Economic Calendar

Monday, December 26, 2011

Kim Jong Un to Play Statesman to Visitors From South

By Sangwon Yoon - Dec 26, 2011 8:48 PM GMT+0700

Kim Jong Un got his first chance to play the role of North Korean statesman as a former first lady from the South and the chairwoman of Hyundai Group visited to pay their condolences over the death of Kim Jong Il.

Lee Hee Ho, the 89-year-old widow of former South Korean President Kim Dae Jung, and Hyundai’s Hyun Jeong Eun led a private group of 18 South Koreans across the Demilitarized Zone to Pyongyang today as the North’s media extended its adulation of Kim Jong Un, believed to be younger than 30 years old. The group made a 10-minute stop at the Kumsusan Memorial Palace, where Kim Jong Il’s body is lying in state, and met his son and successor, said Park Soo Jin, a spokeswoman for the Unification Ministry in Seoul.

The ruling party named Kim head of its central committee just a week after his father’s death on Dec. 17, adding to the official Korean Central News Agency’s recent references to him as “supreme leader of the revolutionary armed forces” and “great successor” to his late father and grandfather, Kim Il Sung.

Meeting with the former first lady may help create an image, both at home and abroad, of Kim Jong Un as a leader who already has a South Korea policy, said Baek Seung Joo, a North Korea specialist at the state-run Korea Institute for Defense Analysis in Seoul.

Paik Hak Soon, director of North Korean studies at the Seongnam, South Korea-based Sejong Institute, said any meeting was unlikely to yield political progress.

“Catastrophic Consequences”

No government officials from Seoul will pay condolences, according to the Unification Ministry, which oversees policy toward North Korea.

Known for making repeated threats against its southern neighbor, North Korea warned yesterday of “unpredictable catastrophic consequences” after the government in Seoul restricted condolences.

South Korea, which prohibits its citizens from traveling to the North except to the jointly run Gaeseong industrial complex, gave special permission for Lee and Hyun.

Private individuals and groups, also banned by South Korean law from praising the North Korean regime, may send condolences via mail or fax.

The delegation is staying at the Baekhwawon State Guest House in Pyongyang, accommodation used previously by Kim Dae Jung and his successor, the late Roh Moo Hyun, the Unification Ministry said.

Kim Praised

Paik said a flurry of official statements hailing the younger Kim over the past week also indicates that he may be given the highest formal roles in the country more quickly than was his father, who waited three years for the titles following the death of Kim Il Sung.

Jang Song Thaek, an ally and brother-in-law of Kim Jong Il, was shown in military uniform for the first time on state television yesterday, Yonhap news reported. Jang’s role within the power structure is widening and this will help him guide and protect the young leader, said Kim Yong Hyun, a professor of North Korea studies at Dongguk University in Seoul.

The group will return home tomorrow, a day before Kim Jong Il’s funeral on Dec. 28. They traveled by land and crossed the border about 8:30 a.m. today near the village of Panmunjom, where a cease-fire that ended fighting in the Korean War was signed in 1953.

To contact the reporter on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net




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Jasmine Telecom Shares Extend Gains in Bangkok After Denying Report

By Suttinee Yuvejwattana - Dec 26, 2011 10:37 AM GMT+0700

Jasmine Telecom Systems Pcl (JTS), a Thai provider of telecommunication services, rose to the highest in more than three months after denying a news report.

The stock advanced 1.8 percent to 1.73 baht per share, set for its highest close since Sept. 12. The company’s shares have risen more than 37 percent in the past three trading sessions.

Jasmine denied a Dec. 23 report in local news and information agency InfoQuest in a statement to the stock exchange today, without providing any details.

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editor responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net




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Bharti Gains After Indian Tribunal Agrees to Hear 3G Disputes

By Ketaki Gokhale - Dec 26, 2011 12:43 PM GMT+0700

Bharti Airtel Ltd. (BHARTI) led shares of Indian telecommunications companies higher in Mumbai trading after a dispute tribunal put on hold a government order telling wireless providers to end some roaming agreements.

Bharti, India’s biggest wireless services provider, gained as much as 3.7 percent to 342.85 rupees and traded up 2.8 percent at 11:07 a.m. Idea Cellular Ltd. (IDEA) rose as much as 3.9 percent and Reliance Communications Ltd. (RCOM) advanced 2.6 percent.

The Telecom Disputes Settlement and Appellate Tribunal will hear the operators’ complaint against the government’s halting of 3G roaming services agreements on Jan. 3, Bloomberg UTV reported Dec. 24. New Delhi-based Bharti said last week it was “shocked” by a Department of Telecommunications order to end the roaming agreements that enable companies to offer 3G services where they don’t own spectrum.

“The fact that TDSAT is looking at it indicates they’re serious about it,” said Ankur Rudra, an analyst at Ambit Capital Pvt. in Mumbai. “The faster it gets sorted out, the better it is for the industry.”

The contracts between cellular-service providers are a “breach of rules” and must be stopped immediately, R. Chandrashekhar, secretary of the telecommunications department, told Bloomberg UTV. The government department hasn’t yet decided whether to impose a penalty on operators for violating license terms, Chandrasekhar said.

Justice S.B. Sinha, the New Delhi-based chairman of the tribunal, didn’t immediately answer calls to his office and residence.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net




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Samsung to Buy Sony’s Stake From LCD JV

By Mariko Yasu and Saeromi Shin - Dec 26, 2011 5:21 PM GMT+0700

Sony Corp. (6758) sold its stake in the venture with Samsung Electronics Co. (005930) to make liquid-crystal displays to the South Korean company after predicting an eighth consecutive year of losses from TVs amid sluggish demand.

Samsung will pay 1.08 trillion won ($935 million) in cash for Sony’s stake in S-LCD Corp., a venture formed in 2004, the Suwon, South Korea-based company said in a statement today. Sony, which invested 1.65 trillion won in the venture, will take a charge of about 66 billion yen ($846 million) in the quarter ending Dec. 31 after the deal, Japan’s biggest consumer- electronics exporter said in its statement.

The stake sale enables Sony Chief Executive Officer Howard Stringer, 69, to shed the responsibility of panel manufacturing amid losses in the TV business, where Samsung is the world’s biggest. To turn around Sony, which has forecast a fourth consecutive annual loss this year, Stringer has announced $8.4 billion of acquisitions in 2011 to bolster the profitable phones and music divisions and introduced tablet computers to challenge Apple Inc. (AAPL)’s iPad.

“It’s a step forward for Sony,” said Shiro Mikoshiba, an analyst at Nomura Holdings Inc. in Tokyo. “Canceling out the venture enables Sony to become more flexible in procuring panels. Still, Sony continues to face falling prices and heavy fixed costs.”

Sony shares gained 1.6 percent to 1,394 yen at the close of trading in Tokyo today, while Samsung fell 0.2 percent to 1.07 million won. The deal was announced after the stock market closed for trading. The Nikkei reported the news earlier today.

