By Jonathan D. Salant and Timothy J. Burger
Aug. 24 (Bloomberg) -- New ethics rules barring lavish parties for individual members of Congress at the national political conventions won't stop AT&T Inc. and other influence- seekers from throwing big bashes so they can rub shoulders with lawmakers at this year's gatherings.
AT&T is sponsoring receptions at the Democratic convention in Denver, which begins tomorrow, and the following week when Republicans meet in Minneapolis-St. Paul. Among the invitees are convention delegations from Maryland, home of House Democratic Majority Leader Steny Hoyer, and Texas, home of Representative Joe Barton, ranking Republican on the House Energy and Commerce Committee.
Bethesda, Maryland-based Lockheed Martin Corp., Dearborn, Michigan-based Ford Motor Co., and Charlotte, North Carolina- based Duke Energy Corp. also are sponsoring receptions.
The quadrennial political conventions will be the first since Congress enacted last year's law to restrain lobbying. After enactment, the Senate and House ethics committees adopted guidelines that let many of the receptions proceed.
``They signed the new rules with one pen and created exemptions with another,'' said former House counsel Stan Brand. ``It's a little bit of a charade.''
The legislation pushed by the Democratic majorities in Congress last year bans gifts from lobbyists and prohibits convention parties to honor individual lawmakers. For example, the Distilled Spirits Council of the United States can't replicate the tributes it sponsored in 2004 for former Senate Republican Majority Leader Bill Frist and Senator Tom Daschle, the Democratic leader at the time.
No Longer `Ethics Free'
``These are not ethics-free zones any more, but there is enough latitude to still have very nice or lovely receptions,'' said Kenneth Gross, a former Federal Election Commission lawyer now at Skadden, Arps, Slate, Meagher & Flom.
Washington-based Discus, the trade group for liquor companies such as Bacardi Corp. and London-based Diageo PLC, is again holding convention events, without honoring any individuals.
``We're going to be very, very cautious,'' spokesman Frank Coleman said.
San Antonio, Texas-based AT&T, the largest U.S. phone company, contributed to the host committees funding the conventions in addition to hosting receptions for the delegations. It ranks among the most frequent sponsors, paying for at least 10 events, according to a list published by the Sunlight Foundation, a Washington-based watchdog group.
Blue Dog Party
In Denver, AT&T will hold a reception for the Blue Dog Coalition, a group of House Democrats who bucked party leaders to support immunity for telecommunications companies that helped the government wiretap Americans without warrants.
The company is throwing a party for the California delegations at each convention. Four California Democrats -- Hilda Solis, Lois Capps, Jane Harman and Anna Eshoo -- are members of the House telecommunications subcommittee, as are Republicans George Radanovich and Mary Bono Mack.
AT&T spokeswoman Claudia Jones said the conventions let the company participate in the political process and ``give AT&T a unique opportunity to present and display the many leading-edge technologies and products that we offer'' to consumers.
While AT&T focuses on delegations with important lawmakers, the financial services industry is honoring Congress's entire freshman class. The five newest House Democrats -- Bill Foster, Andre Carson, Jackie Speier, Don Cazayoux and Travis Childers -- joined the Financial Services Committee after reaching Congress.
Freshman Parties
Sponsors of the freshman party include Visa Inc., the world's largest credit-card company. Congress is considering legislation that would impose new rules on credit-card companies, including a ban on sudden increases in interest rates.
``America's political conventions have always been, and continue to be, an important part of our nation's democratic process,'' the San Francisco-based company, which is hosting an event at the Republican convention as well, said in a statement.
Akin Gump Strauss Hauer & Feld LLP, the No. 1 lobbying company with $18.1 million in reported fees during the first half of this year, will honor partner Vernon Jordan at the Denver convention rather than a lawmaker. Among others, Akin Gump represents Aetna Inc. and General Electric Co.
The No. 2 lobbying firm, Patton Boggs LLP, is holding a Republican convention reception to honor party leaders such as Chairman Mike Duncan.
Absent Companies
Missing from the festivities this year is the trade group for U.S. banks, the Washington-based American Bankers Association. It has held parties in the past to honor House and Senate banking committee members. Also absent: Fannie Mae and Freddie Mac. The two mortgage-finance companies together spent over $1 million to help pay for the 2004 conventions. Fannie and Freddie both pulled out of sponsoring an event at the Republican convention this year.
There are still plenty of opportunities for mingling even if ``the most blatant examples of yesteryear are perhaps not as evident,'' said Nancy Watzman of the Sunlight Foundation.
The nation's largest business lobby, the U.S. Chamber of Commerce, will make its presence felt at the conventions with buses designed to promote its issues and register voters.
The new ethics rules ``absolutely cramped our style,'' said Bill Miller, senior vice president for political affairs.
``There's this we-don't-really-want-you-here attitude,'' he said. ``It isn't that surprising to see people saying, `Maybe I'll go fishing instead of going to Denver and Minneapolis.' I'm sure it will look and feel like past conventions, but with a lot fewer suits.''
To contact the reporters on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net; Timothy J. Burger in Washington at tburger2@bloomberg.net.
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Sunday, August 24, 2008
Home Sales Probably Held Near Decade Low: U.S. Economy Preview
By Shobhana Chandra
Aug. 24 (Bloomberg) -- Home sales in the U.S. probably teetered near a 10-year low, property values dropped and consumer spending cooled, signaling the economy has taken another turn for the worse, reports this week may show.
A total of 5.435 million new and existing homes were purchased in July at an annual pace, according to the median estimate of economists polled by Bloomberg News. June's 5.39 million rate was the weakest since at least 1999. Spending probably rose 0.3 percent in July, half the prior month's gain.
The real-estate recession will persist into next year as stricter lending rules and higher borrowing costs shackle demand. At the same time, equity is disappearing as home prices fall, and wages aren't keeping up with inflation, depriving Americans of the means to maintain spending, the biggest part of the economy.
``The economy is going down a shaky path,'' said Maxwell Clarke, chief U.S. economist at IDEAGlobal Inc. in New York. ``We're not going to see a rebound in housing anytime soon. Consumers are living hand to mouth, and the outlook for spending is very weak.''
Purchases of new houses dropped 0.9 percent to an annual rate of 525,000, according to the median estimate of economists polled ahead of a Commerce Department report on Aug. 26. March's 513,000 pace was the lowest since 1991.
Resales of existing homes, compiled from closings and reflecting contracts signed weeks or months earlier, will be reported by the National Association of Realtors tomorrow. Purchases gained 1 percent to a 4.91 million annual rate, staying near June's 10-year low, the survey median showed.
Timelier Gauge
While sales of previously owned homes account for about 85 percent of the U.S. market, new-home purchases are considered a timelier indicator because they are based on contract signings.
The slump in demand is keeping property values under pressure. The S&P/Case-Shiller index of home prices in 20 metropolitan areas probably fell in June, the survey showed. The figures, due on Aug. 26, would extend a string of declines that began in August 2006.
Consumers, after getting a temporary lift from the government's tax rebates earlier this year, are focusing on buying necessities and hunting for bargains to stretch their paychecks following the jump in food and fuel costs.
Home Depot Inc., the world's largest home-improvement retailer, said second-quarter profit fell 24 percent, its eighth straight quarterly drop. The Atlanta-based company forecast a decline in sales and earnings for the year.
Consumer 'Pressure'
``We continue to see pressure on our market and the consumer,'' Chief Executive Officer Frank Blake said in a statement on Aug. 19.
Commerce Department figures on Aug. 29 will underscore the dimming outlook for consumer spending, according to the Bloomberg survey.
The report is also projected to reinforce concern over inflation. The price gauge tied to spending patterns probably rose 4.5 percent in the year ended July, the biggest 12-month gain since 1991.
The measure that excludes food and energy costs, the one tracked by Federal Reserve policy makers, probably rose 2.4 percent from a year earlier, the biggest gain since February 2007, the survey showed.
Concerns about slower growth and the pickup in prices led Fed policy makers to hold the benchmark interest rate at 2 percent this month. Minutes of the Aug. 5 meeting, to be released Aug. 26, may shed more light on the debate within the central bank about the future direction of rates.
Exports
The one bright spot for the economy remains the narrowing of the trade deficit. A surge in exports caused the economy to grow even faster in the second quarter than previously projected. Revised figures from the Commerce Department, due Aug. 28, may show the economy expanded at a 2.7 percent annual rate from April through June, up from an advance estimate of 1.9 percent issued last month, according to the survey median.
``The data releases this week should illustrate the stark contrast between how well the economy performed in the second quarter and how bad the outlook for the second half of the year is,'' said Paul Ashworth, international economist at Capital Economics Ltd. in London.
Other reports this week may show orders for durables goods stalled in July and confidence among American consumers was little-changed this month from multiyear lows reached earlier this year, even as gasoline prices retreated.
Bloomberg Survey
================================================================
Release Period Prior Median
Indicator Date Value Forecast
================================================================
Exist Homes Mlns 8/25 July 4.86 4.91
Exist Homes MOM% 8/25 June -2.6% 1.0%
Case Shiller Monthly YO 8/26 June -15.8% -16.2%
Case Shiller Monthly In 8/26 June 168.5 167.2
Consumer Conf Index 8/26 Aug. 51.9 53.0
New Home Sales ,000's 8/26 July 530 525
New Home Sales MOM% 8/26 July -0.6% -0.9%
OFHEO HPI MOM% 8/26 June -0.3% -0.4%
OFHEO HPI QOQ% 8/26 #VALUE! -1.3% -1.6%
Durables Orders MOM% 8/27 July 0.8% 0.0%
Durables Ex-Trans MOM% 8/27 July 2.0% -0.6%
GDP Annual QOQ% 8/28 3Q P 1.9% 2.7%
Personal Consump. QOQ% 8/28 3Q P 1.5% 1.6%
GDP Prices QOQ% 8/28 3Q P 1.1% 1.1%
Core PCE Prices QOQ% 8/28 3Q P 2.1% 2.1%
Initial Claims ,000's 8/28 Aug. 23 432 425
Cont. Claims ,000's 8/28 Aug. 16 3362 3380
Pers Inc MOM% 8/29 July 0.1% -0.2%
Pers Spend MOM% 8/29 July 0.6% 0.3%
PCE Deflator YOY% 8/29 July 4.1% 4.5%
Core PCE Prices MOM% 8/29 July 0.3% 0.3%
Core PCE Prices YOY% 8/29 July 2.3% 2.4%
Chicago PM Index 8/29 Aug. 50.8 50.0
U of Mich Conf. Index 8/29 Aug. F 61.7 62.0
=============================================================================
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
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Lobao Says Brazil Plans to Uphold Oil Contracts, O Globo Says
By Katia Cortes
Aug. 24 (Bloomberg) -- Brazil's Mines and Energy Minister Edison Lobao said the government is studying how to manage so- called pre-salt oil fields and ``has no interest in breaking contracts,'' O Globo newspaper reported.
Lobao said ``there'll be a long debate in congress'' in case the decision on how to manage the fields demands a change in legislation, O Globo reported. President Luiz Inacio Lula da Silva will ultimately determine the policy, Lobao said, according to O Globo.
Yesterday, O Globo cited the minister as saying the government may expropriate pre-salt oil wells that have been licensed to companies such as Petroleo Brasileiro SA if they find the wells are linked to others that haven't yet been auctioned.
To contact the reporter on this story: Katia Cortes in Brasilia at kcortes@bloomberg.net
Read more...
Aug. 24 (Bloomberg) -- Brazil's Mines and Energy Minister Edison Lobao said the government is studying how to manage so- called pre-salt oil fields and ``has no interest in breaking contracts,'' O Globo newspaper reported.
Lobao said ``there'll be a long debate in congress'' in case the decision on how to manage the fields demands a change in legislation, O Globo reported. President Luiz Inacio Lula da Silva will ultimately determine the policy, Lobao said, according to O Globo.
Yesterday, O Globo cited the minister as saying the government may expropriate pre-salt oil wells that have been licensed to companies such as Petroleo Brasileiro SA if they find the wells are linked to others that haven't yet been auctioned.
To contact the reporter on this story: Katia Cortes in Brasilia at kcortes@bloomberg.net
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Persian Gulf Shares Fall, Led by Omantel, Emaar Properties
By Zainab Fattah
Aug. 24 (Bloomberg) -- Persian Gulf shares, including Emaar Properties PJSC and Saudi British Bank, declined as investors speculated prices have outpaced prospects for earnings growth.
Emaar Properties, the largest real-estate developer in the Middle East, fell to its lowest in more than three years, while Saudi British Bank ended two days of gains. Oman Telecommunications Co., the sultanate's biggest phone company, slid for a second day.
Oman's Muscat Securities Market 30 Index fell 2.1 percent to 10,245.89. The measure is up 7.4 percent since Aug. 11. The Dubai Financial Market General Index lost 0.2 percent, while Saudi Arabia's Tadawul All Share Index ended nine days of advances, decreasing less than 0.1 percent. The index is up 13 percent since Aug. 10.
