Terror alerts in Europe. Drone strikes on foreign militants. The murder of an outspoken critic of the Taliban. Pakistan’s tribal areas are once more living up to the title coined by Barack Obama, US president, as “the most dangerous place in the world”.
The stakes for Washington in Pakistan have never been higher, but the past week has laid bare the limits of Mr Obama’s attempt to forge a new partnership with Islamabad. A more aggressive approach by the US military, which has sent helicopters to pursue militants across the border from Afghanistan, has fared little better. Pakistan has closed a key supply route for Nato troops through the Khyber Pass in response to the accidental killing of two Pakistani border guards.
The crossing remained shut on Friday amid apologies from US diplomats and generals. The spat has complicated fraught attempts to foster a shared vision on combating extremism.
A procession of US officials has visited Islamabad this year in an attempt to shake off America’s reputation here as a fair-weather friend. Washington has increased civilian and military aid and rushed in relief after catastrophic floods.
The largesse has paid limited dividends. Mr Obama’s desire for Pakistan’s help on Afghanistan conflicts with a long-standing strategy by elements in Pakistan’s intelligence services, who are seeking to curb Indian influence in Afghanistan by backing militants. The weak government of Asif Ali Zardari, Pakistan’s president, is locked in a fresh battle with the judiciary. Pakistan’s generals dictate security policy.
Mr Obama’s gamble of sending 30,000 more troops to Afghanistan hinged on the assumption that Pakistan would broaden an offensive against its own militants to target Afghan fighters in North Waziristan. Obama’s Wars, a new book by veteran US journalist Bob Woodward, suggests that the president sees the Pakistan “safe haven” as the main barrier to progress in Afghanistan.
The hoped-for offensive has not materialised. Pakistan’s army says it is too thinly stretched and security officials fear fresh terror attacks in large cities. The shooting last weekend of Mohammad Farooq Khan, an Islamic scholar and critic of suicide bombings, was a reminder that Pakistanis pay a far higher price for extremist violence than those in the west.
The army’s reluctance to launch big operations in North Waziristan also partly reflects its long-standing reliance on Afghan militants as proxies.
For Pakistan, it might make little sense to abandon the policy of backing the Afghan Taliban when the US commitment to stabilising their neighbour looks so shaky. Mr Obama’s announcement that he will start withdrawing US forces in July next year fanned Pakistani fears that civil war will erupt next door.
Friday, October 8, 2010
Emerging Stocks Keep Losses as Jobs Report Spurs Fed Stimulus Speculation
Emerging-market stocks stayed lower, paring the benchmark index’s sixth weekly gain, after U.S. jobs data and disappointing earnings overshadowed advances in China and rising fund inflows to developing nations.
The MSCI Emerging Markets Index dropped 0.1 percent to 1,101.27 at 5 p.m. New York time, a second day of declines. The measure is on its longest winning streak since March after it gained 1.4 percent this week. China’s Shanghai Composite Index rose 3.1 percent, while benchmark gauges in Taiwan, South Korea, the Philippines, Indonesia and Thailand slumped. Malaysia’s index was little changed.
Developing-nation stocks maintained declines after new payrolls data released in the U.S. showed employers cut 95,000 jobs in September, 90,000 more than the median estimate of economists surveyed by Bloomberg, boosting speculation the Federal Reserve may take further steps to stimulate the economy.
The jobs report is a “strong signal” for further easing by the Fed, said Bill Gross, manager of the world’s biggest bond fund, in a radio interview on “Bloomberg Surveillance” with Tom Keene.
Samsung Electronics Co., Asia’s biggest maker of semiconductors, fell for a second day after profit missed analysts’ estimates. China Shenhua Energy Co. and PetroChina Co. surged, leading a rally in energy and raw-materials stocks as the country’s markets reopened after five days of holidays. Moody’s Investors Service cited China’s economic growth outlook for a possible upgrade in its debt rating.
Slowdown Concerns
“While liquidity will drive the markets, there might be short-term hiccups in terms of earnings forecasts and concerns of a slowdown,” said Scott Lim, chief executive officer of Kuala Lumpur-based MIDF Amanah Asset Management Bhd., which oversees the equivalent of $670 million. “Liquidity can put up a strong front to the negative sentiment.”
Overseas investors pumped the most cash into emerging- market equities since late 2007 in October and Asia bond funds attracted more capital on further signs growth in developed nations is slowing, according to EPFR Global.
The equity funds received net inflows of more than $6 billion in the week ended Oct. 6, the biggest amount in 33 months, the Cambridge, Massachusetts-based research company said in an e-mailed statement. Investors withdrew $3.2 billion from U.S. stock funds, the most in five weeks.
MSCI, S&P
The MSCI Emerging Markets Index rallied 17 percent last quarter, the most in a year, on speculation developing nations will be able to sustain their recovery and that central banks around the world may be prepared to take more measures to spur growth.
The ruble was little changed at 29.85 per dollar. Brazil, Russia, India and China will put up “strong resistance” to attempts to make a “harsh appraisal” of currency controls at the annual meeting of the International Monetary Fund and World Bank this week in Washington, Russian Deputy Finance Minister Dmitry Pankin told reporters late yesterday.
A “bubble” may be forming in the country’s financial markets, Pankin also told reporters today. Corporate bonds are selling like “hot cakes,” he said. Dollar bonds sold by Russian companies yield 5.38 percent, an all-time low, down from an average of 20.4 percent in October 2008, according to JPMorgan Chase & Co.’s EMBI+ index.
South Korea, Thailand
Hyundai Department Store Co., a South Korean department store chain, fell 3.8 percent in Seoul trading after BNP Paribas SA and Hyundai Securities Co. cut recommendations on the stock. BNP lowered the stock’s rating to “reduce” from “hold,” citing a potential slowdown in same-store sales growth. The retailer was downgraded to “market perform” from “buy” at Hyundai Securities.
Sri Trang Agro-Industry Pcl, Thailand’s biggest publicly traded rubber producer, added 3.2 percent in Bangkok, a record, after rubber prices in Shanghai climbed. China is Thailand’s biggest export market for rubber. China Petroleum & Chemical Corp., Asia’s biggest refiner, rose 2.9 percent in Shanghai trading after its parent agreed last week to pay $7.1 billion for a stake in Repsol YPF SA’s Brazilian unit.
The MSCI Emerging Markets Index dropped 0.1 percent to 1,101.27 at 5 p.m. New York time, a second day of declines. The measure is on its longest winning streak since March after it gained 1.4 percent this week. China’s Shanghai Composite Index rose 3.1 percent, while benchmark gauges in Taiwan, South Korea, the Philippines, Indonesia and Thailand slumped. Malaysia’s index was little changed.
Developing-nation stocks maintained declines after new payrolls data released in the U.S. showed employers cut 95,000 jobs in September, 90,000 more than the median estimate of economists surveyed by Bloomberg, boosting speculation the Federal Reserve may take further steps to stimulate the economy.
The jobs report is a “strong signal” for further easing by the Fed, said Bill Gross, manager of the world’s biggest bond fund, in a radio interview on “Bloomberg Surveillance” with Tom Keene.
Samsung Electronics Co., Asia’s biggest maker of semiconductors, fell for a second day after profit missed analysts’ estimates. China Shenhua Energy Co. and PetroChina Co. surged, leading a rally in energy and raw-materials stocks as the country’s markets reopened after five days of holidays. Moody’s Investors Service cited China’s economic growth outlook for a possible upgrade in its debt rating.
Slowdown Concerns
“While liquidity will drive the markets, there might be short-term hiccups in terms of earnings forecasts and concerns of a slowdown,” said Scott Lim, chief executive officer of Kuala Lumpur-based MIDF Amanah Asset Management Bhd., which oversees the equivalent of $670 million. “Liquidity can put up a strong front to the negative sentiment.”
Overseas investors pumped the most cash into emerging- market equities since late 2007 in October and Asia bond funds attracted more capital on further signs growth in developed nations is slowing, according to EPFR Global.
The equity funds received net inflows of more than $6 billion in the week ended Oct. 6, the biggest amount in 33 months, the Cambridge, Massachusetts-based research company said in an e-mailed statement. Investors withdrew $3.2 billion from U.S. stock funds, the most in five weeks.
MSCI, S&P
The MSCI Emerging Markets Index rallied 17 percent last quarter, the most in a year, on speculation developing nations will be able to sustain their recovery and that central banks around the world may be prepared to take more measures to spur growth.
The ruble was little changed at 29.85 per dollar. Brazil, Russia, India and China will put up “strong resistance” to attempts to make a “harsh appraisal” of currency controls at the annual meeting of the International Monetary Fund and World Bank this week in Washington, Russian Deputy Finance Minister Dmitry Pankin told reporters late yesterday.
A “bubble” may be forming in the country’s financial markets, Pankin also told reporters today. Corporate bonds are selling like “hot cakes,” he said. Dollar bonds sold by Russian companies yield 5.38 percent, an all-time low, down from an average of 20.4 percent in October 2008, according to JPMorgan Chase & Co.’s EMBI+ index.
South Korea, Thailand
Hyundai Department Store Co., a South Korean department store chain, fell 3.8 percent in Seoul trading after BNP Paribas SA and Hyundai Securities Co. cut recommendations on the stock. BNP lowered the stock’s rating to “reduce” from “hold,” citing a potential slowdown in same-store sales growth. The retailer was downgraded to “market perform” from “buy” at Hyundai Securities.
Sri Trang Agro-Industry Pcl, Thailand’s biggest publicly traded rubber producer, added 3.2 percent in Bangkok, a record, after rubber prices in Shanghai climbed. China is Thailand’s biggest export market for rubber. China Petroleum & Chemical Corp., Asia’s biggest refiner, rose 2.9 percent in Shanghai trading after its parent agreed last week to pay $7.1 billion for a stake in Repsol YPF SA’s Brazilian unit.
Empty triumph for rush to finish Delhi arenas
After much uncertainty New Delhi may have finally succeeded in its efforts to make ready 17 stadiums for the Commonwealth Games. It now appears that the herculean task was in vain.
Athletes are competing in almost empty arenas, while organisers are trying belatedly to whip up public interest and potential spectators struggle with dysfunctional ticketing systems and onerous security procedures.
Of the 1.7m tickets for the 11-day competition, including the opening and closing ceremonies, Indian organisers say just half have been sold. Sales have been focused on a few popular matches, such as the sell-out India-Pakistan hockey game, leaving most athletes to compete before family and friends and rows of empty chairs.
“It’s not cricket,” said Neha Pandey, a young volunteer who was using a megaphone outside the main Jawaharlal Nehru stadium to urge passers-by to buy the many leftover athletics tickets. “Attendance is a real problem, especially with the less well-known sports where India doesn’t have a presence.”
Sunil Kumar, the manager of the 60,000-seat stadium’s ticket booth, said: “For popular sports like hockey, we have sold more than 50 per cent of the tickets for any given match, but less than 20 per cent for sports such as netball.”
Ticket sales were sluggish in the run-up to the games, as New Delhi’s difficulty completing stadiums and athletes’ accommodation on schedule raised doubts over whether the tournament would go ahead.
With organisers focused on ensuring the readiness of the venues, publicity and marketing fell through the cracks. After the government decided to close schools and universities – part of a plan to ease traffic during the competition – many Delhi families decided to go out of town.
Sunday’s dazzling opening ceremony, including a procession of enthusiastic athletes, lifted the gloom and triggered something of a last-minute ticket rush. However, would-be spectators have been stymied by ticketing systems unable to cope with demand because of staff shortages, time-consuming verification procedures and computer crashes, resulting in ticket queues that take hours to clear.
“The online system for buying tickets has been a complete joke,” said Samir Chawla, who was trying to buy hockey match tickets. “There were so many malfunctions.”
High ticket prices, at as much as Rs750 ($17), are also thought to have kept people away, especially for more obscure sports. “The prices should have been as low as possible to fill up the stadiums and build up interest,” said Vishal Jaison, associate director with Total Sports Asia, the sports marketing company.
Suresh Kalmadi, chief of India’s games organising committee, has made light of the empty stadiums, saying sales were “surging” day by day. But he also suggested that unsold tickets could be given away to children and those from the “lower levels of society”.
The organising committee has given 1,000 tickets to Smile Foundation, a New Delhi-based charity, so that children from poor families could watch the games.