‘Substantial Savings’

The maker of Walkman music players and PlayStation consoles has declined 52 percent this year, valuing the company at $18 billion, down from more than $100 billion in September 2000. Samsung has risen 12 percent in Seoul this year and Apple has jumped 25 percent.

Samsung had 50 percent of the venture plus one share, while Sony held the remainder, according to the statement. The two companies have also entered into an agreement for supply and purchase of LCD panels, Samsung said in the statement.

The transaction and the subsequent agreement will enable Sony to secure a flexible and steady supply of LCD panels from Samsung, based on market prices, and without the responsibility and costs of operating a manufacturing facility, Japan’s biggest consumer-electronics exporter said in its statement.

“Despite this one-time loss, Sony estimates that the transaction will result in substantial savings,” starting January, Sony said in the statement.

Downgrading Sony

Earlier this month, Fitch Ratings downgraded Sony’s long- term ratings to “BBB-,” one level above junk, from “BBB,” citing difficulties in reviving the money-losing TV business and deals that won’t improve profit.

Sony, the world’s No. 3 TV maker, is streamlining its main TV operation, which is estimated to lose 175 billion yen in the year to March. Last month, Sony predicted it will post a loss in the year to March 31 after the company slashed its TV sales target and the yen reached a postwar high.

The Japanese company lagged behind Samsung and Seoul-based LG Electronics Inc. (066570) in the global TV market last year, with 12 percent of sales, according to DisplaySearch. In the U.S., Samsung and Vizio, founded in 2002, had the biggest share for flat-panel televisions, based on research from IHS iSuppli.

Last March, Sony agreed to sell 90 percent of a TV factory in Nitra, Slovakia, to Hon Hai Precision Industry Co., after disposing of 90 percent of its largest North American TV-making site to Taipei-based Hon Hai. Sony also agreed to sell a TV facility in Barcelona in September.

‘Unflagging Resolve’

Earlier this year, Sony agreed to divest its money-losing smaller-sized LCD business to a government-backed fund, which also bought a similar unit from Toshiba Corp. (6502) and Hitachi Ltd. expenses at its marketing units.

“I have unflagging resolve” to turn the TV business around, Executive Deputy President Kazuo Hirai said Nov. 2. Sony’s management “feels a sense of crisis” about the unit’s losses, he said.

TV makers also face what Credit Suisse called a “generational culture shift surrounding video consumption.” Teens live in an Internet-based video culture that doesn’t depend on cable and satellite broadcasts, and they are satisfied with “small-screen experiences” and lower picture quality, the analysts led by New York-based Stefan Anninger said in the Nov. 28 report.

For Samsung, finding another buyer for Sony’s stake would have been “difficult,” said Jeff Kang, an analyst at Daishin Securities Co.

Separately, Samsung today said it will merge with Samsung LED on April 1.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net.

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net





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‘Mission Impossible’ Leads Movies With $26.5M

By Michael White and Martin Z. Braun - Dec 26, 2011 12:00 PM GMT+0700

“Mission: Impossible - Ghost Protocol” was the top U.S. and Canadian film over the holiday weekend, taking in $26.5 million for Paramount Pictures as Hollywood prepared to close out a second year of falling sales.

“The Girl With the Dragon Tattoo,” from Sony Corp. (6758), was fourth with $13 million in its debut, Hollywood.com’s box-office unit said yesterday in an e-mailed statement. Steven Spielberg’s “The Adventures of Tintin” was fifth with $9.13 million. Sales at U.S. and Canadian cinemas this year have fallen 4.5 percent to $9.9 billion, the film researcher said.

End-of-year films, which also include a new Sherlock Holmes movie and Martin Scorsese’s “Hugo,” failed to generate enough business to erase a drop from last year’s $10.6 billion in sales. Studios have struggled to attract audiences to a 2011 lineup filled with sequels and a record 36 movies in 3-D.

“You started off with an awful first quarter, and that was just a case of bad content,” said Martin Pyykkonen, an analyst with Wedge Partners Group, an independent equity-analysis group based in Greenwood Village, Colorado.

“‘Green Hornet’ was the biggest example,” he said. “The other problem was during the summer, you just had a lot of crowding of good films that just couldn’t get enough breathing room.”

In “Ghost Protocol,” the fourth “Mission Impossible” film, Tom Cruise returns as Ethan Hunt, leader of an elite special-operations squad that takes on the government’s most difficult assignments.

‘Dragon Tattoo’

This time, team members go underground to clear their names after being falsely implicated in a bombing at the Kremlin. The movie also features Jeremy Renner and Simon Pegg.

The film opened Dec. 16 for an exclusive, five-day run in large-screen theaters, including 300 Imax Corp. (IMAX) locations, before moving to wide release on Dec. 21. The first three films generated $1.4 billion in global ticket sales, according to Box Office Mojo, another film researcher.

“The Girl With the Dragon Tattoo” features Rooney Mara as Lisbeth Salander, a computer-hacker employed by a security firm. She joins with a journalist, played by Daniel Craig, to investigate a chain of homicides. The film is an English- language remake of a Swedish adaption of the novel by Stieg Larsson.

‘Tintin’

“Tintin,” Spielberg’s adaption of the comic books by Belgian author Herge, tells the story of an intrepid young journalist who tries to unravel the mystery surrounding a lost treasure. The computer-animated film features the voices of Jamie Bell, Andy Serkis and Daniel Craig.

The distributor, Viacom Inc.’s Paramount Pictures, opened the film in October in parts of Europe and on Dec. 21 in the U.S. and Canada. It had $247 million in worldwide sales before the weekend, according to Box Office Mojo.

“All the films have fallen victim to a slow marketplace, and that particularly affected the newcomers,” said Paul Dergarabedian, president of Hollywood.com’s box office division, in a telephone interview. “We virtually had zero momentum heading into Christmas.”

Ticket revenue for 2011 will just “limp over” the $10 billion mark, he said.

‘Chipwrecked’

Among returning films, “Sherlock Holmes: A Game of Shadows” dropped to second from first with $17.8 million. Robert Downey Jr. reprises his role as the cerebral sleuth created by novelist Arthur Conan Doyle. This time, Holmes and his sidekick Dr. John Watson match wits with arch-criminal Moriarty, who plots to create an arms race among European military powers. Jude Law plays Watson and Jared Harris portrays Moriarty.

“Alvin and the Chipmunks: Chipwrecked,” from News Corp. (NWSA)’s Fox studio, finished third. The story of singing chipmunks marooned on a seemingly deserted tropical island had sales of $13.3 million.

Weekend revenue for the top 12 films fell 26 percent to $100.5 million from a year earlier, Hollywood.com said. Attendance is down 5.3 percent. The amounts below are based on actual ticket sales for Dec. 23 and Dec. 24 and estimates for yesterday.

