Markets opened flat tracking lacklustre cues in the global markets as commodity prices firmed up renewing concerns of inflation and further rate hike. The Nifty was up 2 points, at 5,553 and the Sensex gained 23 points, at 18,555,
Brent Crude rebounded to $114/bbl and silver also climbed 5% leading the recovery in the precious metals as Dollar Index fell to 74.6 from 74.7 after breaking out above the 75 level.
US Markets bounced back as energy and natural resource companies surged led by rebound in commodities. The Dow Jones Industrial Average gained 0.4%, the Standard & Poor’s 500 Index added 0.5% and the Nasdaq Composite rose 0.6%.
Asian markets were trading flat in the morning session. Japan's Nikkei Stock Average was down 0.2% driven by potential power shortages. Hang Seng surged 0.8% as crude firmed up boosting energy shares. Shanghai Composite was also up 0.3%. South Korea's Kospi Composite fell 0.4%, Taiwan's weighted index was up 0.1% and Singapore's Strait Times gained 0.3%.
Back in India investors continue to wait on the sidelines and are watching the movement in commodity prices very closely. If commodities continue to remain at elevated level it will put pressure on operating margins of the companies wleading to earnings downgrades going forward.
On the technical charts, Nifty continued to form higher tops and bottom indicating that the markets are in a bear trend. Edelweiss in the morning note said "we continue to maintain an upward bias in the absolute near-term and look for a test of 5630-5650 resistance clusters. On the downside the index is pivoted at 5500 on a daily closing basis."
According to the data available from Bombay Stock Exchange, FIIs were net buyers of Rs 196 crore after being net sellers for past 10 sessions. While DIIs were net sellers of Rs 126 crore on Monday.
Among the new listing, Future Ventures (Private Equity firm) a subsidiary of the Future Group led by Kishore Biyani dipped 10% to Rs 9 on listing.
From the individual stocks, Hindalco Industries surged 1.9% after fourth quarter earnings beat expectations; net profit rose 6.7% to Rs 709 crore. Power Finance Corporation follow-on-public offer (FPO) opened today and the stock was down 1.6% at Rs 209.4. The price band of the FPO is set between Rs 193-203 per share and government plans to raise around Rs 4,700 crore.
BSE Bankex was the top sectoral loser, down 0.2%. HDFC Bank fell 0.5%, ICICI Bank lost 0.4% and Bank of India declined 0.7%. While, the BSE FMCG index was the top gainer, up 1%. Hindustan Unilever was up 3.4%, Dabur India gained 0.9% and Nestle was up 0.9%.
Top gainers on the Sensex were Hindustan Unilever, up 3.4%, Hindalco, up 1.9% and Sterlite gained 1.4%. Top losers were JP Associates and Tata Power, down 0.5% each, and Hero Honda declined 0.4%.
Braoder markets were trading flat. Market breadth was marginally positive, 517 stocks advanced for 498 declining stocks.
Monday, May 9, 2011
Panel moots higher tax on diesel cars
NEW DELHI: Diesel cars and SUV owners should pay higher tax when purchasing these vehicles, the government-appointed committee recommended on Monday.
While diesel is cheaper in Indian market, diesel cars will cost more as committee suggest an up-front tax on vehicles to compensate for differential fuel pricing. The panel headed by Kirit Parikh on low carbon strategies for inclusive growth, which submitted its interim report, also recommended mandatory vehicle rating system and minimum efficiency standards for all vehicles.
The committee says the measures will help 10% reduction in fuel consumption along with improvement in air quality, road safety, better mobility and energy security..
The Parikh committee report came out with suggestions to adopt low carbon strategies for power, transport , industry, buildings and forestry sectors. It projects a range for green house gas emissions intensity reduction in 2020 for both eight and nine per cent real GDP growth.
For transport sector, it has recommended to increase in railways' share, which is more energy efficient, in freight transports by speeding up construction of dedicated freight corridors , better operational efficiency and reducing burden of cross-subsidy vis-à-vis passenger traffic.
Worried with declining share of public and non-motorized transports , the committee has asked to frame housing and habitat policies to encourage neighbourhood shops by promoting mixed land-use cities, city planning to encourage public transport and mass transport corridors for medium cities.
While diesel is cheaper in Indian market, diesel cars will cost more as committee suggest an up-front tax on vehicles to compensate for differential fuel pricing. The panel headed by Kirit Parikh on low carbon strategies for inclusive growth, which submitted its interim report, also recommended mandatory vehicle rating system and minimum efficiency standards for all vehicles.
The committee says the measures will help 10% reduction in fuel consumption along with improvement in air quality, road safety, better mobility and energy security..
The Parikh committee report came out with suggestions to adopt low carbon strategies for power, transport , industry, buildings and forestry sectors. It projects a range for green house gas emissions intensity reduction in 2020 for both eight and nine per cent real GDP growth.
