Merry Christmas, and a Happy New Year 2009

Merry Christmas, and a Happy New Year 2009

beritabiz.blogspot.com is now closed for the Christmas and New Year period, and we'll be back on January 5.

We'd like to extend our thanks for your support this past year, and wish you all the best for Christmas and New Year.



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Thailand, Facing Economic Shrinkage, to Lift Spending

By Haslinda Amin and Daniel Ten Kate

Dec. 24 (Bloomberg) -- Thailand plans to increase domestic spending to boost economic growth as exports fall and tourism recovers from anti-government protests that shut down Bangkok’s airports last month, Finance Minister Korn Chatikavanij said.

“We are intending to kill two birds with one stone,” Korn, a former chairman of JPMorgan Chase & Co.’s Thailand unit, said in an interview with Bloomberg Television today. “On the one hand, we are helping reduce the cost of living pain for the rural poor, on the other hand boosting the domestic economy through domestic consumption as a result of putting money in their hands in the most efficient way.”

The added spending may cause Thailand to run a budget deficit of as much as 400 billion baht ($11.6 billion) in fiscal 2010, Korn said. That compares with a proposed shortfall of 350 billion baht on the 1.84-trillion-baht budget for the fiscal year ending Sept. 30, 2009. Thailand’s public debt to gross domestic product ratio is “relatively low” at 35 percent, he said, allowing room for fiscal stimulus.

Korn’s Democrat party, which last held power in 2001, inherits an economy set to shrink this quarter for the first time in nine years. A global recession and an eight-day airport blockade have curbed exports and tourism, which together make up more than 80 percent of Thailand’s gross domestic product.

Political Uncertainty

Prime Minister Abhisit Vejjajiva, elected by parliament last week as the third premier in four months, has pledged to boost expenditure to spur growth. Korn, his University of Oxford classmate, said yesterday the government may spend a further 80 billion baht on top of the 100 billion baht in additional funds for the current fiscal year approved by the former government last month.

“Thailand is facing wars on both sides as the global economic crisis hurts exports and political uncertainties put pressure on domestic demand,” said Somprawin Manprasert, an economist at Tisco Securities Ltd. in Bangkok. “There is nothing much we can do about exports, but what we can do is boost local consumption.”

Thailand’s exports in November shrunk for the first time in more than six years, falling 18.6 percent in the largest monthly contraction since at least 1992, according to data compiled by Bloomberg. The government expects 2.5 million fewer tourists this quarter and next because of the airport blockade, a loss of 100 billion baht in visitor revenue.

“There is sufficient room for the kind of fiscal stimulus that we believe is necessary to prop up the economy and to also create the jobs that will be necessary in the face of the downturn that we expect next year,” Korn said.

Wooing Rural Voters

Abhisit, whose party supported the protesters who closed down Bangkok’s airports, was elected by lawmakers on Dec. 15 with the help of defectors from the former ruling party, which was dissolved by a court on Dec. 2 for vote buying. He faces deep divisions between the urban middle class that supports him and rural farmers who have backed former Prime Minister Thaksin Shinawatra and his two successors.

“In terms of tenure, we have three years left on the current mandate,” Korn said. “We need to create the kind of political stability that is necessary to force a return of investor and business confidence.”

A year ago, Thaksin’s allies in the now-disbanded People Power Party won the first election since he was ousted in a 2006 coup, taking 75 percent of constituency seats in the northeast, the country’s poorest region. It won rural votes by slashing health-care costs, handing out low-cost loans and propping up crop prices, policies that Abhisit has pledged to continue.

Abhisit’s Challenge

“Abhisit has his own challenges because he needs to satisfy two very different groups of people if he wants to succeed,” said Carl Rajoo, an economist at Forecast Singapore Pte. “We are waiting to see how he’s going to achieve that, how he’s going to balance that.”

Supporters of the ousted government plan to rally on Dec. 28, one day before Abhisit is scheduled to unveil his policies to Parliament. The cabinet may hold a special meeting immediately afterward to approve an economic stimulus package, Abhisit said yesterday.

To contact the reporter on this story: Haslinda Amin in Singapore at hamin1@bloomberg.net; To contact the reporter on this story: Daniel Ten Kate in Bangkok at dtenkate@bloomberg.net

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Philippine Imports Fall as Electronics Orders Slump

By Francisco Alcuaz Jr.

Dec. 24 (Bloomberg) -- Philippine imports fell for the first time in 17 months as demand waned for raw materials used by electronics exporters amid a global recession.

Overseas purchases slid 11.1 percent to $4.58 billion in October after climbing 2.5 percent in September, the National Statistics Office said in Manila today. Exports dropped 14.9 percent in October, the most in seven years, the agency said earlier this month.

The World Bank expects global trade to shrink in 2009 for the first time in more than 25 years, threatening export-reliant economies in Asia. The Philippines last week cut interest rates to support growth as the global slump weakened demand for Intel Corp. computer chips and other electronics goods, which account for two-thirds of the nation’s overseas sales.

“The Philippine story is about a lack of diversification in its export basket, an over-reliance on electronics, that’s why imports and re-exports are hit simultaneously,” said Radhika Rao, an economist at Ideaglobal Ltd. in Singapore. “These products are discretionary and in this scenario of recession, consumers tend to cut back.”

