Davos Tells EU to Fix Crisis for Good By Simon Kennedy and Jana Randow - Jan 29, 2012

European leaders were told by policy makers, bankers and academics from around the world that it’s time to end the region’s debt crisis and measures aimed at simply containing it are no longer enough.

Five days of debating and partying at the World Economic Forum’s annual meeting ended yesterday, with the euro area under pressure to swiftly deliver a bigger bailout fund that could help build a firewall worth more than $1 trillion. Leaders were also told they need to finish crafting tougher budget rules, and finally make Greece’s debt burden manageable.

Failure to comply would threaten economic growth and financial markets, as well as deprive the region of more outside support, said delegates including billionaire investor George Soros and U.S. Treasury Secretary Timothy F. Geithner. How far Europe’s officials are willing to go in response may be revealed at a Brussels summit today.

“There’s a very strong view of get on with it, get this thing done,” Bank of Canada Governor Mark Carney told Bloomberg Television in Davos, Switzerland.

The caution against complacency came toward the end of a month in which signs of stabilization emerged in Europe as market lending rates eased, economic indicators showed some resilience and bond yields fell from Spain (GDBR10) to Italy (GDBR10). At the same time, banks are still cutting lending, Portuguese borrowing costs are surging and Greece faces a 14.5 billion ($19 billion) euro bond repayment in March.
Spillover

Carney estimated Europe’s woes will subtract 1 percentage point from global growth by the end of 2012 “and that’s in a world where this crisis is contained.”

“It’s not just a euro-zone crisis, it’s a crisis that could have spillover effects around the world,” International Monetary Fund Managing Director Christine Lagarde said. She came to Davos promoting her push for $500 billion in new crisis- fighting money for the Washington-based lender.

The main solution proposed was increasing the euro region’s own funds from the planned limit of 500 billion euros that will take effect in July. EU officials already plan to reassess that amount in March and have the option to push it even higher through leverage. That could swell it to a level triggering donations to the IMF from around the world and result in an overall warchest worth at least $1.1 trillion
Stronger Firewall

Both the French and Spanish finance ministers told Davos delegates they’d support increasing the rescue fund even in the face of German opposition.

“The only way Europe’s going to be successful in holding this together, making monetary union work, is to build a stronger firewall,” Geithner said. Soros said in an interview “not enough has been done to ringfence” the region from the risk of a Greek default.

Strengthening the defences was regarded as a pre-requisite by officials from the U.K. to Japan if they are to stump up emergency cash for the region and channel it through the IMF. European governments must show the “colour of their money,” said U.K. Chancellor of the Exchequer George Osborne.

There was unanimity that Greece (GRBD10) remains Europe’s weakest link as talks between the government and bond holders on a debt restructuring dragged on through the weekend. Failure to strike a deal could deprive the country of a second bailout package required to keep its finances afloat.
Greek Fallout

“The fact we’re still at the beginning of 2012 talking about Greece is a sign this problem hasn’t been dealt with,” Osborne said.

Bank chief executives in Davos disagreed over the fallout if Greece reneged on its debt. Deutsche Bank AG’s Josef Ackermann said in an interview that a default would be “playing with fire,” while JPMorgan Chase & Co.’s Jamie Dimon told CNBC it would not be a “disaster.”

For all the angst, conference-goers expressed optimism that European leaders may now be more aware of the risks of failure so more willing to act.

“There is evidence Europe is starting to turn a bit of a corner,” John Phizackerley, Nomura’s chief executive officer for Europe, Middle East and Africa, said in an interview.

While German Chancellor Angela Merkel used her keynote speech to rebuff calls for bigger bailout reserves, she is “absolutely convinced that we will be able to master this crisis.” Merkel meets other euro leaders in Brussels today to continue work on fortifying the region’s budget rules.
ECB Praise

If there was a hero of the week it was ECB President Mario Draghi, who won widespread praise for his decision last month to loan banks an unprecedented 489 billion euros for the next three years. Still, even his fans warned it only gave governments and banks breathing space to remedy their problems.

