BRUSSELS — European exporters have faced more than 220 new and restrictive trade measures since the start of the global economic crisis, but a “protectionist worst-case scenario has been avoided,” according to a report due to be published Friday.
The document from the European Union’s trade commissioner, Catherine Ashton, says that in the 12 months since October 2008, “roughly 223” measures had been introduced by the E.U.’s trading partners or were under consideration, with Russia and Argentina responsible for the most.
However, the report says there is no sign of the spiral of protectionism that some had feared when the worldwide downturn took hold last year.
“Although, new trade-restrictive and distortive policy initiatives have been implemented since the start of the crisis,” the document says, “a widespread and systemic escalation of protectionism has been prevented.”
“Proliferation of the kind of beggar-thy-neighbor protectionist policies of the 1930s has been prevented,” adds the document, which was reviewed by the International Herald Tribune. “The current multilaterally based world trade system seems to have passed one of the most serious stress tests in its entire history.”
Global trade volumes in August 2009 were 18 percent below their 2008 peak but the report concludes that this slump was caused by the reaction to the financial crisis rather than protectionism.
The E.U. says that the commitments of Group of 20 leaders to defend free trade have sent an important signal. However, the range of restrictive measures reported include classical tariff increases, import and export bans or ceilings, non-tariff barriers and government procurement and investment measures which discriminate against foreign companies. Classical barriers alone potentially affect roughly 5 percent of E.U. exports.
And the document warns that some of the measures will remain in place as the global economy recovers — especially in countries that have not acceded to the World Trade Organization.
Russia and Belarus, which are among the nations still outside the W.T.O. framework, “are among the countries that have used border measures more widely.”
Argentina, together with Russia, has “yet again introduced the majority of new potentially trade-restrictive measures,” the document states.
Argentina and Indonesia have made much use of the “flexibility” offered by W.T.O. rules to raise applied tariffs up to their maximum levels.
Mexico, Vietnam, Paraguay, Egypt, and Brazil “have also taken advantage of this policy space but they have done so in a more ‘selective’ fashion,” the report adds.
For the United States, one potentially trade-distorting measure is listed: the Foreign Manufacturers Legal Accountability Act of 2009. The report says that this law aims to protect U.S. consumers and businesses from injuries caused by defective products manufactured abroad.
Four are listed as under consideration, including one draft bill that risks granting “unfair tax disadvantages” to subsidiaries of European companies in the United States in the insurance sector.
Thursday, November 5, 2009
Wednesday, November 4, 2009
U.S., EU Seek WTO Probe of Chinese Raw-Materials Export Curbs
Nov. 5 (Bloomberg) -- The U.S. and the European Union requested a World Trade Organization investigation of China’s restrictions on exports of raw materials used by the steel and chemical industries.
The complaint says China uses special taxes intended to discourage the export of 20 metals or chemicals as a way to keep them inexpensive and available to domestic manufacturers.
Officials from the U.S. and the EU, along with Mexico, asked the WTO yesterday to determine the legality of the curbs on materials that are “critical” to manufacturers and workers, the U.S. Trade Representative’s office and the EU said in separate statements. The materials, including coke, bauxite and manganese, are used by the steel, aluminum and chemicals industries.
Trade tensions between China and the U.S. and the EU have grown as the economic crisis crimps exports and sparks job cuts. China is the 27-nation EU’s second-biggest trading partner. China also passed Canada to become the largest source of U.S. imports in 2007.
The request to the WTO was made more than four months after the U.S. and EU filed a request for consultations at the Geneva- based WTO, setting off a period of discussions with China aimed at resolving the dispute. The EU, the U.S. and Mexico, which filed a request for talks on Aug. 21, “tried to resolve this issue through consultations, but did not succeed,” said Debbie Mesloh, a USTR spokeswoman in Washington.
Hurting Competition
Export restrictions, which have multiplied in recent years because of surging prices for raw materials, discourage companies from being more productive and competitive, according to the European Commission, the EU’s trade authority. Such curbs drive up prices and choke off supplies of raw materials, which affects a broad range of finished products including airplanes, semiconductors, detergent and steel, the commission says.
“China’s restrictions on raw materials continue to distort competition and increase global prices, making conditions for our companies even more difficult in this economic climate,” European Trade Commissioner Catherine Ashton said in a statement. The nation is either a major supplier or the only source of the materials at issue, according to the EU.
China, the world’s fastest-growing major economy and biggest consumer of metals, has defended its policy. The measures are designed to protect the environment and natural resources and are “in accordance with WTO rules,” the government said on June 24.
Measures and Products
The panel requested yesterday focuses on a specific batch of measures and products, said the EU, adding that “further legal action cannot be ruled out if these concerns are not effectively addressed.”