Even those who have managed to get tickets may have been deterred by security measures, involving frisking, body scans and confiscation of 42 prohibited items including electronic equipment, motorcycle helmets, umbrellas, “torn paper” and coins.
Foreign visitors have complained that official games drivers, who were hired from out of town, are unfamiliar with Delhi streets and get lost en route to venues.
It is not just the fans who are struggling to digest the complexities of the event. Several British and Australian swimmers have been felled by illness that some teams fear may be linked to pool water contaminated by the droppings of pigeons nesting in the rafters of the swimming arena.
Athletes are competing in almost empty arenas, while organisers are trying belatedly to whip up public interest and potential spectators struggle with dysfunctional ticketing systems and onerous security procedures.
Of the 1.7m tickets for the 11-day competition, including the opening and closing ceremonies, Indian organisers say just half have been sold. Sales have been focused on a few popular matches, such as the sell-out India-Pakistan hockey game, leaving most athletes to compete before family and friends and rows of empty chairs.
“It’s not cricket,” said Neha Pandey, a young volunteer who was using a megaphone outside the main Jawaharlal Nehru stadium to urge passers-by to buy the many leftover athletics tickets. “Attendance is a real problem, especially with the less well-known sports where India doesn’t have a presence.”
Sunil Kumar, the manager of the 60,000-seat stadium’s ticket booth, said: “For popular sports like hockey, we have sold more than 50 per cent of the tickets for any given match, but less than 20 per cent for sports such as netball.”
Ticket sales were sluggish in the run-up to the games, as New Delhi’s difficulty completing stadiums and athletes’ accommodation on schedule raised doubts over whether the tournament would go ahead.
With organisers focused on ensuring the readiness of the venues, publicity and marketing fell through the cracks. After the government decided to close schools and universities – part of a plan to ease traffic during the competition – many Delhi families decided to go out of town.
Sunday’s dazzling opening ceremony, including a procession of enthusiastic athletes, lifted the gloom and triggered something of a last-minute ticket rush. However, would-be spectators have been stymied by ticketing systems unable to cope with demand because of staff shortages, time-consuming verification procedures and computer crashes, resulting in ticket queues that take hours to clear.
“The online system for buying tickets has been a complete joke,” said Samir Chawla, who was trying to buy hockey match tickets. “There were so many malfunctions.”
High ticket prices, at as much as Rs750 ($17), are also thought to have kept people away, especially for more obscure sports. “The prices should have been as low as possible to fill up the stadiums and build up interest,” said Vishal Jaison, associate director with Total Sports Asia, the sports marketing company.
Suresh Kalmadi, chief of India’s games organising committee, has made light of the empty stadiums, saying sales were “surging” day by day. But he also suggested that unsold tickets could be given away to children and those from the “lower levels of society”.
The organising committee has given 1,000 tickets to Smile Foundation, a New Delhi-based charity, so that children from poor families could watch the games.
Even those who have managed to get tickets may have been deterred by security measures, involving frisking, body scans and confiscation of 42 prohibited items including electronic equipment, motorcycle helmets, umbrellas, “torn paper” and coins.
Foreign visitors have complained that official games drivers, who were hired from out of town, are unfamiliar with Delhi streets and get lost en route to venues.
It is not just the fans who are struggling to digest the complexities of the event. Several British and Australian swimmers have been felled by illness that some teams fear may be linked to pool water contaminated by the droppings of pigeons nesting in the rafters of the swimming arena.
Apple Plans to Offer IPhone on Verizon
SAN FRANCISCO — Facing intense competition from phone makers wedded to Google’s Android software, Steven P. Jobs, Apple’s chief executive, finally plans to make the iPhone available on Verizon Wireless, the largest wireless carrier in the United States.
After more than three years of using only AT&T cellphone networks, Apple is now making a version of the iPhone 4 for Verizon’s network, according to a person who is in direct contact with Apple. Apple and Verizon will begin selling the phone early next year, said the person, who agreed to speak on condition of anonymity because the plans were supposed to be confidential and he did not want to alienate his contacts at Apple.
Apple and Verizon Wireless declined to comment.
The arrival of the iPhone on Verizon, which has long been expected and frequently rumored, could sharply alter the dynamics of the smartphone market in the United States. The iPhone remains the best-selling smartphone. But around the world, many carriers, especially those that do not have access to the iPhone, have been promoting an array of handset models running on Google’s Android software. Collectively, those phones now outsell the iPhone.
This week, Nielsen reported that Android accounted for 32 percent of the new smartphones sold in the United States in last six months. By comparison, the iPhone accounted for 25 percent. The numbers confirm those of other research organizations.
The Android’s rapid ascent threatens to blunt Apple’s lead in the market for high-end smartphones. No other Apple product brings as much revenue for the company as the iPhone, and analysts say that seeing that lucrative market imperiled may have finally pushed Apple into ending its exclusivity with AT&T.
“Android has tremendous momentum,” said A. M. Sacconaghi Jr., an analyst with the research firm Sanford C. Bernstein & Company. Mr. Sacconaghi said that the growth of Android was in large part because the iPhone was not available on Verizon and some major carriers overseas. “Apple moving to sign up these carriers is very important to help mitigate Android momentum,” he said.
A Verizon iPhone could quickly tilt the marketplace back in Apple’s favor. For all its success, the iPhone on AT&T has been plagued by complaints of poor network coverage, especially in some major cities like New York and San Francisco. Many potential customers have chosen to buy Android handsets from other carriers to avoid problems with dropped calls and dead zones.
But many surveys show that many owners of Android handsets would buy an iPhone, if it were available on Verizon. At the same time, AT&T iPhone customers may switch to Verizon as their contracts expire, even though they would have to buy a new phone to do so. Apple’s AT&T phone, which uses G.S.M. networking technology, would not work on Verizon’s network, which uses a different networking technology called C.D.M.A.
“It is going to have a fairly disruptive impact when it lands,” said Charles Wolf, an analyst with Needham & Company.
Another factor that could be pushing Apple to end its AT&T exclusivity is the impending arrival of phones running Microsoft’s new Windows Phone 7 software. The two companies are making a joint announcement about its phones Monday. Early reviews of the devices have been positive, and Microsoft, which has faltered repeatedly in the phone business, plans to spend heavily to market the new handsets.
“Windows phones should not be dismissed,” Mr. Wolf said. “They will be a major player in the market.”
While the arrival of the iPhone on Verizon had long been expected, some industry insiders doubted that Apple would bring the iPhone to Verizon before the carrier deployed its next-generation network, known as L.T.E., or Long-Term Evolution.
But in an interview this week, Tony Melone, the chief technology officer of Verizon Wireless, suggested that those doubters could be wrong. Mr. Melone did not comment on the iPhone, but he said that while Verizon would begin introducing its new network in 38 American cities by the end of the year, the company’s older 3G network would continue to grow for several years. He also said that Verizon would continue “selling 3G devices well into the decade, possibly through the end of the decade.”
However, while L.T.E. phones will be backward-compatible so they can run on Verizon’s older 3G network, those 3G phones won’t run on the new, faster L.T.E. network.
The arrival of the iPhone to Verizon could further increase Apple’s bottom line, with some analysts predicting the company could sell an additional 10 million devices per year. But analysts say that investors have long expected Apple and Verizon to come to terms eventually, and Apple’s stock price already reflects that.
Indeed, over the last year, a flurry of reports have predicted a Verizon iPhone was imminent. On Wednesday, The Wall Street Journal reported that the iPhone would be available on Verizon early next year.
After more than three years of using only AT&T cellphone networks, Apple is now making a version of the iPhone 4 for Verizon’s network, according to a person who is in direct contact with Apple. Apple and Verizon will begin selling the phone early next year, said the person, who agreed to speak on condition of anonymity because the plans were supposed to be confidential and he did not want to alienate his contacts at Apple.
Apple and Verizon Wireless declined to comment.
The arrival of the iPhone on Verizon, which has long been expected and frequently rumored, could sharply alter the dynamics of the smartphone market in the United States. The iPhone remains the best-selling smartphone. But around the world, many carriers, especially those that do not have access to the iPhone, have been promoting an array of handset models running on Google’s Android software. Collectively, those phones now outsell the iPhone.
This week, Nielsen reported that Android accounted for 32 percent of the new smartphones sold in the United States in last six months. By comparison, the iPhone accounted for 25 percent. The numbers confirm those of other research organizations.
The Android’s rapid ascent threatens to blunt Apple’s lead in the market for high-end smartphones. No other Apple product brings as much revenue for the company as the iPhone, and analysts say that seeing that lucrative market imperiled may have finally pushed Apple into ending its exclusivity with AT&T.
“Android has tremendous momentum,” said A. M. Sacconaghi Jr., an analyst with the research firm Sanford C. Bernstein & Company. Mr. Sacconaghi said that the growth of Android was in large part because the iPhone was not available on Verizon and some major carriers overseas. “Apple moving to sign up these carriers is very important to help mitigate Android momentum,” he said.
A Verizon iPhone could quickly tilt the marketplace back in Apple’s favor. For all its success, the iPhone on AT&T has been plagued by complaints of poor network coverage, especially in some major cities like New York and San Francisco. Many potential customers have chosen to buy Android handsets from other carriers to avoid problems with dropped calls and dead zones.
But many surveys show that many owners of Android handsets would buy an iPhone, if it were available on Verizon. At the same time, AT&T iPhone customers may switch to Verizon as their contracts expire, even though they would have to buy a new phone to do so. Apple’s AT&T phone, which uses G.S.M. networking technology, would not work on Verizon’s network, which uses a different networking technology called C.D.M.A.
“It is going to have a fairly disruptive impact when it lands,” said Charles Wolf, an analyst with Needham & Company.
Another factor that could be pushing Apple to end its AT&T exclusivity is the impending arrival of phones running Microsoft’s new Windows Phone 7 software. The two companies are making a joint announcement about its phones Monday. Early reviews of the devices have been positive, and Microsoft, which has faltered repeatedly in the phone business, plans to spend heavily to market the new handsets.
“Windows phones should not be dismissed,” Mr. Wolf said. “They will be a major player in the market.”
While the arrival of the iPhone on Verizon had long been expected, some industry insiders doubted that Apple would bring the iPhone to Verizon before the carrier deployed its next-generation network, known as L.T.E., or Long-Term Evolution.
But in an interview this week, Tony Melone, the chief technology officer of Verizon Wireless, suggested that those doubters could be wrong. Mr. Melone did not comment on the iPhone, but he said that while Verizon would begin introducing its new network in 38 American cities by the end of the year, the company’s older 3G network would continue to grow for several years. He also said that Verizon would continue “selling 3G devices well into the decade, possibly through the end of the decade.”
However, while L.T.E. phones will be backward-compatible so they can run on Verizon’s older 3G network, those 3G phones won’t run on the new, faster L.T.E. network.
The arrival of the iPhone to Verizon could further increase Apple’s bottom line, with some analysts predicting the company could sell an additional 10 million devices per year. But analysts say that investors have long expected Apple and Verizon to come to terms eventually, and Apple’s stock price already reflects that.
Indeed, over the last year, a flurry of reports have predicted a Verizon iPhone was imminent. On Wednesday, The Wall Street Journal reported that the iPhone would be available on Verizon early next year.
Thursday, October 7, 2010
Asian Stocks Fall for First Time in Six Days After Commodities Prices Drop
Asian stocks fell, dragging down the MSCI Asia Pacific Index for the first time in six days, as a decline in commodity prices sent material companies lower.
BHP Billiton Ltd., the No. 1 mining company worldwide and Australia’s largest oil producer, slid 0.4 percent in Sydney after crude and metals prices slumped. Rio Tinto Group, the world’s third-biggest miner, lost 0.4 percent. Commonwealth Bank of Australia led the country’s banks lower, retreating 1 percent. Samsung Electronics Co., Asia’s biggest maker of semiconductors, fell for a second day after profit missed analysts’ estimates.
“A long rally in commodities stopped and commodity-related shares will likely get sold,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.
The MSCI Asia Pacific Index fell 0.3 percent to 130.16 as of 9:35 a.m. in Tokyo, with about as many shares declining as advancing. The gauge is headed toward a 2.5 percent increase this week, the most since the week ended Sept. 3, on speculation central banks worldwide will boost measures to aid the economic recovery.