Electronic chip sales will fall 2.2 percent this year, the first decline since 2001, and another 5.6 percent next year on lower computer and mobile-phone sales, according to the San Jose, California-based Semiconductor Industry Association.

The decline in imports was the first since May 2007 and the sharpest in five years, today’s report showed. Electronics imports, most of them components and raw materials used to make goods that are exported, fell 30 percent to $1.63 billion. Raw material purchases decreased 17 percent to $1.71 billion.

Capital goods purchases declined 11 percent to $1.44 billion. Imports of crude oil and other mineral fuels and lubricants fell 5 percent to $904 million. Consumer goods purchases increased 3.9 percent to $467 million.

The trade deficit widened to $606 million in October from $491 million a year earlier. For the first 10 months, the shortfall was $7.03 billion, compared with $3.41 billion a year earlier.

To contact the reporter on this story: Francisco Alcuaz Jr. in Manila at falcuaz@bloomberg.net

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Japan’s Manufacturer Confidence Slumps Most on Record

By Toru Fujioka

Dec. 24 (Bloomberg) -- Confidence among Japanese manufacturers fell the most on record as the world’s second- largest economy slid deeper into a recession.

Sentiment among large manufacturers was minus 44.5 points this quarter compared with minus 10 points three months earlier, a survey by the Cabinet Office and Finance Ministry showed today. A negative number means pessimists outnumber optimists. The government began compiling the report in 2004.

Japan’s economy is “worsening,” the government said this week, after a report showed exports plunged the most on record in November. Toyota Motor Corp., the world’s second-largest automaker, expects its first operating loss in 71 years in the 12 months ending March 31, the company said on Dec. 22.

“The economy is a disaster,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo. “The outlook remains grim.”

The yen traded at 90.85 per dollar as of 9:01 a.m. in Tokyo from 90.86 before the report was published and 87.14 on Dec. 17, the strongest since 1995. The Nikkei 225 Stock Average opened 1.1 percent lower, extending the year’s decline to 44 percent.

The Bank of Japan last week cut its key interest rate to 0.1 percent to stave off a prolonged downturn and said it would start buying corporate debt for the first time to aid businesses struggling to get funding amid a credit crunch.

Tankan Survey

Today’s report comes a week after the central bank’s Tankan survey, Japan’s most closely watched gauge of business confidence, showed sentiment among large manufacturers dropped the most since the first oil shock in 1975. Unlike the Tankan, which measures the level of confidence, today’s survey examines the degree of change in sentiment from the previous quarter.

The government collected responses until Nov. 25. The Tankan was compiled based on feedback as recent as Dec. 12, offering a more current assessment of business sentiment.

The yen’s 23 percent gain this year is adding to the woes of Toyota, Honda Motor Corp. and Sony Corp, which are cutting output and firing workers as demand weakens and profits dwindle. Industrial production probably fell 6.8 percent in November from a month earlier, according to the median estimate of 36 economists surveyed by Bloomberg News.

The economy shrank in the past two quarters, sending Japan into its first recession since 2001, and the government forecasts zero growth next fiscal year.

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

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AGL Agrees to Buy Sydney Gas to Add Coal Seam Output

By Madelene Pearson

Dec. 24 (Bloomberg) -- AGL Energy Ltd., Australia’s biggest electricity and gas retailer, agreed to buy Sydney Gas Ltd. for A$171 million ($116 million) to expand coal seam gas output.

AGL Energy offered 42.5 cents a share in cash for Sydney Gas, the Australian coal seam gas producer partly owned by Babcock & Brown Ltd., Sydney-based AGL said today in a statement. That’s 55 percent more than Sydney Gas’ last traded price of 27.5 cents

The deal adds to AGL’s expansion into coal-seam gas after it this month agreed to pay A$370 million for an exploration venture in New South Wales state. BG Group Plc, Malaysia’s Petroliam Nasional Bhd. and ConocoPhillips are among international companies that have invested in Australian coal-seam gas assets this year.

“AGL has really come of age as an upstream player and it makes good sense to diversify and broaden its base the way it is,” Peter Arden, an analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co., said by phone from Melbourne. “It’s a pretty generous bid. I would doubt very much if there’s anyone else out there now that is going to rival that bid.”

AGL fell 1.5 percent to A$15.45 on the Australian stock exchange when last traded. Both stocks were halted from trading yesterday ahead of the announcement.

AGL has entered into pre-bid agreements with Sydney Gas’ two largest shareholders for about 20 percent of Sydney Gas stock, it said. The board of Sydney Gas will unanimously recommend the offer in the absence of a higher bid. Babcock & Brown will also accept the offer, AGL said.

More Reserves

AGL, which uses gas for power generation and retail sales, has a target to increase its ownership of gas reserves to 2,000 petajoules, or about 1.9 trillion cubic feet, for protection against higher prices. It agreed to buy the PEL 285 license in the Gloucester Basin from AJ Lucas Group Ltd. and Molopo Australia Ltd. on Dec. 17.

“Combining this acquisition with our recent purchase of the Gloucester Basin acreage will give us the opportunity to further increase our ownership of gas reserves in our core New South Wales market,” Michael Fraser, AGL managing director said in the statement to the exchange.

