Iran's Ballistic Missiles Improving, Pentagon Finds By Tony Capaccio - Jul 10, 2012

Iran’s military continues to improve the accuracy and killing power of its long- and short-range ballistic missiles, including designing a weapon to target vessels, according to a Pentagon report to Congress.

“Iran has boosted the lethality and effectiveness of existing systems by improving accuracy and developing new submunition payloads” that extend the destructive power over a wider area than a solid warhead, according to the June 29 report signed by U.S. Defense Secretary Leon Panetta.

The improvements are in tandem with regular ballistic- missile training that “continues throughout the country” and the addition of “new ships and submarines,” the report found.

The report obtained by Bloomberg News was provided to the four congressional defense committees last week to comply with a fiscal 2010 directive to provide an annual classified and unclassified assessment of Iran’s military power. The unclassified version provides the latest snapshot of Iran’s so- called asymmetric capabilities designed to counter the strengths of western militaries.

The report summarizes what’s been said publicly about the status of Iran’s nuclear program and its aid to Syria, Lebanese Hezbollah, Hamas, and Iraqi Shiite groups. It repeats the long- standing U.S. assessment that Iran with “sufficient foreign assistance may be technically capable of flight-testing” an intercontinental ballistic missile by 2015.

Two analysts who follow Iranian military developments said the report provides new details and emphasis on the nation’s conventional ballistic missiles.

Accuracy Improvements

“There was a theme that Iran is improving the accuracy and lethality of its missiles,” said Congressional Research Service Iran analyst Kenneth Katzman. “U.S. government reports have previously always downplayed the accuracy and effectiveness of Iran’s missile forces.”

“The report seemed pretty sober and respectful of Iran’s capabilities, crediting Iran with improving survivability,” Katzman said.

The Pentagon report was delivered as a European Union embargo on buying Iranian crude took effect on July 1, adding to a series of trade and financial sanctions the U.S., EU and United Nations imposed on the second-biggest producer in the Organization of the Petroleum Exporting Countries in an effort to pressure the Persian Gulf nation over its nuclear activities.

‘Formidable Force’

Iran “would present a formidable force while defending Iranian territory,” the Pentagon said in the report. “We assess with high confidence” that over 30 years Iran “has methodically cultivated a network of sponsored terrorist surrogates capable of targeting U.S. and Israeli interests,” it said. “We suspect this activity continues.”

Iran also continues to develop ballistic missiles with range to reach regional adversaries, Israel and Eastern Europe, including an extended-range Shahab-3 and a 2,000 kilometer (1,240 mile) medium-range ballistic missile, said the report.

Citing the Iranian threat, the Obama administration shifted from the Bush administration’s plans to place missile-defense sites in Poland and radar in the Czech Republic to an approach that would in four phases place closer to Iran some Aegis-class Navy missile defense vessels, ground radar and eventually land- based Navy Standard Missile-3 interceptors.

Lockheed Martin Corp. (LMT), and Raytheon Co. (RTN) are among beneficiaries of the envisioned systems.

Missile Emphasis

The report appears to confirm Iran has actively deployed a new solid-fuel intermediate-range ballistic missile and that the Shahab-3 has improved accuracy and submunitions, said Anthony Cordesman of the Center for Strategic and International Studies in Washington.

The report also disclosed that Iran is seeking to improve its missile counter-measures against U.S. and Gulf Cooperation Council missile defenses and poses a potential new threat to Gulf shipping, said Cordesman, who this week is publishing CSIS updates to his reports on Iran and the Gulf military balance.

Iran, like China, is “developing and claims to have deployed short-range ballistic missiles with seekers that enable the missile to identify and maneuver toward ships during flight,” the report found.

“This technology also may be capable of striking land- based targets,” the Pentagon said.

Katzman said the language about Iran possessing a “formidable force defending Iranian territory” seemed to be a “signal to advocates of military action against Iran, suggesting any action on Iranian soil will carry risk.”