Japan’s Nikkei 225 Stock Average lost 0.2 percent. South Korea’s Kospi index slipped 0.2 percent and Australia’s S&P/ASX 200 Index fell 0.3 percent.
Futures on the Standard & Poor’s 500 Index were little changed. The index decreased 0.2 percent yesterday in New York as mining and energy companies fell, and PepsiCo Inc., the world’s largest snack-food producer, lowered the top end of its annual profit forecast.
Commodities, Currency
Crude oil for November delivery fell 1.9 percent to $81.67 a barrel yesterday, retreating from a five-month high. The London Metal Exchange Index of six metals including aluminum and copper dropped 2.3 percent, the steepest decline since July 16.
The MSCI Asia Pacific Index has risen 8.1 percent this year on speculation growth in profit will weather Europe’s debt crisis, Chinese steps to curb property-price inflation and concern about the pace of the U.S. economic rebound. Stocks in the gauge trade at 14.4 times estimated profit on average, compared with 13.8 times for the S&P 500 and 12 times for the Stoxx Europe 600 Index.
BHP Billiton Ltd., the No. 1 mining company worldwide and Australia’s largest oil producer, slid 0.4 percent in Sydney after crude and metals prices slumped. Rio Tinto Group, the world’s third-biggest miner, lost 0.4 percent. Commonwealth Bank of Australia led the country’s banks lower, retreating 1 percent. Samsung Electronics Co., Asia’s biggest maker of semiconductors, fell for a second day after profit missed analysts’ estimates.
“A long rally in commodities stopped and commodity-related shares will likely get sold,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.
The MSCI Asia Pacific Index fell 0.3 percent to 130.16 as of 9:35 a.m. in Tokyo, with about as many shares declining as advancing. The gauge is headed toward a 2.5 percent increase this week, the most since the week ended Sept. 3, on speculation central banks worldwide will boost measures to aid the economic recovery.
Japan’s Nikkei 225 Stock Average lost 0.2 percent. South Korea’s Kospi index slipped 0.2 percent and Australia’s S&P/ASX 200 Index fell 0.3 percent.
Futures on the Standard & Poor’s 500 Index were little changed. The index decreased 0.2 percent yesterday in New York as mining and energy companies fell, and PepsiCo Inc., the world’s largest snack-food producer, lowered the top end of its annual profit forecast.
Commodities, Currency
Crude oil for November delivery fell 1.9 percent to $81.67 a barrel yesterday, retreating from a five-month high. The London Metal Exchange Index of six metals including aluminum and copper dropped 2.3 percent, the steepest decline since July 16.
The MSCI Asia Pacific Index has risen 8.1 percent this year on speculation growth in profit will weather Europe’s debt crisis, Chinese steps to curb property-price inflation and concern about the pace of the U.S. economic rebound. Stocks in the gauge trade at 14.4 times estimated profit on average, compared with 13.8 times for the S&P 500 and 12 times for the Stoxx Europe 600 Index.
Overseas Buying of Indian Stocks to Be Sustained Amid Growth, Bhave Says
Record overseas buying of Indian stocks is unlikely to reverse as an accelerating economy and share sales by companies including the world’s largest coal producer lure investors, the capital markets regulator said.
“We have no reason to believe, at least if we go by historical evidence, that there will be a sudden reversal,” Securities and Exchange Board of India Chairman C.B. Bhave said in an interview with Bloomberg UTV. For overseas investors “it’s important that there is supply of enough paper” otherwise asset prices may surge, he said.
International investors have bought $21.8 billion of equities this year driving the Bombay Stock Exchange’s Sensitive Index to near a record. Coal India Ltd.’s share sale this month will add to the 753 billion rupees ($17 billion) raised by the nation’s companies this year.
“India is clearly emerging as a key asset globally,” Prashant Jain, chief investment officer at HDFC Asset Management Co., which manages $21 billion in assets, said on Oct. 6. “How many economies are there in the world that are of our size, growing at 8 to 9 percent, where neither the companies nor the households are leveraged?”
The International Monetary Fund on Oct. 6 raised its 2010 economic growth forecast for India to 9.7 percent from 9.4 percent, citing strengthening local consumer demand. The $1.3 trillion economy, Asia’s second-fastest growing, expanded 8.8 percent in the three months to June.
‘Room to Support’
The Sensex has rallied for a record seven straight quarters. The gauge has increased 16 percent this year, making it the best-performing among 10 of the world’s largest markets.
The gains have made India the most expensive among the world’s 20 largest stock markets, according to data compiled by Bloomberg. Stocks on the Sensex are valued at 19.2 times earnings, compared with 13.4 times for Brazil’s Bovespa Index, 7.8 times for Russia’s Micex Index and 15.1 times for China’s Shanghai Composite Index, among the so-called BRIC markets.
The government aims to raise $8.9 billion in the year ending March 31 selling state assets including Coal India, Steel Authority of India Ltd. and Indian Oil Corp. Coal India may raise 150 billion rupees, two people with knowledge of the matter said in August, making it India’s largest.
“There is enough room to support that kind of paper,” Bhave said.
Bhave also said the regulator plans to cut time taken for companies to start trading from the day they sell shares to seven days from the current 10 to 12 days to improve transparency, he said.
“The Indian market has a bright future,” Bhave said. “It has demonstrated its resilience through this tumultuous period of 2008-09 and then the subsequent reversal of that trend.”
“We have no reason to believe, at least if we go by historical evidence, that there will be a sudden reversal,” Securities and Exchange Board of India Chairman C.B. Bhave said in an interview with Bloomberg UTV. For overseas investors “it’s important that there is supply of enough paper” otherwise asset prices may surge, he said.
International investors have bought $21.8 billion of equities this year driving the Bombay Stock Exchange’s Sensitive Index to near a record. Coal India Ltd.’s share sale this month will add to the 753 billion rupees ($17 billion) raised by the nation’s companies this year.
“India is clearly emerging as a key asset globally,” Prashant Jain, chief investment officer at HDFC Asset Management Co., which manages $21 billion in assets, said on Oct. 6. “How many economies are there in the world that are of our size, growing at 8 to 9 percent, where neither the companies nor the households are leveraged?”
The International Monetary Fund on Oct. 6 raised its 2010 economic growth forecast for India to 9.7 percent from 9.4 percent, citing strengthening local consumer demand. The $1.3 trillion economy, Asia’s second-fastest growing, expanded 8.8 percent in the three months to June.
‘Room to Support’
The Sensex has rallied for a record seven straight quarters. The gauge has increased 16 percent this year, making it the best-performing among 10 of the world’s largest markets.
The gains have made India the most expensive among the world’s 20 largest stock markets, according to data compiled by Bloomberg. Stocks on the Sensex are valued at 19.2 times earnings, compared with 13.4 times for Brazil’s Bovespa Index, 7.8 times for Russia’s Micex Index and 15.1 times for China’s Shanghai Composite Index, among the so-called BRIC markets.
The government aims to raise $8.9 billion in the year ending March 31 selling state assets including Coal India, Steel Authority of India Ltd. and Indian Oil Corp. Coal India may raise 150 billion rupees, two people with knowledge of the matter said in August, making it India’s largest.
“There is enough room to support that kind of paper,” Bhave said.
Bhave also said the regulator plans to cut time taken for companies to start trading from the day they sell shares to seven days from the current 10 to 12 days to improve transparency, he said.
“The Indian market has a bright future,” Bhave said. “It has demonstrated its resilience through this tumultuous period of 2008-09 and then the subsequent reversal of that trend.”
Flawed Foreclosure Documents Thwart Home Sales
OCALA, Fla. — Amanda Ducksworth was supposed to move in to her new home this week, a three-bedroom steal here in central Florida with a horse farm across the road. Instead, she is camped out with her 7-year-old son at her boss’s house.
Like many buyers across the country, Ms. Ducksworth was about to complete the purchase of a foreclosed house when it suddenly went off the market. Fannie Mae, the giant mortgage holding company that buys loans from commercial lenders, is pulling back sales of homes that might have been foreclosed in bad faith.
“I gave up my rental thinking I would have a house,” said Ms. Ducksworth, a 28-year-old catering assistant. “Now I’m sharing a room with my son. What the hell is up with that?”
With home sales this past summer at the lowest level in more than a decade, real estate is ill-prepared to suffer another blow. But as a scandal unfolds over mortgage lenders’ shoddy preparation of foreclosure documents, the fallout is beginning to hammer the housing market, especially in states like Florida where distressed properties are abundant.
“This crisis takes a situation that’s already bad and kind of cements it into place,” said Joshua Shapiro, chief United States economist for MFR Inc., an economic consulting firm.
Three major mortgage lenders — Bank of America, GMAC Mortgage and JPMorgan Chase — have said they are suspending foreclosures in the 23 states where they first need a judge’s approval. They are also waving off Fannie Mae from selling any of the foreclosed homes whose loans they sold to Fannie.
The companies say they are reviewing their operations after disclosures that employees signed documents without determining the accuracy of the material, as is required by law.
Those reviews are throwing into limbo hundreds of thousands of foreclosures and pending home sales, analysts estimate, though the lenders and Fannie Mae have been mostly silent about precise numbers and other specifics.
More broadly, the revelations about the sloppy paperwork are emboldening homeowners and law enforcement officials in many states to question whether lenders rightfully hold the notes underlying foreclosed properties — further chilling the housing market.
Distressed properties, many of which are in foreclosure, make up about a third of all home sales. “Foreclosures are going to slow to a crawl,” said Guy D. Cecala, publisher of the trade magazine Inside Mortgage Finance.
Of the 23 states where foreclosures need court approval, Florida has by far the most trouble — about a half-million cases clog its courts — and the moratoriums are having a noticeable effect.
Because most lenders sold their mortgages to Fannie Mae, it is largely that company that has been sending e-mails to real estate agents about putting off deals and removing houses from the market. In most cases, the agents are being told the freeze will last 30 to 90 days, but agents say there is no way to know for sure.
A snapshot of the problems can be seen at the real estate agency that sold Ms. Ducksworth her home, Marc Joseph Realty, based in Fort Myers.
The agency had 35 deals that were supposed to close this month. As of Thursday, Fannie had postponed 11 of them. Another handful of homes that did not have offers or were being prepared for market had also been withdrawn.
“If this wipes out half my inventory, that’s a scary thing,” said Bill Mitchell, the agency’s closing coordinator.
As he spoke, his computer pinged and another message from Fannie came through about withdrawing a house. It had the subject line, “Unable to Market Notice.”
Another client of the agency, Richard Clark, is caught in the foreclosure vise on both ends.
A delivery truck driver, Mr. Clark has gone through several rough years: his wife lost her banking job and they eventually separated; a vending business did not succeed; he fell behind on his home payments; and CitiMortgage rebuffed his efforts to restructure the mortgage.
With the prospect of being tossed out of his house in a foreclosure of his own, Mr. Clark, 62, cobbled together $58,000 — most of it from his parents — and successfully bid on a house in North Fort Myers that was in foreclosure. His offer on the house, with three bedrooms and two baths, a Jacuzzi tub in the master bedroom and a Key lime tree in the backyard, was finally approved on Oct. 1.
Like many buyers across the country, Ms. Ducksworth was about to complete the purchase of a foreclosed house when it suddenly went off the market. Fannie Mae, the giant mortgage holding company that buys loans from commercial lenders, is pulling back sales of homes that might have been foreclosed in bad faith.
“I gave up my rental thinking I would have a house,” said Ms. Ducksworth, a 28-year-old catering assistant. “Now I’m sharing a room with my son. What the hell is up with that?”
With home sales this past summer at the lowest level in more than a decade, real estate is ill-prepared to suffer another blow. But as a scandal unfolds over mortgage lenders’ shoddy preparation of foreclosure documents, the fallout is beginning to hammer the housing market, especially in states like Florida where distressed properties are abundant.
“This crisis takes a situation that’s already bad and kind of cements it into place,” said Joshua Shapiro, chief United States economist for MFR Inc., an economic consulting firm.
Three major mortgage lenders — Bank of America, GMAC Mortgage and JPMorgan Chase — have said they are suspending foreclosures in the 23 states where they first need a judge’s approval. They are also waving off Fannie Mae from selling any of the foreclosed homes whose loans they sold to Fannie.