Sydney Gas was established in 1987 and was the first commercial producer of natural gas in New South Wales state, according to its Web site. It formed a joint venture with AGL in 2005 to develop the state’s coal seam natural gas.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net

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Gas Producers’ Club, Based on OPEC, Will Have Doha Headquarters

By Lucian Kim and Stephen Bierman

Dec. 24 (Bloomberg) -- Russia, Iran and other countries controlling the world’s biggest natural-gas reserves agreed to coordinate forecasts, investments and relations with consumers to defend their market interests amid volatile energy prices.

The 15-member Gas Exporting Countries Forum, which adopted a charter in Moscow yesterday, will locate the headquarters of its new secretariat in Doha, Qatar, the biggest source for world liquefied natural gas shipments. LNG may eventually form the basis for more global gas trading.

Western consumer countries have warned against a “gas OPEC” modeled after the Organization of Petroleum Exporting Countries. Producers will face a challenge shaping the market, where 70 percent of gas is still sent by pipeline to regional consumers and no global benchmark price exists on an exchange.

“This is a significant event for the market,” Russian President Dmitry Medvedev told reporters after the meeting. “Global stability, energy security and the balance of interests between exporters, transit states and consumers depend on the agreed position of the exporting countries.”

The charter transforms it from a loose, consultative body into a formal organization. Russia, which spearheaded the drive for closer coordination, says gas producers won’t be able to copy OPEC and need a forum similar to the International Energy Agency, which represents consumer nations.

“A new organization was born today,” Russian Energy Minister Sergei Shmatko said. “We didn’t limit ourselves in any of the tasks facing gas producers. We agreed that nothing would be off-limits.” The group will choose a secretary-general at its meeting next year, Shmatko said.

Regional Market

Unlike oil, which is traded internationally and has global exchange-based prices, gas is sold regionally, frequently under long-term, private contracts where pricing is more opaque. Where exchange-based prices exist, they reflect local supply and demand fluctuations.

On the New York Mercantile Exchange, U.S. natural gas futures fell to $5.294 per million British thermal units on Dec. 22, the lowest settlement since September 2006, before rallying yesterday. The decline reflects the drop in crude oil, which has fallen about 60 percent this year.

“Coordination will prevent unnecessary and harmful competition in the market that may be to the detriment of exports,” Iranian Oil Minister Gholamhossein Nozari told the forum. Gas market participants should be able to “adjust and revise gas export prices whenever necessary.” Yesterday’s summit in Moscow was postponed several times amid reports that member nations disagreed over the group’s future direction.

Oil Volatility

OPEC itself failed to prevent oil rising to a record $147.27 a barrel in July, driven by demand from China and other Asian economies and speculative purchases. The oil producers’ group has also been unable to stem the plunge in oil to below $40 this week amid recession in the U.S. and Europe, even with an announced cut of 4.2 million barrels a day in production from its September levels.

Venezuelan Energy Minister Rafael Ramirez told the Moscow meeting that gas producers should adopt the “same principles” as OPEC. “We need mechanisms and tools that will let us better interact between gas exporters to avoid competition,” he said.

Russia, which supplies a quarter of Europe’s gas, has argued that the gas market can’t be compared with the spot trades and mobility of the global oil market. The world’s largest crude producer outside of OPEC, Russia has been reluctant to coordinate supply cuts with other countries.

Doha Selection

“I believe exporters can find the balance between competition and the harmonization of their energy policies,” Shmatko said. “Our most important task is the synchronization of our investment plans so that oversupply doesn’t emerge in one part of the world that would put pressure on prices.”

Doha beat competition from three other cities to host the forum’s permanent secretariat. St. Petersburg, Algiers and Tehran were also under consideration.

OPEC was founded in 1960 by Venezuela, Iran, Iraq, Kuwait and Saudi Arabia. The Gas Exporting Countries Forum held its first meeting in Tehran in 2001.

Forum members include Algeria, Bolivia, Brunei, Egypt, Equatorial Guinea, Indonesia, Iran, Libya, Malaysia, Nigeria, Qatar, Russia, Trinidad & Tobago, the United Arab Emirates and Venezuela. Norway and Kazakhstan have observer status.

Largest Producer

Russia is the world’s largest natural gas producer, with output of 607 billion cubic meters in 2007, according to BP Plc statistics. Iran produced 112 billion, Algeria 83 billion and Qatar 60 billion that year. Production in the U.S. in 2007 was 546 billion cubic metres, and in Canada 184 billion.

Russia also has the largest proven natural gas reserves in the world, with 44.7 trillion cubic meters at the end of 2007, followed by Iran with 27.8 trillion and Qatar with 25.6 trillion.

The meeting coincides with a dispute between Russia and Ukraine over gas supplies. Russia has told its neighbor, which ships about four-fifths of the nation’s gas exports to Europe via its pipelines, that it will cut deliveries in the event of a failure to be paid for energy shipments in 2008.

To contact the reporters on this story: Lucian Kim in Moscow at lkim3@bloomberg.net; Stephen Bierman in Moscow at sbierman1@bloomberg.net

By Lucian Kim and Stephen Bierman

Dec. 24 (Bloomberg) -- Russia, Iran and other countries controlling the world’s biggest natural-gas reserves agreed to coordinate forecasts, investments and relations with consumers to defend their market interests amid volatile energy prices.

The 15-member Gas Exporting Countries Forum, which adopted a charter in Moscow yesterday, will locate the headquarters of its new secretariat in Doha, Qatar, the biggest source for world liquefied natural gas shipments. LNG may eventually form the basis for more global gas trading.

