By Dan Levy
July 5 (Bloomberg) -- The vacancy rate for U.S. rental apartment buildings was unchanged at 5.9 percent in the second quarter as the housing slump and a weakening economy deterred people from buying homes, Reis Inc. reported.
The average monthly U.S. asking rent rose 1 percent to $1,047, the 25th consecutive quarter that rents increased or stayed the same, according to Reis, a New York-based research firm.
Home prices in 20 U.S. metropolitan areas declined in April by the most on record and new home sales fell 40 percent in May from a year ago. The slumping housing market means apartment rents should remain steady even as gasoline prices rise and U.S. companies cut jobs, Sam Chandan, chief economist for Reis, said in an interview. Payrolls fell by 62,000 in June and 438,000 in the first half, the Labor Department said July 3.
``Our projection is rent growth will moderate through 2009, but we don't think it will turn negative as it did in the early 2000s,'' Chandan said. ``The bias will be weighted toward rental, in our view. People fear home prices will fall further.''
The last time U.S. rents fell was the first quarter of 2002, when they declined by 0.2 percent, according to Reis.
The five-year housing boom that ended in 2006 attracted investment to homebuilding, so fewer apartment buildings were constructed, Chandan said.
``There has been very little apartment development because all the money was made in housing development,'' he said. ``We don't have a strong pipeline of apartments.''
San Francisco
San Francisco asking rents grew the most in the second quarter from the previous 12 months, increasing 9.4 percent. New York gained 7.7 percent, Seattle rose 7.4 percent, San Jose, California increased 7.3 percent and Salt Lake City increased 6.1 percent, according to Reis.
New York had the highest average U.S. rent at $2,847 a month, followed by San Francisco at $1,825, Fairfield County, Connecticut at $1,757, Boston at $1,646 and Long Island, New York at $1,521, Reis said.
Orange County, California, ranked sixth at $1,520, followed by San Jose at $1,504, Northern New Jersey at $1,460, Ventura County, California at $1,409 and Los Angeles at $1,408, according to Reis.
New York had the lowest vacancy rate at 2.2 percent, followed by Long Island at 2.9 percent, Central New Jersey at 3 percent, San Jose at 3.2 percent and New Haven, Connecticut at 3.3 percent, Northern New Jersey at 3.5 percent, Syracuse, New York at 3.6 percent, San Diego and San Francisco at 3.8 percent and Minneapolis at 3.0 percent, Reis said.
To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net
Read more...
Saturday, July 5, 2008
Merrill nears deal to sell Bloomberg stake: report
Fri Jul 4, 2008 2:26pm EDT
NEW YORK (Reuters) - Merrill Lynch & Co may sell its 20 percent stake in financial news and data provider Bloomberg LP to a blind trust controlled by New York City Mayor Michael Bloomberg, The New York Post reported on Friday.
Details about the terms of a sale remain sketchy, the Post said, and sources warned that a deal could still fall apart.
The sale is part of a broader plan by cash-strapped Merrill to raise about $50 billion through various asset sales, the Post said, citing bankers who have looked at marketing materials.
Merrill in 1981 provided seed money for Bloomberg to launch the business. Analysts have valued Merrill's stake at between $5 billion and $10 billion, the Post said.
Last month, John Thain, Merrill's chief executive hinted to Wall Street that his firm might sell one of its more treasured assets following a deterioration in the value of its balance sheet from mortgage-related losses, the Post said.
A Merrill representative could not be reached for immediate comment.
Michael Bloomberg, who became New York's mayor in January 2002, retains a majority stake in the company, but has said he has given up day-to-day control.
Privately-held Bloomberg LP is a competitor of Thomson Reuters.
Read more...
NEW YORK (Reuters) - Merrill Lynch & Co may sell its 20 percent stake in financial news and data provider Bloomberg LP to a blind trust controlled by New York City Mayor Michael Bloomberg, The New York Post reported on Friday.