For transport sector, it has recommended to increase in railways' share, which is more energy efficient, in freight transports by speeding up construction of dedicated freight corridors , better operational efficiency and reducing burden of cross-subsidy vis-à-vis passenger traffic.
Worried with declining share of public and non-motorized transports , the committee has asked to frame housing and habitat policies to encourage neighbourhood shops by promoting mixed land-use cities, city planning to encourage public transport and mass transport corridors for medium cities.
RIL eyes bigger play in fin space
MUMBAI: Reliance Industries, India's largest private sector company, is looking beyond the DE Shaw Group for its participation in the country's rapidly growing financial services space. It plans to join hands with leading global companies to offer a host of financial products, the company disclosed in its annual report.
"The financial services sector is poised for rapid and significant growth," Mukesh Ambani, CMD, Reliance, wrote in his letter to shareholders. "Several international companies have approached Reliance to be their partner of choice in establishing niche businesses in India. We will participate in this sector through partnerships with leading global companies," Ambani added. The statement comes at a time when there are reports about Reliance buying a substantial stake in IL&FS, one of the leading players in financing of infrastructure projects, and also about its foray into the life insurance space.
Ambani is now busy chalking out major plans in the financial services sector after he forged a deal with his younger brother, Anil, in May last year that allowed both to enter each others' business. At one point, Reliance had plans for a consumer finance joint venture with Citi but things didn't materialize as it competed with Anil's Reliance Consumer Finance. However, things started taking shape in March this year when the $58-billion company announced a joint venture with New York based DE Shaw Group to build a financial services business in India. While both the parties said that the venture will incorporate DE Shaw's investment and technology expertise with Reliance's operational knowledge and extensive presence across India, they haven't revealed the segments they would operate in. Reports suggest that the venture initially plans to float a $800-million infrastructure fund, and then get into carbon trading.
Analysts pointed out that DE Shaw is known mainly as a hedge fund giant. However, Reliance wants to play across the financial services spectrum, including MFs and insurance.
Meanwhile, Reliance's employee strength in 2010-11 fiscal stood at 22,661, down by 704 employees compared to the staff strength last fiscal. This number, however, excludes its subsidiaries such as Reliance Retail.
The Indian major is looking beyond DE Shaw. At one point, Reliance Retail, a unit of the energy-to-education company, was looking to launch co-branded credit cards targeting its loyalty programme (Reliance One) customers.
Although Reliance has its origin in textiles and grew into petrochem, oil explorations and retail, its chief was recently inducted on the global board of Bank of America Corporation, one of the largest banks in the US. Other than this high-profile association of its chairman with a global financial powerhouse, Reliance also nurtures a desire to get into banking, as and when the sector regulator RBI gives the green signal to corporate houses to set up banks. Reliance over the last five years has entered into over 50 partnerships, more noticeable in the retail and shale gas sectors.
Meanwhile, Reliance's staff strength in 2010-11 stood at 22,661, down by 704 employees compared to the staff strength last fiscal. This number, however, excludes its subsidiaries such as Reliance Retail.
"The financial services sector is poised for rapid and significant growth," Mukesh Ambani, CMD, Reliance, wrote in his letter to shareholders. "Several international companies have approached Reliance to be their partner of choice in establishing niche businesses in India. We will participate in this sector through partnerships with leading global companies," Ambani added. The statement comes at a time when there are reports about Reliance buying a substantial stake in IL&FS, one of the leading players in financing of infrastructure projects, and also about its foray into the life insurance space.
Ambani is now busy chalking out major plans in the financial services sector after he forged a deal with his younger brother, Anil, in May last year that allowed both to enter each others' business. At one point, Reliance had plans for a consumer finance joint venture with Citi but things didn't materialize as it competed with Anil's Reliance Consumer Finance. However, things started taking shape in March this year when the $58-billion company announced a joint venture with New York based DE Shaw Group to build a financial services business in India. While both the parties said that the venture will incorporate DE Shaw's investment and technology expertise with Reliance's operational knowledge and extensive presence across India, they haven't revealed the segments they would operate in. Reports suggest that the venture initially plans to float a $800-million infrastructure fund, and then get into carbon trading.
Analysts pointed out that DE Shaw is known mainly as a hedge fund giant. However, Reliance wants to play across the financial services spectrum, including MFs and insurance.
Meanwhile, Reliance's employee strength in 2010-11 fiscal stood at 22,661, down by 704 employees compared to the staff strength last fiscal. This number, however, excludes its subsidiaries such as Reliance Retail.
The Indian major is looking beyond DE Shaw. At one point, Reliance Retail, a unit of the energy-to-education company, was looking to launch co-branded credit cards targeting its loyalty programme (Reliance One) customers.
