Jan. 30 (Bloomberg) -- Asian stocks climbed for the first week in four, led by banks, as the U.S. and Japan stepped up efforts to revive credit markets and economic growth.
Sumitomo Mitsui Financial Group Inc., Japan’s second- largest bank by market value, jumped 14 percent after the government proposed equity financing for companies short of funding. KB Financial Group Inc. rallied 16 percent in Seoul as the U.S. moved closer to creating a bank to absorb toxic assets. Samsung Electronics Co., the world’s biggest computer-memory maker, gained 10 percent after the bankruptcy of a rival lifted confidence a chip supply glut will ease.
“Thanks to once-in-a-century measures from governments worldwide, the global economy will likely be better next year than this year,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $96 billion. “The market is starting to reflect that possible recovery.”
The MSCI Asia Pacific Index rose 3.5 percent this week to 82.12, climbing from a seven-week low. The gauge lost 7.1 percent in January, trailing only 2008 as the worst start to a new year in its two-decade history.
Japan’s Nikkei 225 Stock Average rose 3.2 percent. Most of the region’s markets were closed for part of the week for Lunar New Year. China’s markets will reopen on Feb. 2.
MSCI’s Asian index slumped by a record 43 percent last year as the credit crunch tipped the world’s largest economies into recession, forcing companies to cut jobs amid slumping profits. Earnings estimates for companies included in the gauge dropped 43 percent in the past year, bringing them to the lowest level since Bloomberg began compiling the data in 2005.
Financials Rally
An index of financial companies on MSCI Asia Pacific rose 5.9 percent, the second-largest advance of 10 industry groups, amid speculation policy measures will help ease a crisis that has caused more than $1 trillion of losses at financial institutions worldwide.
Sumitomo Mitsui gained 14 percent to 3,650 yen even as it reported a 99 percent slump in third-quarter profit. KB, which controls South Korea’s largest bank, climbed 16 percent to 37,000 won. Commonwealth Bank of Australia, the nation’s largest mortgage lender, added 12 percent to A$26.90.
In Japan, the government proposed allowing the Development Bank of Japan to buy preferred and common shares in companies, aiding the ones that have difficulty obtaining capital, while the Bank of Japan pledged to purchase corporate debt to help ease credit markets.
Government Support
Parliament passed a 4.8 trillion yen ($53.9 billion) stimulus plan that includes cash handouts to individuals and support for laid-off workers.
In the U.S., President Barack Obama’s administration may announce next week the outlines of a plan to create a “bad” bank that will acquire unwanted assets from financial institutions and allow the government to rewrite the terms of some mortgages, a White House official said.
Additionally, the lower house of the U.S. Congress approved Obama’s $819 billion economic stimulus package, moving it to the Senate for final approval.
Samsung jumped 10 percent to 488,000 won and Elpida Memory Inc., Japan’s largest memory chipmaker, soared 27 percent to 649 yen after Qimonda AG, a German chipmaking rival that accounted for 5 percent of global production, filed for insolvency.
Oversupply in the industry helped push prices for chips down 42 percent in the last quarter of 2008, according to industry research firm DRAMeXchange.
Earnings Reports
Disappointing earnings figures capped gains this week. Toshiba Corp., the world’s second-biggest maker of flash memory chips, lost 14 percent to 318 yen after saying it expects a record loss this year because of falling prices for chips.
India’s Glenmark Pharmaceuticals Ltd. plunged 32.6 percent to 137.25 rupees, the steepest drop in the MSCI Asia gauge, after third-quarter profit tumbled 71 percent.
Boral Ltd., Australia’s biggest seller of building materials, dropped 17 percent to A$3.31 as the ongoing global housing slump forced the company to reduce its annual net income forecast by 40 percent.
“The recession is going to be deeper than what we read to be the consensus,” said Alistair Thompson, who helps manage about $16 billion in equities at First State Investments in Singapore. “People are saying there’s going to be a recovery toward the end of the year, but the credit binge we’ve had is going to take an awful lot longer to unwind.”
Friday, January 30, 2009
Obama Seems to Be Open to a Broader Role for States
The Obama administration seems to be open to a movement known as “progressive federalism,” in which governors and activist state attorneys general have been trying to lead the way on environmental initiatives, consumer protection and other issues, several constitutional experts say.
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A recent decision by President Obama that could open the way for California and other states to set their own limits on greenhouse gases from cars and trucks represents a shift in the delicate and often acrimonious relationship between the federal government and the states, legal experts say, possibly signaling a new view of federalism.
“I think it’s quite significant,” said Samuel Issacharoff, a professor of constitutional law at New York University law school. “It shows the Obama administration’s more benign view of government intervention,” Professor Issacharoff said, and “may indicate a spirit of cooperative federalism” in which Washington will look to the states for new ideas and even a measure of guidance.
Tom Miller, the attorney general of Iowa, who met with the transition team in December to discuss federalism and other issues, said he believed the Obama administration would “usher in a new era in federal-state relations.” Members of the new administration, Mr. Miller said, “are open to what we’re talking about, what we’re thinking.” They also appreciate, he said, the fact that state attorneys general often achieve a level of bipartisan cooperation when they band together to pursue lawsuits.
