May 30 (Bloomberg) -- Asian stocks rose for a fourth week in five, driving the MSCI Asia Pacific Index to the highest level in eight months, as U.S. consumer confidence and Japanese production reports spurred hopes for a global economic recovery.
Toyota Motor Corp., which gets 31 percent of its revenue in North America, gained 6.7 percent in Tokyo. PetroChina Co., the nation’s biggest oil producer, advanced 6 percent as crude oil prices surged for a second week. Hang Lung Properties Ltd., Hong Kong’s fifth-biggest builder, surged 16 percent after Hong Kong’s government announced an additional stimulus package.
“Signs of a turnaround are coming through,” said Matt Riordan, who helps manage about $3.1 billion at Paradice Investment Management in Sydney. “People who were initially dismissing this as a bear-market rally are concerned it might be sustainable.”
The MSCI Asia Pacific Index gained 2.7 percent to 102.04, its highest level since Oct. 3. The gauge, which has rallied 45 percent from a five-year low on March 9, briefly pared gains this week after North Korea threatened a military strike in response to South Korea joining a program to seize weapons shipments.
South Korea’s Kospi Index sank 0.6 percent as North Korea tested a nuclear device on May 25 and launched six short-range missiles in defiance of international condemnation.
“The North Korean missile test is providing investors a reality check,” said Roger Groebli, Singapore-based head of market analysis at LGT Capital Management, which oversees about $20 billion. “Valuations in Asia are a little rich.”
Economic Recovery?
The rally since March has driven the average valuation of companies on MSCI’s Asian index to 1.4 times the book value of assets, 17 percent higher from at the end of 2008.
China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, advanced 24 percent after commodity shipping rates rallied. Singapore Petroleum Co. surged 21 percent after PetroChina Co. agreed to buy a stake in the oil refining company. Genting Singapore Plc, which is building a theme park and casino in the city, retreated 9.9 percent after shareholders sold stock at a discount.
Toyota Motor, the world’s biggest automaker, climbed 6.7 percent to 3,810 yen.
The Conference Board said on May 26 that its index of U.S. consumer confidence surged to 54.9, the most in six years. Sentiment was projected to rise to 42.6, according to a Bloomberg News survey of economists.
Yesterday, Japan said industrial output rose 5.2 percent in April, the most in 56 years. India also said its economy grew 5.8 percent in the first quarter, beating the 5 percent increase economists had expected.
Property Stocks Gain
PetroChina gained 6 percent to HK$8.89. Inpex Corp., Japan’s largest oil explorer, jumped 7.7 percent to 771,000 yen. Crude oil for July delivery climbed 7.5 percent in the week to $66.31 a barrel.
“Oil has followed equities primarily because investors have cash on hand on the sidelines,” Victor Shum, a senior principal at Purvin & Gertz Inc., said in Singapore. “They are counting on some of the positive economic indicators, and are placing bets.”
Hang Lung Properties rallied 16 percent to HK$26.20. Hong Kong announced on May 26 tax cuts, fee waivers and spending totaling $2.2 billion to shield people from a recession that’s likely to be the worst on record. Luxury home sales in the city climbed to their highest since June, according to a May 27 report by Centaline Property Agency Ltd.
Baltic Dry
Property stocks in Singapore also rallied after City Developments Ltd., the city’s second-biggest developer, said on May 27 that it has started raising prices at one if its residential projects and that it was looking to speed up the launch of another project to take advantage of rising mass housing demand. City Developments advanced 15 percent to S$9.45.
China Cosco jumped 24 percent to HK$10.60 in Hong Kong. Kawasaki Kisen Kaisha Ltd., Japan’s third-biggest shipping line, STX Pan Ocean Co., South Korea’s biggest bulk carrier, both advanced 11 percent. The Baltic Dry Index, which measures the cost of shipping commodities, climbed 25.4 percent to its highest level since Sept. 26, 2008.
Singapore Petroleum surged 21 percent to S$6.08. PetroChina said on May 24 it will buy Keppel Corp.’s 45.5 percent stake in the oil refining company at S$6.25 a share.
Genting Singapore slumped 9.9 percent to 73 Singapore cents. Golden Hope Ltd. and Lakewood Sdn Bhd. sold 854 million shares at 72 Singapore cents each, according to a pricing document sent to investors.
Saturday, May 30, 2009
European Stocks Cap Longest Stretch of Monthly Gains Since 2007
May 30 (Bloomberg) -- European stocks rose for a second week, with the Dow Jones Stoxx 600 Index capping its longest stretch of monthly gains since May 2007, as investors speculated the worst of the global recession is over.
Anglo American Plc and Total SA led commodity producers higher after base metals and crude oil increased. Tesco Plc paced an advance among retailers as investors sought shares of companies whose profits are more closely tied to economic growth. United Internet AG rallied 27 percent after agreeing to buy Freenet AG’s digital subscriber-line business.
The Dow Jones Stoxx 600 Index rose 0.6 percent this week to 208.21. The measure added 4 percent in May, gaining for a third straight month and bringing the rally since March 9 to 32 percent amid optimism the $12.8 trillion pledged by the U.S. government and the Federal Reserve will help to end the first global recession since World War II.
“People are on the lookout for bright spots and every time one appears it serves as a relief,” said Peter Braendle, who oversees about $50 billion at Swisscanto Asset Management in Zurich. “The economic data is no longer as alarming as it used to be. If we see an economic upturn, raw-material producers will continue to be in demand.”
A report on May 29 showed the U.S. economy contracted at a 5.7 percent annual pace in the first quarter, less than the government estimated last month. Sales of existing homes in the U.S. gained in April, the National Association of Realtors said earlier this week.
National Indexes
Other reports showed Japan’s industrial output increased the most since 1953 in April, India’s economy grew more than analysts estimated last quarter, and Poland expanded in the first quarter.