                       Rev.            Avg./   Pct.   Total
Movie (mln) Theaters Theater Chg. (mln) Wks
================================================================
1 MISSION IMPOSSIBLE $26.5 3,448 $7,696 -- $59.0 1
2 SHERLOCK HOLMES 17.8 3,703 4,807 -55 76.6 2
3 ALVIN AND CHIPMUNKS 13.3 3,734 3,569 -43 50.3 2
4 GIRL DRAGON TATOO 13.0 2,914 4,461 -- 21.4 1
5 ADVENTURES OF TINTIN 9.1 3,087 2,956 -- 17.1 1
6 WE BOUGHT A ZOO 7.8 3,117 2,502 -- 7.8 1
7 NEW YEAR’S EVE 3.0 2,585 1,162 -59 32.3 3
8 ARTHUR CHRISTMAS 2.7 1,804 1,497 -24 44.2 5
9 HUGO 2.03 1,236 1,638 -45 43.7 5
10 THE MUPPETS 2.00 1,752 1,143 -43 75.6 5
11 THE DESCENDANTS 1.7 813 2,109 -48 32.0 6
12 YOUNG ADULT 1.5 987 1,494 -57 6.9 3


This Week Year Ago Pct.
(mln) (mln) Chg.
===================================
$100.5 $135.3 -26


Year-to-date Revenue:

2011 2010
YTD YTD Pct.
(mln) (mln) Chg.
===================================
$9,914.6 $10,376.9 -4.5


Year-to-date Attendance: -5.3%

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net




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S.Korea Delegation Heads North as Kim Jong Un Elevated

By Sangwon Yoon and Jiyeun Lee - Dec 26, 2011 11:46 AM GMT+0700

Hyundai Group’s chairwoman and a former South Korean first lady arrived in Pyongyang on a private visit as their government’s restrictions on condolences for the death of Kim Jong Il drew warnings of “unpredictable catastrophic consequences” from North Korea.

Lee Hee Ho, the 89-year-old widow of former President Kim Dae Jung, said it was her duty to offer condolences. The North’s official news agency confirmed the arrival of Lee and Hyundai’s Hyun Jeong Eun, who are leading a party of 18 on a two-day trip.

The reaction to any attempts by the South to bar citizens from paying respect for the former dictator Kim underscored efforts to buttress the position of the deceased leader’s son, Kim Jong Un. The ruling party named the younger Kim head of its central committee, and the official Korean Central News Agency started referring to him as “supreme leader of the revolutionary armed forces” and “tender-hearted father.”

“The DPRK will never tolerate anyone checking mourners,” the North’s news service said yesterday, citing the state-run Committee for Peaceful Reunification of Korea and referring to the nation by its official name, the Democratic People’s Republic of Korea. “The South Korean authorities should bear in mind that their obstructions will entail unpredictable catastrophic consequences to the North-South relations.”

Condolences by Fax

No government officials from Seoul will pay condolences, according to the Unification Ministry, which oversees policy toward North Korea. South Korea, which prohibits its citizens from traveling to the North except to visit the jointly run Gaeseong industrial complex, gave special permission for Lee and Hyun. Private individuals and groups, also banned by South Korean law from praising the North Korean regime, are being allowed to send condolences via mail or fax.

While the Lee and Hyun delegation didn’t say if it would see Kim Jong Un, who is thought to be in his late 20s, such a meeting is likely, according to Paik Hak Soon, director of North Korean studies at Seongnam, South Korea-based Sejong Institute. Chances of any political progress are limited, Paik said.

In the U.S., Senator Richard Lugar, the top Republican on the chamber’s Foreign Relations Committee, said he is concerned that the transition to a new North Korean leader could provide an opening for the transfer of nuclear materials out of the country.

Senator’s Concern

“Some in the country might try to sell this to others because of the economic crisis that they have,” Lugar said on CNN’s “State of the Union” program. “That would certainly be one of the missions that I would be most concerned about.”

Paik said a flurry of official statements hailing the younger Kim over the past week indicates that he may be given the highest formal roles in the country more quickly than was his father, who waited three years for the titles following the death of the nation’s founder, Kim Il Sung.

Jang Song Thaek, an ally and brother-in-law of Kim Jong Il, was shown in military uniform for the first time on state television yesterday, Yonhap news reported. Jang’s role within the power structure is widening and this will help him guide and protect the young leader, said Kim Yong Hyun, a professor of North Korea studies at Dongguk University in Seoul.

The group that left today traveled by land and crossed the border about 8:30 a.m. through the Demilitarized Zone near the village of Panmunjom, where a cease-fire that ended fighting in the Korean War was signed in 1953.

Special Permission

South Korea’s government on Dec. 20 expressed “sympathy” to the people of North Korea over Kim’s Dec. 17 death, stopping short of offering formal condolences. His funeral is planned for Dec. 28.

Chung Ju Yung, the late founder of the Hyundai Group, herded cattle across the border during a famine in the North in 1998, expressing his desire to reunite the two Koreas. Kim Dae Jung traveled to Pyongyang for a landmark summit with his North Korean counterpart in 2000, part of his so-called Sunshine Policy that attempted to defuse tension on the peninsula.

To contact the reporters on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net; Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net





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Toyota Adds to Prius Lineup With Smallest Hybrid

By Anna Mukai and Yuki Hagiwara - Dec 26, 2011 11:49 AM GMT+0700
Enlarge image Toyota Adds to Prius Lineup With Smallest Hybrid

People examine Toyota Motor Corp.'s Aqua hybrid vehicl. Photographer: Kiyoshi Ota/Bloomberg

Satoshi Ogiso, executive general manager of Toyota Motor Corp., introduces the company's Aqua hybrid vehicle in Tokyo. Photographer: Kiyoshi Ota/Bloomberg


Toyota Motor Corp. (7203), Asia’s largest automaker, will begin selling its smallest hybrid car in Japan today to compete with Honda Motor Co. for younger consumers seeking an entry-level fuel-efficient vehicle.

The Aqua compact hybrid, to be marketed as the Prius C in the U.S., will cost from 1.69 million yen ($21,700), the Toyota City, Japan-based carmaker said today in a statement. The company aims to sell 12,000 Aquas a month in its home market.

Toyota is counting on gasoline-electric models, led by an expanded Prius lineup, to meet a goal of increasing global vehicle sales 20 percent next year. Honda’s Fit compact car, sold in hybrid and conventional gasoline-engine versions, outsold the larger Prius in the first six months of this year in Japan, underscoring consumer demand for smaller fuel-efficient cars.

“The Aqua shows Toyota is increasing efforts to boost sales in the domestic market,” said Mamoru Kato, an auto analyst at Tokai Tokyo Research Center in Nagoya, Japan. “Toyota raised the price of the Prius to a more profitable level, so the Aqua serves to meet demand for smaller, cheaper hybrids.”

The Aqua measures 3.9 meters (12.8 feet) in length, compared with the 4.48-meter Prius, and has as much legroom as a Corolla compact, according to chief engineer Satoshi Ogiso. It costs 22 percent less than the Prius, which starts from 2.17 million yen, according to Toyota’s website.

Prius Sales

The new model delivers a locally rated 35 kilometers per liter. That compares with 30 kilometers per liter for the hybrid version of the Fit, which starts from 1.59 million yen, according to Honda’s website.