``We are witnessing profit-taking, especially in Saudi after the major rally yesterday,'' said Ali Khan, head of equity trading at Dubai-based Arqaam Capital Ltd. ``Foreign investors will divert more and more money to the Saudi market from the rest of the Gulf over the next few days.''
Saudi Arabia's measure yesterday jumped 5.2 percent, the biggest one-day gain since April 2007. On Aug. 20, the market regulator allowed foreign investors greater access to the country's stock exchange, the largest in the Persian Gulf.
Gulf Stocks Expensive
The MSCI GCC Countries Index, a measure of 115 companies in six Gulf states, trades at an average of 17 times estimated earnings, according to Bloomberg data. That compares with a multiple of 11 for the MSCI Emerging Markets Index.
Oman Telecommunications dropped 4.6 percent to 2.095 rials. The shares have jumped 11 percent since Aug. 11 after Oman's Ministry of Finance invited companies to bid for a 25 percent stake in the company. Emaar fell 1 percent to 9.3 dirhams, its lowest since April 2005.
Saudi British Bank, 40 percent-owned by HSBC Holding Plc, lost 1.7 percent to 88.5 riyals.
Mubarrad Transport Co. declined 1.9 percent to 265 fils after the Kuwaiti transport company reported it's in talks about the possible sale of its stake in a unit.
Qatar Declines
Qatar's Doha Securities Market Index slid 0.2 percent, falling for a third day. The Kuwait Stock Exchange Index advanced 0.2 percent, while the Bahrain All Share Index gained 0.4 percent, ending five days of declines. The Abu Dhabi Securities Exchange General Index increased 0.9 percent.
Dana Gas PJSC added 3 percent to 1.74 dirhams. The U.A.E.- based oil and natural-gas producer was rated ``market perform'' in new coverage at Dubai-based Al Mal Capital PSC with a price estimate of 1.95 dirhams.
Sahara Petrochemical Co. rose 1.1 percent to 44.5 riyals. The Saudi producer of propylene and ethylene started trial operations at an olefin plant on Aug. 23, according to a statement posted on the Web site of the Saudi bourse today.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.
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Aug. 24 (Bloomberg) -- Persian Gulf shares, including Emaar Properties PJSC and Saudi British Bank, declined as investors speculated prices have outpaced prospects for earnings growth.
Emaar Properties, the largest real-estate developer in the Middle East, fell to its lowest in more than three years, while Saudi British Bank ended two days of gains. Oman Telecommunications Co., the sultanate's biggest phone company, slid for a second day.
Oman's Muscat Securities Market 30 Index fell 2.1 percent to 10,245.89. The measure is up 7.4 percent since Aug. 11. The Dubai Financial Market General Index lost 0.2 percent, while Saudi Arabia's Tadawul All Share Index ended nine days of advances, decreasing less than 0.1 percent. The index is up 13 percent since Aug. 10.
``We are witnessing profit-taking, especially in Saudi after the major rally yesterday,'' said Ali Khan, head of equity trading at Dubai-based Arqaam Capital Ltd. ``Foreign investors will divert more and more money to the Saudi market from the rest of the Gulf over the next few days.''
Saudi Arabia's measure yesterday jumped 5.2 percent, the biggest one-day gain since April 2007. On Aug. 20, the market regulator allowed foreign investors greater access to the country's stock exchange, the largest in the Persian Gulf.
Gulf Stocks Expensive
The MSCI GCC Countries Index, a measure of 115 companies in six Gulf states, trades at an average of 17 times estimated earnings, according to Bloomberg data. That compares with a multiple of 11 for the MSCI Emerging Markets Index.
Oman Telecommunications dropped 4.6 percent to 2.095 rials. The shares have jumped 11 percent since Aug. 11 after Oman's Ministry of Finance invited companies to bid for a 25 percent stake in the company. Emaar fell 1 percent to 9.3 dirhams, its lowest since April 2005.
Saudi British Bank, 40 percent-owned by HSBC Holding Plc, lost 1.7 percent to 88.5 riyals.
Mubarrad Transport Co. declined 1.9 percent to 265 fils after the Kuwaiti transport company reported it's in talks about the possible sale of its stake in a unit.
Qatar Declines
Qatar's Doha Securities Market Index slid 0.2 percent, falling for a third day. The Kuwait Stock Exchange Index advanced 0.2 percent, while the Bahrain All Share Index gained 0.4 percent, ending five days of declines. The Abu Dhabi Securities Exchange General Index increased 0.9 percent.
Dana Gas PJSC added 3 percent to 1.74 dirhams. The U.A.E.- based oil and natural-gas producer was rated ``market perform'' in new coverage at Dubai-based Al Mal Capital PSC with a price estimate of 1.95 dirhams.
Sahara Petrochemical Co. rose 1.1 percent to 44.5 riyals. The Saudi producer of propylene and ethylene started trial operations at an olefin plant on Aug. 23, according to a statement posted on the Web site of the Saudi bourse today.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.
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Lobao Says Brazil Plans to Uphold Oil Contracts, O Globo Says
By Katia Cortes
Aug. 24 (Bloomberg) -- Brazil's Mines and Energy Minister Edison Lobao said the government is studying how to manage so- called pre-salt oil fields and ``has no interest in breaking contracts,'' O Globo newspaper reported.
Lobao said ``there'll be a long debate in congress'' in case the decision on how to manage the fields demands a change in legislation, O Globo reported. President Luiz Inacio Lula da Silva will ultimately determine the policy, Lobao said, according to O Globo.
Yesterday, O Globo cited the minister as saying the government may expropriate pre-salt oil wells that have been licensed to companies such as Petroleo Brasileiro SA if they find the wells are linked to others that haven't yet been auctioned.
To contact the reporter on this story: Katia Cortes in Brasilia at kcortes@bloomberg.net
Read more...
Aug. 24 (Bloomberg) -- Brazil's Mines and Energy Minister Edison Lobao said the government is studying how to manage so- called pre-salt oil fields and ``has no interest in breaking contracts,'' O Globo newspaper reported.
Lobao said ``there'll be a long debate in congress'' in case the decision on how to manage the fields demands a change in legislation, O Globo reported. President Luiz Inacio Lula da Silva will ultimately determine the policy, Lobao said, according to O Globo.
Yesterday, O Globo cited the minister as saying the government may expropriate pre-salt oil wells that have been licensed to companies such as Petroleo Brasileiro SA if they find the wells are linked to others that haven't yet been auctioned.
To contact the reporter on this story: Katia Cortes in Brasilia at kcortes@bloomberg.net
Read more...
Japan May Change Auto Taxes to Focus on Emissions, Sankei Says
By Pavel Alpeyev
Aug. 24 (Bloomberg) -- Japan's government may change auto taxation to focus on carbon-dioxide emissions rather than engine size as part of efforts to fight global warming, the Sankei newspaper reported.
The Ministry of Economy, Trade and Industry is considering introducing new rules next fiscal year following a similar plan by the European Union, the newspaper reported, without saying where it obtained the information.
Such a change would raise taxes on light vehicles and will probably meet resistance from carmakers, according to the report. Light vehicles with engines smaller than 660 cubic centimeters (40 cubic inches) are favored under the current tax structure, it said.
To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.
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Aug. 24 (Bloomberg) -- Japan's government may change auto taxation to focus on carbon-dioxide emissions rather than engine size as part of efforts to fight global warming, the Sankei newspaper reported.
The Ministry of Economy, Trade and Industry is considering introducing new rules next fiscal year following a similar plan by the European Union, the newspaper reported, without saying where it obtained the information.
Such a change would raise taxes on light vehicles and will probably meet resistance from carmakers, according to the report. Light vehicles with engines smaller than 660 cubic centimeters (40 cubic inches) are favored under the current tax structure, it said.
To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.
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IFI, Pininfarina and Popolare di Milano: Italy Equity Preview
By Alessandra Migliaccio
Aug. 24 (Bloomberg) -- The following companies may have unusual price changes in Italy. Stock symbols are in parentheses, and share prices are from the previous close.
Italy's S&P/MIB Index rose 332, or 1.2 percent, to 28,090. Futures expiring in September gained 281, or 1 percent, to 28,125.
Pininfarina SpA (PINF IM): The owners of the Italian car- design company plan to reduce their stake to about 30 percent, Il Messaggero reported, without saying where it got the information. The reduction will take place before the end of the year, the newspaper said.
Pininfarina added 15 cents, or 2.3 percent, to 6.4 euros.
Banca Popolare di Milano SpA (BPM IM): The Italian regional bank was given an extra two weeks, until Sept. 12, to make changes to its corporate governance suggested by the Bank of Italy, Corriere della Sera reported, without saying where it got the information.
Popolare di Milano rose 24 cents, or 3.8 percent, to 6.6 euros.
IFI SpA (IFP IM): Amber Capital LP sold 6.2 percent of the Italian holding company back to the Agnelli family for 130 million euros ($192 million), La Repubblica reported, without citing anyone.
IFI gained 1.1 euros, or 9.2 percent, to 13.5 euros.
To contact the reporter on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net
Read more...
Aug. 24 (Bloomberg) -- The following companies may have unusual price changes in Italy. Stock symbols are in parentheses, and share prices are from the previous close.
Italy's S&P/MIB Index rose 332, or 1.2 percent, to 28,090. Futures expiring in September gained 281, or 1 percent, to 28,125.
Pininfarina SpA (PINF IM): The owners of the Italian car- design company plan to reduce their stake to about 30 percent, Il Messaggero reported, without saying where it got the information. The reduction will take place before the end of the year, the newspaper said.
Pininfarina added 15 cents, or 2.3 percent, to 6.4 euros.
Banca Popolare di Milano SpA (BPM IM): The Italian regional bank was given an extra two weeks, until Sept. 12, to make changes to its corporate governance suggested by the Bank of Italy, Corriere della Sera reported, without saying where it got the information.
Popolare di Milano rose 24 cents, or 3.8 percent, to 6.6 euros.
IFI SpA (IFP IM): Amber Capital LP sold 6.2 percent of the Italian holding company back to the Agnelli family for 130 million euros ($192 million), La Repubblica reported, without citing anyone.
IFI gained 1.1 euros, or 9.2 percent, to 13.5 euros.
To contact the reporter on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net
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Invesco Seeks British Energy, Centrica Merger, Telegraph Says
By Sarah Thompson
Aug. 24 (Bloomberg) -- Invesco Ltd.'s head of investment Neil Woodford is pushing for a merger between British Energy Group Plc and Centrica Plc, the Sunday Telegraph reported, citing an interview with Woodford.
Invesco is the largest institutional shareholder with a 15 percent stake in nuclear power producer British Energy, the Telegraph wrote, and also holds a 5 percent stake in Centrica, the U.K.'s biggest energy supplier. ``Together they can work out a joint venture with EDF to build nuclear sites,'' the Telegraph quoted Woodford as saying.
Woodford is to lay out his plans to the Shareholder Executive, the body which manages the sale of government assets on Aug. 26, the newspaper wrote.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net
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Aug. 24 (Bloomberg) -- Invesco Ltd.'s head of investment Neil Woodford is pushing for a merger between British Energy Group Plc and Centrica Plc, the Sunday Telegraph reported, citing an interview with Woodford.
Invesco is the largest institutional shareholder with a 15 percent stake in nuclear power producer British Energy, the Telegraph wrote, and also holds a 5 percent stake in Centrica, the U.K.'s biggest energy supplier. ``Together they can work out a joint venture with EDF to build nuclear sites,'' the Telegraph quoted Woodford as saying.
Woodford is to lay out his plans to the Shareholder Executive, the body which manages the sale of government assets on Aug. 26, the newspaper wrote.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net
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DP World Profit May Double on Expanded Port Network: Week Ahead
By Zainab Fattah
Aug. 24 (Bloomberg) -- DP World Ltd., the world's fourth- largest port operator, may this week report first-half profit doubled on African acquisitions and greater handling capacity at its Dubai hub even as the world's biggest economies slow.
The 45-terminal operator's net income may reach $244.3 million when it reports Aug. 28, according to the average estimate of three analysts surveyed by Bloomberg. The Dubai state-controlled firm said its profit for the same period in 2007 was $111.2 million before separately disclosable items.
``The company's first-half growth is driven by an increase in cargo handling, especially in Jebel Ali, and acquisitions in Africa and Saudi Arabia,'' analyst Muneeba Kayani at Morgan Stanley said in an e-mail. The Dubai-based analyst has an ``equal-weight'' recommendation on the stock.
Dubai is spending billions of dollars on finance, tourism and infrastructure projects to cut its dependence on oil revenue and build the emirate into a new global hub. DP World's $4.96 billion-public share sale in November, the Middle East's largest, has left investors disappointed as its shares have dropped 35 percent to $0.85 since listing on the Dubai International Financial Exchange Ltd. in November.
DP World last month reported container volume jumped 21 percent in the first half, helped by growth in India and the Middle East.