The companies say they are reviewing their operations after disclosures that employees signed documents without determining the accuracy of the material, as is required by law.
Those reviews are throwing into limbo hundreds of thousands of foreclosures and pending home sales, analysts estimate, though the lenders and Fannie Mae have been mostly silent about precise numbers and other specifics.
More broadly, the revelations about the sloppy paperwork are emboldening homeowners and law enforcement officials in many states to question whether lenders rightfully hold the notes underlying foreclosed properties — further chilling the housing market.
Distressed properties, many of which are in foreclosure, make up about a third of all home sales. “Foreclosures are going to slow to a crawl,” said Guy D. Cecala, publisher of the trade magazine Inside Mortgage Finance.
Of the 23 states where foreclosures need court approval, Florida has by far the most trouble — about a half-million cases clog its courts — and the moratoriums are having a noticeable effect.
Because most lenders sold their mortgages to Fannie Mae, it is largely that company that has been sending e-mails to real estate agents about putting off deals and removing houses from the market. In most cases, the agents are being told the freeze will last 30 to 90 days, but agents say there is no way to know for sure.
A snapshot of the problems can be seen at the real estate agency that sold Ms. Ducksworth her home, Marc Joseph Realty, based in Fort Myers.
The agency had 35 deals that were supposed to close this month. As of Thursday, Fannie had postponed 11 of them. Another handful of homes that did not have offers or were being prepared for market had also been withdrawn.
“If this wipes out half my inventory, that’s a scary thing,” said Bill Mitchell, the agency’s closing coordinator.
As he spoke, his computer pinged and another message from Fannie came through about withdrawing a house. It had the subject line, “Unable to Market Notice.”
Another client of the agency, Richard Clark, is caught in the foreclosure vise on both ends.
A delivery truck driver, Mr. Clark has gone through several rough years: his wife lost her banking job and they eventually separated; a vending business did not succeed; he fell behind on his home payments; and CitiMortgage rebuffed his efforts to restructure the mortgage.
With the prospect of being tossed out of his house in a foreclosure of his own, Mr. Clark, 62, cobbled together $58,000 — most of it from his parents — and successfully bid on a house in North Fort Myers that was in foreclosure. His offer on the house, with three bedrooms and two baths, a Jacuzzi tub in the master bedroom and a Key lime tree in the backyard, was finally approved on Oct. 1.
Wednesday, October 6, 2010
Buy-out groups eye BT’s Tech Mahindra stake
Private equity groups are in talks with BT about buying the UK telecoms group’s 31 per cent stake in Tech Mahindra, one of India’s largest software services providers, in a deal worth up to $800m (£506m).
Apax Partners, Providence Equity and Goldman Sachs Private Equity are among the buy-out groups in talks with BT about buying the stake in Tech Mahindra. All the parties declined to comment.
But people familiar with the talks said BT had been trying to sell the stake for several years and a deal could collapse if agreement was not reached on price.
The deal is seen as risky by private equity executives as Tech Mahindra depends on BT for half its revenues. It is also merging with Satyam, the Indian outsourcing group hit by an accounting scandal last year.
BT is willing to sell its Tech Mahindra stake because the holding does not fit its strategy.
BT’s Indian strategy has been focused on Global Services, the UK group’s subsidiary that supplies telecoms and IT services to companies.
Tech Mahindra was established in 1986 as a joint venture between Mahindra & Mahindra, the Indian conglomerate, and BT.
BT last year supported Tech Mahindra’s decision to buy Satyam, which nearly collapsed after its former chairman admitted to fraud.
Tech Mahindra has revived Satyam, which was once one of India’s leading outsourcing groups. But the company’s headcount has nearly halved and it is still making losses.
Satyam, which has been renamed Mahindra Satyam and is wholly owned by Tech Mahindra, released its first accounts since the fraud last month.
They revealed financial irregularities under the previous management of Rs78.5bn (£1.1bn). The company is also facing an investor lawsuit in the US and a potential civil claim by the Securities and Exchange Commission.
Apax Partners, Providence Equity and Goldman Sachs Private Equity are among the buy-out groups in talks with BT about buying the stake in Tech Mahindra. All the parties declined to comment.
But people familiar with the talks said BT had been trying to sell the stake for several years and a deal could collapse if agreement was not reached on price.
The deal is seen as risky by private equity executives as Tech Mahindra depends on BT for half its revenues. It is also merging with Satyam, the Indian outsourcing group hit by an accounting scandal last year.
BT is willing to sell its Tech Mahindra stake because the holding does not fit its strategy.
BT’s Indian strategy has been focused on Global Services, the UK group’s subsidiary that supplies telecoms and IT services to companies.
Tech Mahindra was established in 1986 as a joint venture between Mahindra & Mahindra, the Indian conglomerate, and BT.
BT last year supported Tech Mahindra’s decision to buy Satyam, which nearly collapsed after its former chairman admitted to fraud.
Tech Mahindra has revived Satyam, which was once one of India’s leading outsourcing groups. But the company’s headcount has nearly halved and it is still making losses.
Satyam, which has been renamed Mahindra Satyam and is wholly owned by Tech Mahindra, released its first accounts since the fraud last month.
They revealed financial irregularities under the previous management of Rs78.5bn (£1.1bn). The company is also facing an investor lawsuit in the US and a potential civil claim by the Securities and Exchange Commission.
HDFC Asset's Jain Says Indian Stock Markets Close to `Being Fairly Valued'
India’s stock markets, trading at their highest in more than 2 1/2 years, are approaching fair value, Prashant Jain, chief investment officer at HDFC Asset Management Co., said at an event in Mumbai today.
“The markets are close to being fairly valued,” said Jain, who oversees six of the 15 best-performing Indian funds during the past decade. “It is almost after three years that markets have crossed 20,000. In three years, the economy has grown and many companies have grown meaningfully.”
The Bombay Stock Exchange’s benchmark Sensitive Index rose 135.37, or 0.7 percent, to 20,543.08 today, approaching a record high as foreign investors bought more shares than they sold for a 25th straight day amid optimism the nation’s growth will boost corporate earnings.
Overseas funds bought a net 9.7 billion rupees ($217 million) of Indian equities yesterday, extending this year’s record inflows to 939.7 billion rupees, according to the nation’s market regulator.
“If you take a three- to five-year view, then returns should be in line with earnings growth rate,” Jain said. Returns of as much as 20 percent from a diversified portfolio of equities are not very difficult to achieve and the markets are not overvalued, he said.
Best Performer
This year’s 18 percent rally makes the Sensex the best performer among the world’s 10 biggest stock markets. Foreign fund inflows have surged 59 percent this year, making the gauge the most expensive in Asia and among the BRIC markets that also include Brazil, Russia and China. Gross domestic product expanded 8.8 percent last quarter from a year earlier, the most among major economies in Asia after China.
“The Indian economy is going to quadruple in the next 10 to 12 years,” Sunil Singhania, head of equities at Reliance Capital Asset Management Ltd., India’s biggest money manager, with $23 billion in assets, said on Sept. 29. “Foreign inflows will continue over the next five to six years.”
The gains have made India the most expensive among the world’s 20 largest stock markets, according to data compiled by Bloomberg. Stocks on the Sensex are valued at 19.5 times earnings, compared with 13.7 times for Brazil’s Bovespa Index, 7.8 times for Russia’s Micex Index and 15.1 times for China’s Shanghai Composite Index, among the so-called BRIC markets.
HDFC, with $21 billion in assets, is India’s second-largest money manager.
“The markets are close to being fairly valued,” said Jain, who oversees six of the 15 best-performing Indian funds during the past decade. “It is almost after three years that markets have crossed 20,000. In three years, the economy has grown and many companies have grown meaningfully.”
The Bombay Stock Exchange’s benchmark Sensitive Index rose 135.37, or 0.7 percent, to 20,543.08 today, approaching a record high as foreign investors bought more shares than they sold for a 25th straight day amid optimism the nation’s growth will boost corporate earnings.
Overseas funds bought a net 9.7 billion rupees ($217 million) of Indian equities yesterday, extending this year’s record inflows to 939.7 billion rupees, according to the nation’s market regulator.
“If you take a three- to five-year view, then returns should be in line with earnings growth rate,” Jain said. Returns of as much as 20 percent from a diversified portfolio of equities are not very difficult to achieve and the markets are not overvalued, he said.
Best Performer
This year’s 18 percent rally makes the Sensex the best performer among the world’s 10 biggest stock markets. Foreign fund inflows have surged 59 percent this year, making the gauge the most expensive in Asia and among the BRIC markets that also include Brazil, Russia and China. Gross domestic product expanded 8.8 percent last quarter from a year earlier, the most among major economies in Asia after China.
“The Indian economy is going to quadruple in the next 10 to 12 years,” Sunil Singhania, head of equities at Reliance Capital Asset Management Ltd., India’s biggest money manager, with $23 billion in assets, said on Sept. 29. “Foreign inflows will continue over the next five to six years.”
The gains have made India the most expensive among the world’s 20 largest stock markets, according to data compiled by Bloomberg. Stocks on the Sensex are valued at 19.5 times earnings, compared with 13.7 times for Brazil’s Bovespa Index, 7.8 times for Russia’s Micex Index and 15.1 times for China’s Shanghai Composite Index, among the so-called BRIC markets.
HDFC, with $21 billion in assets, is India’s second-largest money manager.
India's Economy May Expand 9.7% This Year, More Than Forecast, IMF Says
India’s economy may grow faster than previously forecast, helped by consumer demand, the International Monetary Fund said.
The South Asian economy will expand 9.7 percent in 2010, the Washington-based lender said in its World Economic Outlook, more than the 9.4 percent estimated in July. The fund maintained its 2011 prediction for India’s growth at 8.4 percent.
“Low reliance on exports, accommodative policies, and strong capital inflows have supported domestic activity and growth,” the IMF said in the report. “The rapid pace of domestic activity, evidenced by rapidly rising inflation, led the central bank to increase the repo policy rate.”
The Reserve Bank of India has increased its benchmark repurchase rate by 1.25 percentage points this year, the most by any central bank in Asia, to cool price gains. The IMF forecast Indian consumer prices may rise 13.2 percent in 2010 compared with 10.9 percent in 2009.
The Reserve Bank’s repurchase rate is 6 percent and the reverse repurchase rate is 5 percent. The central bank is scheduled to issue its next monetary policy statement on Nov. 2.
Earlier this month, Goldman Sachs Group Inc. increased India’s economic growth forecast to 8.5 percent from 8.2 percent for the financial year ending March 31 and estimated inflation at 6.5 percent by March 31, more than its earlier projection of 6 percent.
The South Asian economy will expand 9.7 percent in 2010, the Washington-based lender said in its World Economic Outlook, more than the 9.4 percent estimated in July. The fund maintained its 2011 prediction for India’s growth at 8.4 percent.
“Low reliance on exports, accommodative policies, and strong capital inflows have supported domestic activity and growth,” the IMF said in the report. “The rapid pace of domestic activity, evidenced by rapidly rising inflation, led the central bank to increase the repo policy rate.”
The Reserve Bank of India has increased its benchmark repurchase rate by 1.25 percentage points this year, the most by any central bank in Asia, to cool price gains. The IMF forecast Indian consumer prices may rise 13.2 percent in 2010 compared with 10.9 percent in 2009.
The Reserve Bank’s repurchase rate is 6 percent and the reverse repurchase rate is 5 percent. The central bank is scheduled to issue its next monetary policy statement on Nov. 2.
Earlier this month, Goldman Sachs Group Inc. increased India’s economic growth forecast to 8.5 percent from 8.2 percent for the financial year ending March 31 and estimated inflation at 6.5 percent by March 31, more than its earlier projection of 6 percent.
Essar eyes Africa for steel ‘shopping centres’
Essar Steel, India’s second-biggest private sector steelmaker, plans to open a series of “shopping centres” for steel in Africa, mirroring outlets it has introduced over the past few years in India.
The “steel hypermarts” that Essar has set up in its home country cater to small merchants or private individuals, allowing them to buy steel in small quantities of a few hundred kilogrammes at a time for use in business or home-improvement projects.