The general trend under previous administrations had favored federal pre-emption, the belief that the best law comes from Washington, a concept still favored by business leaders.
William L. Kovacs, a vice president for environmental and regulatory issues at the United States Chamber of Commerce, said free-for-all federalism was bad for business and would lead to a “patchwork of laws impacting a troubled industry.” Detroit, Mr. Kovacs said, would have to produce different cars for different parts of the country, and the environmental protection agency would grow tremendously to meet the new regulatory burden.
Many liberal thinkers skeptical of states’ rights and state actions since the days of segregation have begun to see that the states, to use Justice Louis Brandeis’s words from the 1930s, can “serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”
Professor Issacharoff said states were often quicker than Washington to spot a problem when it emerged, and so “it may be the states that have the best initial take on it, and try different regulatory methods until we fasten on a single national solution.”
States have taken up the challenge of consumer protection, addressing issues like predatory lending well before the federal government took action, and often achieving reforms by suing the federal government to force it to enforce its laws and through legal settlements with industry. In October, 11 states reached an $8.4 billion settlement with Countrywide Financial in which it agreed to modify home loans to help people at risk of foreclosure. And in 2006, 49 states and the District of Columbia reached a $325 million settlement with the Ameriquest Mortgage company to change its policies.
Attorneys general also pressured major universities to adopt a code of conduct regarding their relationships with student lending companies. Eliot Spitzer, the former New York attorney general, achieved a settlement with the pharmaceutical company GlaxoSmithKline in 2004 in which it agreed to release more information about the risks to patients that had come out in clinical trials.
The Obama administration, then, is embracing a states’ rights movement that a liberal could love. “The pro-regulatory folks realized in the last eight years that the old line on federal power being the only good power wasn’t correct,” said William Marshall, a law professor at the University of North Carolina who was deputy White House counsel in the Clinton administration and a former solicitor general of Ohio.
“It doesn’t mean you abandon the federal regulatory process — you don’t, of course,” Mr. Marshall said. “But you treat it as a floor and not a ceiling.”
He added, “The Obama administration is signaling that state regulations may very well complement federal regulations, and they can both work together to achieve important goals.”
Still, James E. Tierney, the director of the National State Attorneys General Program at Columbia University Law School, cautioned against reading too much into a single presidential directive. “I don’t think we have a hallmark, sweeping view of states’ rights here,” Mr. Tierney said. He said “the Obama administration is going to take these one at a time” and “will be with the states as long as the states fit in with his view of the national interest.”
And Walter Dellinger, a solicitor general in the Clinton administration, said that the economic rise of the United States, compared with Europe’s, in the 1950s could be attributed in large part to the unified American market. Now Europe’s markets have unified, Mr. Dellinger noted. “There is a serious risk that if we decentralize regulations too much, we will, ironically, switch places with Europe,” he said.
Mr. Tierney, who is a former Maine attorney general, said that while he was an advocate for state power, there were areas where federal power should nonetheless hold sway. “What the federal government ought to do,” he said, “is open the door to the states, and let the states enforce the law that the federal government promulgates.”
He added, “This is the opportunity to have the attorneys general join their own government instead of suing their own government.”
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The latest on President Obama, the new administration and other news from Washington and around the nation. Join the discussion.
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A recent decision by President Obama that could open the way for California and other states to set their own limits on greenhouse gases from cars and trucks represents a shift in the delicate and often acrimonious relationship between the federal government and the states, legal experts say, possibly signaling a new view of federalism.
“I think it’s quite significant,” said Samuel Issacharoff, a professor of constitutional law at New York University law school. “It shows the Obama administration’s more benign view of government intervention,” Professor Issacharoff said, and “may indicate a spirit of cooperative federalism” in which Washington will look to the states for new ideas and even a measure of guidance.
Tom Miller, the attorney general of Iowa, who met with the transition team in December to discuss federalism and other issues, said he believed the Obama administration would “usher in a new era in federal-state relations.” Members of the new administration, Mr. Miller said, “are open to what we’re talking about, what we’re thinking.” They also appreciate, he said, the fact that state attorneys general often achieve a level of bipartisan cooperation when they band together to pursue lawsuits.
The general trend under previous administrations had favored federal pre-emption, the belief that the best law comes from Washington, a concept still favored by business leaders.
William L. Kovacs, a vice president for environmental and regulatory issues at the United States Chamber of Commerce, said free-for-all federalism was bad for business and would lead to a “patchwork of laws impacting a troubled industry.” Detroit, Mr. Kovacs said, would have to produce different cars for different parts of the country, and the environmental protection agency would grow tremendously to meet the new regulatory burden.
Many liberal thinkers skeptical of states’ rights and state actions since the days of segregation have begun to see that the states, to use Justice Louis Brandeis’s words from the 1930s, can “serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.”
Professor Issacharoff said states were often quicker than Washington to spot a problem when it emerged, and so “it may be the states that have the best initial take on it, and try different regulatory methods until we fasten on a single national solution.”
