India banks are selling the most dollar-denominated debt in at least a decade, taking advantage of near-zero U.S. benchmark rates after Reserve Bank of India Governor Duvvuri Subarrao raised borrowing costs six times.
ICICI Bank Ltd., the nation’s second-largest lender by assets, sold $1 billion of 5.75 percent, 10-year bonds yesterday that yield 325 basis points more than similar-maturity Treasuries, data compiled by Bloomberg show. The spread on its last sale of 2016 debt was 320 basis points. The offering adds to $6.6 billion raised overseas in 2010 by the nation’s banks, topping the $4.6 billion issued by Chinese lenders.
Subbarao’s rate increases have pushed government 10-year yields up 42 basis points to 8.01 percent this year, compared with 2.52 percent for Treasuries. India’s overseas bond-rush helped sustain a 21 percent increase in bank lending in the year through Oct. 22, even as the RBI sought to slow the fastest inflation after Argentina in the Group of 20 nations.
“India’s economic growth is high and this increases the financing needs for Indian banks and corporates,” Cornel Bruhin, a fund manager in Zurich at Clariden Leu AG, which manages $3.5 billion of emerging-market debt including that of Axis Bank Ltd. and ICICI, said in an interview yesterday. “The level of indebtedness is still relatively low and general investor demand for India debt is still very high.”
Widening Gap
The yield on India’s government notes due in 2020 rose 3 basis points yesterday, widening the gap to 548 basis points over Treasuries of similar maturity. The spread reached 567, or 5.67 percentage points, on Oct. 20, the widest since 2001, according to Bloomberg data. India’s wholesale-price index climbed 8.6 percent in September, while consumer prices rose 11.1 percent in Argentina and 1.1 percent in the U.S.
India’s government bonds returned 4.2 percent this year, the third-worst performance among 10 local-currency debt markets outside Japan, indexes compiled by HSBC Holdings Plc show. India plans to sell 110 billion rupees ($2.48 billion) of bonds due in 2017, 2020 and 2040 through an auction on Nov. 12, according to an e-mailed statement from the finance ministry yesterday.
India’s rupee weakened 0.4 percent to 44.385 per dollar yesterday, trimming its appreciation this year to 5 percent, according to data compiled by Bloomberg.
‘Concerted’ Actions
Subbarao said Nov. 2 that “concerted” policy actions by the central bank will help slow the inflation rate to 5.5 percent by March 31. He forecast India’s $1.3 trillion economy may expand 8.5 percent in the 12 months ending March 31, the fastest pace in three years.
India’s banks faced their worst cash crunch on record in the past month, prompting the RBI to buy back 83.5 billion rupees of government bonds on Nov. 4, the first such move since September 2009.
Lenders borrowed 1.2 trillion rupees of overnight loans from the central bank on Oct. 29, an all-time high, to meet cash shortages after investors pulled deposits to buy shares being issued by Coal India Ltd. in an initial public offering last month. Such borrowing averaged 532 billion rupees a day between Oct. 1 and Nov. 5, more than twice the amount in September, RBI data show.
Rates on three-month commercial paper sold by Indian companies almost doubled this year to 8.16 percent, following an 88 basis-point surge in October, according to Bloomberg data. U.S. three-month Treasury bills yielded 0.127 percent.
State Bank of India
Sales by ICICI’s larger competitor, State Bank of India, climbed to $3.2 billion from $897 million in 2009, Bloomberg data show. The Bank of Baroda Ltd. raised $1.28 billion over the same period, up from $61 million in 2009.
“This is an opportunistic move because of the tight liquidity onshore and relatively high cost of deposits onshore,” Christopher Leow, a fund manager in Singapore at CIMB-Principal Asset Management Ltd., which overseas more than $6 billion globally including Axis Bank and HDFC Bank Ltd, said in an interview yesterday. “This reflects a growing demand for dollar loans from Indian corporates.”
The cost to protect against losses on debt of State Bank of India, a government-controlled lender that is the nearest measure for sovereign debt, declined 3 basis points to 156.2 basis points on Nov. 5, the lowest since April 27, according to New York-based CMA’s data on credit-default swaps.
ICICI Swaps
Those tied to the debt of ICICI fell 10 basis points last week to 189, the lowest since Oct. 15, CMA data show. That compared with 42 for U.S. government debt.
The swaps typically rise as investor confidence deteriorates and fall as it improves. Credit-default contracts pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
The Fed and Chairman Ben S. Bernanke announced on Nov. 3 a plan to buy an additional $600 billion of Treasuries through June, expanding record stimulus in a bid to reduce unemployment and avert deflation. It spent $1.7 trillion through March 2010 in the first round of so-called quantitative easing.
“The Fed’s plan to purchase government bonds means investors in the U.S. have much less to buy,” Tetsuo Ishihara, a senior credit analyst in Tokyo at Mizuho Securities Co., an arm of Japan’s third-largest bank by market value, said in an interview yesterday. “At the same time, Indian banks need to raise funds as their economy is strong.”
U.S. President Barack Obama told business leaders in Mumbai on Nov. 6 that increased trade between India and the U.S. is a “win-win” proposition that would create jobs in both the countries. As part of Obama’s visit, Reliance Power Ltd. won a $5 billion line of credit from the U.S. Export-Import Bank to fund renewable energy and gas plants.
Monday, November 8, 2010
Obama calls for top India role at UN
Barack Obama, US president, has backed India for a permanent seat on the UN Security Council in a diplomatic finale to his three-day visit that highlighted the tightening relationship between the world’s two largest democracies.
India’s leaders have campaigned for permanent Security Council membership for years, seeking an endorsement of a stronger role in multilateral forums, such as the UN, that reflects their claim to be a responsible global power.
EDITOR’S CHOICE
Opinion: Why India needs an Obama plan for Pakistan - Nov-08
Global Insight: Deft diplomacy sets Obama on right course - Nov-08
Obama swipes critics of Fed’s $600bn stimulus - Nov-08
beyondbrics: Obama in India - Nov-05
Obama to push greater US ties with Indonesia - Nov-08
Obama charm push focuses on ‘risen’ India - Nov-08
“The just and sustainable international order that America seeks includes a United Nations that is efficient, effective, credible and legitimate,” Mr Obama said in an address to India’s parliament.