In 2007 the United Arab Emirates company gained control of Egypt's Sokhna Port at the southern entrance to the Suez Canal, its third on the Red Sea after Jeddah in Saudi Arabia and Djibouti, East Africa. This year it plans to raise the capacity of its base at Jebel Ali port by more than a quarter.
`Rapid Growth'
``DP World operates in regions that are expected to witness a rapid increase in utilization rates and shortage in capacity,'' Kareem Murad, a Dubai-based analyst at Shuaa Capital PSC who recommends buying the stock, said in an e-mail. ``This means margins will improve significantly reflecting positively on the company's earnings.''
The port operator now has terminals in 29 countries from Senegal to China, whose economy expanded 11.9 percent this year. The U.A.E. economy will expand 7 percent this year, according to a Bloomberg survey.
A year since the U.S. housing slump sparked about $500 billion in credit market losses for banks globally, the world's largest economies are all stumbling as rising borrowing costs combine with record commodity prices to sap growth. The U.S. is close to a recession and the economies of France, Germany and Japan all contracted in the second quarter.
At the 25 terminals where DP World is majority owner or has management control, volume rose 21 percent to 13.6 million 20- foot containers in the first half. Hong Kong's Hutchison Port Holdings Ltd., Singapore's PSA International Pte. and A.P. Moeller-Maersk of Denmark are DP World's main competitors.
Markets Last Week
Five of the seven Gulf stock indexes tracked by Bloomberg declined last week. The Dubai Financial Market General Index fell 2.5 percent as did the Bahrain All Share Index, losing 2 percent. Saudi Arabia's measure advanced 3.4 percent, while Oman's index rose 1.6 percent.
Tamweel PJSC, the United Arab Emirates' largest mortgage provider, dropped 5.4 percent, ending the week at 5.78 dirhams. The shares fell to the lowest close since Nov. 4 even after the company denied it's being investigated by Dubai police in a probe that resulted in the arrest of its former Chief Executive Officer Adel Al Shirawi and former head of investments Feras Kalthoum.
Agility retreated 5.2 percent to 1,100 fils, the lowest since July 14. The Middle East's largest storage and logistics operator on Aug. 14 said second-quarter profit fell 9 percent to 35.1 million dinars ($131 million).
The following is a list of events in the Gulf this week:
Aug. 25: Qatar Fuel (QFLS QD) plans to hold a press conference to address questions on its second-quarter results. Aug. 27: Barwa Real Estate (BRES QD) will hold an analyst meeting to discuss 1H earnings. Aug. 31: In the Muslim world the holy month of Ramadan is likely to start today, depending on the sighting of the moon.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net
Read more...
Aug. 24 (Bloomberg) -- DP World Ltd., the world's fourth- largest port operator, may this week report first-half profit doubled on African acquisitions and greater handling capacity at its Dubai hub even as the world's biggest economies slow.
The 45-terminal operator's net income may reach $244.3 million when it reports Aug. 28, according to the average estimate of three analysts surveyed by Bloomberg. The Dubai state-controlled firm said its profit for the same period in 2007 was $111.2 million before separately disclosable items.
``The company's first-half growth is driven by an increase in cargo handling, especially in Jebel Ali, and acquisitions in Africa and Saudi Arabia,'' analyst Muneeba Kayani at Morgan Stanley said in an e-mail. The Dubai-based analyst has an ``equal-weight'' recommendation on the stock.
Dubai is spending billions of dollars on finance, tourism and infrastructure projects to cut its dependence on oil revenue and build the emirate into a new global hub. DP World's $4.96 billion-public share sale in November, the Middle East's largest, has left investors disappointed as its shares have dropped 35 percent to $0.85 since listing on the Dubai International Financial Exchange Ltd. in November.
DP World last month reported container volume jumped 21 percent in the first half, helped by growth in India and the Middle East.
In 2007 the United Arab Emirates company gained control of Egypt's Sokhna Port at the southern entrance to the Suez Canal, its third on the Red Sea after Jeddah in Saudi Arabia and Djibouti, East Africa. This year it plans to raise the capacity of its base at Jebel Ali port by more than a quarter.
`Rapid Growth'
``DP World operates in regions that are expected to witness a rapid increase in utilization rates and shortage in capacity,'' Kareem Murad, a Dubai-based analyst at Shuaa Capital PSC who recommends buying the stock, said in an e-mail. ``This means margins will improve significantly reflecting positively on the company's earnings.''
The port operator now has terminals in 29 countries from Senegal to China, whose economy expanded 11.9 percent this year. The U.A.E. economy will expand 7 percent this year, according to a Bloomberg survey.
A year since the U.S. housing slump sparked about $500 billion in credit market losses for banks globally, the world's largest economies are all stumbling as rising borrowing costs combine with record commodity prices to sap growth. The U.S. is close to a recession and the economies of France, Germany and Japan all contracted in the second quarter.
At the 25 terminals where DP World is majority owner or has management control, volume rose 21 percent to 13.6 million 20- foot containers in the first half. Hong Kong's Hutchison Port Holdings Ltd., Singapore's PSA International Pte. and A.P. Moeller-Maersk of Denmark are DP World's main competitors.
Markets Last Week
Five of the seven Gulf stock indexes tracked by Bloomberg declined last week. The Dubai Financial Market General Index fell 2.5 percent as did the Bahrain All Share Index, losing 2 percent. Saudi Arabia's measure advanced 3.4 percent, while Oman's index rose 1.6 percent.
Tamweel PJSC, the United Arab Emirates' largest mortgage provider, dropped 5.4 percent, ending the week at 5.78 dirhams. The shares fell to the lowest close since Nov. 4 even after the company denied it's being investigated by Dubai police in a probe that resulted in the arrest of its former Chief Executive Officer Adel Al Shirawi and former head of investments Feras Kalthoum.
Agility retreated 5.2 percent to 1,100 fils, the lowest since July 14. The Middle East's largest storage and logistics operator on Aug. 14 said second-quarter profit fell 9 percent to 35.1 million dinars ($131 million).
The following is a list of events in the Gulf this week:
Aug. 25: Qatar Fuel (QFLS QD) plans to hold a press conference to address questions on its second-quarter results. Aug. 27: Barwa Real Estate (BRES QD) will hold an analyst meeting to discuss 1H earnings. Aug. 31: In the Muslim world the holy month of Ramadan is likely to start today, depending on the sighting of the moon.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net
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China Molybdenum's First-Half Profit Rises 13% on Higher Prices
By Helen Yuan
Aug. 24 (Bloomberg) -- China Molybdenum Co., the nation's second-biggest producer of the metal used in steelmaking, said first-half profit rose 13 percent because of higher prices.
Net income rose to 1.24 billion yuan ($181 million), or 0.26 yuan a share, in the six months ended June, from 1.1 billion yuan, or 0.27 yuan, a year ago, the Luoyang, Henan province-based company said in a statement on the Hong Kong stock exchange today. Sales rose 16 percent to 3.33 billion yuan.
Molybdenum has jumped more than fivefold since early 2004 as demand for corrosion-resistant pipes grows. China may increase consumption of molybdenum by 24 percent this year, larger rival Jinduicheng Molybdenum Co. said in June.
China Molybdenum's shares have fallen 68 percent this year, compared with the 27 percent decline in the benchmark Hang Seng Index.
A global shortfall for the silvery-white metal will last for three years, Wu Wenjun, executive director manager for China Molybdenum, said April 10. Mines in Inner Mongolia and Henan province in China, as well as in Chile will ``take time'' to expand capacity, he said.
China Molybdenum plans to increase production by about 10 percent this year, and is seeking acquisitions, Wu said.
China overtook the U.S. to become the world's biggest producer of molybdenum last year.
To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net
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Aug. 24 (Bloomberg) -- China Molybdenum Co., the nation's second-biggest producer of the metal used in steelmaking, said first-half profit rose 13 percent because of higher prices.
Net income rose to 1.24 billion yuan ($181 million), or 0.26 yuan a share, in the six months ended June, from 1.1 billion yuan, or 0.27 yuan, a year ago, the Luoyang, Henan province-based company said in a statement on the Hong Kong stock exchange today. Sales rose 16 percent to 3.33 billion yuan.
Molybdenum has jumped more than fivefold since early 2004 as demand for corrosion-resistant pipes grows. China may increase consumption of molybdenum by 24 percent this year, larger rival Jinduicheng Molybdenum Co. said in June.
China Molybdenum's shares have fallen 68 percent this year, compared with the 27 percent decline in the benchmark Hang Seng Index.
A global shortfall for the silvery-white metal will last for three years, Wu Wenjun, executive director manager for China Molybdenum, said April 10. Mines in Inner Mongolia and Henan province in China, as well as in Chile will ``take time'' to expand capacity, he said.
China Molybdenum plans to increase production by about 10 percent this year, and is seeking acquisitions, Wu said.
China overtook the U.S. to become the world's biggest producer of molybdenum last year.
To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net
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Datong Coal Profit More Than Triples on Price, Demand
By Winnie Zhu and Wang Ying
Aug. 24 (Bloomberg) -- Datong Coal Industry Co., China's second-biggest producer of the fuel by capacity, said first- half profit more than tripled because of record prices and higher demand.
Net income climbed to 741.9 million yuan ($109 million), or 0.89 yuan a share, from 244.4 million yuan, or 0.29 yuan a share, a year earlier, Datong Coal said in a statement to the Shanghai stock exchange.
Producers of the fuel have benefited from a rise in prices as the government closes small mines to cut pollution and supplies decrease. Coal prices at Qinhuangdao, a benchmark for China, reached a record $168 a metric ton on Aug. 8. Datong Coal, based in Shanxi, also gained from a cut in corporate tax to 25 percent from 33 percent this year.
Production rose 12 percent to 10.7 million tons in the first half, while sales increased 72 percent to 3.99 billion yuan, the coal producer said.
To expand its capacity, Datong Coal will transfer a stake worth 2.5 billion yuan to its parent Datong Coal Mine Group in exchange for a coal mine and processing plant, the company said on Aug. 11. The Yanzishan mine has an annual capacity of 4.8 million tons and exploitable reserves of 168.4 million tons.
China, which uses coal for about 80 percent of its power generation, has capped the price of the fuel at the June 19 level until the end of the year to help power utilities cope with rising coal costs and ease a nationwide electricity crisis.
Insufficient coal supplies due to the clampdown on small, unsafe mines forced the closure of almost 3 percent of the nation's coal-fired power plants last month, the State Grid Corp. of China said. The country is grappling with its sixth year of power shortages.
Datong Coal shares fell 52 percent this year in Shanghai compared with a 55 percent slump in the benchmark CSI 300 Index. The stock closed at 15.29 yuan on Aug. 22.
To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net;
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Aug. 24 (Bloomberg) -- Datong Coal Industry Co., China's second-biggest producer of the fuel by capacity, said first- half profit more than tripled because of record prices and higher demand.
Net income climbed to 741.9 million yuan ($109 million), or 0.89 yuan a share, from 244.4 million yuan, or 0.29 yuan a share, a year earlier, Datong Coal said in a statement to the Shanghai stock exchange.
Producers of the fuel have benefited from a rise in prices as the government closes small mines to cut pollution and supplies decrease. Coal prices at Qinhuangdao, a benchmark for China, reached a record $168 a metric ton on Aug. 8. Datong Coal, based in Shanxi, also gained from a cut in corporate tax to 25 percent from 33 percent this year.
Production rose 12 percent to 10.7 million tons in the first half, while sales increased 72 percent to 3.99 billion yuan, the coal producer said.
To expand its capacity, Datong Coal will transfer a stake worth 2.5 billion yuan to its parent Datong Coal Mine Group in exchange for a coal mine and processing plant, the company said on Aug. 11. The Yanzishan mine has an annual capacity of 4.8 million tons and exploitable reserves of 168.4 million tons.
China, which uses coal for about 80 percent of its power generation, has capped the price of the fuel at the June 19 level until the end of the year to help power utilities cope with rising coal costs and ease a nationwide electricity crisis.
Insufficient coal supplies due to the clampdown on small, unsafe mines forced the closure of almost 3 percent of the nation's coal-fired power plants last month, the State Grid Corp. of China said. The country is grappling with its sixth year of power shortages.
Datong Coal shares fell 52 percent this year in Shanghai compared with a 55 percent slump in the benchmark CSI 300 Index. The stock closed at 15.29 yuan on Aug. 22.
To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net;
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Qingdao Haier 1st-Half Profit Rises to 548.9 Mln Yuan
By Stephanie Wong and Chia-Peck Wong
Aug. 24 (Bloomberg) -- Qingdao Haier Co., a unit of the Chinese company that may buy General Electric Co.'s appliance arm, said first-half profit rose 46 percent as rising incomes fueled consumer spending in the world's most-populous country.
Net income rose to 548.9 million yuan ($80 million), or 0.41 yuan a share, from 376 million yuan, or 0.28 yuan, a year earlier, the Qingdao, eastern China-based maker of air conditioners and refrigerators said in a statement to Shanghai's stock exchange today, citing Chinese accounting standards. Sales rose 11 percent to 18.5 billion yuan.