Western consumer countries have warned against a “gas OPEC” modeled after the Organization of Petroleum Exporting Countries. Producers will face a challenge shaping the market, where 70 percent of gas is still sent by pipeline to regional consumers and no global benchmark price exists on an exchange.

“This is a significant event for the market,” Russian President Dmitry Medvedev told reporters after the meeting. “Global stability, energy security and the balance of interests between exporters, transit states and consumers depend on the agreed position of the exporting countries.”

The charter transforms it from a loose, consultative body into a formal organization. Russia, which spearheaded the drive for closer coordination, says gas producers won’t be able to copy OPEC and need a forum similar to the International Energy Agency, which represents consumer nations.

“A new organization was born today,” Russian Energy Minister Sergei Shmatko said. “We didn’t limit ourselves in any of the tasks facing gas producers. We agreed that nothing would be off-limits.” The group will choose a secretary-general at its meeting next year, Shmatko said.

Regional Market

Unlike oil, which is traded internationally and has global exchange-based prices, gas is sold regionally, frequently under long-term, private contracts where pricing is more opaque. Where exchange-based prices exist, they reflect local supply and demand fluctuations.

On the New York Mercantile Exchange, U.S. natural gas futures fell to $5.294 per million British thermal units on Dec. 22, the lowest settlement since September 2006, before rallying yesterday. The decline reflects the drop in crude oil, which has fallen about 60 percent this year.

“Coordination will prevent unnecessary and harmful competition in the market that may be to the detriment of exports,” Iranian Oil Minister Gholamhossein Nozari told the forum. Gas market participants should be able to “adjust and revise gas export prices whenever necessary.” Yesterday’s summit in Moscow was postponed several times amid reports that member nations disagreed over the group’s future direction.

Oil Volatility

OPEC itself failed to prevent oil rising to a record $147.27 a barrel in July, driven by demand from China and other Asian economies and speculative purchases. The oil producers’ group has also been unable to stem the plunge in oil to below $40 this week amid recession in the U.S. and Europe, even with an announced cut of 4.2 million barrels a day in production from its September levels.

Venezuelan Energy Minister Rafael Ramirez told the Moscow meeting that gas producers should adopt the “same principles” as OPEC. “We need mechanisms and tools that will let us better interact between gas exporters to avoid competition,” he said.

Russia, which supplies a quarter of Europe’s gas, has argued that the gas market can’t be compared with the spot trades and mobility of the global oil market. The world’s largest crude producer outside of OPEC, Russia has been reluctant to coordinate supply cuts with other countries.

Doha Selection

“I believe exporters can find the balance between competition and the harmonization of their energy policies,” Shmatko said. “Our most important task is the synchronization of our investment plans so that oversupply doesn’t emerge in one part of the world that would put pressure on prices.”

Doha beat competition from three other cities to host the forum’s permanent secretariat. St. Petersburg, Algiers and Tehran were also under consideration.

OPEC was founded in 1960 by Venezuela, Iran, Iraq, Kuwait and Saudi Arabia. The Gas Exporting Countries Forum held its first meeting in Tehran in 2001.

Forum members include Algeria, Bolivia, Brunei, Egypt, Equatorial Guinea, Indonesia, Iran, Libya, Malaysia, Nigeria, Qatar, Russia, Trinidad & Tobago, the United Arab Emirates and Venezuela. Norway and Kazakhstan have observer status.

Largest Producer

Russia is the world’s largest natural gas producer, with output of 607 billion cubic meters in 2007, according to BP Plc statistics. Iran produced 112 billion, Algeria 83 billion and Qatar 60 billion that year. Production in the U.S. in 2007 was 546 billion cubic metres, and in Canada 184 billion.

Russia also has the largest proven natural gas reserves in the world, with 44.7 trillion cubic meters at the end of 2007, followed by Iran with 27.8 trillion and Qatar with 25.6 trillion.

The meeting coincides with a dispute between Russia and Ukraine over gas supplies. Russia has told its neighbor, which ships about four-fifths of the nation’s gas exports to Europe via its pipelines, that it will cut deliveries in the event of a failure to be paid for energy shipments in 2008.

To contact the reporters on this story: Lucian Kim in Moscow at lkim3@bloomberg.net; Stephen Bierman in Moscow at sbierman1@bloomberg.net

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Linc Shares Slump After A$1.5 Billion Asset Sale Is Delayed

By Jason Scott

Dec. 24 (Bloomberg) -- Linc Energy Ltd., an Australian producer of cleaner-burning fuels, fell to a seven-month low after saying Xinwen Mining Group Ltd. may not be able to pay a deposit for its coal assets next week.

Linc fell as much as 14 percent, the most among stocks traded on the benchmark S&P/ASX 200 Index in Sydney, and was down 6.1 percent at 11:19 a.m. to A$1.63 a share.

The worst global financial crisis since the Great Depression has reduced the pool of credit available to companies to fund acquisitions. Linc said after the market closed yesterday that the sale of its two Teresa coal-exploration permits in Queensland to Xinwen Mining Group Ltd. may be delayed, and the Brisbane- based company may invite “non-Chinese groups” to bid for the assets.

In August, Linc said government-controlled Xinwen had agreed to buy the assets for A$1.5 billion ($1 billion).

