Economic Calendar

Monday, June 25, 2012

Apple-Motorola Mobility Patent Suit Ended by U.S. Judge

By Andrew Harris - Jun 25, 2012 4:12 AM GMT+0700

Apple Inc. (AAPL) and Motorola Mobility, the mobile phone-making unit of Google Inc. (GOOG), lost bids for court orders barring each other from infringing their patents.

U.S. Circuit Judge Richard A. Posner in Chicago denied the requests for relief in a 38-page court order issued on June 22, ending a lawsuit started in 2010. A copy of the ruling could not immediately be obtained from the court and was provided to Bloomberg News by a Motorola Mobility spokeswoman.

“Neither party is entitled to an injunction,” Posner wrote. “Neither has shown that damages would not be an adequate remedy.”

Earlier this month, the judge rejected each company’s money-damages theories and canceled a jury trial set for June 11. “That was a simple failure of proof,” not that damages are incalculable, Posner said.

That trial would have been the first between Apple -- whose iPhones are the world’s most popular line of mobile phone and Google, whose Android operating system is the world’s most-used mobile phone platform -- since Google completed its $12.5 billion acquisition of Motorola Mobility last month.

Posner on June 20 heard arguments from Apple lawyers seeking an order enjoining Motorola products from infringing four of its patents, while Motorola sought an order barring Apple’s infringement of one of its cellular technology patents.

The companies also have active litigation before the International Trade Commission in Washington and in other U.S. federal courts and in Germany.

Ruling Confirmed

Kristin Huguet, a spokeswoman for Cupertino, California- based Apple, confirmed Posner’s ruling in a telephone interview today. She declined to comment on the court’s decision.

“We are pleased that Judge Posner formally dismissed the case against Motorola Mobility,” Jennifer Erickson, a spokeswoman for the Google unit, said today in an e-mailed statement. “As it relates to Apple’s violation of our patents, we will continue our efforts to defend our own innovation.”

Google is based in Mountain View, California.

The case is Apple Inc. v. Motorola Mobility Inc., 11cv8540, U.S. District Court for the Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew Harris in Chicago at

To contact the editor responsible for this story: Michael Hytha at


Obama Has Tailwind as He Follows Romney Speech to Latinos

By John McCormick - Jun 22, 2012 11:00 AM GMT+0700

President Barack Obama, speaking in Florida at the same venue where Mitt Romney criticized the incumbent’s immigration policy, gets his turn today to make his case to the critical Hispanic voting bloc.

Obama, who will address the National Association of Latino Elected and Appointed Officials, announced last week a plan to exempt from deportation younger illegal immigrants who meet certain requirements. Hispanics and voters in general welcomed the move.

Romney Criticizes Obama for Lack of Leadership on Immigration

Mitt Romney during a campaign event at the Bavarian Inn Lodge on June 19, 2012 in Frankenmuth, Michigan. Photographer: Joe Raedle/Getty Images

Romney yesterday argued that Obama takes the Hispanic vote for granted and has failed to lead on immigration. He offered few details on his own plan, other than pledging a “long-term solution” to replace Obama’s temporary measure.

“For two years, this president had huge majorities in the House and Senate; he was free to pursue any policy he pleased,” the presumptive Republican presidential nominee said in Lake Buena Vista, Florida yesterday. “But he did nothing to advance a permanent fix for our broken immigration system.” He only acted when “facing a tough re-election and trying to secure your vote.”

In his June 15 announcement, Obama said he won’t try to deport some illegal immigrants under the age of 30 who were brought to the U.S. before they turned 16 and who have been in the country for at least five straight years. They must have no criminal history and attend school or have earned a high school degree or its equivalent, or have served in the military.

Executive Order

“Some people have asked if I will let stand the president’s executive order,” Romney said to about 1,000 people in a ballroom at Disney’s Contemporary Resort. “The answer is that I will put in place my own long-term solution that will replace and supersede the president’s temporary measure.”

Romney received tepid applause, getting some boos when he mentioned repealing the health-care law Obama championed. Juan Zapata, a Republican and the Latino group’s chairman, called the largely Democratic audience “polite.”

Obama had momentum heading into today’s speech after his announcement last week, said Florida Representative Darren Soto, an Orlando Democrat supporting the president.

“There’s definitely going to be a more welcome reception,” Soto said. “He has a lot of wind at his sails.”

Permanent Residency

As he has before, Romney endorsed awarding permanent residency to foreign students who get advanced degrees in math, science or engineering at U.S. universities, saying they should have green cards stapled to their diplomas. He also supports a pathway to legal status for illegal immigrants who serve in the military.

In wooing Hispanic voters angered by the stern positions he took during the Republican primary campaign, Romney also must be careful not to antagonize Republicans who view Obama’s approach as akin to amnesty.

In response to Romney’s speech, Obama’s campaign spotlighted the so-called Dream Act legislation, which would let many illegal immigrants stay in the U.S. and provide a path to citizenship.

Romney’s pledge yesterday to keep his promises to Hispanics contrasts with his primary campaign, Gabriela Domenzain, the president’s campaign director of Hispanic press, said in an e- mailed statement. He previously “called the Dream Act a ‘handout’ and promised to veto it,” she said.

Presuming Support

Romney told the audience Obama presumes Hispanics are with him.

“He may admit that he hasn’t kept every promise,” Romney said, previewing the president’s speech. “He’ll imply that you don’t really have an alternative. I think he’s taking your vote for granted.”

Hispanic households have been among the hardest hit by the struggling economy, he said, repeating a constant theme.

“Is the America of 11 percent Hispanic unemployment the America of our dreams?” he asked. “We can do better. We can prosper again, with the powerful recovery we’ve all been waiting for.”

Romney’s remarks lacked specifics, said Ana Navarro, a Republican strategist based in Florida.

“I wish I heard more,” she said. “Hispanics who want a solution for the 11 million undocumented here are faced with two options: a guy who makes big promises and doesn’t deliver or a guy who makes no promises.”

Court Ruling

The U.S. Supreme Court is due to weigh in next week on immigration, ruling on Arizona’s law requiring police officers to check a person’s legal status during routine traffic stops. The law also makes it a crime for illegal immigrants to work in the state.

With the U.S. unemployment rate at 8.2 percent, the politics of immigration are sensitive. Neither party wants to be viewed as favoring illegal immigrants over American workers.

While Obama campaign officials deny that politics motivated the president’s recent directive, they are counting on it to solidify support among Hispanic voters in a close race with Romney.