Although Reliance has its origin in textiles and grew into petrochem, oil explorations and retail, its chief was recently inducted on the global board of Bank of America Corporation, one of the largest banks in the US. Other than this high-profile association of its chairman with a global financial powerhouse, Reliance also nurtures a desire to get into banking, as and when the sector regulator RBI gives the green signal to corporate houses to set up banks. Reliance over the last five years has entered into over 50 partnerships, more noticeable in the retail and shale gas sectors.
Meanwhile, Reliance's staff strength in 2010-11 stood at 22,661, down by 704 employees compared to the staff strength last fiscal. This number, however, excludes its subsidiaries such as Reliance Retail.
Sunday, May 8, 2011
Seeking Business, States Loosen Insurance Rules
Companies looking to do business in secret once had to travel to places like the Cayman Islands or Bermuda.
Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.
Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company’s own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.
Now some states make it just as easy. And they have broadened the definition of captives so that even insurance companies can create them. This has given rise to concern that a shadow insurance industry is emerging, with less regulation and more potential debt than policyholders know, raising the possibility that some companies will find themselves without enough money to pay future claims. Critics say this is much like the shadow banking system that contributed to the financial crisis.
Aetna recently used a subsidiary in Vermont to refinance a block of health insurance policies, reaping $150 million in savings, according to its chief financial officer, Joseph M. Zubretsky. The main reason is that the insurer did not need to maintain conventional reserves at the same level as would have been required by insurance regulators in Aetna’s home state of Connecticut.
In other big transactions, companies including MetLife, the Hartford Financial Services Group, Swiss Reinsurance, Genworth Financial and the American International Group, among others, have refinanced life, disability and long-term-care insurance policies, as well as annuities.
For the states, attracting these insurance deals promotes business travel and creates jobs for lawyers, actuaries and other white-collar workers, who pay taxes. States have also found that they can impose modest taxes on the premiums collected by captives.
For insurers, these subsidiaries offer ways to unlock some of the money tied up in reserves, making millions available for dividends, acquisitions, bonuses and other projects. Three weeks after Aetna’s deal closed, the company announced it was increasing its dividend fifteenfold.
And as changes to the nation’s health systems are phased in, such innovations might even help hold down the cost of insurance for consumers, much as selling pooled mortgages to investors has made buying a home less expensive.
The downside, though, is that the states are offering a refuge from other states’ insurance rules, especially the all-important ones requiring companies to have sufficient reserves. California, for one, has already chosen not to try to lure such businesses. “We are concerned about systems that usher in less robust financial security and oversight,” said Dave Jones, the California insurance commissioner.
While saying that he wanted to remain open to innovation, Mr. Jones added, “We need to ensure that innovative transactions are not a strategy to drain value away from policyholders only to provide short-term enrichment to shareholders and investment bankers.”
The cost of some of the deals has been considerable. In 2008, MetLife used a subsidiary in Vermont to handle a crucial $3.5 billion letter of credit, with help from Deutsche Bank, because the subsidiary was not subject to the same collateral requirements as in New York. The trade immediately bolstered MetLife’s balance sheet, helping the company to endure that year’s market turmoil without government assistance. But MetLife agreed to pay Deutsche Bank $3.5 million a year for 15 years, according to internal documents obtained by The New York Times — locking itself into high costs for years.
MetLife said its transaction was in keeping with industry rules and norms, and Deutsche Bank declined to comment.
Another issue is public oversight. State regulators normally require insurance companies to make available reams of detailed information. A policyholder can find every asset in an insurer’s investment portfolio, for instance, or the company the carrier turns to for reinsurance. But not if the insurer relies on a captive. The new state laws make the audited financial statements of the captives confidential.
Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.
Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company’s own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.
Now some states make it just as easy. And they have broadened the definition of captives so that even insurance companies can create them. This has given rise to concern that a shadow insurance industry is emerging, with less regulation and more potential debt than policyholders know, raising the possibility that some companies will find themselves without enough money to pay future claims. Critics say this is much like the shadow banking system that contributed to the financial crisis.
Aetna recently used a subsidiary in Vermont to refinance a block of health insurance policies, reaping $150 million in savings, according to its chief financial officer, Joseph M. Zubretsky. The main reason is that the insurer did not need to maintain conventional reserves at the same level as would have been required by insurance regulators in Aetna’s home state of Connecticut.
In other big transactions, companies including MetLife, the Hartford Financial Services Group, Swiss Reinsurance, Genworth Financial and the American International Group, among others, have refinanced life, disability and long-term-care insurance policies, as well as annuities.
For the states, attracting these insurance deals promotes business travel and creates jobs for lawyers, actuaries and other white-collar workers, who pay taxes. States have also found that they can impose modest taxes on the premiums collected by captives.
For insurers, these subsidiaries offer ways to unlock some of the money tied up in reserves, making millions available for dividends, acquisitions, bonuses and other projects. Three weeks after Aetna’s deal closed, the company announced it was increasing its dividend fifteenfold.