The Pentagon highlighted three early 2012 war exercises by the Islamic Revolutionary Guard Corps ground resistance forces “meant to show offensive and defensive capabilities.”

The maneuvers “were the first significant exercises” conducted by this branch of the Iranian military since 2008, the Pentagon said.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

HSBC Account Holders Offered India Amnesty, Official Says By Anto Antony and George Smith Alexander - Jul 9, 2012

India has offered amnesty to more than 100 wealthy citizens who evaded taxes by hiding funds in accounts at HSBC Holdings Plc (HSBA)’s Swiss unit, according to a government official with knowledge of the matter.

The income tax department has agreed not to start criminal proceedings or levy a penalty if the Indians repatriate the money from Geneva and pay the taxes, the official said, asking not to be identified because the information is confidential. The official declined to name anyone on the list.

India joins countries including the U.K. and the U.S. in cracking down on rich people who haven’t disclosed offshore funds amid probes into money laundering and tax evasion. A British millionaire was convicted this month for hiding money in HSBC’s Swiss bank in the first case to come before a London court based on data that the U.K. obtained from France in 2010.

The amnesty offer in India is being made to some people who were on a list of 700 citizens with HSBC accounts in Geneva that was given to the South Asian nation’s government by French authorities last year, the official said, without providing additional details. The government is still investigating other people on that list, the person said.

‘Pragmatic Approach’

“It’s a pragmatic approach,” said R.K. Gupta, managing director at Taurus Asset Management Ltd., which manages $1 billion in assets. Bringing back money that hasn’t been accounted for is now a “global phenomenon,” he said.

The Central Board of Direct Taxes, which includes the income tax department, was asked to probe whether the 700 account holders had evaded taxes, India’s Sunday Express newspaper reported on Aug. 7, citing finance ministry officials that it didn’t identify. The names of HSBC clients won’t be disclosed until the income tax department begins prosecuting them, the Economic Times reported on Nov. 22, citing Finance Secretary R.S. Gujral.

Anuja Sarangi, a spokeswoman at the Central Board of Direct Taxes in New Delhi, didn’t return three calls to her mobile phone or respond to three e-mails seeking comment yesterday. Laxman Das, chairman of the CBDT, also didn’t respond to an e- mail. Rajesh Joshi, an HSBC spokesman in Mumbai, declined to comment.

“As a general principle, we do not comment on whether individuals are our clients or provide the number of clients of a particular nationality,” Medard Schoenmaeckers, a Zurich- based spokesman for HSBC’s private bank, said by phone.

Stolen Data

France obtained data on accounts held at HSBC in Geneva after a bank employee, Herve Falciani, stole information connected to at least 24,000 current and former clients, the London-based lender said in March 2010. Authorities in countries including Italy and the U.K. have since begun investigating whether those clients included people who were evading taxes or involved in money laundering.

At the time of the data theft more than five years ago by Falciani, HSBC’s Swiss private bank had no more than 1,500 clients in any one country, a Geneva-based official who declined to be named in line with company policy, said in May.

In the U.S., a Wisconsin neurosurgeon was re-indicted in September by a U.S. grand jury on new charges that he failed to declare an HSBC account in India valued in 2009 at $8.7 million. The U.S. crackdown on offshore tax evasion includes criminal tax charges filed by prosecutors against more than three dozen former U.S. clients of UBS AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s two biggest banks.

‘Black Economy’

India loses 14 trillion rupees ($250 billion) from tax evasion every year, depriving it of funds for investment in roads, ports and power, Arun Kumar, author of “The Black Economy in India,” said in July 2011. Based on those estimates, a successful crackdown could more than double the nation’s tax revenue, which collected about 9.3 trillion rupees for the year ended March 31, according to the most recent budget proposal.

Prime Minister Manmohan Singh began trying to reform the nation’s post-independence tax and regulatory code when he was finance minister in 1991, accelerating tax cuts and reducing the bureaucracy to make the tax system more effective. The top individual income tax rate is now 30 percent, down from 97.5 percent in 1971.

