to the Reserve Bank of Australia.
“Investors are beginning to see currencies as assets, like commodities and stocks,” said Kuniyuki Hirai, manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender. “I expect foreign-exchange trading to continue to increase in Asia and other commodity-rich places, where rapid growth draws investor attention.”
Internal Dissent and Staff Losses May Hurt Financial Crisis Panel
WASHINGTON — With less than four months left to complete its work, the group appointed by Congress to examine the causes of the financial crisis has been hampered by an exodus of senior employees and by internal disagreements that could hinder its ability to produce a report the entire commission could support.
The group, the Financial Crisis Inquiry Commission, is expected to report to the nation by Dec. 15 on the causes of the 2008 financial debacle. It is investigating 22 factors, including Asian savings, regulatory failings in the United States, executive pay and credit ratings.
Modeled in part on the 9/11 Commission and in part on the Pecora hearings, which the Senate convened to investigate the sources of the Great Depression, the commission hopes to produce a detailed report that will influence future policy making. It has held 12 days of hearings, interviewed more than 500 witnesses and pored over hundreds of thousands of pages of documents.
But as the commission prepares for its final round of public hearings on Capitol Hill this week — including appearances by Richard S. Fuld Jr., the former chief executive of Lehman Brothers, on Wednesday, and Ben S. Bernanke, the chairman of the Federal Reserve, on Thursday — it faces substantial obstacles.
In May, the commission’s executive director was moved aside and succeeded by an economist from the Fed, a decision that drew criticism since the central bank is an object of the investigation because of its leading role in handling the crisis. In addition, five of the commission’s 14 senior staff members have resigned, including Matt Cooper, a journalist who was drafting the report.
Moreover, the commission’s chairman, Phil Angelides, and vice chairman, Bill Thomas, are finding it challenging to maintain support from all eight other commissioners. While squabbling within the panel has not broken into open dissent, several commissioners are divided over how much to blame specific individuals and banks, how and when to release the documents it has gathered and whether to make available testimony of government officials and bank executives it has interviewed privately.
In a joint interview by phone on Tuesday, Mr. Angelides, a Democrat, and Mr. Thomas, a Republican, said that the turnover’s effects had been exaggerated and that they were optimistic about a consensus.
“We’re doing our very best, and we will do our level best,” said Mr. Angelides. He said he had spoken recently with Thomas H. Kean, the former New Jersey governor who led the 9/11 Commission, which produced an acclaimed report that was a surprise best seller. “Several weeks out, they doubted whether they would get any kind of agreement on anything,” Mr. Angelides said.
Mr. Thomas said that the law establishing the commission did not mandate unanimity, but “it’s always desirable,” he said.
Created in May 2009, the commission got off to a slow start. Congressional leaders named the 10 members that July, and the commission met for the first time last September. Not until December did the commission name 14 senior staff members.
The departures also include: Martin T. Biegelman, a veteran corporate fraud investigator; Bradley J. Bondi, a lawyer who returned to the Securities and Exchange Commission; Bartly A. Dzivi, a banking lawyer; and Beneva C. Schulte, who had been in charge of communications.
Mr. Angelides, a former California state treasurer who unsuccessfully challenged Gov. Arnold Schwarzenegger’s re-election campaign in 2006, said the departures had not delayed the commission’s work. “It’s difficult in your first year of operation to assemble a new team,” he said. “You always have a lot of dynamism, people coming and going.”
On July 27, after Congress added $1.8 million to the panel’s initial budget of $8 million, Darrell Issa of California, the top Republican on the House Oversight and Government Reform Committee, asked for details of its staff and budget.
Mr. Issa noted the turnover and questioned the decision to appoint Wendy M. Edelberg, an economist on loan from the Fed, as executive director. She replaced J. Thomas Greene, who had worked in the California attorney general’s office.
Another top staff member, Gregory H. Feldberg, who replaced Ms. Edelberg as research director after she was promoted, is also on loan from the Fed. He is the son of Chester B. Feldberg, one of three trustees overseeing the government’s majority stake in the American International Group, the giant insurer that collapsed in 2008.
The father, known as Chet, is a former chairman of Barclays America and before that was in charge of bank supervision and regulation at the Federal Reserve Bank of New York, which critics say failed to regulate banks and then helped bail them out.
Mr. Issa said the appointments of Ms. Edelberg and Mr. Feldberg raised the appearance of conflicts of interest — a claim Mr. Angelides and Mr. Thomas denied.
“Wendy is in the position she’s in because she’s bright, talented, has an economics degree,” Mr. Thomas said, adding that she “knows how to work with bright, strong ego-driven people as well” because she worked with the Bush and Obama White Houses.
Mr. Angelides called Gregory Feldberg “a wonderful, talented guy” and added: “He signed an ethics agreement and a confidentiality agreement and has recused himself from any matters relating to A.I.G.”
Borrowing employees from other agencies, Mr. Thomas said, was the only way to get people who “had to be up to speed” on complex financial matters.
In a letter on Aug. 9 to Mr. Issa, Mr. Angelides said that the commission was “devoting all our time, energy and resources” to the report, and that the $1.8 million would be used for “engaging additional investigators, researchers and report writers, and expanding our computerized document analysis resources.” (In comparison, the 9/11 Commission had a $15 million budget.)
Mr. Angelides called the criticisms “silly, stupid Washington stuff,” adding: “I don’t know what Mr. Issa’s agenda is, but I can tell you what ours is.”
The commission will also have field hearings this month in Bakersfield, Calif., Las Vegas, Miami and Sacramento.
The group, the Financial Crisis Inquiry Commission, is expected to report to the nation by Dec. 15 on the causes of the 2008 financial debacle. It is investigating 22 factors, including Asian savings, regulatory failings in the United States, executive pay and credit ratings.
Modeled in part on the 9/11 Commission and in part on the Pecora hearings, which the Senate convened to investigate the sources of the Great Depression, the commission hopes to produce a detailed report that will influence future policy making. It has held 12 days of hearings, interviewed more than 500 witnesses and pored over hundreds of thousands of pages of documents.
But as the commission prepares for its final round of public hearings on Capitol Hill this week — including appearances by Richard S. Fuld Jr., the former chief executive of Lehman Brothers, on Wednesday, and Ben S. Bernanke, the chairman of the Federal Reserve, on Thursday — it faces substantial obstacles.
In May, the commission’s executive director was moved aside and succeeded by an economist from the Fed, a decision that drew criticism since the central bank is an object of the investigation because of its leading role in handling the crisis. In addition, five of the commission’s 14 senior staff members have resigned, including Matt Cooper, a journalist who was drafting the report.