Trade volume between China and the EU grew to more than 326 billion euros ($484 billion) last year. The industries in the EU that are potentially affected by the Chinese restrictions represent about 4 percent of the bloc’s industrial activity and a half-million jobs. Trade between the U.S. and China expanded to $408 billion last year.
U.S. steelmakers and unions have ramped up their complaints of China this year, arguing that cheap government loans, tax rebates and grants give manufacturers an unfair advantage. After filing a WTO case in 2007 against Chinese tax breaks, which the U.S. argued was another subsidy, China agreed to drop them.
The WTO’s dispute settlement body will consider the request for the establishment of a panel at its Nov. 19 meeting, the USTR said.
The complaint says China uses special taxes intended to discourage the export of 20 metals or chemicals as a way to keep them inexpensive and available to domestic manufacturers.
Officials from the U.S. and the EU, along with Mexico, asked the WTO yesterday to determine the legality of the curbs on materials that are “critical” to manufacturers and workers, the U.S. Trade Representative’s office and the EU said in separate statements. The materials, including coke, bauxite and manganese, are used by the steel, aluminum and chemicals industries.
Trade tensions between China and the U.S. and the EU have grown as the economic crisis crimps exports and sparks job cuts. China is the 27-nation EU’s second-biggest trading partner. China also passed Canada to become the largest source of U.S. imports in 2007.
The request to the WTO was made more than four months after the U.S. and EU filed a request for consultations at the Geneva- based WTO, setting off a period of discussions with China aimed at resolving the dispute. The EU, the U.S. and Mexico, which filed a request for talks on Aug. 21, “tried to resolve this issue through consultations, but did not succeed,” said Debbie Mesloh, a USTR spokeswoman in Washington.
Hurting Competition
Export restrictions, which have multiplied in recent years because of surging prices for raw materials, discourage companies from being more productive and competitive, according to the European Commission, the EU’s trade authority. Such curbs drive up prices and choke off supplies of raw materials, which affects a broad range of finished products including airplanes, semiconductors, detergent and steel, the commission says.
“China’s restrictions on raw materials continue to distort competition and increase global prices, making conditions for our companies even more difficult in this economic climate,” European Trade Commissioner Catherine Ashton said in a statement. The nation is either a major supplier or the only source of the materials at issue, according to the EU.
China, the world’s fastest-growing major economy and biggest consumer of metals, has defended its policy. The measures are designed to protect the environment and natural resources and are “in accordance with WTO rules,” the government said on June 24.
Measures and Products
The panel requested yesterday focuses on a specific batch of measures and products, said the EU, adding that “further legal action cannot be ruled out if these concerns are not effectively addressed.”
Trade volume between China and the EU grew to more than 326 billion euros ($484 billion) last year. The industries in the EU that are potentially affected by the Chinese restrictions represent about 4 percent of the bloc’s industrial activity and a half-million jobs. Trade between the U.S. and China expanded to $408 billion last year.
U.S. steelmakers and unions have ramped up their complaints of China this year, arguing that cheap government loans, tax rebates and grants give manufacturers an unfair advantage. After filing a WTO case in 2007 against Chinese tax breaks, which the U.S. argued was another subsidy, China agreed to drop them.
The WTO’s dispute settlement body will consider the request for the establishment of a panel at its Nov. 19 meeting, the USTR said.
BOE May Expand Bond Plan as Officials ‘Throw Money’ at Economy
Nov. 5 (Bloomberg) -- The Bank of England may increase its bond-purchase plan by 50 billion pounds ($83 billion) today as central bankers and politicians scramble to shore up Britain’s banking system and drag the economy out of recession.
Governor Mervyn King’s nine-member Monetary Policy Committee will expand the asset-buying program to 225 billion pounds at 12 p.m. in London, the median of 48 forecasts in a Bloomberg News survey shows. That follows Prime Minister Gordon Brown’s pledge this week to spend almost 40 billion pounds in a second bailout of two the nation’s biggest banks.
Any increase in the Bank of England’s emergency program would be the third since King unveiled the plan in March. Brown’s first bank bailout, the government’s fiscal stimulus measures and an injection of 175 billion pounds in newly printed central bank money have so far failed to end Britain’s longest recession on record.
“They’ve got to throw money at it,” said Neil Mackinnon, an economist at VTB Capital Plc and a former U.K. Treasury official. “The fact of the matter is that the U.K. economy is lagging behind. As to whether quantitative easing is working, the jury is still out.”
The central bank will keep its benchmark interest rate at a record low of 0.5 percent, according to all 60 economists in a Bloomberg survey. The European Central Bank, which also meets today, will maintain its main rate at 1 percent at 1:45 p.m. in Frankfurt, a separate survey showed.