Details about the terms of a sale remain sketchy, the Post said, and sources warned that a deal could still fall apart.
The sale is part of a broader plan by cash-strapped Merrill to raise about $50 billion through various asset sales, the Post said, citing bankers who have looked at marketing materials.
Merrill in 1981 provided seed money for Bloomberg to launch the business. Analysts have valued Merrill's stake at between $5 billion and $10 billion, the Post said.
Last month, John Thain, Merrill's chief executive hinted to Wall Street that his firm might sell one of its more treasured assets following a deterioration in the value of its balance sheet from mortgage-related losses, the Post said.
A Merrill representative could not be reached for immediate comment.
Michael Bloomberg, who became New York's mayor in January 2002, retains a majority stake in the company, but has said he has given up day-to-day control.
Privately-held Bloomberg LP is a competitor of Thomson Reuters.
Read more...
BCE, Ontario Teachers' Reach Final Agreement on Sale
By Chris Fournier and Frederic Tomesco
July 4 (Bloomberg) -- BCE Inc., Canada's biggest phone company, signed a final agreement with a group led by the Ontario Teachers' Pension Plan to complete the world's largest leveraged buyout after scrapping its quarterly dividend. The stock had its biggest gain in more than six years.
The C$52 billion ($51 billion) purchase of BCE, first announced a year ago, will be done by Dec. 11 at the original price of C$42.75 a share, the Montreal-based company said in a statement today. BCE won't pay dividends on its common shares, preserving as much as C$900 million to appease the banks financing the purchase.
BCE's financing accord is an exception in a leveraged buyout market that's been stalled by the subprime mortgage crisis and rising borrowing costs. Buyout loan defaults may be ``significantly higher'' than ratings companies' estimates as about $500 billion of debt used to fund the takeovers comes due, the Bank for International Settlements said in a report today.
``BCE's release is uplifting news, signaling the ability to close transactions with big funding requirements, at least for highly cash-generative assets,'' said Edward Nash, managing director and head of mergers at CIBC World Markets in Toronto.
BCE rose C$4.49, or 13 percent, to C$39.64 in 4:10 p.m. trading on the Toronto Stock Exchange, the biggest gain since April 2002.
Bank Financing
BCE shares last month traded as much as 25 percent below the offer price on concern that banks funding the purchase, including Citigroup Inc. and Deutsche Bank AG, may back out or reduce the price as financing costs rise and the U.S. economy slows.
``It's a morale booster,'' said Ian Nakamoto, research director at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages about $4.8 billion, including BCE shares. ``People were pessimistic after all the talk of, `It won't get done' or `only at a lower price.'''
The buyout group and BCE made several changes to the agreement to win the backing of the bankers, who will provide C$34 billion in financing. The closing was pushed back almost three months from Sept. 30, giving the bankers more time to sell debt to pay for the purchase.
The common share dividend, which had been deferred last week, won't be paid, though preferred shareholders will get a dividend. The buyers must also pay a break fee of C$1.2 billion, or 20 percent more than in the original agreement, if the purchase doesn't get done.
Concession to Banks
Scrapping the dividend ``is obviously a concession, but in light of current market conditions, it's not unexpected,'' said Jim Hall, who manages about $1 billion, including 400,000 BCE shares, at Mawer Investment Management in Calgary. ``This is the way the world is supposed to work, and the 12 months of nonsense before this was trying.''
Toronto-based Ontario Teachers', Canada's third-largest pension manager, and Providence, Rhode Island-based Providence Equity agreed a year ago to pay C$42.75 a share, or C$34.2 billion, to take BCE private. Madison Dearborn Partners LLC in Chicago and New York-based Merrill Lynch & Co. joined the deal.
The Supreme Court of Canada on June 20 approved the takeover, reversing a lower court ruling that said the deal didn't treat bondholders fairly.
Funding Risk
Today's agreement ``largely eliminates the funding risk for the deal,'' National Bank Financial analyst Greg MacDonald said in a note to clients. Retaining the dividend for two to three quarters may be worth C$588 million to C$882 million to BCE, and was a ``concession for the banks to close the deal,'' he said.