Moreover, the commission’s chairman, Phil Angelides, and vice chairman, Bill Thomas, are finding it challenging to maintain support from all eight other commissioners. While squabbling within the panel has not broken into open dissent, several commissioners are divided over how much to blame specific individuals and banks, how and when to release the documents it has gathered and whether to make available testimony of government officials and bank executives it has interviewed privately.
In a joint interview by phone on Tuesday, Mr. Angelides, a Democrat, and Mr. Thomas, a Republican, said that the turnover’s effects had been exaggerated and that they were optimistic about a consensus.
“We’re doing our very best, and we will do our level best,” said Mr. Angelides. He said he had spoken recently with Thomas H. Kean, the former New Jersey governor who led the 9/11 Commission, which produced an acclaimed report that was a surprise best seller. “Several weeks out, they doubted whether they would get any kind of agreement on anything,” Mr. Angelides said.
Mr. Thomas said that the law establishing the commission did not mandate unanimity, but “it’s always desirable,” he said.
Created in May 2009, the commission got off to a slow start. Congressional leaders named the 10 members that July, and the commission met for the first time last September. Not until December did the commission name 14 senior staff members.
The departures also include: Martin T. Biegelman, a veteran corporate fraud investigator; Bradley J. Bondi, a lawyer who returned to the Securities and Exchange Commission; Bartly A. Dzivi, a banking lawyer; and Beneva C. Schulte, who had been in charge of communications.
Mr. Angelides, a former California state treasurer who unsuccessfully challenged Gov. Arnold Schwarzenegger’s re-election campaign in 2006, said the departures had not delayed the commission’s work. “It’s difficult in your first year of operation to assemble a new team,” he said. “You always have a lot of dynamism, people coming and going.”
On July 27, after Congress added $1.8 million to the panel’s initial budget of $8 million, Darrell Issa of California, the top Republican on the House Oversight and Government Reform Committee, asked for details of its staff and budget.
Mr. Issa noted the turnover and questioned the decision to appoint Wendy M. Edelberg, an economist on loan from the Fed, as executive director. She replaced J. Thomas Greene, who had worked in the California attorney general’s office.
Another top staff member, Gregory H. Feldberg, who replaced Ms. Edelberg as research director after she was promoted, is also on loan from the Fed. He is the son of Chester B. Feldberg, one of three trustees overseeing the government’s majority stake in the American International Group, the giant insurer that collapsed in 2008.
The father, known as Chet, is a former chairman of Barclays America and before that was in charge of bank supervision and regulation at the Federal Reserve Bank of New York, which critics say failed to regulate banks and then helped bail them out.
Mr. Issa said the appointments of Ms. Edelberg and Mr. Feldberg raised the appearance of conflicts of interest — a claim Mr. Angelides and Mr. Thomas denied.
“Wendy is in the position she’s in because she’s bright, talented, has an economics degree,” Mr. Thomas said, adding that she “knows how to work with bright, strong ego-driven people as well” because she worked with the Bush and Obama White Houses.
Mr. Angelides called Gregory Feldberg “a wonderful, talented guy” and added: “He signed an ethics agreement and a confidentiality agreement and has recused himself from any matters relating to A.I.G.”
Borrowing employees from other agencies, Mr. Thomas said, was the only way to get people who “had to be up to speed” on complex financial matters.
In a letter on Aug. 9 to Mr. Issa, Mr. Angelides said that the commission was “devoting all our time, energy and resources” to the report, and that the $1.8 million would be used for “engaging additional investigators, researchers and report writers, and expanding our computerized document analysis resources.” (In comparison, the 9/11 Commission had a $15 million budget.)
Mr. Angelides called the criticisms “silly, stupid Washington stuff,” adding: “I don’t know what Mr. Issa’s agenda is, but I can tell you what ours is.”
The commission will also have field hearings this month in Bakersfield, Calif., Las Vegas, Miami and Sacramento.
Asian Stocks Rise on China Manufacturing Data; BHP, Rio Climb
Sept. 1 (Bloomberg) -- Asian stocks rose, led by commodity companies, after China’s manufacturing expanded at a faster pace in August. Japanese exporters declined on speculation a stronger yen will hurt earnings.
Mining companies BHP Billiton Ltd. and Rio Tinto Group, which get at least a quarter of their sales from China, climbed more than 2 percent in Sydney. Toyota Motor Corp., which derives 30 percent of its sales in the U.S., declined 1.5 percent after the yen earlier traded near a 15-year high versus dollar. Panasonic Corp. fell 0.8 percent after saying it may fail to meet its sales target for 3-D television sets.
The MSCI Asia Pacific Index gained 0.4 percent to 117 as of 10:38 a.m. in Tokyo. The gauge slumped 2.2 percent last month, the biggest monthly loss since May. The index has declined 4.4 percent from a three-month high on Aug. 6 on concern economic growth in the U.S., Europe and China will slow.
Japan’s Nikkei 225 Stock Average climbed 0.6 percent as the yen erased gains against the dollar following the China manufacturing data. Australia’s S&P/ASX 200 Index advanced 1.6 percent. South Korea’s Kospi Index gained 1 percent.
Futures on the Standard & Poor’s 500 Index rose 0.7 percent today. The index yesterday rose less than 0.1 percent, reversing a 0.8 percent loss, as regulators approved a Chinese investment in Morgan Stanley and gains in home prices and consumer confidence tempered concern the economy is faltering.
Mining companies BHP Billiton Ltd. and Rio Tinto Group, which get at least a quarter of their sales from China, climbed more than 2 percent in Sydney. Toyota Motor Corp., which derives 30 percent of its sales in the U.S., declined 1.5 percent after the yen earlier traded near a 15-year high versus dollar. Panasonic Corp. fell 0.8 percent after saying it may fail to meet its sales target for 3-D television sets.
The MSCI Asia Pacific Index gained 0.4 percent to 117 as of 10:38 a.m. in Tokyo. The gauge slumped 2.2 percent last month, the biggest monthly loss since May. The index has declined 4.4 percent from a three-month high on Aug. 6 on concern economic growth in the U.S., Europe and China will slow.
Japan’s Nikkei 225 Stock Average climbed 0.6 percent as the yen erased gains against the dollar following the China manufacturing data. Australia’s S&P/ASX 200 Index advanced 1.6 percent. South Korea’s Kospi Index gained 1 percent.
Futures on the Standard & Poor’s 500 Index rose 0.7 percent today. The index yesterday rose less than 0.1 percent, reversing a 0.8 percent loss, as regulators approved a Chinese investment in Morgan Stanley and gains in home prices and consumer confidence tempered concern the economy is faltering.