Qingdao Haier is using publicity gained from sponsoring the Beijing Olympics to tap rising affluence in the world's fastest- growing major economy, which has expanded by at least 10 percent annually since 2003. Retail sales in China rose by at least 19 percent in each of the first six months of this year, accelerating to 23 percent in June, the fastest pace since Bloomberg data began in 1999.
``Sales volume will continue to grow,'' Zhang Hongdao, a Nanjing-based industrial analyst with Huatai Securities Co Ltd., said by phone before the earnings announcement. ``Because of the seasonality, more products are sold in the first than the second half.'' He doesn't have a rating for the stock.
The company will pay an interim dividend of 0.20 yuan, compared with the 0.15 yuan per share paid a year earlier.
The company is a unit of unlisted Haier Group Corp., China's largest maker of refrigerators and air conditioners. Both are based in the city of Qingdao in eastern China.
Air-Conditioner
First-half sales of air conditioners fell 3 percent from a year earlier to 7 billion yuan. Gross margin in the business, or the percentage of sales left after subtracting production costs, widened to 24.4 percent from 22.8 percent.
Refrigerator sales rose 18 percent to 7.41 billion yuan, with gross margin widening to 29.5 percent from 22.6 percent a year earlier, the company said.
Revenue from outside China fell 7.6 percent to 3.4 billion yuan, while domestic sales rose 16 percent to 15.1 billion yuan.
Haier Group is considering GE's appliance unit, the biggest provider of refrigerators, ovens and dishwashers for new U.S. homes, as well as other ``opportunities'' as it seeks acquisitions overseas, Zhang Tieyan, chief executive officer for Asia outside of China, said Aug 1.
GE Chief Executive Officer Jeffrey Immelt in May identified Haier and Korea's LG Electronics Inc. as potential suitors. A purchase of the century-old division would give Haier, which sells products through Wal-Mart Stores Inc., Best Buy Co. and Home Depot Inc., a household name to help its U.S. expansion.
The GE unit may fetch $3 billion to $8 billion, according to estimates from Citigroup Inc. and Goldman Sachs Group Inc.
The Sunday Telegraph reported Aug. 10 that Haier and Blackstone will jointly bid for GE's appliances unit, which was later denied by the Chinese company.
Qingdao Haier's shares declined 2.9 percent to 9.58 yuan in Shanghai on Aug. 22. The company has lost more than half its market value in the past 12 months.
To contact the reporters on this story: Stephanie Wong in Hong Kong at swong139@bloomberg.net; Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Aug. 24 (Bloomberg) -- Qingdao Haier Co., a unit of the Chinese company that may buy General Electric Co.'s appliance arm, said first-half profit rose 46 percent as rising incomes fueled consumer spending in the world's most-populous country.
Net income rose to 548.9 million yuan ($80 million), or 0.41 yuan a share, from 376 million yuan, or 0.28 yuan, a year earlier, the Qingdao, eastern China-based maker of air conditioners and refrigerators said in a statement to Shanghai's stock exchange today, citing Chinese accounting standards. Sales rose 11 percent to 18.5 billion yuan.
Qingdao Haier is using publicity gained from sponsoring the Beijing Olympics to tap rising affluence in the world's fastest- growing major economy, which has expanded by at least 10 percent annually since 2003. Retail sales in China rose by at least 19 percent in each of the first six months of this year, accelerating to 23 percent in June, the fastest pace since Bloomberg data began in 1999.
``Sales volume will continue to grow,'' Zhang Hongdao, a Nanjing-based industrial analyst with Huatai Securities Co Ltd., said by phone before the earnings announcement. ``Because of the seasonality, more products are sold in the first than the second half.'' He doesn't have a rating for the stock.
The company will pay an interim dividend of 0.20 yuan, compared with the 0.15 yuan per share paid a year earlier.
The company is a unit of unlisted Haier Group Corp., China's largest maker of refrigerators and air conditioners. Both are based in the city of Qingdao in eastern China.
Air-Conditioner
First-half sales of air conditioners fell 3 percent from a year earlier to 7 billion yuan. Gross margin in the business, or the percentage of sales left after subtracting production costs, widened to 24.4 percent from 22.8 percent.
Refrigerator sales rose 18 percent to 7.41 billion yuan, with gross margin widening to 29.5 percent from 22.6 percent a year earlier, the company said.
Revenue from outside China fell 7.6 percent to 3.4 billion yuan, while domestic sales rose 16 percent to 15.1 billion yuan.
Haier Group is considering GE's appliance unit, the biggest provider of refrigerators, ovens and dishwashers for new U.S. homes, as well as other ``opportunities'' as it seeks acquisitions overseas, Zhang Tieyan, chief executive officer for Asia outside of China, said Aug 1.
GE Chief Executive Officer Jeffrey Immelt in May identified Haier and Korea's LG Electronics Inc. as potential suitors. A purchase of the century-old division would give Haier, which sells products through Wal-Mart Stores Inc., Best Buy Co. and Home Depot Inc., a household name to help its U.S. expansion.
The GE unit may fetch $3 billion to $8 billion, according to estimates from Citigroup Inc. and Goldman Sachs Group Inc.
The Sunday Telegraph reported Aug. 10 that Haier and Blackstone will jointly bid for GE's appliances unit, which was later denied by the Chinese company.
Qingdao Haier's shares declined 2.9 percent to 9.58 yuan in Shanghai on Aug. 22. The company has lost more than half its market value in the past 12 months.
To contact the reporters on this story: Stephanie Wong in Hong Kong at swong139@bloomberg.net; Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Shandong Gold's First-Half Profit Surges More Than Fivefold
By Theresa Tang
Aug. 24 (Bloomberg) -- Shandong Gold Mining Co., China's third-largest bullion producer, said first-half profit rose more than fivefold after it bought five gold mines and cut production costs.
Net income rose to 495.5 million yuan ($72.5 million), or 1.40 yuan, from 92.6 million yuan, or 0.58 yuan, a year earlier, the Jinan, Shandong province-based company said in a filing to Shanghai Stock Exchange today.
China's gold demand jumped 23 percent in 2007, as rising incomes spurred jewelry buying, making the nation the second- largest consumer. Gold has jumped 23 percent in the past 12 months and reached a record in March as a weaker dollar and higher oil prices spurred investors to seek alternative investments and to hedge inflation.
To contact the reporter on this story: Theresa Tang in Hong Kong at ttang3@bloomberg.net
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Aug. 24 (Bloomberg) -- Shandong Gold Mining Co., China's third-largest bullion producer, said first-half profit rose more than fivefold after it bought five gold mines and cut production costs.
Net income rose to 495.5 million yuan ($72.5 million), or 1.40 yuan, from 92.6 million yuan, or 0.58 yuan, a year earlier, the Jinan, Shandong province-based company said in a filing to Shanghai Stock Exchange today.
China's gold demand jumped 23 percent in 2007, as rising incomes spurred jewelry buying, making the nation the second- largest consumer. Gold has jumped 23 percent in the past 12 months and reached a record in March as a weaker dollar and higher oil prices spurred investors to seek alternative investments and to hedge inflation.
To contact the reporter on this story: Theresa Tang in Hong Kong at ttang3@bloomberg.net
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Yanzhou Coal Net More Than Doubles on Higher Prices
By Wang Ying
Aug. 24 (Bloomberg) -- Yanzhou Coal Mining Co., a unit of China's fourth-biggest producer of the fuel, said first-half profit more than doubled because of rising energy demand and record prices.
Net income increased to 3.91 billion yuan ($572 million), or 0.80 yuan a share, from 1.5 billion yuan, or 0.31 yuan, a year earlier, the company said in a Hong Kong's stock exchange filing today. Sales rose to 12 billion yuan from 6.7 billion yuan.
China's economy expanded 10.4 percent between January and June, boosting demand for coal, used to run almost 80 percent of the country's power plants. Benchmark coal prices at China's Qinghuangdao port reached a record 1,080 yuan a metric ton on July 23, according to data posted on the Web site of China Coal Transport and Distribution Association.
``As China still sees high economic growth, the demand for coal for electricity, metallurgy, chemical, building materials and other fundamental industries will remain strong,'' in the second half, Yanzhou Coal said in the statement.
The shares fell 0.2 percent to HK$11.68 in Hong Kong on Aug. 21, before the earnings. The market was closed Aug. 22 for a typhoon. The stock has fallen 24 percent this year, compared with the 27 percent drop in the benchmark Hang Seng Index.
Output Falls
The company's raw coal production fell 0.4 percent to 18.01 million tons between January and June, it said. Sales of the fuel rose by 9.1 percent to 18.51 million tons, it said.
Coal prices will remain ``at a high level'' this year, especially for high-quality thermal coal for power plants, the company said on April 20. Yangzhou Coal plans to increase capital spending by 26 percent this year to 3.7 billion yuan to raise production capacity, it said then.
China has asked coal producers to boost deliveries to power stations to help ease a sixth year of electricity shortages and ensure adequate supplies before the Beijing Olympic Games that will conclude Aug. 24, Vice Premier Li Keqiang said July 31.
The world's biggest coal producer and consumer said it will take additional steps to boost domestic production of the fuel to help ease the nation's electricity crisis, Zhang Guobao, head of the National Energy Administration, China's top energy regulator, said Aug. 18.
The government said imposed a 10 percent export tax on power-station coal and doubled the rate on coking coal, used in steelmaking, to 10 percent on Aug. 20.
The company plans to export 9.1 percent less coal under term contracts at a higher price in 2008 than a year earlier, Yanzhou Coal said on June 3. Contractual shipments in 2008 will help boost revenue by 224.9 million yuan this year, it said then.
To contact the reporters on this story: Wang Ying in Beijing at ywang30@bloomberg.net;
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Aug. 24 (Bloomberg) -- Yanzhou Coal Mining Co., a unit of China's fourth-biggest producer of the fuel, said first-half profit more than doubled because of rising energy demand and record prices.
Net income increased to 3.91 billion yuan ($572 million), or 0.80 yuan a share, from 1.5 billion yuan, or 0.31 yuan, a year earlier, the company said in a Hong Kong's stock exchange filing today. Sales rose to 12 billion yuan from 6.7 billion yuan.
China's economy expanded 10.4 percent between January and June, boosting demand for coal, used to run almost 80 percent of the country's power plants. Benchmark coal prices at China's Qinghuangdao port reached a record 1,080 yuan a metric ton on July 23, according to data posted on the Web site of China Coal Transport and Distribution Association.
``As China still sees high economic growth, the demand for coal for electricity, metallurgy, chemical, building materials and other fundamental industries will remain strong,'' in the second half, Yanzhou Coal said in the statement.
The shares fell 0.2 percent to HK$11.68 in Hong Kong on Aug. 21, before the earnings. The market was closed Aug. 22 for a typhoon. The stock has fallen 24 percent this year, compared with the 27 percent drop in the benchmark Hang Seng Index.
Output Falls
The company's raw coal production fell 0.4 percent to 18.01 million tons between January and June, it said. Sales of the fuel rose by 9.1 percent to 18.51 million tons, it said.
Coal prices will remain ``at a high level'' this year, especially for high-quality thermal coal for power plants, the company said on April 20. Yangzhou Coal plans to increase capital spending by 26 percent this year to 3.7 billion yuan to raise production capacity, it said then.
China has asked coal producers to boost deliveries to power stations to help ease a sixth year of electricity shortages and ensure adequate supplies before the Beijing Olympic Games that will conclude Aug. 24, Vice Premier Li Keqiang said July 31.
The world's biggest coal producer and consumer said it will take additional steps to boost domestic production of the fuel to help ease the nation's electricity crisis, Zhang Guobao, head of the National Energy Administration, China's top energy regulator, said Aug. 18.
The government said imposed a 10 percent export tax on power-station coal and doubled the rate on coking coal, used in steelmaking, to 10 percent on Aug. 20.
The company plans to export 9.1 percent less coal under term contracts at a higher price in 2008 than a year earlier, Yanzhou Coal said on June 3. Contractual shipments in 2008 will help boost revenue by 224.9 million yuan this year, it said then.
To contact the reporters on this story: Wang Ying in Beijing at ywang30@bloomberg.net;
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Fosun's First-Half Profit More Than Doubles on Steel, Mining
By Chia-Peck Wong
Aug. 24 (Bloomberg) -- Fosun International Ltd., a Shanghai- based investment company, said first-half profit more than doubled on higher income from its steel, mining and pharmaceuticals holdings.
Net income rose to 1.92 billion yuan ($281 million), or 0.30 yuan a share, from 826.6 million yuan, or 0.17 yuan, a year earlier, Fosun said in a Hong Kong's stock exchange filing today. Revenue rose to 20.8 billion yuan from 14.3 billion yuan.
Net income from Fosun's mining business more than quadrupled to 880.9 million yuan and profit from pharmaceuticals more than tripled to 196.1 million yuan, the company said. Steel profit rose to 1.09 billion yuan from 609.3 million yuan.