The Supreme Court in July 2011 also ordered a team headed by a judge to take over the government’s efforts to retrieve as much as $500 billion that Indians may have stashed illegally overseas, citing in a 53-page ruling a case where records were found of assets being held by a Swiss bank in Zurich.

Secrecy Protection

HSBC’s Swiss private bank in September 2008 asked clients and independent money managers to surrender their rights to banking secrecy protection. In countries including India, where rules demand investor disclosure, HSBC sought permission to hand over the names of clients that want to keep their overseas investments, the bank said in a letter e-mailed to Bloomberg News in July 2009.

India is also proposing a clampdown on tax avoidance from April 2013 onwards if foreign institutional investors route money to the country through tax shelters. The draft guidelines released by the finance ministry in New Delhi on June 28 will become law after discussions and approval from Prime Minister Manmohan Singh, the government had said.

The value of illicit Indian assets held abroad was about $462 billion, or 72 percent of the nation’s underground economy, according to a November 2010 report from Global Financial Integrity, a Washington-based research firm that focuses on the cross-border flow of illegal money. India has lost $213 billion in tax collection due to such flows from 1948 to 2008, it said.

The research firm’s estimates for illicit outflows from India, while being useful, “are incomplete and further studies are required,” India’s then-Finance Minister Pranab Mukherjee said in a report titled “White Paper on Black Money” in May.

To contact the reporters on this story: Anto Antony in Mumbai at aantony1@bloomberg.net; George Smith Alexander in Mumbai at galexander11@bloomberg.net

To contact the editors responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net

China Must Prevent Rebound in Property Prices, Wen Says By Bloomberg News - Jul 8, 2012

Chinese Premier Wen Jiabao said downward pressure on the economy is still “relatively large” and the government will intensify fine-tuning of policies even as measures taken since April are helping stabilize a slowdown.

Wen’s comments, four days after the central bank announced the second interest-rate cut in a month, were made during an inspection tour of eastern Jiangsu province, the official Xinhua News Agency reported yesterday. The premier also pledged to “unswervingly” continue property controls and prevent prices from rebounding, Xinhua said.

Asia’s largest economy probably grew at the slowest pace in three years in the second quarter, underscoring the risks to a global recovery already threatened by a worsening crisis in the euro area and faltering employment gains in the U.S. The International Monetary Fund next week will cut its world-growth estimate this year, with Managing Director Christine Lagarde warning the outlook has “regrettably become more worrisome.”

“The big downside risks to economic growth increase the pressure for monetary easing,” economists Peng Wensheng and Zhao Yang from Beijing-based China International Capital Corp. said in a July 6 note. “Based on the recent developments in the global economy, we believe major central banks will take more conventional and unconventional measures in coming months to loosen monetary conditions and encourage bank lending.”

China’s inflation probably slowed to 2.3 percent in June, the lowest since January 2010, according to an analyst survey ahead of a government report due today at 9:30 a.m. in Beijing.

Reversing Slowdown

The People’s Bank of China also last week allowed banks to offer bigger discounts on loans, stepping up efforts to reverse a slowdown in the world’s second-biggest economy. The moves coincided with the European Central Bank’s decision to reduce borrowing costs to a record low and the Bank of England’s expansion of asset purchases.

China’s benchmark stock index fell for a third week on concern the government isn’t doing enough to stem an economic slowdown that will hurt company earnings. The Shanghai Composite Index rose 1 percent on July 6 after the PBOC announcement, paring the week’s decline to 0.1 percent.

The pace of China’s growth is “within the expected target zone set at the beginning of the year,” Xinhua reported Wen as saying during his tour from July 6 to July 8.

“In April this year we announced we would put stabilizing growth in a more prominent position and we intensified efforts to preemptively fine-tune policies,” Wen said. “Currently these measures have already seen some results and the economic slowdown has stabilized.”

Proactive Policy

The premier in March set a goal of 7.5 percent expansion for 2012, down from an 8 percent target in place since 2005.

