Feb. 24 (Bloomberg) -- Indian stocks fell to a three-month low, led by Infosys Technologies Ltd. and other software exporters on concern that a deepening recession in the U.S. will erode earnings from their biggest export market.
Infosys Technologies, the nation’s second-biggest software exporter, slid 1.7 percent. ICICI Bank Ltd., the nation’s second-largest lender, dropped 3.8 percent to a three-month low. Tata Steel Ltd. led makers of the alloy lower after UBS AG said producers had overestimated demand.
“No one has a handle on how bad things are in the U.S.,” said Kenneth Andrade, head of investments at IDFC Asset Management Co. and oversees assets worth $1.8 billion. “To kick-off credit, the government will need to nationalize the liabilities side of the business at banks.”
The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 180.47, or 2 percent, to 8,662.74 as of 10:12 a.m. local time, a level not reached since Nov. 20. The S&P CNX Nifty Index on the National Stock Exchange declined 1.7 percent to 2,689.65. The BSE 200 Index retreated 2 percent to 1,023.17. S&P CNX Nifty futures for February delivery dropped 1.5 percent to 2,682.
Infosys fell 1.7 percent to 1,157.10 rupees. Wipro Ltd., India’s third-largest provider of software services, dropped 2.4 percent to 210.15 rupees. The U.S. accounts for more than half the revenue of software developers.
ICICI, State Bank
ICICI Bank, the nation’s second-largest lender, dropped 3.8 percent to 323 rupees. State Bank of India, the No. 1, slid 1.8 percent to 1,018.20 rupees, its worst in almost a year.
In the U.S., Standard & Poor’s 500 Index dropped 3.5 percent yesterday to the lowest level since April 1997. U.S. regulators said they will begin examining which banks have enough capital to survive a deeper recession.
Tata Steel slid 4.6 percent to 160.40 rupees, leading makers of the alloy lower after UBS AG said producers had overestimated demand. The report said global steelmakers have raised output too quickly in response to a bounce in Chinese demand. Steel Authority of India Ltd., the No. 2 producer, fell 4.2 percent to 76.20 rupees.
Overseas investors sold a net 3.2 billion rupees ($64 million) of Indian stocks on Feb. 19, according to the nation’s market regulator.
The following were among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:
Sugar Producers: India, the world’s second-biggest sugar producer, plans to announce stock limits on the commodity to curb prices, Home Minister Palaniappan Chidambaram said after a cabinet meeting in New Delhi late yesterday.
Bajaj Hindusthan Ltd. (BJH IN), India’s biggest sugar producer, dropped 7.9 percent to 45.9 rupees. Balrampur Chini Mills Ltd. (BRCM IN), India’s second biggest, fell 7.5 percent to 49 rupees. Shree Renuka Sugars Ltd. (SHRS IN), India’s biggest sugar refiner, declined 6.7 percent to 76.95 rupees.
Satyam Computer Services Ltd. (SCS IN) fell 3.3 percent to 44.05 rupees. The Indian software provider at the center of the nation’s biggest corporate fraud inquiry will seek approval from regulators next week for its plan to sell a stake to a strategic investor. The company said it won orders worth $250 million in the last seven weeks.
Sobha Developers Ltd. (SOBHA IN) retreated 1.9 percent to 79.05 rupees. The Indian real estate developer had its stock rating downgraded to “underweight” from “equal-weight” and had its price target cut 79 percent at Morgan Stanley, citing weak demand.
Tata Power Ltd. (TPWR IN) declined 1.7 percent to 725.5 rupees. India’s biggest electricity generator outside state control may not bid for projects that can generate 4,000 megawatts of electricity. Raising funds in the current situation is difficult, said Banmali Agrawala, executive director.
UltraTech Cement Ltd. (UTCEM IN) slid 1.5 percent to 410.55 rupees. India’s second-biggest producer of the material had its rating raised to “equal-weight” from “underweight” at Morgan Stanley.
Monday, February 23, 2009
Asian Stocks Drop to Five-Year Low; Nomura Slumps on Share Sale
Feb. 24 (Bloomberg) -- Asian stocks fell, dragging the regional benchmark index to the lowest in more than five years, as the deepening global recession hurts company earnings and forces companies to sell shares.
Nomura Holdings Inc., Japan’s largest brokerage, slumped 9.3 percent on concern it will sell $3.1 billion of stock at a discount. PetroChina Co., China’s largest oil producer, lost 4.6 percent in Hong Kong after crude oil dropped. Suncorp-Metway Ltd., Australia’s third-largest general insurer, declined 4.8 percent as its first-half profit tumbled.
“Pessimism about company earnings hasn’t yet run its course,” said Naoyuki Torii, general manager of equities at Fukoku Mutual Life Insurance Co., which manages about $59 billion. “As massive losses are eating into companies’ capital, investors are expecting more businesses will sell new shares and dilute shareholders’ equity.”
The MSCI Asia Pacific Index fell 1.8 percent to 74.90 at 4:06 p.m. in Tokyo, set for its lowest close since Aug. 28, 2003. The MSCI World Index declined for an 11th day. The slump has wiped at least $2.7 trillion off the value of global stocks even as the U.S., China and Australia passed stimulus policies to bolster their economies.