Vote Split
The Bank of England’s bond plan already split the rate panel once this year when King’s push to increase the plan to 200 billion pounds was defeated in August. While he argued that being too cautious was less of a risk than spending too much, Chief Economist Spencer Dale says that there is a danger of stoking asset prices too much.
“It is a lot of money, but if it does restart the economy and gets it moving again then it’s worth it,” said George Buckley, an economist at Deutsche Bank AG in London. “It’s very difficult to say if quantitative easing is working, but it is doing something.”
Service industries showed the fastest pace of expansion since August 2007 in October in a survey by Markit Economics released yesterday, while Nationwide Building Society said that consumer confidence held at the highest level in 1 1/2 years.
Some economists say the pickup may have more to do with record-low interest rates than the bank’s bond purchases.
‘Full Impact’
“When you have a 500 basis point cut in interest rates that is bound to impact the economy with a bit of a lag and that lag is coming to an end and we’re seeing the full impact now,” former U.K. policy DeAnne Julius said in a Bloomberg Television interview this week.
While the Bank of England says that one of the aims of the bond purchases is to increase the amount of money in the economy, a gauge of money supply favored by the bank fell an annualized 1.7 percent in the third quarter, the weakest reading on record.
“If reviving bank lending and in turn money supply growth is the objective, it’s clearly not working,” VTB’s Mackinnon said. “The evidence for any upturn in lending is still very tentative.”
Gross domestic product shrank 0.4 percent in the three months through September, dragging Britain’s recession into a record sixth quarter. By contrast, the U.S., German and French economies have all returned to growth.
Marks & Spencer Group Plc, the nation’s largest clothing retailer, said yesterday it’s “cautious” about the outlook for the next year. HSBC Holdings Plc, Europe’s largest bank, said this week it will cut 1,700 jobs in the U.K.
Brown’s Challenge
Brown is seeking to revive the banking system and the economy in preparation for an election due by June. He pledged this week to inject 31.2 billion pounds into Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, allowing the institutions to scale back dependence on state guarantees for their most toxic assets. The government also promised up to 8 billion pounds for RBS to use “in exceptional circumstances.”
“Every effort must be made to bring the recession to an end,” David Kern, economic adviser at the British Chambers of Commerce, said today. “The current economic situation -- in which our economy is still declining while other countries are already growing -- entails serious dangers and must not be allowed to continue.”
Governor Mervyn King’s nine-member Monetary Policy Committee will expand the asset-buying program to 225 billion pounds at 12 p.m. in London, the median of 48 forecasts in a Bloomberg News survey shows. That follows Prime Minister Gordon Brown’s pledge this week to spend almost 40 billion pounds in a second bailout of two the nation’s biggest banks.
Any increase in the Bank of England’s emergency program would be the third since King unveiled the plan in March. Brown’s first bank bailout, the government’s fiscal stimulus measures and an injection of 175 billion pounds in newly printed central bank money have so far failed to end Britain’s longest recession on record.
“They’ve got to throw money at it,” said Neil Mackinnon, an economist at VTB Capital Plc and a former U.K. Treasury official. “The fact of the matter is that the U.K. economy is lagging behind. As to whether quantitative easing is working, the jury is still out.”
The central bank will keep its benchmark interest rate at a record low of 0.5 percent, according to all 60 economists in a Bloomberg survey. The European Central Bank, which also meets today, will maintain its main rate at 1 percent at 1:45 p.m. in Frankfurt, a separate survey showed.
Vote Split
The Bank of England’s bond plan already split the rate panel once this year when King’s push to increase the plan to 200 billion pounds was defeated in August. While he argued that being too cautious was less of a risk than spending too much, Chief Economist Spencer Dale says that there is a danger of stoking asset prices too much.
“It is a lot of money, but if it does restart the economy and gets it moving again then it’s worth it,” said George Buckley, an economist at Deutsche Bank AG in London. “It’s very difficult to say if quantitative easing is working, but it is doing something.”
Service industries showed the fastest pace of expansion since August 2007 in October in a survey by Markit Economics released yesterday, while Nationwide Building Society said that consumer confidence held at the highest level in 1 1/2 years.
Some economists say the pickup may have more to do with record-low interest rates than the bank’s bond purchases.
‘Full Impact’
“When you have a 500 basis point cut in interest rates that is bound to impact the economy with a bit of a lag and that lag is coming to an end and we’re seeing the full impact now,” former U.K. policy DeAnne Julius said in a Bloomberg Television interview this week.
While the Bank of England says that one of the aims of the bond purchases is to increase the amount of money in the economy, a gauge of money supply favored by the bank fell an annualized 1.7 percent in the third quarter, the weakest reading on record.