“I’m really glad the ECB took these actions, but let’s not be complacent,” World Bank President Robert Zoellick said. “This buys time, you still have to act.”

The mood was bleakest among economists and historians. Nouriel Roubini, co-founder of Roubini Global Economics LLC, described Europe as a “slow motion train wreck” and said Greece may be forced out of the euro within a year.

Harvard University professor Niall Ferguson said the crisis remained one of solvency. Only an agreement by Germany to transfer cash to indebted nations and issue joint debt would end it.

“Optimism is ill-advised,” said Ferguson, a Bloomberg News contributor. “As often happens, there is temporary respite and then markets wake up and everyone realises the crisis isn’t over.”

To contact the reporter on this story: Simon Kennedy in Davos at skennedy4@bloomberg.net Jana Randow in Davos at jrandow@bloomberg.net

To contact the editors responsible for this story: John Fraher at jfraher@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Mumbai’s Home Sales Decline to Three-Year Low as Record Prices Dent Demand

By Pooja Thakur - Jan 27, 2012 5:56 AM GMT+0530

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Enlarge image Mumbai Home Sales Drop to 3-Year Low as Prices Climb

The Mumbai housing market faced the risk of a price decline last year. Photographer: Dhiraj Singh/Bloomberg

Mumbai’s residential home sales dropped to a three-year low in the quarter ended December as record home prices and higher interest rates crimped demand, according to Liases Foras Real Estate Rating & Research Pvt.

Sales in Mumbai, India’s most expensive property market, fell 17 percent from the previous quarter to 7.59 million square feet, said Pankaj Kapoor, founder of Liases Foras. The city’s unsold inventory, or the number of months needed to clear stock at the existing absorption rate, climbed to 44 months. A “healthy market” normally maintains about eight months of inventory, according to Kapoor.

“The likely scenario looks like we will see a dip in prices seeing the dismal sales and as liquidity remains tight,” Kapoor said in a phone interview from Mumbai yesterday.

India’s central bank raised borrowing costs by a record 375 basis points in 13 moves from mid-March 2010 to help curb inflation, hurting demand and investment. The Reserve Bank of India also cut the nation’s growth forecast three days ago to 7 percent in the year through March from the 7.6 percent predicted in October, after the economy expanded at the slowest pace in nine quarters, based on the most recent government data.

The city’s unsold inventory climbed to a record 119.85 million square feet, according to Liases Foras, a Mumbai real estate research company whose clients include Housing Development Finance Corp. (HDFC), India’s largest mortgage lender. The weighted average selling price in Mumbai climbed to a record 10,558 rupees ($210) a square foot, the data showed.
‘Sizeable Inventories’

The Mumbai housing market faced the risk of a price decline last year, said Om Ahuja, chief executive officer of residential services at the Indian unit of Jones Lang LaSalle Inc.

“Though developers are saddled with sizeable inventories of both ready and under-construction stock, they continue to be hesitant about announcing revised rates,” Ahuja said. Housing demand in the city has been showing signs of weakness for the last few quarters and this may continue, he said.

Bangalore and Chennai posted the largest sales increases last quarter. Sales in Bangalore climbed 54 percent from three months ended September to 14.16 million square feet, Kapoor said. Chennai (LIASCHSF) sold 91 percent more homes at 7.44 million square feet, he said, boosted by new projects and as buyers rushed to purchase homes ahead of higher registration charges levied by the state government. Both cities posted their highest quarterly sales in at least three years, while prices remained little changed from the earlier quarter.

Sales in the National Capital Region, which includes New Delhi and its surrounding areas, gained 27 percent to 22.77 million square feet in the quarter, the data showed. The weighted average selling price rose to 3,394.72 rupees a square foot, 5 percent higher than the September quarter.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at Apapuc1@bloomberg.net

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Ranbaxy Falls Most Since March on Proposed Settlement Costs: Mumbai Mover By Adi Narayan - Jan 27, 2012

Ranbaxy Laboratories Ltd. (RBXY), India’s biggest drugmaker, slumped the most in ten months in Mumbai trading because of costs of a proposed settlement with U.S. authorities over manufacturing violations.