National benchmark indexes rose in 11 of the 18 western European markets. The U.K.’s FTSE 100 climbed 1.2 percent, led by a rally in mining shares. France’s CAC 40 added 1.5 percent and Germany’s DAX advanced 0.5 percent.
Basic-resource stocks posted the steepest gain among 19 industry groups in the Stoxx 600, increasing 4.9 percent.
Anglo American, the world’s fourth-biggest diversified mining company, soared 9.4 percent. Xstrata Plc, the fourth- largest copper producer, added 4.4 percent. Copper advanced for a fifth consecutive month on the London Metal Exchange. LME- monitored stockpiles of copper have fallen 43 percent from a peak at the end of February as China, the world’s largest consumer, bought metal.
‘Vector of Support’
“There is optimism from signs that activity in Asia is taking off,” said Emmanuel Soupre, who helps manage about $18 billion at Neuflize OBC in Paris. “This is welcome and shows that China remains a vector of support. This explains the rebound in raw materials.”
Oil climbed 30 percent in May, the biggest monthly increase since March 1999. Yesterday’s settlement at $66.31 was the highest since Nov. 4 and came after OPEC kept output unchanged.
Total, Europe’s third-largest oil company, rose 2.7 percent. Royal Dutch Shell Plc, the biggest, advanced 1.8 percent. Cairn Energy Ltd., the U.K. explorer operating on six continents, increased 3.9 percent.
Seadrill Ltd. added 8.8 percent after the Norwegian oil-rig company controlled by billionaire John Fredriksen said first- quarter net income was $243.2 million, beating the $148 million average estimate of 10 analysts surveyed by Bloomberg News.
Consumer Confidence
A measure of retailers in the Stoxx 600 rose 1.8 percent. Tesco, the U.K.’s biggest retailer, climbed 4 percent. Metro AG, Germany’s largest, rallied 4.7 percent.
U.K. consumer confidence matched the highest level in almost a year this month as people became more optimistic that they can weather the recession, according to a report on May 29. Conference Board figures earlier this week showed confidence among U.S. consumers in May surged the most in six years.
United Internet, Germany’s third-largest Web-access provider, jumped 27 percent after agreeing to buy Freenet’s digital subscriber-line business for 123 million euros ($174 million) in cash and shares, adding about 700,000 customers.
ITV Plc, the U.K.’s biggest commercial broadcaster, soared 35 percent. Goldman Sachs Group Inc. added the stock to its “conviction buy” list, saying the company is well positioned to benefit from a recovery in the advertising industry. Bank of America Corp. also recommended investors buy the shares.
Wolseley Plc sank 15 percent after the world’s largest supplier of heating and plumbing gear said slumping demand caused pretax profit to fall 80 percent in the nine months through April and warned markets won’t recover this year.
Worst Performers
Construction and material stocks dropped 2.7 percent as a group, the worst performance in the Stoxx 600. Royal BAM Groep NV sank 10 percent after the Dutch builder reported first- quarter earnings that missed analysts’ estimates, caused by a loss at the company’s property division.
Genmab A/S tumbled 19 percent as U.S. regulators said it’s difficult to tell whether the Danish biotechnology company’s experimental Arzerra drug will yield significant health benefits for leukemia patients.
Anglo American Plc and Total SA led commodity producers higher after base metals and crude oil increased. Tesco Plc paced an advance among retailers as investors sought shares of companies whose profits are more closely tied to economic growth. United Internet AG rallied 27 percent after agreeing to buy Freenet AG’s digital subscriber-line business.
The Dow Jones Stoxx 600 Index rose 0.6 percent this week to 208.21. The measure added 4 percent in May, gaining for a third straight month and bringing the rally since March 9 to 32 percent amid optimism the $12.8 trillion pledged by the U.S. government and the Federal Reserve will help to end the first global recession since World War II.
“People are on the lookout for bright spots and every time one appears it serves as a relief,” said Peter Braendle, who oversees about $50 billion at Swisscanto Asset Management in Zurich. “The economic data is no longer as alarming as it used to be. If we see an economic upturn, raw-material producers will continue to be in demand.”
A report on May 29 showed the U.S. economy contracted at a 5.7 percent annual pace in the first quarter, less than the government estimated last month. Sales of existing homes in the U.S. gained in April, the National Association of Realtors said earlier this week.
National Indexes
Other reports showed Japan’s industrial output increased the most since 1953 in April, India’s economy grew more than analysts estimated last quarter, and Poland expanded in the first quarter.
National benchmark indexes rose in 11 of the 18 western European markets. The U.K.’s FTSE 100 climbed 1.2 percent, led by a rally in mining shares. France’s CAC 40 added 1.5 percent and Germany’s DAX advanced 0.5 percent.
Basic-resource stocks posted the steepest gain among 19 industry groups in the Stoxx 600, increasing 4.9 percent.
Anglo American, the world’s fourth-biggest diversified mining company, soared 9.4 percent. Xstrata Plc, the fourth- largest copper producer, added 4.4 percent. Copper advanced for a fifth consecutive month on the London Metal Exchange. LME- monitored stockpiles of copper have fallen 43 percent from a peak at the end of February as China, the world’s largest consumer, bought metal.
‘Vector of Support’
“There is optimism from signs that activity in Asia is taking off,” said Emmanuel Soupre, who helps manage about $18 billion at Neuflize OBC in Paris. “This is welcome and shows that China remains a vector of support. This explains the rebound in raw materials.”
Oil climbed 30 percent in May, the biggest monthly increase since March 1999. Yesterday’s settlement at $66.31 was the highest since Nov. 4 and came after OPEC kept output unchanged.
Total, Europe’s third-largest oil company, rose 2.7 percent. Royal Dutch Shell Plc, the biggest, advanced 1.8 percent. Cairn Energy Ltd., the U.K. explorer operating on six continents, increased 3.9 percent.
Seadrill Ltd. added 8.8 percent after the Norwegian oil-rig company controlled by billionaire John Fredriksen said first- quarter net income was $243.2 million, beating the $148 million average estimate of 10 analysts surveyed by Bloomberg News.