And as changes to the nation’s health systems are phased in, such innovations might even help hold down the cost of insurance for consumers, much as selling pooled mortgages to investors has made buying a home less expensive.
The downside, though, is that the states are offering a refuge from other states’ insurance rules, especially the all-important ones requiring companies to have sufficient reserves. California, for one, has already chosen not to try to lure such businesses. “We are concerned about systems that usher in less robust financial security and oversight,” said Dave Jones, the California insurance commissioner.
While saying that he wanted to remain open to innovation, Mr. Jones added, “We need to ensure that innovative transactions are not a strategy to drain value away from policyholders only to provide short-term enrichment to shareholders and investment bankers.”
The cost of some of the deals has been considerable. In 2008, MetLife used a subsidiary in Vermont to handle a crucial $3.5 billion letter of credit, with help from Deutsche Bank, because the subsidiary was not subject to the same collateral requirements as in New York. The trade immediately bolstered MetLife’s balance sheet, helping the company to endure that year’s market turmoil without government assistance. But MetLife agreed to pay Deutsche Bank $3.5 million a year for 15 years, according to internal documents obtained by The New York Times — locking itself into high costs for years.
MetLife said its transaction was in keeping with industry rules and norms, and Deutsche Bank declined to comment.
Another issue is public oversight. State regulators normally require insurance companies to make available reams of detailed information. A policyholder can find every asset in an insurer’s investment portfolio, for instance, or the company the carrier turns to for reinsurance. But not if the insurer relies on a captive. The new state laws make the audited financial statements of the captives confidential.
Oil Gains in New York as U.S. Economic Data Signals Slump Was Exaggerated
Oil rose in New York, rebounding from the biggest weekly decline since 2008 as signs of an improving economy in the U.S., the world’s largest crude consumer, stoked speculation last week’s slump was exaggerated.
Futures climbed as much as 1.9 percent today, snapping a five-day losing streak, after Labor Department data on May 6 showed payrolls expanded more than forecast. The global economy isn’t weak enough to justify a freefall in prices, Qatar Oil Minister Mohammed bin Saleh al-Sada said yesterday. Oil’s 14-day relative strength index, a measure of how rapidly prices are rising or falling, dropped to 29.2 on May 6. A reading below 30 typically indicates prices may rebound.
“You’d expect some sort of reaction after the reasonable employment data,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted oil will average $100 a barrel this year. “I’d expect a nervous recovery after the move from $113 down to $97. We may see some strength the next couple of days.”
Crude for June delivery increased as much as $1.81 to $98.99 a barrel in electronic trading on the New York Mercantile Exchange. It was at $98.75 at 12:22 p.m. Singapore time. On May 6, the contract fell $2.62, or 2.6 percent, to $97.18, the lowest settlement since March 15.
Oil slumped 15 percent last week, the biggest drop since December 2008. Prices are up 29 in the past year.
Brent crude for June settlement on the London-based ICE Futures Europe exchange rose as much as $1.57, or 1.4 percent, to $110.70 a barrel.
Bullish Bets
Hedge funds were caught with bullish bets near record highs last week as oil in New York plunged.
Large speculators reduced net-long positions by 2.4 percent to 293,823 futures and options in the seven days to May 3, according to the U.S. Commodity Futures Trading Commission’s weekly Commitments of Traders report. That’s still within 5.7 percent of an all-time high in March.
U.S. retail sales climbed in April, bolstering evidence employment gains are allowing Americans to weather higher fuel costs, according to economists surveyed by Bloomberg News before a Commerce Department report on May 12. Purchases probably gained 0.6 percent, based on the median forecast.
A stable oil price is a goal of the Organization of Petroleum Exporting Countries, Qatar’s al-Sada said yesterday. Markets are well supplied and it’s too early to say whether OPEC will decide to pump more crude at its next meeting on June 8, he said. The 12-member group is responsible for 40 percent of the world’s oil supply.
Brent Crude
Brent, the benchmark for Europe and Africa, has rallied 17 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and disrupted exports from Libya, an OPEC member.
Security forces yesterday beat back protests and fired on demonstrators in Syria and Yemen as Egypt’s justice minister vowed to restore order with an “iron fist,” after sectarian clashes in Cairo left 12 people dead.
“Some of the tightness that was expected around the supply side seems to have abated,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said in an interview with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.”
The regional conflict “seems to be relatively well contained,” said Westmore, who predicted oil will average $113 a barrel in the third quarter.
Futures climbed as much as 1.9 percent today, snapping a five-day losing streak, after Labor Department data on May 6 showed payrolls expanded more than forecast. The global economy isn’t weak enough to justify a freefall in prices, Qatar Oil Minister Mohammed bin Saleh al-Sada said yesterday. Oil’s 14-day relative strength index, a measure of how rapidly prices are rising or falling, dropped to 29.2 on May 6. A reading below 30 typically indicates prices may rebound.