Hispanics helped propel Obama to the White House in 2008. He won 67 percent of their vote compared with 31 percent for Republican John McCain, according to exit polls. This year, Hispanics could be crucial in such swing states as Florida, Colorado, Nevada and Virginia.

Poll Findings

A Bloomberg poll this week showed Obama benefiting from his new immigration policy. Among likely voters, 64 percent surveyed said they agreed with the policy and 30 percent disagreed. Independents backed the decision by better than 2-1.

In battling to lock up the Republican nomination, Romney used tougher rhetoric on illegal immigration, opposing any proposal that gives legal status to undocumented immigrants without first requiring that they leave the U.S. He made no distinction at the time for illegal immigrants brought to the country as children.

Once the nomination was secured, Romney has tried to moderate his position, stressing the pain Hispanics have suffered in the economic downturn.

Romney, 65, this week disclosed he is considering an Hispanic, Marco Rubio, as a potential vice presidential running mate. Rubio, 41, is being vetted for the No. 2 spot on the Republican ticket, Romney said, challenging a news report suggesting the Florida senator had been excluded from the search.

As a running mate, Rubio, a Cuban-American elected to the Senate in 2010, could boost Romney’s standing among Hispanics and has the backing of former Florida Governor Jeb Bush, the brother of one former president and son of another.

Rubio yesterday said Obama’s shift on deportation was intended as a political “talking point,” underscored by his failure to consult Republicans beforehand to build bipartisan support.

“This White House didn’t reach out to anybody,” Rubio told reporters at a breakfast in Washington sponsored by the Christian Science Monitor. “That never happened.”

To contact the reporter on this story: John McCormick in Lake Buena Vista, Florida at

To contact the editor responsible for this story: Jeanne Cummings at


Germany to Confront United Euro Bloc as Leaders Head to Summit

By Patrick Donahue - Jun 25, 2012 6:01 AM GMT+0700

Germany will confront an increasingly united bloc of euro-area nations demanding more ambitious policies to save the currency union this week, as European leaders prepare for a summit setting the course for the currency’s preservation or ultimate demise.

As concern mounts over their banking systems and finances, Spanish and Italian leaders have added their voices to those calling for more decisive action, a counterpoint to Germany’s more incremental approach to solving the 2 1/2-year-old crisis. European Union leaders will attend pre-summit meetings as they work to to narrow differences before the June 28-29 gathering in Brussels.

“We are too close to the edge of the cliff for comfort, and the time to make big changes is awfully short,” Erik Nielsen, chief economist at UniCredit SpA (UCG) in London, wrote in a note to clients yesterday.

Chancellor Angela Merkel last week resisted attempts by the leaders of France, Italy and Spain to persuade Germany to accept faster action to ease sovereign-debt worries in the financial markets, delineating divisions on greater euro-area integration. The friction between Germany and the rest of Europe was illustrated on June 22 by the Bundesbank’s opposition to European Central Bank plans to help ailing banks.

Yields Recede

Spanish and Italian borrowing costs retreated last week, aided by speculation that euro-area leaders will take more action. Spain’s 10-year bond yield receded to 6.38 percent on June 22 after climbing above 7 percent earlier in the week. Comparable Italian yields slid to 5.8 percent after climbing as high as 6.17 percent on June 18.

At a June 22 four-way summit meeting in Rome, Merkel faced a united front among her three interlocutors -- Italian Prime Minister Mario Monti, French President Francois Hollande and Spanish Prime Minister Mariano Rajoy -- on making the euro region’s rescue funds more flexible. She dismissed a Monti plan last week to use the funds -- the temporary European Financial Stability Facility or the permanent European Stability Mechanism -- to buy bonds, and spelled out her opposition to directly recapitalizing banks.

German taxpayers couldn’t back channeling funds directly to banks in other countries because they have no oversight of how the money would be used, Merkel told reporters in Rome. As chancellor, she only had such powers over German banks. “You would have a huge problem here,” she said. Merkel travels to Paris on June 27 for a pre-summit meeting with Hollande.

`Wrong Direction'

Merkel is worsening Europe's crisis because countries need growth, not austerity, to pay down their debt, billionaire investor George Soros said in a Bloomberg Television interview yesterday.

``Merkel has emerged as a strong leader,'' Soros, 81, said in an interview with Bloomberg Television's Francine Lacqua at his London home. ``Unfortunately, she has been leading Europe in the wrong direction.''

While the German leader has said repeatedly that counterparts in the euro area need to take a “step-by-step” approach and that there was no “big bang” solution to the crisis, Italy’s Monti said this week may prove critical to the euro’s survival.

Should leaders fail to produce a blueprint for a tighter fiscal and financial union, there will be “progressively greater speculative attacks” on the currency bloc’s more indebted nations, Monti told a group of European newspapers including Le Monde and El Pais on June 21.

Euro-Area Debt

France’s Hollande reiterated his support for jointly issued euro-area debt at the meeting, calling the so-called euro bonds “a useful instrument for Europe.” Merkel has consistently rejected the idea as premature.

“At the start of the crisis, we really had clear joint actions that worked,” ECB Governing Council member Ewald Nowotny said when asked about euro-area dissonance in a June 23 interview with Austrian state broadcaster ORF. “Now in the second phase, where we have much more differentiated problems, this no longer is the case.”

With the European Commission expecting the economies of the 17-nation euro area to shrink 0.3 percent overall this year and six of the member states to contract, the leaders of the four biggest economies unveiled a fleshed-out growth package to underscore their shift from austerity. As much as 130 billion euros ($163 billion) will be deployed, equivalent to 1 percent of the euro area’s economic output.

'Not Trivial'

That amount “is not trivial,” UniCredit’s Nielsen said, though the stimulus’s punch would depend on the details. The funding will likely derive from unused EU funds, increased capital to the bloc’s regional-funding vehicle -- the European Investment Bank -- and project bonds, he said.

Possible steps toward a common banking system and the degree to which euro members surrender autonomy to Brussels may form the centerpiece of the summit agreement. While often reiterating that the bloc needs “more Europe,” Merkel, for example, rejects calls for a euro deposit-guarantee fund, saying such a measure would be inconceivable without more robust political union.

Proposals for common bank rules and supervision within the euro area are ambitious and would take time, Bank for International Settlements General Manager Jaime Caruana said in a speech in Basel yesterday.