Domestic sales of the Prius plummeted 51 percent in the first six months of this year to 83,319 vehicles as Japan’s March 11 earthquake and tsunami disrupted production. Honda’s Fit topped the market segment with sales of 88,282, a 2 percent decrease from a year earlier.

U.S. deliveries of the Prius, the world’s best-selling hybrid car, rose 49 percent last month from a year earlier, according to Autodata Corp.

“While hybrids are generally projected to sell in developed markets like the U.S., it’s difficult to say if such a small car as the Prius C will sell,” said Tokai Tokyo’s Kato.

Toyota began selling a wagon version of the Prius in May and will also introduce a plug-in version, which can run about 23 kilometers on its lithium-ion battery before its gasoline engine kicks in, next month in Japan and by March in the U.S.

To contact the reporters on this story: Anna Mukai in Tokyo at amukai1@bloomberg.net; Yuki Hagiwara in Tokyo at yhagiwara1@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net




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Lugar: Tea Party Could Lose Senate Majority

By Jonathan D. Salant - Dec 26, 2011 12:31 AM GMT+0700

Tea Party supporters that helped the Republicans win a U.S. House majority last year also prevented the party from taking control of the Senate and could do it again in 2012, Senator Richard Lugar said.

Lugar, 79, an Indiana Republican, said his seat could be in danger if he loses a primary next year to state Treasurer Richard Mourdock, who is backed by Tea Party groups. U.S. Representative Joe Donnelly is seeking the Democratic nod.

“Republicans who are running for re-election ought to be supported by people who want to see that majority,” Lugar said today on CNN’s “State of the Union.”

Lugar characterized the Tea Party groups as “very conservative Republicans” and said that he had “a very conservative voting record” in the Senate deserving of their support.

His campaign website touts his opposition to President Barack Obama’s health-care law, which provides coverage for millions of uninsured Americans, and his support for a national sales tax instead of the progressive income tax that requires the wealthy to pay more.

He mentioned Nevada and Colorado as two states where Tea Party-backed Senate candidates won Republican primaries last year before losing the general election to Democratic incumbents. Senate Majority Leader Harry Reid defeated former state legislator Sharron Angle in Nevada and Senator Michael Bennett beat county prosecutor Ken Buck in Colorado.

‘Killed Off’ Chances

“There were people who claim that they wanted somebody who was more of their Tea Party aspect, but in doing so they killed off the Republican chances for majority,” Lugar said. “This is one of the reasons we have a minority in the Senate right now.”

Mourdock, 60, is backed by a coalition of Tea Party groups, Hoosiers for a Conservative Senate. He also has the support of the political action committee of FreedomWorks, the Tea Party- aligned group led by former House Majority Leader Dick Armey of Texas.

Mourdock’s campaign website criticizes Lugar for supporting the Troubled Asset Relief Program, passed under Republican President George W. Bush to bail out the financial industry; and for supporting federal aid for General Motors Co. (GM) and Chrysler Group LLC, an Obama administration program that saved both companies.

Democrats now hold a 53-47 edge in the Senate, including two independents who caucus with them.

Through Sept. 30, Lugar’s campaign had $3.8 million in the bank, compared with $291,640 for Mourdock, Federal Election Commission reports show.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.





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China, Japan to Back Direct Trade of Currencies

By Toru Fujioka - Dec 26, 2011 4:55 PM GMT+0700

Japan and China will promote direct trading of the yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said.

Japan will also apply to buy Chinese bonds next year, allowing the investment of renminbi that leaves China during the transactions, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday. Encouraging direct yen- yuan settlement should reduce currency risks and trading costs, the Japanese and Chinese governments said.

China is Japan’s biggest trading partner with 26.5 trillion yen ($340 billion) in two-way transactions last year, from 9.2 trillion yen a decade earlier. The pacts between the world’s second- and third-largest economies mirror attempts by fund managers to diversify as the two-year-old European debt crisis keeps global financial markets volatile.

“Given the huge size of the trade volume between Asia’s two biggest economies, this agreement is much more significant than any other pacts China has signed with other nations,” said Ren Xianfang, a Beijing-based economist with IHS Global Insight Ltd.

Currency Swap

China also announced a 70 billion yuan ($11 billion) currency swap agreement with Thailand last week as part of a plan outlined in October to promote the use of the yuan in the Association of Southeast Asian Nations and establish free trade zones.

Central banks from Thailand to Nigeria plan to start buying yuan assets as slowing global growth has capped interest rates in the U.S. and Europe.

The move by China and Japan to strengthen market cooperation “benefits the ease of trade and investments between the two countries,” Chinese Foreign Ministry spokesman Hong Lei said today in Beijing. “It strengthens the region’s ability to protect against risks and deal with challenges.”

The yuan traded in Hong Kong’s offshore market gained 0.5 percent offshore last week and touched 6.3324 per dollar, the strongest level since trading started in July 2010. Its discount to the exchange rate in Shanghai narrowed to 0.1 percent, from a record 1.9 percent on Sept. 23.

Yuan Gains

The yuan gained 0.05 percent in Shanghai to 6.3330 per dollar today and was little changed at 6.3450 in Hong Kong. It strengthened 4.3 percent this year, the best-performing Asian currency excluding the yen. The currency is allowed to trade 0.5 percent on either side of that rate. The yuan is a denomination of the renminbi.

Japan exported 10.8 trillion yen to China in the year through November, and imported 12 trillion yen, according to Ministry of Finance data. The deficit with China widened to 1.2 trillion yen, from 418 billion yen in January-to-November 2010. About 60 percent of the trade transactions are settled in dollars, according to Japan’s Finance Ministry.

Finance Minister Jun Azumi said Dec. 20 buying of Chinese bonds would help reveal more information about financial markets in China. Noda said in September 2010, when he was finance minister, that Japan should be able to invest in China given that its neighbor buys Japanese debt. Japan holds $1.3 trillion of foreign-currency reserves, the world’s second largest after China’s $3.2 trillion.

Chinese Debt

Investing in Chinese debt has become easier for central banks as issuance of yuan-denominated bonds in Hong Kong more than tripled to 112 billion yuan ($18 billion) this year and institutions were granted quotas to invest onshore. Japan will start to buy “a small amount” of China’s bonds, a Japanese government official said on condition of anonymity because of the ministry’s policy, without elaborating.

China sold the second-biggest net amount of Japanese debt on record in October as the yen headed for a postwar high against the dollar and benchmark yields approached their lowest levels in a year. It cut Japanese debt by 853 billion yen, Japan’s Ministry of Finance said on Dec. 8.

Separately, the Japan Bank for International Cooperation, JGC Corp., Mizuho Corporate Bank Ltd., the Export-Import Bank of China and other Chinese companies will establish a $154 million fund to invest in environment-related businesses such as recycling and energy, the Japanese government said.