Consumer Confidence
A measure of retailers in the Stoxx 600 rose 1.8 percent. Tesco, the U.K.’s biggest retailer, climbed 4 percent. Metro AG, Germany’s largest, rallied 4.7 percent.
U.K. consumer confidence matched the highest level in almost a year this month as people became more optimistic that they can weather the recession, according to a report on May 29. Conference Board figures earlier this week showed confidence among U.S. consumers in May surged the most in six years.
United Internet, Germany’s third-largest Web-access provider, jumped 27 percent after agreeing to buy Freenet’s digital subscriber-line business for 123 million euros ($174 million) in cash and shares, adding about 700,000 customers.
ITV Plc, the U.K.’s biggest commercial broadcaster, soared 35 percent. Goldman Sachs Group Inc. added the stock to its “conviction buy” list, saying the company is well positioned to benefit from a recovery in the advertising industry. Bank of America Corp. also recommended investors buy the shares.
Wolseley Plc sank 15 percent after the world’s largest supplier of heating and plumbing gear said slumping demand caused pretax profit to fall 80 percent in the nine months through April and warned markets won’t recover this year.
Worst Performers
Construction and material stocks dropped 2.7 percent as a group, the worst performance in the Stoxx 600. Royal BAM Groep NV sank 10 percent after the Dutch builder reported first- quarter earnings that missed analysts’ estimates, caused by a loss at the company’s property division.
Genmab A/S tumbled 19 percent as U.S. regulators said it’s difficult to tell whether the Danish biotechnology company’s experimental Arzerra drug will yield significant health benefits for leukemia patients.
Thursday, May 28, 2009
Asian Stocks Gain on Japan Industrial Production; BHP Advances
May 29 (Bloomberg) -- Asian stocks rose and were poised for the longest streak of monthly gains since the credit crisis began in 2007, as a better-than-forecast report on Japanese industrial production lifted mining and energy stocks.
BHP Billiton Ltd., the world’s biggest mining company and Australia’s top oil producer, gained 2.3 percent as copper prices rose on the Japanese report. Mitsui O.S.K. Lines Ltd. added 4.8 percent after commodity-shipping fees climbed to an eight-month high. Bank of China Ltd., the nation’s third-largest bank, climbed 3.4 percent in Hong Kong after Deutsche Bank AG recommended investors buy the stock.
“People are anticipating a recovery and demand for commodities going up on the back of that.” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “Things are getting less worse. It’s still going to be a rocky road, and there’s always the risk of some sort of shock to the negative.”
The MSCI Asia Pacific Index climbed 0.6 percent to 100.8 as of 1:02 p.m. in Tokyo. The gauge rose 1.5 percent this week, taking its rally from a five-year low on March 9 to 43 percent.
Australia’s S&P/ASX 200 Index increased 1.7 percent. Hong Kong’s Hang Seng Index added 0.5 percent. Japan’s Nikkei 225 Stock Average added 0.1 percent as gains in the yen after the production report dimmed exporters’ earnings prospects.
MSCI’s Asian index has climbed 11 percent in May, its third month of gains and the longest winning streak since Bear Stearns Cos. filed for bankruptcy protection in July 2007 for two hedge funds. India’s Reliance Infrastructure Ltd. and Kotak Mahindra Bank Ltd. surged more than 70 percent this month, leading gains on the gauge amid speculation the government’s election victory will accelerate policies to boost economic growth.
Increased Output
In Sydney, Commonwealth Bank of Australia rose 2.4 percent after the country’s bank lending increased. Singapore’s Chartered Semiconductor Manufacturing Ltd. gained 2.3 percent as the Business Times reported the company received a takeover bid. AirAsia Bhd. climbed 4 percent in Kuala Lumpur after first- quarter profit jumped.
Futures on the Standard & Poor’s 500 Index lost 0.1 percent. The gauge climbed 1.5 percent yesterday as oil prices jumped and a rebound in 10-year Treasuries eased concern record government debt sales will trigger higher borrowing costs.
Copper futures in New York gained as much as 1 percent today after Japan’s Trade Ministry said industrial production advanced 5.2 percent last month from March. Economists had estimated a 3.3 percent increase. Companies said they planned to increase output in May and June as well, the report showed.
‘More Confidence’
U.S. reports this week added to confidence the worst global slowdown since World War II is easing. The Conference Board’s index of consumer confidence showed sentiment surged to the highest since September. Durable goods orders gained 1.9 percent in April, more than some economists expected. Economists also upgraded their forecasts for Chinese economic growth.
BHP rose 2.3 percent to A$34.80. Mitsui & Co., a trading company that gets more than half its profit from commodities, gained 1.8 percent to 1,219 yen.
Toshiba Corp., Japan’s biggest chipmaker, climbed 2.6 percent to 357 yen after NHK television said the company will raise output of flash memory chips.
“The market is gaining more confidence as we haven’t seen bad economic news lately,” said Yoji Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong.
Asian stocks were poised to rise for the fourth time in five weeks as speculation the worst of the recession is over boosted retailers, mining companies and banks. Hong Kong-based property developers had three of the six biggest advances in the MSCI Asia index. Guangzhou R&F Properties Ltd., Sino Land Co. and Shimao Property Holdings Ltd. gained more than 20 percent.
Baltic Dry
The index’s climb since March has driven the average valuation of its companies to 1.4 times the book value of assets, 17 percent higher than at the end of 2008.
Inpex Corp., Japan’s largest oil explorer, climbed 6.8 percent to 774,000 yen. Woodside Petroleum Ltd., Australia’s No. 2 oil company, added 1.4 percent to A$43.58.
Crude oil rose to a six-month high yesterday after the Organization of Petroleum Exporting Countries decided to leave production quotas unchanged. Crude for July delivery rose to $65.08 a barrel in New York, the highest settlement since Nov. 5.