“That is why I can say today, in the years ahead, I look forward to a reformed UN Security Council that includes India as a permanent member.” Mr Obama had previously supported Japan for a permanent security council seat.
Recognising he would struggle to match the US-India civil nuclear deal promoted by his predecessor, George W. Bush, Indian officials had lowered expectations for Mr Obama’s visit. They identified support for the permanent security council seat and the relaxation of export controls on US technology as the best they could hope for, and held out for strong criticism of neighbouring Pakistan for harbouring terror networks.
Mr Obama delivered on all counts, saying India had arrived as a global power that could stand “shoulder to shoulder” with the US.
During his first visit to India, Mr Obama rolled out a carefully calibrated message that was widely welcomed across India’s political spectrum. He emphasised the economic benefits of a closer relationship and urged India to step up its dialogue with Pakistan to secure peace in the region. Finally, he signalled support for India to rise to the top table of world affairs.
In spite of their warming ties, the US and India have frequently taken different sides at the UN. Analysts had also questioned the significance of Washington’s support for multilateral reform that will take place years in the future.
But Ashley Tellis, of the Washington-based Carnegie Endowment for International Peace, said Mr Obama’s support for India was more unequivocal than it had been to Japan. “This is truly the strongest endorsement that the US has tabled so far. I did not detect any hesitation at all,” he said.
Jaswant Singh, an Indian opposition leader and former foreign minister, said: “It’s a welcome endorsement but it’s accompanied by a baggage of expectations. It’s important for us to be more realistic about this.”
India’s leaders have campaigned for permanent Security Council membership for years, seeking an endorsement of a stronger role in multilateral forums, such as the UN, that reflects their claim to be a responsible global power.
EDITOR’S CHOICE
Opinion: Why India needs an Obama plan for Pakistan - Nov-08
Global Insight: Deft diplomacy sets Obama on right course - Nov-08
Obama swipes critics of Fed’s $600bn stimulus - Nov-08
beyondbrics: Obama in India - Nov-05
Obama to push greater US ties with Indonesia - Nov-08
Obama charm push focuses on ‘risen’ India - Nov-08
“The just and sustainable international order that America seeks includes a United Nations that is efficient, effective, credible and legitimate,” Mr Obama said in an address to India’s parliament.
“That is why I can say today, in the years ahead, I look forward to a reformed UN Security Council that includes India as a permanent member.” Mr Obama had previously supported Japan for a permanent security council seat.
Recognising he would struggle to match the US-India civil nuclear deal promoted by his predecessor, George W. Bush, Indian officials had lowered expectations for Mr Obama’s visit. They identified support for the permanent security council seat and the relaxation of export controls on US technology as the best they could hope for, and held out for strong criticism of neighbouring Pakistan for harbouring terror networks.
Mr Obama delivered on all counts, saying India had arrived as a global power that could stand “shoulder to shoulder” with the US.
During his first visit to India, Mr Obama rolled out a carefully calibrated message that was widely welcomed across India’s political spectrum. He emphasised the economic benefits of a closer relationship and urged India to step up its dialogue with Pakistan to secure peace in the region. Finally, he signalled support for India to rise to the top table of world affairs.
In spite of their warming ties, the US and India have frequently taken different sides at the UN. Analysts had also questioned the significance of Washington’s support for multilateral reform that will take place years in the future.
But Ashley Tellis, of the Washington-based Carnegie Endowment for International Peace, said Mr Obama’s support for India was more unequivocal than it had been to Japan. “This is truly the strongest endorsement that the US has tabled so far. I did not detect any hesitation at all,” he said.
Jaswant Singh, an Indian opposition leader and former foreign minister, said: “It’s a welcome endorsement but it’s accompanied by a baggage of expectations. It’s important for us to be more realistic about this.”
The Flash Crash, in Miniature
BlackBerrys were buzzing inside Progress Energy in Raleigh, N.C.: in a blink, the 102-year-old utility had been virtually wiped out on Wall Street.
For no apparent reason, Progress’s share price had plunged almost 90 percent. In a matter of seconds, a company with 3.1 million customers and 11,000 employees had all but vanished on the nation’s stock market, and Progress executives had no idea why.
In the anxious hours that followed, the answers began to come clear: the harrowing plunge in the early afternoon of Sept. 27 had been a mini flash crash — a small-time version of the stock market’s wild day last spring.
Since the Dow Jones industrial average fell about 700 points then largely recovered on May 6, setting the financial world on edge, similar flash crashes have occurred with alarming frequency in more than a dozen individual stocks.
Citigroup, Core Molding, the Washington Post Company — all have soared, plunged, and often both, in wild, seemingly inexplicable trading. An exchange-traded fund, a popular investment that is basically an index fund that trades like stocks, has also been given the flash treatment, although that was attributed to a software error.
To some analysts, these mini flash crashes are a sign that another big one is possible, if not probable. Others say these abrupt reversals are simply the way modern, lightning-quick markets work, and that investors had better get used to it.
The crashes continue even as Washington regulators investigate the structure of modern markets and as a report traced the main trigger of May’s big crash to a poorly timed trade by a mutual fund in Kansas. Regulators have put in place circuit breakers to halt trading and reset prices in case stocks plunge. But some analysts fear that one day, these mechanisms could be overwhelmed.
And to corporate executives caught in the middle, it is all just plain hair-raising — and still puzzling.
That September afternoon, with fearful investors on the phone from New York, Mark F. Mulhern, Progress Energy’s chief financial officer, was told by the exchanges that it was all a mistake. A wayward keystroke by a trader somewhere had unleashed a powerful computer algorithm that had devoured Progress Energy’s stock in moments.
Progress Energy stock was trading at about $44.57 a share, and a dealer at an unidentified brokerage firm had entered a mistaken sell order into a computer that instantly drove the price to $4.57. Dozens of trades were declared void, and after a five-minute halt, normal trading resumed.