'Common Vision'

“But setting out a common vision, an agreed objective and a clear mandate could help to break some of the adverse links that are making the euro-area crisis so severe,” he said. “Institutional development has not kept up with the needs of the monetary union.”

Underscoring Germany’s position outside the main European consensus was last week’s suggestion by the Bundesbank, the country’s central bank, that the ECB was wrong to relax some rules on the collateral that banks can offer in exchange for loans. “We’re critical of this,” Bundesbank spokesman Michael Best said June 22. In terms of collateral, “we won’t accept what we don’t have to accept,” he said.

More Germans would favor leaving the euro area than those in France, Italy and Spain, according to a poll published in four European newspapers yesterday. Some 39 percent of Germans would back such a move, compared with 28 percent of Italians, 26 percent of French voters and 24 percent of Spaniards, according to the Ifop-Fiducial survey.

Lesser Evil

This week’s cover of the German magazine Der Spiegel featured a defaced 1 euro coin with the title “If the Euro Breaks Up -- a Scenario.” Germany’s economy could shrink by as much as 10 percent in the year after a euro collapse, the magazine cited an unpublished study from the German Finance Ministry as saying.

The statistics suggest that the cost of rescuing the euro would be a lesser evil compared with returning to national currencies, Spiegel cited a ministry official as saying. Joblessness would soar to more than 5 million from less then 3 million today, the magazine reported.

The ministry “won’t take part in speculation about alleged secret papers,” spokeswoman Silke Bruns said yesterday in Berlin. She said she isn’t aware that such a study exists.

Meanwhile, German Finance Minister Wolfgang Schaeuble is considering the idea of a national referendum on further European integration, telling Spiegel that EU members need to move more power to Brussels “without every national state being able to block the decisions.”

Schaeuble didn’t say when a German referendum may be needed to approve the changes.

“A few months ago I would have said: in five years? Not in my lifetime! Now I’m not so sure,” he told Spiegel.

To contact the reporter on this story: Patrick Donahue in Rome at

To contact the editor responsible for this story: James Hertling at


Mirvac Delays Buyback Decision, Plans Queensland Housing Entry

By Nichola Saminather - Jun 25, 2012 7:25 AM GMT+0700

Mirvac Group (MGR), which recently raised more than A$300 million ($301 million) from the sale of its hotel management business, will delay any share buyback until market uncertainty stemming from Europe’s debt crisis abates.

“It doesn’t take much to put a credit freeze through the world if Europe, and particularly Greece, doesn’t sort out its issues,” Nick Collishaw, managing director of Mirvac, said in an interview in Sydney on June 22. “We’re holding more cash than we would ordinarily in more stable times. If the board and I see overall market sentiment picking up and we don’t have uses for the capital, then a buyback is on the cards.”

Mirvac in May completed the sale of its hotels unit to Accor Asia Pacific and Ascendas Real Estate Investment Trust (AREIT) for about A$322 million to simplify its business. The group is now focusing on office and retail properties in its investment unit, which makes up 80 percent of its business, while its development division is concentrating on creating condos, housing communities and commercial properties, Collishaw said.

Mirvac needs about A$200 million from asset sales to fund capital expenditure, Collishaw said at the group’s first-half earnings teleconference on Feb. 21. Above that, the group makes a “serious commitment” to a buyback, taking into account economic conditions, its share price and other opportunities, he said at the time.

As housing markets in Sydney, Brisbane and Melbourne slow, Mirvac is looking to mining areas in Queensland and Western Australia states for future growth. The company is in early stages of talks with coal and liquefied natural gas producers and government bodies in northern Queensland, Collishaw said.

Karratha Project

The talks, about housing the construction workers for plants and pipelines being built, will be followed in about three to five years by discussions about longer-term, master- planned communities, he said.

In Western Australia, Mirvac was named the preferred developer of the city center of Karratha, the biggest town in the iron-ore rich Pilbara region, in November in a joint venture with the local land authority. The A$1.5 billion project, which will create a new suburb, Mulataga, will accommodate as many as 8,000 people, Collishaw said.

“What’s been happening in the Pilbara and north of Queensland so far has been one off, ad hoc projects,” he said. “The debate going on right now in the resource centers and councils is this is no longer boom-bust style development. We’re now putting together the infrastructure, the cultural facilities, you expect to see in the suburb of a city.”

Population Growth

The population of Western Australia jumped 14.3 percent in the five years to 2011, while Queensland’s rose 11 percent, Census figures released last week showed. The median individual income surged 32.4 percent in Western Australia and 23.3 percent in Queensland, they showed.

Mirvac has also entered Perth’s office market, with the redevelopment of the Old Treasury Building, which is fully leased to the Western Australian government for 25 years, he said.

Perth had a vacancy rate of 3.3 percent at the end of December, as the city saw its third-highest absorption on record, driven by an unemployment rate of 4.3 percent, according to figures from broker Colliers International. In contrast, Sydney’s vacancy rate was 9.6 percent, and Melbourne’s 5.3 percent.

To contact the reporter on this story: Nichola Saminather in Sydney at

To contact the editor responsible for this story: Nichola Saminather at


Treasuries Rise as George Soros Warns Euro Is at Risk

By Wes Goodman - Jun 25, 2012 9:04 AM GMT+0700

Treasuries rose, snapping a decline from last week, after billionaire investor George Soros warned the euro may dissolve if European Union leaders fail to curb the region’s debt crisis at a two-day summit starting June 28.

Soros called on Europe to start a fund to buy Italian and Spanish bonds in return for budget cuts in the nations, speaking in an interview in London yesterday. Demand for the safest assets as European governments try to find ways to pay their debts has helped Treasuries beat all other U.S. fixed-income securities for the first time in three quarters.

“The ideal thing will be for EU leaders to lay out a grand plan for fiscal union, but the suspicion is that they will again fall short of that,” said Peter Jolly, the Sydney-based head of market research at National Australia Bank Ltd. (NAB), the nation’s largest lender by assets. “That’s going to keep Treasury yields low.”

The U.S. 10-year yield declined two basis points, or 0.02 percentage point, to 1.66 percent as of 11:02 a.m. in Tokyo, Bloomberg Bond Trader data show. The 1.75 percent note due in May 2022 advanced 5/32, or $1.56 per $1,000 face amount, to 100 27/32. The rate increased 10 basis points last week.

Treasury 10-year notes will yield 2 percent at year-end, Jolly said, versus the average of 3.78 percent over the past decade.