Xinwen, among Chinese companies tapping gas from unconventional sources such as coal, remains a contender for the permits, and a sale could still be completed within eight weeks, Linc Chief Executive Officer Peter Bond said in last night’s statement.

To contact the reporter on this story: Jason Scott in Perth at Jscott14@bloomberg.net

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Oil Rises in Light Trading After Dropping on Demand Concern

By Mark Shenk

Dec. 24 (Bloomberg) -- Crude oil rose in light holiday trading after dropping yesterday on signs that the economy of the U.S., the world’s biggest oil consumer, may contract further.

Crude declined as much as 5.3 percent yesterday, extending its slide from a record $147.27 a barrel in July. The median resale price of homes fell 13 percent, probably the largest drop since the Great Depression, National Association of Realtors Chief Economist Lawrence Yun said in Washington.

“The primary factor that’s been guiding the market is concern about demand,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. “We are searching for where the bottom to this record slide is.”

Oil for February delivery rose 24 cents, or 0.6 percent, to $39.22 a barrel at 10:16 a.m. Sydney time on the New York Mercantile Exchange. Prices are down 59 percent this year. Yesterday, oil fell 93 cents, or 2.3 percent, to close at $38.98 a barrel.

Oil for delivery in February 2010 was more than $14 higher than the current month yesterday, a market condition known as contango. The pattern encourages companies to increase supplies.

U.S. crude-oil stockpiles probably increased 500,000 barrels in the week ended Dec. 19 from 321.3 million the week before, according to the median of responses in a Bloomberg News survey before an Energy Department report today. It would be the 12th gain in 13 weeks, also an indication that demand is falling.

‘Strong Contango’

“The strong contango is providing a strong incentive for people to put oil in storage and discourages financial investors that had such a big role in the run-up in prices,” said Guy Caruso, senior adviser with the Energy and National Security programs at the Center for Strategic and International Studies in Washington.

The Energy Department is scheduled to release its next inventory report at 10:35 a.m. today in Washington.

“We are seeing the reverse of what happened in the first half of 2008, when prices surged,” said Caruso, who was administrator of the Energy Information Administration, the statistical arm of the Energy Department, from 2002 until September.

Sales of new homes in the U.S. fell 2.9 percent last month to a 17-year low of 407,000, the Commerce Department said yesterday in Washington. The median sales price declined 11.5 percent from a year earlier to $220,400.

“I doubt there will be much strength in the energy markets as long as people are worried about losing their jobs and paying their bills,” McGillian said.

Shrinking Economy

The U.S. economy shrank in the third quarter at a 0.5 percent annual rate, the worst since 2001, according to revised figures from the Commerce Department.

The Gross Domestic Product numbers “are in line with expectations,” said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York. “Now the question is how long it will be before the economy recovers or at least stops its decline.”

Prices may be more volatile this week because many traders are taking time off for the Christmas holidays.

“Volume is declining by the day,” Barakat said.

Volume in electronic trading on the exchange was 232,352 contracts, as of 3:13 p.m. in New York yesterday. Volume totaled 287,570 contracts Dec. 22, down 42 percent from the average over the past 3 months. Open interest Dec. 22 was 1.14 million contracts. The exchange has a one-day delay in reporting open interest and full volume data.

OPEC Response

The Organization of Petroleum Exporting Countries announced a record production cut last week in response to collapsing demand as a result of the economic slowdown. The group may hold an emergency meeting before its next scheduled gathering in March, Venezuelan Energy Minister Rafael Ramirez said yesterday.

Ramirez, who was attending a summit of gas-producing nations in Moscow, didn’t say exactly where or when such an oil meeting might take place.

OPEC President Chakib Khelil said four days ago that OPEC may meet in Kuwait City on Jan. 19 to discuss further production cuts, adding that OPEC will continue to reduce supply as demand falls until an “equilibrium” is reached.

Brent crude oil for February settlement declined $1.09, or 2.6 percent, to $40.36 a barrel on London’s ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

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Dongkuk, Hynix, PCCW, Sime Darby: Asia Ex-Japan Equity Preview

By Anuchit Nguyen

Dec. 24 (Bloomberg) -- The following companies may have unusual price changes in Asia trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

China Mengniu Dairy Co. (2319 HK): The nation’s biggest liquid-milk producer expects to post a loss of about 900 million yuan ($131 million) for this year because of the melamine- tainting scandal. The tainted-milk scandal reduced sales, forced the company to write off inventories and increased raw-milk disposal and sales-promotional costs, Mengniu said. China Mengniu fell 26 cents, or 2.6 percent, to HK$9.68.

China Yurun Food Group Ltd. (1068 HK): The country’s biggest hog processor will buy the 49 percent it doesn’t already own in hog slaughtering unit Hunan Huihong Food Co. for 159.3 million yuan ($23 million). The company is buying the stake in the Hunan Huihong from businesswoman Lin Qinghong, according to Yurun’s statement. China Yurun dropped 45 cents, or 4.9 percent, to HK$8.80.

Dongkuk Steel Mill Co. (001230 KS): South Korea’s third- largest steelmaker will invest 469.1 billion won ($350 million) to expand production capacity. The investment will be made through September 2012 at its plant in Incheon, 40 kilometers (25 miles) west of Seoul, to modernize ageing facilities, Seoul- based Dongkuk said in a regulatory filing. Dongkuk dropped 700 won, or 2.6 percent, to 26,750.