Growth may have slid to 7.7 percent in the second quarter from a year earlier, according to the median estimate of 33 analysts in a Bloomberg News survey as of July 6. The data are due on July 13. The economy expanded 8.1 percent in the first three months, the fifth quarterly slowdown.

The government will “continue to intensify preemptive fine-tuning and implement a proactive fiscal policy, especially with a focus on improving the structural tax reduction policy,” Wen said, according to Xinhua. Authorities will “continue to implement a prudent monetary policy and effectively solve the structural contradiction between the supply of and demand for credit,” he said.

Even as Wen pledged to support growth, he reiterated that property controls will continue. Restricting speculative demand and investment in property must be made a long-term policy, Xinhua said in its reports of the premier’s visit.

Price Rebound

“We must unswervingly continue to implement all manner of controls in the property market to allow prices to return to reasonable levels,” Wen was quoted as saying when he met residents and local government officials in charge of affordable housing on July 7. “We cannot allow prices to rebound, or all our efforts will come to naught,” he said.

Market expectations about property prices are changing and citizens are worried prices will rise again, he said. Signals in the market are “chaotic” and misleading and speculative information must be stopped, Wen said, according to Xinhua.

Local governments that introduced or covered up a loosening of curbs on residential real-estate must be stopped, he said.

China’s new-home prices rose for the first time in 10 months in June, according to SouFun Holdings Ltd. (SFUN), owner of the nation’s biggest real-estate website.

‘Arduous’ Task

“As long as there are no new curbs to come and it’s only the implementation of existing policies, home prices will still rise,” Du Jinsong, a Hong Kong-based property analyst at Credit Suisse Group AG, said by telephone on July 7.

Property controls are still in a “critical period” and the task remains “arduous,” Xinhua reported Wen as saying in its July 7 report.

The government must “promote the study and implementation of changes to the property-tax mechanism, and to speed up the establishment of a comprehensive long-term mechanism and policy framework for controlling the property market,” Xinhua cited Wen as saying.

To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net; Henry Sanderson in Beijing at hsanderson@bloomberg.net.

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

Emerging Stocks Pare Weekly Gain as Rate Cuts Disappoint

By Christine Harvey and Jason Webb - Jul 6, 2012

Emerging-market stocks fell, paring the benchmark index’s second straight weekly gain, as Chinese and European interest-rate cuts failed to bolster investor confidence and U.S. payrolls rose less than forecast.
The MSCI Emerging Markets Index lost 1 percent to 946.01 by the close in New York, trimming its weekly advance to 0.9 percent. Samsung Electronics (005930), the world’s largest maker of televisions and mobile phones, slumped after quarterly sales missed estimates. Brazil’s Bovespa snapped a five-day advance with B2W Cia. Global do Varejo falling 6.2 percent in Sao Paulo. The Micex Index dropped the most in a week as oil slid.
The People’s Bank of China announced yesterday its second reduction in borrowing costs in a month and the European Central Bank lowered its benchmark rate to a record low 0.75 percent. U.S. payrolls rose 80,000 last month after a 77,000 increase in May, Labor Department figures showed today in Washington. Economists projected a 100,000 gain, according to the median estimate in a Bloomberg News survey. Private employment increased 84,000 in June, the weakest in 10 months.
“The rate cuts by the Chinese central bank and the ECB failed to spark any optimism and led to profit taking yesterday,” Slava Smolyaninov and Leonid Slipchenko, analysts at UralSib Capital in Moscow, wrote in an e-mail to clients. “Investors clearly need to have greater confidence if they are to continue buying equities after the emergence of the latest signs of a slowdown.”

Worst Quarter

The MSCI Emerging Market gauge has added 3.2 percent in 2012 and trades at a multiple of 10.2 times estimated earnings, compared with 12.2 for the MSCI World Index, according to data compiled by Bloomberg, The index of developed nations has added 4 percent this year.
Unemployment in the U.S. held at 8.2 percent, matching the Bloomberg survey median. June concluded the worst quarter for corporate hiring since the first three months of 2010.
The IShares MSCI Emerging Markets Index (MXEF) exchange-traded fund, the ETF tracking developing-nation shares, sank 1.8 percent to $38.77.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 2.4 percent to 26.90.
Brazil’s Bovespa dropped 1.7 percent, paring its weekly advance to 1.9 percent, its first five-day advance in three weeks.