Japan’s 10-year rate was unchanged at 0.825 percent. It was as low as 0.79 percent on June 4, a level not seen since 2003.

Comparative Returns

U.S. government debt has gained 2.9 percent since March, while corporate bonds returned 1.9 percent, mortgages rose 1 percent and municipal bonds increased 1.8 percent, according to Bank of America Merrill Lynch index data.

European leaders are running out of time to show investors they will do what’s necessary to save their currency, Soros said.

“There is a disagreement on the fiscal side,” Soros said in an interview with Bloomberg Television’s Francine Lacqua. “Unless that is resolved in the next three days, then I am afraid the summit could turn out to be a fiasco. That could actually be fatal.”

Italy plans to sell inflation-linked securities maturing in 2016 and 2026 tomorrow as well as 3 billion euros ($3.76 billion) of zero-coupon bonds. Spain will auction three- and six-month bills tomorrow.

Government bonds losing their risk-free status are depriving investors of wealth-preservation opportunities as Europe’s debt crisis boosts demand for havens, according to the Bank for International Settlements.

The global pool of safer assets “has shrunk just as demand has risen due to a flight to safety, leading to a major shortage of safe assets in the global financial system,” the BIS said in its annual report in Basel, Switzerland.

To contact the reporter on this story: Wes Goodman in Singapore at

To contact the editor responsible for this story: Rocky Swift at


Yahoo Japan Shares Fall on E-Mail Privacy Inquiry: Tokyo Mover

By Shunichi Ozasa and Naoko Fujimura - Jun 25, 2012 9:15 AM GMT+0700

Yahoo Japan Corp. fell the most in four months in Tokyo trading as the government said it will question the company about plans to display advertisements based on the contents of users’ e-mail messages.

Yahoo Japan fell as much as 6.1 percent, the biggest intraday decline since Feb. 15, to 23,710 yen and traded at 24,740 yen as of 10:59 a.m. Japan’s benchmark Nikkei 225 Stock Average was little changed.

Japan’s largest Internet company by market value will start using a program in August that automatically detects key words in e-mails, said Asuka Isayama, a spokeswoman for the Tokyo- based web-portal operator. The Ministry of Internal Affairs and Communications plans to ask Yahoo Japan about the service, said Noriyuki Morisato, a deputy director at the telecommunications consumer policy division, confirming an earlier report by the Yomiuri newspaper.

“We’ve been notifying users of our plan to introduce the service since the end of May, and we will also offer an option to opt out,” Yahoo Japan’s Isayama said. “So we don’t think there’s a problem.”

Morisato declined to comment on whether the service violates privacy laws.

Incoming e-mails from senders not using Yahoo would also be subject to scanning, Isayama said. The company’s e-mail service has about 15 million users in Japan, she said.

“There won’t be any impact on Yahoo’s earnings” from a potential government probe, said Eiji Maeda, a senior analyst at SMBC Nikko Securities Inc. in Tokyo. “Still, the market is taking the news as negative.”

Softbank Corp. (9984), Japan’s third-biggest mobile-phone company, owns about 42 percent of Yahoo Japan, while Yahoo! Inc. (YHOO) owns about 35 percent, according to data compiled by Bloomberg.

To contact the reporters on this story: Shunichi Ozasa in Tokyo at; Naoko Fujimura in Tokyo at

To contact the editor responsible for this story: Michael Tighe at


Hong Kong-LME Deal Spurs Biggest Exchange Drop: Real M&A

By Jonathan Burgos and Eleni Himaras - Jun 25, 2012 8:49 AM GMT+0700

Hong Kong Exchanges & Clearing Ltd.’s pursuit of the London Metal Exchange is transforming the Asian bourse into the industry’s worst performer.

Hong Kong Exchanges’ $2.2 billion bid for the LME this month valued the world’s largest trading venue for industrial metals at 181 times earnings, making it the most expensive bourse acquisition exceeding $1 billion on record, according to data compiled by Bloomberg. With the Asian company’s stock tumbling since the first report of its interest in the LME, it has now retreated 33 percent in the past year, the biggest decline among the world’s 20 largest exchanges, the data show.

Charles Li, chief executive officer of Hong Kong Exchanges & Clearing Ltd. Photographer: Jerome Favre/Bloomberg

While the merger will give Hong Kong Exchanges control of about 80 percent of global trade in industrial-metal futures as it grapples with falling profits and a slump in initial public offerings, the New York Stock Exchange (NYX)’s head said the price would have been too rich for the biggest U.S. bourse operator. An increase in trading by Chinese companies on the LME is vital to justify the deal, making the takeover’s success dependent on China’s regulators, who have so far resisted granting the LME access to the mainland to protect its rival in Shanghai, according to Core Pacific-Yamaichi International (H.K.) Ltd.

“In the short-term, this acquisition will be a huge burden,” Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co., which oversees $65 billion, said in a phone interview. “The valuation they’re buying LME for is expensive. This investment could pay off eventually if they are able to boost China’s trading volumes on LME, but that’s not easy to achieve given current regulatory restrictions.”

Benchmark Prices

Hong Kong Exchanges, formed a decade ago through the combination of the city’s equity and derivatives markets, has focused on stocks, options and futures on equity indexes and interest rates. The 135-year-old LME, which reported record volume of $15.4 trillion last year, sets global benchmark prices for metals including copper, aluminum and nickel, of which China consumes more than any other nation.

Trading volume on the LME grew about 58 percent between 2007 and 2011, according to data from the exchange. UBS AG analyst Stephen Andrews forecasts trading will increase to 261 million lots by 2015, from about 147 million lots in 2011, according to a June 18 note.

“This deal is about growth over not just one or two years, but over the longer term,” James Fok, chief of staff to Hong Kong Exchanges’ (388) Chief Executive Officer Charles Li, said in a phone interview. “As a standalone business, LME has quite an attractive growth rate. On top of that, what we’re able to help plug it into are areas of growth that it’s not capturing today - - in particular China -- that are able to boost that growth quite substantially.”

‘Very Well’

“From our point of view we think the valuation stacks up very well,” he said.

Miriam Heywood, a spokeswoman for LME, declined to comment on the price Hong Kong Exchanges offered for the firm.

Hong Kong Exchanges said on June 15 it had agreed to pay 1.39 billion pounds ($2.2 billion) for LME, or 181 times the London-based company’s 2011 earnings of 7.68 million pounds, according to data compiled by Bloomberg. The exchange’s stocks fell as much as 0.6 percent today and was little changed at HK$108.80 as of 9:44 a.m. in Hong Kong.