“If reviving bank lending and in turn money supply growth is the objective, it’s clearly not working,” VTB’s Mackinnon said. “The evidence for any upturn in lending is still very tentative.”
Gross domestic product shrank 0.4 percent in the three months through September, dragging Britain’s recession into a record sixth quarter. By contrast, the U.S., German and French economies have all returned to growth.
Marks & Spencer Group Plc, the nation’s largest clothing retailer, said yesterday it’s “cautious” about the outlook for the next year. HSBC Holdings Plc, Europe’s largest bank, said this week it will cut 1,700 jobs in the U.K.
Brown’s Challenge
Brown is seeking to revive the banking system and the economy in preparation for an election due by June. He pledged this week to inject 31.2 billion pounds into Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, allowing the institutions to scale back dependence on state guarantees for their most toxic assets. The government also promised up to 8 billion pounds for RBS to use “in exceptional circumstances.”
“Every effort must be made to bring the recession to an end,” David Kern, economic adviser at the British Chambers of Commerce, said today. “The current economic situation -- in which our economy is still declining while other countries are already growing -- entails serious dangers and must not be allowed to continue.”
Tuesday, November 3, 2009
RBS Sacrifices More Than Lloyds to Get Biggest Banking Bailout
Nov. 4 (Bloomberg) -- Royal Bank of Scotland Plc will sacrifice more than Lloyds Banking Group Plc to secure its bailout by the British government.
RBS said yesterday that asset sales and limits on its banking activities imposed by its rescue may curb pretax profit by 1.1 billion pounds ($1.8 billion) a year. Lloyds’s bailout, also announced yesterday, will erase about 500 million pounds of pretax profit, finance director Tim Tookey told analysts on a conference call.
Lloyds Chief Executive Officer Eric Daniels is raising money from institutional investors to avoid insuring the bank’s riskiest assets with the government. The bank said yesterday that loan impairments will drop in the second half. By contrast, Stephen Hester, RBS’s CEO, will insure 282 billion pounds of assets through the U.K.’s Asset Protection Scheme.
“RBS has been more severely treated,” said Robert Talbut, who helps manage about 32 billion pounds at Royal London Asset Management. “The earnings power of the new group has been pretty severely diluted.”
RBS fell 7 percent to 35.93 pence in London trading yesterday, for a market value of 20.3 billion pounds. Lloyds rose 2.7 percent to 87.33 pence.
RBS agreed to sell its Churchill, Direct Line and Green Flag insurance units, its commodities trading unit and 318 branches in return for 25.5 billion pounds of state aid, the Edinburgh-based bank said in a statement. The units on sale generated about a fifth of RBS’s revenue in 2008. In return, RBS secured the costliest bailout of a bank in the world.
EU Pressure
The European Union is forcing banks that had government help to sell assets to stop them having an unfair advantage and boost competition. Last month, it forced ING Groep NV, the biggest Dutch financial services company, to sell its insurance units to win approval for a bailout. By contrast, U.S. regulators have provided financial assistance to banks that expanded during the crisis through acquisitions.
“It’s far more onerous for RBS,” than Lloyds, said Joe Dickerson, an analyst at Execution Ltd. in London who has a “sell” rating on RBS and a “buy” on Lloyds. “Visibility on the earnings prospects of RBS is very low.”
Both RBS and Lloyds yesterday agreed they won’t pay cash bonuses to workers earning more than 39,000 pounds a year. RBS will also be banned from being ranked higher than fifth in debt league tables as one of the conditions of its bailout. RBS is the top arranger of company bonds in Bloomberg’s Euromarket Corporates league table, beating Deutsche Bank AG.
Bonus Curbs
The bonus decision will place RBS’s investment bank at a “material disadvantage,” Dickerson added. The asset sales will also make it harder for the bank to raise capital, he said.
CEO Stephen Hester is unwinding acquisitions made by his predecessor, Fred Goodwin, who helped lead RBS through $140 billion of takeovers, swelling the balance to 2.2 trillion pounds, exceeding Britain’s annual economic output.
The “one positive” for RBS is it wasn’t forced to sell its Citizens Financial Group unit in the U.S., said Danny Clarke, a Liverpool-based analyst at Shore Capital Group Plc. “They will be grateful to hold onto it.”
Lloyds, which kept the government’s stake at 43 percent, will also sell 600 branches to gain EU approval for state aid. The outlets will include 164 Cheltenham & Gloucester branches it had earmarked for closure in June, a decision it reversed in August. The bank also planned to cut branches to reduce costs by more than 1.5 billion pounds after its acquired HBOS Plc, the U.K.’s biggest mortgage lender in January, according to analysts.