Monday, August 30, 2010
Hong Kong May Sell Site in Kowloon for District Record Price
Aug. 31 (Bloomberg) -- Hong Kong developers may pay a record per-square-foot price for government land on the Kowloon Peninsula in an auction today even after new measures to cool home prices, some analysts said.
The site on Ede Road in the Kowloon Tong district may fetch HK$1.02 billion ($131 million), or HK$13,167 per buildable square foot, according to the median of a five analyst estimates in a Bloomberg News survey. The previous record was set in June, when Sun Hung Kai Properties Ltd. paid HK$12,540 a square foot for a site in the nearby Ho Man Tin district.
The government on Aug. 13 raised down-payment ratios and said it will increase land supply amid concerns housing is becoming unaffordable. Four days after the announcement, Cheung Kong (Holdings) Ltd., controlled by Hong Kong’s richest man, Li Ka-shing, paid more than estimated for two building sites in a government auction, one of them also in Ho Man Tin.
“The site is at a good location in a traditional luxury residential area,” said Ringo Lam, director in the valuation department of surveying firm AG Wilkinson & Associates, who forecast the site to be sold for HK$1.1 billion. “Also, the relatively small amount of capital needed to invest means more developers can afford to compete for it.”
The value of today’s site maybe further bolstered by two adjacent plots that the government may sell in the future, as they can be jointly developed into a large-scale residential complex with a higher profit margin, said Lam.
Today’s auction will be the sixth in the current government fiscal year and was triggered by developers’ applications. The opening bid for the lot will be HK$659 million ($84.8 million), the Lands Department said in a release posted on its website.
Smaller Parcel
The Ede Road site has a total buildable area of 77,469 square feet (7,197 square meters), compared with the 394,000 square feet of the Ho Man Tin site purchased by Cheung Kong earlier this month and 869,000 square feet of the one bought by Sun Hung Kai in June.
“This is a much smaller parcel and we also don’t think its location is as attractive as the couple of Ho Man Tin sites sold over the last few months,” said Alnwick Chan, Hong Kong-based executive director at Knight Frank LLP, who forecast an auction price of HK$9.3 billion. “There’ll still be quite a few bidders going for it, but I doubt it’ll be as intense as the last one.”
Analysts’ estimates for the Kowloon Tong site range from HK$930 million to HK$1.1 billion.
The government will auction two residential sites in the Fanling and Chai Wan districts on Sept. 29 as part of Financial Secretary John Tsang’s plan to curb home prices. The government will also work with MTR Corp. and the Urban Renewal Authority to increase land supply.
The government may also change the purpose of some land to residential, Tsang added. MTR is one of the biggest owners of unoccupied residential sites in Hong Kong.
Hong Kong property stocks has fallen 2.7 percent since the government announced new measures to curb home prices Aug. 13, compared with the 1.6 percent decline in the Hang Seng Index.
Prices Surge
Hong Kong’s home prices have surged about 45 percent since the beginning of 2009 on record low mortgage rates and the influx of wealthy mainland Chinese buyers, according to Centaline Property Agency Ltd.
Sun Hung Kai on June 8 paid HK$10.9 billion for a residential site in Ho Man Tin. The price, which beat an estimate compiled by Bloomberg News by 30 percent, is the highest paid in a government auction in urban Hong Kong since the market peaked in 1997.
Most government land sales in recent years, including today’s auction, have been triggered by developers who promised to pay minimum amounts for sites on a list of available lots under the so-called land application system. Regular government land auctions have been partially resumed this year after they were halted in 2004 to support falling home prices.
The site on Ede Road in the Kowloon Tong district may fetch HK$1.02 billion ($131 million), or HK$13,167 per buildable square foot, according to the median of a five analyst estimates in a Bloomberg News survey. The previous record was set in June, when Sun Hung Kai Properties Ltd. paid HK$12,540 a square foot for a site in the nearby Ho Man Tin district.
The government on Aug. 13 raised down-payment ratios and said it will increase land supply amid concerns housing is becoming unaffordable. Four days after the announcement, Cheung Kong (Holdings) Ltd., controlled by Hong Kong’s richest man, Li Ka-shing, paid more than estimated for two building sites in a government auction, one of them also in Ho Man Tin.
“The site is at a good location in a traditional luxury residential area,” said Ringo Lam, director in the valuation department of surveying firm AG Wilkinson & Associates, who forecast the site to be sold for HK$1.1 billion. “Also, the relatively small amount of capital needed to invest means more developers can afford to compete for it.”
The value of today’s site maybe further bolstered by two adjacent plots that the government may sell in the future, as they can be jointly developed into a large-scale residential complex with a higher profit margin, said Lam.
Today’s auction will be the sixth in the current government fiscal year and was triggered by developers’ applications. The opening bid for the lot will be HK$659 million ($84.8 million), the Lands Department said in a release posted on its website.
Smaller Parcel
The Ede Road site has a total buildable area of 77,469 square feet (7,197 square meters), compared with the 394,000 square feet of the Ho Man Tin site purchased by Cheung Kong earlier this month and 869,000 square feet of the one bought by Sun Hung Kai in June.
“This is a much smaller parcel and we also don’t think its location is as attractive as the couple of Ho Man Tin sites sold over the last few months,” said Alnwick Chan, Hong Kong-based executive director at Knight Frank LLP, who forecast an auction price of HK$9.3 billion. “There’ll still be quite a few bidders going for it, but I doubt it’ll be as intense as the last one.”
Analysts’ estimates for the Kowloon Tong site range from HK$930 million to HK$1.1 billion.
The government will auction two residential sites in the Fanling and Chai Wan districts on Sept. 29 as part of Financial Secretary John Tsang’s plan to curb home prices. The government will also work with MTR Corp. and the Urban Renewal Authority to increase land supply.
The government may also change the purpose of some land to residential, Tsang added. MTR is one of the biggest owners of unoccupied residential sites in Hong Kong.
Hong Kong property stocks has fallen 2.7 percent since the government announced new measures to curb home prices Aug. 13, compared with the 1.6 percent decline in the Hang Seng Index.
Prices Surge
Hong Kong’s home prices have surged about 45 percent since the beginning of 2009 on record low mortgage rates and the influx of wealthy mainland Chinese buyers, according to Centaline Property Agency Ltd.
Sun Hung Kai on June 8 paid HK$10.9 billion for a residential site in Ho Man Tin. The price, which beat an estimate compiled by Bloomberg News by 30 percent, is the highest paid in a government auction in urban Hong Kong since the market peaked in 1997.