“We feel there is a lot of entrepreneurial activity in Africa which is waiting there to be built on,” said Malay Mukherjee, Essar Steel’s chief executive, in an interview with the Financial Times at the annual World Steel Association meeting in Tokyo.
The Essar Group, which also has oil and gas and telecom interests, is keen to expand into Africa. It has oil and gas exploration blocks around the continent. Last year, it bought a 50 per cent stake in a refinery in Mombasa, Kenya, and is reportedly interested in joining a project to build a refinery in Uganda.
It also sees Africa’s growing economies as a potential market for its steel production, particularly the continent’s burgeoning small businesses.
The company hopes to establish an initial base of a few dozen steel centres within the next couple of years, with an eye to extending the concept if it is successful.
Mr Mukherjee did not specify which countries Essar would target to start with, but the first centres would probably be built in the east of Africa – a relatively close shipping distance to the company’s main steel plant in Hazira, on India’s west coast near Mumbai.
Essar has about 600 steel retail centres in India that together with larger, more conventional steel service centres geared toward large industrial users distribute about 4m tonnes of steel a year.
The company believes the segment of the market targeting sales of smaller amounts of steel to small businesses has been neglected by most distributors.
“This accent on new ways to convey steel to the final user is part of our effort to try to establish ourselves as being as good on the distribution side of the business as in manufacturing,” said Prashant Ruia, Essar Group chief executive.
The company expects this year to make about 8m tonnes of steel, of which 5m tonnes would come from Hazira and the rest from a Canadian steel mill which the company bought in 2007.
That total output would slightly exceed the roughly 7m tonnes of steel JSW, India’s third-biggest steelmaker, expects to produce over the same period.
Essar plans, via a series of expansions, to ramp up total steel production by 2014 to 14m tonnes, of which 10m tonnes would be made in India and the rest in Canada.
The expansion of output in India comes amid rapid growth in the domestic sector, as a result of which the country is expected by the end of 2011 to be the world’s third-biggest steel consumer after China and the US.
The “steel hypermarts” that Essar has set up in its home country cater to small merchants or private individuals, allowing them to buy steel in small quantities of a few hundred kilogrammes at a time for use in business or home-improvement projects.
“We feel there is a lot of entrepreneurial activity in Africa which is waiting there to be built on,” said Malay Mukherjee, Essar Steel’s chief executive, in an interview with the Financial Times at the annual World Steel Association meeting in Tokyo.
The Essar Group, which also has oil and gas and telecom interests, is keen to expand into Africa. It has oil and gas exploration blocks around the continent. Last year, it bought a 50 per cent stake in a refinery in Mombasa, Kenya, and is reportedly interested in joining a project to build a refinery in Uganda.
It also sees Africa’s growing economies as a potential market for its steel production, particularly the continent’s burgeoning small businesses.
The company hopes to establish an initial base of a few dozen steel centres within the next couple of years, with an eye to extending the concept if it is successful.
Mr Mukherjee did not specify which countries Essar would target to start with, but the first centres would probably be built in the east of Africa – a relatively close shipping distance to the company’s main steel plant in Hazira, on India’s west coast near Mumbai.
Essar has about 600 steel retail centres in India that together with larger, more conventional steel service centres geared toward large industrial users distribute about 4m tonnes of steel a year.
The company believes the segment of the market targeting sales of smaller amounts of steel to small businesses has been neglected by most distributors.
“This accent on new ways to convey steel to the final user is part of our effort to try to establish ourselves as being as good on the distribution side of the business as in manufacturing,” said Prashant Ruia, Essar Group chief executive.
The company expects this year to make about 8m tonnes of steel, of which 5m tonnes would come from Hazira and the rest from a Canadian steel mill which the company bought in 2007.
That total output would slightly exceed the roughly 7m tonnes of steel JSW, India’s third-biggest steelmaker, expects to produce over the same period.
Essar plans, via a series of expansions, to ramp up total steel production by 2014 to 14m tonnes, of which 10m tonnes would be made in India and the rest in Canada.
The expansion of output in India comes amid rapid growth in the domestic sector, as a result of which the country is expected by the end of 2011 to be the world’s third-biggest steel consumer after China and the US.
Tuesday, October 5, 2010
ING Buys Most Longer-Term Debt in Year on `Benign' Inflation: India Credit
Indian ventures of the world’s biggest fund managers are buying the most longer-term debt in almost a year after interest-rate increases helped slow inflation from a 19-month high.
ING Investment Management Pvt., a Mumbai-based unit of the largest Dutch financial services company, increased the average maturity of its bond holdings sixfold to six years since July. Birla Sun Life Asset Management Co., Canara Robeco Asset Management Ltd. and DSP Blackrock made similar adjustments. Benchmark 2020 government notes returned 1 percent in the past month, beating the 0.2 percent for 2012 securities.
The notes rallied as the central bank forecast inflation would slow to 6 percent from an 8.5 percent rise in wholesale prices in August, and the government raised its cap on foreign ownership of rupee debt by 50 percent to $30 billion. India’s investment funds more than doubled assets in three years to $160 billion, according to the Association of Mutual Funds in India.
“Our outlook on inflation is much more benign than what it was before,” K. Ramanathan, chief investment officer in Mumbai at ING Investment, said in a phone interview yesterday. “We have increased our average maturity significantly.”
The average tenor of bond funds rose to 6.55 years at the end of August, the longest duration in 11 months, according to New Delhi-based Value Research. A drop of one basis point in the yield of a 10-year note will push its price up more than a similar move in the yield on a two-year note because its valuation needs to factor in more interest-rate payments.
Household Savings
The yield on the 7.80 percent note due May 2020 has fallen 14 basis points, or 0.14 percentage point, from a high of 8.08 percent on Aug. 25 to close yesterday at 7.94 percent. ING predicted 10-year yields will fall 44 basis points to 7.5 percent by March. That would deliver investors an annualized return of 13.7 percent.
The yield is the highest among major economies except Brazil, where similar-maturity notes pay 11.86 percent. Comparable securities offer 7.70 percent in Russia, 3.32 percent in China and 2.46 percent in the U.S.
The difference in yields between India’s debt due in a decade and 10-year Treasuries grew to 547 basis points from 546 yesterday. The measure, which has averaged 318 in the past 10 years, reached a two-year high of 556 on Aug. 26.
Holdings Grow
Foreign holdings of India’s corporate and government debt have more than doubled in 2010 to a record $17.5 billion on Oct. 4 as yields climbed, according to the Securities and Exchange Board of India. Accelerated investment inflows helped the rupee strengthen 4.5 percent against the dollar in the past month, the best performance among Asia’s 10-most traded currencies.
Local investors are also buying government debt, adding 254 billion rupees to bond funds and pulling out 76 billion rupees from equities in the eight months through August, according to data from the Association of Mutual Funds. Indian households’ savings have more than doubled in the six years ending March 2009 to 12.6 trillion rupees ($283 billon), giving citizens more assets to invest in financial markets.
The economy has expanded an average of 8.5 percent in the past five years, the second-fastest growing major economy after China. Wholesale price inflation, which slowed for a fourth month in August to 8.5 percent, may touch 6.5 percent by the end of March, said ING Investment’s Ramanathan.
Inflation
The central bank wants to cool inflation to between 4 and 4.5 percent in the medium-term and 3 percent in the long-term, said Reserve Bank of India Deputy Governor Subir Gokarn yesterday. India’s challenge is to keep inflation “under check,” and the monetary authority will seek a balance between sustaining the recovery and reigning in rise in prices, he said.
The Reserve Bank of India has increased its overnight lending rate by 125 basis points this year, the most since the policy tool was introduced in 2000. The repurchase auction rate is 6 percent. As borrowing costs rose, India’s government securities returned 3.6 percent this year, the second-worst among 10 local-currency debt markets outside Japan, according to indexes compiled by London-based HSBC Holdings Plc, Europe’s largest bank.
“The impact of past monetary policy actions is now beginning to kick in and its effect on curbing inflation will be more visible over the next two to three quarters,” said Gaurav Kapur, a Mumbai-based economist at Royal Bank of Scotland NV. “Higher bank lending rates should cool demand side pressures.”
Yield Difference
Yearly expansion in money supply slowed to 15.2 percent last month from 18.9 percent a year earlier as central bank Governor Duvvuri Subbarao restrained cash to combat inflation. The central bank may increase its benchmark rate by 50 basis points more by March, said Kapur.
Food inflation accelerated to almost a two-month high of 16.44 percent in the week ended Sept. 18 from a year earlier, compared with 15.46 percent the previous week, according to data published by the commerce ministry.
DSP Blackrock, the Indian unit of the world’s biggest money manager, which holds Indian debt with an average maturity of 11 years compared with 9 years in June, will assess global and local economic data before deciding whether to maintain or reduce duration of the bonds, Dhawal Dalal, the head of fixed income at DSP Blackrock in Mumbai said in a phone interview yesterday.
“The worry is that with festival season around the corner you could probably see food inflation passing through to second round of non-food inflation,” said Dalal, who manages the equivalent of $2.5 billion in debt funds, referring to religious holidays running through Nov. 5.
Narrow Deficit
Finance Minister Pranab Mukherjee aims to narrow the budget deficit to 5.5 percent of gross domestic product in the year ending March 31, from a 16-year high of 6.9 percent in fiscal 2010. The federal government’s borrowing target this fiscal year is 4.47 trillion rupees compared with a record 4.51 trillion rupees in the last fiscal year.
In the second half that began in October, the Finance Ministry plans to sell debt securities worth 1.63 trillion rupees. Only a quarter of those bonds will mature in 15 years or more, which may boost demand for debt in that segment, Ritesh Jain, head of fixed-income at Canara Robeco Asset Management in Mumbai, said in a phone interview yesterday.
Demand for longer bonds may increase as insurance companies and pension funds typically boost their holdings before the end of the fiscal year, said Jain, whose company is a venture with Robeco NV, the Dutch money manager owned by Rabobank Groep NV.
“I’m probably sitting on the highest duration in the industry,” said Jain. “There will be demand in the longer end as the shorter end is very volatile.”
ING Investment Management Pvt., a Mumbai-based unit of the largest Dutch financial services company, increased the average maturity of its bond holdings sixfold to six years since July. Birla Sun Life Asset Management Co., Canara Robeco Asset Management Ltd. and DSP Blackrock made similar adjustments. Benchmark 2020 government notes returned 1 percent in the past month, beating the 0.2 percent for 2012 securities.
The notes rallied as the central bank forecast inflation would slow to 6 percent from an 8.5 percent rise in wholesale prices in August, and the government raised its cap on foreign ownership of rupee debt by 50 percent to $30 billion. India’s investment funds more than doubled assets in three years to $160 billion, according to the Association of Mutual Funds in India.
“Our outlook on inflation is much more benign than what it was before,” K. Ramanathan, chief investment officer in Mumbai at ING Investment, said in a phone interview yesterday. “We have increased our average maturity significantly.”
The average tenor of bond funds rose to 6.55 years at the end of August, the longest duration in 11 months, according to New Delhi-based Value Research. A drop of one basis point in the yield of a 10-year note will push its price up more than a similar move in the yield on a two-year note because its valuation needs to factor in more interest-rate payments.
Household Savings
The yield on the 7.80 percent note due May 2020 has fallen 14 basis points, or 0.14 percentage point, from a high of 8.08 percent on Aug. 25 to close yesterday at 7.94 percent. ING predicted 10-year yields will fall 44 basis points to 7.5 percent by March. That would deliver investors an annualized return of 13.7 percent.
The yield is the highest among major economies except Brazil, where similar-maturity notes pay 11.86 percent. Comparable securities offer 7.70 percent in Russia, 3.32 percent in China and 2.46 percent in the U.S.
The difference in yields between India’s debt due in a decade and 10-year Treasuries grew to 547 basis points from 546 yesterday. The measure, which has averaged 318 in the past 10 years, reached a two-year high of 556 on Aug. 26.
Holdings Grow
Foreign holdings of India’s corporate and government debt have more than doubled in 2010 to a record $17.5 billion on Oct. 4 as yields climbed, according to the Securities and Exchange Board of India. Accelerated investment inflows helped the rupee strengthen 4.5 percent against the dollar in the past month, the best performance among Asia’s 10-most traded currencies.