Mr. Mulhern says he still does not really know what caused the sell-off — and worries what mini flash crashes like this one are doing to investors’ confidence in the stock market.
“It is a little disconcerting when a trade like this could cause this kind of havoc,” he said. “It has got implications for the confidence in our markets. I don’t know what caused it, to tell the truth. The one hesitation all investors have about the market is the drift to so much electronic trading. It is so fast and real time, you have to wonder a little bit how these things happen, and can the regulatory procedures, the stop measures, can they really keep up with the technology?”
Robert F. Drennan Jr., the vice president for investor relations at Progress Energy, said he had reviewed the trading records and had noticed unusual trading activity in the run-up to the plunge. He said Progress Energy was not a heavily traded stock; it may go for several seconds without a trade. But before the price fell, “There was a big ramp-up in the trades, hundreds of trades a second,” he said.
Mr. Mulhern said he received calls from worried investors, including hedge funds: “When the hedge funds call up and start to complain, you know you have a problem.”
The fall set off circuit breakers the exchanges had put in place after May 6. The circuit breakers are intended to halt trading of a stock for five minutes if its price changes by 10 percent within a five-minute period, and thus to stop panic from spreading.
In the case of Progress Energy, the circuit breaker worked on the New York Exchange, Mr. Mulhern said, but trading happens so fast that before other exchanges could also halt trading, the company’s stock price continued to fall on the Nasdaq, all the way down to $4.57.
For no apparent reason, Progress’s share price had plunged almost 90 percent. In a matter of seconds, a company with 3.1 million customers and 11,000 employees had all but vanished on the nation’s stock market, and Progress executives had no idea why.
In the anxious hours that followed, the answers began to come clear: the harrowing plunge in the early afternoon of Sept. 27 had been a mini flash crash — a small-time version of the stock market’s wild day last spring.
Since the Dow Jones industrial average fell about 700 points then largely recovered on May 6, setting the financial world on edge, similar flash crashes have occurred with alarming frequency in more than a dozen individual stocks.
Citigroup, Core Molding, the Washington Post Company — all have soared, plunged, and often both, in wild, seemingly inexplicable trading. An exchange-traded fund, a popular investment that is basically an index fund that trades like stocks, has also been given the flash treatment, although that was attributed to a software error.
To some analysts, these mini flash crashes are a sign that another big one is possible, if not probable. Others say these abrupt reversals are simply the way modern, lightning-quick markets work, and that investors had better get used to it.
The crashes continue even as Washington regulators investigate the structure of modern markets and as a report traced the main trigger of May’s big crash to a poorly timed trade by a mutual fund in Kansas. Regulators have put in place circuit breakers to halt trading and reset prices in case stocks plunge. But some analysts fear that one day, these mechanisms could be overwhelmed.
And to corporate executives caught in the middle, it is all just plain hair-raising — and still puzzling.
That September afternoon, with fearful investors on the phone from New York, Mark F. Mulhern, Progress Energy’s chief financial officer, was told by the exchanges that it was all a mistake. A wayward keystroke by a trader somewhere had unleashed a powerful computer algorithm that had devoured Progress Energy’s stock in moments.
Progress Energy stock was trading at about $44.57 a share, and a dealer at an unidentified brokerage firm had entered a mistaken sell order into a computer that instantly drove the price to $4.57. Dozens of trades were declared void, and after a five-minute halt, normal trading resumed.
Mr. Mulhern says he still does not really know what caused the sell-off — and worries what mini flash crashes like this one are doing to investors’ confidence in the stock market.
“It is a little disconcerting when a trade like this could cause this kind of havoc,” he said. “It has got implications for the confidence in our markets. I don’t know what caused it, to tell the truth. The one hesitation all investors have about the market is the drift to so much electronic trading. It is so fast and real time, you have to wonder a little bit how these things happen, and can the regulatory procedures, the stop measures, can they really keep up with the technology?”
Robert F. Drennan Jr., the vice president for investor relations at Progress Energy, said he had reviewed the trading records and had noticed unusual trading activity in the run-up to the plunge. He said Progress Energy was not a heavily traded stock; it may go for several seconds without a trade. But before the price fell, “There was a big ramp-up in the trades, hundreds of trades a second,” he said.
Mr. Mulhern said he received calls from worried investors, including hedge funds: “When the hedge funds call up and start to complain, you know you have a problem.”
The fall set off circuit breakers the exchanges had put in place after May 6. The circuit breakers are intended to halt trading of a stock for five minutes if its price changes by 10 percent within a five-minute period, and thus to stop panic from spreading.
In the case of Progress Energy, the circuit breaker worked on the New York Exchange, Mr. Mulhern said, but trading happens so fast that before other exchanges could also halt trading, the company’s stock price continued to fall on the Nasdaq, all the way down to $4.57.
Sunday, November 7, 2010
Obama’s quest for an Indian pay-off
When Barack Obama arrives in Mumbai on Saturday he will see large red and yellow billboards telling him that foreign direct investment from the US in India’s retail sector is not welcome.
But with a midterm election “shellacking” behind him, the US president can ill-afford to return short-changed after a three-day stop in India accompanied by the likes of Walmart, the world’s largest retailer, large power companies GE and Westinghouse and aircraft manufacturers Boeing and Lockheed.
The billboards in south Mumbai are a reminder that fast-growing India, where local companies are fiercely competitive and regulation often opaque, is not a market easily conquered. Maharashtra’s retailers, as in many other parts of the economy, are not about to embrace foreign participation.
A nuclear liability law, recently passed by the Indian parliament, has served as a caution to Washington that a political breakthrough along the lines of the 2008 US-India civil nuclear deal does not necessarily clear the way for US investment.
Now Washington is eager to garner what some officials bluntly call “pay-offs” for former president George W. Bush’s bold initiative to legitimise India’s nuclear programme and put the relationship between the two capitals on a new footing. About $10bn worth of deals are expected to be signed.
Before leaving Washington on Friday, Mr Obama said that a four-nation tour of Asia taking him to India, Indonesia, South Korea and Japan would open new markets for US companies and create jobs at home.
