By Angela Macdonald-Smith
Aug. 27 (Bloomberg) -- Woodside Petroleum Ltd., operator of the proposed Browse liquefied natural gas venture in Australia, said it may cut spending on the project, estimated to cost as much as $30 billion, because of a planned carbon trading system.
The draft design of the emissions trading system outlined last month by the government could have ``serious implications'' for the Browse project off Western Australia, Don Voelte, Chief Executive Officer of Perth-based Woodside, said today. ``Browse is big and this is costly,'' he said.
Under the system's proposed design, LNG producers wouldn't qualify for free emissions permits, increasing costs for Australian ventures that compete for customers against rivals in countries such as Qatar and Indonesia where there is no cost placed on carbon output. The Browse venture is worth about A$16.30 a share for Woodside, JPMorgan Chase & Co. estimated in April, more than a quarter of the current stock price.
``If the current discussion paper does not get corrected, we'll need to consider dramatically reducing the spending that we have going on this in 2009 and beyond,'' Voelte said during a conference call.
Woodside has initial accords to supply gas from Browse to PetroChina Co. and Taiwan's CPC Corp. The agreements, if completed, may each be worth as much as A$45 billion ($39 billion), Woodside has estimated. Shipments are due to start as early as 2013.
Woodside owns about 50 percent of the Browse project, which would be its biggest LNG venture. BHP Billiton Ltd., BP Plc, Chevron Corp. and Woodside's 34 percent shareholder Royal Dutch Shell Plc have stakes in the project.
`Rework System'
Melbourne-based BHP in May estimated the Browse project may cost between $20 billion and $30 billion to develop. JPMorgan in November estimated the cost at A$31 billion.
``Without some fundamental rework of the emissions trading scheme, it's very difficult for Woodside to justify substantial expenditure into Browse,'' Chief Financial Officer Mark Chatterji said during the teleconference on Woodside's first- half earnings. He declined to say how much investment may be cut.
The partners are considering two primary options for developing Browse, one calling for an onshore LNG plant in the undeveloped Kimberley region of Australia's far northwest, and the other involving piping the gas about 1,000 kilometers (622 miles) to the Burrup Peninsula, the site of existing LNG plants. A reserve option is turning gas into LNG on board ships, Woodside said. The venture may select the preferred option by the end of the year, it said.
Chevron and Shell have also said the design of Australia's proposed emissions trading plan may curtail growth in the country's LNG exports.
LNG is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit), for transportation by ship to destinations not connected by pipeline. On arrival, it's turned back into gas for distribution to power plants, factories and households.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Wednesday, August 27, 2008
Hungary's Premier Gyurcsany Proposes Tax-Cut Package
By Zoltan Simon
Aug. 27 (Bloomberg) -- Hungarian Prime Minister Ferenc Gyurcsany, fighting to lift his popularity from record lows, proposed cutting taxes to accelerate growth from the slowest pace in 14 years.
The government wants to cut taxes by as much as 1.2 trillion forint ($7.4 billion) over the next four years, Gyurcsany wrote in an article published in news daily Nepszabadsag. The proposal calls for cutting corporate and payroll taxes and making the lower of the two income tax brackets available for higher salaries.
Gyurcsany is reversing some of the tax increases he pushed through in 2006 as part of a plan to trim a record budget deficit and meet euro-adoption terms next year. The measures, which also included cutting state jobs and subsidies, stalled economic growth and sank the premier's popularity.
``We can create a better-functioning, stronger, more prosperous new Hungary,'' Gyurcsany wrote. ``The Hungarian model we are proposing can match the social and economic goals of competitiveness.''
The forint traded at 235.67 at 8:48 a.m. in Budapest, from 235.84 late yesterday.
Economic growth was 1.3 percent last year, matching the lowest rate since 1993. Gyurcsany, who faced riots after his deficit-cutting measures were announced, had a 22 percent approval rating in June after six months at a record low of 19 percent, the pollster Gallup said on July 11. The poll of 1,023 people had a margin of error of 3.1 percentage points.
Region's Laggard
Growth, at an annual 2.2 percent in the second quarter, is slower than in most other east European countries that joined the EU since 2004. The Czech economy grew an annual 4.5 percent in the second quarter and Slovak annual growth was 7.6 percent.
With the next parliamentary elections less than two years away, Gyurcsany is now under pressure to boost growth and his party's popularity.
The Socialists had 22 percent support in July, compared with 41 percent for the main opposition Fidesz party, according to an Aug. 8 to 12 poll by Marketing Centrum. The pollster surveyed 1,207 Hungarians and didn't give a margin of error.
Minority Government
The premier has governed in a parliamentary minority since May and needs opposition support to pass the proposed measures. As the opposition is calling for early elections, the government's fate hinges on its ability to pass the tax law and next year's budget, the premier said on May 7.
Gyurcsany is proposing cutting the corporate income tax rate next year to 18 percent from 20 percent, while raising the upper limit for the lower, 18 percent personal income tax to 2 million forint a year from 1.7 million forint a year. With lower payroll taxes, the net effect for next year would be about 300 billion forint, he wrote.
``Two-thirds of this considerable tax cut will go to businesses and one-third to individuals,'' Gyurcsany wrote.
The scope of tax cuts after next year hinges on the government's success in raising revenue by cracking down on the so-called gray and black economies, which Gyurcsany said make up 20 percent of the economy.
Budget Plan
The tax cuts ``can't threaten'' Hungary's plan to narrow the budget deficit to 3.8 percent of gross domestic product this year and 3.2 percent next year, Gyurcsany said. He has pledged to meet euro-adoption terms next year.