Oil Falls

Russia’s Micex Index tumbled 1.5 percent, its biggest decline since June 28, to pare its weekly advance to 3 percent. OAO Novatek, the nation’s largest non-state producer of natural- gas, slid 3.9 percent.
OAO Sberbank, the nation’s largest lender, fell 1.9 percent as its operating expenses in the first six months of this year rose 22 percent from a year earlier.
Oil for August delivery fell $2.77, or 3.2 percent, to $84.45 a barrel on the New York Mercantile Exchange. Crude is down 15 percent this year and 0.6 percent this week.
The BSE India Sensitive Index (SENSEX) dropped 0.1 percent.
The FTSE/JSE Africa All Share Index (JALSH) was little changed in Johannesburg. SABMiller Ltd. (SAB), the world’s second-largest brewer, added 1.9 percent.
The ISE National 100 Index (XU100) gained 1.3 percent in Istanbul.

Samsung Electronics

Samsung Electronics dropped 2 percent in Seoul after the company’s second-quarter sales of 47 trillion won ($41.3 billion) trailed the 49.8 trillion-won average of 35 analysts’ estimates compiled by Bloomberg, overshadowing record operating profit.
South Korea’s Kospi Index fell 0.9 percent.
A gauge of developers in the Shanghai index surged 3.5 percent, the most since March 2. Poly Real Estate Group Co., the second-largest listed developer, surged 5 percent to the highest level in 2 1/2 years. Investors and speculators will increasingly re-enter the property market after the rate cut and housing prices will rise over the next few months, Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG, wrote in a note to clients yesterday.
The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong lost 0.2 percent. China Construction Bank Corp. (939) dropped 2.7 percent as Citigroup Inc. said the nation’s interest-rate cut will hurt lenders’ earnings.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose four basis points, or 0.04 percentage point, to 369, according to JPMorgan Chase & Co.’s EMBI Global Index.
To contact the reporters on this story: Christine Harvey in New York at charvey32@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net
To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net; Tal Barak Harif at tbarak@bloomberg.net

®2012 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Singh Adviser Warns Against Portfolio Investor Tax-Rule Changes By Unni Krishnan - Jul 5, 2012

India should refrain from changing the way foreign investors in stocks and bonds are taxed, a key adviser to Prime Minister Manmohan Singh said, as the nation prepares rules to clamp down on tax avoidance.

“We should clarify that it is not the intention to change the tax treatment of bona fide foreign institutional investors,” Montek Singh Ahluwalia, 68, deputy chairman of India’s Planning Commission, said in an interview in New Delhi yesterday. “I hope they will clarify it in a way in which FIIs will be reassured that their investment is welcome.”

Prime Minister Singh has made reviving investment in India a priority after taking charge of the finance ministry on June 26 with growth at a nine-year low. Ahluwalia also said he hopes India will “very soon” allow foreign companies to open supermarkets selling multiple brands, an industry closed off to overseas businesses and one that Singh is trying to open up.

The prime minister decided to lead the finance ministry after Pranab Mukherjee resigned to vie for the presidency. Mukherjee outlined steps to tackle tax avoidance, the so-called General Anti-Avoidance Rule, or GAAR, in the budget in March, before retreating on the proposals in May by delaying implementation until 2013 to salvage investor confidence.

Ahluwalia’s comments “are more to assuage foreign investors,” said Jagannadham Thunuguntla, a strategist at SMC Global Securities Ltd. (GLBS) in New Delhi. “It is an effort to find a middle ground while introducing the tax rules.”

Stocks, Rupee

India plans to issue a clarification this month keeping overseas investors of equity and bond derivative instruments out of the purview of Indian taxes, two government officials with direct knowledge of the matter said, declining to be identified citing rules. The so-called participatory notes are derivatives that allow foreigners not registered with the nation’s market regulator to invest in local stocks and bonds.