Japan’s Nikkei 225 Stock Average lost 1.5 percent to 7,268.56. A close below 7,162.90 today would have been the lowest since October 1982. Hong Kong’s Hang Seng Index slumped 3.2 percent, while South Korea’s Kospi Index dropped 3.2 percent. All markets fell except Malaysia.
Baoshan Iron & Steel Co., China’s largest steelmaker, slid 5.6 percent after UBS AG said producers had overestimated demand. Engineering company Ausenco Ltd. slumped 19 percent in Sydney after saying clients had canceled projects. Modec Inc., which makes offshore oil and gas equipment, plunged by 20 percent in Tokyo as it forecast profits to tumble.
Deeper Recession
Futures on the U.S. Standard & Poor’s 500 Index added 0.9 percent, following the benchmark index’s 3.5 percent slide to the lowest level since April 1997 yesterday. U.S. regulators said they will begin examining which banks have enough capital to survive a deeper recession. Banks that need more funds and cannot raise the money from private investors will be able to tap taxpayer funds.
The MSCI Asia Pacific Index has lost 49 percent in the past year as the global slowdown worsened, cutting the average valuation of companies on the gauge by 10 percent to 13 times reported profit. Advanced economies are already in “depression”, IMF Managing Director Dominique Strauss-Kahn said this month.
“The economics statistics aren’t that flash at the moment and the market remains quite nervous,” said Paul Xiradis, who manages the equivalent of $8 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney. “There’s no doubt good value, but the momentum is still negative.”
‘People Are Nervous’
Thailand’s government said yesterday the economy shrank 4.3 percent, pushing the country closer to its first recession in a decade. Economists in a Bloomberg survey expect Hong Kong to say tomorrow its economy contracted in the same period by the most since 2003.
Nomura slumped 9.3 percent to 420 yen. The company will sell shares valued at as much as 291.2 billion yen ($3.1 billion) to replenish capital eroded by four-straight quarterly losses, according to filings to the Ministry of Finance yesterday. Nikko Citigroup Ltd. cut its share price estimate for Nomura by more than a third to 530 yen with a “hold” rating.
“Investors are dumping risk assets and flocking to cash amid heightening uncertainty,” Mamoru Shimode, a Tokyo-based equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. “People are nervous about companies’ financial health.”
Profit Concerns
PetroChina declined 4.6 percent to HK$5.66 after oil futures declined 4 percent to $38.44 a barrel in New York yesterday on concern the global economic slump will cut demand for fuels. Cnooc Ltd., China’s biggest offshore oil company, dropped 4.4 percent to HK$6.71. BHP Billiton Ltd., Australia’s largest oil producer, lost 1.2 percent to A$28.97.
Suncorp fell 4.8 percent to A$4.75 after saying first-half profit slumped 33 percent. The company slashed its dividend for the period to 20 Australian cents a share, down from 52 cents a year earlier.
Baoshan Iron slid 5.6 percent to 5.71 yuan in Shanghai after a UBS report said global steelmakers have raised output too quickly in response to a bounce in Chinese demand. Australia’s BlueScope Steel Ltd., which said yesterday it may have a second-half loss, slumped 8.3 percent to A$2.55.
Ausenco, based in the Australian city of Brisbane, plummeted 19 percent to A$2.05 after saying some clients had sought to extend the timing of new projects.
In Tokyo, Modec tumbled 20 percent to 1,207 yen. The company said it expects operating profit, or sales minus the cost of goods sold and administrative expenses, of 500 million yen for the year started Jan. 1, compared with 1.97 billion yen in the year just ended.
Nomura Holdings Inc., Japan’s largest brokerage, slumped 9.3 percent on concern it will sell $3.1 billion of stock at a discount. PetroChina Co., China’s largest oil producer, lost 4.6 percent in Hong Kong after crude oil dropped. Suncorp-Metway Ltd., Australia’s third-largest general insurer, declined 4.8 percent as its first-half profit tumbled.
“Pessimism about company earnings hasn’t yet run its course,” said Naoyuki Torii, general manager of equities at Fukoku Mutual Life Insurance Co., which manages about $59 billion. “As massive losses are eating into companies’ capital, investors are expecting more businesses will sell new shares and dilute shareholders’ equity.”
The MSCI Asia Pacific Index fell 1.8 percent to 74.90 at 4:06 p.m. in Tokyo, set for its lowest close since Aug. 28, 2003. The MSCI World Index declined for an 11th day. The slump has wiped at least $2.7 trillion off the value of global stocks even as the U.S., China and Australia passed stimulus policies to bolster their economies.
Japan’s Nikkei 225 Stock Average lost 1.5 percent to 7,268.56. A close below 7,162.90 today would have been the lowest since October 1982. Hong Kong’s Hang Seng Index slumped 3.2 percent, while South Korea’s Kospi Index dropped 3.2 percent. All markets fell except Malaysia.
Baoshan Iron & Steel Co., China’s largest steelmaker, slid 5.6 percent after UBS AG said producers had overestimated demand. Engineering company Ausenco Ltd. slumped 19 percent in Sydney after saying clients had canceled projects. Modec Inc., which makes offshore oil and gas equipment, plunged by 20 percent in Tokyo as it forecast profits to tumble.