The dividend cut reduces the cost to the buyers by as much as C$1.10 a share, MacDonald said.
George Cope, 46, chief operating officer of BCE's Bell Canada phone business, will succeed Michael Sabia as chief executive officer on July 11. Sabia had said he would step down when the sale closes.
``Work is now largely done,'' Sabia, 54, said in the statement. ``We have been planning this transition for some time. Now is the time to get on with it.''
BCE's priority will be to hang on to its customers, former Teachers' Chief Executive Officer Claude Lamoureux said last week. Lamoureux will join the BCE board.
The company lost 511,000 local-phone subscribers in 2007, compared with 463,000 in 2006 and 297,000 in 2005, according to last year's annual report.
``Rule No. 1 is, let's make sure everybody is happy,'' Lamoureux, 65, said when asked about BCE. ``If the clients are happy, then the owners are going to make some money.''
In addition to New York-based Citigroup and Deutsche Bank of Frankfurt, lenders on the BCE deal are Royal Bank of Scotland Group Plc and Toronto-Dominion Bank in Toronto.
To contact the reporters on this story: Chris Fournier in Montreal Cfournier3@bloomberg.net. Frederic Tomesco in Montreal at tomesco@bloomberg.net.
Read more...
July 4 (Bloomberg) -- BCE Inc., Canada's biggest phone company, signed a final agreement with a group led by the Ontario Teachers' Pension Plan to complete the world's largest leveraged buyout after scrapping its quarterly dividend. The stock had its biggest gain in more than six years.
The C$52 billion ($51 billion) purchase of BCE, first announced a year ago, will be done by Dec. 11 at the original price of C$42.75 a share, the Montreal-based company said in a statement today. BCE won't pay dividends on its common shares, preserving as much as C$900 million to appease the banks financing the purchase.
BCE's financing accord is an exception in a leveraged buyout market that's been stalled by the subprime mortgage crisis and rising borrowing costs. Buyout loan defaults may be ``significantly higher'' than ratings companies' estimates as about $500 billion of debt used to fund the takeovers comes due, the Bank for International Settlements said in a report today.
``BCE's release is uplifting news, signaling the ability to close transactions with big funding requirements, at least for highly cash-generative assets,'' said Edward Nash, managing director and head of mergers at CIBC World Markets in Toronto.
BCE rose C$4.49, or 13 percent, to C$39.64 in 4:10 p.m. trading on the Toronto Stock Exchange, the biggest gain since April 2002.
Bank Financing
BCE shares last month traded as much as 25 percent below the offer price on concern that banks funding the purchase, including Citigroup Inc. and Deutsche Bank AG, may back out or reduce the price as financing costs rise and the U.S. economy slows.
``It's a morale booster,'' said Ian Nakamoto, research director at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages about $4.8 billion, including BCE shares. ``People were pessimistic after all the talk of, `It won't get done' or `only at a lower price.'''
The buyout group and BCE made several changes to the agreement to win the backing of the bankers, who will provide C$34 billion in financing. The closing was pushed back almost three months from Sept. 30, giving the bankers more time to sell debt to pay for the purchase.
The common share dividend, which had been deferred last week, won't be paid, though preferred shareholders will get a dividend. The buyers must also pay a break fee of C$1.2 billion, or 20 percent more than in the original agreement, if the purchase doesn't get done.
Concession to Banks
Scrapping the dividend ``is obviously a concession, but in light of current market conditions, it's not unexpected,'' said Jim Hall, who manages about $1 billion, including 400,000 BCE shares, at Mawer Investment Management in Calgary. ``This is the way the world is supposed to work, and the 12 months of nonsense before this was trying.''
Toronto-based Ontario Teachers', Canada's third-largest pension manager, and Providence, Rhode Island-based Providence Equity agreed a year ago to pay C$42.75 a share, or C$34.2 billion, to take BCE private. Madison Dearborn Partners LLC in Chicago and New York-based Merrill Lynch & Co. joined the deal.