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

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net





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Most Stocks Gain as Dollar Holds Losses

By Shiyin Chen - Dec 26, 2011 4:39 PM GMT+0700

Most stocks (MXAP) climbed, helping the MSCI All Country World Index gain for a fifth day, while the dollar maintained losses against higher-yielding peers amid speculation the U.S. economy will continue to recover. China’s yuan surged to a 17-year high.

MSCI’s global index advanced 0.1 percent at 9:30 a.m. in London as benchmark equity gauges in Japan, India and Russia rose at least 1 percent. Financial markets from Hong Kong to the U.K. and the U.S. are closed for holidays today. The dollar weakened 0.2 percent to $1.3068 per euro. The yuan touched 6.3160 versus the U.S. currency, the strongest level since 1993, on speculation China’s policy makers will tolerate appreciation to capital stem outflows.

Reports tomorrow may show home prices in 20 U.S. cities probably declined at a slower pace and consumer confidence improved to a five-month high. Data last week showed durable goods orders jumped in November by the most in four months, while sales of new homes increased to a seven-month high.

“The U.S. economy is improving more than expected,” said Hideyuki Ishiguro, assistant manager at the investment strategy department at Okasan Securities Co. in Tokyo. “Pessimism is easing among American consumers due to a recovery in the job market and some stability in the stock market.”

About five shares advanced for every four that declined on MSCI’s global benchmark index, helping the gauge extend its 3.1 percent advance last week. The measure is still down 9.2 percent this year.

Japan’s Nikkei 225 Stock Average added 1 percent, the BSE India Sensitive Index jumped 1.6 percent, while Russia’s Micex Index gained 1.1 percent. Canon Inc. (7751) climbed 1.3 percent after the Nikkei newspaper reported that the camera maker may pay a 120 yen ($1.54) dividend this year.

U.S. Economy

The S&P 500 (SPX) added 0.9 percent on Dec. 23, erasing its losses for this year, after Commerce Department data showed orders for goods meant to last at least three months rose 3.8 percent in November. A separate report showed purchases of single-family properties increased 1.6 percent to a 315,000 annual pace, while consumer spending rose less than forecast in November as wages declined for the first time in three months.

Property values probably dropped 3.2 percent in October from the same month in 2010, the smallest year-over-year decrease since January, according to the median forecast of 20 economists before a report from S&P/Case-Shiller. Consumer confidence may have climbed to a five-month high of 58.6 in December from 56 last month, a separate survey showed before tomorrow’s report from the New York-based Conference Board.

‘Resilient’ Economy

“Excessive pessimism has receded at the end of the year, and what we’re seeing is some unwinding of safe-haven buying of currencies like the dollar and yen,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-biggest listed bank by market value. “The U.S. economy is resilient.”

The Dollar Index, which tracks the U.S. currency against those of six trading partners, was little changed after sliding last week. The Australian dollar rose 0.1 percent to $1.0164 and Turkey’s lira gained 0.4 percent to 1.8931 per dollar.

The yuan strengthened 0.26 percent to 6.3198 per dollar as the central bank set the reference rate 0.07 percent higher at 6.3167 per dollar. A depreciation of the yuan may fuel outflows of capital, Yi Xianrong, a researcher at the Institute of Finance and Banking that is affiliated to the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily.

Japan and China will promote direct trading of yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges, the Japanese government said a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing yesterday.

Gold for immediate delivery retreated as much as 0.5 percent to $1,597.75 an ounce before trading at $1,599.60 an ounce. Copper declined 1.2 percent to 55,200 yuan ($8,735) a metric ton in Shanghai, the first retreat in five days. The London Metal Exchange and Comex are closed today.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net




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Japanese Stocks Advance on Positive U.S. Employment Report, Durable Orders

By Norie Kuboyama and Toshiro Hasegawa - Dec 26, 2011 7:59 AM GMT+0700

Japanese stocks gained, sending the Nikkei 225 Stock Average (NKY) set to rise to its highest in nearly two weeks, as U.S. unemployment claims unexpectedly dropped and orders for durable goods rose, boosting the earnings outlook for Asia’s exporters.

Honda Motor Co. (7267), a carmaker that gets more than 80 percent of its sales abroad, gained 1.8 percent. Mitsubishi Corp. (8058), Japan’s biggest commodities trader by revenue, rose 1.6 percent after oil and metals prices increased. Canon Inc. climbed 1.8 percent after the Nikkei newspaper said the camera maker may pay a 120 yen dividend this year.

The Nikkei 225 rose 1.3 percent to 8,506.27 as of 9:36 a.m. in Tokyo, set for the highest close since Dec. 14. The broader Topix rose 0.7 percent to 728.28, with almost three times as many shares rising as falling.

“The U.S. economy is improving more than expected,” said Hideyuki Ishiguro, assistant manager at the investment strategy department at Okasan Securities Co. in Tokyo. “Pessimism is easing among American consumers due to a recovery in the job market and some stability in the stock market.”

The Standard & Poor’s 500 Index (SPXL1) added 0.9 percent in New York on Dec. 23 as orders for durable goods rose by the most in four months and the number of applications for unemployment benefits unexpectedly dropped last week to the lowest since April 2008.

Commodity prices gained on speculation an economic recovery in the U.S. may spur demand for oil and industrial metals. Crude oil for February delivery gained 0.2 percent to $99.68 a barrel in New York on Dec. 23, the highest settlement since Dec. 13. The London Metal Exchange Index of prices for six metals including copper and aluminum rose 0.7 percent.

The following are among the most active shares in the Japanese market today. Stock symbols are in parentheses after company names.

Canon Inc. (7751) (7751 JT), the world’s biggest camera maker, gained 1.6 percent to 3,470 yen, after the Nikkei reported the company is likely to pay a 120 yen dividend for this year, matching last year’s record payment. Canon anticipates an earnings recovery next year after Thailand floods and a strengthening yen cut profit, the report said.

Ebara Corp. (6361) (6361 JT), a hydraulic pump maker, climbed 3.7 percent to 280 yen, after the Nikkei said Ebara will boost production capacity in Southeast Asia. The company will invest as much as 3 billion yen ($38 million) to double sales in the region in three years, the report said.

Japan Hotel & Resort Inc. (8981 JT) rallied 5.3 percent to 164,100 yen, while Nippon Hotel Fund Investment Corp. (8985) (8985 JT) slid 0.4 percent to 184,200 yen after the real estate investment trusts said they will merge on April 1. Japan Hotel will be delisted, according to a statement.

Makita Corp. (6586) (6586 JT), a maker of electric power tools, jumped 7.6 percent to 2,530 yen, headed for its biggest rise since March 16. The company said it will buy back up to 1.45 percent of its outstanding shares.

Tokyo Electric Power Co. (9501) (9501 JT), the utility known as Tepco, lost 3.2 percent to 215 yen after the Nikkei reported the company may seek several hundred billion yen in fresh aid to compensate nuclear disaster victims. The company received 890 billion yen in state assistance last month.