Deeper Recession
Futures on the U.S. Standard & Poor’s 500 Index added 0.9 percent, following the benchmark index’s 3.5 percent slide to the lowest level since April 1997 yesterday. U.S. regulators said they will begin examining which banks have enough capital to survive a deeper recession. Banks that need more funds and cannot raise the money from private investors will be able to tap taxpayer funds.
The MSCI Asia Pacific Index has lost 49 percent in the past year as the global slowdown worsened, cutting the average valuation of companies on the gauge by 10 percent to 13 times reported profit. Advanced economies are already in “depression”, IMF Managing Director Dominique Strauss-Kahn said this month.
“The economics statistics aren’t that flash at the moment and the market remains quite nervous,” said Paul Xiradis, who manages the equivalent of $8 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney. “There’s no doubt good value, but the momentum is still negative.”
‘People Are Nervous’
Thailand’s government said yesterday the economy shrank 4.3 percent, pushing the country closer to its first recession in a decade. Economists in a Bloomberg survey expect Hong Kong to say tomorrow its economy contracted in the same period by the most since 2003.
Nomura slumped 9.3 percent to 420 yen. The company will sell shares valued at as much as 291.2 billion yen ($3.1 billion) to replenish capital eroded by four-straight quarterly losses, according to filings to the Ministry of Finance yesterday. Nikko Citigroup Ltd. cut its share price estimate for Nomura by more than a third to 530 yen with a “hold” rating.
“Investors are dumping risk assets and flocking to cash amid heightening uncertainty,” Mamoru Shimode, a Tokyo-based equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. “People are nervous about companies’ financial health.”
Profit Concerns
PetroChina declined 4.6 percent to HK$5.66 after oil futures declined 4 percent to $38.44 a barrel in New York yesterday on concern the global economic slump will cut demand for fuels. Cnooc Ltd., China’s biggest offshore oil company, dropped 4.4 percent to HK$6.71. BHP Billiton Ltd., Australia’s largest oil producer, lost 1.2 percent to A$28.97.
Suncorp fell 4.8 percent to A$4.75 after saying first-half profit slumped 33 percent. The company slashed its dividend for the period to 20 Australian cents a share, down from 52 cents a year earlier.
Baoshan Iron slid 5.6 percent to 5.71 yuan in Shanghai after a UBS report said global steelmakers have raised output too quickly in response to a bounce in Chinese demand. Australia’s BlueScope Steel Ltd., which said yesterday it may have a second-half loss, slumped 8.3 percent to A$2.55.
Ausenco, based in the Australian city of Brisbane, plummeted 19 percent to A$2.05 after saying some clients had sought to extend the timing of new projects.
In Tokyo, Modec tumbled 20 percent to 1,207 yen. The company said it expects operating profit, or sales minus the cost of goods sold and administrative expenses, of 500 million yen for the year started Jan. 1, compared with 1.97 billion yen in the year just ended.
Sunday, February 22, 2009
Yahoo CEO Said to Be Looking for New Executives Amid Shuffle
Feb. 22 (Bloomberg) -- Yahoo! Inc. Chief Executive Officer Carol Bartz has commissioned searches for several high-level executives amid a management shuffle at the Internet company, a person familiar with the matter said.
The reorganization would be Bartz’s first significant shakeup to bolster Yahoo’s position in the online advertising market after she took over as CEO from co-founder Jerry Yang last month.
Yahoo is seeking new ways to revive growth under Bartz, the former CEO of Autodesk Inc. Yahoo faces a slowdown in the online advertising market at the same time as Google steps up competition in areas such as graphical-display ads. Microsoft Corp. is also going after Yahoo’s employees, hiring at least three Internet-search executives since November.
Bartz assumed the CEO job after Yang spurned a $47.5 billion takeover offer from Microsoft last year. Yahoo posted a loss for the fourth quarter of $303.4 million, and profit fell in 10 of the 11 quarters before that.
Yahoo may announce the reorganization as early as next week, the AllThingsDigital blog reported, citing people familiar with the matter.
Yahoo spokesman Brad Williams declined to comment on what he called “rumors and speculation.”
Talent War
Yahoo said this month that Chief Communications Officer Jill Nash would leave after a two-year stint with the company. Susan Decker, who was president, stepped down after Bartz was named CEO in January.
Microsoft, the world’s largest software maker, has hired several Yahoo search executives after takeover negotiations fell through last year. Microsoft named Yahoo’s Qi Lu as president of its online services group in December and hired Sean Suchter from Yahoo the previous month. This month, Microsoft hired Larry Heck, who oversaw a Yahoo lab that developed search and advertising algorithms.
A reorganization by Bartz would come after a shuffle orchestrated by Yang last June. At the time, Yang created three teams that reported to then-president Susan Decker. Those moves centralized consumer-product development and created a companywide strategy group.
Yahoo, based in Sunnyvale, California, rose 16 cents to $12.14 on Feb. 20 in Nasdaq Stock Market trading. The shares are little changed this year.
The reorganization would be Bartz’s first significant shakeup to bolster Yahoo’s position in the online advertising market after she took over as CEO from co-founder Jerry Yang last month.