Most government land sales in recent years, including today’s auction, have been triggered by developers who promised to pay minimum amounts for sites on a list of available lots under the so-called land application system. Regular government land auctions have been partially resumed this year after they were halted in 2004 to support falling home prices.
Australia Bank Bonds Punished on Bubble Concern: Credit Markets
Aug. 31 (Bloomberg) -- Investors in U.S. dollar-denominated bonds issued by Australian banks are demanding higher relative yields on concern the country’s property market is overheating.
The spread between Westpac Banking Corp.’s $2 billion of five-year notes and similar-maturity Treasuries widened to 144 basis points yesterday from 137 basis points when sold on July 26, Citadel Securities prices show. The cost of credit-default swaps tied to Sydney-based Westpac and its three largest peers jumped at least 59 percent this year, outpacing the benchmark Australia Markit iTraxx index’s 47 percent increase.
House values in Australia surged 18.4 percent in 2010, causing Nobel-winning economist Joseph Stiglitz to say this month that the nation’s property inflation gives “cause for concern.” Westpac, National Australia Bank Ltd., Commonwealth Bank of Australia and Australia & New Zealand Banking Group Ltd. accumulated A$798 billion ($713.5 billion) of mortgage debt, almost 66 percent of their combined loans, according to their banking regulator.
“We don’t have the same type of bets on we would have had four years ago,” said Tom Farina, a director at Deutsche Insurance Asset Management in New York, who helps manage $188 billion. While Australian homeowners may not be facing a U.S.- style meltdown, “we’re certainly hitting some lofty leverage levels from a valuation perspective,” he said.
Four Pillar Banks
The so-called Four Pillar banks, named for a law that forbids them from merging with each other, have raised more than $102.5 billion from bonds in the U.S. currency since the start of 2008, or about 46 percent of their total sales, Bloomberg data including issues by units show.
The lenders, facing regulatory reforms that favor long-term capital over short-dated funding, may need to sell A$162 billion of bonds in the 2011 financial year, 80 percent more than their annual average for the five years to 2007, Morgan Stanley analysts led by Viktor Hjort said last month.
Elsewhere in credit markets, the extra yield investors demand to own corporate bonds worldwide rather than government debt rose amid increasing concern U.S. growth is decelerating. Emerging market debentures weakened and government-backed mortgage bonds are poised for their worst monthly performance relative to Treasuries since November 2008. Sara Lee Corp. sold $800 million of bonds, the day’s biggest offering in the U.S.
Global company bond spreads widened 1 basis point to 179 basis points according to Bank of America Merrill Lynch’s Global Broad Market Corporate index. The gap increased 2 basis points this month and is 3 basis points higher from Dec. 31. Yields fell to 3.478 percent from 3.751 percent on July 31.
Slowing Economy
The bonds returned 1.96 percent in August, the best monthly performance since July 2009, according to Bank of America Merrill Lynch index data, as equity markets faltered amid signs the economic recovery may be stuttering. The debt gained 1.47 percent in July, according to the index.
Commerce Department data yesterday showed that disposable incomes, or the money left over after taxes, dropped for the first time since January after adjusting for inflation, showing how the lack of jobs may prevent consumer spending from strengthening further after purchases rose 0.4 percent in July.
For the year, corporate bonds have returned 8.63 percent, versus 6.17 percent for global government debt. The MSCI World Index has lost 5.5 percent including reinvested dividends.
Sara Lee, the maker of Ball Park hot dogs and Hillshire Farm meat products, sold bonds in the U.S. for the first time since 2003, Bloomberg data show.
Debt Offerings
The Downers Grove, Illinois-based company issued $800 million evenly split between 5- and 10-year debt, the data show. The 5-year notes yield 137 basis points more than similar- maturity Treasuries and $400 million of 10-year debt pays a 157 basis-point spread, Bloomberg data show.
That helped U.S. debt offerings reach $97.3 billion this month, a 37 percent increase from the similar period last year, and the busiest August since 2007, Bloomberg data show. Companies from Johnson & Johnson to Southern California Edison Co. took advantage of the lowest rates on record as declining Treasury yields encouraged investors to buy corporate debt.
Sales rose to the most since March, when issuance was about $140 billion, the data show.
High-yield, high-risk debt offerings reached $23.2 billion, the most for an August on record even as issuance halted after Aug. 20 amid mounting concern the economic recovery is slowing.
The debt returned 0.2 percent this month, the worst performance since May, when Bank of America Merrill Lynch’s U.S. High Yield Master II index lost 3.5 percent.
Loan Returns
Loan prices fell for the month, with the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index declining 0.31 cent to 89.34 cents on the dollar. Loans have returned 3.85 percent in 2010, based on the index, which tracks the 100 largest dollar- denominated first-lien leveraged loans.
Leveraged loans and junk bonds are typically rated below Baa3 by Moody’s Investors Service and lower than BBB- by S&P.
Fannie Mae, Freddie Mac and Ginnie Mae securities have returned 35 basis points less than U.S. debt this month through Aug. 27, even after narrowing the gap by 19 basis points last week, Barclays Capital indexes show.
That’s the worst relative performance since November 2008, when the securities underperformed U.S. debt by 68 basis points amid the depths of the global financial crisis. Last month, the bonds returned 44 basis points more than Treasuries.
Home Prices
In emerging markets, the extra yield investors demand to own corporate bonds rather than government debentures rose 13 basis points to 296 basis points, the highest since July 22, according to index data from JPMorgan Chase & Co. Spreads for the month rose 11 basis points after declining 53 basis points in July, index data show.
Spreads on bonds issues by Australian financial companies have widened to 215 basis points on average from 209 on June 11, while the gap for bonds issued by similar borrowers around the world have narrowed to 224 from 256, according to Bank of America Merrill Lynch index data.
Home prices in the most populous cities of Melbourne and Sydney climbed 24 percent and 21 percent in the year to June as Australia continued almost two decades of uninterrupted economic growth, statistics bureau data show.
Australia’s ratio of household debt to disposable income was 157 percent as of March 31, central bank data show. It was 133 percent in the U.S. before the housing collapse began in 2007, according to the Federal Reserve Bank of San Francisco.
‘Collateral Damage’
“I’m not persuaded by arguments that houses are sustainably priced, I’m not persuaded by the view that debt is not a problem, and I’m not persuaded that policy-makers could prevent collateral damage to banks,” Gerard Minack, chief strategist for global developed markets at Morgan Stanley’s Australian unit, wrote in an Aug. 17 report. “Dodging the worst of the global financial crisis didn’t demonstrate that there’s no bubble, in my view it just showed we dodged the prick.”