‘Greatest Triumph’
“The greatest ‘triumph’ of this entire episode for Lloyds is probably the capitulation by Brussels, possibly assisted by the U.K. government, apparently choosing to give Lloyds special treatment in comparison with other state-aided banks,” wrote Ian Gordon, an analyst at Exane BNP Paribas SA in London. Lloyds will sell assets “it might well have chosen to sell anyway.”
“We have neither sought nor received special treatment,” Lloyds spokesman Shane O’Riordain said in a telephone interview. “We believe we had a fair an appropriate deal.”
Lloyds will relinquish 4.6 percentage points of its 30 percent share of the U.K. current account market. Officials at the bank declined to comment.
“In terms of what would have happened had we entered into the APS, what we do know from Europe, we received very specific guidance that the remedies would have been more, considerably more,” Daniels told analysts yesterday.
RBS will be forced by the EU to reduce its market share in retail banking by 2 percentage points and SME banking by 5 percentage points. The bank had a 20 percent market share of current accounts, 10 percent of savings and 6 percent of mortgages at the end of 2008, Hester said in a presentation last month.
“The damage in the long term is much more severe at RBS than Lloyds,” said Richard Champion, who helps manage about $2 billion at Principal Asset Management in Sevenoaks, England.
RBS said yesterday that asset sales and limits on its banking activities imposed by its rescue may curb pretax profit by 1.1 billion pounds ($1.8 billion) a year. Lloyds’s bailout, also announced yesterday, will erase about 500 million pounds of pretax profit, finance director Tim Tookey told analysts on a conference call.
Lloyds Chief Executive Officer Eric Daniels is raising money from institutional investors to avoid insuring the bank’s riskiest assets with the government. The bank said yesterday that loan impairments will drop in the second half. By contrast, Stephen Hester, RBS’s CEO, will insure 282 billion pounds of assets through the U.K.’s Asset Protection Scheme.
“RBS has been more severely treated,” said Robert Talbut, who helps manage about 32 billion pounds at Royal London Asset Management. “The earnings power of the new group has been pretty severely diluted.”
RBS fell 7 percent to 35.93 pence in London trading yesterday, for a market value of 20.3 billion pounds. Lloyds rose 2.7 percent to 87.33 pence.
RBS agreed to sell its Churchill, Direct Line and Green Flag insurance units, its commodities trading unit and 318 branches in return for 25.5 billion pounds of state aid, the Edinburgh-based bank said in a statement. The units on sale generated about a fifth of RBS’s revenue in 2008. In return, RBS secured the costliest bailout of a bank in the world.
EU Pressure
The European Union is forcing banks that had government help to sell assets to stop them having an unfair advantage and boost competition. Last month, it forced ING Groep NV, the biggest Dutch financial services company, to sell its insurance units to win approval for a bailout. By contrast, U.S. regulators have provided financial assistance to banks that expanded during the crisis through acquisitions.
“It’s far more onerous for RBS,” than Lloyds, said Joe Dickerson, an analyst at Execution Ltd. in London who has a “sell” rating on RBS and a “buy” on Lloyds. “Visibility on the earnings prospects of RBS is very low.”
Both RBS and Lloyds yesterday agreed they won’t pay cash bonuses to workers earning more than 39,000 pounds a year. RBS will also be banned from being ranked higher than fifth in debt league tables as one of the conditions of its bailout. RBS is the top arranger of company bonds in Bloomberg’s Euromarket Corporates league table, beating Deutsche Bank AG.
Bonus Curbs
The bonus decision will place RBS’s investment bank at a “material disadvantage,” Dickerson added. The asset sales will also make it harder for the bank to raise capital, he said.
CEO Stephen Hester is unwinding acquisitions made by his predecessor, Fred Goodwin, who helped lead RBS through $140 billion of takeovers, swelling the balance to 2.2 trillion pounds, exceeding Britain’s annual economic output.
The “one positive” for RBS is it wasn’t forced to sell its Citizens Financial Group unit in the U.S., said Danny Clarke, a Liverpool-based analyst at Shore Capital Group Plc. “They will be grateful to hold onto it.”
Lloyds, which kept the government’s stake at 43 percent, will also sell 600 branches to gain EU approval for state aid. The outlets will include 164 Cheltenham & Gloucester branches it had earmarked for closure in June, a decision it reversed in August. The bank also planned to cut branches to reduce costs by more than 1.5 billion pounds after its acquired HBOS Plc, the U.K.’s biggest mortgage lender in January, according to analysts.