The shortfall was 9.2 percent in 2006, when pre-election spending helped the premier lead his Socialists to become the first Hungarian party to win consecutive terms since the country shed communism in 1990.
Economic recovery is limited by weak demand in the euro region, destination of 57 percent of Hungarian exports, the central bank said in a report on Monday. It forecast gross domestic product growing 2.4 percent this year and next and 3.4 percent in 2010.
Germany, Europe's largest economy and the buyer of more than a quarter of Hungarian exports, contracted for the first time in almost four years in the second quarter. German GDP fell 0.5 percent in the second quarter and the French economy, the second-largest in the euro area, contracted 0.3 percent.
To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net
Read more...
Aug. 27 (Bloomberg) -- Hungarian Prime Minister Ferenc Gyurcsany, fighting to lift his popularity from record lows, proposed cutting taxes to accelerate growth from the slowest pace in 14 years.
The government wants to cut taxes by as much as 1.2 trillion forint ($7.4 billion) over the next four years, Gyurcsany wrote in an article published in news daily Nepszabadsag. The proposal calls for cutting corporate and payroll taxes and making the lower of the two income tax brackets available for higher salaries.
Gyurcsany is reversing some of the tax increases he pushed through in 2006 as part of a plan to trim a record budget deficit and meet euro-adoption terms next year. The measures, which also included cutting state jobs and subsidies, stalled economic growth and sank the premier's popularity.
``We can create a better-functioning, stronger, more prosperous new Hungary,'' Gyurcsany wrote. ``The Hungarian model we are proposing can match the social and economic goals of competitiveness.''
The forint traded at 235.67 at 8:48 a.m. in Budapest, from 235.84 late yesterday.
Economic growth was 1.3 percent last year, matching the lowest rate since 1993. Gyurcsany, who faced riots after his deficit-cutting measures were announced, had a 22 percent approval rating in June after six months at a record low of 19 percent, the pollster Gallup said on July 11. The poll of 1,023 people had a margin of error of 3.1 percentage points.
Region's Laggard
Growth, at an annual 2.2 percent in the second quarter, is slower than in most other east European countries that joined the EU since 2004. The Czech economy grew an annual 4.5 percent in the second quarter and Slovak annual growth was 7.6 percent.
With the next parliamentary elections less than two years away, Gyurcsany is now under pressure to boost growth and his party's popularity.
The Socialists had 22 percent support in July, compared with 41 percent for the main opposition Fidesz party, according to an Aug. 8 to 12 poll by Marketing Centrum. The pollster surveyed 1,207 Hungarians and didn't give a margin of error.
Minority Government
The premier has governed in a parliamentary minority since May and needs opposition support to pass the proposed measures. As the opposition is calling for early elections, the government's fate hinges on its ability to pass the tax law and next year's budget, the premier said on May 7.
Gyurcsany is proposing cutting the corporate income tax rate next year to 18 percent from 20 percent, while raising the upper limit for the lower, 18 percent personal income tax to 2 million forint a year from 1.7 million forint a year. With lower payroll taxes, the net effect for next year would be about 300 billion forint, he wrote.
``Two-thirds of this considerable tax cut will go to businesses and one-third to individuals,'' Gyurcsany wrote.
The scope of tax cuts after next year hinges on the government's success in raising revenue by cracking down on the so-called gray and black economies, which Gyurcsany said make up 20 percent of the economy.
Budget Plan
The tax cuts ``can't threaten'' Hungary's plan to narrow the budget deficit to 3.8 percent of gross domestic product this year and 3.2 percent next year, Gyurcsany said. He has pledged to meet euro-adoption terms next year.
The shortfall was 9.2 percent in 2006, when pre-election spending helped the premier lead his Socialists to become the first Hungarian party to win consecutive terms since the country shed communism in 1990.
Economic recovery is limited by weak demand in the euro region, destination of 57 percent of Hungarian exports, the central bank said in a report on Monday. It forecast gross domestic product growing 2.4 percent this year and next and 3.4 percent in 2010.
Germany, Europe's largest economy and the buyer of more than a quarter of Hungarian exports, contracted for the first time in almost four years in the second quarter. German GDP fell 0.5 percent in the second quarter and the French economy, the second-largest in the euro area, contracted 0.3 percent.
To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net
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BP's Texas City Refinery Reports Emission Release at Two Units
By Christian Schmollinger
Aug. 27 (Bloomberg) -- BP Plc, Europe's second-largest oil company by market value, reported two emission releases at its Texas City, Texas, refinery.
In the first incident, the residual hydrotreating unit had a depressurization. A high-temperature reading on a catalyst reactor caused the safety systems to engage, leading to the depressurization, the company said in a filing to state regulators. The unit returned to normal after the depressurization.
The incident began about 11:12 p.m. local time and lasted 1 1/2 hours, the filing showed. About 1,000 pounds of sulfur dioxide were released through two different flare stacks.
A residual hydrotreater removes sulfur and other impurities from fuel oil.
The second incident occurred at the plant's fluidized catalytic cracking unit.
A large amount of volatile organic compounds was found in the unit's cooling tower from a leak in a heat exchanger, BP said in a separate filing. The company took the exchanger out of service to fix the leak.
The incident started at 4:54 p.m. yesterday and last about 8 hours causing the release of 100 pounds of butane and 100 pounds of propene.
A fluid catalytic cracker processes vacuum gasoil into gasoline.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Aug. 27 (Bloomberg) -- BP Plc, Europe's second-largest oil company by market value, reported two emission releases at its Texas City, Texas, refinery.
In the first incident, the residual hydrotreating unit had a depressurization. A high-temperature reading on a catalyst reactor caused the safety systems to engage, leading to the depressurization, the company said in a filing to state regulators. The unit returned to normal after the depressurization.