Yahoo is seeking new ways to revive growth under Bartz, the former CEO of Autodesk Inc. Yahoo faces a slowdown in the online advertising market at the same time as Google steps up competition in areas such as graphical-display ads. Microsoft Corp. is also going after Yahoo’s employees, hiring at least three Internet-search executives since November.
Bartz assumed the CEO job after Yang spurned a $47.5 billion takeover offer from Microsoft last year. Yahoo posted a loss for the fourth quarter of $303.4 million, and profit fell in 10 of the 11 quarters before that.
Yahoo may announce the reorganization as early as next week, the AllThingsDigital blog reported, citing people familiar with the matter.
Yahoo spokesman Brad Williams declined to comment on what he called “rumors and speculation.”
Talent War
Yahoo said this month that Chief Communications Officer Jill Nash would leave after a two-year stint with the company. Susan Decker, who was president, stepped down after Bartz was named CEO in January.
Microsoft, the world’s largest software maker, has hired several Yahoo search executives after takeover negotiations fell through last year. Microsoft named Yahoo’s Qi Lu as president of its online services group in December and hired Sean Suchter from Yahoo the previous month. This month, Microsoft hired Larry Heck, who oversaw a Yahoo lab that developed search and advertising algorithms.
A reorganization by Bartz would come after a shuffle orchestrated by Yang last June. At the time, Yang created three teams that reported to then-president Susan Decker. Those moves centralized consumer-product development and created a companywide strategy group.
Yahoo, based in Sunnyvale, California, rose 16 cents to $12.14 on Feb. 20 in Nasdaq Stock Market trading. The shares are little changed this year.
SFCG Goes Bankrupt With 338 Billion Yen Debt, Most in a Year
Feb. 23 (Bloomberg) -- SFCG Co., a Tokyo-based lender whose creditors include Citigroup Inc., collapsed in the biggest bankruptcy by a publicly traded Japanese company in more than a year, listing 338 billion yen ($3.6 billion) in liabilities.
SFCG, whose shareholders include Hikari Tsushin Inc. with an 11.5 percent stake as of Feb. 4, owes Citigroup 71 billion yen, according to a securities report filed by SFCG on Oct. 27. Shinsei Bank Ltd., owed 54.1 billion yen by SFCG as of July 31, led declines among Japanese lenders in Tokyo trading.
SFCG’s finances deteriorated because of difficulties obtaining credit and collecting on loans as the global financial crisis deepened, the company said in a statement today. Its shares, down 92 percent in the past year, will be delisted on March 24, according to the Tokyo Stock Exchange’s Web site.
A record 33 publicly traded companies in Japan declared bankruptcy last year as banks trimmed lending and consumers stopped spending money due to concern about jobs. Urban Corp., a Hiroshima-based developer, filed for protection with 255.8 billion in liabilities on Aug. 13, the biggest failure last year.
Overall corporate bankruptcies rose 15.8 percent to 1,360 cases in January, the eighth monthly increase.
Calls to Citigroup’s Tokyo office and to Shinsei Bank by Bloomberg News weren’t immediately returned.
Tokyo-based Shinsei fell 13 percent, the biggest decline among more than 1,600 companies tracked by the MSCI World Index, to a record-low 80 yen as of 9:56 a.m. in Tokyo. A 27-stock index of Japanese non-bank lenders dropped 6.5 percent to the lowest since at least 1983.
SFCG specializes in loans to small businesses. The lender, previously called Shohkoh Fund & Co., was ordered by regulators in 2000 to suspend its business for violating lending laws.
Hikari Tsushin, a Tokyo-based telecommunications company, hasn’t made loans to SFCG, spokesman Taichi Konno said.
SFCG, whose shareholders include Hikari Tsushin Inc. with an 11.5 percent stake as of Feb. 4, owes Citigroup 71 billion yen, according to a securities report filed by SFCG on Oct. 27. Shinsei Bank Ltd., owed 54.1 billion yen by SFCG as of July 31, led declines among Japanese lenders in Tokyo trading.
SFCG’s finances deteriorated because of difficulties obtaining credit and collecting on loans as the global financial crisis deepened, the company said in a statement today. Its shares, down 92 percent in the past year, will be delisted on March 24, according to the Tokyo Stock Exchange’s Web site.
A record 33 publicly traded companies in Japan declared bankruptcy last year as banks trimmed lending and consumers stopped spending money due to concern about jobs. Urban Corp., a Hiroshima-based developer, filed for protection with 255.8 billion in liabilities on Aug. 13, the biggest failure last year.
Overall corporate bankruptcies rose 15.8 percent to 1,360 cases in January, the eighth monthly increase.
Calls to Citigroup’s Tokyo office and to Shinsei Bank by Bloomberg News weren’t immediately returned.
Tokyo-based Shinsei fell 13 percent, the biggest decline among more than 1,600 companies tracked by the MSCI World Index, to a record-low 80 yen as of 9:56 a.m. in Tokyo. A 27-stock index of Japanese non-bank lenders dropped 6.5 percent to the lowest since at least 1983.
SFCG specializes in loans to small businesses. The lender, previously called Shohkoh Fund & Co., was ordered by regulators in 2000 to suspend its business for violating lending laws.
Hikari Tsushin, a Tokyo-based telecommunications company, hasn’t made loans to SFCG, spokesman Taichi Konno said.