The Supreme Court of Canada on June 20 approved the takeover, reversing a lower court ruling that said the deal didn't treat bondholders fairly.
Funding Risk
Today's agreement ``largely eliminates the funding risk for the deal,'' National Bank Financial analyst Greg MacDonald said in a note to clients. Retaining the dividend for two to three quarters may be worth C$588 million to C$882 million to BCE, and was a ``concession for the banks to close the deal,'' he said.
The dividend cut reduces the cost to the buyers by as much as C$1.10 a share, MacDonald said.
George Cope, 46, chief operating officer of BCE's Bell Canada phone business, will succeed Michael Sabia as chief executive officer on July 11. Sabia had said he would step down when the sale closes.
``Work is now largely done,'' Sabia, 54, said in the statement. ``We have been planning this transition for some time. Now is the time to get on with it.''
BCE's priority will be to hang on to its customers, former Teachers' Chief Executive Officer Claude Lamoureux said last week. Lamoureux will join the BCE board.
The company lost 511,000 local-phone subscribers in 2007, compared with 463,000 in 2006 and 297,000 in 2005, according to last year's annual report.
``Rule No. 1 is, let's make sure everybody is happy,'' Lamoureux, 65, said when asked about BCE. ``If the clients are happy, then the owners are going to make some money.''
In addition to New York-based Citigroup and Deutsche Bank of Frankfurt, lenders on the BCE deal are Royal Bank of Scotland Group Plc and Toronto-Dominion Bank in Toronto.
To contact the reporters on this story: Chris Fournier in Montreal Cfournier3@bloomberg.net. Frederic Tomesco in Montreal at tomesco@bloomberg.net.
Read more...
Japanese Bonds Complete Biggest Gain in a Week on ECB Comments
By Theresa Barraclough
July 5 (Bloomberg) -- Japan's bonds advanced yesterday after European Central Bank President Jean-Claude Trichet's comments eased speculation the Bank of Japan will increase borrowing costs this year.
Benchmark debt yesterday completed its biggest gain in a week after Trichet on July 3 said he isn't ``pre-committed'' to lifting interest rates to combat inflation, after the central bank boosted borrowing costs for the first time in a year. Bonds also gained on a report that showed U.S. employers cut jobs for the sixth consecutive month in June.
``The Bank of Japan is now under less pressure for a coordinated effort by central banks,'' said Takashi Nishimura, an analyst at Mitsubishi UFJ Securities Co. in Tokyo. ``Investors are focusing more on fundamentals.''
The yield on 10-year securities auctioned on June 3 with a 1.7 percent coupon fell 3 basis points yesterday, the biggest decline since June 27, to 1.64 percent in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. A basis point is 0.01 percentage point.
Ten-year yields may decline to as low as 1.55 percent by the end of September, Nishimura said. Should his predictions prove accurate, investors would stand to make a 1.1 percent return, according to Bloomberg calculations.
Ten-year bond futures for September delivery yesterday rose 0.32 to 135.18 as of the afternoon close at the Tokyo Stock Exchange.
Weekly Decline
Bonds completed a weekly decline on speculation a government report on July 10 will show wholesale prices rose last month. Ten-year yields added 3 basis points this week.
``Inflation remains a concern in the long run,'' said Tatsuo Ichikawa, a fixed-income strategist at ABN Amro Securities Japan Ltd. in Tokyo. ``Inflation-linked bonds are a good investment. It has limited downside.''
Japan's producer-price inflation accelerated to 5.3 percent in June from 4.7 percent in May, according to the median estimate of 26 economists surveyed by Bloomberg News.
Consumer prices, excluding fresh food, rose 1.5 percent in May from a year earlier, the statistics bureau said in Tokyo on June 27. Crude oil for August delivery rose to a record $145.85 a barrel yesterday. Accelerating inflation reduces the value of the fixed interest debt pays.