The incident began about 11:12 p.m. local time and lasted 1 1/2 hours, the filing showed. About 1,000 pounds of sulfur dioxide were released through two different flare stacks.
A residual hydrotreater removes sulfur and other impurities from fuel oil.
The second incident occurred at the plant's fluidized catalytic cracking unit.
A large amount of volatile organic compounds was found in the unit's cooling tower from a leak in a heat exchanger, BP said in a separate filing. The company took the exchanger out of service to fix the leak.
The incident started at 4:54 p.m. yesterday and last about 8 hours causing the release of 100 pounds of butane and 100 pounds of propene.
A fluid catalytic cracker processes vacuum gasoil into gasoline.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Woodside Petroleum Profit Rises 67%, Beats Estimates
By Angela Macdonald-Smith
Aug. 27 (Bloomberg) -- Woodside Petroleum Ltd., Australia's second-biggest oil and gas producer, beat analysts' estimates to post a 67 percent increase in profit as prices rose to records and output started at an oil project off the northwest coast.
Net income climbed to A$1.02 billion ($874 million) in the first half ended June 30, from A$608 million a year earlier, the Perth-based company said today in a statement. That's higher than the median forecast of A$939.3 million in a Bloomberg News survey. Woodside rose to the highest in five weeks in Sydney.
Chief Executive Officer Don Voelte, 55, has started new fields, gaining from the 62 percent advance in oil prices in the past year. Production began at the 50 percent-owned Stybarrow field in November and at the delayed Neptune project in the U.S. last month, while the Vincent field in Australia is due to pump its first oil this week.
``It's a strong result; everything seems to be in line,'' said Brendan Warn, an oil and gas analyst at Macquarie Group Ltd. in Sydney. ``They are saying there will be stronger production in the second half of 2008 and they will reach their full-year output target.''
Woodside, 34 percent-owned by Royal Dutch Shell Plc, gained A$1.92, or 3.4 percent, to A$58.42.
The result was boosted by gains on foreign exchange and derivative contracts, said Mark Greenwood, an oil and gas analyst at JPMorgan Chase & Co. ``These are non-operational items that are not going to be sustainable,'' he said.
`Imminent' Production
A A$2.6 billion expansion of liquefied natural gas production capacity at the Woodside-operated North West Shelf venture will contribute to an increase in output in the second half, Woodside said. Production from the new unit is ``imminent'' and the first shipments are due in October, Voelte said on a conference call.
The company said it is ``on track'' to achieve its 2008 output forecast of 80 million to 86 million barrels of oil equivalent, as much as 22 percent higher than last year. Production rose 4 percent to 36.5 million barrels in the first half, when increased prices and gains on foreign exchange and hedging boosted profit by A$499 million.
Construction of the A$12 billion Pluto LNG project is about one-quarter complete, while Woodside is working on potential development designs for both the Sunrise and Browse LNG projects.
Work for Sunrise in the Timor Sea is focusing on either a floating project or the expansion of ConocoPhillips' LNG plant in Darwin, while the Browse venture may select a development site by the end of the year, it said.
Carbon Threat
Development of Browse, Woodside's biggest project, may be threatened by the government's proposed carbon trading system, Voelte said. The company may ``dramatically'' cut planned spending on Browse, a venture estimated to cost as much as $30 billion, if the trading system isn't re-designed, he said.
Woodside said it is examining options for raising between A$1 billion and A$2 billion in debt finance in the second half, mostly for the Pluto LNG project, after signing loan agreements totaling $1.5 billion in June. It reinstated a dividend reinvestment plan and said thus will be activated as required for funds for the construction of Pluto.
Capital expenditure, which was A$2.4 billion in the first half, will be higher in the second because of Pluto, Chief Financial Officer Mark Chatterji said on the call. Total spending this year may rise to about A$5.4 billion, from about A$3.3 billion last year, according to a Woodside presentation.
Wheatstone, Iago
Voelte said May 1 the company may miss its end-2008 target for approving an expansion of Pluto while it weighs the best option for gas supply. Drilling in the area has so far failed to yield discoveries while Chevron Corp. decided to build its own LNG project for its Wheatstone and Iago fields nearby. Talks are continuing with third parties for gas supply, Voelte said today.
Woodside declared an interim dividend of 80 cents a share, up from 49 cents a year earlier. Sales rose 45 percent to a record A$2.57 billion, while per-share earnings rose to A$1.49 from 92 cents. Profit excluding one-time items jumped 86 percent to A$1.01 billion.
Woodside said it is ``considering options'' for its remaining assets in Africa, including those in Libya, after selling out of Mauritania and exiting Kenya.
The government's planned tax on condensates, a type of light crude oil, produced at the North West Shelf venture is ``ill-conceived'' and the additional cost will have to be passed on to customers when gas supply contracts are renewed, Voelte said.
The company is considering developing the Laverda oil field off Western Australia by connecting it to the production system at the BHP-operated Stybarrow venture, he said.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Aug. 27 (Bloomberg) -- Woodside Petroleum Ltd., Australia's second-biggest oil and gas producer, beat analysts' estimates to post a 67 percent increase in profit as prices rose to records and output started at an oil project off the northwest coast.
Net income climbed to A$1.02 billion ($874 million) in the first half ended June 30, from A$608 million a year earlier, the Perth-based company said today in a statement. That's higher than the median forecast of A$939.3 million in a Bloomberg News survey. Woodside rose to the highest in five weeks in Sydney.
Chief Executive Officer Don Voelte, 55, has started new fields, gaining from the 62 percent advance in oil prices in the past year. Production began at the 50 percent-owned Stybarrow field in November and at the delayed Neptune project in the U.S. last month, while the Vincent field in Australia is due to pump its first oil this week.