Rising borrowing costs are a “revenue headwind” and may remain inflated for 18 months, Gail Kelly, the chief executive officer of Sydney-based Westpac, said when the lender reported quarterly earnings this month. They will be “permanently” higher, said Mike Smith, ANZ’s Melbourne-based CEO.
Omega Global Investors Pty Ltd., a fund management firm based in Melbourne, bought Macquarie Group Ltd. bonds in July and August from U.S. and European investors concerned about a housing slowdown, according to Investment Director Mat McCrum.
“Australia’s increasing population and limited supply make the market very different from the U.S. and Europe,” McCrum said in a telephone interview.
Housing Shortage
Australia, a nation of 22.4 million, faces a housing shortage and needs to build about 420,000 more homes in the next decade than it did in the last, according to Harley Dale, chief economist at the Canberra-based Housing Industry Association.
The median cost of an urban home was A$465,000 in July, research by real estate monitoring company RP Data show. The median price of a new home sold in the U.S. that month was $204,000, while sales unexpectedly dropped to the lowest on record, according to Commerce Department data published Aug. 25.
National Australia Bank priced $1.25 billion of three-year bonds in January to yield 87.5 basis points more than Treasuries, the data show. The spread has since widened to 126 basis points, according to HSBC Holdings Plc.
Credit Swaps
Investor demand for corporate debt globally will support Australian bank bonds, said Mark Kiesel, global head of corporate bond portfolio management at Pacific Investment Management Co. The Newport Beach, California-based firm oversees the world’s biggest bond fund and is among the largest holders of Australian bank debt.
While that may benefit the securities, “when we look around the world, the most attractive banks from a valuation perspective are U.S. and U.K. banks,” he said.
Investors have allocated $480.2 billion into debt mutual funds in the two years ending in June, according to data compiled by Bloomberg and the Washington-based Investment Company Institute.
Bank of America Corp., rated three grades lower than ANZ at A by Standard & Poor’s, priced $1.5 billion of five-year bonds on Aug. 17 to yield 230 basis points more than Treasuries, according to Bloomberg data.
Similarly-rated Royal Bank of Scotland Group Plc, the U.K.’s biggest state-owned bank, sold $1.5 billion of 2013 notes at a 265 basis point spread, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
The spread between Westpac Banking Corp.’s $2 billion of five-year notes and similar-maturity Treasuries widened to 144 basis points yesterday from 137 basis points when sold on July 26, Citadel Securities prices show. The cost of credit-default swaps tied to Sydney-based Westpac and its three largest peers jumped at least 59 percent this year, outpacing the benchmark Australia Markit iTraxx index’s 47 percent increase.
House values in Australia surged 18.4 percent in 2010, causing Nobel-winning economist Joseph Stiglitz to say this month that the nation’s property inflation gives “cause for concern.” Westpac, National Australia Bank Ltd., Commonwealth Bank of Australia and Australia & New Zealand Banking Group Ltd. accumulated A$798 billion ($713.5 billion) of mortgage debt, almost 66 percent of their combined loans, according to their banking regulator.
“We don’t have the same type of bets on we would have had four years ago,” said Tom Farina, a director at Deutsche Insurance Asset Management in New York, who helps manage $188 billion. While Australian homeowners may not be facing a U.S.- style meltdown, “we’re certainly hitting some lofty leverage levels from a valuation perspective,” he said.
Four Pillar Banks
The so-called Four Pillar banks, named for a law that forbids them from merging with each other, have raised more than $102.5 billion from bonds in the U.S. currency since the start of 2008, or about 46 percent of their total sales, Bloomberg data including issues by units show.
The lenders, facing regulatory reforms that favor long-term capital over short-dated funding, may need to sell A$162 billion of bonds in the 2011 financial year, 80 percent more than their annual average for the five years to 2007, Morgan Stanley analysts led by Viktor Hjort said last month.
Elsewhere in credit markets, the extra yield investors demand to own corporate bonds worldwide rather than government debt rose amid increasing concern U.S. growth is decelerating. Emerging market debentures weakened and government-backed mortgage bonds are poised for their worst monthly performance relative to Treasuries since November 2008. Sara Lee Corp. sold $800 million of bonds, the day’s biggest offering in the U.S.
Global company bond spreads widened 1 basis point to 179 basis points according to Bank of America Merrill Lynch’s Global Broad Market Corporate index. The gap increased 2 basis points this month and is 3 basis points higher from Dec. 31. Yields fell to 3.478 percent from 3.751 percent on July 31.
Slowing Economy
The bonds returned 1.96 percent in August, the best monthly performance since July 2009, according to Bank of America Merrill Lynch index data, as equity markets faltered amid signs the economic recovery may be stuttering. The debt gained 1.47 percent in July, according to the index.
Commerce Department data yesterday showed that disposable incomes, or the money left over after taxes, dropped for the first time since January after adjusting for inflation, showing how the lack of jobs may prevent consumer spending from strengthening further after purchases rose 0.4 percent in July.
For the year, corporate bonds have returned 8.63 percent, versus 6.17 percent for global government debt. The MSCI World Index has lost 5.5 percent including reinvested dividends.
Sara Lee, the maker of Ball Park hot dogs and Hillshire Farm meat products, sold bonds in the U.S. for the first time since 2003, Bloomberg data show.
Debt Offerings
The Downers Grove, Illinois-based company issued $800 million evenly split between 5- and 10-year debt, the data show. The 5-year notes yield 137 basis points more than similar- maturity Treasuries and $400 million of 10-year debt pays a 157 basis-point spread, Bloomberg data show.
That helped U.S. debt offerings reach $97.3 billion this month, a 37 percent increase from the similar period last year, and the busiest August since 2007, Bloomberg data show. Companies from Johnson & Johnson to Southern California Edison Co. took advantage of the lowest rates on record as declining Treasury yields encouraged investors to buy corporate debt.
Sales rose to the most since March, when issuance was about $140 billion, the data show.
High-yield, high-risk debt offerings reached $23.2 billion, the most for an August on record even as issuance halted after Aug. 20 amid mounting concern the economic recovery is slowing.
The debt returned 0.2 percent this month, the worst performance since May, when Bank of America Merrill Lynch’s U.S. High Yield Master II index lost 3.5 percent.
Loan Returns
Loan prices fell for the month, with the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 Index declining 0.31 cent to 89.34 cents on the dollar. Loans have returned 3.85 percent in 2010, based on the index, which tracks the 100 largest dollar- denominated first-lien leveraged loans.