Mitsui O.S.K. jumped 4.8 percent to 674 yen. The Baltic Dry Index, which measures the cost of shipping commodities, gained 4.2 percent yesterday to the highest since Sept. 29.
Pacific Basin Shipping Ltd., which operates bulk cargo ships, surged 12 percent to HK$5.41 in Hong Kong.
Mounting Losses
Bank of China climbed 3.4 percent to HK$3.34. The stock was upgraded to “buy” from “hold” by Deutsche Bank AG on expectation its foray into the international yuan settlement business will boost earnings.
Finance companies accounted for 36 percent of the MSCI Asia Pacific’s advance today. The group is the third-worst performing of 10 industry gauges in the past year as losses from the credit crisis since the start of 2007 swelled to almost $1.5 trillion.
Commonwealth Bank of Australia, the nation’s second-biggest bank by market value, rose 2.4 percent to A$34.78. Australia & New Zealand Banking Group Ltd. climbed 3.3 percent to A$15.88.
Loans provided by banks and other finance companies climbed 0.1 percent in April from the previous month, according to the Reserve Bank of Australia.
Chartered, the world’s third-largest contract chipmaker, gained 2.3 percent to S$2.23. Abu Dhabi’s Advanced Technology Investment Co. offered to buy Chartered shares from Temasek Holdings Pte, which owns a stake of about 60 percent, the Business Times said. Chartered denied the report.
AirAsia, Southeast Asia’s largest low-cost airline, climbed 4 percent to 1.30 ringgit. Profit at Malaysian airline climbed 26 percent in the first quarter from a year earlier to 203.2 million ringgit ($58 million), the company said late yesterday.
Demand in the second quarter “looks good” and the airline won’t slow down its expansion, Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview today.
BHP Billiton Ltd., the world’s biggest mining company and Australia’s top oil producer, gained 2.3 percent as copper prices rose on the Japanese report. Mitsui O.S.K. Lines Ltd. added 4.8 percent after commodity-shipping fees climbed to an eight-month high. Bank of China Ltd., the nation’s third-largest bank, climbed 3.4 percent in Hong Kong after Deutsche Bank AG recommended investors buy the stock.
“People are anticipating a recovery and demand for commodities going up on the back of that.” said Matt Riordan, who helps manage about $3.2 billion at Paradice Investment Management in Sydney. “Things are getting less worse. It’s still going to be a rocky road, and there’s always the risk of some sort of shock to the negative.”
The MSCI Asia Pacific Index climbed 0.6 percent to 100.8 as of 1:02 p.m. in Tokyo. The gauge rose 1.5 percent this week, taking its rally from a five-year low on March 9 to 43 percent.
Australia’s S&P/ASX 200 Index increased 1.7 percent. Hong Kong’s Hang Seng Index added 0.5 percent. Japan’s Nikkei 225 Stock Average added 0.1 percent as gains in the yen after the production report dimmed exporters’ earnings prospects.
MSCI’s Asian index has climbed 11 percent in May, its third month of gains and the longest winning streak since Bear Stearns Cos. filed for bankruptcy protection in July 2007 for two hedge funds. India’s Reliance Infrastructure Ltd. and Kotak Mahindra Bank Ltd. surged more than 70 percent this month, leading gains on the gauge amid speculation the government’s election victory will accelerate policies to boost economic growth.
Increased Output
In Sydney, Commonwealth Bank of Australia rose 2.4 percent after the country’s bank lending increased. Singapore’s Chartered Semiconductor Manufacturing Ltd. gained 2.3 percent as the Business Times reported the company received a takeover bid. AirAsia Bhd. climbed 4 percent in Kuala Lumpur after first- quarter profit jumped.
Futures on the Standard & Poor’s 500 Index lost 0.1 percent. The gauge climbed 1.5 percent yesterday as oil prices jumped and a rebound in 10-year Treasuries eased concern record government debt sales will trigger higher borrowing costs.
Copper futures in New York gained as much as 1 percent today after Japan’s Trade Ministry said industrial production advanced 5.2 percent last month from March. Economists had estimated a 3.3 percent increase. Companies said they planned to increase output in May and June as well, the report showed.
‘More Confidence’
U.S. reports this week added to confidence the worst global slowdown since World War II is easing. The Conference Board’s index of consumer confidence showed sentiment surged to the highest since September. Durable goods orders gained 1.9 percent in April, more than some economists expected. Economists also upgraded their forecasts for Chinese economic growth.
BHP rose 2.3 percent to A$34.80. Mitsui & Co., a trading company that gets more than half its profit from commodities, gained 1.8 percent to 1,219 yen.
Toshiba Corp., Japan’s biggest chipmaker, climbed 2.6 percent to 357 yen after NHK television said the company will raise output of flash memory chips.
“The market is gaining more confidence as we haven’t seen bad economic news lately,” said Yoji Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong.
Asian stocks were poised to rise for the fourth time in five weeks as speculation the worst of the recession is over boosted retailers, mining companies and banks. Hong Kong-based property developers had three of the six biggest advances in the MSCI Asia index. Guangzhou R&F Properties Ltd., Sino Land Co. and Shimao Property Holdings Ltd. gained more than 20 percent.
Baltic Dry
The index’s climb since March has driven the average valuation of its companies to 1.4 times the book value of assets, 17 percent higher than at the end of 2008.
Inpex Corp., Japan’s largest oil explorer, climbed 6.8 percent to 774,000 yen. Woodside Petroleum Ltd., Australia’s No. 2 oil company, added 1.4 percent to A$43.58.
Crude oil rose to a six-month high yesterday after the Organization of Petroleum Exporting Countries decided to leave production quotas unchanged. Crude for July delivery rose to $65.08 a barrel in New York, the highest settlement since Nov. 5.
Mitsui O.S.K. jumped 4.8 percent to 674 yen. The Baltic Dry Index, which measures the cost of shipping commodities, gained 4.2 percent yesterday to the highest since Sept. 29.