``It's a strong result; everything seems to be in line,'' said Brendan Warn, an oil and gas analyst at Macquarie Group Ltd. in Sydney. ``They are saying there will be stronger production in the second half of 2008 and they will reach their full-year output target.''
Woodside, 34 percent-owned by Royal Dutch Shell Plc, gained A$1.92, or 3.4 percent, to A$58.42.
The result was boosted by gains on foreign exchange and derivative contracts, said Mark Greenwood, an oil and gas analyst at JPMorgan Chase & Co. ``These are non-operational items that are not going to be sustainable,'' he said.
`Imminent' Production
A A$2.6 billion expansion of liquefied natural gas production capacity at the Woodside-operated North West Shelf venture will contribute to an increase in output in the second half, Woodside said. Production from the new unit is ``imminent'' and the first shipments are due in October, Voelte said on a conference call.
The company said it is ``on track'' to achieve its 2008 output forecast of 80 million to 86 million barrels of oil equivalent, as much as 22 percent higher than last year. Production rose 4 percent to 36.5 million barrels in the first half, when increased prices and gains on foreign exchange and hedging boosted profit by A$499 million.
Construction of the A$12 billion Pluto LNG project is about one-quarter complete, while Woodside is working on potential development designs for both the Sunrise and Browse LNG projects.
Work for Sunrise in the Timor Sea is focusing on either a floating project or the expansion of ConocoPhillips' LNG plant in Darwin, while the Browse venture may select a development site by the end of the year, it said.
Carbon Threat
Development of Browse, Woodside's biggest project, may be threatened by the government's proposed carbon trading system, Voelte said. The company may ``dramatically'' cut planned spending on Browse, a venture estimated to cost as much as $30 billion, if the trading system isn't re-designed, he said.
Woodside said it is examining options for raising between A$1 billion and A$2 billion in debt finance in the second half, mostly for the Pluto LNG project, after signing loan agreements totaling $1.5 billion in June. It reinstated a dividend reinvestment plan and said thus will be activated as required for funds for the construction of Pluto.
Capital expenditure, which was A$2.4 billion in the first half, will be higher in the second because of Pluto, Chief Financial Officer Mark Chatterji said on the call. Total spending this year may rise to about A$5.4 billion, from about A$3.3 billion last year, according to a Woodside presentation.
Wheatstone, Iago
Voelte said May 1 the company may miss its end-2008 target for approving an expansion of Pluto while it weighs the best option for gas supply. Drilling in the area has so far failed to yield discoveries while Chevron Corp. decided to build its own LNG project for its Wheatstone and Iago fields nearby. Talks are continuing with third parties for gas supply, Voelte said today.
Woodside declared an interim dividend of 80 cents a share, up from 49 cents a year earlier. Sales rose 45 percent to a record A$2.57 billion, while per-share earnings rose to A$1.49 from 92 cents. Profit excluding one-time items jumped 86 percent to A$1.01 billion.
Woodside said it is ``considering options'' for its remaining assets in Africa, including those in Libya, after selling out of Mauritania and exiting Kenya.
The government's planned tax on condensates, a type of light crude oil, produced at the North West Shelf venture is ``ill-conceived'' and the additional cost will have to be passed on to customers when gas supply contracts are renewed, Voelte said.
The company is considering developing the Laverda oil field off Western Australia by connecting it to the production system at the BHP-operated Stybarrow venture, he said.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Tullow Oil Profit Climbs to Record on Oil, Gas Prices
By Eduard Gismatullin
Aug. 27 (Bloomberg) -- Tullow Oil Plc, the U.K. explorer with the most licenses in Africa, said first-half profit rose to a record as crude oil and natural-gas prices advanced.
Net income climbed to 124 million pounds ($229 million), or 16.98 pence a share, from 37 million pounds, or 5.03 pence, a year earlier, the London-based company said today in a statement. Sales gained 33 percent to 378 million pounds.
Tullow forecasts record-high earnings and production for the full year, Chief Financial Officer Tom Hickey said in a telephone interview. The company expects a ``significant revision'' of its oil and gas resources by the end of the year following exploration successes in Uganda and Ghana, Chief Operating Officer Paul McDade also said by phone.
Crude oil traded in New York exceeded $100 a barrel for the first time in January and jumped 46 percent in the first six months of the year. Gas prices were about 36 percent higher in the period. Tullow increased oil and gas extraction by 1 percent to 70,600 barrels of oil equivalent a day in the first half.
Tullow rose as much as 2.1 percent to 810 pence in London trading, which would be the highest close in six weeks. The stock was at 805 pence as of 8:19 a.m. local time.
The company plans to pump 68,000 to 70,000 barrels a day this year, down from a July forecast of 70,000 to 72,000 barrels a day. Tullow revised its target because of delays to gas projects in the U.K., McDade said.
Jubilee Field
Tullow will invest at least $3.1 billion in the first phase of its Jubilee field development in Ghana, with the first crude production expected in the second half of 2010, McDade said. The deposit, which will initially pump 120,000 barrels of oil a day, may later double output to about 250,000 barrels a day.
The company has contracted Modec Inc., the world's second- biggest builder of floating oil-production platforms and storage facilities, to supply infrastructure for the Jubilee field. The development of the deposit will be approved by Ghana's government ``within months,'' McDade said.
Over the next two years, Tullow plans to expand development of its fields in the U.K., where gas sales have become ``very profitable,'' Hickey said.
Hickey will step down as CFO Sept. 1 and will be replaced by Ian Springett, Tullow said today in a separate e-mailed statement.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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Aug. 27 (Bloomberg) -- Tullow Oil Plc, the U.K. explorer with the most licenses in Africa, said first-half profit rose to a record as crude oil and natural-gas prices advanced.