To contact the reporters on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net





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Asian Stocks Advance on U.S. Profit Reports

By Yoshiaki Nohara - Dec 26, 2011 8:41 AM GMT+0700

Asian stocks rose, extending last week’s gain, as reports showed orders for U.S. durable goods and home sales gained, boosting the earnings outlook for Asia’s exporters.

Fanuc Corp. (6954), a maker of factory robots that gets 75 percent of its sales outside of Japan, rose 3 percent in Tokyo. Mitsubishi Corp. (8058), Japan’s biggest commodities trader by revenue, rose 2.2 percent after raw materials and metals prices increased. Canon Inc. (7751) climbed 1.6 percent after the Nikkei newspaper reported the camera maker may pay a 120 yen dividend this year.

“America is holding up amid concern Europe’s problems would drag the world down,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees the equivalent of $68 billion. “The U.S. economy will need policy backing to stand its ground. Moves in equities will be limited this week before investors start seeking a trend in the next year.”

The MSCI Asia Pacific Index (CRY) gained 0.4 percent to 114.1 as of 9:20 a.m. in Tokyo. The measure added 1.1 percent last week.

The gauge has tumbled 17 percent this year amid concern Europe’s debt crisis will slow global economic growth. Stocks (MXAP) in the index were valued at 12.7 times estimated earnings on average as of Dec. 23, compared with 12.8 times for the S&P 500 and 10.5 times for the Stoxx Europe 600 index, according to data compiled by Bloomberg.

Japan, South Korea

Japan’s Nikkei 225 Stock Average rose 1.3 percent today after a public holiday on Dec. 23. South Korea’s Kospi Index fell 0.2 percent as a private group traveled to North Korea to express their condolences over the death of Kim Jong Il.

Vietnam’s VN Index, the benchmark measure of the Ho Chi Minh City Stock Exchange may be active after the government said the finance ministry will work with the central bank on measures to boost the domestic stock market next year.

Markets in Hong Kong, Australia and Singapore are shut today.

Futures on the Standard & Poor’s 500 Index (SPXL1) rose 0.9 percent today. The index added 0.9 percent in New York on Dec. 23. as orders for durable goods rose in November by the most in four months and sales of new U.S. homes advanced last month to a seven-month high.

Exporters to the U.S. advanced. Fanuc added 3 percent to 11,790 yen. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, rose 1.5 percent to 1,392 yen.

Mitsubishi Corp. climbed 2.2 percent to 1,547 yen after the Thomson Reuters/Jefferies CRB Index of raw materials added 0.1 percent on Dec. 23. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 0.7 percent.

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net





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Pakistan Cricket Star Imran Khan’s Rally Shows His Growing Political Power

By Haris Anwar and Khurrum Anis - Dec 26, 2011 2:00 AM GMT+0700

Pakistan cricket legend and opposition politician Imran Khan drew as many as 150,000 people to a rally in Karachi yesterday, demonstrating his growing appeal amid anger over power blackouts and a troubled alliance with the U.S.

After 15 years of political irrelevance, Khan’s Pakistan Tehreek-e-Insaf, or the Movement for Justice Party, is gaining momentum as the ruling coalition fails to improve a slowing economy or fight corruption. Khan’s stance that Pakistan should pull out of a security pact with the U.S. is winning support amid criticism of army offensives against Taliban militants since 2007 that have triggered retaliatory bombings.

“Nobody can stop this tsunami,” Khan, 59, told yesterday’s gathering at the mausoleum of the country’s founder, Muhammad Ali Jinnah, in the port city of Karachi. He vowed to “end corruption and injustice from our society. All I want is your support.” Senior Karachi police officer Javed Odho said 100,000 to 150,000 people attended the event.

Pakistan’s president, Asif Ali Zardari, has been weakened by a confrontation with the military that has ruled Pakistan for half its history. Prime Minister Yousuf Raza Gilani, a member of Zardari’s party, warned last week of conspiracies to oust his administration and replace it with a dictatorship. Political upheaval in Pakistan may complicate U.S. plans to bolster security in the region as it withdraws troops from neighboring Afghanistan.

Khan’s party may win 20 to 40 seats in the 342-seat National Assembly if an election were held in the next year, Hasan-Askari Rizvi, a political analyst, said. Tehreek’s appeal may be restricted largely to cities where middle-class disdain for established groups like Zardari’s Pakistan People’s Party and its chief opponent, Nawaz Sharif’s Pakistan Muslim League, is at its strongest, Rizvi said.

‘Corrupt, Incapable’

“He is cashing in on this widespread perception that Pakistan’s main political parties are corrupt and incapable,” Rizvi said in a telephone interview from Lahore. “He has been successful in attracting large crowds but has failed to present a plan of action.”

Since an October rally in Lahore that the government estimated was attended by 100,000 people, scores of established politicians have joined Khan’s party. Shah Mahmood Qureshi, a People’s party dissident and former foreign minister; Jahangir Tareen, a minister in the regime of former military leader Pervez Musharraf; and Masood Sharif Khattak, a former head of Pakistan’s civilian intelligence bureau, are among those who have flocked to Khan’s side.

Change of Strategy

“After languishing on the political sidelines, Imran has changed his strategy,” Muhammad Waseem, a political science professor at the Lahore University of Management Sciences, said by phone. “He’s now accepting people in his party who have been very much part of the status quo and the corrupt system. But they are powerful and electable.”

Khan, the captain of Pakistan’s 1992 world champion cricket team, managed to win just a single seat, his own, in the last elections his party contested in 2002 as he struggled to translate his sporting renown into poll success. The recent successful rallies indicate his message may be attracting urban voters especially in his base of Punjab. The U.S.-based Pew Research Center found Khan to be the most popular political leader in the country in a June poll.

In a country where only about 1 percent of people pay income tax, Khan has demanded that leading politicians, including Zardari and Sharif, declare their wealth. He set an example last month by disclosing at a press conference in Islamabad his income and the amount of tax he has paid.

‘Strong Character’

“He has a strong character,” said Muhammad Sadiq, who had attended the rally in Karachi with his two children. “I think he will be the next prime minister. I hope he will be the next prime minister.”

Gilani is under pressure from opposition parties to call a general election before the scheduled date of February 2013 as growth in the economy stalls and his government fails to resolve chronic energy shortages that have shut factories and sparked street protests.

Pakistan cut its economic growth forecast to 3.6 percent from 4.2 percent for the year through June 2012. Policy makers plan to boost growth from 2.4 percent in the year ended June 30, one of Pakistan’s weakest expansions in a decade.

Pakistan’s Supreme Court is investigating claims that Zardari sought U.S. assistance to help prevent an army coup as the military stood humiliated by the strike that killed Osama bin Laden in a garrison town north of Islamabad. That account has renewed tensions with army chiefs, who have backed the court probe.

Critical of Alliance

Khan is a critic of Pakistan’s alliance with the U.S. in the fight against militants in the northwestern regions of the country near the Afghan border, a pact that was further strained by a NATO border raid last month that killed 24 Pakistan soldiers.