Fortescue Metals Group Ltd. (FMG AU): Australia’s third- biggest iron ore producer completed a second ship loader at its port in Western Australia and will increase output next year. The second ship loader will boost capacity to 55 million metric tons a year, the Perth-based company said in a statement to the Australian stock exchange. Fortescue jumped 9.5 cents, or 5.5 percent, to A$1.81.

Guangdong Investment Ltd. (270 HK): The operator of power and water businesses in Guangdong, the Chinese province with the largest economy, will receive a 652 million yuan ($95 million) subsidy over four years from the government as part of a water- supply agreement. Guangdong Investment will receive the subsidy as compensation for not obtaining an increased tariff on water it sells to Hong Kong, according to the company’s filing. The stock lost 9 cents, or 2.9 percent, to HK$3.03.

Hynix Semiconductor Inc. (000660 KS): The world’s second- largest maker of computer memory chips will receive 800 billion won ($595 million) in financial support from controlling creditor banks because of mounting losses. Controlling shareholders will provide 500 billion won in fresh loans and extend the maturity of Hynix’s debt until the end of next year, main creditor Korea Exchange Bank said in a statement. Hynix declined 510 won, or 6.2 percent, to 7,700.

Kowloon Development Co. (34 HK): The Hong Kong and Macau developer run by billionaire Or Wai Sheun will terminate an asset management venture with China Orient Asset Management Corp. because of the global financial crisis. Kowloon Development and China Orient formed the venture to manage non- performing assets, Kowloon Development said last year. Kowloon Development dropped 12 cents, or 4.1 percent, to HK$2.81.

Linc Energy Ltd. (LNC AU): The Australian producer of cleaner-burning fuels may invite “non-Chinese groups” to bid for its coal assets in Queensland, as Xinwen Mining Group Ltd. may be unable to pay a deposit by next week. The stock dropped 16.5 cents, or 8.7 percent, to A$1.735.

Malaysia Airports Holdings Bhd. (MAHB MK): The operator of 39 civilian airports in the country won approval for a financial restructuring plan that will let it repay debt owed to the government. Malaysia Airports will pay the government 1.01 billion ringgit ($291 million), of which 508 million ringgit will be in cash, it said in an e-mailed statement. The stock declined 4 sen, or 1.8 percent, to 2.19 ringgit.

PCCW Ltd. (8 HK): The city’s biggest phone company received the Hong Kong government’s approval for a HK$14.9 billion ($1.9 billion) proposal led by Chairman Richard Li to buy out the company. The proposed buyout of PCCW won’t reduce competition, the Office of the Telecommunications Authority said in an e- mailed statement. The shares fell 3.3 percent to HK$3.23.

PT Bakrie Telecom (BTEL IJ): The Indonesian mobile-phone operator said it won a government tender yesterday to offer long-distance call services using its own network. Bakrie Telecom fell 2 rupiah, or 3.9 percent, to 50.

PT Bumi Resources (BUMI IJ): Asia’s biggest exporter of power-station coal canceled a plan to use a $75 million loan from Credit Suisse Group to buy back shares. Bumi will use the funds for “general purposes,” it said in a statement. Bumi rose 20 rupiah, or 2.2 percent, to 930.

Sinopec Shanghai Petrochemical Co. (338 HK): The nation’s biggest ethylene maker expects to post a “substantial loss” this year on a sharp decline in product prices as the global recession cuts demand. Product prices have dropped more than 60 percent from their highs this year, the company said in a statement to Hong Kong’s stock exchange. Sinopec Shanghai fell 9 cents, or 4.3 percent, to HK$2.00.

Sime Darby Bhd. (SIME MK): Sime Darby, a Malaysian property and palm-oil company, said it’s seeking to build a low-cost- carrier airport in the country with AirAsia Bhd., Southeast Asia’s largest budget airline. The two companies “have jointly expressed an interest to the government” in building and operating a private airport on Sime Darby-owned land in the southern state of Negeri Sembilan, Kuala Lumpur-based Sime Darby said in a statement. Sime Darby slipped 10 sen, or 1.8 percent, to 5.40 ringgit.

AirAsia (AIRA MK) declined 0.5 sen, or 0.5 percent, to 92.5 sen.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net.

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Japan Stocks Drop on U.S. Housing Slump; Toyota Poised to Fall

By Masaki Kondo and Shani Raja

Dec. 24 (Bloomberg) -- Japan’s stocks sank as plunging home prices in the U.S. stoked investor concern that the nation’s recession will deepen and curb demand for local exports.

Sony Corp., which gets a quarter of its sales from the U.S., lost 1.1 percent. Toyota Motor Corp., Japan’s biggest automaker, fell 3.5, after forecasting its first operating loss in 71 years. Denso Corp., partly owned by Toyota, was poised to retreat after reducing its earnings estimate by 90 percent.

The Nikkei 225 Stock Average retreated 131.26, or 1.5 percent, to 8,592.52 as of 9:15 a.m. in Tokyo. The broader Topix index fell 10.28, or 1.2 percent, to 838.44. Stocks in Japan resume trading today after a holiday yesterday.