States have taken up the challenge of consumer protection, addressing issues like predatory lending well before the federal government took action, and often achieving reforms by suing the federal government to force it to enforce its laws and through legal settlements with industry. In October, 11 states reached an $8.4 billion settlement with Countrywide Financial in which it agreed to modify home loans to help people at risk of foreclosure. And in 2006, 49 states and the District of Columbia reached a $325 million settlement with the Ameriquest Mortgage company to change its policies.
Attorneys general also pressured major universities to adopt a code of conduct regarding their relationships with student lending companies. Eliot Spitzer, the former New York attorney general, achieved a settlement with the pharmaceutical company GlaxoSmithKline in 2004 in which it agreed to release more information about the risks to patients that had come out in clinical trials.
The Obama administration, then, is embracing a states’ rights movement that a liberal could love. “The pro-regulatory folks realized in the last eight years that the old line on federal power being the only good power wasn’t correct,” said William Marshall, a law professor at the University of North Carolina who was deputy White House counsel in the Clinton administration and a former solicitor general of Ohio.
“It doesn’t mean you abandon the federal regulatory process — you don’t, of course,” Mr. Marshall said. “But you treat it as a floor and not a ceiling.”
He added, “The Obama administration is signaling that state regulations may very well complement federal regulations, and they can both work together to achieve important goals.”
Still, James E. Tierney, the director of the National State Attorneys General Program at Columbia University Law School, cautioned against reading too much into a single presidential directive. “I don’t think we have a hallmark, sweeping view of states’ rights here,” Mr. Tierney said. He said “the Obama administration is going to take these one at a time” and “will be with the states as long as the states fit in with his view of the national interest.”
And Walter Dellinger, a solicitor general in the Clinton administration, said that the economic rise of the United States, compared with Europe’s, in the 1950s could be attributed in large part to the unified American market. Now Europe’s markets have unified, Mr. Dellinger noted. “There is a serious risk that if we decentralize regulations too much, we will, ironically, switch places with Europe,” he said.
Mr. Tierney, who is a former Maine attorney general, said that while he was an advocate for state power, there were areas where federal power should nonetheless hold sway. “What the federal government ought to do,” he said, “is open the door to the states, and let the states enforce the law that the federal government promulgates.”
He added, “This is the opportunity to have the attorneys general join their own government instead of suing their own government.”
Financial Crisis Dims Hopes for Giant Cross-Border Banks in Europe
FRANKFURT — Only a few years ago, the future of European banking was said to belong to European champions, big border-straddling banks that would compete with the American giants.
Instead, European integration has been replaced by Balkanization.
Because of the financial crisis, banks are retrenching and refocusing on their home markets, all but abandoning ambitions of banking on a Continental scale — or bigger. Strings-attached government rescue plans and basic business logic are driving the change.
So instead of strategies for global conquest, Martin Blessing, the chief executive of Commerzbank, is concentrating on ways to keep credit flowing to the small and medium-size businesses that form the backbone of the German economy.
“We will see a domestic refocusing of banking but not because everyone is turning nationalist or because one or the other governments take stakes,” he said during a recent interview at his office in the bank’s stunning Norman Foster-designed office tower here. “Banks are going to look at where their franchise is strongest.”
These new realities could end up hurting Eastern Europe most. After communism, privatization led to an extended gold rush for Western bankers. Now those investors are having to decide whether to continue lending at home — in France or Austria — or in Poland, the Czech Republic or Hungary. In the global financial crisis, with the health of many banks dependent on the good will of their home governments, the choice is not hard. The thinking at the heart of cross-border expansion in Europe was always straightforward: Europe needed banks that could achieve economies of scale and have the global reach, global clients and global influence to compete with American titans.
Operating on that basis, a handful of European banks moved to grow and consolidate. In 2004, Banco Santander of Spain bought Abbey National of Britain. A year later, Italy’s UniCredit swallowed the bank HVB Group of Germany. In early 2007, Royal Bank of Scotland led a consortium that snapped up ABN Amro of the Netherlands for 70 billion euros, or $92 billion at current exchange rates.
That deal is already coming undone, with the implosion last year of Fortis, one of Royal Bank’s partners.
More broadly, nationalist impulses are on the move across the Continent, with many politicians arguing — as some Democrats are in the United States — that if the government is going to bail out banks, then taxpayers should get some ownership and some say in how they operate.
For example, Gordon Brown, the British prime minister, has said he wants to stay out of the operating side of the banks Britain has bailed out. But his government is under heavy pressure to help small businesses at home, and the documents that created the new British vehicle for investing in banks, United Kingdom Financial Investments, cite domestic lending as its priority.
French and German governments have also injected cash into their banks, both with the goal of keeping money flowing to businesses inside their borders.
Daniel Gros, director of the Center for European Policy Studies in Brussels, called the developments the Balkanization of European finance.
“Whenever governments get into the share capital of banks, even in a small way, of course they think nationally,” Mr. Gros said.
For instance, few banks expanded more rapidly in Germany over the last decade than Royal Bank of Scotland. The British financier muscled onto Continental turf with attractive financing packages for German manufacturers. Today, Royal Bank is majority-owned by the British government after losses in 2008 from £7 billion to £8 billion, or $9.2 billion to $10.5 billion.