The LME purchase price was almost double the prior record for an exchange deal exceeding $1 billion, the data show. The merger of Sao Paulo-based Bolsa de Mercadorias & Futuros-BM&F SA and Bovespa Holding SA to create Latin America’s biggest stock and futures exchange valued Bovespa at 107 times profit when it was announced in March 2008, data compiled by Bloomberg show.

‘Limited Relevance’

The member-owned LME’s previous profits are “of limited relevance” because the bourse kept fees low for the benefit of its shareholders, Hong Kong Exchanges said in a June 15 statement. Had a fee increase scheduled for next month taken place before 2011, profits would have tripled to 23.8 million pounds last year, it said.

With that level of earnings, the takeover would value LME at 58 times profit. That would still leave Hong Kong’s bid as the third-most expensive for a bourse on record, behind the BM&F-Bovespa merger and the Chicago Mercantile Exchange’s October 2006 offer for the Chicago Board of Trade, according to data compiled by Bloomberg. The Bloomberg World Exchanges Index (BNWEXCH) of 25 bourses traded at almost twice its current price-earnings multiple when the deal to create the current Chicago-based CME Group Inc. (CME) was announced, the data show.

“The earnings don’t justify the price,” Thomas Monaco, an analyst at Mizuho Securities Asia Ltd. in Hong Kong, said in a telephone interview. “I don’t see it being positive for earnings, which is essentially what the stock trades off of. I think they’ve bitten off much more than they can chew.”


Taking into account the agreement by Hong Kong Exchanges not to raise fees on the LME until 2015, Monaco estimated in a June 18 note that the bourse will have to double the LME’s profits in order to avoid cutting its dividend or selling new shares to finance the deal.

“This was a value-destructive deal and the company should not be doing something like this,” Monaco said.

NYSE Euronext’s CEO Duncan Niederauer said on June 8 that the LME had become too expensive for the operator of the New York Stock Exchange. NYSE Euronext had said in May it was removed from the list of potential buyers.

“We weren’t going to chase it,” Niederauer said at the Sandler O’Neill Global Exchange and Brokerage Conference in New York. “The price it’ll likely trade at, frankly, it was too rich in terms of what we were able to afford to pay.”

LME Shareholders

Hong Kong Exchanges’ bid has left New York-based JPMorgan Chase & Co. poised to more than double the value of its investment in LME shares bought seven months ago from the U.K. unit of bankrupt MF Global Holdings Ltd. The New York-based bank is the biggest investor in the LME with 1.4 million shares valued at 150.6 million pounds after Hong Kong’s offer of 107.60 pounds per ordinary share.

New York-based Goldman Sachs Group Inc. (GS)’s stake of 1.23 million shares in LME is valued at 132.3 million pounds. U.K. metals trading companies Metdist Ltd. and Metdist Trading Ltd. have a combined 1.21 million LME shares, valued at about 130 million pounds after the offer.

Hong Kong Exchanges, which had $5.7 billion in cash and short-term investments at the end of March, is borrowing 1.1 billion pounds for the purchase and plans to sell stock or bonds to refinance the loans. The company is likely to issue 10 percent of its share capital to raise funds, according to Ivan Li, an analyst at Kim Eng Securities in Hong Kong.

‘Under Pressure’

“Its share price may be under pressure again at that time,” Li wrote in a June 20 note. Li cut his forecast for Hong Kong Exchange’s 2012 earnings by about 10 percent and the price estimate on the stock to HK$90 a share, or 17 percent below last week’s close.

With the announcement of the LME acquisition sending Hong Kong Exchanges to the largest drop in the city’s benchmark Hang Seng Index on June 18, the bourse has now tumbled 33 percent in the past year. That’s a bigger slump than any global exchange with a market value of more than $500 million, data compiled by Bloomberg show. Most of the decline has come since the South China Morning Post newspaper first reported the bourse’s interest in LME in February.

The deal price means that Hong Kong Exchanges will have to boost LME’s revenue to at least 400 million pounds, from 61 million pounds in 2011, if it is to meet its own goal of a 10 percent to 15 percent return on investment for the acquisition in five years, UBS’s Andrews said. The purchase is unlikely to make more than a “mid-single digit” return on investment in the next three to five years, according to a June 18 note from Andrews, who factored in the cost of financing and U.K. taxes.

‘Strategic Benefits’

“There are clearly strategic benefits for Hong Kong from owning this asset but for HKEx’s shareholders acquisitions need to generate a good return on cash invested to add value,” Andrews wrote. “LME may well come up short of expectations in this regard.”

Hong Kong plans to increase the London exchange’s revenue in part by tapping the large potential base of customers in China, which accounts for about 40 percent of consumption of commodities globally and only as much as 25 percent of trading on the LME, the company said when announcing the deal.

To increase trading by Chinese firms, the LME will need permission to register warehouses in mainland China, according to Timothy Li, a Hong Kong-based senior analyst for Core-Pacific Yamaichi. That may not be forthcoming with Chinese regulators interested in protecting the Shanghai Futures Exchange from competition, he said.

Warehouse Ban

The China Securities Regulatory Commission, which is responsible both for regulating trading and developing China’s domestic markets, has prohibited foreign bourses from setting up warehouses for delivery of commodities. The ban is in place until the government issues rules on the opening of futures markets, the CSRC said in a July 2008 statement. The CSRC hasn’t said when that will happen and didn’t respond to a request for comment outside normal business hours.

“Whether you are a producer, user or trader, warehouse delivery is an important part of commodity trading,” Zhang Yifan, a commodity strategist at China Galaxy Securities Co., said by phone from Shanghai. “Obstacles for overseas exchanges to set up delivery warehouses in China gives domestic players less incentive to trade on the foreign exchanges.”

The CSRC also controls Chinese companies’ ability to trade commodity futures in overseas exchanges, including the LME.

“They need to boost LME trades from China,” Core Pacific- Yamaichi’s Li said in a telephone interview. “China’s interest in protecting the Shanghai Futures Exchange from overseas competition may make this difficult.”

Declining Earnings

Before Hong Kong Exchanges agreed to the deal for LME, analysts were projecting it would report earnings of about HK$5 billion ($640 million) in 2012, the fifth year of falling or unchanged profits since 2007. The average of analyst forecasts dropped to HK$4.9 billion in the past week, data compiled by Bloomberg show.