The extra yield paid by 10-year conventional government debt compared with similar-maturity inflation-linked bonds was about 59 basis points yesterday from 46 basis points a week ago, according to data compiled by Bloomberg.
The so-called breakeven inflation rate reflects investors' expectations for average annual increases in consumer prices over the next decade.
Bunds Versus JGBs
German two-year bunds on July 3 rallied the most in 3 1/2 months after Trichet's comments, dropping about 19 basis points to 4.45 percent. The spread between two-year German and Japanese yields shrunk to about 3.60 percentage points that day, the narrowest since June 12, according Bloomberg data.
``Japan's yield curve will be under pressure to steepen,'' Mitsubishi UFJ's Nishimura said. A yield curve is a chart that plots the yields of bonds with different maturities.
The difference in yields between two- and 10-year debt was about 80 basis points yesterday, compared with 77 basis points three months ago, according to data compiled by Bloomberg. The spread will probably widen to 83 basis points by September, according to a Bloomberg News survey of economists and analysts. The estimate puts a heavier weighting on more recent forecasts.
There was a 27 percent chance yesterday the Bank of Japan will raise its target rate by a quarter-percentage point to 0.75 percent by Dec. 31, according to calculations by JPMorgan Chase & Co., using overnight interest-rate swaps. The odds were 31 percent on July 3 and as high as 92 percent on June 11.
U.S. employers cut 62,000 jobs in June, the Labor Department said on June 3, larger than a 60,000 drop estimated by economists. The U.S. is Japan's largest export market.
To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.
Read more...
July 5 (Bloomberg) -- Japan's bonds advanced yesterday after European Central Bank President Jean-Claude Trichet's comments eased speculation the Bank of Japan will increase borrowing costs this year.
Benchmark debt yesterday completed its biggest gain in a week after Trichet on July 3 said he isn't ``pre-committed'' to lifting interest rates to combat inflation, after the central bank boosted borrowing costs for the first time in a year. Bonds also gained on a report that showed U.S. employers cut jobs for the sixth consecutive month in June.
``The Bank of Japan is now under less pressure for a coordinated effort by central banks,'' said Takashi Nishimura, an analyst at Mitsubishi UFJ Securities Co. in Tokyo. ``Investors are focusing more on fundamentals.''
The yield on 10-year securities auctioned on June 3 with a 1.7 percent coupon fell 3 basis points yesterday, the biggest decline since June 27, to 1.64 percent in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. A basis point is 0.01 percentage point.
Ten-year yields may decline to as low as 1.55 percent by the end of September, Nishimura said. Should his predictions prove accurate, investors would stand to make a 1.1 percent return, according to Bloomberg calculations.
Ten-year bond futures for September delivery yesterday rose 0.32 to 135.18 as of the afternoon close at the Tokyo Stock Exchange.
Weekly Decline
Bonds completed a weekly decline on speculation a government report on July 10 will show wholesale prices rose last month. Ten-year yields added 3 basis points this week.
``Inflation remains a concern in the long run,'' said Tatsuo Ichikawa, a fixed-income strategist at ABN Amro Securities Japan Ltd. in Tokyo. ``Inflation-linked bonds are a good investment. It has limited downside.''
Japan's producer-price inflation accelerated to 5.3 percent in June from 4.7 percent in May, according to the median estimate of 26 economists surveyed by Bloomberg News.
Consumer prices, excluding fresh food, rose 1.5 percent in May from a year earlier, the statistics bureau said in Tokyo on June 27. Crude oil for August delivery rose to a record $145.85 a barrel yesterday. Accelerating inflation reduces the value of the fixed interest debt pays.
The extra yield paid by 10-year conventional government debt compared with similar-maturity inflation-linked bonds was about 59 basis points yesterday from 46 basis points a week ago, according to data compiled by Bloomberg.
The so-called breakeven inflation rate reflects investors' expectations for average annual increases in consumer prices over the next decade.