According to two senior German executives, Royal Bank is now playing tough with German clients, calling in loans as the bank retrenches in favor of its British business. The executives, who asked not to be identified, because they were not authorized to publicly discuss confidential negotiations, said Royal Bank had demanded that its clients on the Continent sell assets, despite the catastrophic state of financial markets, so the bank could recover its cash quickly, perhaps to lend in Britain.
Most recently, Royal Bank was a major creditor of Adolf Merckle, the German billionaire who killed himself when it became clear the banks — with Royal Bank in the lead, the executives said — would insist on the sale of his prized possession, the generic drug maker Ratiopharm.
Christine Kortyka, a Royal Bank spokeswoman in Germany, denied the bank was retrenching. “We are an international bank with international clients and we will continue to serve them where they need us,” she said.
Mr. Blessing, who took over at Commerzbank just in time to sell a 25 percent stake to the German government to stabilize its finances and complete a major acquisition, does not dispute that governments are angling for national advantage.
Commerzbank styles itself the bank of Germany’s Mittelstand, as this country’s small and midsize companies are known.
Mr. Blessing says he is comfortable with focusing on serving the Mittelstand, because that has always been the bank’s core mission. .
As part of the deal for a cash infusion, the German government received the right to veto major decisions by the bank. That means it can ward off any acquisition from abroad — or any effort at a European expansion.
Instead, European integration has been replaced by Balkanization.
Because of the financial crisis, banks are retrenching and refocusing on their home markets, all but abandoning ambitions of banking on a Continental scale — or bigger. Strings-attached government rescue plans and basic business logic are driving the change.
So instead of strategies for global conquest, Martin Blessing, the chief executive of Commerzbank, is concentrating on ways to keep credit flowing to the small and medium-size businesses that form the backbone of the German economy.
“We will see a domestic refocusing of banking but not because everyone is turning nationalist or because one or the other governments take stakes,” he said during a recent interview at his office in the bank’s stunning Norman Foster-designed office tower here. “Banks are going to look at where their franchise is strongest.”
These new realities could end up hurting Eastern Europe most. After communism, privatization led to an extended gold rush for Western bankers. Now those investors are having to decide whether to continue lending at home — in France or Austria — or in Poland, the Czech Republic or Hungary. In the global financial crisis, with the health of many banks dependent on the good will of their home governments, the choice is not hard. The thinking at the heart of cross-border expansion in Europe was always straightforward: Europe needed banks that could achieve economies of scale and have the global reach, global clients and global influence to compete with American titans.
Operating on that basis, a handful of European banks moved to grow and consolidate. In 2004, Banco Santander of Spain bought Abbey National of Britain. A year later, Italy’s UniCredit swallowed the bank HVB Group of Germany. In early 2007, Royal Bank of Scotland led a consortium that snapped up ABN Amro of the Netherlands for 70 billion euros, or $92 billion at current exchange rates.
That deal is already coming undone, with the implosion last year of Fortis, one of Royal Bank’s partners.
More broadly, nationalist impulses are on the move across the Continent, with many politicians arguing — as some Democrats are in the United States — that if the government is going to bail out banks, then taxpayers should get some ownership and some say in how they operate.
For example, Gordon Brown, the British prime minister, has said he wants to stay out of the operating side of the banks Britain has bailed out. But his government is under heavy pressure to help small businesses at home, and the documents that created the new British vehicle for investing in banks, United Kingdom Financial Investments, cite domestic lending as its priority.
French and German governments have also injected cash into their banks, both with the goal of keeping money flowing to businesses inside their borders.
Daniel Gros, director of the Center for European Policy Studies in Brussels, called the developments the Balkanization of European finance.
“Whenever governments get into the share capital of banks, even in a small way, of course they think nationally,” Mr. Gros said.
For instance, few banks expanded more rapidly in Germany over the last decade than Royal Bank of Scotland. The British financier muscled onto Continental turf with attractive financing packages for German manufacturers. Today, Royal Bank is majority-owned by the British government after losses in 2008 from £7 billion to £8 billion, or $9.2 billion to $10.5 billion.
According to two senior German executives, Royal Bank is now playing tough with German clients, calling in loans as the bank retrenches in favor of its British business. The executives, who asked not to be identified, because they were not authorized to publicly discuss confidential negotiations, said Royal Bank had demanded that its clients on the Continent sell assets, despite the catastrophic state of financial markets, so the bank could recover its cash quickly, perhaps to lend in Britain.
Most recently, Royal Bank was a major creditor of Adolf Merckle, the German billionaire who killed himself when it became clear the banks — with Royal Bank in the lead, the executives said — would insist on the sale of his prized possession, the generic drug maker Ratiopharm.
Christine Kortyka, a Royal Bank spokeswoman in Germany, denied the bank was retrenching. “We are an international bank with international clients and we will continue to serve them where they need us,” she said.
Mr. Blessing, who took over at Commerzbank just in time to sell a 25 percent stake to the German government to stabilize its finances and complete a major acquisition, does not dispute that governments are angling for national advantage.
Commerzbank styles itself the bank of Germany’s Mittelstand, as this country’s small and midsize companies are known.