“You’d expect some sort of reaction after the reasonable employment data,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted oil will average $100 a barrel this year. “I’d expect a nervous recovery after the move from $113 down to $97. We may see some strength the next couple of days.”
Crude for June delivery increased as much as $1.81 to $98.99 a barrel in electronic trading on the New York Mercantile Exchange. It was at $98.75 at 12:22 p.m. Singapore time. On May 6, the contract fell $2.62, or 2.6 percent, to $97.18, the lowest settlement since March 15.
Oil slumped 15 percent last week, the biggest drop since December 2008. Prices are up 29 in the past year.
Brent crude for June settlement on the London-based ICE Futures Europe exchange rose as much as $1.57, or 1.4 percent, to $110.70 a barrel.
Bullish Bets
Hedge funds were caught with bullish bets near record highs last week as oil in New York plunged.
Large speculators reduced net-long positions by 2.4 percent to 293,823 futures and options in the seven days to May 3, according to the U.S. Commodity Futures Trading Commission’s weekly Commitments of Traders report. That’s still within 5.7 percent of an all-time high in March.
U.S. retail sales climbed in April, bolstering evidence employment gains are allowing Americans to weather higher fuel costs, according to economists surveyed by Bloomberg News before a Commerce Department report on May 12. Purchases probably gained 0.6 percent, based on the median forecast.
A stable oil price is a goal of the Organization of Petroleum Exporting Countries, Qatar’s al-Sada said yesterday. Markets are well supplied and it’s too early to say whether OPEC will decide to pump more crude at its next meeting on June 8, he said. The 12-member group is responsible for 40 percent of the world’s oil supply.
Brent Crude
Brent, the benchmark for Europe and Africa, has rallied 17 percent this year as unrest in the Middle East and North Africa toppled leaders in Tunisia and Egypt and disrupted exports from Libya, an OPEC member.
Security forces yesterday beat back protests and fired on demonstrators in Syria and Yemen as Egypt’s justice minister vowed to restore order with an “iron fist,” after sectarian clashes in Cairo left 12 people dead.
“Some of the tightness that was expected around the supply side seems to have abated,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, said in an interview with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.”
The regional conflict “seems to be relatively well contained,” said Westmore, who predicted oil will average $113 a barrel in the third quarter.
Asia Stocks Advance as U.S. Jobs Report Beats Estimate
Energy producers led Asian stocks higher, with the regional benchmark index climbing for the first time in five days, after stronger-than-forecast U.S. jobs growth bolstered confidence in the world’s largest economy and halted a rout of commodity prices. Japan’s power companies fell.
Cnooc Ltd., China’s largest offshore oil producer, climbed 1.8 percent in Hong Kong as oil rebounded from the biggest weekly decline since 2008. BHP Billiton Ltd., Australia’s biggest oil producer, gained 0.8 percent in Sydney. HSBC Holdings Plc (5), Europe’s biggest bank by market value, added 1.5 percent in Hong Kong after Greece denied it was considering leaving the euro. Chubu Electric Power Co. slumped 11 percent in Tokyo after Japan’s Prime Minister Naoto Kan asked the utility to shut its Hamaoka nuclear plant.
The MSCI Asia Pacific Index climbed 0.4 percent to 138.06 as of 1:41 p.m. in Tokyo, with about five stocks rising for every four that fell.
“The U.S. nonfarm payroll data released on Friday was encouraging to see, although the tenor of recent economic releases out of the U.S. has been very mixed,” said Tim Schroeders, Melbourne-based manager at Pengana Capital Ltd., which oversees about A$1 billion. “It is highly unrealistic that Greece will leave the European Union.”
Regional Indexes
The Asia-Pacific gauge sank 1.4 percent last week after central banks from India to the Philippines raised interest rates and U.S. reports ahead of Friday’s employment data suggested the country’s economic recovery was slowing.
Japan’s Nikkei 225 (NKY) Stock Average slipped 0.6 percent, dropping for a second straight day on speculation the government’s request to shut the nuclear reactor located close to an earthquake fault-line may hurt the economy. Australia’s S&P/ASX 200 Index rose 0.4 percent, while Hong Kong’s Hang Seng Index gained 0.9 percent.
Futures on the Standard & Poor’s 500 Index added 0.5 percent today. In New York, the index advanced 0.4 percent on May 6 as a government report showed the U.S. economy added more jobs than forecast in April, easing concern that higher fuel prices are slowing a recovery.
Payrolls increased by 244,000 workers last month, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the U.S. Labor Department said. Economists projected an April increase of 185,000, according to the median estimate in a Bloomberg News survey. Employment excluding government jobs jumped the most in five years, while the jobless rate rose to 9 percent, the first increase since November.