‘Greatest Triumph’
“The greatest ‘triumph’ of this entire episode for Lloyds is probably the capitulation by Brussels, possibly assisted by the U.K. government, apparently choosing to give Lloyds special treatment in comparison with other state-aided banks,” wrote Ian Gordon, an analyst at Exane BNP Paribas SA in London. Lloyds will sell assets “it might well have chosen to sell anyway.”
“We have neither sought nor received special treatment,” Lloyds spokesman Shane O’Riordain said in a telephone interview. “We believe we had a fair an appropriate deal.”
Lloyds will relinquish 4.6 percentage points of its 30 percent share of the U.K. current account market. Officials at the bank declined to comment.
“In terms of what would have happened had we entered into the APS, what we do know from Europe, we received very specific guidance that the remedies would have been more, considerably more,” Daniels told analysts yesterday.
RBS will be forced by the EU to reduce its market share in retail banking by 2 percentage points and SME banking by 5 percentage points. The bank had a 20 percent market share of current accounts, 10 percent of savings and 6 percent of mortgages at the end of 2008, Hester said in a presentation last month.
“The damage in the long term is much more severe at RBS than Lloyds,” said Richard Champion, who helps manage about $2 billion at Principal Asset Management in Sevenoaks, England.
Morgan Stanley Said to Seek Bids for Stake in China’s CICC
Nov. 4 (Bloomberg) -- Morgan Stanley, the U.S. bank that last month posted its first profit in a year, is soliciting bids for its 34.3 percent stake in a joint-venture investment bank it formed in China in 1995, said three people familiar with the situation.
Potential bidders for the stake in China International Capital Corp., known as CICC, include U.S. private-equity firms, said the people, who spoke anonymously because the bidding process is confidential. The stake could be worth $1 billion, according to one of the people. The Wall Street Journal reported the sale plans earlier today.
John Mack, Morgan Stanley’s chairman and chief executive officer, is seeking to sell the firm’s CICC stake so that the company can build a brokerage in China that it controls. Morgan Stanley invested $35 million in CICC when it was established in 1995 as the first Sino-foreign bank. The New York-based bank ceded management control in 2000 and CICC is now run by Levin Zhu, the son of former Chinese Premier Zhu Rongji.
CICC is the top manager of Chinese domestic equity offerings this year and second to HSBC Holdings Plc in managing Asian debt offerings, excluding Japan, according to data compiled by Bloomberg. In September, CICC said it plans to open a New York office as early as this year as it seeks to trade Chinese stocks in the U.S.
China Investment Corp., the nation’s sovereign wealth fund, acquired a 9.9 percent stake in Morgan Stanley for $5 billion two years ago, when Morgan Stanley reported its first quarterly loss as a public company. Last year, Japan’s Mitsubishi UFJ Financial Group Inc. acquired a 21 percent sake in Morgan Stanley for $9 billion.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net. Cathy Chan in Hong Kong at kchan14@bloomberg.net
Potential bidders for the stake in China International Capital Corp., known as CICC, include U.S. private-equity firms, said the people, who spoke anonymously because the bidding process is confidential. The stake could be worth $1 billion, according to one of the people. The Wall Street Journal reported the sale plans earlier today.
John Mack, Morgan Stanley’s chairman and chief executive officer, is seeking to sell the firm’s CICC stake so that the company can build a brokerage in China that it controls. Morgan Stanley invested $35 million in CICC when it was established in 1995 as the first Sino-foreign bank. The New York-based bank ceded management control in 2000 and CICC is now run by Levin Zhu, the son of former Chinese Premier Zhu Rongji.
CICC is the top manager of Chinese domestic equity offerings this year and second to HSBC Holdings Plc in managing Asian debt offerings, excluding Japan, according to data compiled by Bloomberg. In September, CICC said it plans to open a New York office as early as this year as it seeks to trade Chinese stocks in the U.S.
China Investment Corp., the nation’s sovereign wealth fund, acquired a 9.9 percent stake in Morgan Stanley for $5 billion two years ago, when Morgan Stanley reported its first quarterly loss as a public company. Last year, Japan’s Mitsubishi UFJ Financial Group Inc. acquired a 21 percent sake in Morgan Stanley for $9 billion.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net. Cathy Chan in Hong Kong at kchan14@bloomberg.net
Monday, November 2, 2009
IMF Sells Gold to Central Bank of India, Netting $6.7 Billion
Nov. 3 (Bloomberg) -- The International Monetary Fund said it is selling 200 metric tons of gold to the Reserve Bank of India for about $6.7 billion, its first sale of the precious metal in nine years.
The sale accounts for almost half the 403.3 tons that the Washington-based lender in September agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low- income countries.
“This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the fund’s finances on a sound long-term footing and enable us to step up much-needed concession lending to the poorest countries,” IMF Managing Director Dominique Strauss- Kahn said in an e-mailed statement yesterday.