Leveraged loans and junk bonds are typically rated below Baa3 by Moody’s Investors Service and lower than BBB- by S&P.
Fannie Mae, Freddie Mac and Ginnie Mae securities have returned 35 basis points less than U.S. debt this month through Aug. 27, even after narrowing the gap by 19 basis points last week, Barclays Capital indexes show.
That’s the worst relative performance since November 2008, when the securities underperformed U.S. debt by 68 basis points amid the depths of the global financial crisis. Last month, the bonds returned 44 basis points more than Treasuries.
Home Prices
In emerging markets, the extra yield investors demand to own corporate bonds rather than government debentures rose 13 basis points to 296 basis points, the highest since July 22, according to index data from JPMorgan Chase & Co. Spreads for the month rose 11 basis points after declining 53 basis points in July, index data show.
Spreads on bonds issues by Australian financial companies have widened to 215 basis points on average from 209 on June 11, while the gap for bonds issued by similar borrowers around the world have narrowed to 224 from 256, according to Bank of America Merrill Lynch index data.
Home prices in the most populous cities of Melbourne and Sydney climbed 24 percent and 21 percent in the year to June as Australia continued almost two decades of uninterrupted economic growth, statistics bureau data show.
Australia’s ratio of household debt to disposable income was 157 percent as of March 31, central bank data show. It was 133 percent in the U.S. before the housing collapse began in 2007, according to the Federal Reserve Bank of San Francisco.
‘Collateral Damage’
“I’m not persuaded by arguments that houses are sustainably priced, I’m not persuaded by the view that debt is not a problem, and I’m not persuaded that policy-makers could prevent collateral damage to banks,” Gerard Minack, chief strategist for global developed markets at Morgan Stanley’s Australian unit, wrote in an Aug. 17 report. “Dodging the worst of the global financial crisis didn’t demonstrate that there’s no bubble, in my view it just showed we dodged the prick.”
Rising borrowing costs are a “revenue headwind” and may remain inflated for 18 months, Gail Kelly, the chief executive officer of Sydney-based Westpac, said when the lender reported quarterly earnings this month. They will be “permanently” higher, said Mike Smith, ANZ’s Melbourne-based CEO.
Omega Global Investors Pty Ltd., a fund management firm based in Melbourne, bought Macquarie Group Ltd. bonds in July and August from U.S. and European investors concerned about a housing slowdown, according to Investment Director Mat McCrum.
“Australia’s increasing population and limited supply make the market very different from the U.S. and Europe,” McCrum said in a telephone interview.
Housing Shortage
Australia, a nation of 22.4 million, faces a housing shortage and needs to build about 420,000 more homes in the next decade than it did in the last, according to Harley Dale, chief economist at the Canberra-based Housing Industry Association.
The median cost of an urban home was A$465,000 in July, research by real estate monitoring company RP Data show. The median price of a new home sold in the U.S. that month was $204,000, while sales unexpectedly dropped to the lowest on record, according to Commerce Department data published Aug. 25.
National Australia Bank priced $1.25 billion of three-year bonds in January to yield 87.5 basis points more than Treasuries, the data show. The spread has since widened to 126 basis points, according to HSBC Holdings Plc.
Credit Swaps
Investor demand for corporate debt globally will support Australian bank bonds, said Mark Kiesel, global head of corporate bond portfolio management at Pacific Investment Management Co. The Newport Beach, California-based firm oversees the world’s biggest bond fund and is among the largest holders of Australian bank debt.
While that may benefit the securities, “when we look around the world, the most attractive banks from a valuation perspective are U.S. and U.K. banks,” he said.
Investors have allocated $480.2 billion into debt mutual funds in the two years ending in June, according to data compiled by Bloomberg and the Washington-based Investment Company Institute.
Bank of America Corp., rated three grades lower than ANZ at A by Standard & Poor’s, priced $1.5 billion of five-year bonds on Aug. 17 to yield 230 basis points more than Treasuries, according to Bloomberg data.
Similarly-rated Royal Bank of Scotland Group Plc, the U.K.’s biggest state-owned bank, sold $1.5 billion of 2013 notes at a 265 basis point spread, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Doctors Seek Way to Treat Muscle Loss
Bears emerge from months of hibernation with their muscles largely intact. Not so for people, who, if bedridden that long, would lose so much muscle they would have trouble standing.
Why muscles wither with age is captivating a growing number of scientists, drug and food companies, let alone aging baby boomers who, despite having spent years sweating in the gym, are confronting the body’s natural loss of muscle tone over time.
Comparisons between age groups underline the muscle disparity: An 80-year-old might have 30 percent less muscle mass than a 20-year-old. And strength declines even more than mass. Weight-lifting records for 60-year-old men are 30 percent lower than for 30-year-olds; for women the drop-off is 50 percent.
With interest high among the aging, the market potential for maintaining and rebuilding muscle mass seems boundless. Drug companies already are trying to develop drugs that can build muscles or forestall their weakening without the notoriety of anabolic steroids. Food giants like Nestlé and Danone are exploring nutritional products with the same objective.
In addition, geriatric specialists, in particular, are now trying to establish the age-related loss of muscles as a medical condition under the name sarcopenia, from the Greek for loss of flesh. Simply put, sarcopenia is to muscle what osteoporosis is to bone.
“In the future, sarcopenia will be known as much as osteoporosis is now,” said Dr. Bruno Vellas, president of the International Association of Gerontology and Geriatrics.
Researchers involved in the effort say doctors and patients need to be more aware that muscle deterioration is a major reason the elderly lose mobility and cannot live independently.
“A doctor sees old people who are shrinking and getting weak, but there is no medical terminology that’s been created and made uniform to allow the doctor to make a diagnosis, look at possible causes, and make a treatment plan,” said Dr. Stephanie A. Studenski, a professor of medicine at the University of Pittsburgh.
Of course, commercial interests are at play as well. “If you are trying to sell drugs, you want to have a very clear criterion for diagnosing the problem and for endpoints to treat it,” said Dr. Thomas Lang of the University of California, San Francisco, who is working on techniques for diagnosing sarcopenia.
A task force of academic and industry scientists met in Rome last November and in Albuquerque last month and has submitted a proposed definition of sarcopenia for publication in a medical journal. The meeting received financial support from several drug companies and food companies.
Underscoring the focus on sarcopenia, four European medical societies proposed a somewhat different definition, and Dr. Studenski is developing yet another.