Hong Kong has accounted for about 5 percent of the global amount raised through new listings this year, compared with 13 percent in 2011 and 18 percent in 2010, according to data compiled by Bloomberg.

The acquisition of LME will have a “significant impact” on Hong Kong’s ability to boost its profits as it increases trading fees and expands its offering of products denominated in renminbi in the world’s fastest growing major economy, according to Simmy Grewal, London-based senior analyst at Aite Group LLC.

‘Very Large’

“The potential is very large and that is what Hong Kong is paying for,” Grewal said in a phone interview. “They’ve been very smart about diversifying to now look at commodities. They didn’t want more exposure to equities, so they realized they needed to diversify and get to a completely different space that also complements the exposure to China because that is something that no other exchange in the world has.”

With the takeover unlikely to boost Hong Kong’s earnings in the short-term, investors may still grow more impatient given the uncertainty about the merged entity’s ability to get the necessary access to China, according to Mizuho’s Monaco.

“This is a very, very long-term thing,” he said. “We don’t know if they’ll be able to get the warehouses in China. We have no idea.”

To contact the reporters on this story: Jonathan Burgos in Singapore at; Eleni Himaras in Hong Kong at

To contact the editors responsible for this story: Daniel Hauck at; Katherine Snyder at; Nick Gentle at


Islamist Mohamed Mursi Elected Egyptian President

By Mariam Fam and Tarek El-Tablawy - Jun 25, 2012 1:11 AM GMT+0700

The Muslim Brotherhood’s Mohamed Mursi was elected Egypt’s first Islamist civilian president, capping an acrimonious race that divided a nation whose economy is reeling and where the military has curbed his authority.

Mursi, 60, defeated Ahmed Shafik, who served as Hosni Mubarak’s last premier, election commission head Farouk Sultan said in a televised press conference. Mursi won 13.2 million votes or 51.7 percent, beating Shafik who garnered 12.3 million votes or almost 48.3 percent, Sultan said.

Newly-elected President Mohamed Mursi delivers a speech in Cairo on Sunday. Source: Egypt State TV via The Associated Press

Muslim Brotherhood candidate Mohamed Mursi waves after casting his ballot at a polling station in the city of Zagazig on June 16, 2012. Photographer: Marwan Naamani/AFP/Getty Images

Egyptians celebrate the election of their new president the Muslim Brotherhood's Mohamed Mursi in Tahrir Square. Photographer: Daniel Berehulak/Getty Images

Egyptians celebrate the election of their new president Mohamed Mursi in Cairo's Tahrir Square on June 24. Photographer: Daniel Berehulak/Getty Images

Egyptians celebrate the election of their new president, the Muslim Brotherhood's Mohamed Mursi in Tahrir Square. Photographer: Daniel Berehulak/Getty Images

The crowd carries a Muslim Brotherhood supporter overcome by emotion as Egyptians celebrate the election of their new president Mohamed Mursi in Tahrir Square on Sunday. Photographer: Daniel Berehulak/Getty Images

Egyptians celebrate the election victory of the Muslim Brotherhood's Mohamed Mursi in Cairo's Tahrir Square. Photographer: Khaled Desouki//AFP/Getty Images

Fireworks above Cairo's Tahrir Square as Egyptians celebrate the election victory of the Muslim Brotherhood's candidate Mohamed Mursi. Photographer: Khaled Desouki/AFP/Getty Images

The announcement drew an uproar of cheers from tens of thousands gathered in Cairo’s Tahrir Square where supporters of the Brotherhood had been rallying for the past week against the ruling military council. In the Hamas-ruled Gaza Strip, backers of that Islamist movement fired celebratory shots in the air and hundreds waved the Egyptian flag.

“The Brotherhood wants to have a stronger presidency, and they are going to use their popular mandate and their democratic legitimacy now to aggressively push against” the ruling military council, said Shadi Hamid, director of research at the Brookings Doha Center. “That’s a key struggle to watch.”

Second Choice

Mursi was only nominated by the Brotherhood after it became apparent that its first choice, chief strategist Khairat el- Shater, was going to be disqualified because of an electoral technicality. Mursi and Shafik both claimed victory immediately after the June 16 and 17 runoff vote, sparking a week of tension in a country that has seen little stability since Mubarak’s ouster in February 2011.

Before the announcement, the military council boosted its authority at the expense of the presidency after a court ordered the dissolution of the Islamist-dominated parliament. A decree granted the military legislative powers and the ability to play a role in shaping a new constitution. The military defended its moves as being in the interests of national security.

“The Egyptian people want a real president and not a figurehead,” Muslim Brotherhood spokesman Mahmoud Ghozlan said in a telephone interview after the announcement. “The Egyptian people and the Muslim Brotherhood are keen on restoring the president’s authorities and thus are out there on the streets for the decree to be canceled.”

Ahead of the release of the results, officials boosted security across the country as tens of thousands of Mursi’s supporters gathered in Tahrir Square, the epicenter of last year’s uprising. Some businesses let their employees leave early amid worries that the outcome would trigger unrest. Official results were originally due to be released on June 21 before being postponed amid fraud allegations from the two candidates.

Military Confrontation

The military’s moves raised the possibility of a power struggle between the army and the Brotherhood after Mursi’s victory. Tensions marring the country’s transition have scared away foreign investors and tourists and hampered efforts to secure a $3.2 billion loan from the International Monetary Fund.

Israel’s government said it “appreciates the democratic process in Egypt and respects the results” of the election. “Israel looks forward to continuing cooperation with the Egyptian government on the basis of the peace treaty between the two countries, which is a joint interest of both peoples,” the office of Prime Minister Benjamin Netanyahu said today in a text message to journalists.

In Gaza, Hamas leader Mahmoud Zahar said “the loser in this battle is Israel.”

Power Struggle

Mursi’s win is unlikely to settle the longer-range challenge of the Brotherhood’s power struggle with the military and how that will play out in the country’s push to stabilize its economy and its political situation.

“There are still a lot of unknowns for the market, which will be looking for direction from the street, the presidency and progress by the constitutional committee,” Wael Ziada, head of research at Cairo-based EFG-Hermes Holding SAE, said by phone. “A lot will depend on public acceptance of the dissolution of parliament and the constitutional declaration after Mursi’s win.”