Local investors are also buying government debt, adding 254 billion rupees to bond funds and pulling out 76 billion rupees from equities in the eight months through August, according to data from the Association of Mutual Funds. Indian households’ savings have more than doubled in the six years ending March 2009 to 12.6 trillion rupees ($283 billon), giving citizens more assets to invest in financial markets.
The economy has expanded an average of 8.5 percent in the past five years, the second-fastest growing major economy after China. Wholesale price inflation, which slowed for a fourth month in August to 8.5 percent, may touch 6.5 percent by the end of March, said ING Investment’s Ramanathan.
Inflation
The central bank wants to cool inflation to between 4 and 4.5 percent in the medium-term and 3 percent in the long-term, said Reserve Bank of India Deputy Governor Subir Gokarn yesterday. India’s challenge is to keep inflation “under check,” and the monetary authority will seek a balance between sustaining the recovery and reigning in rise in prices, he said.
The Reserve Bank of India has increased its overnight lending rate by 125 basis points this year, the most since the policy tool was introduced in 2000. The repurchase auction rate is 6 percent. As borrowing costs rose, India’s government securities returned 3.6 percent this year, the second-worst among 10 local-currency debt markets outside Japan, according to indexes compiled by London-based HSBC Holdings Plc, Europe’s largest bank.
“The impact of past monetary policy actions is now beginning to kick in and its effect on curbing inflation will be more visible over the next two to three quarters,” said Gaurav Kapur, a Mumbai-based economist at Royal Bank of Scotland NV. “Higher bank lending rates should cool demand side pressures.”
Yield Difference
Yearly expansion in money supply slowed to 15.2 percent last month from 18.9 percent a year earlier as central bank Governor Duvvuri Subbarao restrained cash to combat inflation. The central bank may increase its benchmark rate by 50 basis points more by March, said Kapur.
Food inflation accelerated to almost a two-month high of 16.44 percent in the week ended Sept. 18 from a year earlier, compared with 15.46 percent the previous week, according to data published by the commerce ministry.
DSP Blackrock, the Indian unit of the world’s biggest money manager, which holds Indian debt with an average maturity of 11 years compared with 9 years in June, will assess global and local economic data before deciding whether to maintain or reduce duration of the bonds, Dhawal Dalal, the head of fixed income at DSP Blackrock in Mumbai said in a phone interview yesterday.
“The worry is that with festival season around the corner you could probably see food inflation passing through to second round of non-food inflation,” said Dalal, who manages the equivalent of $2.5 billion in debt funds, referring to religious holidays running through Nov. 5.
Narrow Deficit
Finance Minister Pranab Mukherjee aims to narrow the budget deficit to 5.5 percent of gross domestic product in the year ending March 31, from a 16-year high of 6.9 percent in fiscal 2010. The federal government’s borrowing target this fiscal year is 4.47 trillion rupees compared with a record 4.51 trillion rupees in the last fiscal year.
In the second half that began in October, the Finance Ministry plans to sell debt securities worth 1.63 trillion rupees. Only a quarter of those bonds will mature in 15 years or more, which may boost demand for debt in that segment, Ritesh Jain, head of fixed-income at Canara Robeco Asset Management in Mumbai, said in a phone interview yesterday.
Demand for longer bonds may increase as insurance companies and pension funds typically boost their holdings before the end of the fiscal year, said Jain, whose company is a venture with Robeco NV, the Dutch money manager owned by Rabobank Groep NV.
“I’m probably sitting on the highest duration in the industry,” said Jain. “There will be demand in the longer end as the shorter end is very volatile.”
Indian Oil Plans $2.5 Billion January Share Sale to Cut Debt, Fund Growth
Indian Oil Corp., the nation’s second-biggest refiner, aims to raise $2.5 billion in a proposed share sale to lower debt and fund expansions.
The state-owned fuel producer has debt of about 450 billion rupees ($10.1 billion), Chairman Brij Mohan Bansal said in an interview in New York yesterday. “We also plan to use part of the money to fund our ongoing expansion plan.”
The Indian government said in January it plans to sell shares in as many as 68 companies as part of efforts to shrink the budget deficit to 5.5 percent of gross domestic product this fiscal year from an estimated 6.9 percent last year. Prime Minister Manmohan Singh wants to raise 400 billion rupees from asset sales by March 31 to also help fund construction of roads, ports, hospitals and schools.
The company last month approved the sale of as many as 242.8 million shares, or 10 percent of its equity, through a public offer along with the government share sale.
“We are in the process of appointing the lead managers and bankers,” Bansal said. He expects government approval for the plan “soon” and to hold the share sale in January, he said.
Indian Oil is building a refinery in Orissa state with an annual processing capacity of 15 million tons. The company plans to spend $10 billion on expansion, Bansal said.
The refiner has advanced 38 percent in Mumbai trading this year compared with the 17 percent gain in the benchmark Sensitive Index of the Bombay Stock Exchange. The stock climbed 1.2 percent to 420.6 rupees yesterday.
Bansal said that crude oil prices will likely range between $70 and $80 a barrel by the end of this year. Benchmark futures have climbed 17 percent in New York the past year and traded at $82.66 at 5:22 a.m. New Delhi time today.
The increase in crude prices has forced the company to slow its overseas expansion, he said.
“We had very optimistic plans for overseas, but because of oil prices and subsidy issues we have kept our overseas ventures in Indonesia and Malaysia on the backburner,” Bansal said. “If opportunities are there, our first target will be Africa.”
The state-owned fuel producer has debt of about 450 billion rupees ($10.1 billion), Chairman Brij Mohan Bansal said in an interview in New York yesterday. “We also plan to use part of the money to fund our ongoing expansion plan.”
The Indian government said in January it plans to sell shares in as many as 68 companies as part of efforts to shrink the budget deficit to 5.5 percent of gross domestic product this fiscal year from an estimated 6.9 percent last year. Prime Minister Manmohan Singh wants to raise 400 billion rupees from asset sales by March 31 to also help fund construction of roads, ports, hospitals and schools.
The company last month approved the sale of as many as 242.8 million shares, or 10 percent of its equity, through a public offer along with the government share sale.
“We are in the process of appointing the lead managers and bankers,” Bansal said. He expects government approval for the plan “soon” and to hold the share sale in January, he said.
Indian Oil is building a refinery in Orissa state with an annual processing capacity of 15 million tons. The company plans to spend $10 billion on expansion, Bansal said.
The refiner has advanced 38 percent in Mumbai trading this year compared with the 17 percent gain in the benchmark Sensitive Index of the Bombay Stock Exchange. The stock climbed 1.2 percent to 420.6 rupees yesterday.
Bansal said that crude oil prices will likely range between $70 and $80 a barrel by the end of this year. Benchmark futures have climbed 17 percent in New York the past year and traded at $82.66 at 5:22 a.m. New Delhi time today.
The increase in crude prices has forced the company to slow its overseas expansion, he said.
“We had very optimistic plans for overseas, but because of oil prices and subsidy issues we have kept our overseas ventures in Indonesia and Malaysia on the backburner,” Bansal said. “If opportunities are there, our first target will be Africa.”
Foreclosure Furor Rises; Many Call for a Freeze
The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.
Representative Nancy Pelosi, the House speaker, and 30 other Democratic representatives from California told the Justice Department, the Federal Reserve and the comptroller of the currency that “it is time that banks are held accountable for their practices.”
In a request for an investigation into questionable foreclosure practices by lenders, the lawmakers said that “the excuses we have heard from financial institutions are simply not credible."
Officials from the federal agencies declined to comment.
Texas Attorney General Greg Abbott, a Republican, sent letters to 30 lenders demanding they stop foreclosures, evictions and the sale of foreclosed properties until they could provide assurances that they were proceeding legally.
Both developments indicated that scarcely two weeks after the country’s fourth-biggest lender, GMAC Mortgage, revealed that it was suspending all foreclosures in the 23 states where the process requires judicial approval, concerns about flawed foreclosures had mushroomed into a nationwide problem.
Some of the finger-pointing was also being directed back at Congress. The Ohio secretary of state, Jennifer Brunner, suggested in a telephone interview on Tuesday that a bill passed by Congress last week about notarizations could facilitate foreclosure fraud.
Dubious notary practices used by banks to justify foreclosures have come under scrutiny in recent weeks as GMAC and other top lenders suspended homeowner evictions over possible improper procedures.
Ms. Brunner, who has recently referred possible cases of notary fraud in her state to federal authorities, worries that the legislation would allow the lowest standard for notaries to become a nationwide practice. She said she also worried that the changes were coming in the middle of a foreclosure storm where people could lose their homes improperly.
“A notary’s signature is that of a trusted, impartial third party, whose notarization bolsters the integrity of the document,” Ms. Brunner said. “To take away the safeguards of notarization means foreclosure procedures could be more susceptible to fraud.”
As banks’ foreclosure practices have come under the microscope, problems with notarizations on mortgage assignments have emerged. These documents transfer the ownership of the underlying note from one institution to another and are required for foreclosures to proceed.
In some cases, the notarizations predated the preparation of the legal documents, suggesting that signatures were not reviewed by a notary. Other notarizations took place in offices far away from where the documents were signed, indicating that the notaries might not have witnessed the signings as the law required.
Notary practices vary from state to state and the bill, sponsored by Representative Robert B. Aderholt, a Republican from Alabama, would essentially require that one state’s rules be accepted by others. If one state allows its notaries to sign off on electronic signatures, for example, documents carrying such signatures and notarized by officials in that state would have to be recognized and accepted in any state or federal court.
Ms. Brunner pointed out that some states had adopted “electronic notarization” laws that ignored the requirement of a signer’s personal appearance before a notary. “Many of these policies for electronic notarization are driven by technology rather than by principle, and they are dangerous to consumers,” she said.
Mr. Aderholt had introduced the bill twice before and both times it passed the House of Representatives but not the Senate. Mr. Aderholt reintroduced the bill last October and it passed the Senate on Sept. 29. It is awaiting President Obama’s signature.
Mr. Aderholt’s press secretary, Darrell Jordan, said there was no connection between the timing of the bill and the current notarization problems with foreclosures. In a statement announcing the bill’s passage, Mr. Aderholt said: “This legislation will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out of state.”
Last week, JPMorgan Chase and Bank of America joined GMAC in suspending foreclosures in the states where they must be approved by a judge. The judicial states do not include California or Texas. But Mr. Abbott, the Texas attorney general, told lenders in letters dated Oct. 4 that if they used so-called robo-signers — employees who signed thousands of foreclosure affidavits a month, falsely attesting that they had reviewed the material — it would be a violation of Texas law.
As a result, he wrote, “the document and therefore the foreclosure sale would have been invalid.”
The three lenders who are at the center of the controversy, GMAC Mortgage, JPMorgan Chase and Bank of America, declined to comment. Other lenders singled out by Mr. Abbott include Wells Fargo, CitiMortgage, HSBC and National City.
Meanwhile, shares of a major foreclosure outsourcing company, Lender Processing Services of Jacksonville, Fla., fell 5 percent on Tuesday, adding to a slide that began last week.
The company’s documentation practices are stirring questions, including how the same employee can have wildly varying signatures on mortgage documents. L.P.S. blamed a midlevel manager’s decision to allow employees to sign forms in the name of an authorized employee. It says it has stopped the practice.
The United States Attorney’s Office in Tampa began investigating L.P.S. in February. An L.P.S. representative could not be reached Tuesday for comment.
Other calls for investigations came from Senators Al Franken, a Democrat from Minnesota, and Robert Menendez, a Democrat from New Jersey.
Representative Nancy Pelosi, the House speaker, and 30 other Democratic representatives from California told the Justice Department, the Federal Reserve and the comptroller of the currency that “it is time that banks are held accountable for their practices.”
In a request for an investigation into questionable foreclosure practices by lenders, the lawmakers said that “the excuses we have heard from financial institutions are simply not credible."
Officials from the federal agencies declined to comment.
Texas Attorney General Greg Abbott, a Republican, sent letters to 30 lenders demanding they stop foreclosures, evictions and the sale of foreclosed properties until they could provide assurances that they were proceeding legally.
Both developments indicated that scarcely two weeks after the country’s fourth-biggest lender, GMAC Mortgage, revealed that it was suspending all foreclosures in the 23 states where the process requires judicial approval, concerns about flawed foreclosures had mushroomed into a nationwide problem.