Fosun's retail and financial services business posted a loss of 264.9 million yuan, widening from 63.3 billion yuan, it said.
Shares of the company, listed in Hong Kong, have fallen 41 percent this year, compared with a 27 percent decline in the benchmark Hang Seng Index. Fosun fell 2.7 percent to HK$4.31 on Aug. 21. The market was closed Aug. 22 because of a typhoon.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Aug. 24 (Bloomberg) -- Fosun International Ltd., a Shanghai- based investment company, said first-half profit more than doubled on higher income from its steel, mining and pharmaceuticals holdings.
Net income rose to 1.92 billion yuan ($281 million), or 0.30 yuan a share, from 826.6 million yuan, or 0.17 yuan, a year earlier, Fosun said in a Hong Kong's stock exchange filing today. Revenue rose to 20.8 billion yuan from 14.3 billion yuan.
Net income from Fosun's mining business more than quadrupled to 880.9 million yuan and profit from pharmaceuticals more than tripled to 196.1 million yuan, the company said. Steel profit rose to 1.09 billion yuan from 609.3 million yuan.
Fosun's retail and financial services business posted a loss of 264.9 million yuan, widening from 63.3 billion yuan, it said.
Shares of the company, listed in Hong Kong, have fallen 41 percent this year, compared with a 27 percent decline in the benchmark Hang Seng Index. Fosun fell 2.7 percent to HK$4.31 on Aug. 21. The market was closed Aug. 22 because of a typhoon.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Sinopec Second-Quarter Profit Falls 87% on Oil Refining Losses
By Wang Ying
Aug. 24 (Bloomberg) -- China Petroleum & Chemical Corp., Asia's biggest oil refiner, posted an 87 percent drop in second- quarter profit after government caps on fuel prices prevented the company from passing on record crude oil costs to consumers.
Net income declined to 2.19 billion yuan ($320 million) in the three months ended June 30 from last year's 16.8 billion yuan, according to calculations made from first-half figures released today. Profit in the first three quarters may fall by more than 50 percent, the company said.
China controls fuel prices to limit their impact on inflation in the world's fastest-growing major economy, curbing refiners' ability to pass on crude oil costs. Benchmark crude in New York has doubled in the second quarter from a year earlier, with prices reaching a record $147.27 a barrel on July 11.
``The refiner likely made a refining loss of as much as 70 billion yuan in the first six months,'' Yin Xiaodong, an analyst with Citic Securities Co., said by mobile phone in Beijing today. ``The second-half should look a little better, as crude should ease and the government may further increase fuel prices.''
Sinopec's Hong Kong-tradedshares have retreated 36 percent this year, compared with a 27 percent decline in the city's benchmark Hang Seng Index. The stock fell 3.7 percent to HK$7.59 on Aug. 21 before the earnings announcement. The Hong Kong market was shut on Aug. 22 because of a typhoon.
The Beijing-based company's first-half profit fell 77 percent to 8.26 billion, beating the median estimate of 7 billion yuan in a Bloomberg News survey of seven analysts. Sales rose 31 percent to 722.4 billion yuan. Sinopec will pay an interim dividend of 0.03 yuan a share.
`Significant Losses'
The company's refining business incurred ``significant losses,'' Sinopec said, without giving specific numbers.
First-half total capital expenditure was 36.5 billion yuan, of which exploration and development spending stood at 21 billion yuan, it said. The company said it will speed up explorations in ``key regions'' such as Tahe and northeastern Sichuan in the second half.
Sinopec said it plans to produce 21.24 million tons of crude oil and 4.2 billion cubic meters of natural gas in the second half. Crude refining volume may reach 89.75 million tons and oil- product sales are expected to be 64 million tons during the period, it said.
Sinopec increased crude processing by 6.7 percent to 84.25 million tons in the first half to meet higher demand for fuels and chemicals, the company said on July 18. Crude output climbed 2.4 percent to 147 million barrels while gas output rose 3.3 percent to 144 billion cubic feet, it said at the time.
Subsidy, Windfall Tax
The government paid Sinopec and PetroChina Co., the nation's largest refiners, rebates of 75 percent on the 17 percent value- added tax levied on crude oil imports in the second quarter.
Sinopec was paid a subsidy of 22.93 billion yuan in the quarter and a tax refund of 3.07 billion yuan for imported fuels, the company said in today's statement, without saying whether the assistance will continue for the rest of the year.
The refiner received 4.9 billion yuan in subsidies to offset refining losses in 2007 and 7.4 billion in the first quarter of this year, it said in March. It received a 9.42 billion yuan subsidy in 2005 and 5 billion yuan in 2006.
Sinopec's windfall tax payment increased by 13.3 billion yuan in the first half, the company said. The tax levy on revenue from crude oil sold at more than $40 a barrel was 3.1 billion yuan between January and June of 2007, it said last year.
Higher Fuel Prices
China raised the prices of gasoline, diesel and jet fuel by at least 17 percent on June 20, the first increase since November, in a move to help ease the nation's fuel shortfalls.
Sinopec was losing about 3,000 yuan on each ton of refined products because of near-record crude oil costs, the company's spokesman Chen Ge said in May before the fuel price increase.
Sinopec forecast a jump in 2008 capital spending to 121.8 billion yuan from last year's 109.3 billion yuan, it said in April. The company plans to spend 60.1 billion yuan on exploration and production, including expediting construction on a project to pipe gas from the Puguang field in Sichuan province.
To contact the reporter on this story: Wang Ying in Beijing at wang30@bloomberg.net;
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Aug. 24 (Bloomberg) -- China Petroleum & Chemical Corp., Asia's biggest oil refiner, posted an 87 percent drop in second- quarter profit after government caps on fuel prices prevented the company from passing on record crude oil costs to consumers.
Net income declined to 2.19 billion yuan ($320 million) in the three months ended June 30 from last year's 16.8 billion yuan, according to calculations made from first-half figures released today. Profit in the first three quarters may fall by more than 50 percent, the company said.
China controls fuel prices to limit their impact on inflation in the world's fastest-growing major economy, curbing refiners' ability to pass on crude oil costs. Benchmark crude in New York has doubled in the second quarter from a year earlier, with prices reaching a record $147.27 a barrel on July 11.
``The refiner likely made a refining loss of as much as 70 billion yuan in the first six months,'' Yin Xiaodong, an analyst with Citic Securities Co., said by mobile phone in Beijing today. ``The second-half should look a little better, as crude should ease and the government may further increase fuel prices.''
Sinopec's Hong Kong-tradedshares have retreated 36 percent this year, compared with a 27 percent decline in the city's benchmark Hang Seng Index. The stock fell 3.7 percent to HK$7.59 on Aug. 21 before the earnings announcement. The Hong Kong market was shut on Aug. 22 because of a typhoon.
The Beijing-based company's first-half profit fell 77 percent to 8.26 billion, beating the median estimate of 7 billion yuan in a Bloomberg News survey of seven analysts. Sales rose 31 percent to 722.4 billion yuan. Sinopec will pay an interim dividend of 0.03 yuan a share.
`Significant Losses'
The company's refining business incurred ``significant losses,'' Sinopec said, without giving specific numbers.
First-half total capital expenditure was 36.5 billion yuan, of which exploration and development spending stood at 21 billion yuan, it said. The company said it will speed up explorations in ``key regions'' such as Tahe and northeastern Sichuan in the second half.
Sinopec said it plans to produce 21.24 million tons of crude oil and 4.2 billion cubic meters of natural gas in the second half. Crude refining volume may reach 89.75 million tons and oil- product sales are expected to be 64 million tons during the period, it said.
Sinopec increased crude processing by 6.7 percent to 84.25 million tons in the first half to meet higher demand for fuels and chemicals, the company said on July 18. Crude output climbed 2.4 percent to 147 million barrels while gas output rose 3.3 percent to 144 billion cubic feet, it said at the time.
Subsidy, Windfall Tax
The government paid Sinopec and PetroChina Co., the nation's largest refiners, rebates of 75 percent on the 17 percent value- added tax levied on crude oil imports in the second quarter.
Sinopec was paid a subsidy of 22.93 billion yuan in the quarter and a tax refund of 3.07 billion yuan for imported fuels, the company said in today's statement, without saying whether the assistance will continue for the rest of the year.
The refiner received 4.9 billion yuan in subsidies to offset refining losses in 2007 and 7.4 billion in the first quarter of this year, it said in March. It received a 9.42 billion yuan subsidy in 2005 and 5 billion yuan in 2006.
Sinopec's windfall tax payment increased by 13.3 billion yuan in the first half, the company said. The tax levy on revenue from crude oil sold at more than $40 a barrel was 3.1 billion yuan between January and June of 2007, it said last year.
Higher Fuel Prices
China raised the prices of gasoline, diesel and jet fuel by at least 17 percent on June 20, the first increase since November, in a move to help ease the nation's fuel shortfalls.
Sinopec was losing about 3,000 yuan on each ton of refined products because of near-record crude oil costs, the company's spokesman Chen Ge said in May before the fuel price increase.
Sinopec forecast a jump in 2008 capital spending to 121.8 billion yuan from last year's 109.3 billion yuan, it said in April. The company plans to spend 60.1 billion yuan on exploration and production, including expediting construction on a project to pipe gas from the Puguang field in Sichuan province.
To contact the reporter on this story: Wang Ying in Beijing at wang30@bloomberg.net;
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China Construction Bank to Issue Bonds in Hong Kong
By Chia-Peck Wong
Aug. 24 (Bloomberg) -- China Construction Bank Corp., the nation's second-biggest, will issue up to 3 billion yuan ($439 million) worth of ``ordinary financial bonds'' in Hong Kong.
The company's board also approved an increase of $800 million in capital to wholly owned Hong Kong commercial banking unit China Construction Bank (Asia) Corp., the Beijing-based bank said in a statement to the Hong Kong's stock exchange today.
China Construction's board also approved a transfer of $300 million to CCB International (Holdings) Ltd., another fully owned unit, which underwrites sales of shares and bonds in Hong Kong, the bank said in the statement.
The capital increases are subject to the approval by the relevant regulators, China Construction said.
The bank said on Aug. 22 that first-half profit surged 71 percent to 58.7 billion yuan on more lucrative lending and increased fee-based services.
China Construction's Hong Kong-traded shares fell 7.6 percent this year, making it the sixth-best performer on the local benchmark Hang Seng index, which has dropped 27 percent. The stock fell 2.3 percent to HK$5.97 on Aug 21. The market was closed Aug. 22 for a typhoon.
The bank, established in 1954 to fund roads, bridges, dams and other infrastructure, is China's largest mortgage and real- estate lender. It provides 23.1 percent of the nation's mortgages and about 12 percent of overall loans.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Aug. 24 (Bloomberg) -- China Construction Bank Corp., the nation's second-biggest, will issue up to 3 billion yuan ($439 million) worth of ``ordinary financial bonds'' in Hong Kong.
The company's board also approved an increase of $800 million in capital to wholly owned Hong Kong commercial banking unit China Construction Bank (Asia) Corp., the Beijing-based bank said in a statement to the Hong Kong's stock exchange today.
China Construction's board also approved a transfer of $300 million to CCB International (Holdings) Ltd., another fully owned unit, which underwrites sales of shares and bonds in Hong Kong, the bank said in the statement.
The capital increases are subject to the approval by the relevant regulators, China Construction said.
The bank said on Aug. 22 that first-half profit surged 71 percent to 58.7 billion yuan on more lucrative lending and increased fee-based services.
China Construction's Hong Kong-traded shares fell 7.6 percent this year, making it the sixth-best performer on the local benchmark Hang Seng index, which has dropped 27 percent. The stock fell 2.3 percent to HK$5.97 on Aug 21. The market was closed Aug. 22 for a typhoon.
The bank, established in 1954 to fund roads, bridges, dams and other infrastructure, is China's largest mortgage and real- estate lender. It provides 23.1 percent of the nation's mortgages and about 12 percent of overall loans.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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BHP `Closely Monitoring' Guinea's Political Situation
By Rebecca Keenan
Aug. 24 (Bloomberg) -- BHP Billiton Ltd., the world's biggest mining company, is ``closely monitoring'' the West African nation of Guinea, where it is developing a $4.8 billion alumina refinery and takeover target Rio Tinto Group is planning an iron ore operation.
``The situation in Guinea is something that we are monitoring very closely,'' Marius Kloppers, chief executive officer of Melbourne-based BHP, said today on Australian Broadcasting Corp. television.
BHP is spending at least $90 billion to increase its output of metals to meet demand led by China. The president of Guinea wrote to Rio on Aug. 1, ``purporting to rescind'' a mining concession for its $6 billion Simandou iron ore project.
``It is getting harder and harder to find world-class deposits, which is why companies are going to these destinations,'' said Gavin Wendt, senior resources analyst at Fat Prophets Funds Management in Sydney. ``Governments have to realize that companies won't invest if the rules are going to get changed on them.''
BHP's project in Guinea, a partnership with New York-based Global Alumina Corp., is ``the world's most wonderful bauxite resource,'' Kloppers has said. ``There is country risk, there is political uncertainty,'' he said on June 5.