“The primary purpose is to take a bunch of US companies and open up markets so that we can sell in Asia, in some of the fastest-growing markets in the world,” the president said.
Time out: Barack Obama is expected to visit Humayun’s Tomb, a world heritage site in New Delhi, during his trip
Mr Obama is bringing to India’s financial capital the biggest presidential business mission ever to leave US shores. It numbers about 200 chief executives and the delegation is holding business summits in both Mumbai and Delhi that will seek opportunities to boost bilateral trade estimated at $50bn this year.
Among Mr Obama’s key goals will be pushing for a contract to supply the Indian air force with 126 fighter jets made by Boeing and Lockheed, worth $11bn. The contract is to be decided early next year, and is part of a bigger rearmament estimated to be worth $100bn over 10 years.
In spite of political will to buy American, the Indian defence establishment is unwilling to sign agreements with the US that would allow the bigger partner any after-sale claim on the technology it has sold.
Others US goals include reducing tariff barriers in sectors where its exporters are strong, including agriculture and engineering.
Emerging markets blog
Follow Barack Obama’s visit to India
One message that Mr Obama will bear is that, if India wishes to access the global economy, it must open up its own.
What is at stake is India’s IT outsourcing industry, which has been built up over the past 20 years by servicing US multinationals. Its executives, many based in Bangalore, are anxious about protectionist measures against their companies as the US faces an unemployment crisis.
Already the US has increased the price of temporary work visas which are essential for Indian professionals working there.
Ahead of Mr Obama’s arrival, New Delhi was defensively stressing India’s foreign direct investment in the US.
“This investment from India is creating, saving or supporting tens of thousands of jobs in the US,” said Nirupama Rao, India’s foreign secretary. “India’s defence acquisitions and major purchases in the energy and aviation sectos ... are contributing in a substantive manner to the US economy.”
Agreements are expected in joint space launches, a global disease centre and a big education summit next year. Yet the US’s private sector will want more. India’s greater claims to the US’s support for its permanent seat in the UN Security Council and access to US technology will depend on that.
But with a midterm election “shellacking” behind him, the US president can ill-afford to return short-changed after a three-day stop in India accompanied by the likes of Walmart, the world’s largest retailer, large power companies GE and Westinghouse and aircraft manufacturers Boeing and Lockheed.
The billboards in south Mumbai are a reminder that fast-growing India, where local companies are fiercely competitive and regulation often opaque, is not a market easily conquered. Maharashtra’s retailers, as in many other parts of the economy, are not about to embrace foreign participation.
A nuclear liability law, recently passed by the Indian parliament, has served as a caution to Washington that a political breakthrough along the lines of the 2008 US-India civil nuclear deal does not necessarily clear the way for US investment.
Now Washington is eager to garner what some officials bluntly call “pay-offs” for former president George W. Bush’s bold initiative to legitimise India’s nuclear programme and put the relationship between the two capitals on a new footing. About $10bn worth of deals are expected to be signed.
Before leaving Washington on Friday, Mr Obama said that a four-nation tour of Asia taking him to India, Indonesia, South Korea and Japan would open new markets for US companies and create jobs at home.
“The primary purpose is to take a bunch of US companies and open up markets so that we can sell in Asia, in some of the fastest-growing markets in the world,” the president said.
Time out: Barack Obama is expected to visit Humayun’s Tomb, a world heritage site in New Delhi, during his trip
Mr Obama is bringing to India’s financial capital the biggest presidential business mission ever to leave US shores. It numbers about 200 chief executives and the delegation is holding business summits in both Mumbai and Delhi that will seek opportunities to boost bilateral trade estimated at $50bn this year.
Among Mr Obama’s key goals will be pushing for a contract to supply the Indian air force with 126 fighter jets made by Boeing and Lockheed, worth $11bn. The contract is to be decided early next year, and is part of a bigger rearmament estimated to be worth $100bn over 10 years.
In spite of political will to buy American, the Indian defence establishment is unwilling to sign agreements with the US that would allow the bigger partner any after-sale claim on the technology it has sold.
Others US goals include reducing tariff barriers in sectors where its exporters are strong, including agriculture and engineering.
Emerging markets blog
Follow Barack Obama’s visit to India
One message that Mr Obama will bear is that, if India wishes to access the global economy, it must open up its own.
What is at stake is India’s IT outsourcing industry, which has been built up over the past 20 years by servicing US multinationals. Its executives, many based in Bangalore, are anxious about protectionist measures against their companies as the US faces an unemployment crisis.
Already the US has increased the price of temporary work visas which are essential for Indian professionals working there.
Ahead of Mr Obama’s arrival, New Delhi was defensively stressing India’s foreign direct investment in the US.
“This investment from India is creating, saving or supporting tens of thousands of jobs in the US,” said Nirupama Rao, India’s foreign secretary. “India’s defence acquisitions and major purchases in the energy and aviation sectos ... are contributing in a substantive manner to the US economy.”
Agreements are expected in joint space launches, a global disease centre and a big education summit next year. Yet the US’s private sector will want more. India’s greater claims to the US’s support for its permanent seat in the UN Security Council and access to US technology will depend on that.
Asian Stocks Rise as U.S. Jobs Data Boosts Confidence; Honda, Samsung Jump
Asian stocks rose, driving the benchmark index to its longest winning streak since June, after a report last week showed the U.S. added more jobs than forecast, boosting confidence in the world’s largest economy.
Honda Motor Co., a Japanese carmaker that gets about 42 percent of its revenue from North America, climbed 2.9 percent. Komatsu Ltd., the world’s second-largest maker of construction machinery, advanced 2.4 percent. Rio Tinto Ltd., the world’s No. 3 mining company, gained 1 percent as oil and metal prices increased. JX Holdings Inc., Japan’s biggest oil refiner, jumped 5.7 percent after raising its full-year profit forecast.
The MSCI Asia Pacific Index rose 0.2 percent to 135.09 as of 10:45 a.m. in Tokyo, on course for a sixth consecutive increase. The gauge advanced 4.2 percent last week on optimism the U.S. Federal Reserve will succeed in stoking growth in the world’s biggest economy.