Pacific Basin Shipping Ltd., which operates bulk cargo ships, surged 12 percent to HK$5.41 in Hong Kong.
Mounting Losses
Bank of China climbed 3.4 percent to HK$3.34. The stock was upgraded to “buy” from “hold” by Deutsche Bank AG on expectation its foray into the international yuan settlement business will boost earnings.
Finance companies accounted for 36 percent of the MSCI Asia Pacific’s advance today. The group is the third-worst performing of 10 industry gauges in the past year as losses from the credit crisis since the start of 2007 swelled to almost $1.5 trillion.
Commonwealth Bank of Australia, the nation’s second-biggest bank by market value, rose 2.4 percent to A$34.78. Australia & New Zealand Banking Group Ltd. climbed 3.3 percent to A$15.88.
Loans provided by banks and other finance companies climbed 0.1 percent in April from the previous month, according to the Reserve Bank of Australia.
Chartered, the world’s third-largest contract chipmaker, gained 2.3 percent to S$2.23. Abu Dhabi’s Advanced Technology Investment Co. offered to buy Chartered shares from Temasek Holdings Pte, which owns a stake of about 60 percent, the Business Times said. Chartered denied the report.
AirAsia, Southeast Asia’s largest low-cost airline, climbed 4 percent to 1.30 ringgit. Profit at Malaysian airline climbed 26 percent in the first quarter from a year earlier to 203.2 million ringgit ($58 million), the company said late yesterday.
Demand in the second quarter “looks good” and the airline won’t slow down its expansion, Chief Executive Officer Tony Fernandes said in a Bloomberg Television interview today.
Infosys CEO Says Demand Won’t Recover Until Mid-2010
May 29 (Bloomberg) -- India’s biggest technology companies won’t see a rebound until mid-2010, said S. Gopalakrishnan, chief executive officer of Infosys Technologies Ltd., the country’s second-largest provider of computer services.
“We hope then that companies will start to spend,” Gopalakrishnan said in an interview in New York.
The company, which is predicting its first drop in annual revenue, gets 90 percent of sales from North American and European customers. Those companies are cutting spending as they cope with the global slump. Gopalakrishnan expects “flat” revenue growth for the industry this year.
Businesses hire Infosys to handle their finance and computer functions in India, where costs are lower. The company ranks behind Tata Consultancy Services Inc. in computer-services revenue.
Indian software companies such as Infosys face a “rocky road” in the next six to 12 months because of the recession, Richard Parower, who manages the global technology fund at J&W Seligman & Co., said last week.
Infosys is investing in emerging markets such as Latin America, China and the Middle East, Gopalakrishnan said.
“We want to reduce our dependence on the developed markets,” he said.
Wipro Ltd., India’s third-largest provider of software services, expects its Middle East business to grow 50 percent this year, Chairman Azim Premji told reporters this week.
European Acquisitions?
Infosys also wants to make acquisitions that build its presence in Europe, where the company gets about a quarter of sales.
Gopalakrishnan plans to go after smaller companies that could easily be tucked into existing operations. He declined to name specific targets. Infosys has about $2 billion in cash.
Revenue in the year ending March 31 will fall at least 3.1 percent to $4.52 billion, the company said last month. Customers remain tentative about spending decisions, Gopalakrishnan said. Infosys is renegotiating prices to attract clients.
“Spending will start when customers are convinced that there is a recovery,” he said. “Right now the focus is on conserving cash and reducing expenses.”
Indian Growth
The company is banking on growth in its home country, he said. The Indian government is increasing investment in technology, which creates more opportunity for the domestic computer-services market, Gopalakrishnan said. The company plans to get as much as 5 percent of revenue from India, up from about 2 percent now.
“The expectation is that they will continue to invest in technology, disproportionate to other markets, because there’s a lot of catching up to do,” he said of India. Gopalakrishnan, 54, helped found the company in 1981.
The Indian economy is “definitely in better shape” after elections this month, he said.
Prime Minister Manmohan Singh’s ruling Congress Party will be able to form a government without needing the support of communist lawmakers, who frustrated plans to entice foreign investment in his first five-year term. The Congress Party won the most seats since 1991 in the election, which ended May 16.
“We expect the reform process to continue,” Gopalakrishnan said.
“We hope then that companies will start to spend,” Gopalakrishnan said in an interview in New York.
The company, which is predicting its first drop in annual revenue, gets 90 percent of sales from North American and European customers. Those companies are cutting spending as they cope with the global slump. Gopalakrishnan expects “flat” revenue growth for the industry this year.
Businesses hire Infosys to handle their finance and computer functions in India, where costs are lower. The company ranks behind Tata Consultancy Services Inc. in computer-services revenue.
Indian software companies such as Infosys face a “rocky road” in the next six to 12 months because of the recession, Richard Parower, who manages the global technology fund at J&W Seligman & Co., said last week.
Infosys is investing in emerging markets such as Latin America, China and the Middle East, Gopalakrishnan said.
“We want to reduce our dependence on the developed markets,” he said.
Wipro Ltd., India’s third-largest provider of software services, expects its Middle East business to grow 50 percent this year, Chairman Azim Premji told reporters this week.
European Acquisitions?
Infosys also wants to make acquisitions that build its presence in Europe, where the company gets about a quarter of sales.
Gopalakrishnan plans to go after smaller companies that could easily be tucked into existing operations. He declined to name specific targets. Infosys has about $2 billion in cash.
Revenue in the year ending March 31 will fall at least 3.1 percent to $4.52 billion, the company said last month. Customers remain tentative about spending decisions, Gopalakrishnan said. Infosys is renegotiating prices to attract clients.
“Spending will start when customers are convinced that there is a recovery,” he said. “Right now the focus is on conserving cash and reducing expenses.”
Indian Growth
The company is banking on growth in its home country, he said. The Indian government is increasing investment in technology, which creates more opportunity for the domestic computer-services market, Gopalakrishnan said. The company plans to get as much as 5 percent of revenue from India, up from about 2 percent now.