Asia Agrees on $120 Billion Currency Pool as Crisis Worsens
Feb. 23 (Bloomberg) -- Asian nations will form a $120 billion pool of foreign-exchange reserves that can be used by countries to defend their currencies in an expansion of efforts to battle fallout from the global financial crisis.
Finance ministers from Japan, China, South Korea and 10 Southeast Asian nations agreed to the fund at a summit yesterday in Phuket, Thailand. The amount is 50 percent more than was proposed last May, and a broadening of the current arrangement called the Chiang Mai Initiative that allows only bilateral currency swaps. No date was set for completion of the new pool.
A regional currency agreement is vital “in ensuring market confidence in the Asian economies,” Thailand Finance Minister Korn Chatikavanij told reporters. “It is one of our highest priorities.”
The fund is aimed at ensuring central banks have enough to shield their currencies from speculative attacks such as those that depleted the reserves of Indonesia, Thailand and South Korea during financial crisis a decade ago. Many Asian currencies have tumbled in the past year, threatening regional stability, as the global downturn spreads through their export- dependent economies.
Japan, China and South Korea will provide about 80 percent of the currency pool with the 10 Association of Southeast Asian nations contributing the rest, the statement said. How much each country will supply will probably be decided by the next meeting in May, the ministers said yesterday.
Thailand, Indonesia, Malaysia, Singapore and the Philippines, the five-biggest Southeast Asian nations, will contribute $3.5 billion each to the pool, Malaysia’s state news service Bernama reported, citing Deputy Prime Minister Najib Razak who attended the meeting.
Fund Needed
“The pool will shore up confidence and provide support for these nations in any kind of emergency,” said Alvin Liew, an economist at Standard Chartered Plc in Singapore. “We cannot rule out that some countries will need to tap the fund in this crisis.”
Eight of 10 of Asia’s most-traded currencies outside of Japan have fallen against the dollar in the past year, led by a 37 percent tumble in the Korean won and a 23 percent decline in Indonesia’s rupiah, according to Bloomberg data.
The currencies are at risk of further losses as wealthier nations curb overseas investment and private investors sell existing stock and bond holdings in emerging markets.
“Capital flows into the region have decreased due to global de-leveraging,” the ministers said yesterday.
Risks to Asia
Large reversals “of capital flows, which have affected the financial markets, could undermine growth prospects,” they said. “This can be a significant downside risk to regional growth, which has already been dragged down by the global economic downturn.”
A decade ago, Indonesia, Thailand and South Korea spent much of their foreign reserves attempting to prop up their exchange rates. The three nations were forced to turn to the International Monetary Fund for more than $100 billion of loans. In return, the governments had to cut spending, raise interest rates and sell state-owned companies.
In the years since, Japan, China and South Korea together with the Asean economies have amassed more than $3.6 trillion of foreign-exchange reserves, about half of the global total.
“We reaffirm our determination to dedicate ourselves to increasing the free flow of trade and investment, to standing firm against protectionist measures which would worsen the economic downturn and to refrain from raising new barriers,” the Asean ministers said in a statement.
Reserves Decline
Fallout from the current global slump has led to some Asian nations using their reserves to support their currencies.
South Korea’s foreign-currency holdings declined to $202 billion in January from a record $264 billion last March. The nation may use reserves after the won weakened beyond 1,500 per dollar last week, Yonhap News reported yesterday, citing unidentified government and central bank officials.
Malaysia’s gold and foreign-exchange reserves fell to $91.3 billion on Jan. 30 from $123.7 billion on Aug. 15. Indonesia’s have slumped by $10 billion since last July to $50.9 billion at the end of January.
Asian nations are expanding or forging new bilateral currency swap agreements even as they set up the combined reserve pool. Japan and Indonesia on Feb. 21 agreed to boost the size of an existing bilateral agreement to $12 billion from $6 billion. China and Malaysia this month agreed on a three-year 80 billion-yuan ($11.7 billion) currency swap.
“As an interim measure, the existing bilateral swap agreement network should play its full role and be strengthened in terms of size and participants if necessary,” the Asian ministers said.
Finance ministers from Japan, China, South Korea and 10 Southeast Asian nations agreed to the fund at a summit yesterday in Phuket, Thailand. The amount is 50 percent more than was proposed last May, and a broadening of the current arrangement called the Chiang Mai Initiative that allows only bilateral currency swaps. No date was set for completion of the new pool.
A regional currency agreement is vital “in ensuring market confidence in the Asian economies,” Thailand Finance Minister Korn Chatikavanij told reporters. “It is one of our highest priorities.”
The fund is aimed at ensuring central banks have enough to shield their currencies from speculative attacks such as those that depleted the reserves of Indonesia, Thailand and South Korea during financial crisis a decade ago. Many Asian currencies have tumbled in the past year, threatening regional stability, as the global downturn spreads through their export- dependent economies.
Japan, China and South Korea will provide about 80 percent of the currency pool with the 10 Association of Southeast Asian nations contributing the rest, the statement said. How much each country will supply will probably be decided by the next meeting in May, the ministers said yesterday.
Thailand, Indonesia, Malaysia, Singapore and the Philippines, the five-biggest Southeast Asian nations, will contribute $3.5 billion each to the pool, Malaysia’s state news service Bernama reported, citing Deputy Prime Minister Najib Razak who attended the meeting.