He has led many rallies this year against the U.S.’s covert drone attacks, which he says kill innocent people and convince more people to take up arms.

“You can’t win this war even if you fight for another 10 years,” Khan said at a press conference on Dec. 19 in Islamabad. “Pakistan must get out of this alliance to stop the radicalization of our society. We must talk to the Taliban.”

Khan’s opponents, including Sharif’s Pakistan Muslim League, attribute the party’s sudden rise to backing by the “establishment,” the term they use for the country’s army. To support their claim, they point to a large number of former ministers during Musharraf’s eight years of military rule who have joined Khan’s party.

To contact the reporters on this story: Haris Anwar in Islamabad at hanwar2@bloomberg.net; Khurrum Anis in Karachi at kkhan14@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net




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South Korea Unofficial Delegation Heads North as Kim Jong Un Role Elevated

By Sangwon Yoon and Jiyeun Lee - Dec 26, 2011 8:52 AM GMT+0700

Hyundai Group’s chairwoman and a former South Korean first lady crossed into the North on a private visit as their government’s restrictions on condolences for the death of Kim Jong Il drew warnings of “unpredictable catastrophic consequences” from the regime in Pyongyang.

Lee Hee Ho, the 89-year-old widow of former President Kim Dae Jung, said it was her duty to offer condolences. Lee and Hyundai’s Hyun Jeong Eun are leading 18 South Koreans who are expected to arrive in the North Korean capital about 11:30 a.m. local time, according the Unification Ministry in Seoul.

The reaction to any attempts by the South to bar citizens from paying respect for the former dictator Kim underscored efforts to buttress the position of the deceased leader’s son, Kim Jong Un. The ruling party named the younger Kim head of its central committee, and the official Korean Central News Agency started referring to him as “supreme leader of the revolutionary armed forces” and “tender-hearted father.”

“The DPRK will never tolerate anyone checking mourners,” the North’s official news service said yesterday, citing the state-run Committee for Peaceful Reunification of Korea and referring to the nation by its official name, the Democratic People’s Republic of Korea. “The South Korean authorities should bear in mind that their obstructions will entail unpredictable catastrophic consequences to the North-South relations.”

Condolences by Fax

No government officials from Seoul will pay condolences, according to the Unification Ministry, which oversees policy toward North Korea. South Korea, which prohibits its citizens from traveling to the North except to visit the jointly run Gaeseong industrial complex, gave special permission for Lee and Hyun. Private individuals and groups, also banned by South Korean law from praising the North Korean regime, are being allowed to send condolences via mail or fax.

While the Lee and Hyun delegation didn’t say if it would see Kim Jong Un, who is thought to be in his late 20s, such a meeting is likely, according to Paik Hak Soon, director of North Korean studies at Seongnam, South Korea-based Sejong Institute. Chances of any political progress are limited, Paik said.

In the U.S., Senator Richard Lugar, the top Republican on the chamber’s Foreign Relations Committee, said he is concerned that the transition to a new North Korean leader could provide an opening for the transfer of nuclear materials out of the country.

Senator’s Concern

“Some in the country might try to sell this to others because of the economic crisis that they have,” Lugar said on CNN’s “State of the Union” program. “That would certainly be one of the missions that I would be most concerned about.”

Paik said a flurry of official statements hailing the younger Kim over the past week indicates that he may be given the highest formal roles in the country more quickly than was his father, who waited three years for the titles following the death of the nation’s founder, Kim Il Sung.

Jang Song Thaek, an ally and brother-in-law of Kim Jong Il, was shown in military uniform for the first time on state television yesterday, Yonhap news reported. Jang’s role within the power structure is widening and this will help him guide and protect the young leader, said Kim Yong Hyun, a professor of North Korea studies at Dongguk University in Seoul.

The group that left today is traveling by land and crossed the border about 8:30 a.m. through the Demilitarized Zone near the village of Panmunjom, where a cease-fire that ended fighting in the Korean War was signed in 1953.

Special Permission

South Korea’s government on Dec. 20 expressed “sympathy” to the people of North Korea over Kim’s Dec. 17 death, stopping short of offering formal condolences. His funeral is planned for Dec. 28.

Chung Ju Yung, the late founder of the Hyundai Group, herded cattle across the border during a famine in the North in 1998, expressing his desire to reunite the two Koreas. Kim Dae Jung traveled to Pyongyang for a landmark summit with his North Korean counterpart in 2000, part of his so-called Sunshine Policy that attempted to defuse tension on the peninsula.

To contact the reporters on this story: Sangwon Yoon in Seoul at syoon32@bloomberg.net; Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net





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Gingrich Doesn’t Make Republican Ballot in Va.

By Jonathan D. Salant - Dec 26, 2011 1:32 AM GMT+0700

Former House Speaker Newt Gingrich, atop a recent opinion poll among Virginia Republicans, won’t be on the party’s March 6 primary ballot because he couldn’t get enough signatures.

The Republican Party of Virginia said yesterday that neither Gingrich nor Texas Governor Rick Perry obtained signatures from 10,000 registered voters, including 400 from each of the state’s 11 congressional districts. Two other Republicans, former Massachusetts Governor Mitt Romney and U.S. Representative Ron Paul of Texas, qualified for the primary scheduled for so-called Super Tuesday.

“It speaks volumes to me about the particular organizational skills of the candidates,” said Carl Tobias, a law professor at the University of Richmond. “It’s hard for me to understand how they could miss this opportunity.”

Gingrich’s campaign director, Michael Krull, issued a statement calling Virginia’s ballot requirement “a failed system” and said the former House speaker would launch a write- in campaign. Virginia law, however, doesn’t allow for write-ins in primary elections.

“Voters deserve the right to vote for any top contender, especially leading candidates,” Krull said.

‘Exploring’ Alternatives

Krull said last night on Gingrich’s Facebook page that the campaign was “exploring alternative methods to compete” in the primary, and likened the failure to make the ballot to December 1941, when the Japanese bombed Pearl Harbor.

“We have experienced an unexpected setback, but we will regroup and refocus with interested determination, commitment and positive action,” Krull wrote. “In the end, we will stand victorious.”

Krull said the campaign will make other deadlines for getting on the ballot in state primaries.

Gingrich now is turning his attention to Iowa, where the first test of the 2012 presidential race is scheduled for Jan. 3. Gingrich had led in state polls in recent weeks, though fell behind Paul and Romney in the wake of attack ads, most of them by a political action committee funded by Romney supporters. Gingrich has called the ads “dishonest” and challenged Romney to defend them in a debate.

Effects of Ads

Former Arkansas Governor Mike Huckabee, who won the Iowa caucuses four years ago, said the ads are hurting Gingrich.

“If you are soft on a candidate, and every day you get pounded with about 20 messages telling you that the guy you think you might want to vote for has a lot of problems, it’s easier to switch horses at that point,” Huckabee said today on “Fox News Sunday.”

“Newt is a good candidate,” Huckabee said. “He’s had a great message. But he has been pounded by Ron Paul, Mitt Romney, Rick Perry and pretty much anybody who has 15 cents to buy part of an ad.”