The refinery will have an initial annual production capacity of 3.3 million metric tons and will increase to 3.6 million tons within five years. A third processing line at the plant may eventually boost production to more than 5.4 million tons, Global Alumina said March 25.
Refinery Project
BHP and Global Alumina each will own a third of the refinery project, which includes an accompanying bauxite mine. Dubai Aluminum Co. will control 25 percent, and Mubadala Development Co. will hold the remainder.
Global Alumina is building the refinery to take advantage of higher prices for alumina as companies including Rio and Alcoa Inc. boost smelting capacity to keep pace with rising aluminum demand. Alumina prices more than doubled in the past five years on rising demand from China.
Alumina is the base ore used to make aluminum and is refined from bauxite, a rock primarily found in tropical areas. Guinea has one-third of the world's reserves of bauxite, according to the International Monetary Fund.
`More Uncertainty'
``These green-fields projects do carry higher risk, more uncertainty than things in the backyard,'' Kloppers said. BHP and London-based Rio both have about half of their operating assets in Australia.
Rio has rejected BHP's $143 billion takeover bid, which BHP said would allow it to deliver more metals at a faster rate to developing nations.
Guinea's government fired two officials on Aug. 5 that were associated with the office of president over the spat with Rio. The dispute ``is just one of the many vehicles for the competing factions within the Guinean political system to flex their muscles,'' Sebastian Spio-Garbrah, a New York-based analyst at the Eurasia Group, a political risk consultancy, said Aug. 5 in a note to clients.
Should there be political change, ``almost all of the country's pre-existing mining contracts will be re-examined and resource-nationalist pressures for high taxes and royalties will grow,'' Spio-Garbrah said, adding that Rio would probably retain the deposit because of concerns rival investors might have over litigation in the country.
Reviews After Boom
Guinea follows Zambia and the Democratic Republic of Congo in reviewing agreements to mine Africa's natural resources after a seven-year boom in prices.
The Simandou project has resources of 2.25 billion metric tons of iron ore and may produce as much as 170 million tons a year, Rio said in May. The project is the world's ``top undeveloped'' deposit, Rio's Chief Executive Officer Tom Albanese said at the time.
Rio is seeking to triple iron ore output to more than 600 million metric tons and benefit from record prices for the steelmaking raw material. The project will need a 750-kilometer (466-mile) rail line to link the mine with a new port facility, Sam Walsh, chief executive officer of London-based Rio's iron ore unit, said Aug. 4.
Rio owns 95 percent of the project and the World Bank's International Finance Corp. 5 percent, Walsh said. Guinea's government has the right to take 20 percent if approval for the project, expected by end-2009, is confirmed, he said.
To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net
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Aug. 24 (Bloomberg) -- BHP Billiton Ltd., the world's biggest mining company, is ``closely monitoring'' the West African nation of Guinea, where it is developing a $4.8 billion alumina refinery and takeover target Rio Tinto Group is planning an iron ore operation.
``The situation in Guinea is something that we are monitoring very closely,'' Marius Kloppers, chief executive officer of Melbourne-based BHP, said today on Australian Broadcasting Corp. television.
BHP is spending at least $90 billion to increase its output of metals to meet demand led by China. The president of Guinea wrote to Rio on Aug. 1, ``purporting to rescind'' a mining concession for its $6 billion Simandou iron ore project.
``It is getting harder and harder to find world-class deposits, which is why companies are going to these destinations,'' said Gavin Wendt, senior resources analyst at Fat Prophets Funds Management in Sydney. ``Governments have to realize that companies won't invest if the rules are going to get changed on them.''
BHP's project in Guinea, a partnership with New York-based Global Alumina Corp., is ``the world's most wonderful bauxite resource,'' Kloppers has said. ``There is country risk, there is political uncertainty,'' he said on June 5.
The refinery will have an initial annual production capacity of 3.3 million metric tons and will increase to 3.6 million tons within five years. A third processing line at the plant may eventually boost production to more than 5.4 million tons, Global Alumina said March 25.
Refinery Project
BHP and Global Alumina each will own a third of the refinery project, which includes an accompanying bauxite mine. Dubai Aluminum Co. will control 25 percent, and Mubadala Development Co. will hold the remainder.
Global Alumina is building the refinery to take advantage of higher prices for alumina as companies including Rio and Alcoa Inc. boost smelting capacity to keep pace with rising aluminum demand. Alumina prices more than doubled in the past five years on rising demand from China.
Alumina is the base ore used to make aluminum and is refined from bauxite, a rock primarily found in tropical areas. Guinea has one-third of the world's reserves of bauxite, according to the International Monetary Fund.
`More Uncertainty'
``These green-fields projects do carry higher risk, more uncertainty than things in the backyard,'' Kloppers said. BHP and London-based Rio both have about half of their operating assets in Australia.
Rio has rejected BHP's $143 billion takeover bid, which BHP said would allow it to deliver more metals at a faster rate to developing nations.
Guinea's government fired two officials on Aug. 5 that were associated with the office of president over the spat with Rio. The dispute ``is just one of the many vehicles for the competing factions within the Guinean political system to flex their muscles,'' Sebastian Spio-Garbrah, a New York-based analyst at the Eurasia Group, a political risk consultancy, said Aug. 5 in a note to clients.
Should there be political change, ``almost all of the country's pre-existing mining contracts will be re-examined and resource-nationalist pressures for high taxes and royalties will grow,'' Spio-Garbrah said, adding that Rio would probably retain the deposit because of concerns rival investors might have over litigation in the country.
Reviews After Boom
Guinea follows Zambia and the Democratic Republic of Congo in reviewing agreements to mine Africa's natural resources after a seven-year boom in prices.
The Simandou project has resources of 2.25 billion metric tons of iron ore and may produce as much as 170 million tons a year, Rio said in May. The project is the world's ``top undeveloped'' deposit, Rio's Chief Executive Officer Tom Albanese said at the time.
Rio is seeking to triple iron ore output to more than 600 million metric tons and benefit from record prices for the steelmaking raw material. The project will need a 750-kilometer (466-mile) rail line to link the mine with a new port facility, Sam Walsh, chief executive officer of London-based Rio's iron ore unit, said Aug. 4.
Rio owns 95 percent of the project and the World Bank's International Finance Corp. 5 percent, Walsh said. Guinea's government has the right to take 20 percent if approval for the project, expected by end-2009, is confirmed, he said.
To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net
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Chinalco Gets Australia's Approval to Raise Rio Stake
By Rebecca Keenan
Aug. 24 (Bloomberg) -- Aluminum Corp. of China, or Chinalco, got Australian approval to raise to 11 percent its stake in Rio Tinto Group, the target of a hostile $143 billion takeover by rival miner BHP Billiton Ltd.
``I have decided to raise no objections under Australia's foreign investment policy,'' Wayne Swan, Federal Treasurer of Australia, said today in a statement. Chinalco, in partnership with Alcoa Inc., bought a 9 percent stake in London-based Rio in February and said in March it may seek to increase that holding.
The bid by China's biggest aluminum producer may make it more difficult for Melbourne-based BHP to succeed in its all- stock takeover offer for Rio, the world's third-largest mining company. Chinalco may be seeking to increase its stake to block that deal, the Australian Financial Review reported Aug. 12.
``This will underpin the Rio share price and also create uncertainty about whether or not BHP will get its deal over the line,'' Stephen Bartrop, a resources analyst and director of Sydney-based Stock Resource, said by phone today. ``Even if Chinalco doesn't increase its stake, it shows they have the capacity to block the deal.''
BHP closed 3.1 percent higher at A$40.15 on Aug. 22 on the Australian stock exchange and Rio gained 0.7 percent to 5,179 pence on the London Stock Exchange. Rio's stock is 14 percent below the 6,000 pence a share price paid by Chinalco and Alcoa when they bought their stake.
Liu Qiang, Chinalco's company secretary, couldn't be reached on her mobile phone for comment. Rio spokeswoman Amanda Buckley also couldn't be contacted.
`Australia Welcomes'
``While Australia welcomes foreign investment in our economy, we will carefully examine national interest issues where these arise in relation to foreign sovereign ownership,'' Swan said in the statement. Chinalco will have to reapply to increase its stake beyond the level approved today, and has agreed not to seek representation on Rio's board, Swan said.
BHP Chief Executive Officer Marius Kloppers wants the Chinese company's support for his deal, which would create the world's biggest producer of aluminum and energy coal. Chinalco was a guest of BHP at the Olympic Games in Beijing this month, and Kloppers said on Aug. 18 he can't comment on individual shareholder discussions.
Swan's approval today enables Chinalco to hold as much as 14.99 percent of Rio's London shares, equivalent to 11 percent of the mining company's combined Australian and London equities. Chinalco was in talks with Alcoa Inc. to consider raising their holdings, Chairman Xiao Yaqing said March 18.
Resources Strategy
Chinalco said in February it bought the stake to diversify into other metals and as part of a strategy to secure resources. It may want to secure any alumina or aluminum assets that may be sold off if BHP buys Rio, Stock Resources' Bartrop said.
``It could do a soft deal with BHP and vote for the merger in return for securing the assets,'' he said.
Chinese companies are making more acquisitions to help feed an economy that's grown at more than 10 percent a year since 2001. Chinalco bought Peru Copper Inc. for $860 million in August last year.
Chinalco and Alcoa bought the stake in Rio in a surprise raid just five days before BHP increased its takeover offer for Rio in February. Rio rejected that offer as two low.
China's steelmakers have said a combination of BHP and Rio would exert too much power in the iron-ore market, and other analysts have speculated Alcoa still is interested in the aluminum assets Rio acquired when it took over Canada's Alcan Inc. in July, topping Alcoa's hostile offer.
Alcoa can force Chinalco to buy it out of the joint investment, New York-based Alcoa said April 25. Under the companies' Shining Prospect Pte venture, Alcoa can compel Chinalco to purchase its portion of the stake at market rates after a six-month period expires. Alcoa contributed $1.2 billion to the $14 billion investment.
-- With reporting by Chua Kong Ho in Shanghai. Editor: Mike Millard, Jim McDonald
To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net
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Aug. 24 (Bloomberg) -- Aluminum Corp. of China, or Chinalco, got Australian approval to raise to 11 percent its stake in Rio Tinto Group, the target of a hostile $143 billion takeover by rival miner BHP Billiton Ltd.
``I have decided to raise no objections under Australia's foreign investment policy,'' Wayne Swan, Federal Treasurer of Australia, said today in a statement. Chinalco, in partnership with Alcoa Inc., bought a 9 percent stake in London-based Rio in February and said in March it may seek to increase that holding.
The bid by China's biggest aluminum producer may make it more difficult for Melbourne-based BHP to succeed in its all- stock takeover offer for Rio, the world's third-largest mining company. Chinalco may be seeking to increase its stake to block that deal, the Australian Financial Review reported Aug. 12.
``This will underpin the Rio share price and also create uncertainty about whether or not BHP will get its deal over the line,'' Stephen Bartrop, a resources analyst and director of Sydney-based Stock Resource, said by phone today. ``Even if Chinalco doesn't increase its stake, it shows they have the capacity to block the deal.''
BHP closed 3.1 percent higher at A$40.15 on Aug. 22 on the Australian stock exchange and Rio gained 0.7 percent to 5,179 pence on the London Stock Exchange. Rio's stock is 14 percent below the 6,000 pence a share price paid by Chinalco and Alcoa when they bought their stake.
Liu Qiang, Chinalco's company secretary, couldn't be reached on her mobile phone for comment. Rio spokeswoman Amanda Buckley also couldn't be contacted.
`Australia Welcomes'
``While Australia welcomes foreign investment in our economy, we will carefully examine national interest issues where these arise in relation to foreign sovereign ownership,'' Swan said in the statement. Chinalco will have to reapply to increase its stake beyond the level approved today, and has agreed not to seek representation on Rio's board, Swan said.
BHP Chief Executive Officer Marius Kloppers wants the Chinese company's support for his deal, which would create the world's biggest producer of aluminum and energy coal. Chinalco was a guest of BHP at the Olympic Games in Beijing this month, and Kloppers said on Aug. 18 he can't comment on individual shareholder discussions.
Swan's approval today enables Chinalco to hold as much as 14.99 percent of Rio's London shares, equivalent to 11 percent of the mining company's combined Australian and London equities. Chinalco was in talks with Alcoa Inc. to consider raising their holdings, Chairman Xiao Yaqing said March 18.
Resources Strategy
Chinalco said in February it bought the stake to diversify into other metals and as part of a strategy to secure resources. It may want to secure any alumina or aluminum assets that may be sold off if BHP buys Rio, Stock Resources' Bartrop said.
``It could do a soft deal with BHP and vote for the merger in return for securing the assets,'' he said.
Chinese companies are making more acquisitions to help feed an economy that's grown at more than 10 percent a year since 2001. Chinalco bought Peru Copper Inc. for $860 million in August last year.