Mr. Blessing says he is comfortable with focusing on serving the Mittelstand, because that has always been the bank’s core mission. .
As part of the deal for a cash infusion, the German government received the right to veto major decisions by the bank. That means it can ward off any acquisition from abroad — or any effort at a European expansion.
Thursday, January 29, 2009
Morgan Stanley Predicts Weaker Taiwan Dollar, Stronger Yuan Email | Print | A A A
Jan. 30 (Bloomberg) -- Morgan Stanley predicted the Taiwan dollar will weaken, even as the Chinese yuan strengthens, because countries dependent on exports are the “most vulnerable” during a global economic slowdown.
The Taiwan dollar will decline almost 5 percent to NT$35.3 this year, Morgan Stanley forecast in a report published yesterday. The New York-based company recommended investors bet on appreciation in the yuan against the dollar with three-month non-deliverable forwards.
The Taiwan dollar will decline almost 5 percent to NT$35.3 this year, Morgan Stanley forecast in a report published yesterday. The New York-based company recommended investors bet on appreciation in the yuan against the dollar with three-month non-deliverable forwards.
India’s Sensex Declines; Bharti, DLF Fall as Automakers Advance
Jan. 29 (Bloomberg) -- Indian stocks fell, with the benchmark index snapping a two-day, 6.7 percent rally. Bharti Airtel Ltd. and Reliance Communications Ltd., India’s two biggest mobile-phone operators, dropped after they had their price targets cut at Goldman Sachs Group Inc.
DLF Ltd., India’s biggest real estate developer, declined after its share price forecast was reduced at Morgan Stanley, which said weak demand for property will damp profits. DLF will report earnings on Jan. 31.
“We are seeing demand declining and revenue contracting,” said Mahesh Patil, who helps manage the equivalent of $8.8 billion at Birla Sunlife Asset Management in Mumbai. “Cost pressures are high, now with demand declining it will create a problem.”
Mahindra & Mahindra Ltd., the largest local maker of sport- utility vehicles, led automakers higher after the government cut retail fuel prices for the second time in less than two months.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 21.19, or 0.2 percent, to 9,236.28. The S&P CNX Nifty Index on the National Stock Exchange fell 25.55, or 0.9 percent, to 2,823.95. The BSE 200 Index slid 0.5 percent to 1,086.02. S&P CNX Nifty futures for January delivery declined 0.8 percent to 2,823.70.
Bharti fell 3.8 percent to 627.40 rupees. Reliance Communications declined 2.6 percent to 161.85 rupees. Bharti’s 12-month share price estimate was lowered 5.5 percent to 800 rupees while that of Reliance Communications was lowered 25 percent to 170 rupees, according to a Goldman Sachs report released today. Goldman cited the effect on earnings from spending on high-speed networks.
DLF dropped 7.6 percent to 164.05 rupees. The developer’s stock price estimate was cut by 41 percent to 150 rupees a share at Morgan Stanley. The company is expected to report a 26 percent decline in earnings in the December quarter, according to the median estimate of analysts surveyed by Bloomberg News.
Mahindra added 3.9 percent to 294.40 rupees. Tata Motors Ltd., India’s largest truck and busmaker, gained 3.7 percent to 152.05 rupees. Maruti Suzuki India Ltd., the No. 1 carmaker, added 4.6 percent to 544.45 rupees. Gasoline prices will be lowered by 5 rupees (10 U.S. cents) a liter, diesel by 2 rupees a liter, and cooking gas by 25 rupees a bottle effective midnight, Oil Minister Murli Deora said late yesterday.
The following are among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:
Asian Paints (India) Ltd. (APNT IN) dropped 30.8 rupees, or 4 percent, to 749.80, its lowest since April 2007. The nation’s largest paintmaker reported that its founders pledged a 15 percent stake following tightened disclosure norms.
GAIL India Ltd. (GAIL IN) slid 4.25 rupees, or 2.1 percent, to 197. India’s monopoly natural gas distributor said yesterday third-quarter profit declined 59 percent to 2.53 billion rupees. That was below the 5.9 billion rupees median estimate of analysts surveyed by Bloomberg News.
Reliance Power Ltd. (RPWR IN) added 1.9 rupees, or 1.9 percent, to 104.5. The unit of India’s third-largest power generator may win its third so-called ultra mega power project with the lowest bid to build a 4,000 megawatt electricity generation plant. Reliance Power quoted a price of less than 2 rupees a unit to sell power from the coal-fired project in Jharkhand state, said an official of the state-run Power Finance Corp., which manages the bidding on behalf of India’s Power Ministry.
Tata Steel Ltd. (TATA IN) rose 6.5 rupees, or 3.7 percent, to 183.70. India’s largest steelmaker aims to revive fourth- quarter earnings by lowering fuel costs and increasing exports.
The company has renegotiated lower coking coal rates for this quarter, Managing Director B. Muthuraman said yesterday. Tata Steel plans to triple exports to 330,000 tons in the period as local demand wanes for hot-rolled coils, Chief Operating Officer H.M. Nerurkar said.
DLF Ltd., India’s biggest real estate developer, declined after its share price forecast was reduced at Morgan Stanley, which said weak demand for property will damp profits. DLF will report earnings on Jan. 31.