“The expectation is that they will continue to invest in technology, disproportionate to other markets, because there’s a lot of catching up to do,” he said of India. Gopalakrishnan, 54, helped found the company in 1981.
The Indian economy is “definitely in better shape” after elections this month, he said.
Prime Minister Manmohan Singh’s ruling Congress Party will be able to form a government without needing the support of communist lawmakers, who frustrated plans to entice foreign investment in his first five-year term. The Congress Party won the most seats since 1991 in the election, which ended May 16.
“We expect the reform process to continue,” Gopalakrishnan said.
India’s Economy Probably Expanded at Slowest Pace in Six Years
May 29 (Bloomberg) -- India’s economy probably grew at the slowest pace in six years last quarter, underscoring the challenge Prime Minister Manmohan Singh faces in his second term.
Asia’s third-largest economy expanded 5 percent in the three months to March 31 after a 5.3 percent gain in the previous quarter, according to the median forecast of 24 economists in a Bloomberg survey. The Central Statistical Organisation will release the data at 11 a.m. today in New Delhi.
Singh made reviving growth his top priority after this month’s resounding re-election and added the task requires more “reform of the economy.” Finance Minister Pranab Mukherjee says he will spend more on roads and ports in July’s budget to help India weather the worst global recession since World War II.
“Reviving growth is vital to make a dent on poverty,” said Shashanka Bhide, chief economist at the New Delhi-based National Council of Applied Economic Research. “Expectations are high from the new government.”
India’s key Sensitive stock index has surged 18 percent since Singh won a clear mandate, on optimism a coalition without communist parties will facilitate plans to sell state assets and allow more foreign investments in insurance and banking.
The sale of stakes in state-run companies such as National Hydroelectric Power Corp. and Oil India Ltd. is vital for Mukherjee to find money to spend without widening a budget deficit that Moody’s Investors Service says has ‘deteriorated.”
Credit Rating
India’s budget shortfall stood at 6 percent of gross domestic product in the year ended March 31, more than double the target. Moody’s has kept India’s local currency long term rating at Ba2, two levels below investment grade while Standard & Poor’s has a BBB- rating on India, the lowest investment grade.
“The unexpected election outcome provides scope for rationalizing spending, pushing ahead with disinvestments and key reforms,” Moody’s said in its annual report yesterday.
For now, Mukherjee said he plans to spend more to stimulate the economy, betting it will help boost tax revenues. He said the election results vindicate the strategy to pursue growth as a tool to improve people’s livelihood. The World Bank estimates three-quarters of Indians live on less than $2 a day.
The 73-year-old Mukherjee returned to the finance ministry after a quarter of a century. As the finance minister in Indira Gandhi’s cabinet from 1982 to 1984, he ran an economy that was almost closed and insulated from the global economy.
Singh, as finance minister between 1991 and 1996, abandoned the Soviet-style state planning and introduced free-market policies that have helped the economy quadruple to $1.2 trillion. Mukherjee said this week he will draft the budget with Singh, renewing a relationship that started in the early 1980s when he appointed Singh as the central bank governor.
‘Game-Changing’
Singh’s election triumph has been a “game-changing” verdict, says Macquarie Group Ltd. economist Rajeev Malik, describing it as a “catalyst in enhancing the evolving global rise of the Indian economy.”
In Singh’s first term between 2004 and 2009, India’s economy grew close to 9 percent on average each year, the fastest pace since independence in 1947, helped by a six-fold surge in foreign direct investments to $38 billion.
General Electric Co. Chief Executive Officer Jeffrey Immelt said yesterday the Indian elections was the best development in the country he’d seen in 20 years and that he was “completely optimistic about India in the long term.”
Foreign Investment
At stake are economic changes blocked by Singh’s erstwhile communist partners such as a bill to raise the foreign investment ceiling for Prudential Plc and other insurers to 49 percent from 26 percent, and other proposed legislation aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. The government also wants to allow global retailers such as Wal-Mart Stores Inc. into India.
Growth may recover from the current quarter ending June 30 as stimulus measures and six interest rate cuts together worth $85 billion, or 7 percent of GDP, begin to filter in the economy, analysts said. The economy may grow 5.2 percent this quarter, according to the median of 10 analysts surveyed by Bloomberg.
Car sales and the production of cement, electricity and refined petroleum are already showing signs of revival. India’s passenger car sales increased 4.2 percent in April from a year earlier, after a 1 percent gain in March. Cement production jumped 10.1 percent in March and electricity output rose 5.9 percent from a year ago, according to government data.
UBS AG raised its growth forecast for India to 6.2 percent in the year ending March 2010, compared with an earlier prediction of 5.2 percent. Standard Chartered economist Anubhuti Sahay said risks to the bank’s 5 percent forecast for the same period were now “to the upside” and Morgan Stanley’s Chetan Ahya raised his estimate to 5.8 percent from 4.4 percent.
The election outcome “is a huge positive surprise and is likely to allow the new government to initiate some long-pending structural reforms,” said Morgan Stanley’s Ahya. “Decisive policy actions will be critical to lift the pace of GDP growth closer to potential.”
Asia’s third-largest economy expanded 5 percent in the three months to March 31 after a 5.3 percent gain in the previous quarter, according to the median forecast of 24 economists in a Bloomberg survey. The Central Statistical Organisation will release the data at 11 a.m. today in New Delhi.
Singh made reviving growth his top priority after this month’s resounding re-election and added the task requires more “reform of the economy.” Finance Minister Pranab Mukherjee says he will spend more on roads and ports in July’s budget to help India weather the worst global recession since World War II.
“Reviving growth is vital to make a dent on poverty,” said Shashanka Bhide, chief economist at the New Delhi-based National Council of Applied Economic Research. “Expectations are high from the new government.”
India’s key Sensitive stock index has surged 18 percent since Singh won a clear mandate, on optimism a coalition without communist parties will facilitate plans to sell state assets and allow more foreign investments in insurance and banking.