Economic Recovery
“The stronger-than-expected payroll report tells us that the U.S. economic recovery is becoming more sustainable,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which manages $98 billion in Sydney. “More jobs means more spending, means more profits, means more jobs, and so on.”
In Hong Kong today, Cnooc gained 1.8 percent to HK$18.30, while PetroChina Co., the nation’s largest oil company, advanced 2.3 percent to HK$10.72. BHP Billiton, the world’s No. 1 mining company, rose 0.8 percent to A$44.92 in Sydney, while Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, gained 1.1 percent to A$45.81.
A measure of energy stocks on the Asia-Pacific gauge advanced the most among 10 industry groups as oil futures climbed for the first day in six. Crude for June delivery rose as much as 1.9 percent in electronic trading on the New York Mercantile Exchange after slumping 14.7 percent last week, the biggest decrease since December 2008.
Payroll Data
HSBC climbed 1.5 percent to HK$83.95 in Hong Kong, and Billabong International Ltd. (BBG), a surf-wear maker that gets more than a fifth of its sales in Europe, climbed 1.2 percent to A$6.71 in Sydney.
European Union leaders showed their resolve in keeping the euro region together, agreeing in an unannounced meeting last week to ease the terms of the 110 billion-euro ($158 billion) lifeline that Greece received last year.
The euro tumbled 3.45 percent in the final two days last week, the biggest back-to-back loss since 2008, as Der Spiegel magazine said Greece may withdraw from the currency bloc. EU officials denied the report and said Greece will need more aid.
In Sydney, Spotless Group Ltd. (SPT), a corporate-services provider that grew from one Melbourne dry-cleaning store in 1946, soared 15 percent to A$2.24 after receiving a A$657 million ($707 million) takeover bid from a private-equity firm. Spotless, which didn’t name the suitor, said the A$2.50-a-share cash offer was too low. Spotless provides facilities management, food and cleaning services in more than 30 countries.
Power Companies
Chubu Electric plunged 11 percent to 1,569 yen in Tokyo today, leading power and gas companies to the steepest decline among 33 industry groups in Japan’s broader Topix index.
Prime Minister Kan on May 6 asked the nation’s third- biggest utility to shut its Hamaoka power plant, citing a government study that showed an 87 percent likelihood of a magnitude-8 quake striking the area within 30 years. It is the first government request to close reactors since a temblor and tsunami hit northeastern Japan on March 11 and caused the world’s worst nuclear accident in 25 years.
Tohoku Electric Power Co., a utility based in Miyagi prefecture, northern Japan, sank 2 percent to 1,206 yen after Asahi newspaper reported it may post a full-year loss after power plants were damaged in the earthquake.
Government Measures
Toyota Motor Corp., the world’s largest carmaker, retreated 0.8 percent to 3,185 yen.
“A lot of industrial-use products such as cars and electronics parts are produced in the Chubu district,” said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co. in Tokyo. “The uncertainty about the government measures toward nuclear power is a negative factor for stock prices.”
The Topix has declined about 8 percent through May 6 since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, disabled a nuclear power plant and disrupted supply chains at companies from Toyota to Canon Inc.
Cnooc Ltd., China’s largest offshore oil producer, climbed 1.8 percent in Hong Kong as oil rebounded from the biggest weekly decline since 2008. BHP Billiton Ltd., Australia’s biggest oil producer, gained 0.8 percent in Sydney. HSBC Holdings Plc (5), Europe’s biggest bank by market value, added 1.5 percent in Hong Kong after Greece denied it was considering leaving the euro. Chubu Electric Power Co. slumped 11 percent in Tokyo after Japan’s Prime Minister Naoto Kan asked the utility to shut its Hamaoka nuclear plant.
The MSCI Asia Pacific Index climbed 0.4 percent to 138.06 as of 1:41 p.m. in Tokyo, with about five stocks rising for every four that fell.
“The U.S. nonfarm payroll data released on Friday was encouraging to see, although the tenor of recent economic releases out of the U.S. has been very mixed,” said Tim Schroeders, Melbourne-based manager at Pengana Capital Ltd., which oversees about A$1 billion. “It is highly unrealistic that Greece will leave the European Union.”
Regional Indexes
The Asia-Pacific gauge sank 1.4 percent last week after central banks from India to the Philippines raised interest rates and U.S. reports ahead of Friday’s employment data suggested the country’s economic recovery was slowing.
Japan’s Nikkei 225 (NKY) Stock Average slipped 0.6 percent, dropping for a second straight day on speculation the government’s request to shut the nuclear reactor located close to an earthquake fault-line may hurt the economy. Australia’s S&P/ASX 200 Index rose 0.4 percent, while Hong Kong’s Hang Seng Index gained 0.9 percent.