Mursi, a U.S.-trained engineer, inherits an economy that has struggled to recover since the revolt last year, as tourists and investors stayed away.

Bond Yields

The yield on Egypt’s 5.75 percent dollar bonds due in 2020 soared the most last week since they were sold in April 2010. The rate jumped 97 basis points to 7.87 percent in the week that ended June 22, according to prices compiled by Bloomberg. That included a 52 basis-point surge on the last day of the week.

The Arab country’s five-year credit default risk jumped 68 basis points last week to 723, the highest level since December 2008, according to CMA, which is owned by CME Group Inc. and compiles prices from the privately negotiated market. Egypt is among the 10 riskiest credits in the world.

“The new president arrives in a total institutional vacuum and in a seat essentially devoid of powers,” said Philippe Dauba-Pantanacce, Dubai-based senior economist at Standard Chartered Plc. “There is no constitution to define the presidential attributions, allocate and distinguish the executive from the legislative powers.”

The generals say they are committed to transferring rule to the new civilian president by the end of the month. Their critics charge they have tightened their grip in what amounts to a coup and will not cede meaningful power.

Mursi cast himself as the “revolutionary” candidate in the runoffs against Shafik, a former air force pilot and civil aviation minister, who ran on a law and order platform. He also tried to allay fears by some Christians and secular Muslims who say they were concerned that the Brotherhood may monopolize power or curb freedoms.

“The country is split into two,” said Teymour El-Derini, Cairo-based director of Middle East and North Africa sales trading at Naeem Brokerage. “The new president has to make everyone happy. There won’t be much patience.”

To contact the reporters on this story: Mariam Fam in Cairo at; Tarek El-Tablawy in Cairo at

To contact the editor responsible for this story: Andrew J. Barden at


BRICs Biggest Currency Depreciation Since 1998 to Worsen

By Ye Xie and Michael Patterson - Jun 25, 2012 6:02 AM GMT+0700

The largest emerging markets, whose economies grew more than four-fold in the past decade, are making losers out of everyone from central bankers to Procter & Gamble Co. (PG) as their currencies post the biggest declines since at least 1998.

For the first time in 13 years, the real, ruble and rupee are weakening the most among developing-nation currencies, while the yuan has depreciated more than in any other period since its 1994 devaluation. P&G, the world’s largest consumer-goods maker, cut its profit forecast for the second time in two months last week in part because of currency losses. Brazil’s Fibria Celulose SA (FIBR3), the biggest pulp producer, asked banks to loosen restrictions on dollar loans after the real hit a three-year low.

BRICS' heads of state, from left, Brazil's President Dilma Rousseff, Russia's President Vladimir Putin, India's Prime Minister Manmohan Singh, China's President Hu Jintao and South Africa's President Jacob Zuma. (AP Photo/Andres Leighton)

Investors are fleeing the four biggest emerging markets, known as the BRICs, after Brazil’s consumer default rate rose to the highest level since 2009, prices for Russian oil exports fell to an 18-month low, India’s budget deficit widened and Chinese home prices slumped. Investors are bracing for more losses as economic growth slows.

“I am quite bearish,” Stephen Jen, a managing partner at hedge fund SLJ Macro Partners LLP and a former economist at the International Monetary Fund, said in a phone interview from London. “When the global economy and capital flow slow down, it’s going to expose a lot of problems in these countries and make people stop and ask questions. A run on the currency could be particularly ugly.”

Ruble’s Retreat

Currencies from Brazil, Russia and India will probably decline at least 15 percent by year-end, said Jen, the former head of global currency research at Morgan Stanley.

Brazil’s real lost 12 percent so far this quarter, the biggest drop among the 31 most-actively traded currencies tracked by Bloomberg. The 11 percent depreciation in the ruble and the rupee was twice the retreat in the euro. China’s yuan, which was kept unchanged during the global financial crisis in 2008 and 2009, fell 1 percent since March after the government widened the amount the currency is allowed to fluctuate each day.

The ruble sank 2.4 percent last week, the rupee fell 2.9 percent to a record low against the dollar and the real dropped 0.8 percent. The yuan was little changed. For the week, the euro declined 0.5 percent.

Foreign Reserves

A decade after Goldman Sachs Group Inc. (GS)’s Jim O’Neill coined the term BRIC, China has become the second-largest economy while Brazil, India and Russia are among the 11 biggest worldwide. Their combined gross domestic product rose to $13.3 trillion last year from $2.8 trillion in 2002 as their share of the global economy increased to 19 percent from 8 percent, according to IMF data. Together, they control $4.4 trillion in foreign-exchange reserves, about 40 percent of the total.

The MSCI BRIC Index (MXBRIC) of shares has surged 281 percent during the past decade, compared with 34 percent for the Standard & Poor’s 500 Index (SPX) as the real and the yuan strengthened more than 30 percent. Local-currency debt in the BRIC nations returned an average 86 percent in dollar terms since data for JPMorgan Chase & Co. indexes on all four countries began in October 2005, versus a 48 percent increase in U.S. Treasuries.

The countries are still strong enough to account for 80 percent of growth at New York-based Goldman Sachs, the fifth- biggest U.S. bank by assets, Chief Executive Officer Lloyd Blankfein said at the St. Petersburg International Economic Forum in Russia’s second-largest city on June 21.

Export Boost

Weaker currencies will stimulate economic expansion by making exports more competitive, said Warren Hyland, an emerging-market money manager at Schroder Investment Management, which oversees about $319 billion worldwide. He’s been buying ruble bonds of Russian companies.

Earnings at the nation’s commodity producers, including OAO GMK Norilsk Nickel (GMKN) and Polyus Gold International Ltd. (PGIL), will get a boost because their sales are in dollars while the bulk of their costs are in rubles, New York-based Morgan Stanley said in a report this month.

Weaker currencies are hurting U.S. companies that rely on developing-nation revenue to offset slower growth in the U.S., Europe and Japan.

Lower Forecasts

P&G, led by Chief Executive Officer Bob McDonald, said in a June 20 presentation at the Deutsche Bank Global Consumer Conference in Paris that foreign-currency fluctuations will cut 2013 earnings growth for the maker of Tide washing detergent and Bounty paper towels by about 4 percentage points. China is the Cincinnati-based company’s second-largest market and some of the firm’s biggest businesses are in Russia and Brazil, P&G said.

Philip Morris International Inc. (PM), the world’s largest listed tobacco company, reduced its 2012 earnings forecast the next day because of currency swings. The New York-based maker of Marlboro cigarettes gets more than 40 percent of its operating profit from Asia and Latin America, according to data compiled by Bloomberg.