“It appears the U.S. economy is in better shape than when the Fed first announced its new quantitative-easing measures,” said Prasad Patkar, who helps manage about $1.8 billion at Platypus Asset Management Ltd. in Sydney. “The solid payroll numbers may be another indication that it’s coming out of its soft patch. A strong U.S. economy is immensely helpful in supporting growth around the world, mostly to Asia’s export- dominant countries.”
Japan’s Nikkei 225 Stock Average gained 0.9 percent. China’s Shanghai Composite Index increased 0.4 percent. South Korea’s Kospi Index slipped 0.1 percent. Australia’s S&P/ASX 200 Index lost 0.2 percent.
Downside Risks Reduced
Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The index climbed 0.4 percent on Nov. 5 after U.S. Labor Department figures showed payrolls climbed by 151,000, exceeding the median estimate of economists surveyed by Bloomberg News. Private payrolls that exclude government agencies also gained more than forecast, and the jobless rate held at 9.6 percent.
The MSCI Asia Pacific Index has increased about 3 percent since the Federal Reserve unveiled on Nov. 3 plans to buy an additional $600 billion of Treasuries to bolster economic growth. Stocks in the gauge are valued at 14.7 times estimated earnings on average, compared with about 22.7 times at the start of the year, according to data compiled by Bloomberg.
Goldman Sachs Group Inc., which warned a month ago that the U.S. economic outlook was “fairly bad” at best, said the Fed’s decision to increase bond purchases will spur growth.
‘Risks Have Declined’
“Downside risks to the economic outlook have declined significantly,” Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients.
Gauges of industrial and raw-material companies increased the most among the 10 industry groups in the MSCI Asia Pacific index. Honda climbed 2.9 percent to 2,963 yen. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, rose 1.3 percent to 2,746 yen. Komatsu advanced 2.4 percent to 2,225 yen. Samsung Electronics Co., the world’s biggest maker of televisions, memory chips and flat screens, gained 0.8 percent to 782,000 won in Seoul.
“The jobs report indicates the U.S. real economy is heading toward restoration,” said Tomochika Kitaoka, a senior strategist in Tokyo at Mizuho Securities Co.
Rio Tinto gained 1 percent to A$88.07. Woodside Petroleum Ltd., Australia’s second-biggest oil producer, increased 1 percent to A$46.20. Mitsui & Co., which gets about 19 percent of sales from commodities, climbed 2.8 percent to 1,356 yen.
Crude oil for December delivery rose 0.4 percent in New York on Nov. 5 to $86.85 a barrel, the highest settlement price since Oct. 8, 2008. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum gained 0.3 percent, and gold futures surged to a record.
JX Holdings surged 6.3 percent to 527 yen. The company raised its full-year profit forecast by 19 percent to 320 billion yen ($3.9 billion) as margins for selling oil products improved after the company was formed out of a merger.
Honda Motor Co., a Japanese carmaker that gets about 42 percent of its revenue from North America, climbed 2.9 percent. Komatsu Ltd., the world’s second-largest maker of construction machinery, advanced 2.4 percent. Rio Tinto Ltd., the world’s No. 3 mining company, gained 1 percent as oil and metal prices increased. JX Holdings Inc., Japan’s biggest oil refiner, jumped 5.7 percent after raising its full-year profit forecast.
The MSCI Asia Pacific Index rose 0.2 percent to 135.09 as of 10:45 a.m. in Tokyo, on course for a sixth consecutive increase. The gauge advanced 4.2 percent last week on optimism the U.S. Federal Reserve will succeed in stoking growth in the world’s biggest economy.
“It appears the U.S. economy is in better shape than when the Fed first announced its new quantitative-easing measures,” said Prasad Patkar, who helps manage about $1.8 billion at Platypus Asset Management Ltd. in Sydney. “The solid payroll numbers may be another indication that it’s coming out of its soft patch. A strong U.S. economy is immensely helpful in supporting growth around the world, mostly to Asia’s export- dominant countries.”
Japan’s Nikkei 225 Stock Average gained 0.9 percent. China’s Shanghai Composite Index increased 0.4 percent. South Korea’s Kospi Index slipped 0.1 percent. Australia’s S&P/ASX 200 Index lost 0.2 percent.
Downside Risks Reduced
Futures on the Standard & Poor’s 500 Index fell 0.2 percent today. The index climbed 0.4 percent on Nov. 5 after U.S. Labor Department figures showed payrolls climbed by 151,000, exceeding the median estimate of economists surveyed by Bloomberg News. Private payrolls that exclude government agencies also gained more than forecast, and the jobless rate held at 9.6 percent.
The MSCI Asia Pacific Index has increased about 3 percent since the Federal Reserve unveiled on Nov. 3 plans to buy an additional $600 billion of Treasuries to bolster economic growth. Stocks in the gauge are valued at 14.7 times estimated earnings on average, compared with about 22.7 times at the start of the year, according to data compiled by Bloomberg.
Goldman Sachs Group Inc., which warned a month ago that the U.S. economic outlook was “fairly bad” at best, said the Fed’s decision to increase bond purchases will spur growth.
‘Risks Have Declined’
“Downside risks to the economic outlook have declined significantly,” Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients.
Gauges of industrial and raw-material companies increased the most among the 10 industry groups in the MSCI Asia Pacific index. Honda climbed 2.9 percent to 2,963 yen. Sony Corp., the maker of Bravia televisions and PlayStation game consoles, rose 1.3 percent to 2,746 yen. Komatsu advanced 2.4 percent to 2,225 yen. Samsung Electronics Co., the world’s biggest maker of televisions, memory chips and flat screens, gained 0.8 percent to 782,000 won in Seoul.
“The jobs report indicates the U.S. real economy is heading toward restoration,” said Tomochika Kitaoka, a senior strategist in Tokyo at Mizuho Securities Co.
Rio Tinto gained 1 percent to A$88.07. Woodside Petroleum Ltd., Australia’s second-biggest oil producer, increased 1 percent to A$46.20. Mitsui & Co., which gets about 19 percent of sales from commodities, climbed 2.8 percent to 1,356 yen.