Futures on the Standard & Poor’s 500 Index added 0.5 percent today. In New York, the index advanced 0.4 percent on May 6 as a government report showed the U.S. economy added more jobs than forecast in April, easing concern that higher fuel prices are slowing a recovery.
Payrolls increased by 244,000 workers last month, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the U.S. Labor Department said. Economists projected an April increase of 185,000, according to the median estimate in a Bloomberg News survey. Employment excluding government jobs jumped the most in five years, while the jobless rate rose to 9 percent, the first increase since November.
Economic Recovery
“The stronger-than-expected payroll report tells us that the U.S. economic recovery is becoming more sustainable,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., which manages $98 billion in Sydney. “More jobs means more spending, means more profits, means more jobs, and so on.”
In Hong Kong today, Cnooc gained 1.8 percent to HK$18.30, while PetroChina Co., the nation’s largest oil company, advanced 2.3 percent to HK$10.72. BHP Billiton, the world’s No. 1 mining company, rose 0.8 percent to A$44.92 in Sydney, while Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, gained 1.1 percent to A$45.81.
A measure of energy stocks on the Asia-Pacific gauge advanced the most among 10 industry groups as oil futures climbed for the first day in six. Crude for June delivery rose as much as 1.9 percent in electronic trading on the New York Mercantile Exchange after slumping 14.7 percent last week, the biggest decrease since December 2008.
Payroll Data
HSBC climbed 1.5 percent to HK$83.95 in Hong Kong, and Billabong International Ltd. (BBG), a surf-wear maker that gets more than a fifth of its sales in Europe, climbed 1.2 percent to A$6.71 in Sydney.
European Union leaders showed their resolve in keeping the euro region together, agreeing in an unannounced meeting last week to ease the terms of the 110 billion-euro ($158 billion) lifeline that Greece received last year.
The euro tumbled 3.45 percent in the final two days last week, the biggest back-to-back loss since 2008, as Der Spiegel magazine said Greece may withdraw from the currency bloc. EU officials denied the report and said Greece will need more aid.
In Sydney, Spotless Group Ltd. (SPT), a corporate-services provider that grew from one Melbourne dry-cleaning store in 1946, soared 15 percent to A$2.24 after receiving a A$657 million ($707 million) takeover bid from a private-equity firm. Spotless, which didn’t name the suitor, said the A$2.50-a-share cash offer was too low. Spotless provides facilities management, food and cleaning services in more than 30 countries.
Power Companies
Chubu Electric plunged 11 percent to 1,569 yen in Tokyo today, leading power and gas companies to the steepest decline among 33 industry groups in Japan’s broader Topix index.
Prime Minister Kan on May 6 asked the nation’s third- biggest utility to shut its Hamaoka power plant, citing a government study that showed an 87 percent likelihood of a magnitude-8 quake striking the area within 30 years. It is the first government request to close reactors since a temblor and tsunami hit northeastern Japan on March 11 and caused the world’s worst nuclear accident in 25 years.
Tohoku Electric Power Co., a utility based in Miyagi prefecture, northern Japan, sank 2 percent to 1,206 yen after Asahi newspaper reported it may post a full-year loss after power plants were damaged in the earthquake.
Government Measures
Toyota Motor Corp., the world’s largest carmaker, retreated 0.8 percent to 3,185 yen.
“A lot of industrial-use products such as cars and electronics parts are produced in the Chubu district,” said Kazuhiro Takahashi, a general manager at Daiwa Securities Capital Markets Co. in Tokyo. “The uncertainty about the government measures toward nuclear power is a negative factor for stock prices.”
The Topix has declined about 8 percent through May 6 since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, disabled a nuclear power plant and disrupted supply chains at companies from Toyota to Canon Inc.
Tata Motors pins hopes on twin-track approach
Tata Motors has set its sights on being an “unconventional global player” in the automotive industry, drawing out important benefits from its twin bases in India and Britain, according to Carl-Peter Forster, the chief executive and a German car industry veteran.
Mr Forster concedes that the combination of operations at Tata Motors – part of India’s Tata industrial group, and the country’s largest automotive supplier – is unusual by the standards of the global vehicle industry.
Tata has a large commercial vehicles business in India and a solid position in cheap and small cars built around its Nano vehicle, the brainchild of Ratan Tata, the Tata Group’s chairman.
Tacked on to this is UK-based Jaguar Land Rover, which specialises in relatively sophisticated cars at the expensive end of the market. Tata bought JLR from Ford Motor three years ago for $2.3bn as part of a plan by Mr Tata to make his group more global.
“We have a combination of a low cost base and a rapidly growing market in India, and a strong technological position in Britain,” says Mr Forster. “That gives us a lot of advantages which we can build on.”
An aeronautical engineer who previously ran General Motors’ operations in Europe and who also worked at BMW, Mr Forster was recruited to Tata Motors last year by Mr Tata as part of an effort to inject international management and engineering expertise at the top of the Mumbai-based company.