Net income climbed to 124 million pounds ($229 million), or 16.98 pence a share, from 37 million pounds, or 5.03 pence, a year earlier, the London-based company said today in a statement. Sales gained 33 percent to 378 million pounds.
Tullow forecasts record-high earnings and production for the full year, Chief Financial Officer Tom Hickey said in a telephone interview. The company expects a ``significant revision'' of its oil and gas resources by the end of the year following exploration successes in Uganda and Ghana, Chief Operating Officer Paul McDade also said by phone.
Crude oil traded in New York exceeded $100 a barrel for the first time in January and jumped 46 percent in the first six months of the year. Gas prices were about 36 percent higher in the period. Tullow increased oil and gas extraction by 1 percent to 70,600 barrels of oil equivalent a day in the first half.
Tullow rose as much as 2.1 percent to 810 pence in London trading, which would be the highest close in six weeks. The stock was at 805 pence as of 8:19 a.m. local time.
The company plans to pump 68,000 to 70,000 barrels a day this year, down from a July forecast of 70,000 to 72,000 barrels a day. Tullow revised its target because of delays to gas projects in the U.K., McDade said.
Jubilee Field
Tullow will invest at least $3.1 billion in the first phase of its Jubilee field development in Ghana, with the first crude production expected in the second half of 2010, McDade said. The deposit, which will initially pump 120,000 barrels of oil a day, may later double output to about 250,000 barrels a day.
The company has contracted Modec Inc., the world's second- biggest builder of floating oil-production platforms and storage facilities, to supply infrastructure for the Jubilee field. The development of the deposit will be approved by Ghana's government ``within months,'' McDade said.
Over the next two years, Tullow plans to expand development of its fields in the U.K., where gas sales have become ``very profitable,'' Hickey said.
Hickey will step down as CFO Sept. 1 and will be replaced by Ian Springett, Tullow said today in a separate e-mailed statement.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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Gloucester Coal 2008 Profit Gains 30% on Price Gains
By Jesse Riseborough
Aug. 27 (Bloomberg) -- Gloucester Coal Ltd., an Australian coal producer, said full-year profit rose 30 percent after customers agreed to pay record prices.
Net income was A$23.4 million ($20 million), or 28.7 cents a share, in the 12 months ended June 30, from A$18 million, or 22.8 cents, a year earlier, the Sydney-based company said today in a statement. The results confirm guidance given Aug. 11.
Asian steelmakers have agreed to pay three times more for coking coal this year, boosting profits for producers. Prices are expected to remain ``strong'' for the next two to three years, Chief Executive Officer Rob Lord said today on a conference call with analysts.
``We do expect the coming fiscal year to be a record year by a considerable margin,'' Lord said. ``These robust cash flows will allow us to fund dividends and growth.''
Gloucester fell 0.3 percent to A$10.40 at the 4:10 p.m. Sydney time close on the Australian stock exchange. It will pay a final dividend of 16 cents a share.
To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net
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Aug. 27 (Bloomberg) -- Gloucester Coal Ltd., an Australian coal producer, said full-year profit rose 30 percent after customers agreed to pay record prices.
Net income was A$23.4 million ($20 million), or 28.7 cents a share, in the 12 months ended June 30, from A$18 million, or 22.8 cents, a year earlier, the Sydney-based company said today in a statement. The results confirm guidance given Aug. 11.
Asian steelmakers have agreed to pay three times more for coking coal this year, boosting profits for producers. Prices are expected to remain ``strong'' for the next two to three years, Chief Executive Officer Rob Lord said today on a conference call with analysts.
``We do expect the coming fiscal year to be a record year by a considerable margin,'' Lord said. ``These robust cash flows will allow us to fund dividends and growth.''
Gloucester fell 0.3 percent to A$10.40 at the 4:10 p.m. Sydney time close on the Australian stock exchange. It will pay a final dividend of 16 cents a share.
To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net
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Nordic Currencies: Norway's Krone Gains Before Jobless Figures
By Bo Nielsen
Aug. 27 (Bloomberg) -- Norway's krone gained versus the dollar, snapping three days of declines, before data that will probably show the country's jobless rate held close to the lowest level in two decades in June.
The Norwegian krone climbed to 5.3935 at 9:18 a.m. in Oslo from 5.4143 yesterday and traded at 7.9251 per euro, from 7.9346.
Norwegian unemployment held at 2.5 percent in June, a report from Statistics Norway will show, according to the median estimate of 15 economists in a Bloomberg survey. The report will be released at 10 a.m. in Oslo.
Sweden's krona rose against the dollar, ending a three-day decline, after a report showed August consumer confidence rose in August from a 13-year low. The Swedish krona rose to 6.3675 per dollar from 6.4003 yesterday. It was little changed at 9.3790 per euro.
The consumer confidence index increased to minus 16.5 from minus 18.2 in July, the Stockholm-based National Institute of Economic Research said on its Web site today. The gauge was expected to rise to minus 17, according to the median estimate of 13 economists in a Bloomberg survey. The manufacturing confidence index fell to minus 12 in August from minus 11 in July.
In other trading, Iceland's krona rose to 82.69 per dollar, from 82.89 yesterday, before data that may show consumer prices increased 14.6 percent in the year ended August, from 13.6 percent in July, according to a Bloomberg survey. The report will be released at 9 a.m. in Reykjavik.