Some of the finger-pointing was also being directed back at Congress. The Ohio secretary of state, Jennifer Brunner, suggested in a telephone interview on Tuesday that a bill passed by Congress last week about notarizations could facilitate foreclosure fraud.
Dubious notary practices used by banks to justify foreclosures have come under scrutiny in recent weeks as GMAC and other top lenders suspended homeowner evictions over possible improper procedures.
Ms. Brunner, who has recently referred possible cases of notary fraud in her state to federal authorities, worries that the legislation would allow the lowest standard for notaries to become a nationwide practice. She said she also worried that the changes were coming in the middle of a foreclosure storm where people could lose their homes improperly.
“A notary’s signature is that of a trusted, impartial third party, whose notarization bolsters the integrity of the document,” Ms. Brunner said. “To take away the safeguards of notarization means foreclosure procedures could be more susceptible to fraud.”
As banks’ foreclosure practices have come under the microscope, problems with notarizations on mortgage assignments have emerged. These documents transfer the ownership of the underlying note from one institution to another and are required for foreclosures to proceed.
In some cases, the notarizations predated the preparation of the legal documents, suggesting that signatures were not reviewed by a notary. Other notarizations took place in offices far away from where the documents were signed, indicating that the notaries might not have witnessed the signings as the law required.
Notary practices vary from state to state and the bill, sponsored by Representative Robert B. Aderholt, a Republican from Alabama, would essentially require that one state’s rules be accepted by others. If one state allows its notaries to sign off on electronic signatures, for example, documents carrying such signatures and notarized by officials in that state would have to be recognized and accepted in any state or federal court.
Ms. Brunner pointed out that some states had adopted “electronic notarization” laws that ignored the requirement of a signer’s personal appearance before a notary. “Many of these policies for electronic notarization are driven by technology rather than by principle, and they are dangerous to consumers,” she said.
Mr. Aderholt had introduced the bill twice before and both times it passed the House of Representatives but not the Senate. Mr. Aderholt reintroduced the bill last October and it passed the Senate on Sept. 29. It is awaiting President Obama’s signature.
Mr. Aderholt’s press secretary, Darrell Jordan, said there was no connection between the timing of the bill and the current notarization problems with foreclosures. In a statement announcing the bill’s passage, Mr. Aderholt said: “This legislation will help businesses around the nation by eliminating the confusion which arises when states refuse to acknowledge the integrity of documents notarized out of state.”
Last week, JPMorgan Chase and Bank of America joined GMAC in suspending foreclosures in the states where they must be approved by a judge. The judicial states do not include California or Texas. But Mr. Abbott, the Texas attorney general, told lenders in letters dated Oct. 4 that if they used so-called robo-signers — employees who signed thousands of foreclosure affidavits a month, falsely attesting that they had reviewed the material — it would be a violation of Texas law.
As a result, he wrote, “the document and therefore the foreclosure sale would have been invalid.”
The three lenders who are at the center of the controversy, GMAC Mortgage, JPMorgan Chase and Bank of America, declined to comment. Other lenders singled out by Mr. Abbott include Wells Fargo, CitiMortgage, HSBC and National City.
Meanwhile, shares of a major foreclosure outsourcing company, Lender Processing Services of Jacksonville, Fla., fell 5 percent on Tuesday, adding to a slide that began last week.
The company’s documentation practices are stirring questions, including how the same employee can have wildly varying signatures on mortgage documents. L.P.S. blamed a midlevel manager’s decision to allow employees to sign forms in the name of an authorized employee. It says it has stopped the practice.
The United States Attorney’s Office in Tampa began investigating L.P.S. in February. An L.P.S. representative could not be reached Tuesday for comment.
Other calls for investigations came from Senators Al Franken, a Democrat from Minnesota, and Robert Menendez, a Democrat from New Jersey.
Sunday, October 3, 2010
Sinopec Group Pays ‘Very High’ Premium for Brazil Oil Reserves
Oct. 4 (Bloomberg) -- China Petrochemical Corp. is paying a premium to take a stake in Repsol YPF SA’s Brazilian unit, betting that Latin American offshore oil reserves will help meet demand in the world’s biggest energy user.
Sinopec Group, as China’s second-largest energy company is known, agreed Oct. 1 to pay $7.1 billion for a 40 percent stake in Madrid-based Repsol’s unit, which has reserves in the same area as the biggest oil discovery in the Americas this century. That amounts to $15 a barrel, or 76 percent above the $8.50 Petroleo Brasileiro SA paid last month for assets in Brazil, said Neil Beveridge, an analyst at Sanford C. Bernstein & Co.
“This shows the importance that China places on securing oil resources overseas,” Beveridge said by telephone from Hong Kong. “This is a key emerging deepwater basin, and there are a lot of developments taking place. Sinopec has a good position established, but the price it has paid is very high.”
Chinese companies spent a record $32 billion last year buying energy and resources assets abroad. Sinopec Group’s investment is the country’s second-largest overseas acquisition and follows the company’s purchase of Addax Petroleum Corp. for C$8.3 billion ($8 billion) last year to gain reserves in Iraq’s Kurdistan and West Africa. Cnooc Ltd. and state-controlled Sinochem Group have paid about $3.1 billion each for stakes in oil producers in Argentina and Brazil.
“South America seems to be a key area of focus at the moment,” said Beveridge. “The focus has switched from Africa, and it’s all part of China’s desire for energy security and the exceptional growth in demand for oil.”
Shares Rise
American depositary receipts in Sinopec Group’s listed arm, China Petroleum & Chemical Corp., rose 0.7 percent to $88.92 on Oct. 1. Repsol jumped to a two-year high, climbing 5 percent to close at 19.83 euros in Madrid, giving the company a market value of 24 billion euros ($33 billion).
Shares of other energy companies with stakes in Brazilian offshore projects advanced Oct. 1 after Sinopec Group’s investment in the Repsol unit was announced. Galp Energia SGPS SA rose as much as 7.8 percent in Lisbon, while BG Group Plc, the U.K.’s third-largest oil and natural gas producer, climbed as much as 5.8 percent in London.
“This puts a hefty valuation on reserves in Brazil,” said Peter Hitchens, an analyst at Panmure Gordon & Co. in London. “It could read through into BG’s assets.”
‘Surprisingly High’
Brazil’s state oil company Petroleo Brasileiro, known also as Petrobras, issued about $42.5 billion of stock to the country’s government last month in exchange for the rights to develop 5 billion barrels of oil reserves. Beveridge estimates Repsol’s assets in Brazil hold about 1.2 billion barrels of oil equivalent.
Spain’s biggest oil company has stakes in Brazil’s Santos and Espirito Santo basins and plans to invest as much as $14 billion there through 2019, in fields that may hold as much as 3 billion barrels.
The valuation of Sinopec Group’s stake purchase is “surprisingly high,” Banco BPI SA analysts Bruno Silva, Flora Trindade and Gonzalo Sanchez-Bordona wrote in a research note.
Repsol had considered a plan to sell about 40 percent of the Brazilian business through an initial public offering. The company now won’t be selling shares in the unit to the public, Madrid-based spokesman Kristian Rix said Oct. 1.
Too Large
“For us, Brazil was way too large,” Repsol’s Chief Operating Officer Miguel Martinez said in an interview on Bloomberg Television. “Obtaining a partner was a move that was necessary.” Repsol and Sinopec Group may work together in other areas in the future, he said.
Since 2007, Repsol and partners BG Group and Petrobras have found hydrocarbons in the offshore Carioca, Guara and Iguacu fields in the Santos Basin’s BM-S-9 block. They are ultra-deep deposits beneath a salt layer under the seabed.
Petrobras estimated in November 2007 that the Santos Basin’s pre-salt Tupi field may contain as many as 8 billion barrels of oil, the largest find in the Americas since Mexico’s Cantarell field in 1976. Repsol doesn’t own a stake in Tupi.
Repsol wants to invest in exploration in Brazil’s offshore Santos Basin and elsewhere to increase reserves and output, while trying to reduce exposure to mature fields in neighboring Argentina. The company forecasts annual production growth of as much as 4 percent through 2014 as projects in Brazil and Peru come on stream. Repsol plans to invest a total of 28.5 billion euros in the period.
Crude oil futures in New York have gained 16 percent in a year to $81.58 a barrel. Prices reached a record $147.27 a barrel in July 2008.
“If oil does go over $100 a barrel, then this deal may look very attractive,” said Beveridge of Sanford C. Bernstein. “It comes down to it either seeing more exploration potential here, or Sinopec’s betting on higher oil prices in the future to justify the price it is paying.”
Sinopec Group, as China’s second-largest energy company is known, agreed Oct. 1 to pay $7.1 billion for a 40 percent stake in Madrid-based Repsol’s unit, which has reserves in the same area as the biggest oil discovery in the Americas this century. That amounts to $15 a barrel, or 76 percent above the $8.50 Petroleo Brasileiro SA paid last month for assets in Brazil, said Neil Beveridge, an analyst at Sanford C. Bernstein & Co.
“This shows the importance that China places on securing oil resources overseas,” Beveridge said by telephone from Hong Kong. “This is a key emerging deepwater basin, and there are a lot of developments taking place. Sinopec has a good position established, but the price it has paid is very high.”
Chinese companies spent a record $32 billion last year buying energy and resources assets abroad. Sinopec Group’s investment is the country’s second-largest overseas acquisition and follows the company’s purchase of Addax Petroleum Corp. for C$8.3 billion ($8 billion) last year to gain reserves in Iraq’s Kurdistan and West Africa. Cnooc Ltd. and state-controlled Sinochem Group have paid about $3.1 billion each for stakes in oil producers in Argentina and Brazil.
“South America seems to be a key area of focus at the moment,” said Beveridge. “The focus has switched from Africa, and it’s all part of China’s desire for energy security and the exceptional growth in demand for oil.”
Shares Rise
American depositary receipts in Sinopec Group’s listed arm, China Petroleum & Chemical Corp., rose 0.7 percent to $88.92 on Oct. 1. Repsol jumped to a two-year high, climbing 5 percent to close at 19.83 euros in Madrid, giving the company a market value of 24 billion euros ($33 billion).
Shares of other energy companies with stakes in Brazilian offshore projects advanced Oct. 1 after Sinopec Group’s investment in the Repsol unit was announced. Galp Energia SGPS SA rose as much as 7.8 percent in Lisbon, while BG Group Plc, the U.K.’s third-largest oil and natural gas producer, climbed as much as 5.8 percent in London.
“This puts a hefty valuation on reserves in Brazil,” said Peter Hitchens, an analyst at Panmure Gordon & Co. in London. “It could read through into BG’s assets.”
‘Surprisingly High’
Brazil’s state oil company Petroleo Brasileiro, known also as Petrobras, issued about $42.5 billion of stock to the country’s government last month in exchange for the rights to develop 5 billion barrels of oil reserves. Beveridge estimates Repsol’s assets in Brazil hold about 1.2 billion barrels of oil equivalent.
Spain’s biggest oil company has stakes in Brazil’s Santos and Espirito Santo basins and plans to invest as much as $14 billion there through 2019, in fields that may hold as much as 3 billion barrels.
The valuation of Sinopec Group’s stake purchase is “surprisingly high,” Banco BPI SA analysts Bruno Silva, Flora Trindade and Gonzalo Sanchez-Bordona wrote in a research note.
Repsol had considered a plan to sell about 40 percent of the Brazilian business through an initial public offering. The company now won’t be selling shares in the unit to the public, Madrid-based spokesman Kristian Rix said Oct. 1.
Too Large
“For us, Brazil was way too large,” Repsol’s Chief Operating Officer Miguel Martinez said in an interview on Bloomberg Television. “Obtaining a partner was a move that was necessary.” Repsol and Sinopec Group may work together in other areas in the future, he said.
Since 2007, Repsol and partners BG Group and Petrobras have found hydrocarbons in the offshore Carioca, Guara and Iguacu fields in the Santos Basin’s BM-S-9 block. They are ultra-deep deposits beneath a salt layer under the seabed.
Petrobras estimated in November 2007 that the Santos Basin’s pre-salt Tupi field may contain as many as 8 billion barrels of oil, the largest find in the Americas since Mexico’s Cantarell field in 1976. Repsol doesn’t own a stake in Tupi.