Bunds Versus JGBs
German two-year bunds on July 3 rallied the most in 3 1/2 months after Trichet's comments, dropping about 19 basis points to 4.45 percent. The spread between two-year German and Japanese yields shrunk to about 3.60 percentage points that day, the narrowest since June 12, according Bloomberg data.
``Japan's yield curve will be under pressure to steepen,'' Mitsubishi UFJ's Nishimura said. A yield curve is a chart that plots the yields of bonds with different maturities.
The difference in yields between two- and 10-year debt was about 80 basis points yesterday, compared with 77 basis points three months ago, according to data compiled by Bloomberg. The spread will probably widen to 83 basis points by September, according to a Bloomberg News survey of economists and analysts. The estimate puts a heavier weighting on more recent forecasts.
There was a 27 percent chance yesterday the Bank of Japan will raise its target rate by a quarter-percentage point to 0.75 percent by Dec. 31, according to calculations by JPMorgan Chase & Co., using overnight interest-rate swaps. The odds were 31 percent on July 3 and as high as 92 percent on June 11.
U.S. employers cut 62,000 jobs in June, the Labor Department said on June 3, larger than a 60,000 drop estimated by economists. The U.S. is Japan's largest export market.
To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.
Read more...
Toronto-Dominion Error to Cut Profit by C$96 Million
By Sean B. Pasternak
July 4 (Bloomberg) -- Toronto-Dominion Bank, Canada's second-largest lender, said one of its traders in London incorrectly priced credit derivatives, costing the bank about C$96 million ($94.3 million) in pretax earnings.
The employee linked to the pricing error, a senior male trader, left TD Securities on June 23 when the mistake was discovered, bank spokeswoman Simone Philogène said today in a telephone interview from Toronto. She declined to name the employee.
``We are very disappointed that this has occurred,'' Chief Executive Officer Ed Clark said in a statement. ``Our company has a strong risk culture, and we deeply regret this incident.''
Toronto-Dominion has avoided debt writedowns in the last year, while its five biggest competitors in Canada have recorded combined costs of about C$10 billion related to the U.S. subprime mortgage market.
``It's too bad; it's such a small amount yet it sort of spoils the track record,'' said Blackmont Capital Inc. analyst Brad Smith. ``It's got to be a disappointment to management, who've rightfully pointed to their ability to sidestep a lot of these problems.''
The Toronto-based bank reported the incident to the Financial Services Authority in the U.K. and Canada's Office of the Superintendent of Financial Institutions, Philogène said. The bank is cooperating with authorities.
Toronto-Dominion's estimated charge is equal to about 11 percent of its C$852 million in second-quarter net income. The lender is scheduled to release third-quarter earnings on Aug. 28.
Toronto-Dominion fell 25 cents to C$63.09 at 4:10 p.m. in trading on the Toronto Stock Exchange.
To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.
Read more...
July 4 (Bloomberg) -- Toronto-Dominion Bank, Canada's second-largest lender, said one of its traders in London incorrectly priced credit derivatives, costing the bank about C$96 million ($94.3 million) in pretax earnings.
The employee linked to the pricing error, a senior male trader, left TD Securities on June 23 when the mistake was discovered, bank spokeswoman Simone Philogène said today in a telephone interview from Toronto. She declined to name the employee.
``We are very disappointed that this has occurred,'' Chief Executive Officer Ed Clark said in a statement. ``Our company has a strong risk culture, and we deeply regret this incident.''
Toronto-Dominion has avoided debt writedowns in the last year, while its five biggest competitors in Canada have recorded combined costs of about C$10 billion related to the U.S. subprime mortgage market.
``It's too bad; it's such a small amount yet it sort of spoils the track record,'' said Blackmont Capital Inc. analyst Brad Smith. ``It's got to be a disappointment to management, who've rightfully pointed to their ability to sidestep a lot of these problems.''