Crude oil for December delivery rose 0.4 percent in New York on Nov. 5 to $86.85 a barrel, the highest settlement price since Oct. 8, 2008. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum gained 0.3 percent, and gold futures surged to a record.
JX Holdings surged 6.3 percent to 527 yen. The company raised its full-year profit forecast by 19 percent to 320 billion yen ($3.9 billion) as margins for selling oil products improved after the company was formed out of a merger.
Indian Stocks to Extend Record Rally on Earnings, Franklin Templeton Says
India’s more than 20 percent growth in earnings and slowing inflation will spur further gains in the nation’s equities after the benchmark stock index surged to a record, according to Franklin Templeton Investments.
HDFC Bank Ltd. and Axis Bank Ltd. are among the country’s most “high quality” bank investments as loan growth reaches as much as 25 percent a year, said Sukumar Rajah, who oversees $4 billion as Franklin Templeton’s chief investment officer of Asian equities. Inflation is “under control” after the Reserve Bank of India raised its benchmark interest rates last week for the sixth time this year, he said.
The Bombay Stock Exchange Sensitive Index has jumped 20 percent since December and hit an all-time high Nov. 4, the last full day of trading, as foreign investors bought Indian equities at a record pace this year on speculation economic growth will boost corporate profits. The 30-stock gauge is valued at 17.9 times analysts’ 12-month earnings estimates, the highest level among the world’s 30 biggest markets, according to data compiled by Bloomberg.
“The markets generally will continue to go up,” Rajah said in a Nov. 3 interview in Warsaw. Indian stocks will move in line with other emerging markets, he said. “We are looking at some high-quality banks.”
HDFC, India’s third-largest bank by market value, reported profit jumped 33 percent in its fiscal second quarter, according to a company statement dated Oct. 19 on its website. The shares have rallied 40 percent this year, and trade at 35 times reported earnings. Axis, which is valued at 24 times profit, posted a 38 percent jump in earnings. The fourth-biggest lender has surged 56 percent this year. The MSCI Emerging Markets Financials Index, a global gauge for the industry, trades at 16 times earnings.
GDP Expansion
India’s gross domestic product expanded 8.8 percent in the three months through June, the most among major economies in Asia after China. The Reserve Bank of India probably won’t raise interest rates in the next three months, Governor Duvvuri Subbarao said on Nov. 2 after increasing the repurchase rate by a quarter-point to 6.25 percent. Consumer prices for industrial workers in India rose 9.8 percent, down from a 16 percent increase January.
“It is quite unlikely the central bank will raise rates more,” Rajah said. “We are quite close to the peak right now -- inflation is under control.”
IPOs
India’s expanding economy has helped companies to raise $7.7 billion in initial public offerings for businesses ranging from consumer manufacturing to jewelry retailers this year, according to data compiled by Bloomberg. That’s almost double the $4 billion raised in 2009 and the most in three years.
Coal India Ltd., the world’s No. 1 producer of the fuel, surged 40 percent to 342 rupees in its first day of trading on Nov. 4 after selling 152 billion rupees ($3.4 billion) of shares at the top of the price range in the country’s biggest IPO in at least a decade, according to data compiled by Bloomberg. The offering attracted bids worth at least $48.7 billion.
“The supply of new stocks is good for the market at the current juncture because it’s keeping the lid on prices,” Rajah said. “Right now the market is not overvalued but if a lot of money keeps coming in and there is no supply it can get overvalued.”
Even after this year’s gains, the benchmark Sensex index is still 15 percent cheaper than in January 2008, when it traded for 21 times earnings estimates, according to data compiled by Bloomberg. The Sensex’s price-to-book ratio of 3.7 compares with its earlier peak level of 6.2, the data show.
Franklin Templeton’s Franklin India Prima Plus Fund has returned 24 percent as of Nov. 4 since the start of 2010 compared with the Sensex’s 20 percent gain.
HDFC Bank Ltd. and Axis Bank Ltd. are among the country’s most “high quality” bank investments as loan growth reaches as much as 25 percent a year, said Sukumar Rajah, who oversees $4 billion as Franklin Templeton’s chief investment officer of Asian equities. Inflation is “under control” after the Reserve Bank of India raised its benchmark interest rates last week for the sixth time this year, he said.
The Bombay Stock Exchange Sensitive Index has jumped 20 percent since December and hit an all-time high Nov. 4, the last full day of trading, as foreign investors bought Indian equities at a record pace this year on speculation economic growth will boost corporate profits. The 30-stock gauge is valued at 17.9 times analysts’ 12-month earnings estimates, the highest level among the world’s 30 biggest markets, according to data compiled by Bloomberg.
“The markets generally will continue to go up,” Rajah said in a Nov. 3 interview in Warsaw. Indian stocks will move in line with other emerging markets, he said. “We are looking at some high-quality banks.”
HDFC, India’s third-largest bank by market value, reported profit jumped 33 percent in its fiscal second quarter, according to a company statement dated Oct. 19 on its website. The shares have rallied 40 percent this year, and trade at 35 times reported earnings. Axis, which is valued at 24 times profit, posted a 38 percent jump in earnings. The fourth-biggest lender has surged 56 percent this year. The MSCI Emerging Markets Financials Index, a global gauge for the industry, trades at 16 times earnings.
GDP Expansion
India’s gross domestic product expanded 8.8 percent in the three months through June, the most among major economies in Asia after China. The Reserve Bank of India probably won’t raise interest rates in the next three months, Governor Duvvuri Subbarao said on Nov. 2 after increasing the repurchase rate by a quarter-point to 6.25 percent. Consumer prices for industrial workers in India rose 9.8 percent, down from a 16 percent increase January.
“It is quite unlikely the central bank will raise rates more,” Rajah said. “We are quite close to the peak right now -- inflation is under control.”
IPOs
India’s expanding economy has helped companies to raise $7.7 billion in initial public offerings for businesses ranging from consumer manufacturing to jewelry retailers this year, according to data compiled by Bloomberg. That’s almost double the $4 billion raised in 2009 and the most in three years.