Fund Needed
“The pool will shore up confidence and provide support for these nations in any kind of emergency,” said Alvin Liew, an economist at Standard Chartered Plc in Singapore. “We cannot rule out that some countries will need to tap the fund in this crisis.”
Eight of 10 of Asia’s most-traded currencies outside of Japan have fallen against the dollar in the past year, led by a 37 percent tumble in the Korean won and a 23 percent decline in Indonesia’s rupiah, according to Bloomberg data.
The currencies are at risk of further losses as wealthier nations curb overseas investment and private investors sell existing stock and bond holdings in emerging markets.
“Capital flows into the region have decreased due to global de-leveraging,” the ministers said yesterday.
Risks to Asia
Large reversals “of capital flows, which have affected the financial markets, could undermine growth prospects,” they said. “This can be a significant downside risk to regional growth, which has already been dragged down by the global economic downturn.”
A decade ago, Indonesia, Thailand and South Korea spent much of their foreign reserves attempting to prop up their exchange rates. The three nations were forced to turn to the International Monetary Fund for more than $100 billion of loans. In return, the governments had to cut spending, raise interest rates and sell state-owned companies.
In the years since, Japan, China and South Korea together with the Asean economies have amassed more than $3.6 trillion of foreign-exchange reserves, about half of the global total.
“We reaffirm our determination to dedicate ourselves to increasing the free flow of trade and investment, to standing firm against protectionist measures which would worsen the economic downturn and to refrain from raising new barriers,” the Asean ministers said in a statement.
Reserves Decline
Fallout from the current global slump has led to some Asian nations using their reserves to support their currencies.
South Korea’s foreign-currency holdings declined to $202 billion in January from a record $264 billion last March. The nation may use reserves after the won weakened beyond 1,500 per dollar last week, Yonhap News reported yesterday, citing unidentified government and central bank officials.
Malaysia’s gold and foreign-exchange reserves fell to $91.3 billion on Jan. 30 from $123.7 billion on Aug. 15. Indonesia’s have slumped by $10 billion since last July to $50.9 billion at the end of January.
Asian nations are expanding or forging new bilateral currency swap agreements even as they set up the combined reserve pool. Japan and Indonesia on Feb. 21 agreed to boost the size of an existing bilateral agreement to $12 billion from $6 billion. China and Malaysia this month agreed on a three-year 80 billion-yuan ($11.7 billion) currency swap.
“As an interim measure, the existing bilateral swap agreement network should play its full role and be strengthened in terms of size and participants if necessary,” the Asian ministers said.
Asian Stocks Drop on Norinchukin Bank, BlueScope Steel Losses
Feb. 23 (Bloomberg) -- Asian stocks slumped, led by financial and commodity companies, as losses at Japan’s Norinchukin Bank and BlueScope Steel Ltd. heightened concerns that the global recession is deepening.
Sumitomo Mitsui Financial Group Inc., Japan’s third-biggest bank, slid 4.7 percent as concern the U.S. government will take over financial companies sent stocks there lower on Feb. 20. BlueScope, Australia’s largest steelmaker, tumbled 9.6 percent in Sydney after saying it may have a loss this half and cutting its dividend payment. Toyota Motor Corp., the world’s largest carmaker, fell 2.3 percent after the Nikkei English News said the company will cut global vehicle production.
“There is a worry that the recession will be deeper and more prolonged than previously expected,” said Prasad Patkar, who helps manage $1 billion at Sydney-based Platypus Asset Management. “My sense is that the current consensus is for a recovery in first half of next year. The new lows are telling you that the market believes a recovery will be muted.”
The MSCI Asia Pacific Index fell 1 percent to 75.30 at 9:42 a.m. in Tokyo, The gauge tumbled 7 percent last week, the sharpest decline since the period ended Oct. 24, and has lost 15 percent in 2009 as the economic slowdown hurts corporate profits.
Japan’s Nikkei 225 Stock Average lost 1.4 percent to 7,315.66. Australia’s S&P/ASX 200 Index fell 1.2 percent. New Zealand’s NZX 50 Index lost 0.6 percent, set to close at the lowest since May 2004.
Toshiba Corp., Japan’s biggest chipmaker, slumped 10 percent after the Yomiuri newspaper reported the company is considering raising funds to strengthen its finances. Newcrest Mining Ltd., Australia’s largest gold producer, rallied 2.3 percent as bullion exceeded $1,000 an ounce for the first time since March.
Biggest Bankruptcy
Futures on the U.S. Standard & Poor’s 500 Index lost 0.6 percent today. The gauge dropped 1.1 percent on Feb. 20. Citigroup Inc. and Bank of America Corp. tumbled as Senator Christopher Dodd, chairman of the Banking Committee, said it may be necessary to nationalize some banks for “a short time.”
Sumitomo Mitsui dropped 4.7 percent to 2,825 yen. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, lost 3.5 percent to 414 yen.
Norinchukin Bank, which isn’t listed, said on Feb. 20 that it will raise 1.9 trillion yen ($20 billion) through share sales. Norinchukin, owned by more than 4,000 shareholders including farm, fishing and forestry cooperatives, lost at least $10 billion on overseas asset-backed securities following the collapse of the American housing market.