In Virginia, Gingrich launched a last-minute effort last week to get on the primary ballot in a state he led in a recent opinion poll.

A Quinnipiac University survey of 489 registered Republican voters taken Dec. 13-19 put Gingrich in the lead in Virginia, with 30 percent, followed by Romney with 25 percent and Paul at 9 percent. Perry had 6 percent. The margin of error was plus or minus 4.4 percentage points.

Not Prepared

At a Dec. 21 rally in Arlington, Virginia, Gingrich said he wasn’t prepared for the surge that made him a frontrunner.

“We weren’t ready for it yet because we don’t have the structure and we don’t have the money to compete at that level, so we had to scramble a little bit,” Gingrich said.

His exclusion from the Virginia ballot highlights the difference between his and Romney’s campaign apparatus.

“A real presidential campaign is more than just appearing at a bunch of debates,” Republican consultant John Feehery, who is not supporting any of the candidates, said yesterday in an e- mail.

Such organizational advantage may also help Romney if the Republican nomination contest lasts longer than in previous years. This time, states voting in March will no longer award all of their delegates to the winner of their primaries. Instead, they will be awarded proportionally. Romney had raised $32.6 million through Sept. 30, more than any of his rivals.

That financial advantage is going to help Romney, especially if his rivals don’t do well in the early states, Huckabee said on Fox.

“Unless they have a bunch of millions banked away, they’re not going to raise anymore,” Huckabee said. “So, that’s where Mitt Romney does have the advantage.”

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.




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China May Establish Credit-Rating Companies

By Bloomberg News - Dec 25, 2011 2:50 PM GMT+0700

China should reduce its reliance on overseas rating companies by encouraging large financial institutions to strengthen their research and make their own judgments, central bank Governor Zhou Xiaochuan said.

The nation is also considering establishing credit-rating companies backed by the government, Zhou said at a financial forum in Beijing today. A copy of his speech transcript was posted on financial news portal hexun.com.

Zhou’s remarks reflect China’s desire to seek alternatives to the top-three global rating companies amid skepticism among officials about the firms’ independence. The nation set up its first rating company that makes investors rather than borrowers pay, called China Credit Rating Co., in September last year.

"With the rapid expansion in China’s bond market, we need rating companies that are familiar with the Chinese situation," said Lu Zhengwei, Shanghai-based chief economist at Industrial Bank Co., who was rated the nation’s best analyst in 2010 by China Business News newspaper. “We see comments from rating companies during this round of the crisis have influenced the financial market to a large degree. It’s no surprise China is paying attention to them.”

‘Beneficial Alliance’

Overseas rating companies’ earnings models cause “a strong beneficial alliance between the issuer and the ratings agency that cannot avoid influencing the agency’s independence,” said the National Association of Financial Market Institutional Investors in a draft report seen by Bloomberg News last July. The association was formed by the central bank in 2007 to help develop the country’s over-the-counter financial markets.

One possibility for nurturing local rating companies is to require that a domestic firm also rate a local financial product if one of the international companies does so, said Zhou, the governor of People’s Bank of China. Moody’s Investors Service, Standard & Poor’s and Fitch Ratings are the three biggest rating companies.

Domestic rating firms can play a larger role by researching the finances of local or municipal government, an area in which foreign companies lack expertise, Zhou said.

The State Council, China’s cabinet, has designated the central bank to regulate the country’s credit-rating companies, making it the sole regulator of the industry, local media reported last week.

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net





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U.S. Home Prices Probably Fell, Confidence Up

By Timothy R. Homan - Dec 25, 2011 12:01 PM GMT+0700

Home prices in 20 U.S. cities probably declined at a slower pace and consumer confidence improved, signs the economy gained strength heading into 2012, economists said before reports this week.

Property values dropped 3.2 percent in October from the same month in 2010, the smallest year-over-year decrease since January, according to the median forecast of 20 economists before a Dec. 27 report from S&P/Case-Shiller. Consumer confidence rose to a five-month high in December and more people signed contracts to buy previously owned homes than a month earlier, other data may show.

Rising builder confidence, fewer unsold new properties on the market and a pickup in construction point to improvement in the industry that triggered the last recession. Real estate is still facing another wave of foreclosures that may keep pressure on home prices, making for an uneven housing recovery.

“We’ll continue to see prices drop,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “The middle of 2012 is when we think prices will actually bottom.”

Economists surveyed projected the gauge of residential real-estate values declined 0.3 percent in October from the prior month, when it fell 0.6 percent. The index was down 31 percent in September from its July 2006 peak.

The year-over-year gauge provides a better indication of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.

Pending Home Sales

Figures on Dec. 29 may show pending sales of previously owned homes rose 1.5 percent in November after a 10 percent jump, economists said before a report from the National Association of Realtors.

Reports last week showed a pickup in demand for houses. Sales of previously owned homes, which make up about 94 percent of the market, rose 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said Dec. 21.

Purchases of new single-family properties advanced 1.6 percent to a 315,000 annual pace, a seven-month high, figures from the Commerce Department showed Dec. 23. The increase pushed the number of new homes on the market to a record low.

Those gains have buoyed builders’ stocks since the end of the third quarter. The Standard & Poor’s Supercomposite Homebuilding Index (S15HOME), which includes Toll Brothers Inc. and Lennar Corp., has climbed 32 percent, while the broader S&P 500 has gained 12 percent.

Consumer Confidence

As housing stabilizes and employment strengthens, consumers are becoming more optimistic. Confidence rose to 58.6 from 56 last month, according to the Bloomberg survey median before a Dec. 27 report from the New York-based Conference Board.

Other surveys reflect gains in optimism. The Bloomberg Consumer Comfort Index improved to minus 45 in the period ended Dec. 18 from a reading of minus 49.9 the prior week, marking the biggest seven-day gain since January. The Thomson Reuters/University of Michigan index of consumer sentiment rose to a six-month high in December.

Some homebuilders say an increase in sentiment is needed to help boost demand.

“We need a higher level of confidence to get back to the traditional move-upstream or first-time buyer out of the rental,” Jeffrey Mezger, chief executive officer of KB Home, said on a Dec. 21 conference call with analysts. “A lot of consumers are surprised, frankly, at how low home payments are compared to rent.”

Policy makers are promoting programs designed to reinvigorate the housing market. The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.

Officials at the Federal Reserve this month reiterated that they will keep the benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.

Bloomberg Survey
==============================================================
Release Period Prior Median
Indicator Date Value Forecast
==============================================================
Case Shiller Monthly MO 12/27 Oct. -0.6% -0.3%
Case Shiller Monthly YO 12/27 Oct. -3.6% -3.2%
Consumer Conf Index 12/27 Dec. 56.0 58.6
Initial Claims ,000’s 12/29 24-Dec 364 374
Chicago PM Index 12/29 Dec. 62.6 61.0
Pending Homes MOM% 12/29 Nov. 10.4% 1.5%
==============================================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net





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