The rupee fell 0.8 percent to 54.955 per dollar in Mumbai yesterday. The currency has declined 19 percent against the dollar in the past 12 months. The BSE India Sensitive Index (SENSEX) of stocks rose 0.4 percent. The yield on the 8.15 percent notes due June 2022 advanced 3 basis points, or 0.03 percentage point, to 8.19 percent.

The government aims to revive plans to allow companies including Wal-Mart Stores Inc. (WMT) to set up retail stores after protest from allies and opposition parties prompted it to defer the rules in December, Ahluwalia said. Singh may allow state governments to decide whether to implement the rule, he said.

‘Consensus Building’

“We have done some consensus building since” December, said Ahluwalia, one of the top bureaucrats in the finance ministry when Singh opened up India’s economy in 1991 as finance minister. Under India’s federal structure, states are responsible for issuing licenses for retail stores.

Ahluwalia said the government had set up monitoring mechanisms to ensure faster implementation of road, port and power projects. The measures will help boost economic growth and increase foreign investment flows, he said.

Gross domestic product rose 5.3 percent in the three months to March 31 from a year earlier, the least since 2003. Ahluwalia, who last year set a 9 percent target for economic growth in the next five years, estimates GDP to expand 8 percent to 8.5 percent as the global recovery falters.

Economic Prospects

Inflation accelerated to 7.55 percent in May, the fastest pace in the BRIC group of largest emerging markets that also includes Brazil, Russia and China. Higher food prices and more expensive imports because of the weaker rupee have contributed to jumps in living costs.

Ahluwalia said the rupee had corrected after over depreciating and a “little” fall in the currency should be positive. The rupee has surged 3.7 percent since June 27, when Singh called for capital inflows.

India’s current account, the broadest measure of trade, widened to a record $21.7 billion in the three months ended March. The widening of the deficit was due to a surge in gold imports, which have slowed after the government imposed an additional tax on shipments, Ahluwalia said.

“India’s economic prospects will support foreign capital inflow needed in order to finance the deficit, without putting pressure on the rupee,” Ahluwalia said. “The current account deficit this year won’t be as bad as last year.”

To contact the reporter on this story: Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

Mahindra Said to Consider Bidding for Hawker Beechcraft By Siddharth Philip - Jul 4, 2012

Mahindra & Mahindra Ltd. (MM), India’s biggest maker of utility vehicles, is considering bidding for Hawker Beechcraft Inc., the bankrupt aircraft maker part owned by Goldman Sachs Group Inc. (GS), a person with knowledge of the matter said.

Hawker would fit well with Mahindra because both produce turboprop aircraft, said the person, who asked not to be identified because the deliberations are private. The Mumbai- based company has not decided whether to make an offer, the person said. Roma Balwani, a spokeswoman for Mahindra, said the company doesn’t comment on speculation.

Mahindra, which purchased majority stakes in component maker Aerostaff Australia and turboprop aircraft manufacturer Gippsland Aeronautics in 2009, has been in talks with India’s National Aerospace Laboratories on possibly partnering for a regional jet. A successful bid for the business jet-maker will catapult Mahindra into the aerospace market as a manufacturer, according to Dhiraj Mathur of PricewaterhouseCoopers LLP.

“This is a sensible move as with an acquisition, they get access to years’ worth of technology and certification,” said Mathur, a Gurgaon, India-based executive director at PwC’s unit. “Mahindra will jump up the value chain. It’ll give them aersopace capabilities. They will be able to participate as an OEM and not a partner of an OEM.”

Ssangyong Purchase

Shares of Mahindra were little changed at 718.55 rupees yesterday in Mumbai. They have gained 5.4 percent this year, compared with a 13 percent increase in the benchmark Sensitive Index. (SENSEX) Of the 61 analysts who track the stock, 46 recommend buying the shares, according to data compiled by Bloomberg.