Nordic government bonds were mixed, with the yield on Sweden's 5.25 percent note due March 2011 falling 4 basis points, or 0.04 percentage point, to 4.24 percent. The yield on Norway's 6 percent government note maturing May 2011 rose 1 basis point to 5.013 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
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Aug. 27 (Bloomberg) -- Norway's krone gained versus the dollar, snapping three days of declines, before data that will probably show the country's jobless rate held close to the lowest level in two decades in June.
The Norwegian krone climbed to 5.3935 at 9:18 a.m. in Oslo from 5.4143 yesterday and traded at 7.9251 per euro, from 7.9346.
Norwegian unemployment held at 2.5 percent in June, a report from Statistics Norway will show, according to the median estimate of 15 economists in a Bloomberg survey. The report will be released at 10 a.m. in Oslo.
Sweden's krona rose against the dollar, ending a three-day decline, after a report showed August consumer confidence rose in August from a 13-year low. The Swedish krona rose to 6.3675 per dollar from 6.4003 yesterday. It was little changed at 9.3790 per euro.
The consumer confidence index increased to minus 16.5 from minus 18.2 in July, the Stockholm-based National Institute of Economic Research said on its Web site today. The gauge was expected to rise to minus 17, according to the median estimate of 13 economists in a Bloomberg survey. The manufacturing confidence index fell to minus 12 in August from minus 11 in July.
In other trading, Iceland's krona rose to 82.69 per dollar, from 82.89 yesterday, before data that may show consumer prices increased 14.6 percent in the year ended August, from 13.6 percent in July, according to a Bloomberg survey. The report will be released at 9 a.m. in Reykjavik.
Nordic government bonds were mixed, with the yield on Sweden's 5.25 percent note due March 2011 falling 4 basis points, or 0.04 percentage point, to 4.24 percent. The yield on Norway's 6 percent government note maturing May 2011 rose 1 basis point to 5.013 percent. Yields move inversely to bond prices.
To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net
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Orders for Durable Goods in U.S. Probably Stalled in July
By Timothy R. Homan
Aug. 27 (Bloomberg) -- Orders for U.S. durable goods probably stalled in July as elevated raw-material costs and slowing sales prompted companies to limit spending, economists said ahead of a government report today.
Bookings for goods meant to last several years were unchanged after a gain of 0.8 percent in June, according to the median estimate in a Bloomberg News survey of 76 forecasters. Excluding transportation equipment, orders probably fell by the most in five months.
The three-year housing slump and stricter lending rules may hurt demand even more in coming months after the effects of the federal tax rebates fade, raising the risk growth will slow. Economies abroad are also weakening, indicating companies will not be able to count on sustained gains in exports.
``With domestic demand expected to slow sharply over the second half of the year, orders and investment spending will be weak,'' said Peter Kretzmer, a senior economist at Bank of America Corp. in New York.
The Commerce Department is scheduled to release its durable goods report at 8:30 a.m. in Washington. Projections in the Bloomberg survey ranged from a drop of 2.1 percent to an advance of 2.2 percent.
Excluding transportation equipment, orders probably fell 0.7 percent, according to the survey median.
Other reports have indicated manufacturing has stagnated.
The Institute for Supply Management said on Aug. 5 that its factory index fell to 50 in July, the dividing line between growth and contraction, from 50.2 a month earlier. During the 2001 recession the index averaged 43.5.
Export Boost
Manufacturing has fared better than in past downturns, helped in part by a weak dollar that has boosted exports. Now, that expansion is in question as overseas growth falters.
Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, the European Union said this month. Japan's economy also shrank in the period as consumers spent less and exports fell, the government said on Aug. 13.
Manufacturing ``declined or remained weak in most districts,'' even as ``demand for exports remained generally high,'' the Federal Reserve said last month in its regional economic survey known as the Beige Book. Bank lending ``was generally reported to be restrained.''
Consumers are retrenching as their home equity declines and banks restrict lending. Sales at U.S. retailers fell in July for the first time in five months as demand for automobiles slumped, the Commerce Department reported this month.
Slower Growth
Economists surveyed by Bloomberg News earlier this month forecast the U.S. economy will grow in the last six months of the year at half the pace of the first two quarters. Household spending, which has risen every quarter since 1992, is projected to stall in the last three months of 2008.
A slowdown in growth and spending may give companies even less incentive to invest or hire. Alcoa Inc., the world's third largest aluminum producer, said last week that it will lay off 300 employees in Texas starting Aug. 31. The cuts come as a result of ``uneconomical power prices,'' the New York-based company said in a statement.