Ranbaxy declined 6.5 percent to 443.90 rupees, the worst fall since March 21, at the close in Mumbai, making it the biggest loser on the 50-member S&P CNX Nifty (NIFTY) index. The company, based on the outskirts of New Delhi, may forgo at least $200 million in sales as a result of the settlement, Kotak Securities Ltd. said.

A decree signed last month and filed by the Department of Justice in federal court in Maryland on Jan. 25 requires Ranbaxy to relinquish 180-day marketing exclusivity for three pending generic drug applications. Court documents don’t identify the affected medicines, though probably include a version of Takeda Pharmaceutical Co. (4502)’s Actos diabetes pill, said Priti Arora, a pharmaceuticals analyst at Kotak in Mumbai.

“Losing 180-day exclusivity is very bad,” Arora said in an interview yesterday. Selling generic Actos in the U.S. with limited competition may have generated more than $200 million in revenue for Ranbaxy, she said. The drug, which had global sales of $4.7 billion in 2010, faces generic competition in August.

Ranbaxy set aside $500 million to resolve all potential civil and criminal liability related to the three-year-old dispute with the Justice Department and Food and Drug Administration, it said on Dec. 21. Before today, the stock had gained about 20 percent since then on optimism the company can press ahead with its applications to sell generic medicines in the U.S.

Details of the proposed settlement released this week “dispel any optimism,” Credit Suisse AG said in a report yesterday.
‘More Severe’

“We had expected the filing of this consent decree to show a way out of Ranbaxy’s difficulties and reopen its exports to the U.S., but the decree’s actual terms are more severe than we anticipated,” Tokyo-based health-care analysts Fumiyoshi Sakai and Toshiyuki Tateno said.

One of the three generic drug applications affected may include a version of Nexium, a heart-burn treatment sold by AstraZeneca Plc (AZN) that had global sales of $5 billion in 2010, according to Credit Suisse. Five other generic-drug applications are at risk if Ranbaxy doesn’t implement certain changes by a specified date, Mumbai-based analyst Anubhav Aggarwal said.

Chuck Caprariello, a spokesman for Ranbaxy in the U.S., declined to specify the drug applications affected.
‘Potentially Unsafe’

The Indian drugmaker made “adulterated, potentially unsafe” medicines that were illegal to sell, U.S. prosecutors said in the court documents. The company didn’t admit or deny the accusations detailed in the 58-page filing, which requires approval by a federal judge.

Ranbaxy consented to the proposed decree on Dec. 20 in an agreement signed by company officials including co-defendants Dale Adkisson, head of global quality; Managing Director Arun Sawhney; and Venkatachalam Krishnan, the company’s regional director for the Americas.

Drug manufacturing and testing defects led the FDA to block more than 30 generic drugs made at the Indian drugmaker’s Paonta Sahib and Dewas plants, the FDA said in September 2008, three months after Tokyo-based Daiichi Sankyo Co. (4568) agreed to buy a controlling stake in Ranbaxy for $4.6 billion.

Daiichi Sankyo closed down 2.3 percent in Tokyo trading at 1,422 yen, the lowest since Dec. 2.
Earnings Prospects

Earnings contributions from Ranbaxy “remain uncertain, weighing down shares in Daiichi Sankyo,” Sakai and Tateno said yesterday. They reiterated an “underperform” rating on the stock and expect it to fall to 1,200 yen in the next 12 months.

The proposed decree made it clear why Ranbaxy and Daiichi Sankyo took more than three years to reach an agreement with U.S. authorities, a Morgan Stanley analyst said.

“While the companies are making progress to resolve the issue, they still have many more hurdles to overcome,” said Mayo Mita, health-care analyst at Morgan Stanley in Tokyo by telephone today. “The timeframe of that is unclear. The process may require more staffing and investment, in addition to $500 million Ranbaxy set aside.”