Mahindra Group is a conglomerate with 110 subsidiaries in finance, information technology, real estate and resorts. Mahindra last year acquired 70 percent of South Korean automaker Ssangyong Motor Co. (003620) for $378 million.

The tractor maker, which formed its aerospace division in 2007, makes light aircraft, as well as parts for Boeing Co. (BA)’s 737s, Gulfstream Aerospace Corp. business jets and Lockheed Martin Corp. (LMT)’s F-35 Joint Strike Fighters, according to its website.

The company had cash and short-term investments of 54 billion rupees ($989 million) as of March 31, according to data compiled by Bloomberg.

The Indian automaker in March said it was in exploratory talks with National Aerospace to partner the state-owned plane designer in developing a planned regional jet. NAL last year announced the 40 billion-rupee plan to develop a 90-seat aircraft as the country joins China in trying to form a globally competitive aerospace industry.

Revamp Plan

Hawker, which makes the Beechcraft King Air turboprop and the Hawker 4000 business jet, filed a reorganization plan in U.S. Bankruptcy Court on June 30 that would give control of the Wichita, Kansas-based company to secured creditors who hold debt valued at almost $922 million.

Goldman Sachs Capital Partners, the fifth-biggest U.S. bank’s private-equity arm, and Toronto-based Onex Corp. (OCX) bought Hawker in 2007 for $3.3 billion. Hawker reported net losses totaling more than $900 million in the past two years as U.S. military contracts and plane sales declined.

Hawker competes with Cessna Aircraft Co, Embraer SA (EMBR3), Gulfstream Aerospace Corp. and Bombardier Inc. (BBD/B) to supply business jets in the mid- and light-aircraft categories.

To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net

To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net

India’s Sensex Swings Between Gains, Losses; Tata Drops By Rajhkumar K Shaaw - Jul 2, 2012

Indian stocks swung between gains and losses as some investors judged a recent rally excessive.
Tata Motors Ltd. (TTMT), the nation’s biggest truckmaker and owner of Jaguar Land Rover, dropped 1.2 percent after June sales declined. Bharti Airtel Ltd. (BHARTI), the largest mobile-phone operator, climbed 1.1 percent.
The BSE India Sensitive Index (SENSEX), or Sensex, retreated 0.2 percent to 17,403.83 at 9:54 a.m. after swinging between gains and losses at least five times. Its 14-day relative strength index, a measure of how rapidly prices rose or fell during the specified period, was 68 on June 29. Some investors see readings of more than 70 as a signal to sell.
“Investors are taking a breather given the superb rally we had last month,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kochi. “They are waiting for some trigger which could come from more reform measures by the Prime Minister to boost economic growth.”
Indian stocks jumped the most in Asia in June on optimism Prime Minister Manmohan Singh will accelerate the government’s reform agenda after he took over the country’s Finance Ministry on June 26. Singh, who will head the ministry until a successor for Pranab Mukherjee is named, was finance minister in the 1990s, sparking an economic turnaround that now faces one of its sternest tests.

Reform Pressure

Singh’s administration has seen its agenda stymied by opposition from its own coalition allies, and last year suspended a plan to allow Wal-Mart Stores Inc. (WMT) and other foreign companies to buy majority stakes in Indian multi-brand retailers. An anti-corruption bill and proposals to allow foreign direct investment in pensions have also been shelved.
“There is hope that he will go quicker on reforms because there is so much pressure from the media, analysts and economists that we are not doing anything,” Nirmal Jain, chairman of IIFL Ltd., a Mumbai-based brokerage, said in a Bloomberg UTV interview on June 29.
The Sensex has gained 13 percent this year and trades at 13.6 times estimated earnings. Valuations sank to a three-year low of 12.4 times on May 23 on concern slowing economic growth will hurt corporate profits. The MSCI Emerging Markets Index trades at 10 times.
Overseas investors sold a net $122.1 million of Indian stocks on June 28, paring their investment this year to $8.6 billion, according to the nation’s market regulator.
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net