Tokyo-based SFCG Co., which provides small enterprises with loans, today said it filed for protection from creditors with 338 billion yen in liabilities, making it Japan’s biggest bankruptcy this year.
Mounting Losses
The MSCI Asia Pacific’s finance gauge is the worst performer of the broader index’s 10 industry measures this year as losses from the financial crisis swelled. The International Monetary Fund said last month bank losses worldwide from toxic U.S.-originated assets may reach $2.2 trillion.
“Investors are increasingly wondering which businesses can survive in the coming months,” Tomochika Kitaoka, a strategist at Tokyo-based Mizuho Securities Co., said in an interview with Bloomberg Television.
BlueScope tumbled 9.6 percent to A$2.82 as the global slowdown forced steelmakers to cut output, prompting the company to say today that it may have a second-half loss. BlueScope, which reported a three-fold increase in first-half profit, cut its interim dividend by 77 percent.
Toyota, Toshiba
Rio Tinto Group, the world’s No. 3 mining company, lost 4 percent to A$48.26. BHP Billiton Ltd., Rio’s largest rival, declined 1.3 percent to A$29.49. Copper in New York lost 3.7 percent on Feb. 20 in New York as the global economic slump increased stockpiles of the metal. Futures rose 1.5 percent in after-hours trading.
Toyota dropped 2.3 percent to 3,020 yen. The company will cut worldwide vehicle production by 20 percent this calendar year on slumping demand, the Nikkei reported, without saying where it got the information.
Toshiba tumbled 10 percent to 207 yen following the Yomiuri’s Feb. 20 report that the company is considering raising more than 300 billion yen.
Newcrest gained 2.7 percent to A$33.93 following a two-day, 9 percent slump. Gold rose 2.6 percent to $1,002.20 an ounce on Feb. 20 as investors flocked to the metal as a safe haven. Prices increased 0.5 percent today.
Sumitomo Mitsui Financial Group Inc., Japan’s third-biggest bank, slid 4.7 percent as concern the U.S. government will take over financial companies sent stocks there lower on Feb. 20. BlueScope, Australia’s largest steelmaker, tumbled 9.6 percent in Sydney after saying it may have a loss this half and cutting its dividend payment. Toyota Motor Corp., the world’s largest carmaker, fell 2.3 percent after the Nikkei English News said the company will cut global vehicle production.
“There is a worry that the recession will be deeper and more prolonged than previously expected,” said Prasad Patkar, who helps manage $1 billion at Sydney-based Platypus Asset Management. “My sense is that the current consensus is for a recovery in first half of next year. The new lows are telling you that the market believes a recovery will be muted.”
The MSCI Asia Pacific Index fell 1 percent to 75.30 at 9:42 a.m. in Tokyo, The gauge tumbled 7 percent last week, the sharpest decline since the period ended Oct. 24, and has lost 15 percent in 2009 as the economic slowdown hurts corporate profits.
Japan’s Nikkei 225 Stock Average lost 1.4 percent to 7,315.66. Australia’s S&P/ASX 200 Index fell 1.2 percent. New Zealand’s NZX 50 Index lost 0.6 percent, set to close at the lowest since May 2004.
Toshiba Corp., Japan’s biggest chipmaker, slumped 10 percent after the Yomiuri newspaper reported the company is considering raising funds to strengthen its finances. Newcrest Mining Ltd., Australia’s largest gold producer, rallied 2.3 percent as bullion exceeded $1,000 an ounce for the first time since March.
Biggest Bankruptcy
Futures on the U.S. Standard & Poor’s 500 Index lost 0.6 percent today. The gauge dropped 1.1 percent on Feb. 20. Citigroup Inc. and Bank of America Corp. tumbled as Senator Christopher Dodd, chairman of the Banking Committee, said it may be necessary to nationalize some banks for “a short time.”
Sumitomo Mitsui dropped 4.7 percent to 2,825 yen. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, lost 3.5 percent to 414 yen.
Norinchukin Bank, which isn’t listed, said on Feb. 20 that it will raise 1.9 trillion yen ($20 billion) through share sales. Norinchukin, owned by more than 4,000 shareholders including farm, fishing and forestry cooperatives, lost at least $10 billion on overseas asset-backed securities following the collapse of the American housing market.
Tokyo-based SFCG Co., which provides small enterprises with loans, today said it filed for protection from creditors with 338 billion yen in liabilities, making it Japan’s biggest bankruptcy this year.
Mounting Losses
The MSCI Asia Pacific’s finance gauge is the worst performer of the broader index’s 10 industry measures this year as losses from the financial crisis swelled. The International Monetary Fund said last month bank losses worldwide from toxic U.S.-originated assets may reach $2.2 trillion.
“Investors are increasingly wondering which businesses can survive in the coming months,” Tomochika Kitaoka, a strategist at Tokyo-based Mizuho Securities Co., said in an interview with Bloomberg Television.
BlueScope tumbled 9.6 percent to A$2.82 as the global slowdown forced steelmakers to cut output, prompting the company to say today that it may have a second-half loss. BlueScope, which reported a three-fold increase in first-half profit, cut its interim dividend by 77 percent.