The transaction, which involved daily sales from Oct. 19-30 at market prices, is in the process of being settled, the IMF said in the statement. The average price in the transaction with India was about $1,045 an ounce, an IMF official said on a conference call with reporters.
The lender has said it is ready to sell directly to central banks and later make transactions on the open market if necessary. The IMF official declined to say whether other central banks have expressed interest in purchases.
The 403.3 tons the IMF board agreed to sell amount to one- eight of its stockpile. Gold prices reached a record of $1,072 an ounce on Oct. 14 and have gained 45 percent from a year ago.
Gold futures for December delivery jumped $13.60, or 1.3 percent, to $1,054 an ounce on the New York Mercantile Exchange’s Comex division yesterday, the highest closing price for a most-active contract since Oct. 23.
Low-Income Countries
Proceeds from the sales and other IMF resources as well as individual contributors would help pay for discounted interest rates on loans to low-income countries, the IMF said in July. It plans to grant as much as $17 billion in extra loans to poor nations through 2014.
The IMF, which helped shore up economies from Pakistan to Iceland over the past year, has sold gold on several occasions in the past. The last transaction was authorized in December 1999 and took place off-market between then and April 2000.
The sale accounts for almost half the 403.3 tons that the Washington-based lender in September agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low- income countries.
“This transaction is an important step toward achieving the objectives of the IMF’s limited gold sales program, which are to help put the fund’s finances on a sound long-term footing and enable us to step up much-needed concession lending to the poorest countries,” IMF Managing Director Dominique Strauss- Kahn said in an e-mailed statement yesterday.
The transaction, which involved daily sales from Oct. 19-30 at market prices, is in the process of being settled, the IMF said in the statement. The average price in the transaction with India was about $1,045 an ounce, an IMF official said on a conference call with reporters.
The lender has said it is ready to sell directly to central banks and later make transactions on the open market if necessary. The IMF official declined to say whether other central banks have expressed interest in purchases.
The 403.3 tons the IMF board agreed to sell amount to one- eight of its stockpile. Gold prices reached a record of $1,072 an ounce on Oct. 14 and have gained 45 percent from a year ago.
Gold futures for December delivery jumped $13.60, or 1.3 percent, to $1,054 an ounce on the New York Mercantile Exchange’s Comex division yesterday, the highest closing price for a most-active contract since Oct. 23.
Low-Income Countries
Proceeds from the sales and other IMF resources as well as individual contributors would help pay for discounted interest rates on loans to low-income countries, the IMF said in July. It plans to grant as much as $17 billion in extra loans to poor nations through 2014.
The IMF, which helped shore up economies from Pakistan to Iceland over the past year, has sold gold on several occasions in the past. The last transaction was authorized in December 1999 and took place off-market between then and April 2000.
New Zealand Wages Accelerate as Recession Ends
Nov. 3 (Bloomberg) -- New Zealand wages rose more than economists estimated in the third quarter as the nation emerged from a recession and companies began paying more to attract and retain workers.
Wages for non-government workers, excluding overtime, increased 0.4 percent from the second quarter when they gained 0.3 percent, according to Statistics New Zealand’s labor cost index released in Wellington today. The median estimate of 10 economists surveyed by Bloomberg was for a 0.3 percent gain.
New Zealand’s economy grew for the first time in six quarters in the three months to June, buoying business confidence and encouraging employers to expand production and retain workers. Wages are unlikely to accelerate rapidly because the jobless rate rose to a nine-year high in the second quarter and may increase further.
“We expect wage growth to remain reasonably soft for some time yet,” said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. “The labor market remains weak and will continue to act as a drag on households.”
New Zealand’s dollar bought 71.86 U.S. cents at 11:50 a.m. in Wellington from 71.74 cents immediately before the report was released.
From a year earlier, wages rose 1.9 percent. That’s less than the 2.6 percent in the previous three months and was the smallest increase since the year ended June 30, 2001.
Teachers’ Pay
Including overtime, wages for non-government workers rose 0.4 percent from the second quarter when they increased 0.3 percent, today’s report showed. From a year earlier, wages including overtime gained 2 percent.
Wages for government workers rose 1.1 percent in the quarter, led by new pay deals for teachers and health workers.
A separate series based on reported salary and ordinary- time wage rates of non-government workers gained 0.8 percent in the third quarter from the previous three months. From a year earlier, reported wage rates rose 3.7 percent.
Business confidence rose to a 10-year high in September, according to a survey by ANZ National Bank Ltd. Reserve Bank Governor Alan Bollard said last week there are “welcome signs” the economy is growing again. He kept the official cash rate at a record-low 2.5 percent and said he is unlikely to raise borrowing costs until the second half of 2010.