Bloomberg Survey
=============================================
Durables Durables
Orders Ex-Trans
MOM% MOM%
=============================================
Date of Release 08/27 08/27
Observation Period July July
---------------------------------------------
Median 0.0% -0.7%
Average -0.1% -0.6%
High Forecast 2.2% 0.6%
Low Forecast -2.1% -2.9%
Number of Participants 76 43
Previous 0.8% 2.0%
---------------------------------------------
4CAST Ltd. -1.0% -1.5%
Action Economics 0.0% -2.9%
AIG Investments 0.2% 0.6%
Aletti Gestielle SGR 0.5% ---
Argus Research Corp. 0.5% ---
Banc of America Securitie -0.3% ---
Bank of Tokyo- Mitsubishi 0.5% ---
Barclays Capital 0.3% ---
BBVA 0.1% 0.5%
BMO Capital Markets 0.1% -0.7%
BNP Paribas -0.4% ---
Briefing.com 0.5% ---
Calyon 0.7% 0.4%
CFC Group -0.2% -1.0%
CIBC World Markets 0.0% -0.7%
Citi 2.2% -0.3%
ClearView Economics 0.5% ---
Commerzbank AG -0.3% ---
Credit Suisse 0.2% -0.3%
Daiwa Securities America -1.0% ---
DekaBank 0.1% ---
Desjardins Group 0.1% ---
Deutsche Bank Securities 0.3% 0.5%
Deutsche Postbank AG 0.0% -0.7%
Dresdner Kleinwort -0.2% -1.0%
DZ Bank 0.2% -0.4%
First Trust Advisors 0.4% -1.3%
Fortis 0.0% ---
FTN Financial 0.2% 0.4%
Global Insight Inc. 0.0% ---
Goldman, Sachs & Co. -1.0% ---
H&R Block Financial Advis -0.5% -1.0%
HBOS Treasury Services 0.0% -0.6%
Helaba -0.5% -1.0%
High Frequency Economics -1.0% -1.0%
Horizon Investments -0.2% -0.3%
HSBC Markets 0.1% -0.4%
IDEAglobal -0.5% 0.3%
Informa Global Markets 0.1% ---
ING Financial Markets 0.0% -1.0%
Insight Economics -1.0% ---
Intesa-SanPaulo -0.5% -0.8%
J.P. Morgan Chase 0.6% -0.8%
Janney Montgomery Scott L 0.4% -0.7%
Landesbank Berlin -2.1% -1.0%
Landesbank BW 0.0% ---
Lehman Brothers -1.0% ---
Lloyds TSB 0.3% ---
Merk Investments 0.0% -0.6%
Merrill Lynch 0.5% -0.9%
Moody's Economy.com -0.5% -0.2%
Morgan Keegan & Co. -0.3% ---
Morgan Stanley & Co. 0.2% ---
National Bank Financial -0.1% -0.6%
Natixis 0.4% -1.0%
Newedge 0.3% -0.2%
Nomura Securities Intl. -1.3% -1.1%
Nord/LB -0.5% 0.3%
PNC Bank -0.1% ---
RBS Greenwich Capital -0.7% ---
Ried, Thunberg & Co. -0.5% ---
Schneider Trading Associa -1.7% -1.6%
Scotia Capital -0.1% -0.5%
Societe Generale 0.0% -0.5%
Stone & McCarthy Research 0.6% ---
TD Securities -0.5% -1.3%
Thomson Financial/IFR -0.3% 0.5%
Tullett Prebon 0.2% ---
UBS Securities LLC -1.0% -2.3%
Unicredit MIB 0.2% ---
University of Maryland 0.1% ---
Wachovia Corp. 0.2% -0.4%
Wells Fargo & Co. 0.0% ---
WestLB AG 0.1% ---
Westpac Banking Co. 0.5% ---
Wrightson Associates -0.5% ---
=============================================
To contact the report on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
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Brazil, Mexico: Latin America Local Bond and Currency Preview
By Valerie Rota
Aug. 27 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous session.
Brazil: The IGP-M price index, the country's broadest measure of consumer, construction and wholesale prices, fell 0.2 percent in August after rising 1.76 percent in July, according to the median forecast of 28 economists surveyed by Bloomberg.
The Getulio Vargas Foundation is slated to publish the price report at 7 a.m. New York time.
The real rose 0.1 percent to 1.6288 per dollar.
The yield on the country's zero-coupon bonds due January 2010 fell 5 basis points, or 0.05 percentage point, to 14.79 percent, according to Banco Votorantim SA.
Mexico: The economy expanded 7.8 percent in the second quarter after growing 9 percent in the first quarter, according to the median estimate of seven economists surveyed by Bloomberg.
The national statistics agency is slated to release the report at 3:30 p.m. New York time.
The peso fell 0.2 percent to 10.1582 per dollar.
The yield on Mexico's benchmark 10 percent bonds due December 2024 rose 4 basis points to 8.59 percent, according to Banco Santander SA.
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net.
Read more...
Aug. 27 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous session.
Brazil: The IGP-M price index, the country's broadest measure of consumer, construction and wholesale prices, fell 0.2 percent in August after rising 1.76 percent in July, according to the median forecast of 28 economists surveyed by Bloomberg.
The Getulio Vargas Foundation is slated to publish the price report at 7 a.m. New York time.
The real rose 0.1 percent to 1.6288 per dollar.
The yield on the country's zero-coupon bonds due January 2010 fell 5 basis points, or 0.05 percentage point, to 14.79 percent, according to Banco Votorantim SA.
Mexico: The economy expanded 7.8 percent in the second quarter after growing 9 percent in the first quarter, according to the median estimate of seven economists surveyed by Bloomberg.
The national statistics agency is slated to release the report at 3:30 p.m. New York time.
The peso fell 0.2 percent to 10.1582 per dollar.
The yield on Mexico's benchmark 10 percent bonds due December 2024 rose 4 basis points to 8.59 percent, according to Banco Santander SA.
To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net.
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Paladin Shares Drop as Debt, Costs Contribute to Loss
By Jason Scott
Aug. 27 (Bloomberg) -- Paladin Energy Ltd. fell in Sydney trading, making the stock the third-worst performer on the energy index after the uranium producer said soaring financing costs contributed to a $36 million full-year loss.
Shares of Paladin dropped 2.9 percent to A$5.32 on the Australian stock exchange, the third-worst performer on the 17- member S&P/ASX 200 energy sub-index, behind Roc Oil Co. and Felix Resources Ltd.
Paladin is working to get two mines in Africa operational in the next 12 months to meet a surge in demand for nuclear energy, with the International Atomic Energy Agency forecasting 60 plants will be built in the next 15 years. The expansion drive helped more than double financing costs, as the Perth- based company services $575 million of corporate debt.
``They're getting operational costs down but when you get marketing, corporate, exploration and financing costs so high, it totally overshadows the operational performance,'' said Gavin van der Wath, an analyst at BBY Ltd. in Sydney. ``I don't know if they can cut those costs. They've got a lot of debt now.''