“We are seeing demand declining and revenue contracting,” said Mahesh Patil, who helps manage the equivalent of $8.8 billion at Birla Sunlife Asset Management in Mumbai. “Cost pressures are high, now with demand declining it will create a problem.”
Mahindra & Mahindra Ltd., the largest local maker of sport- utility vehicles, led automakers higher after the government cut retail fuel prices for the second time in less than two months.
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 21.19, or 0.2 percent, to 9,236.28. The S&P CNX Nifty Index on the National Stock Exchange fell 25.55, or 0.9 percent, to 2,823.95. The BSE 200 Index slid 0.5 percent to 1,086.02. S&P CNX Nifty futures for January delivery declined 0.8 percent to 2,823.70.
Bharti fell 3.8 percent to 627.40 rupees. Reliance Communications declined 2.6 percent to 161.85 rupees. Bharti’s 12-month share price estimate was lowered 5.5 percent to 800 rupees while that of Reliance Communications was lowered 25 percent to 170 rupees, according to a Goldman Sachs report released today. Goldman cited the effect on earnings from spending on high-speed networks.
DLF dropped 7.6 percent to 164.05 rupees. The developer’s stock price estimate was cut by 41 percent to 150 rupees a share at Morgan Stanley. The company is expected to report a 26 percent decline in earnings in the December quarter, according to the median estimate of analysts surveyed by Bloomberg News.
Mahindra added 3.9 percent to 294.40 rupees. Tata Motors Ltd., India’s largest truck and busmaker, gained 3.7 percent to 152.05 rupees. Maruti Suzuki India Ltd., the No. 1 carmaker, added 4.6 percent to 544.45 rupees. Gasoline prices will be lowered by 5 rupees (10 U.S. cents) a liter, diesel by 2 rupees a liter, and cooking gas by 25 rupees a bottle effective midnight, Oil Minister Murli Deora said late yesterday.
The following are among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:
Asian Paints (India) Ltd. (APNT IN) dropped 30.8 rupees, or 4 percent, to 749.80, its lowest since April 2007. The nation’s largest paintmaker reported that its founders pledged a 15 percent stake following tightened disclosure norms.
GAIL India Ltd. (GAIL IN) slid 4.25 rupees, or 2.1 percent, to 197. India’s monopoly natural gas distributor said yesterday third-quarter profit declined 59 percent to 2.53 billion rupees. That was below the 5.9 billion rupees median estimate of analysts surveyed by Bloomberg News.
Reliance Power Ltd. (RPWR IN) added 1.9 rupees, or 1.9 percent, to 104.5. The unit of India’s third-largest power generator may win its third so-called ultra mega power project with the lowest bid to build a 4,000 megawatt electricity generation plant. Reliance Power quoted a price of less than 2 rupees a unit to sell power from the coal-fired project in Jharkhand state, said an official of the state-run Power Finance Corp., which manages the bidding on behalf of India’s Power Ministry.
Tata Steel Ltd. (TATA IN) rose 6.5 rupees, or 3.7 percent, to 183.70. India’s largest steelmaker aims to revive fourth- quarter earnings by lowering fuel costs and increasing exports.
The company has renegotiated lower coking coal rates for this quarter, Managing Director B. Muthuraman said yesterday. Tata Steel plans to triple exports to 330,000 tons in the period as local demand wanes for hot-rolled coils, Chief Operating Officer H.M. Nerurkar said.
Japan Heads for Worst Postwar Recession as Production Collapses
Jan. 30 (Bloomberg) -- Japan headed for its worst postwar recession in December as factory output slumped an unprecedented 9.6 percent, unemployment surged and households cut spending.
The drop in production eclipsed the previous record of 8.5 percent set only a month earlier, the Trade Ministry said today in Tokyo. The jobless rate soared to 4.4 percent from 3.9 percent, the biggest jump in 41 years.
Recessions in the U.S. and Europe and a slowdown in China have smothered demand for Japanese cars and electronics. Toyota Motor Corp., Sony Corp. and Honda Motor Co. are shutting factory lines and firing thousands of workers as plummeting sales abroad wipe out earnings.
“Japan’s economy is falling off a cliff,” said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “There’s really nothing out there to drive growth.”
The Nikkei 225 Stock Average fell 3.2 percent as of 9:31 a.m. in Tokyo. The yen traded at 89.71 per dollar from 89.99 before the reports were published. The Japanese currency’s 18 percent gain in the past year has compounded exporters’ woes by eroding the value of their profits earned overseas.
Household spending slid 4.6 percent, a 10th month of declines, a separate report showed. Consumer prices excluding fresh food rose 0.2 percent in December from a year earlier, slowing from 1 percent in November.
The month-on-month decline in production was steeper than the 8.9 percent economists predicted and the biggest since the figures were first compiled in 1953. Output tumbled 11.9 percent in the three months to December, the ministry said, the fourth straight quarterly drop.
‘Profound Impact’
“There’s a global synchronized recession and manufacturers are responding aggressively,” said Jan Lambregts, head of Asian research at Rabobank International in Hong Kong. “That’s going to have a profound impact” on economic growth.