Daiichi Sankyo declined to comment on the proposed settlement until the court approves the filing, spokesman Masaya Tamae said.

Ranbaxy has 66 generic-drug applications awaiting approval with the FDA. For 13 of these, the company was the first to challenge patents, according to a presentation on its website. Under a 1984 law, the first generic drugmaker to challenge U.S. patents gets six months of exclusive sales before competitors can enter the market.
Provigil, Diovan

Near-term exclusivities relate to versions of the sleep- disorder drug Provigil, which had $1.1 billion in sales in 2010; Actos; and Diovan, a blood-pressure pill made by Novartis AG (NOVN) that generated $1.5 billion in annual sales, Nomura Holdings Inc. said in a report yesterday.

The proposed settlement includes requirements that Ranbaxy remove false data contained in past drug applications; hire an outside expert to conduct a thorough internal review at the affected facilities and to audit applications containing data from those facilities; withdraw any applications found to contain false data; set up a separate office of data reliability within Ranbaxy; and hire an outside auditor to audit the affected facilities in the future, according to court documents.

“The detailed process, particularly product-by-product validation of data integrity, imply that complete resolution can take two to three years,” Nomura analysts Saion Mukherjee and Aditya Khemka said in a report yesterday. “As Ranbaxy works towards compliance with the help of external agencies, it will continue to incur high costs for resolution.”

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Mumbai’s Home Sales Decline to Three-Year Low as Record Prices Dent Demand By Pooja Thakur - Jan 26, 2012

Mumbai’s residential home sales dropped to a three-year low in the quarter ended December as record home prices and higher interest rates crimped demand, according to Liases Foras Real Estate Rating & Research Pvt.

Sales in Mumbai, India’s most expensive property market, fell 17 percent from the previous quarter to 7.59 million square feet, said Pankaj Kapoor, founder of Liases Foras. The city’s unsold inventory, or the number of months needed to clear stock at the existing absorption rate, climbed to 44 months. A “healthy market” normally maintains about eight months of inventory, according to Kapoor.

“The likely scenario looks like we will see a dip in prices seeing the dismal sales and as liquidity remains tight,” Kapoor said in a phone interview from Mumbai yesterday.

India’s central bank raised borrowing costs by a record 375 basis points in 13 moves from mid-March 2010 to help curb inflation, hurting demand and investment. The Reserve Bank of India also cut the nation’s growth forecast three days ago to 7 percent in the year through March from the 7.6 percent predicted in October, after the economy expanded at the slowest pace in nine quarters, based on the most recent government data.

The city’s unsold inventory climbed to a record 119.85 million square feet, according to Liases Foras, a Mumbai real estate research company whose clients include Housing Development Finance Corp. (HDFC), India’s largest mortgage lender. The weighted average selling price in Mumbai climbed to a record 10,558 rupees ($210) a square foot, the data showed.
‘Sizeable Inventories’

The Mumbai housing market faced the risk of a price decline last year, said Om Ahuja, chief executive officer of residential services at the Indian unit of Jones Lang LaSalle Inc.

“Though developers are saddled with sizeable inventories of both ready and under-construction stock, they continue to be hesitant about announcing revised rates,” Ahuja said. Housing demand in the city has been showing signs of weakness for the last few quarters and this may continue, he said.

Bangalore and Chennai posted the largest sales increases last quarter. Sales in Bangalore climbed 54 percent from three months ended September to 14.16 million square feet, Kapoor said. Chennai (LIASCHSF) sold 91 percent more homes at 7.44 million square feet, he said, boosted by new projects and as buyers rushed to purchase homes ahead of higher registration charges levied by the state government. Both cities posted their highest quarterly sales in at least three years, while prices remained little changed from the earlier quarter.