The sale of stakes in state-run companies such as National Hydroelectric Power Corp. and Oil India Ltd. is vital for Mukherjee to find money to spend without widening a budget deficit that Moody’s Investors Service says has ‘deteriorated.”
Credit Rating
India’s budget shortfall stood at 6 percent of gross domestic product in the year ended March 31, more than double the target. Moody’s has kept India’s local currency long term rating at Ba2, two levels below investment grade while Standard & Poor’s has a BBB- rating on India, the lowest investment grade.
“The unexpected election outcome provides scope for rationalizing spending, pushing ahead with disinvestments and key reforms,” Moody’s said in its annual report yesterday.
For now, Mukherjee said he plans to spend more to stimulate the economy, betting it will help boost tax revenues. He said the election results vindicate the strategy to pursue growth as a tool to improve people’s livelihood. The World Bank estimates three-quarters of Indians live on less than $2 a day.
The 73-year-old Mukherjee returned to the finance ministry after a quarter of a century. As the finance minister in Indira Gandhi’s cabinet from 1982 to 1984, he ran an economy that was almost closed and insulated from the global economy.
Singh, as finance minister between 1991 and 1996, abandoned the Soviet-style state planning and introduced free-market policies that have helped the economy quadruple to $1.2 trillion. Mukherjee said this week he will draft the budget with Singh, renewing a relationship that started in the early 1980s when he appointed Singh as the central bank governor.
‘Game-Changing’
Singh’s election triumph has been a “game-changing” verdict, says Macquarie Group Ltd. economist Rajeev Malik, describing it as a “catalyst in enhancing the evolving global rise of the Indian economy.”
In Singh’s first term between 2004 and 2009, India’s economy grew close to 9 percent on average each year, the fastest pace since independence in 1947, helped by a six-fold surge in foreign direct investments to $38 billion.
General Electric Co. Chief Executive Officer Jeffrey Immelt said yesterday the Indian elections was the best development in the country he’d seen in 20 years and that he was “completely optimistic about India in the long term.”
Foreign Investment
At stake are economic changes blocked by Singh’s erstwhile communist partners such as a bill to raise the foreign investment ceiling for Prudential Plc and other insurers to 49 percent from 26 percent, and other proposed legislation aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. The government also wants to allow global retailers such as Wal-Mart Stores Inc. into India.
Growth may recover from the current quarter ending June 30 as stimulus measures and six interest rate cuts together worth $85 billion, or 7 percent of GDP, begin to filter in the economy, analysts said. The economy may grow 5.2 percent this quarter, according to the median of 10 analysts surveyed by Bloomberg.
Car sales and the production of cement, electricity and refined petroleum are already showing signs of revival. India’s passenger car sales increased 4.2 percent in April from a year earlier, after a 1 percent gain in March. Cement production jumped 10.1 percent in March and electricity output rose 5.9 percent from a year ago, according to government data.
UBS AG raised its growth forecast for India to 6.2 percent in the year ending March 2010, compared with an earlier prediction of 5.2 percent. Standard Chartered economist Anubhuti Sahay said risks to the bank’s 5 percent forecast for the same period were now “to the upside” and Morgan Stanley’s Chetan Ahya raised his estimate to 5.8 percent from 4.4 percent.
The election outcome “is a huge positive surprise and is likely to allow the new government to initiate some long-pending structural reforms,” said Morgan Stanley’s Ahya. “Decisive policy actions will be critical to lift the pace of GDP growth closer to potential.”
Wednesday, May 27, 2009
Indonesian Stocks Are Upgraded to ‘Overweight’ at BNP
May 28 (Bloomberg) -- Indonesian stocks were raised to “overweight” from “neutral” at BNP Paribas SA, which cited record-low interest rates, a resilient economy and better-than- expected earnings outlook.
The Jakarta Composite index may rise 16 percent to 2,200 based on a 12-month target, BNP said. PT Bank Danamon Indonesia, PT Astra International, PT Indofood Sukses Makmur and PT Ciputra Property are among its preferred stocks, BNP said. The measure closed at 1,892.84 yesterday, a 40 percent gain this year.
BNP’s rating upgrade follows those by JPMorgan Chase & Co. and Credit Suisse Group after a legislative election in April strengthened President Susilo Bambang Yudhoyono’s hold in parliament and raised expectations he will boost economic growth. Southeast Asia’s biggest economy expanded 4.4 percent in the first quarter, the fastest pace in the region.
“The democratic process has become entrenched, which has resulted in a stronger currency and a re-rating in both the bond and equity markets,” BNP’s Jakarta-based analyst Elvira Tjandrawinata wrote in a note today. “The economy is one of the most resilient in the region.”
The Indonesian rupiah has risen 7.2 percent this year, helping to ease inflation to a 16-month low in April. The central bank has cut its key interest rate six times since December to 7.25 percent, the lowest since the measure was introduced in July 2005. Slowing inflation supports purchasing power while lower borrowing costs may spur lending.
The Jakarta Composite fell less than 0.1 percent to 1,892.23 as of 10:04 a.m. local time.
JPMorgan, Credit Suisse and Deutsche Bank AG raised their ratings on Indonesia to “overweight” earlier this month.
The Jakarta Composite index may rise 16 percent to 2,200 based on a 12-month target, BNP said. PT Bank Danamon Indonesia, PT Astra International, PT Indofood Sukses Makmur and PT Ciputra Property are among its preferred stocks, BNP said. The measure closed at 1,892.84 yesterday, a 40 percent gain this year.
BNP’s rating upgrade follows those by JPMorgan Chase & Co. and Credit Suisse Group after a legislative election in April strengthened President Susilo Bambang Yudhoyono’s hold in parliament and raised expectations he will boost economic growth. Southeast Asia’s biggest economy expanded 4.4 percent in the first quarter, the fastest pace in the region.