The International Monetary Fund said this week that Japan’s gross domestic product will shrink 2.6 percent this year, the bleakest projection for any Group of Seven economy except the U.K. That contraction would be Japan’s worst since World War II.
Japan’s recession began in November 2007, a government panel that dates the economic cycle said yesterday. The slump may last more than three years to become the longest on record, Hiroshi Yoshikawa, a Tokyo University professor who heads the committee, said in an interview this month.
Exports tumbled a record 35 percent in December, decimating corporate earnings and bringing the global recession home to Japanese households as companies cut work hours and fire employees.
Toyota, which is forecasting its first loss in 71 years, will halt its home production for 14 extra days this quarter.
‘Frightening’
“If the production cuts ended with the carmakers that would be one thing, but the carmakers drag down the steelmakers and the suppliers along with them,” RBS’s Nishioka said. “The numbers are frightening.”
Last month’s increase in the jobless rate was the sharpest since 1967, the statistics bureau said, as manufacturers fired mostly temporary staff. Some 400,000 non-regular workers will be out of jobs by the end of March, the Japan Manufacturing Outsourcing Association reported this week, which was about five times more than a December estimate by the Labor Ministry.
“This deep recession could compel companies to cut full- time workers,” said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo. “The jobless rate could rise to around 5 percent, giving us more reasons not to expect consumer spending to support the economy.”
Parliamentary gridlock has stymied the ruling Liberal Democratic Party’s efforts to pass a 10 trillion yen ($111.2 billion) stimulus package that seeks to encourage consumer spending. The Bank of Japan, which last month lowered interest rates to 0.1 percent, has little room to counter the downturn.
The drop in production eclipsed the previous record of 8.5 percent set only a month earlier, the Trade Ministry said today in Tokyo. The jobless rate soared to 4.4 percent from 3.9 percent, the biggest jump in 41 years.
Recessions in the U.S. and Europe and a slowdown in China have smothered demand for Japanese cars and electronics. Toyota Motor Corp., Sony Corp. and Honda Motor Co. are shutting factory lines and firing thousands of workers as plummeting sales abroad wipe out earnings.
“Japan’s economy is falling off a cliff,” said Junko Nishioka, an economist at RBS Securities Japan Ltd. in Tokyo. “There’s really nothing out there to drive growth.”
The Nikkei 225 Stock Average fell 3.2 percent as of 9:31 a.m. in Tokyo. The yen traded at 89.71 per dollar from 89.99 before the reports were published. The Japanese currency’s 18 percent gain in the past year has compounded exporters’ woes by eroding the value of their profits earned overseas.
Household spending slid 4.6 percent, a 10th month of declines, a separate report showed. Consumer prices excluding fresh food rose 0.2 percent in December from a year earlier, slowing from 1 percent in November.
The month-on-month decline in production was steeper than the 8.9 percent economists predicted and the biggest since the figures were first compiled in 1953. Output tumbled 11.9 percent in the three months to December, the ministry said, the fourth straight quarterly drop.
‘Profound Impact’
“There’s a global synchronized recession and manufacturers are responding aggressively,” said Jan Lambregts, head of Asian research at Rabobank International in Hong Kong. “That’s going to have a profound impact” on economic growth.
The International Monetary Fund said this week that Japan’s gross domestic product will shrink 2.6 percent this year, the bleakest projection for any Group of Seven economy except the U.K. That contraction would be Japan’s worst since World War II.
Japan’s recession began in November 2007, a government panel that dates the economic cycle said yesterday. The slump may last more than three years to become the longest on record, Hiroshi Yoshikawa, a Tokyo University professor who heads the committee, said in an interview this month.
Exports tumbled a record 35 percent in December, decimating corporate earnings and bringing the global recession home to Japanese households as companies cut work hours and fire employees.
Toyota, which is forecasting its first loss in 71 years, will halt its home production for 14 extra days this quarter.
‘Frightening’
“If the production cuts ended with the carmakers that would be one thing, but the carmakers drag down the steelmakers and the suppliers along with them,” RBS’s Nishioka said. “The numbers are frightening.”
Last month’s increase in the jobless rate was the sharpest since 1967, the statistics bureau said, as manufacturers fired mostly temporary staff. Some 400,000 non-regular workers will be out of jobs by the end of March, the Japan Manufacturing Outsourcing Association reported this week, which was about five times more than a December estimate by the Labor Ministry.
“This deep recession could compel companies to cut full- time workers,” said Noriaki Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo. “The jobless rate could rise to around 5 percent, giving us more reasons not to expect consumer spending to support the economy.”
Parliamentary gridlock has stymied the ruling Liberal Democratic Party’s efforts to pass a 10 trillion yen ($111.2 billion) stimulus package that seeks to encourage consumer spending. The Bank of Japan, which last month lowered interest rates to 0.1 percent, has little room to counter the downturn.
Asian Stocks Fall on Renewed Recession Concern; Toshiba Plunges
Jan. 30 (Bloomberg) -- Asian stocks fell for the first time in four days, led by banks and technology companies, as a record slump in Japanese production and lower profit forecasts renewed concern that the global recession is deepening.
Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, slumped 4.7 percent as reports showed the country’s factory output slumped 9.6 percent in December and unemployment surged. Toshiba Corp., Japan’s No. 1 chipmaker, and Nintendo Co., which makes the Wii game console, tumbled more than 12 percent after reducing earnings forecasts. Rio Tinto Group, the world’s third- biggest mining company, fell 3.1 percent on lower metal prices.
The MSCI Asia Pacific Index dropped 1.9 percent to 83.10 as of 10:47 a.m. in Tokyo. The measure snapped a three-day, 5.8 percent climb that came as the U.S., Japan and Australia widened efforts to end the global financial crisis that has dragged the world’s largest economies into recession.
“Expectations for government measures have been fully priced into the market, and investor focus is returning to the deterioration of the global economy,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television.
Five stocks declined for each that rose on the MSCI gauge, which has fallen 5.6 percent this month. The Nikkei 225 Stock Average gained 1.8 percent, while Australia’s S&P/ASX 200 Index fell 1 percent to 3,490.00.
The Standard & Poor’s 500 Index dropped 3.3 percent in New York yesterday, breaking a four-day winning streak, as reports showed new home sales fell to an all-time low and the number of Americans receiving jobless benefits surged to a record.
Record Decline
The MSCI Asia Pacific Index’s declines this year extended last year’s record 43 percent tumble. The slump has cut the average valuation of companies on the benchmark measure by 38 percent in the past year to 10 times reported profit.
Mitsubishi UFJ lost 4.7 percent to 502 yen. Mizuho Financial Group Inc., Japan’s second-largest bank, slumped 4.1 percent to 235 yen.
Japanese manufacturers cut production by 9.6 percent last month as recessions in the U.S. and Europe and a slowdown in China weakened demand for Japanese cars and electronics, the Trade Ministry said today. The drop eclipsed November’s record 8.5 percent decline.
Toshiba tumbled 16 percent to 325 yen after reversing its full-year profit outlook to a loss as the global recession damped demand for chips used in consumer electronics. Nintendo tumbled 12 percent to 28,300 yen after cutting cut its full-year net income forecast by 33 percent.
Kyocera Corp., the world’s fourth-largest solar-cell maker, dropped 5 percent to 5,920 yen. The company slashed its full- year profit target by 64 percent, citing a downturn in the global electronics market.
Rio fell 3.5 percent to A$39.29. BHP Billiton Ltd., the world’s largest mining company lost 1.7 percent to A$30.13. A measure of six metals traded in London dropped 2.2 percent, with both copper and nickel falling 3 percent.
Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, slumped 4.7 percent as reports showed the country’s factory output slumped 9.6 percent in December and unemployment surged. Toshiba Corp., Japan’s No. 1 chipmaker, and Nintendo Co., which makes the Wii game console, tumbled more than 12 percent after reducing earnings forecasts. Rio Tinto Group, the world’s third- biggest mining company, fell 3.1 percent on lower metal prices.
The MSCI Asia Pacific Index dropped 1.9 percent to 83.10 as of 10:47 a.m. in Tokyo. The measure snapped a three-day, 5.8 percent climb that came as the U.S., Japan and Australia widened efforts to end the global financial crisis that has dragged the world’s largest economies into recession.
“Expectations for government measures have been fully priced into the market, and investor focus is returning to the deterioration of the global economy,” Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of $53 billion, said in an interview with Bloomberg Television.
Five stocks declined for each that rose on the MSCI gauge, which has fallen 5.6 percent this month. The Nikkei 225 Stock Average gained 1.8 percent, while Australia’s S&P/ASX 200 Index fell 1 percent to 3,490.00.
The Standard & Poor’s 500 Index dropped 3.3 percent in New York yesterday, breaking a four-day winning streak, as reports showed new home sales fell to an all-time low and the number of Americans receiving jobless benefits surged to a record.
Record Decline
The MSCI Asia Pacific Index’s declines this year extended last year’s record 43 percent tumble. The slump has cut the average valuation of companies on the benchmark measure by 38 percent in the past year to 10 times reported profit.
Mitsubishi UFJ lost 4.7 percent to 502 yen. Mizuho Financial Group Inc., Japan’s second-largest bank, slumped 4.1 percent to 235 yen.
Japanese manufacturers cut production by 9.6 percent last month as recessions in the U.S. and Europe and a slowdown in China weakened demand for Japanese cars and electronics, the Trade Ministry said today. The drop eclipsed November’s record 8.5 percent decline.
Toshiba tumbled 16 percent to 325 yen after reversing its full-year profit outlook to a loss as the global recession damped demand for chips used in consumer electronics. Nintendo tumbled 12 percent to 28,300 yen after cutting cut its full-year net income forecast by 33 percent.
Kyocera Corp., the world’s fourth-largest solar-cell maker, dropped 5 percent to 5,920 yen. The company slashed its full- year profit target by 64 percent, citing a downturn in the global electronics market.
Rio fell 3.5 percent to A$39.29. BHP Billiton Ltd., the world’s largest mining company lost 1.7 percent to A$30.13. A measure of six metals traded in London dropped 2.2 percent, with both copper and nickel falling 3 percent.
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