Mr Forster bases much of his hope for future growth on connections between the company’s 7,500-strong engineering team. Of these people, 4,000 work in the UK for JLR, with the rest mainly in India.
The company plans to add another 1,000 to the UK engineering group, part of a £5bn ($8.2bn) effort in the next five years to bring new vehicle models to JLR’s product range, while also increasing “at a rapid rate” its cadre of India-based engineers, Mr Forster said.
One idea for mixing the efforts of the Indian and UK groups involves expertise in fields such as novel transmissions or turbocharger-based fuel compression. Both of these are being developed by JLR to try to make versions of cars that emit less carbon dioxide.
The skills in these fields could be linked to fresh concepts for lightweight materials – which also have a role in low-emission vehicles – that have been developed in India as part of Tata’s project to build the Nano.
Ian Fletcher, an automotive analyst at IHS Global Insight, a consultancy, said Mr Forster’s strategy had “some credibility” as a result of the potential that existed for collaboration between the Indian and UK parts of the business.
“For instance, it is fairly easy to visualise the company in the next few years introducing a new series of models that could fill the gap between its small cars made in India and the vehicles at the luxury end of the market that JLR is making.”
In the year to March, Tata Motors produced 1.1m vehicles – a small figure by the standards of the world’s biggest automotive businesses such as Toyota and Ford.
Of the total, slightly less than half were medium and heavy trucks, of which the company is the world’s fourth-biggest producer. The company’s car output during the year of 512,000 vehicles was split about equally between operations in India and Britain.
As part of Mr Tata’s plans to boost Tata Motors’ overall engineering effort, the company is forming closer links with several small UK-based technology businesses. For instance, it has taken a minority stake in Bladon Jets, a maker of small “micro-turbine” engines that use ideas borrowed from jet engines to provide greater thrust. It is also collaborating with Torotrak, which is developing new gear boxes.
Mr Forster concedes that the combination of operations at Tata Motors – part of India’s Tata industrial group, and the country’s largest automotive supplier – is unusual by the standards of the global vehicle industry.
Tata has a large commercial vehicles business in India and a solid position in cheap and small cars built around its Nano vehicle, the brainchild of Ratan Tata, the Tata Group’s chairman.
Tacked on to this is UK-based Jaguar Land Rover, which specialises in relatively sophisticated cars at the expensive end of the market. Tata bought JLR from Ford Motor three years ago for $2.3bn as part of a plan by Mr Tata to make his group more global.
“We have a combination of a low cost base and a rapidly growing market in India, and a strong technological position in Britain,” says Mr Forster. “That gives us a lot of advantages which we can build on.”
An aeronautical engineer who previously ran General Motors’ operations in Europe and who also worked at BMW, Mr Forster was recruited to Tata Motors last year by Mr Tata as part of an effort to inject international management and engineering expertise at the top of the Mumbai-based company.
Mr Forster bases much of his hope for future growth on connections between the company’s 7,500-strong engineering team. Of these people, 4,000 work in the UK for JLR, with the rest mainly in India.
The company plans to add another 1,000 to the UK engineering group, part of a £5bn ($8.2bn) effort in the next five years to bring new vehicle models to JLR’s product range, while also increasing “at a rapid rate” its cadre of India-based engineers, Mr Forster said.
One idea for mixing the efforts of the Indian and UK groups involves expertise in fields such as novel transmissions or turbocharger-based fuel compression. Both of these are being developed by JLR to try to make versions of cars that emit less carbon dioxide.
The skills in these fields could be linked to fresh concepts for lightweight materials – which also have a role in low-emission vehicles – that have been developed in India as part of Tata’s project to build the Nano.
Ian Fletcher, an automotive analyst at IHS Global Insight, a consultancy, said Mr Forster’s strategy had “some credibility” as a result of the potential that existed for collaboration between the Indian and UK parts of the business.
“For instance, it is fairly easy to visualise the company in the next few years introducing a new series of models that could fill the gap between its small cars made in India and the vehicles at the luxury end of the market that JLR is making.”
In the year to March, Tata Motors produced 1.1m vehicles – a small figure by the standards of the world’s biggest automotive businesses such as Toyota and Ford.
Of the total, slightly less than half were medium and heavy trucks, of which the company is the world’s fourth-biggest producer. The company’s car output during the year of 512,000 vehicles was split about equally between operations in India and Britain.
As part of Mr Tata’s plans to boost Tata Motors’ overall engineering effort, the company is forming closer links with several small UK-based technology businesses. For instance, it has taken a minority stake in Bladon Jets, a maker of small “micro-turbine” engines that use ideas borrowed from jet engines to provide greater thrust. It is also collaborating with Torotrak, which is developing new gear boxes.
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