Chinalco and Alcoa bought the stake in Rio in a surprise raid just five days before BHP increased its takeover offer for Rio in February. Rio rejected that offer as two low.
China's steelmakers have said a combination of BHP and Rio would exert too much power in the iron-ore market, and other analysts have speculated Alcoa still is interested in the aluminum assets Rio acquired when it took over Canada's Alcan Inc. in July, topping Alcoa's hostile offer.
Alcoa can force Chinalco to buy it out of the joint investment, New York-based Alcoa said April 25. Under the companies' Shining Prospect Pte venture, Alcoa can compel Chinalco to purchase its portion of the stake at market rates after a six-month period expires. Alcoa contributed $1.2 billion to the $14 billion investment.
-- With reporting by Chua Kong Ho in Shanghai. Editor: Mike Millard, Jim McDonald
To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net
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John Parker Is Seen as Next Anglo Chairman, Telegraph Reports
By Sarah Thompson
Aug. 24 (Bloomberg) -- Sir John Parker is the frontrunner to replace Mark Moody-Stuart, who is due to retire as chairman of Anglo American Plc next year, the Sunday Telegraph reported, citing people at the company.
The appointment is expected to be made at the end of the year, the newspaper said, adding that headhunter Spencer Stuart is understood to be orchestrating the recruitment process.
Parker's resume includes the chairmanship of National Grid Plc and seats on the boards of the Court of the Bank of England and Carnival Plc, the Telegraph said.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net
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Aug. 24 (Bloomberg) -- Sir John Parker is the frontrunner to replace Mark Moody-Stuart, who is due to retire as chairman of Anglo American Plc next year, the Sunday Telegraph reported, citing people at the company.
The appointment is expected to be made at the end of the year, the newspaper said, adding that headhunter Spencer Stuart is understood to be orchestrating the recruitment process.
Parker's resume includes the chairmanship of National Grid Plc and seats on the boards of the Court of the Bank of England and Carnival Plc, the Telegraph said.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net
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East European Currencies: Polish Zloty Declines Against Euro
By Ewa Krukowska
Aug. 23 (Bloomberg) -- Poland's zloty declined against the euro yesterday, paring a weekly advance, on concern Europe's economic slowdown will deepen, curbing investor appetite for the region's currencies. The Czech koruna fell.
The zloty snapped three weeks of losses versus Europe's single currency, making it the third-best performer among emerging-market currencies. Industrial orders in the euro area fell the most in more than six years in June, the European Union's statistics office in Luxembourg said yesterday. The data pushed the euro lower against the dollar.
``The fall of the euro and concerns that Europe's growth prospects may worsen caused a decline in the zloty,'' said Grzegorz Maliszewski, an economist at Bank Millennium in Warsaw. This `` prompted investors to take profit on earlier gains,'' he added.
The zloty was at 3.3051 per euro in Warsaw, from 3.3339 on Aug. 15, a gain of 0.9 percent. It may ``strengthen toward 3.20 at the end of this year,'' Maliszewski forecast.
Poland's Monetary Policy Council rejected a quarter-point increase in the benchmark interest rate last month because a majority of rate setters said a strong zloty and an expected economic slowdown should help curb inflation, according to the minutes of the meeting released Aug. 21.
Policy makers will probably leave the main rate unchanged at 6 percent next week, according to a Bloomberg survey of 15 economists.
Carry Trades
Hungary's forint posted the biggest weekly advance in two months, strengthening 2.3 percent to 233.89 per euro.
The forint is supported by bets that its interest-rate advantage over the euro area will continue to attract carry trades, where investors borrow cheaply in currencies with lower rates and invest in higher-yielding assets elsewhere.
It may advance to 225 per euro by the end of the year because the central bank will probably keep rates unchanged at 8.5 percent as the European Central Bank signals lower borrowing costs to stimulate growth, said Ulrich Leuchtmann, an analyst at Commerzbank AG in Frankfurt.
The Turkish lira rose for a second week, strengthening to 1.1866 per dollar, from 1.1873 on Aug 15.
The lira is the best emerging-market performer this quarter as policy makers raised the key interest rate to 16.75 percent, the highest among major developing economies.
In other trading, the Czech koruna snapped four weeks of losses, gaining to 24.422 per euro, from 24.536 on Aug. 15. The Romanian leu rose 0.6 percent on the week, to 3.5283, from 3.5499. The Slovak koruna was little changed at 30.316 per euro.
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net;
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Aug. 23 (Bloomberg) -- Poland's zloty declined against the euro yesterday, paring a weekly advance, on concern Europe's economic slowdown will deepen, curbing investor appetite for the region's currencies. The Czech koruna fell.
The zloty snapped three weeks of losses versus Europe's single currency, making it the third-best performer among emerging-market currencies. Industrial orders in the euro area fell the most in more than six years in June, the European Union's statistics office in Luxembourg said yesterday. The data pushed the euro lower against the dollar.
``The fall of the euro and concerns that Europe's growth prospects may worsen caused a decline in the zloty,'' said Grzegorz Maliszewski, an economist at Bank Millennium in Warsaw. This `` prompted investors to take profit on earlier gains,'' he added.
The zloty was at 3.3051 per euro in Warsaw, from 3.3339 on Aug. 15, a gain of 0.9 percent. It may ``strengthen toward 3.20 at the end of this year,'' Maliszewski forecast.
Poland's Monetary Policy Council rejected a quarter-point increase in the benchmark interest rate last month because a majority of rate setters said a strong zloty and an expected economic slowdown should help curb inflation, according to the minutes of the meeting released Aug. 21.
Policy makers will probably leave the main rate unchanged at 6 percent next week, according to a Bloomberg survey of 15 economists.
Carry Trades
Hungary's forint posted the biggest weekly advance in two months, strengthening 2.3 percent to 233.89 per euro.
The forint is supported by bets that its interest-rate advantage over the euro area will continue to attract carry trades, where investors borrow cheaply in currencies with lower rates and invest in higher-yielding assets elsewhere.
It may advance to 225 per euro by the end of the year because the central bank will probably keep rates unchanged at 8.5 percent as the European Central Bank signals lower borrowing costs to stimulate growth, said Ulrich Leuchtmann, an analyst at Commerzbank AG in Frankfurt.
The Turkish lira rose for a second week, strengthening to 1.1866 per dollar, from 1.1873 on Aug 15.
The lira is the best emerging-market performer this quarter as policy makers raised the key interest rate to 16.75 percent, the highest among major developing economies.
In other trading, the Czech koruna snapped four weeks of losses, gaining to 24.422 per euro, from 24.536 on Aug. 15. The Romanian leu rose 0.6 percent on the week, to 3.5283, from 3.5499. The Slovak koruna was little changed at 30.316 per euro.
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net;
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Cathay Life Buys Taipei Building From Gala TV for $96 Million
By Chinmei Sung
Aug. 23 (Bloomberg) -- Cathay Life Insurance Co., Taiwan's biggest life insurer, bought a building in Neihu Technology Park in Taipei for NT$3 billion ($96 million), its second property investment in the island's capital this year.
Cathay Life paid NT$410,000 per ping for the headquarters of Taiwan's Gala Television Corp., the Taipei-based insurer said in a stock exchange filing through parent Cathay Financial Holding Co., Taiwan's biggest financial services company by market value, yesterday.
The value per ping was a record for the Neihu district, the Economic Daily News reported today. A ping, the standard area measure for real estate in Taiwan, equals 3.3 square meters, or about 36 square feet.
Cathay Life won a tender for 2,629 square meters of land in Taipei's downtown with a NT$2.39 billion bid last month.
To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.net.
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Aug. 23 (Bloomberg) -- Cathay Life Insurance Co., Taiwan's biggest life insurer, bought a building in Neihu Technology Park in Taipei for NT$3 billion ($96 million), its second property investment in the island's capital this year.
Cathay Life paid NT$410,000 per ping for the headquarters of Taiwan's Gala Television Corp., the Taipei-based insurer said in a stock exchange filing through parent Cathay Financial Holding Co., Taiwan's biggest financial services company by market value, yesterday.
The value per ping was a record for the Neihu district, the Economic Daily News reported today. A ping, the standard area measure for real estate in Taiwan, equals 3.3 square meters, or about 36 square feet.
Cathay Life won a tender for 2,629 square meters of land in Taipei's downtown with a NT$2.39 billion bid last month.
To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.net.
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Taishin Financial Charges Lawmaker Chou With Libel, Obstruction
By Chinmei Sung
Aug. 23 (Bloomberg) -- Taishin Financial Holding Co., whose shareholders include billionaire George Soros, has filed civil and criminal charges against legislator Chou Yi for alleging its 2005 bid for Chang Hwa Commercial Bank was illegal.
Complaints of libel and obstruction of credit were filed yesterday with the Taipei District Court, Taishin said in a stock exchange filing after market closed yesterday. The company denies all allegations made by Chou, it said in the statement.
Taishin is seeking a public apology from Chou, the Economic Daily News reported today, citing Lin Keh-Hsiao, president of the Taipei-based financial company.
Chou didn't return calls made to his mobile phone today seeking comment.
Taishin lost 15 percent of its market value and fell to record lows in five days of declines through Aug. 21 amid reports that regulators are investigating possible irregularities in financial mergers, including the takeover of Chang Hwa Commercial.
Taiwan's former President Chen Shui-bian is the subject of a corruption probe as regulators examine takeovers, seeking possible links to Chen and his family.
Taishin, Taiwan's third-worst-performing financial stock this year, rose 4.7 percent to NT$9.79 yesterday in Taipei. UBS AG cut its rating on the stock to ``sell'' from ``neutral'' on political risks and a likely failure of the Chang Hwa deal.
To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.net.
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Aug. 23 (Bloomberg) -- Taishin Financial Holding Co., whose shareholders include billionaire George Soros, has filed civil and criminal charges against legislator Chou Yi for alleging its 2005 bid for Chang Hwa Commercial Bank was illegal.
Complaints of libel and obstruction of credit were filed yesterday with the Taipei District Court, Taishin said in a stock exchange filing after market closed yesterday. The company denies all allegations made by Chou, it said in the statement.
Taishin is seeking a public apology from Chou, the Economic Daily News reported today, citing Lin Keh-Hsiao, president of the Taipei-based financial company.
Chou didn't return calls made to his mobile phone today seeking comment.
Taishin lost 15 percent of its market value and fell to record lows in five days of declines through Aug. 21 amid reports that regulators are investigating possible irregularities in financial mergers, including the takeover of Chang Hwa Commercial.
Taiwan's former President Chen Shui-bian is the subject of a corruption probe as regulators examine takeovers, seeking possible links to Chen and his family.
Taishin, Taiwan's third-worst-performing financial stock this year, rose 4.7 percent to NT$9.79 yesterday in Taipei. UBS AG cut its rating on the stock to ``sell'' from ``neutral'' on political risks and a likely failure of the Chang Hwa deal.
To contact the reporter on this story: Chinmei Sung in Taipei at csung4@bloomberg.net.
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NBA Seeks to Tap China Popularity in Tsingtao Beer Partnership
By Wing-Gar Cheng
Aug. 23 (Bloomberg) -- The National Basketball Association signed a multiyear sponsorship agreement with Tsingtao Brewery Co. in which China's largest brewer will fund sports and dance competitions related to the league in the most populous nation.
Tsingtao, China's biggest beer company by sales, will sponsor a nationwide search for an NBA China Dance Team, help finance basketball tours in the country and assist in an All- Star Game balloting system, the NBA said in a statement today. Terms weren't disclosed.
``Through Tsingtao's extensive retail network and presence in China, we will be bringing entertaining basketball experiences to fans,'' NBA Commissioner David Stern said in the statement.
The NBA last month opened two merchandise stores in downtown Beijing -- the first of as many as 1,000 planned -- to tap spiraling interest in the league fueled by the success of Houston Rockets center Yao Ming. The NBA is the most-watched sports league in China and now has 21 marketing partnerships in the country.
Tsingtao said publicity from sponsoring the Beijing Games boosted demand for its products in the first half of 2008. Basketball has as many as 300 million players in China, according to the sport's national association.
``The NBA's global appeal amongst young fans and consumers will help Tsingtao Beer further globalize its brand,'' Tsingtao Chairman Jin Zhiguo said in the statement.
To contact the reporter on this story: Wing-Gar Cheng in Beijing at wgcheng@bloomberg.net.
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Aug. 23 (Bloomberg) -- The National Basketball Association signed a multiyear sponsorship agreement with Tsingtao Brewery Co. in which China's largest brewer will fund sports and dance competitions related to the league in the most populous nation.
Tsingtao, China's biggest beer company by sales, will sponsor a nationwide search for an NBA China Dance Team, help finance basketball tours in the country and assist in an All- Star Game balloting system, the NBA said in a statement today. Terms weren't disclosed.
``Through Tsingtao's extensive retail network and presence in China, we will be bringing entertaining basketball experiences to fans,'' NBA Commissioner David Stern said in the statement.