Coal India Ltd., the world’s No. 1 producer of the fuel, surged 40 percent to 342 rupees in its first day of trading on Nov. 4 after selling 152 billion rupees ($3.4 billion) of shares at the top of the price range in the country’s biggest IPO in at least a decade, according to data compiled by Bloomberg. The offering attracted bids worth at least $48.7 billion.
“The supply of new stocks is good for the market at the current juncture because it’s keeping the lid on prices,” Rajah said. “Right now the market is not overvalued but if a lot of money keeps coming in and there is no supply it can get overvalued.”
Even after this year’s gains, the benchmark Sensex index is still 15 percent cheaper than in January 2008, when it traded for 21 times earnings estimates, according to data compiled by Bloomberg. The Sensex’s price-to-book ratio of 3.7 compares with its earlier peak level of 6.2, the data show.
Franklin Templeton’s Franklin India Prima Plus Fund has returned 24 percent as of Nov. 4 since the start of 2010 compared with the Sensex’s 20 percent gain.
Web Browsing Takes a Social Turn
MOUNTAIN VIEW, Calif. — Silicon Valley is awash in tales of the “PayPal Mafia,” the tight-knit group of PayPal alumni who have helped one another start and finance a crop of new companies.
But William V. Campbell, who is something of a godfather figure in the Valley, said, in a rare interview, “There is a ‘Netscape Mafia,’ too.”
And as Mafia families sometimes do, the Netscape Mafia is coming together for a reunion.
On Monday, RockMelt, a company founded and financed by a group of Netscape alumni, will release a new Web browser, 16 years after Netscape introduced the first commercial Internet browser, and 12 years after the company was sold to AOL after its defeat by Microsoft in the so-called browser wars.
“We think it is a fantastic time to build a company around a browser,” said Marc Andreessen, who co-founded Netscape, and whose venture capital firm, Andreessen Horowitz, is the principal financial backer of RockMelt.
Although most people spend more time using their Web browser than any other program on their computers, most browsers have not kept up with the evolution of the Web into a social media hub, Mr. Andreessen said. He and Mr. Campbell, a former Netscape board member who is advising the new company as well as investing in it, say RockMelt is a browser for the Facebook era.
At first glance, RockMelt looks like an ordinary browser, a digital windowpane onto the Web. But along the side of its main window are two thin rails with icons, one showing a user’s friends on the left, and another displaying a user’s favorite social sites, including Twitter and Facebook, on the right.
A “share” button makes it easy to post a Web page, a YouTube video or any other items, to Facebook, Twitter or other sites. Similarly, users can update their status or keep tabs on their friends’ activities on any social network right on their main browser window. They can also easily add and remove friends, or chat with them, on the left-side rail.
When a user searches the Web using Google, RockMelt not only delivers the Google search results, but also fetches the pages associated with those results, so a user can preview those pages quickly and decide which to click to.
“Had we known about Facebook and Twitter and Google back in ’92 or ’93, we would have built them into the browser,” Mr. Andreessen said, referring to Netscape. “This is an opportunity to go back and do it right.”
Like other browsers, RockMelt will be free, and like the popular open-source browser Firefox, it plans to make money by earning a share of the revenue from Web searches conducted by its users.
For all its modern features, the challenges facing RockMelt, which is inviting users to try a test version on Monday, are enormous. The browser market has become intensely competitive in recent years and is dominated by giants like Microsoft, Apple and Google, as well as Mozilla, which makes Firefox.
“Getting heard above the noise is going to be hard,” said David B. Yoffie, a professor at the Harvard Business School and the co-author of “Competing on Internet Time,” a book that chronicled the battle between Netscape and Microsoft.
Consider the fate of Chrome, the latest major competitor in the browser market, which Google introduced two years ago. Despite good reviews and being heavily promoted by Google — through ads and links on the company’s home page, the most visited page on the Web — Chrome has captured just 8 percent of the browser market, according to NetApplications, which tracks browser usage.
Even Microsoft, considered a laggard in innovation for much of the last decade, has revamped Internet Explorer in recent years and is expected to release a new and improved version soon. A test version of the product was downloaded 10 million times in just six weeks, Microsoft said.
“There is no reason to suggest that the momentum that we have seen in the past six weeks is going to slow,” said Ryan Gavin, senior director for Internet Explorer at Microsoft.
RockMelt’s ties to Netscape run deep. The company was co-founded by Tim Howes, 47, and Eric Vishria, 31. Mr. Howes, the chief technology officer, is a former Netscape executive who developed some of the most widely used Internet technologies. Mr. Vishria did not work at Netscape but was a senior executive at Opsware, the company Mr. Andreessen, Mr. Howes and Ben Horowitz, Mr. Andreessen’s venture capital partner, founded after they left Netscape.
Then there is Mr. Campbell, a former chief executive of companies like Intuit; Go, a renowned but failed maker of a pen computer; and Claris, which made software for Macintosh computers. He is known in Silicon Valley as the coach. Mr. Campbell once coached Columbia’s football team, but he earned the moniker more recently for his role as a behind-the-scenes adviser to a long list of young entrepreneurs and veteran executives, including Steven P. Jobs of Apple, on whose board he currently serves, and Eric E. Schmidt of Google.
Mr. Campbell is now helping Mr. Vishria and Mr. Howes with recruitment, organization and management.
Mr. Howes and Mr. Vishria built RockMelt using Chromium, the same open source browser technology that Google used for Chrome. But unlike Chrome and other major browsers that run entirely on a user’s PC, RockMelt will manage users’ interactions with sites like Facebook and Twitter in its data center. To make that possible, users will be required to log into RockMelt.
“This is the beginning of what we think browsers will look like in the next decade,” Mr. Vishria said.
RockMelt is not the first browser built around social networking features. Three years ago, Flock introduced a browser that also makes it easy to share items with sites like Facebook and Twitter. While Flock gained a loyal following, it never broke into the big leagues of the browser market, though it has recently released a well-reviewed upgrade.