“The democratic process has become entrenched, which has resulted in a stronger currency and a re-rating in both the bond and equity markets,” BNP’s Jakarta-based analyst Elvira Tjandrawinata wrote in a note today. “The economy is one of the most resilient in the region.”
The Indonesian rupiah has risen 7.2 percent this year, helping to ease inflation to a 16-month low in April. The central bank has cut its key interest rate six times since December to 7.25 percent, the lowest since the measure was introduced in July 2005. Slowing inflation supports purchasing power while lower borrowing costs may spur lending.
The Jakarta Composite fell less than 0.1 percent to 1,892.23 as of 10:04 a.m. local time.
JPMorgan, Credit Suisse and Deutsche Bank AG raised their ratings on Indonesia to “overweight” earlier this month.
Japan Retail Sales Fall for Eighth Month on Job Woes
May 28 (Bloomberg) -- Japan’s retail sales fell for an eighth month in April as worsening job prospects and declining wages deterred shoppers.
Sales slid 2.9 percent from a year earlier after decreasing a revised 3.8 percent in March, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted a 3.3 percent drop.
The worst postwar recession is spreading to households, whose outlays account for more than half of the economy. Japan may struggle to return to a sustainable growth path as long as companies from Toyota Motor Corp. to Panasonic Corp. keep cutting jobs to minimize losses.
“Consumer spending is too weak to support a recovery, given the deterioration in the job market,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Japan’s economy will remain fragile in the absence of stronger domestic demand.”
The yen traded at 95.79 per dollar as of 9:37 a.m. in Tokyo from 95.63 before the report. The Nikkei 225 Stock Average fell 0.1 percent.
Sales at large retailers tumbled 6.7 percent as operators of department stores and supermarkets discounted to attract customers, said Shinichiro Kobayashi, director of statistics at the Trade Ministry.
Isetan Mitsukoshi
Isetan Mitsukoshi Holdings, Japan’s biggest department store operator, forecasts a 90 percent decline in profit this fiscal year.
From a month earlier, sales climbed 0.6 percent, the first gain in eight months, as the government began distributing 12,000 yen ($125 to each resident as part of its efforts to stimulate the world’s second-largest economy. Taro Aso’s administration has also slashed highway tolls and on May 15 started to offer incentives for purchasers of environment- friendly televisions, refrigerators and air-conditioners.
The unemployment rate surged 0.4 percentage point to 4.8 percent in March, the biggest increase since 1967, and analysts expect a report this week will show it rose to a five-year high of 5 percent in April. Nikon Corp., the world’s second-biggest maker of cameras used by hobbyists and professionals, will eliminate 1,000 jobs, the company said this week.
The Bank of Japan and the government raised their assessments of the economy for the first time since 2006 this week on signs that exports and production are starting to stabilize. Both pointed to weakness in consumer spending and rising unemployment as risks to a recovery.
Lower Bonuses
Workers at the country’s biggest businesses will have their mid-year bonuses cut by a record 19.4 percent, according to a survey published last week by the Keidanren business group.
Still, consumer confidence rose to a 10-month high in April on optimism that the worst of the recession is over. The $25 trillion yen in stimulus spending and the Nikkei’s 33 percent rebound from a 26-year low in March may also be helping sentiment.
“The mist of uncertainty over Japanese private consumption is thick,” said Masayuki Kichikawa, chief Japan economist at Merrill Lynch & Co. in Tokyo. “It will be tug of war between fiscal stimulus and the deteriorating labor market.”
Sales slid 2.9 percent from a year earlier after decreasing a revised 3.8 percent in March, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News predicted a 3.3 percent drop.
The worst postwar recession is spreading to households, whose outlays account for more than half of the economy. Japan may struggle to return to a sustainable growth path as long as companies from Toyota Motor Corp. to Panasonic Corp. keep cutting jobs to minimize losses.
“Consumer spending is too weak to support a recovery, given the deterioration in the job market,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Japan’s economy will remain fragile in the absence of stronger domestic demand.”
The yen traded at 95.79 per dollar as of 9:37 a.m. in Tokyo from 95.63 before the report. The Nikkei 225 Stock Average fell 0.1 percent.
Sales at large retailers tumbled 6.7 percent as operators of department stores and supermarkets discounted to attract customers, said Shinichiro Kobayashi, director of statistics at the Trade Ministry.
Isetan Mitsukoshi
Isetan Mitsukoshi Holdings, Japan’s biggest department store operator, forecasts a 90 percent decline in profit this fiscal year.
From a month earlier, sales climbed 0.6 percent, the first gain in eight months, as the government began distributing 12,000 yen ($125 to each resident as part of its efforts to stimulate the world’s second-largest economy. Taro Aso’s administration has also slashed highway tolls and on May 15 started to offer incentives for purchasers of environment- friendly televisions, refrigerators and air-conditioners.
The unemployment rate surged 0.4 percentage point to 4.8 percent in March, the biggest increase since 1967, and analysts expect a report this week will show it rose to a five-year high of 5 percent in April. Nikon Corp., the world’s second-biggest maker of cameras used by hobbyists and professionals, will eliminate 1,000 jobs, the company said this week.
The Bank of Japan and the government raised their assessments of the economy for the first time since 2006 this week on signs that exports and production are starting to stabilize. Both pointed to weakness in consumer spending and rising unemployment as risks to a recovery.
Lower Bonuses
Workers at the country’s biggest businesses will have their mid-year bonuses cut by a record 19.4 percent, according to a survey published last week by the Keidanren business group.
Still, consumer confidence rose to a 10-month high in April on optimism that the worst of the recession is over. The $25 trillion yen in stimulus spending and the Nikkei’s 33 percent rebound from a 26-year low in March may also be helping sentiment.
“The mist of uncertainty over Japanese private consumption is thick,” said Masayuki Kichikawa, chief Japan economist at Merrill Lynch & Co. in Tokyo. “It will be tug of war between fiscal stimulus and the deteriorating labor market.”
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