Sales in the National Capital Region, which includes New Delhi and its surrounding areas, gained 27 percent to 22.77 million square feet in the quarter, the data showed. The weighted average selling price rose to 3,394.72 rupees a square foot, 5 percent higher than the September quarter.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at Apapuc1@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Asia Stocks, U.S. Equity Futures Rise By Shiyin Chen - Jan 24, 2012

Asian stocks and U.S. equity-index futures gained after Apple Inc.’s quarterly profit more than doubled, while the dollar was 0.2 percent from its lowest level in three weeks against the euro before the Federal Open Market Committee releases forecasts for its key interest rate.

The MSCI Asia Pacific Index climbed 0.6 percent as of 9:45 a.m. in Tokyo. Standard & Poor’s 500 Index futures rose 0.3 percent and contracts on the Nasdaq-100 Index jumped 1 percent. The dollar traded at $1.3032 against the euro, after yesterday reaching $1.3063, while Australia’s currency erased earlier losses after data on inflation. Oil added 0.4 percent to $99.33 a barrel in New York.

Apple shares soared as much as 12 percent in extended trading after its results. President Barack Obama will lay out what he calls a “blueprint” for revitalizing the economy in his third State of the Union address, while the Fed will release its interest-rate forecasts for the first time. The World Economic Forum’s annual meeting begins a day after the International Monetary Fund cut its forecast yesterday for global growth.

“The FOMC meeting could be negative for the U.S. dollar against other currencies, but positive against the yen,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “If they explicitly say they’re going to leave the Fed funds rate at a record low for a very long time, even though the market already knows that and expects it, it may be positive for risk markets.”
Stocks Climb

More than three shares gained for every one that declined on MSCI’s Asia Pacific Index. Japan’s Nikkei 225 Stock Average rose 0.9 percent, Australia’s S&P/ASX 200 Index rallied 0.7 percent and South Korea’s Kospi Index increased 0.8 percent. Financial markets in Hong Kong, Taiwan and China remain closed for public holidays.

S&P 500 futures expiring in March signal the stocks gauge may rebound from yesterday’s 0.1 percent loss. Apple, the maker of iPhones and iPads, said first-quarter profit surged to $13.1 billion, or $13.87 a share. Analysts surveyed by Bloomberg on average estimated profit of $10.14 a share.

Boeing Co., Xerox Corp. and ConocoPhillips are among companies scheduled to release results today. Earnings-per-share topped estimates at about 65 percent of the 82 companies in the S&P 500 that released results from Jan. 9, data compiled by Bloomberg show.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net

To contact the editors responsible for this story: Rocky Swift at rswift5@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Asia Stocks Gain a Sixth Day as New Zealand Dollar, Oil Advance on Europe By Lynn Thomasson and Norie Kuboyama - Jan 23, 2012

Asian stocks rose for a sixth day, the longest winning streak in seven weeks, as the New Zealand dollar climbed on signs Europe is taking steps to tame the debt crisis. Oil extended yesterday’s rally after the European Union agreed to ban crude imports from Iran.

The MSCI Asia Pacific Index (MXAP) gained 0.2 percent as of 9:19 a.m. in Tokyo, bringing its advance since Jan. 16 to 4.9 percent. Standard & Poor’s 500 Index futures were little changed. The New Zealand currency strengthened 0.2 percent and the euro traded near the highest level in almost three weeks. Oil increased 0.4 percent to $99.88 a barrel, adding to a 1.3 percent jump yesterday.

Markets in China, Hong Kong, South Korea and Singapore are shut for the Lunar New Year holiday. Germany floated the idea of combining Europe’s two rescue funds yesterday, a concession to bolster the fight against the fiscal crisis as Greece bargained with bondholders over debt relief. India’s economic growth outlook has weakened and inflation remains elevated, the nation’s central bank said on Jan. 23, signaling it may leave interest rates unchanged.

“The worst scenario that Greece will break away from the euro region is gone, easing excessive worries about the European debt issues,” said Fumiyuki Nakanishi, a strategist at Tokyo- based SMBC Friend Securities Co. “Globally, a feeling of confidence to buy stocks is emerging.”