Whatever the definition, experts say, sarcopenia affects about 10 percent of those over 60, with higher rates as age advances. One study estimated that disability caused by sarcopenia accounted for $18.5 billion in direct medical costs in 2000, equivalent to 1.5 percent of the nation’s health care spending that year.
Causes of the loss of muscle mass or strength might include hormonal changes, sedentary lifestyles, oxidative damage, infiltration of fat into muscles, inflammation and resistance to insulin. Some problems stem from the brain and nervous system, which activate the muscles.
Experts say the best approach to restoring or maintaining muscle mass and strength is exercise, particularly resistance training.
The National Institute on Aging is now sponsoring a controlled trial to test whether exercise can prevent disability in largely sedentary people, age 70 to 89. There is also some early evidence that nutrition, like vitamin D or high levels of protein, might help. “At this point, what we can say is that older people are at risk for eating too little protein for adequate muscle preservation,” said Dr. Elena Volpi of the University of Texas Medical Branch in Galveston.
Pharmaceutical companies are paying more attention to muscles, a part of the body they once largely ignored. A year ago, for instance, GlaxoSmithKline hired William Evans, a leading academic expert on sarcopenia, to run a new muscle research unit.
But with sarcopenia still not established as a treatable condition, “there is no real defined regulatory path as to how one would get approved in this area,” said R. Alan Ezekowitz, a research executive at Merck.
So for now, many companies are focusing on better defined illnesses like muscular dystrophy and cachexia, the rapid muscle wasting that can accompany cancer or other diseases.
One problem is that academic researchers and drug companies initially viewed sarcopenia as primarily a loss of muscle mass, a direct analogy to bone density in osteoporosis. Muscle mass can be measured by the same scans used for bone density.
But some studies have shown that strength, like gripping force, or muscle function, as measured, say, by walking speed, can be more important than mass in predicting problems seniors might have.
“There’s a lot more to the story than simply having a lot of muscle tissue,” said Brian C. Clark, an expert at Ohio University. “Most of the drug stuff has been targeting muscle mass.”
So the definition is shifting to include muscle strength and function. The academic-industry task force recommends testing whether a person can walk four meters, or about 13 feet, in four seconds.
That can be tested by any doctor, without the special equipment needed to measure muscle mass or strength, said Roger A. Fielding of Tufts University, a leader of the task force.
Experts say that to win approval from regulators and reimbursement from insurers, a drug must do more than merely improve mass or strength. It must, for example, improve walking ability or prevent people from falling.
Or perhaps it could restore mobility faster after a person is bedridden. Older people can lose so much muscle during a prolonged hospital stay that they have to move to a nursing home.
Demonstrating such benefits and cost savings would help counter criticism that doctors and drug companies are trying to turn a natural consequence of aging into a disease.
“If you can get out of a nursing home in three weeks instead of three months, wouldn’t we say it is a useful thing?” said Dr. Studenski, who consults for drug companies.
Efforts to develop muscle drugs are still in early stages, and there have been setbacks.
But for inspiration, researchers can look to the bears, though scientists have no definitive answer to the animals’ youthful secret.
Moreover, a study that has tracked 3,000 people for 50 years found that about 20 of them, now in their 80s, have not lost muscle mass.
“Maintaining the muscle is possible,” said Dr. Luigi Ferrucci of the National Institute on Aging, who directs the study, called the Baltimore Longitudinal Study of Aging. “We just don’t know the right formula yet.”
Why muscles wither with age is captivating a growing number of scientists, drug and food companies, let alone aging baby boomers who, despite having spent years sweating in the gym, are confronting the body’s natural loss of muscle tone over time.
Comparisons between age groups underline the muscle disparity: An 80-year-old might have 30 percent less muscle mass than a 20-year-old. And strength declines even more than mass. Weight-lifting records for 60-year-old men are 30 percent lower than for 30-year-olds; for women the drop-off is 50 percent.
With interest high among the aging, the market potential for maintaining and rebuilding muscle mass seems boundless. Drug companies already are trying to develop drugs that can build muscles or forestall their weakening without the notoriety of anabolic steroids. Food giants like Nestlé and Danone are exploring nutritional products with the same objective.
In addition, geriatric specialists, in particular, are now trying to establish the age-related loss of muscles as a medical condition under the name sarcopenia, from the Greek for loss of flesh. Simply put, sarcopenia is to muscle what osteoporosis is to bone.
“In the future, sarcopenia will be known as much as osteoporosis is now,” said Dr. Bruno Vellas, president of the International Association of Gerontology and Geriatrics.
Researchers involved in the effort say doctors and patients need to be more aware that muscle deterioration is a major reason the elderly lose mobility and cannot live independently.
“A doctor sees old people who are shrinking and getting weak, but there is no medical terminology that’s been created and made uniform to allow the doctor to make a diagnosis, look at possible causes, and make a treatment plan,” said Dr. Stephanie A. Studenski, a professor of medicine at the University of Pittsburgh.
Of course, commercial interests are at play as well. “If you are trying to sell drugs, you want to have a very clear criterion for diagnosing the problem and for endpoints to treat it,” said Dr. Thomas Lang of the University of California, San Francisco, who is working on techniques for diagnosing sarcopenia.
A task force of academic and industry scientists met in Rome last November and in Albuquerque last month and has submitted a proposed definition of sarcopenia for publication in a medical journal. The meeting received financial support from several drug companies and food companies.
Underscoring the focus on sarcopenia, four European medical societies proposed a somewhat different definition, and Dr. Studenski is developing yet another.
Whatever the definition, experts say, sarcopenia affects about 10 percent of those over 60, with higher rates as age advances. One study estimated that disability caused by sarcopenia accounted for $18.5 billion in direct medical costs in 2000, equivalent to 1.5 percent of the nation’s health care spending that year.
Causes of the loss of muscle mass or strength might include hormonal changes, sedentary lifestyles, oxidative damage, infiltration of fat into muscles, inflammation and resistance to insulin. Some problems stem from the brain and nervous system, which activate the muscles.
Experts say the best approach to restoring or maintaining muscle mass and strength is exercise, particularly resistance training.
The National Institute on Aging is now sponsoring a controlled trial to test whether exercise can prevent disability in largely sedentary people, age 70 to 89. There is also some early evidence that nutrition, like vitamin D or high levels of protein, might help. “At this point, what we can say is that older people are at risk for eating too little protein for adequate muscle preservation,” said Dr. Elena Volpi of the University of Texas Medical Branch in Galveston.
Pharmaceutical companies are paying more attention to muscles, a part of the body they once largely ignored. A year ago, for instance, GlaxoSmithKline hired William Evans, a leading academic expert on sarcopenia, to run a new muscle research unit.