Filling Vacancies
As the economy recovers, filling vacancies isn’t as easy as it was three months earlier. A net 25 percent of companies said it was easier to find skilled workers in the third quarter, down from 42 percent in the second quarter, according to a survey by the New Zealand Institute of Economic Research Inc. Forty eight percent said it was easier to find unskilled employees.
Finance Minister Bill English said on Oct. 13 that signs of improving business confidence haven’t translated into increased jobs. He expects the unemployment rate will rise to about 7 percent by mid-2010, less than the 8 percent peak the government was forecasting earlier in the year.
Fisher & Paykel Appliances Holdings Ltd. returned its Auckland refrigerator plant to 40-hour-a-week production after scaling it back to 35 hours in April. The company took government subsidies to keep the factory operating on reduced hours, saving 60 jobs.
Labor Demand
The jobless rate probably rose to 6.4 percent in the third quarter, the highest level since 2000, according to a Bloomberg survey of seven economists. The government will publish its employment report on Nov. 5 in Wellington.
Average ordinary time hourly earnings for non-government workers rose 1.7 percent in the quarter, the statistics agency said in its quarterly employment survey also published today. Economists expected a 0.5 percent increase.
Companies reduced demand for labor in the quarter, led by manufacturing, according to the survey.
Filled jobs fell 0.8 percent in the quarter and 2.6 percent from a year earlier, the report showed. The number of full-time equivalent employees declined 1 percent. Total paid hours rose 0.2 percent.
Wages for non-government workers, excluding overtime, increased 0.4 percent from the second quarter when they gained 0.3 percent, according to Statistics New Zealand’s labor cost index released in Wellington today. The median estimate of 10 economists surveyed by Bloomberg was for a 0.3 percent gain.
New Zealand’s economy grew for the first time in six quarters in the three months to June, buoying business confidence and encouraging employers to expand production and retain workers. Wages are unlikely to accelerate rapidly because the jobless rate rose to a nine-year high in the second quarter and may increase further.
“We expect wage growth to remain reasonably soft for some time yet,” said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. “The labor market remains weak and will continue to act as a drag on households.”
New Zealand’s dollar bought 71.86 U.S. cents at 11:50 a.m. in Wellington from 71.74 cents immediately before the report was released.
From a year earlier, wages rose 1.9 percent. That’s less than the 2.6 percent in the previous three months and was the smallest increase since the year ended June 30, 2001.
Teachers’ Pay
Including overtime, wages for non-government workers rose 0.4 percent from the second quarter when they increased 0.3 percent, today’s report showed. From a year earlier, wages including overtime gained 2 percent.
Wages for government workers rose 1.1 percent in the quarter, led by new pay deals for teachers and health workers.
A separate series based on reported salary and ordinary- time wage rates of non-government workers gained 0.8 percent in the third quarter from the previous three months. From a year earlier, reported wage rates rose 3.7 percent.
Business confidence rose to a 10-year high in September, according to a survey by ANZ National Bank Ltd. Reserve Bank Governor Alan Bollard said last week there are “welcome signs” the economy is growing again. He kept the official cash rate at a record-low 2.5 percent and said he is unlikely to raise borrowing costs until the second half of 2010.
Filling Vacancies
As the economy recovers, filling vacancies isn’t as easy as it was three months earlier. A net 25 percent of companies said it was easier to find skilled workers in the third quarter, down from 42 percent in the second quarter, according to a survey by the New Zealand Institute of Economic Research Inc. Forty eight percent said it was easier to find unskilled employees.
Finance Minister Bill English said on Oct. 13 that signs of improving business confidence haven’t translated into increased jobs. He expects the unemployment rate will rise to about 7 percent by mid-2010, less than the 8 percent peak the government was forecasting earlier in the year.
Fisher & Paykel Appliances Holdings Ltd. returned its Auckland refrigerator plant to 40-hour-a-week production after scaling it back to 35 hours in April. The company took government subsidies to keep the factory operating on reduced hours, saving 60 jobs.
Labor Demand
The jobless rate probably rose to 6.4 percent in the third quarter, the highest level since 2000, according to a Bloomberg survey of seven economists. The government will publish its employment report on Nov. 5 in Wellington.
Average ordinary time hourly earnings for non-government workers rose 1.7 percent in the quarter, the statistics agency said in its quarterly employment survey also published today. Economists expected a 0.5 percent increase.
Companies reduced demand for labor in the quarter, led by manufacturing, according to the survey.
Filled jobs fell 0.8 percent in the quarter and 2.6 percent from a year earlier, the report showed. The number of full-time equivalent employees declined 1 percent. Total paid hours rose 0.2 percent.
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