A weaker real and lower interest rates in Brazil may reduce Coca-Cola Co. (KO)’s second-quarter profit by $30 million, according to JPMorgan. The Atlanta-based company left about $3 billion in cash in Brazil at the end of 2011 to take advantage of the country’s higher interest rates, Chief Financial Officer Gary Fayard said in a conference call in February. Half of the positions were left unhedged, he said.

Pandit’s Expansion

Brazil’s central bank President Alexandre Tombini has cut the benchmark Selic rate by 2.5 percentage points this year to 8.5 percent, while the real has depreciated 9.7 percent.

“We continue to be concerned by Coke’s reliance on this income source,” JPMorgan analysts led by John Faucher wrote in a note to clients on June 7, reducing their 2012 profit estimate to $4 a share from $4.06.

Kent Landers, a spokesman for Coca-Cola, declined to comment.

Citigroup Inc. (C), which has been expanding in Latin America and Asia under Chief Executive Officer Vikram Pandit, may take a $3 billion to $5 billion “hit” this quarter related to foreign exchange losses, Charles Peabody, a New York-based analyst at Portales Partners LLC, said in an interview with Bloomberg Television on June 20. The losses may reduce Citigroup’s book value, or assets minus liabilities, he said.

Peabody, whose recommendations on shares of New York-based Citigroup during the past year produced the highest total return among 31 forecasters tracked by Bloomberg, cut his rating on the stock to the equivalent of sell from buy in March.

Fibria Debt

“Citi’s unique global footprint and exposure to the higher economic growth regions of the world will drive above-average book value growth over time,” Jon Diat, a Citigroup spokesman, said in an e-mail. “The suggestion that having non-U.S. exposure is somehow detrimental to Citi’s ability to continue to grow value over time is simply wrong.”

Local companies in the BRIC countries are also being hurt. Sao Paulo-based Fibria said on June 11 that it renegotiated loan covenants after the real’s decline increased the cost of servicing foreign obligations. About 90 percent of the company’s net debt is in dollars, according to company filings.

The rupee’s drop has hurt Indian companies by fueling inflation and reducing the scope for lower borrowing costs, said V. Ashok, the chief financial officer of Essar Group, the utility and shipping company owned by billionaire brothers Shashi and Ravi Ruia. India’s central bank unexpectedly left interest rates unchanged on June 18.

Yuan Debt

“One has no clue where it is going to end,” Ashok said in a June 22 phone interview from Mumbai. “The uncertainty and the volatility is the biggest concern.”

A weaker yuan is sapping demand for local-currency debt sold in Hong Kong, where international investors speculate on China’s foreign exchange rate. The average yield rose to a four- month high of 5.35 percent on June 5 from 4.82 percent at the end of March, according to data compiled by Bank of America Corp. Wang Changshun, chairman of Air China Ltd. (601111), told reporters this month that the company’s income from foreign-currency transactions will drop about 80 percent.

“All the BRIC looked ugly,” John Taylor, who oversees $3.5 billion as founder of currency hedge fund FX Concepts LLC in New York, said in an phone interview on June 19. The real and ruble will suffer “fairly decent” declines later this year as a global recession spurs investors to buy dollars as a haven, Taylor said.

Bearish Bets

After spending most of last year introducing policies to weaken their currencies, emerging-market governments are now working to limit the slide amid capital outflows.

Brazil’s government pared a tax on overseas loans on June 14 and has used swaps to add dollars to the market. Russia’s central bank sold U.S. currency this month to slow the ruble’s retreat, according to Chairman Sergey Ignatiev. India cut the amount of overseas income companies can hold in foreign exchange last month, spurring them to repatriate earnings. The government and central bank plan to unveil steps today to support the rupee, Finance Minister Pranab Mukherjee told reporters in Kolkata on June 23.

Investors withdrew $6.3 billion from Brazil’s stocks and bonds in May, the most since at least 2010, central bank data show. Russian capital outflows reached a net $46.5 billion in the first five months of the year, including $5.8 billion in May, which is “a lot” for the country, Ignatiev told reporters in St. Petersburg on June 6.

Derivatives traders see no sign of a turnaround.

Wagers on a weaker real on Sao Paulo-based BM&FBovespa’s futures exchange rose to $4.7 billion on June 12, the most since February 2010, according to data compiled by Bloomberg.

Bad Loans

Option traders are the most bearish on the ruble since October and they expect price swings in the rupee to be the biggest in Asia, the data show. Twelve-month forward contracts on the yuan are pricing in a further decline of 0.7 percent in 12 months.

A surge in bad loans in Brazil will weaken the real further, said Amit Rajpal, who manages global financial funds for London-based Marshall Wace LLP. The default rate on consumer debt rose to 7.6 percent in April, matching the highest level since December 2009, as lending growth slowed to 18 percent from a record 34 percent in September 2008, according to the central bank.

“What we’ll see now is basically a full-blown credit problem,” said Rajpal, who predicts rising defaults in Brazil will resemble the collapse of the U.S. subprime mortgage market five years ago.

India Deficit

In India, Prime Minister Manmohan Singh is grappling with trade and budget deficits, corruption scandals and fighting in the ruling coalition. The country may become the first among the BRIC nations to lose its investment-grade rating, Standard & Poor’s and Fitch Ratings said this month. India’s budget gap amounted to 5.8 percent of gross domestic product, compared with 4.2 percent in Portugal and 3.9 percent in Italy, according to data compiled by Bloomberg.

China has cut its growth target this year to 7.5 percent, from the 8 percent goal that had been in place since 2005. Home values fell in a record 54 of 70 cities tracked by the government in May, while industrial production growth slowed to a three-year low in April.

In Russia, the price of Urals crude, the country’s main export blend, sank 26 percent this quarter. Russia relies on oil and gas for about 50 percent of its budget revenue.

Investors are still too bullish on assets in the BRIC nations as Europe’s debt crisis weighs on emerging economies, said Eric Fine, a money manager at Van Eck Global.

“They will do poorly when the world is doing poorly,” Fine, whose firm oversees about $35 billion, said in a phone interview from New York. “I don’t believe in decoupling.”

To contact the reporters on this story: Ye Xie in New York at; Michael Patterson in London at;

To contact the editors responsible for this story: Laura Zelenko at; Dave Liedtka at