But with sarcopenia still not established as a treatable condition, “there is no real defined regulatory path as to how one would get approved in this area,” said R. Alan Ezekowitz, a research executive at Merck.
So for now, many companies are focusing on better defined illnesses like muscular dystrophy and cachexia, the rapid muscle wasting that can accompany cancer or other diseases.
One problem is that academic researchers and drug companies initially viewed sarcopenia as primarily a loss of muscle mass, a direct analogy to bone density in osteoporosis. Muscle mass can be measured by the same scans used for bone density.
But some studies have shown that strength, like gripping force, or muscle function, as measured, say, by walking speed, can be more important than mass in predicting problems seniors might have.
“There’s a lot more to the story than simply having a lot of muscle tissue,” said Brian C. Clark, an expert at Ohio University. “Most of the drug stuff has been targeting muscle mass.”
So the definition is shifting to include muscle strength and function. The academic-industry task force recommends testing whether a person can walk four meters, or about 13 feet, in four seconds.
That can be tested by any doctor, without the special equipment needed to measure muscle mass or strength, said Roger A. Fielding of Tufts University, a leader of the task force.
Experts say that to win approval from regulators and reimbursement from insurers, a drug must do more than merely improve mass or strength. It must, for example, improve walking ability or prevent people from falling.
Or perhaps it could restore mobility faster after a person is bedridden. Older people can lose so much muscle during a prolonged hospital stay that they have to move to a nursing home.
Demonstrating such benefits and cost savings would help counter criticism that doctors and drug companies are trying to turn a natural consequence of aging into a disease.
“If you can get out of a nursing home in three weeks instead of three months, wouldn’t we say it is a useful thing?” said Dr. Studenski, who consults for drug companies.
Efforts to develop muscle drugs are still in early stages, and there have been setbacks.
But for inspiration, researchers can look to the bears, though scientists have no definitive answer to the animals’ youthful secret.
Moreover, a study that has tracked 3,000 people for 50 years found that about 20 of them, now in their 80s, have not lost muscle mass.
“Maintaining the muscle is possible,” said Dr. Luigi Ferrucci of the National Institute on Aging, who directs the study, called the Baltimore Longitudinal Study of Aging. “We just don’t know the right formula yet.”
India gives BlackBerry group more time
Research in Motion and India’s government avoided a standoff on Monday by agreeing to extend for two months talks over a demand to open all BlackBerry services to scrutiny by the country’s intelligence agencies.
The reprieve came before a Tuesday deadline for mobile operators in India to shut down the Canadian company’s corporate e-mail and messaging services if it did not agree to the demand. This would have caused serious disruption before next month’s Commonwealth Games.
The home affairs ministry said: “RIM have made certain proposals for lawful access by law enforcement agencies.” The ministry added that it would “review the situation within 60 days”.
This followed talks over the weekend between Jim Balsillie, RIM’s co-chief executive, and senior home affairs officials. The dispute was emerging as a test of the private sector’s right to data security.
RIM said India’s demands for access to its encrypted corporate e-mail service, known as BlackBerry Enterprise Server, was technically unfeasible since customers held the keys to the codes.
The company was concerned about losing access to the Indian market, where it has 1m subscribers. RIM was also worried about setting a precedent for government interference in its services that would undermine the confidence of its 46m users worldwide.
The company’s share price has declined 32 per cent in US trading this year, underperforming rival handset makers. This has already led competitors, notably Nokia, to take their own measures to ease Indian government concerns. Nokia said it would install a server in India to handle communications from its messaging service by November.
India, shaken by terrorist attacks in Mumbai and militant activity across the border in Pakistan, insists that its security agencies should have access to all communications in the country.
“Any communication through the telecom networks should be accessible to the law enforcement agencies and all telecom service providers including third parties have to comply with this,” the home affairs ministry said on Monday.
RIM had made “certain proposals” for lawful access to BlackBerry communications that would be “operationalised immediately”, the ministry said, without giving details.
The department of telecommunications will prepare a report on a long-term solution under which RIM would locate a server in India. The department would report to the ministry within 60 days.
However, analysts doubted whether the Canadian company would technically be able to meet the government’s demands. The BlackBerry Enterprise Server system channels packets of encrypted information through RIM’s routers to servers controlled by corporate customers. These are beyond RIM’s control.
Nokia’s offer to install a “push server” in India might not meet the government’s requirements for the same reason.
Kunal Bajaj, from Analysys Mason, a consultancy, said: “If they want to deliver secure e-mail then they’re going to run into the same exact problem.”
The reprieve came before a Tuesday deadline for mobile operators in India to shut down the Canadian company’s corporate e-mail and messaging services if it did not agree to the demand. This would have caused serious disruption before next month’s Commonwealth Games.
The home affairs ministry said: “RIM have made certain proposals for lawful access by law enforcement agencies.” The ministry added that it would “review the situation within 60 days”.
This followed talks over the weekend between Jim Balsillie, RIM’s co-chief executive, and senior home affairs officials. The dispute was emerging as a test of the private sector’s right to data security.
RIM said India’s demands for access to its encrypted corporate e-mail service, known as BlackBerry Enterprise Server, was technically unfeasible since customers held the keys to the codes.
The company was concerned about losing access to the Indian market, where it has 1m subscribers. RIM was also worried about setting a precedent for government interference in its services that would undermine the confidence of its 46m users worldwide.
The company’s share price has declined 32 per cent in US trading this year, underperforming rival handset makers. This has already led competitors, notably Nokia, to take their own measures to ease Indian government concerns. Nokia said it would install a server in India to handle communications from its messaging service by November.
India, shaken by terrorist attacks in Mumbai and militant activity across the border in Pakistan, insists that its security agencies should have access to all communications in the country.
“Any communication through the telecom networks should be accessible to the law enforcement agencies and all telecom service providers including third parties have to comply with this,” the home affairs ministry said on Monday.
RIM had made “certain proposals” for lawful access to BlackBerry communications that would be “operationalised immediately”, the ministry said, without giving details.
The department of telecommunications will prepare a report on a long-term solution under which RIM would locate a server in India. The department would report to the ministry within 60 days.
However, analysts doubted whether the Canadian company would technically be able to meet the government’s demands. The BlackBerry Enterprise Server system channels packets of encrypted information through RIM’s routers to servers controlled by corporate customers. These are beyond RIM’s control.
Nokia’s offer to install a “push server” in India might not meet the government’s requirements for the same reason.
Kunal Bajaj, from Analysys Mason, a consultancy, said: “If they want to deliver secure e-mail then they’re going to run into the same exact problem.”
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