Repsol wants to invest in exploration in Brazil’s offshore Santos Basin and elsewhere to increase reserves and output, while trying to reduce exposure to mature fields in neighboring Argentina. The company forecasts annual production growth of as much as 4 percent through 2014 as projects in Brazil and Peru come on stream. Repsol plans to invest a total of 28.5 billion euros in the period.
Crude oil futures in New York have gained 16 percent in a year to $81.58 a barrel. Prices reached a record $147.27 a barrel in July 2008.
“If oil does go over $100 a barrel, then this deal may look very attractive,” said Beveridge of Sanford C. Bernstein. “It comes down to it either seeing more exploration potential here, or Sinopec’s betting on higher oil prices in the future to justify the price it is paying.”
Casinos Weigh an Online Bet
Many of the country’s largest casinos, long opposed to gambling games like poker on the Internet, are now having second thoughts.
Although online gambling is popular with millions of Americans, it is illegal in the United States, and the casino industry has considered it a threat.
But a trade group that represents major casinos like Harrah’s Entertainment, MGM Resorts and Wynn Resorts is working on a proposal that would ask Congress to legalize at least some form of online gambling, the group’s chief executive said.
The group, the American Gaming Association, issued a statement in the spring suggesting that online gambling could be properly regulated — the first public indication that its hard-line stance was softening.
The chief executive, Frank J. Fahrenkopf Jr., said in an interview by phone that the association had not settled on the details of its proposed legislation, including how the proceeds from Internet gambling would be taxed. “We have been working on something,” he said, “and continue to work on it.”
Gambling specialists said it was likely that any casino-supported legalization would be limited to Internet poker because it was considered the least threatening to brick-and-mortar casinos. Internet poker already had the backing of some in the casino industry, and was seen as a new and lucrative source of revenue for the casino companies.
Congress has been weighing a bill by Representative Barney Frank, Democrat of Massachusetts, that would legalize all types of Internet gambling apart from sports betting. In July, the House Financial Services Committee approved the Frank bill, but most industry analysts give it little chance of passage in the full Congress because it is opposed by the big casinos and some other gambling interests.
The move by casinos to open the door to online gambling could bring a powerful new lobbying force into Congressional debate. It would also most likely intensify fights in state legislatures as various gambling interests — groups that include lotteries, racetracks and Indian tribes — push lawmakers to grab more gambling dollars for states by moving to the Web.
California, Florida and New Jersey recently made unsuccessful efforts to legalize Internet betting on casino-style games, said Mark Balestra, the director of the BolaVerde Media Group, a consulting firm in St. Louis that tracks Internet gambling. Current law does not prevent in-state gambling over the Internet but to do so across state lines would require a change in federal law.
The flurry of activity suggests the state efforts will continue, Mr. Balestra said. “Gambling expansion typically happens during difficult times,” he said.
For some time, operators of large casinos have been split on the industry’s approach to Internet gambling.
Some companies like Harrah’s, which has actively supported legalization, have aggressively invested in software companies or businesses involved in Internet gambling overseas. Harrah’s, which operates the popular World Series of Poker, has also been building a prospective customer base. Last month, the company ran a full-page advertisement in USA Today, inviting readers to take part in a nongambling Internet version of the event.
But other operators like Wynn Resorts have argued that online gambling would, among other things, cannibalize profits by reducing casino attendance. In recent years, casino operators have sought to generate added revenue from visitors by investing heavily to turn smoke-filled gambling rooms into “resorts” that feature fine dining and other amenities.
The chief executive of Wynn Resorts, Stephen A. Wynn, also stated last year in response to a reporter’s questions that he thought it “would be impossible” to regulate Internet gambling.
However, the company, when recently asked for comment, issued a more temperate statement. “Wynn Resorts monitors any legislative activity, federal or state, that pertains to our industry,” the statement said. “We make judgments after such legislation is passed.”
A gambling industry analyst, Sebastian Sinclair, said that a change of heart among casino operators like Wynn Resorts should not be surprising, given the stakes involved. One of the Internet poker industry’s biggest sites, Pokerstars, which operates on the Isle of Man in the Irish Sea, has estimated annual revenues of $1 billion, according to Poker Analytics, a consulting firm in New York.
“When any industry is confronted with something of this nature, a game changer that is a paradigm shift, the first reaction is to circle the wagons to protect your business,” Mr. Sinclair said. “But then, that changes over time.”
Senator Harry Reid of Nevada, the Senate majority leader, might also be rethinking his opposition to Internet gambling. A spokesman for Mr. Reid said he was still reviewing the Internet issue and had not decided. Last month, The Reno Gazette Journal reported that several operators of smaller casinos in Nevada had left a meeting with Mr. Reid, a former state gambling regulator, with the impression that he was prepared to support a bill legalizing online poker.
Bill Hughes, the marketing director of one of those operations, the Peppermill Resort Casino in Reno, said that smaller operators viewed online poker as a threat to profits and jobs. Typically, poker accounts for about 2 percent of a casino’s revenues but some operators contend its legalization would soon lead to online versions of other casino games. “It opens the crack in the door to expand to all types of gaming online,” Mr. Hughes said.
Mr. Fahrenkopf, of the casino trade association, said that his group started about two years to look closely at a number of issues involved in Internet gambling, including taxation, online security and consumer protection.
He said that the big turnabout came when a study by a panel of industry officials concluded that online poker would not cut casino profits to the degree some operators had feared.
Poker Analytics said that data it compiled indicated that there were significant differences between those gambling in casinos and those playing poker on the Web. Among them, it said, was that people who played poker online were more likely to be male and less wealthy than those who visited casinos.
Although online gambling is popular with millions of Americans, it is illegal in the United States, and the casino industry has considered it a threat.
But a trade group that represents major casinos like Harrah’s Entertainment, MGM Resorts and Wynn Resorts is working on a proposal that would ask Congress to legalize at least some form of online gambling, the group’s chief executive said.
The group, the American Gaming Association, issued a statement in the spring suggesting that online gambling could be properly regulated — the first public indication that its hard-line stance was softening.
The chief executive, Frank J. Fahrenkopf Jr., said in an interview by phone that the association had not settled on the details of its proposed legislation, including how the proceeds from Internet gambling would be taxed. “We have been working on something,” he said, “and continue to work on it.”
Gambling specialists said it was likely that any casino-supported legalization would be limited to Internet poker because it was considered the least threatening to brick-and-mortar casinos. Internet poker already had the backing of some in the casino industry, and was seen as a new and lucrative source of revenue for the casino companies.
Congress has been weighing a bill by Representative Barney Frank, Democrat of Massachusetts, that would legalize all types of Internet gambling apart from sports betting. In July, the House Financial Services Committee approved the Frank bill, but most industry analysts give it little chance of passage in the full Congress because it is opposed by the big casinos and some other gambling interests.
The move by casinos to open the door to online gambling could bring a powerful new lobbying force into Congressional debate. It would also most likely intensify fights in state legislatures as various gambling interests — groups that include lotteries, racetracks and Indian tribes — push lawmakers to grab more gambling dollars for states by moving to the Web.
California, Florida and New Jersey recently made unsuccessful efforts to legalize Internet betting on casino-style games, said Mark Balestra, the director of the BolaVerde Media Group, a consulting firm in St. Louis that tracks Internet gambling. Current law does not prevent in-state gambling over the Internet but to do so across state lines would require a change in federal law.
The flurry of activity suggests the state efforts will continue, Mr. Balestra said. “Gambling expansion typically happens during difficult times,” he said.
For some time, operators of large casinos have been split on the industry’s approach to Internet gambling.
Some companies like Harrah’s, which has actively supported legalization, have aggressively invested in software companies or businesses involved in Internet gambling overseas. Harrah’s, which operates the popular World Series of Poker, has also been building a prospective customer base. Last month, the company ran a full-page advertisement in USA Today, inviting readers to take part in a nongambling Internet version of the event.
But other operators like Wynn Resorts have argued that online gambling would, among other things, cannibalize profits by reducing casino attendance. In recent years, casino operators have sought to generate added revenue from visitors by investing heavily to turn smoke-filled gambling rooms into “resorts” that feature fine dining and other amenities.
The chief executive of Wynn Resorts, Stephen A. Wynn, also stated last year in response to a reporter’s questions that he thought it “would be impossible” to regulate Internet gambling.
However, the company, when recently asked for comment, issued a more temperate statement. “Wynn Resorts monitors any legislative activity, federal or state, that pertains to our industry,” the statement said. “We make judgments after such legislation is passed.”
A gambling industry analyst, Sebastian Sinclair, said that a change of heart among casino operators like Wynn Resorts should not be surprising, given the stakes involved. One of the Internet poker industry’s biggest sites, Pokerstars, which operates on the Isle of Man in the Irish Sea, has estimated annual revenues of $1 billion, according to Poker Analytics, a consulting firm in New York.
“When any industry is confronted with something of this nature, a game changer that is a paradigm shift, the first reaction is to circle the wagons to protect your business,” Mr. Sinclair said. “But then, that changes over time.”
Senator Harry Reid of Nevada, the Senate majority leader, might also be rethinking his opposition to Internet gambling. A spokesman for Mr. Reid said he was still reviewing the Internet issue and had not decided. Last month, The Reno Gazette Journal reported that several operators of smaller casinos in Nevada had left a meeting with Mr. Reid, a former state gambling regulator, with the impression that he was prepared to support a bill legalizing online poker.
Bill Hughes, the marketing director of one of those operations, the Peppermill Resort Casino in Reno, said that smaller operators viewed online poker as a threat to profits and jobs. Typically, poker accounts for about 2 percent of a casino’s revenues but some operators contend its legalization would soon lead to online versions of other casino games. “It opens the crack in the door to expand to all types of gaming online,” Mr. Hughes said.
Mr. Fahrenkopf, of the casino trade association, said that his group started about two years to look closely at a number of issues involved in Internet gambling, including taxation, online security and consumer protection.
He said that the big turnabout came when a study by a panel of industry officials concluded that online poker would not cut casino profits to the degree some operators had feared.
Poker Analytics said that data it compiled indicated that there were significant differences between those gambling in casinos and those playing poker on the Web. Among them, it said, was that people who played poker online were more likely to be male and less wealthy than those who visited casinos.
Asian Stocks Advance on Commodity Prices, Weaker Yen; BHP Gains
Oct. 4 (Bloomberg) -- Asian stocks rose, led by mining companies and Japanese exporters, after commodity prices increased and the yen weakened against the dollar.
BHP Billiton Ltd., the world’s No. 1 mining company, increased 1.4 percent in Sydney on speculation commodity demand will rise after U.S. consumer spending increased. Hyundai Motor Co., South Korea’s largest automaker, climbed 2.6 percent in Seoul after its U.S. sales rose to a record for September. Honda Motor Co., which receives 46 percent of its sales from North America, rose 1.3 percent.
The MSCI Asia Pacific Index gained 0.5 percent to 127.64 as of 10:53 a.m. in Tokyo, with about twice as many stocks advancing as declining. Japan’s Nikkei 225 Stock Average climbed 1.1 percent. Australia’s S&P/ASX 200 Index rose 1 percent, and South Korea’s Kospi index increased 0.7 percent.
Hong Kong stocks may move after China’s premier said the nation will stabilize its economy by increasing domestic demand. Hong Kong’s market was closed on Oct. 1 for a holiday. Chinese markets are shut this week.
BHP Billiton Ltd., the world’s No. 1 mining company, increased 1.4 percent in Sydney on speculation commodity demand will rise after U.S. consumer spending increased. Hyundai Motor Co., South Korea’s largest automaker, climbed 2.6 percent in Seoul after its U.S. sales rose to a record for September. Honda Motor Co., which receives 46 percent of its sales from North America, rose 1.3 percent.
The MSCI Asia Pacific Index gained 0.5 percent to 127.64 as of 10:53 a.m. in Tokyo, with about twice as many stocks advancing as declining. Japan’s Nikkei 225 Stock Average climbed 1.1 percent. Australia’s S&P/ASX 200 Index rose 1 percent, and South Korea’s Kospi index increased 0.7 percent.
Hong Kong stocks may move after China’s premier said the nation will stabilize its economy by increasing domestic demand. Hong Kong’s market was closed on Oct. 1 for a holiday. Chinese markets are shut this week.
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