“All the macro indicators are pointing to slowing growth globally,” said Sean Fenton, who manages about $324 million at Tribeca Investment Partners in Sydney. “Most of the developed world is in recession and that’s destroying a lot of demand.”

Writedowns and credit losses at financial companies have swelled to $1 trillion globally as falling home prices in the U.S. reduce the value of securities backed by loan and mortgage payments. The bleak economic outlook discourages American consumers from buying Asian-made cars and electronics, which forced Toyota to revise its profit projection to a loss for this business year.

The median resale price of U.S. single-family houses dropped 13 percent last month, the most since the tally started in 1968 and likely the biggest since the 1930s, the National Association of Realtors said yesterday. A separate report from the Commerce Department showed sales of new homes fell to a 17- year low in November.

On Dec. 22, Toyota said it will post a 150 billion yen ($1.65 billion) operating loss in the year to March 31, reversing its forecast for 600 billion-yen profit. The company’s expected loss may prompt President Katsuaki Watanabe to step down next year, people familiar with the matter said.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Shani Raja in Sydney at sraja4@bloomberg.net.

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Merrill, Wachovia, National City Replaced in S&P 500

By Eric Martin

Dec. 23 (Bloomberg) -- Merrill Lynch & Co., Wachovia Corp. and National City Corp. will be dropped from the Standard & Poor’s 500 Index after the credit contraction wiped out more than three quarters of their value, forcing them into takeovers.

The companies will be replaced by Scana Corp., South Carolina’s largest utility owner, Owens-Illinois Inc., the world’s largest maker of glass containers, and FLIR Systems Inc., the maker of night-vision cameras used by U.S. troops, S&P said in a statement posted on its Web site. The change in the benchmark index for U.S. stocks will occur after the close of trading on Dec. 31, S&P said.

New York-based Merrill, the world’s largest securities brokerage, agreed to sell itself to Bank of America Corp. in September for $50 billion after a crisis of confidence sent the stock plunging 36 percent in a single week. Wells Fargo & Co. outbid Citigroup Inc. in October to buy Wachovia, the sixth- largest U.S. lender, which lost or wrote down $96.5 billion from loans to the riskiest borrowers, more than any other firm.

PNC Financial Services Group Inc. agreed to buy National City in October and to sell the U.S. Treasury $7.7 billion in preferred shares and $1.1 billion in warrants. National City, ranked among the top 10 subprime lenders in 2006, has lost more than $3 billion in the past five quarters.

The additions of Scana, Owens-Illinois and FLIR Systems may support their stock prices as money managers tracking the S&P 500 buy shares. In after hours trading Owens-Illinois climbed 6.1 percent to $23.60, FLIR Systems rose 3.3 percent to $27.66 and Scana was unchanged at $33.98 at 6:05 p.m. New York time.

Merrill fell 80 percent to $10.88 in 2008, while Wachovia dropped 86 percent to $5.30 and National City lost 90 percent to $1.65.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

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Exar, Micron, Owens-Illinois, Wal-Mart: U.S. Equity Preview

By Lu Wang

Dec. 23 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading tomorrow. Stock symbols are in parentheses, and share prices are as of 5:30 p.m. in New York, unless otherwise specified.

Standard & Poor’s 500 Index futures expiring in March declined 12.70, or 1.5 percent, to 858.60. Dow Jones Industrial Average futures fell 158, or 1.9 percent, to 8,388. Nasdaq-100 Index futures slipped 12.50, or 1 percent, to 1,184.50.

Exar Corp. (EXAR US) fell 35 cents, or 5.5 percent, to $6 in trading after the official close of exchanges. The semiconductor component supplier lowered its sales forecast, predicting revenue of as much as $27 million in the fiscal third quarter.

Owens-Illinois Inc. (OI US) rose 99 cents, or 4.5 percent, to $23.23. The world’s largest maker of glass containers will replace Wachovia Corp. (WB US) in the Standard & Poor’s 500 Index, S&P said in a statement.

Scana Corp. (SCG US) will replace Merrill Lynch & Co. (MER US) while Flir Systems Inc. (FLIR US) will take the place of National City Corp. (NCC US) in the benchmark. Scana fell 1 percent to $33.98 in regular trading and Flir lost 1.3 percent to $26.77.

Micron Technology Inc. (MU US) dropped 16 cents, or 6.8 percent, to $2.20. The largest U.S. producer of memory chips posted a wider first-quarter loss than analysts anticipated after falling prices forced the company to write down the value of its inventory.

PLX Technology Inc. (PLXT US): The chipmaker reduced its fourth-quarter sales forecast, saying it expects as much as $14.2 million. The company had projected revenue of as much as $18 million. The stock dropped 12 percent to $1.77 in regular trading.

Wal-Mart Stores Inc. (WMT US): The world’s largest retailer said it will pay at least $352 million to settle 63 federal and state class actions claiming the company cheated hourly workers and forced them to work through breaks. The stock fell 1.3 percent to $55.29 in regular trading.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

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U.S. Stocks Decline on Concern Over Carmakers’ Debt, Recession

By Eric Martin

Dec. 23 (Bloomberg) -- U.S. stocks fell for a second day as concern grew that emergency loans won’t save the auto industry, while home prices plunged and the government confirmed the economy shrank the most since 2001 last quarter.