Industry insiders say that Flock may have been ahead of its time, since it was developed before social networks became mainstream. RockMelt’s timing may give it a better chance at success.
“If they build a browser that matches the way people work, it will get some adoption,” said John Lilly, the former chief executive of Mozilla. “But it is hard to make people change their habits.”
RockMelt’s backers acknowledge that getting the browser into users’ hands will be a big challenge, but they say that if the product is good enough, it will spread through recommendations.
“You hope it is going to happen by word of mouth,” said Mr. Cambpell. Noting his ties to Apple, which makes the Safari browser, and Google, which he advised for many years, Mr. Campbell added, “I don’t want to be poking at Chrome and Safari, but this is unique.”
But William V. Campbell, who is something of a godfather figure in the Valley, said, in a rare interview, “There is a ‘Netscape Mafia,’ too.”
And as Mafia families sometimes do, the Netscape Mafia is coming together for a reunion.
On Monday, RockMelt, a company founded and financed by a group of Netscape alumni, will release a new Web browser, 16 years after Netscape introduced the first commercial Internet browser, and 12 years after the company was sold to AOL after its defeat by Microsoft in the so-called browser wars.
“We think it is a fantastic time to build a company around a browser,” said Marc Andreessen, who co-founded Netscape, and whose venture capital firm, Andreessen Horowitz, is the principal financial backer of RockMelt.
Although most people spend more time using their Web browser than any other program on their computers, most browsers have not kept up with the evolution of the Web into a social media hub, Mr. Andreessen said. He and Mr. Campbell, a former Netscape board member who is advising the new company as well as investing in it, say RockMelt is a browser for the Facebook era.
At first glance, RockMelt looks like an ordinary browser, a digital windowpane onto the Web. But along the side of its main window are two thin rails with icons, one showing a user’s friends on the left, and another displaying a user’s favorite social sites, including Twitter and Facebook, on the right.
A “share” button makes it easy to post a Web page, a YouTube video or any other items, to Facebook, Twitter or other sites. Similarly, users can update their status or keep tabs on their friends’ activities on any social network right on their main browser window. They can also easily add and remove friends, or chat with them, on the left-side rail.
When a user searches the Web using Google, RockMelt not only delivers the Google search results, but also fetches the pages associated with those results, so a user can preview those pages quickly and decide which to click to.
“Had we known about Facebook and Twitter and Google back in ’92 or ’93, we would have built them into the browser,” Mr. Andreessen said, referring to Netscape. “This is an opportunity to go back and do it right.”
Like other browsers, RockMelt will be free, and like the popular open-source browser Firefox, it plans to make money by earning a share of the revenue from Web searches conducted by its users.
For all its modern features, the challenges facing RockMelt, which is inviting users to try a test version on Monday, are enormous. The browser market has become intensely competitive in recent years and is dominated by giants like Microsoft, Apple and Google, as well as Mozilla, which makes Firefox.
“Getting heard above the noise is going to be hard,” said David B. Yoffie, a professor at the Harvard Business School and the co-author of “Competing on Internet Time,” a book that chronicled the battle between Netscape and Microsoft.
Consider the fate of Chrome, the latest major competitor in the browser market, which Google introduced two years ago. Despite good reviews and being heavily promoted by Google — through ads and links on the company’s home page, the most visited page on the Web — Chrome has captured just 8 percent of the browser market, according to NetApplications, which tracks browser usage.
Even Microsoft, considered a laggard in innovation for much of the last decade, has revamped Internet Explorer in recent years and is expected to release a new and improved version soon. A test version of the product was downloaded 10 million times in just six weeks, Microsoft said.
“There is no reason to suggest that the momentum that we have seen in the past six weeks is going to slow,” said Ryan Gavin, senior director for Internet Explorer at Microsoft.
RockMelt’s ties to Netscape run deep. The company was co-founded by Tim Howes, 47, and Eric Vishria, 31. Mr. Howes, the chief technology officer, is a former Netscape executive who developed some of the most widely used Internet technologies. Mr. Vishria did not work at Netscape but was a senior executive at Opsware, the company Mr. Andreessen, Mr. Howes and Ben Horowitz, Mr. Andreessen’s venture capital partner, founded after they left Netscape.
Then there is Mr. Campbell, a former chief executive of companies like Intuit; Go, a renowned but failed maker of a pen computer; and Claris, which made software for Macintosh computers. He is known in Silicon Valley as the coach. Mr. Campbell once coached Columbia’s football team, but he earned the moniker more recently for his role as a behind-the-scenes adviser to a long list of young entrepreneurs and veteran executives, including Steven P. Jobs of Apple, on whose board he currently serves, and Eric E. Schmidt of Google.
Mr. Campbell is now helping Mr. Vishria and Mr. Howes with recruitment, organization and management.
Mr. Howes and Mr. Vishria built RockMelt using Chromium, the same open source browser technology that Google used for Chrome. But unlike Chrome and other major browsers that run entirely on a user’s PC, RockMelt will manage users’ interactions with sites like Facebook and Twitter in its data center. To make that possible, users will be required to log into RockMelt.
“This is the beginning of what we think browsers will look like in the next decade,” Mr. Vishria said.
RockMelt is not the first browser built around social networking features. Three years ago, Flock introduced a browser that also makes it easy to share items with sites like Facebook and Twitter. While Flock gained a loyal following, it never broke into the big leagues of the browser market, though it has recently released a well-reviewed upgrade.
Industry insiders say that Flock may have been ahead of its time, since it was developed before social networks became mainstream. RockMelt’s timing may give it a better chance at success.
“If they build a browser that matches the way people work, it will get some adoption,” said John Lilly, the former chief executive of Mozilla. “But it is hard to make people change their habits.”
RockMelt’s backers acknowledge that getting the browser into users’ hands will be a big challenge, but they say that if the product is good enough, it will spread through recommendations.
“You hope it is going to happen by word of mouth,” said Mr. Cambpell. Noting his ties to Apple, which makes the Safari browser, and Google, which he advised for many years, Mr. Campbell added, “I don’t want to be poking at Chrome and Safari, but this is unique.”
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