Apple Inc., McDonald’s Corp. and Johnson & Johnson are among U.S. companies scheduled to report quarterly results today. Earnings topped estimates at about 65 percent of the 52 companies in the S&P 500 that released results since Jan. 9, data compiled by Bloomberg show.

Elpida Memory Inc. (6665) rallied 4.8 percent for the biggest jump in the MSCI Asia Pacific Index. The Japanese chipmaker is in talks with Micron Technology Inc. and Nanya Technology Corp. for a three-way merger, the Yomiuri newspaper reported, without saying where it got the information.

To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Asian Stocks Swing Between Gains, Losses on European Debt, U.S. Outlook By Jonathan Burgos - Jan 22, 2012

Asian stocks swung between gains and losses as increasing home sales in the U.S. added to signs the world’s biggest economy is recovering, overshadowing uncertainties over continuing debt negotiations in Greece.

BHP Billiton Ltd. (BHP), the world’s biggest mining company and Australia’s largest oil producer, lost 0.9 percent in Sydney after crude and metal futures dropped. Canon Inc. (7751), the Japanese camera maker that gets one-third of sales from Europe, fell 0.7 percent in Tokyo. Olympus Corp., the world’s No. 1 maker of endoscopes, jumped 7.7 percent after it was allowed to keep its stock market listing following an accounting fraud that cut the company’s market value by about $4 billion.

“The market could come under short-term pressure as it’s had a strong run this year,” said Nader Naeimi, a Sydney-based senior strategist at AMP Capital Investors Ltd., which manages nearly $100 billion. “Any weakness is a good buying opportunity given improving economic data out of the U.S. Greece can go hot and cold very quickly. Greece defaulting is still a possibility.”

The MSCI Asia Pacific Index rose 0.1 percent to 120.81 as as of 11:06 a.m. in Tokyo, having swung between gains and losses at least seven times. About the same number of shares rose and fell in the measure. The gauge completed its longest streak of weekly gains last week as U.S. reports showed the world’s biggest economy is recovering and falling European borrowing costs signaled the debt crisis may be easing.

Japan’s Nikkei 225 Stock Average gained 0.2 percent, reversing losses of as much as 0.3 percent. Australia’s S&P/ASX 200 Index lost 0.3 percent. Markets in China, Hong Kong, Indonesia, Malaysia, Philippines, South Korea, Singapore and Taiwan are closed today for holidays.

U.S. Futures

Futures on the Standard & Poor’s 500 Index slipped 0.4 percent today. The gauge added 0.1 percent in New York on Jan. 20, erasing a loss in the final minutes of trading, as banks gained and results from International Business Machines Corp. and Intel Corp. boosted technology shares.

Raw-material producers dropped as crude oil fell for a fourth day ahead of a meeting of European leaders to discuss measures to tackle a debt crisis that may curb demand for commodities, and sanctions on Iran that may disrupt Middle East crude supplies. The London Metals Exchange Index, which tracks prices of commodities from aluminum to copper, fell for the first time in five days on Jan. 20.

Companies that receive revenue from Europe declined before a European Union meeting today aimed at crafting a long-term plan to tackle the region’s debt crisis as banking and government negotiators continue trying to reach an agreement that will lighten Greece’s debt burden.

U.S. Home Sales

Exporters to the U.S. advanced as sales of previously owned U.S. homes rose for a third month in December to the highest level since January 2011, a sign the housing market ended last year with momentum.

The MSCI Asia Pacific Index (MXAP) gained 6 percent this year through Jan. 20, compared with gains of 4.6 percent by the S&P 500 and 4.6 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 1.3 times book value. That compares with 2.1 times for the Standard & Poor’s 500 Index in the U.S. and 1.4 times for the Europe Stoxx 600 Index in Europe.

To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

To contact the editor responsible for this story: John McCluskey at j.mccluskey@bloomberg.net
®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.