The Toronto-based bank reported the incident to the Financial Services Authority in the U.K. and Canada's Office of the Superintendent of Financial Institutions, Philogène said. The bank is cooperating with authorities.
Toronto-Dominion's estimated charge is equal to about 11 percent of its C$852 million in second-quarter net income. The lender is scheduled to release third-quarter earnings on Aug. 28.
Toronto-Dominion fell 25 cents to C$63.09 at 4:10 p.m. in trading on the Toronto Stock Exchange.
To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.
Read more...
Asian Stocks Fall for Fourth Week as Oil Prices Surge to Record
By Hanny Wan and Shani Raja
July 5 (Bloomberg) -- Asian stocks fell for a fourth week, on concern record crude oil prices will slow global economic growth and erode earnings. Japan's Nikkei 225 Stock Average posted its longest losing streak in 54 years.
BHP Billiton Ltd., the world's largest mining company, led declines on concern metals demand will drop. Toyota Motor Corp., the world's second-largest automaker, dropped after its U.S. sales slumped last month. Posco led steelmakers lower on speculation lower vehicle sales will reduce demand for the metal.
``The world has definitely turned bearish and sentiment is very negative,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``The price of oil at this time is choking demand. That's what the world's equity markets are reacting to.''
The MSCI Asia Pacific Index dropped 3.1 percent to 132.78 in the past five days, with a gauge tracking material producers posting the biggest losses among 10 industry groups. The four weeks of declines were the most since a six-week losing streak that ended Feb. 8.
Japan's Nikkei 225 Stock Average retreated 2.3 percent this week to 13,237.89. The measure has fallen for 12 straight days, the longest losing streak since 1954.
Malaysia's Kuala Lumpur Composite Index dropped 4.7 percent this week to the lowest since March 6, 2007 on concern rising political tension will hurt investments. Trading on the country's stock market was suspended July 3 due to a systems failure.
Biggest Threat
The MSCI Asia Pacific has slumped 16 percent this year amid mounting credit losses at the biggest financial institutions and as central banks across Asia raised borrowing costs to curb inflation. Finance ministers from the Group of Eight nations said last month surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy.
BHP retreated 5.1 percent to A$40.70 this week. Rio Tinto Group, the world's third-biggest mining company, declined 4.8 percent to A$125.70. Jiangxi Copper Co., China's largest publicly traded producer of the metal, dropped 5.6 percent to HK$14.26 in Hong Kong.
BHP, the world's sixth-largest producer of primary aluminum, also fell after Credit Suisse Group cut its earnings estimate for Alcoa Inc. and Century Aluminum Co. Analysts said profits will be hurt by higher energy and materials costs and a lower average price for the metal.
Toyota, which derives a third of its revenue from North America, dropped 3 percent to 4,920 yen this week. Its U.S. sales slumped 21 percent in June, the company said this week. Honda Motor Co., Japan's second-largest automaker, lost 1.9 percent to 3,580 yen. Vehicle sales plunged 18 percent in the U.S. last month, the steepest slump in almost six years.
`Disappointing' Earnings
General Motors Corp. yesterday tumbled to the lowest price since 1954 after Merrill Lynch & Co. said the largest U.S. automaker may face bankruptcy as U.S. auto demand slows.
Posco, Asia's third-biggest steelmaker, fell 9.6 percent this week to 482,000 won. BlueScope Steel Ltd., Australia's No. 1 steelmaker, tumbled 12 percent to A$9.76. JSW Steel Ltd., India's third-largest steelmaker, slumped 23 percent to 753 rupees.
Cathay Pacific Airways Ltd., Hong Kong's largest airline, lost 5.4 percent to HK$13.98 this week after saying on July 2 that earnings will be ``disappointing'' because of rising fuel prices. Jet fuel has more than doubled in the past year, reflecting the surge in oil. Oil futures climbed to a record $145.85 a barrel yesterday on speculation tension in the Middle East may worsen.