The NBA last month opened two merchandise stores in downtown Beijing -- the first of as many as 1,000 planned -- to tap spiraling interest in the league fueled by the success of Houston Rockets center Yao Ming. The NBA is the most-watched sports league in China and now has 21 marketing partnerships in the country.
Tsingtao said publicity from sponsoring the Beijing Games boosted demand for its products in the first half of 2008. Basketball has as many as 300 million players in China, according to the sport's national association.
``The NBA's global appeal amongst young fans and consumers will help Tsingtao Beer further globalize its brand,'' Tsingtao Chairman Jin Zhiguo said in the statement.
To contact the reporter on this story: Wing-Gar Cheng in Beijing at wgcheng@bloomberg.net.
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Jim Rogers Says Oil Price Rise to Continue for Decade
By Chan Tien Hin
Aug. 23 (Bloomberg) -- Jim Rogers, who in April 2006 correctly forecast the oil price would reach $100 a barrel and gold $1,000 an ounce, said he expects oil to continue to increase over the next decade.
``Over the course of time, it's a bull market,'' the chairman of Rogers Holdings said today after an investor conference in Kuala Lumpur. While the oil price could fall to $75 or rise to $175, the market will continue to increase over the next 10 years, he said.
Crude oil futures have dropped 22 percent since touching $147.27 a barrel on July 11, the highest since trading began in 1983. Oil slid more than $6 a barrel yesterday, falling the most in percentage terms since December 2004, as the rising dollar curbed demand for commodities as an inflation hedge and BP Plc restored shipments on a Caspian Sea pipeline through the former Soviet republic of Georgia to Turkey.
Rogers said Aug. 21 in Bangkok that declines in commodity prices from record highs represented a temporary reversal in a bull market that will last for several years.
David Cohen, director of Asian forecasting at Action Economics in Singapore, said the rise in the crude oil price ``was a recognition'' of the growing demand of emerging economies like China and India.
``Those countries will continue with their development process and continue to outpace global growth,'' he said.
Dollar Gains
Soybeans, copper, platinum and crude oil have dropped from all-time highs after a rally in the dollar curbed demand for raw materials as a hedge against inflation and concerns increased that economic growth will slow. The Reuters/Jefferies CRB Index plunged 10 percent in July, the biggest drop in 28 years.
Crude-oil futures for October delivery fell $6.59, or 5.4 percent, to $114.59 a barrel on the New York Mercantile Exchange yesterday. Crude oil may rise next week because of a weakening dollar, rising tension between the U.S. and Russia, the world's second-biggest crude exporter after Saudi Arabia, and falling gasoline stockpiles.
Sixteen of 29 analysts surveyed by Bloomberg News, or 55 percent, said prices will increase through Aug. 29. Seven of the respondents, or 24 percent, said oil will be little changed and six said there would be a drop in prices. Last week, 63 percent expected prices to increase.
`` I can certainly see crude continuing above $100 a barrel for the longer term,'' Cohen said. ``The fundamentals of supply and demand should be supportive'' of prices.
To contact the reporter on this story: Chan Tien Hin in Kuala Lumpur thchan@bloomberg.net
Read more...
Aug. 23 (Bloomberg) -- Jim Rogers, who in April 2006 correctly forecast the oil price would reach $100 a barrel and gold $1,000 an ounce, said he expects oil to continue to increase over the next decade.
``Over the course of time, it's a bull market,'' the chairman of Rogers Holdings said today after an investor conference in Kuala Lumpur. While the oil price could fall to $75 or rise to $175, the market will continue to increase over the next 10 years, he said.
Crude oil futures have dropped 22 percent since touching $147.27 a barrel on July 11, the highest since trading began in 1983. Oil slid more than $6 a barrel yesterday, falling the most in percentage terms since December 2004, as the rising dollar curbed demand for commodities as an inflation hedge and BP Plc restored shipments on a Caspian Sea pipeline through the former Soviet republic of Georgia to Turkey.
Rogers said Aug. 21 in Bangkok that declines in commodity prices from record highs represented a temporary reversal in a bull market that will last for several years.
David Cohen, director of Asian forecasting at Action Economics in Singapore, said the rise in the crude oil price ``was a recognition'' of the growing demand of emerging economies like China and India.
``Those countries will continue with their development process and continue to outpace global growth,'' he said.
Dollar Gains
Soybeans, copper, platinum and crude oil have dropped from all-time highs after a rally in the dollar curbed demand for raw materials as a hedge against inflation and concerns increased that economic growth will slow. The Reuters/Jefferies CRB Index plunged 10 percent in July, the biggest drop in 28 years.
Crude-oil futures for October delivery fell $6.59, or 5.4 percent, to $114.59 a barrel on the New York Mercantile Exchange yesterday. Crude oil may rise next week because of a weakening dollar, rising tension between the U.S. and Russia, the world's second-biggest crude exporter after Saudi Arabia, and falling gasoline stockpiles.
Sixteen of 29 analysts surveyed by Bloomberg News, or 55 percent, said prices will increase through Aug. 29. Seven of the respondents, or 24 percent, said oil will be little changed and six said there would be a drop in prices. Last week, 63 percent expected prices to increase.
`` I can certainly see crude continuing above $100 a barrel for the longer term,'' Cohen said. ``The fundamentals of supply and demand should be supportive'' of prices.
To contact the reporter on this story: Chan Tien Hin in Kuala Lumpur thchan@bloomberg.net
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Canada's Dollar Posts Second Weekly Gain as Commodities Rebound
By Chris Fournier
Aug. 23 (Bloomberg) -- The Canadian dollar gained for a second consecutive week, boosted by a rebound in the price of commodities including crude oil and gold.
``It's been a good week for commodities and the Canadian dollar has certainly benefited from that,'' said Stefane Marion, assistant chief economist at National Bank Financial in Montreal. ``We've had a significant rebound in prices.''
The currency of Canada, which relies on commodities for about half its export revenue, appreciated 1.2 percent since Aug. 15 against its U.S. counterpart. It gained against all of the world's 16 most actively traded currencies in that period except for the South African rand.
The loonie, named after the aquatic bird on the one-dollar coin, rose 0.4 percent to C$1.047 per U.S. dollar yesterday in Toronto, from C$1.0592 on Aug. 15. One Canadian dollar buys 95.51 U.S. cents.
The currency surged 17 percent in 2007 as commodity prices soared. The rally stalled this year as the economy of the U.S., the nation's largest trading partner, cooled and as oil fell from the record high of $147.27 a barrel set July 11. The Canadian currency touched a year-low C$1.0728 on Aug. 12.
``I wonder if there's been a bit of sober second though when you see how far the Canadian dollar had fallen in such a short time span,'' said Eric Lascelles, chief economist at TD Securities Inc. in Toronto. ``It kicked in when oil was appreciating and failed to respond as sharply when oil was depreciating.''
Gold, Silver
Crude oil climbed $6.20 to $121.18 on Aug. 21 before erasing that advance yesterday. It still posted its first weekly price increase since the start of August. Gold, Silver and copper also gained this week.
The Reuters/Jefferies CRB Index of 19 commodities rose for four straight sessions before paring gains yesterday. The index posted its first weekly advance in three, and the biggest since the five days ended June 6.
The U.S. dollar has risen against all of the 16 other major currencies this month on speculation the U.S. economic slowdown is spreading to other industrialized countries.
Lascelles predicts the dollar will trade at C$1.099 against its U.S. counterpart by year-end as commodity markets weaken, while Marion forecasts the currency slumping to C$1.12. The loonie will slip to C$1.10 against the U.S. dollar by the end of 2009, according to the median forecast of economists surveyed by Bloomberg News.
`Not so Bearish'
June wholesale sales advanced 2 percent, Statistics Canada said Aug. 19, almost triple the median forecast of economists in a Bloomberg survey. Retail sales rose 0.5 percent, while consumer prices increased 0.3 percent from June, less than economists' 0.4 percent forecast.
``Some of the underlying fundamentals for Canada are pretty good,'' said John Rothfield, senior currency strategist at Banc of America Securities LLC in San Francisco. ``The market's not so bearish anymore on how many rate cuts the Bank of Canada's got to do.''
The loonie will approach parity by the end of the year, Rothfield forecasts. He said ``we have C$1.03 and C$1.02 next couple of quarters.''
The central bank's policy makers are scheduled to meet on Sept. 3, when they will leave the key rate unchanged at 3 percent, according to all seven economists polled by Bloomberg.
The yield on the two-year Canadian government bond rose 13 basis points, or 0.138 percentage point, to 2.94 percent. The price of the 2.75 percent security due in December 2010 decreased 27 cents to C$99.59. The 10-year bond's yield increased 5 basis points to 3.62 percent this week.
Bond Yield Outlook
The two-year bond's yield will rise to 3.09 percent by the end of this year, while the 10-year bond's yield will increase to 3.86 percent, according to the median forecasts of economists surveyed by Bloomberg News.
The yield advantage of the 10-year U.S. Treasury note compared with similar-maturity Canadian government bonds was 25 basis points, down from 36 basis points on Aug. 11. The Canadian 10-year bond yielded 36 basis points more than its U.S. counterpart on Jan. 22.
Canadian government bonds have returned 4.3 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries have returned 3.6 percent this year.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
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Aug. 23 (Bloomberg) -- The Canadian dollar gained for a second consecutive week, boosted by a rebound in the price of commodities including crude oil and gold.
``It's been a good week for commodities and the Canadian dollar has certainly benefited from that,'' said Stefane Marion, assistant chief economist at National Bank Financial in Montreal. ``We've had a significant rebound in prices.''
The currency of Canada, which relies on commodities for about half its export revenue, appreciated 1.2 percent since Aug. 15 against its U.S. counterpart. It gained against all of the world's 16 most actively traded currencies in that period except for the South African rand.
The loonie, named after the aquatic bird on the one-dollar coin, rose 0.4 percent to C$1.047 per U.S. dollar yesterday in Toronto, from C$1.0592 on Aug. 15. One Canadian dollar buys 95.51 U.S. cents.
The currency surged 17 percent in 2007 as commodity prices soared. The rally stalled this year as the economy of the U.S., the nation's largest trading partner, cooled and as oil fell from the record high of $147.27 a barrel set July 11. The Canadian currency touched a year-low C$1.0728 on Aug. 12.
``I wonder if there's been a bit of sober second though when you see how far the Canadian dollar had fallen in such a short time span,'' said Eric Lascelles, chief economist at TD Securities Inc. in Toronto. ``It kicked in when oil was appreciating and failed to respond as sharply when oil was depreciating.''
Gold, Silver
Crude oil climbed $6.20 to $121.18 on Aug. 21 before erasing that advance yesterday. It still posted its first weekly price increase since the start of August. Gold, Silver and copper also gained this week.
The Reuters/Jefferies CRB Index of 19 commodities rose for four straight sessions before paring gains yesterday. The index posted its first weekly advance in three, and the biggest since the five days ended June 6.
The U.S. dollar has risen against all of the 16 other major currencies this month on speculation the U.S. economic slowdown is spreading to other industrialized countries.
Lascelles predicts the dollar will trade at C$1.099 against its U.S. counterpart by year-end as commodity markets weaken, while Marion forecasts the currency slumping to C$1.12. The loonie will slip to C$1.10 against the U.S. dollar by the end of 2009, according to the median forecast of economists surveyed by Bloomberg News.
`Not so Bearish'
June wholesale sales advanced 2 percent, Statistics Canada said Aug. 19, almost triple the median forecast of economists in a Bloomberg survey. Retail sales rose 0.5 percent, while consumer prices increased 0.3 percent from June, less than economists' 0.4 percent forecast.
``Some of the underlying fundamentals for Canada are pretty good,'' said John Rothfield, senior currency strategist at Banc of America Securities LLC in San Francisco. ``The market's not so bearish anymore on how many rate cuts the Bank of Canada's got to do.''
The loonie will approach parity by the end of the year, Rothfield forecasts. He said ``we have C$1.03 and C$1.02 next couple of quarters.''
The central bank's policy makers are scheduled to meet on Sept. 3, when they will leave the key rate unchanged at 3 percent, according to all seven economists polled by Bloomberg.
The yield on the two-year Canadian government bond rose 13 basis points, or 0.138 percentage point, to 2.94 percent. The price of the 2.75 percent security due in December 2010 decreased 27 cents to C$99.59. The 10-year bond's yield increased 5 basis points to 3.62 percent this week.
Bond Yield Outlook
The two-year bond's yield will rise to 3.09 percent by the end of this year, while the 10-year bond's yield will increase to 3.86 percent, according to the median forecasts of economists surveyed by Bloomberg News.
The yield advantage of the 10-year U.S. Treasury note compared with similar-maturity Canadian government bonds was 25 basis points, down from 36 basis points on Aug. 11. The Canadian 10-year bond yielded 36 basis points more than its U.S. counterpart on Jan. 22.
Canadian government bonds have returned 4.3 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries have returned 3.6 percent this year.
To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net
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Weekly Review and Outlook Dollar Pullback's Ended Before It's Begun?
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