Toyota, Toshiba
Rio Tinto Group, the world’s No. 3 mining company, lost 4 percent to A$48.26. BHP Billiton Ltd., Rio’s largest rival, declined 1.3 percent to A$29.49. Copper in New York lost 3.7 percent on Feb. 20 in New York as the global economic slump increased stockpiles of the metal. Futures rose 1.5 percent in after-hours trading.
Toyota dropped 2.3 percent to 3,020 yen. The company will cut worldwide vehicle production by 20 percent this calendar year on slumping demand, the Nikkei reported, without saying where it got the information.
Toshiba tumbled 10 percent to 207 yen following the Yomiuri’s Feb. 20 report that the company is considering raising more than 300 billion yen.
Newcrest gained 2.7 percent to A$33.93 following a two-day, 9 percent slump. Gold rose 2.6 percent to $1,002.20 an ounce on Feb. 20 as investors flocked to the metal as a safe haven. Prices increased 0.5 percent today.
Saturday, February 21, 2009
Obama Plans to Reduce Budget Deficit to $533 Billion by 2013
Feb. 21 (Bloomberg) -- President Barack Obama plans to cut the U.S. budget deficit to $533 billion by the end of his first term by increasing taxes on the wealthy and cutting spending for the war in Iraq, according to an administration official.
Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity. The deficit Obama inherited on taking office last month was $1.3 trillion. The administration next week is to release an overview of its budget proposal for the 2010 fiscal year, which begins Oct. 1.
“Next week sets the table for the year,” and the president’s four-year term, Kenneth Baer, spokesman for the White House budget office, said yesterday, referring to the budget plan that will be released on Feb. 26.
To increase revenue, Obama will propose taxing the investment income of hedge-fund and private-equity partners at ordinary tax rates, which are now as high as 35 percent and may rise to 39.6 percent under the administration’s plan, the New York Times reported today. They are currently taxed at the capital-gains rate of as much as 15 percent.
Obama promised during the campaign that he would slash federal programs that weren’t working. “The president has said he can’t kick the can down the road anymore,” Baer said.
The $1.3 trillion deficit Obama inherited equals 9.2 percent of gross domestic product, said the administration official. The administration’s budget proposal cuts the deficit to 3 percent of GDP by 2013, at the end of Obama’s first term.
Iraq War
Most of the savings will be realized from winding down the war in Iraq as well as increased revenue from Americans making more than $250,000 a year, said the official. The Times said Obama will propose letting President George W. Bush’s tax cuts for the wealthy lapse in 2010.
Earlier today, Obama talked about the importance of reining in the ballooning federal deficit in his weekly address. He will hold a so-called fiscal-responsibility summit at the White House on Feb. 23, with about 130 people invited to attend, including about 50 members of the House and Senate from both parties, according to Baer.
Obama said the Treasury Department will begin ordering employers today to cut taxes taken from workers’ paychecks as part of his effort to pull the economy out of a recession.
The president said a “typical” family will start getting at least an extra $65 a month by April 1 as a result of the $787 billion stimulus package he signed into law this week. He said the measure is only a “first step.”
The president has also pledged $275 billion to help struggling homeowners avoid foreclosure and plans to announce measures to stabilize banks. Companies from General Motors Corp. to Alcoa Inc. are slashing jobs and cutting production as the recession threatens to become the worst slump in the postwar era.
Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity. The deficit Obama inherited on taking office last month was $1.3 trillion. The administration next week is to release an overview of its budget proposal for the 2010 fiscal year, which begins Oct. 1.
“Next week sets the table for the year,” and the president’s four-year term, Kenneth Baer, spokesman for the White House budget office, said yesterday, referring to the budget plan that will be released on Feb. 26.
To increase revenue, Obama will propose taxing the investment income of hedge-fund and private-equity partners at ordinary tax rates, which are now as high as 35 percent and may rise to 39.6 percent under the administration’s plan, the New York Times reported today. They are currently taxed at the capital-gains rate of as much as 15 percent.
Obama promised during the campaign that he would slash federal programs that weren’t working. “The president has said he can’t kick the can down the road anymore,” Baer said.
The $1.3 trillion deficit Obama inherited equals 9.2 percent of gross domestic product, said the administration official. The administration’s budget proposal cuts the deficit to 3 percent of GDP by 2013, at the end of Obama’s first term.
Iraq War
Most of the savings will be realized from winding down the war in Iraq as well as increased revenue from Americans making more than $250,000 a year, said the official. The Times said Obama will propose letting President George W. Bush’s tax cuts for the wealthy lapse in 2010.
Earlier today, Obama talked about the importance of reining in the ballooning federal deficit in his weekly address. He will hold a so-called fiscal-responsibility summit at the White House on Feb. 23, with about 130 people invited to attend, including about 50 members of the House and Senate from both parties, according to Baer.
Obama said the Treasury Department will begin ordering employers today to cut taxes taken from workers’ paychecks as part of his effort to pull the economy out of a recession.
The president said a “typical” family will start getting at least an extra $65 a month by April 1 as a result of the $787 billion stimulus package he signed into law this week. He said the measure is only a “first step.”
The president has also pledged $275 billion to help struggling homeowners avoid foreclosure and plans to announce measures to stabilize banks. Companies from General Motors Corp. to Alcoa Inc. are slashing jobs and cutting production as the recession threatens to become the worst slump in the postwar era.
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