``Nobody wants to hold on to stocks right now,'' said Choi Min Jai, who helps manage about $5 billion at KTB Asset Management Co. in Seoul. ``The slowdown in the global economy is being felt. There is rising concern higher oil prices will mean higher inflation, which means lower demand.''
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
Read more...
July 5 (Bloomberg) -- Asian stocks fell for a fourth week, on concern record crude oil prices will slow global economic growth and erode earnings. Japan's Nikkei 225 Stock Average posted its longest losing streak in 54 years.
BHP Billiton Ltd., the world's largest mining company, led declines on concern metals demand will drop. Toyota Motor Corp., the world's second-largest automaker, dropped after its U.S. sales slumped last month. Posco led steelmakers lower on speculation lower vehicle sales will reduce demand for the metal.
``The world has definitely turned bearish and sentiment is very negative,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``The price of oil at this time is choking demand. That's what the world's equity markets are reacting to.''
The MSCI Asia Pacific Index dropped 3.1 percent to 132.78 in the past five days, with a gauge tracking material producers posting the biggest losses among 10 industry groups. The four weeks of declines were the most since a six-week losing streak that ended Feb. 8.
Japan's Nikkei 225 Stock Average retreated 2.3 percent this week to 13,237.89. The measure has fallen for 12 straight days, the longest losing streak since 1954.
Malaysia's Kuala Lumpur Composite Index dropped 4.7 percent this week to the lowest since March 6, 2007 on concern rising political tension will hurt investments. Trading on the country's stock market was suspended July 3 due to a systems failure.
Biggest Threat
The MSCI Asia Pacific has slumped 16 percent this year amid mounting credit losses at the biggest financial institutions and as central banks across Asia raised borrowing costs to curb inflation. Finance ministers from the Group of Eight nations said last month surging food and fuel prices have replaced the credit squeeze as the biggest threat to the world economy.
BHP retreated 5.1 percent to A$40.70 this week. Rio Tinto Group, the world's third-biggest mining company, declined 4.8 percent to A$125.70. Jiangxi Copper Co., China's largest publicly traded producer of the metal, dropped 5.6 percent to HK$14.26 in Hong Kong.
BHP, the world's sixth-largest producer of primary aluminum, also fell after Credit Suisse Group cut its earnings estimate for Alcoa Inc. and Century Aluminum Co. Analysts said profits will be hurt by higher energy and materials costs and a lower average price for the metal.
Toyota, which derives a third of its revenue from North America, dropped 3 percent to 4,920 yen this week. Its U.S. sales slumped 21 percent in June, the company said this week. Honda Motor Co., Japan's second-largest automaker, lost 1.9 percent to 3,580 yen. Vehicle sales plunged 18 percent in the U.S. last month, the steepest slump in almost six years.
`Disappointing' Earnings
General Motors Corp. yesterday tumbled to the lowest price since 1954 after Merrill Lynch & Co. said the largest U.S. automaker may face bankruptcy as U.S. auto demand slows.
Posco, Asia's third-biggest steelmaker, fell 9.6 percent this week to 482,000 won. BlueScope Steel Ltd., Australia's No. 1 steelmaker, tumbled 12 percent to A$9.76. JSW Steel Ltd., India's third-largest steelmaker, slumped 23 percent to 753 rupees.
Cathay Pacific Airways Ltd., Hong Kong's largest airline, lost 5.4 percent to HK$13.98 this week after saying on July 2 that earnings will be ``disappointing'' because of rising fuel prices. Jet fuel has more than doubled in the past year, reflecting the surge in oil. Oil futures climbed to a record $145.85 a barrel yesterday on speculation tension in the Middle East may worsen.
``Nobody wants to hold on to stocks right now,'' said Choi Min Jai, who helps manage about $5 billion at KTB Asset Management Co. in Seoul. ``The slowdown in the global economy is being felt. There is rising concern higher oil prices will mean higher inflation, which means lower demand.''
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
Read more...
Subscribe to:
Posts (Atom)
Posts