General Motors Corp., which received $9.4 billion in aid from the Treasury last week, and Ford Motor Co. slid 15 percent as their debt was cut deeper into junk. Textron Inc., the maker of Bell helicopters, tumbled the most in seven years after saying profit will trail forecasts. Bank of America Corp. and Citigroup Inc. lost more than 3.4 percent as the collapse in house prices spurred concern mortgage defaults will increase.

“The money that we saw committed last week just addresses the short-term situation,” Walter “Bucky” Hellwig, who manages $30 billion at Morgan Asset Management in Birmingham, Alabama, said of the automakers. “The whole consumer mindset is in a process of change as layoffs increase and unemployment ticks higher.”

The Standard & Poor’s 500 Index fell 1 percent to 863.16, extending the 2008 slump to 41 percent. All 10 of the index’s main industry groups declined, led by financials. The Dow Jones Industrial Average retreated 100.28 points, or 1.2 percent, to 8,419.49. The Russell 2000 Index slipped 1.4 percent.

The two-day decline in the S&P 500 erased gains from the gauge’s first back-to-back weekly advance since September. About 7.6 billion shares changed hands on all U.S. exchanges, 27 percent fewer than the three-month daily average as trading slowed ahead of the Christmas holiday.

Christmas-Week Gains

The U.S. stock market historically performs better during the Christmas week, according to Bespoke Investment Group LLC. The Dow average has risen an average 0.7 percent during the holiday season, compared with a 0.1 percent advance for all 4- day periods, data since 1900 from the Harrison, New York-based research firm show.

GM lost 52 cents to $3 as S&P cut its debt rating further below investment status, while Ford slid 40 cents to $2.19 as Moody’s Investors Service lowered its credit grade. The downgrades reflect unease over effects on debt holders of the $13.4 billion U.S. aid plan for GM and Chrysler LLC.

Textron Inc. dropped 20 percent to $12.20. The company, which also makes Cessna aircraft, said it will eliminate 2,200 jobs and exit all finance businesses except those that directly serve its manufacturing units. Profit this quarter will be hurt by losses at the financial unit, the company said.

Credit Concerns

Legg Mason Inc. dropped 4.9 percent to $19.36. The money manager had its issuer default rating lowered one level to A- by Fitch Ratings because slumping investment performance and rising costs to support money funds have reduced its profits.

Liz Claiborne Inc. tumbled 23 percent to $2.28. The maker of Kate Spade handbags had its credit rating cut to BB- by S&P.

The U.S. economy shrank in the third quarter at a 0.5 percent annual pace, matching economists’ forecasts, as the now year-old recession began to intensify. Consumer spending fell the most in almost three decades.

“This is a normal business cycle, a little bit deeper than average, but we will have an upside,” John Carey, who runs the $4.62 billion Pioneer Fund that’s beaten 72 percent of its peers in the past five years, told Bloomberg Television from Boston. “When we do, investors will be rewarded for their patience.”

Housing Slump

Sales of new homes in the U.S. fell in November to a 17- year low as credit dried up and consumer confidence sank, the Commerce Department said. A separate report from the National Association of Realtors said the median resale price of single- family houses dropped 13 percent last month, the most since records began in 1968 and likely the largest since the 1930s.

The S&P 500 is poised for its worst year since the Great Depression after the collapse of the subprime mortgage markets sent the world’s largest economy into a recession and spurred $1 trillion in global credit losses at financial firms.

The pensions of S&P 500 companies are likely to report “broad losses,” according to Howard Silverblatt, an analyst at S&P. They are currently underfunded by a record $257 billion, compared with a $63.4 billion surplus a year earlier.

Red Hat Inc. gained 8.5 percent to $12.99. The world’s biggest seller of Linux software forecast fourth-quarter profit that exceeded analysts’ estimates. The company is capitalizing on the recession by touting its software as a way to trim costs.

The Chicago Board Options Exchange Volatility Index added 1 percent to 45.02. The VIX, as it’s known, measures the cost of insurance against declines in the S&P 500. Yesterday’s close of 44.56 was the lowest since Oct. 1 and 45 percent less than the record set on Nov. 20.

Dividend Watch

Corporate dividends may need to be increased to draw investors back to stocks, according to Citigroup Inc.’s Tobias Levkovich.

“A shift in equity markets may be in the making with dividends once again becoming an important factor in stock market returns after a 20-year focus almost exclusively on capital appreciation,” Levkovich, Citigroup’s chief U.S. stock strategist, wrote in a report dated yesterday.

Covidien Ltd. fell 4.7 percent to $35.42. The supplier of health-care products said it will change its country of incorporation to Ireland from Bermuda. Investors who track stock benchmarks such as the S&P 500 may sell 65 million shares as a result, JPMorgan Chase & Co. said.

Prologis gained the most in the S&P 500, climbing 10 percent to $10.10. The world’s largest warehouse owner agreed to sell operations in China and property fund interests in Japan to the Government of Singapore Investment Corp. for $1.3 billion to cut debt. The shares, down 84 percent this year, were upgraded to “neutral” from “underperform” at Merrill Lynch & Co.

CIT Group Inc., the commercial lender that ran short of cash this year, added 8 cents, or 1.9 percent, to $4.26 after winning preliminary approval for a $2.3 billion infusion from the government. CIT said the Federal Reserve would allow the New York-based firm to become a bank holding company, making it eligible for funds from the Treasury’s Troubled Asset Relief Program.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

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