Paladin's loss narrowed in the 12 months ended June 30 from $37.6 million a year earlier, even as sales soared to $101.9 million, from $11.2 million, it said yesterday.
Financing costs more than doubled to $30.7 million from $13 million, exploration and evaluation expenses almost doubled to $13.1 million from $7.1 million, and other expenses, including corporate and exploration costs and foreign exchange losses, rose to $35.7 million from $28.5 million.
Acquisitions Planned
The group almost doubled its cash reserves in the period to $338 million, which will allow it to seek acquisitions even as it pays interest on existing debt, Chief Financial Officer Ross Glossop said in a conference call yesterday.
``They're going to buy something, otherwise why leave all that money on the balance sheet,'' BBY's van der Wath said. ``Investors are concerned they might overpay for an asset.''
Output is set to more than double this year as volumes increase at the Langer Heinrich mine in Namibia and a new project starts in Malawi.
Production should rise to 3.6 million pounds of uranium oxide in the year ending June 30, 2009, from 1.71 million in the preceding 12 months, Managing Director John Borshoff said on a conference call. Output should increase to 6.8 million pounds the following year, to 7.4 million pounds in 2010-11 and 9.3 million in 2011-12, he said.
Paladin is due to complete an expansion of the Namibian project by the year end. The $200 million Kayalekera project in Malawi is due to start operating in January. It is also seeking to develop ventures in Australia, including the Mt. Isa and Angela projects. Global demand for uranium is rising as the construction of nuclear power plants gathers pace.
The outlook for the uranium market is ``very strong,'' with ``stagnant'' supply and ``very bullish'' demand, Borshoff said.
The world needs to build 32 new nuclear plants each year as part of measures to cut greenhouse gas emissions in half by 2050, the Paris-based International Energy Agency has said.
To contact the reporter on this story: Jason Scott in Perth at Jscott14@bloomberg.net.
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Singapore Dollar to Rise 1.2% on Inflation, UBS Says
By Patricia Lui
Aug. 27 (Bloomberg) -- Singapore's dollar will rise 1.2 percent in three months time to reach S$1.40 as persistent inflation prevents the central bank from stalling the currency's appreciation, UBS AG said.
Singapore's inflation slowed in July by less than economists had estimated, after holding at 26-year highs in each of the three previous months. The trade ministry urged policy makers to maintain vigilance on inflation while ensuring the currency doesn't hurt exports by appreciating too sharply.
``It remains too early for the central bank to contemplate a move to a neutral bias, much less an outright easing by shifting the policy band lower,'' New York-based analyst Benedikt Germanier wrote in a note yesterday. ``We do not rule out a more gradual appreciation at the October meeting.''
The city-state's currency traded at S$1.4170 per U.S. dollar at 11:50 a.m. local time, up 0.6 percent, according to data compiled by Bloomberg. It has declined 4 percent this quarter to be the worst performer among Asia's 10 most-active currencies on concern a slowing economy and shrinking exports will spur policy makers to support growth rather than tackle inflation.
The central bank conducts monetary policy by guiding the local dollar within an undisclosed band against a trade-weighted basket of currencies belonging to major trading partners.
Investors should ``not be deceived'' by July's lower year- on-year July inflation which was ``driven primarily by the base effect from the 2 percentage point GST hike in July 2007,'' the UBS note read, adding that price pressures is ``best judged'' by the month-on-month number which was the highest since January.
Consumer Prices
Consumer prices rose 6.5 percent last month from a year earlier, compared with 7.5 percent in each of the previous three months, the government said Aug. 25. Economists had expected a 6.1 percent increase, according to a Bloomberg survey. On a month-on-month basis, consumer prices rose 1.2 percent, after declining 0.3 percent during June.
UBS also said comments from the trade ministry following the release of the July inflation which urged policy makers to curb inflation.
The Monetary Authority of Singapore allowed a faster pace of appreciation in October 2007 and announced a one-off strengthening at its last policy meeting in April to rein in inflation. It holds its next biannual policy review in October.
Singapore's government this month cut its 2008 growth and export forecasts and warned of a ``bumpy year ahead.''
The economy may grow at the lower end of the government's 4 percent-to-5 percent forecast range this year, Trade and Industry Minister Lim Hng Kiang said yesterday. Singapore recognizes the risk of very low growth or recessionary conditions globally in the future, he said.
To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net
Read more...
Aug. 27 (Bloomberg) -- Singapore's dollar will rise 1.2 percent in three months time to reach S$1.40 as persistent inflation prevents the central bank from stalling the currency's appreciation, UBS AG said.
Singapore's inflation slowed in July by less than economists had estimated, after holding at 26-year highs in each of the three previous months. The trade ministry urged policy makers to maintain vigilance on inflation while ensuring the currency doesn't hurt exports by appreciating too sharply.
``It remains too early for the central bank to contemplate a move to a neutral bias, much less an outright easing by shifting the policy band lower,'' New York-based analyst Benedikt Germanier wrote in a note yesterday. ``We do not rule out a more gradual appreciation at the October meeting.''
The city-state's currency traded at S$1.4170 per U.S. dollar at 11:50 a.m. local time, up 0.6 percent, according to data compiled by Bloomberg. It has declined 4 percent this quarter to be the worst performer among Asia's 10 most-active currencies on concern a slowing economy and shrinking exports will spur policy makers to support growth rather than tackle inflation.
The central bank conducts monetary policy by guiding the local dollar within an undisclosed band against a trade-weighted basket of currencies belonging to major trading partners.
Investors should ``not be deceived'' by July's lower year- on-year July inflation which was ``driven primarily by the base effect from the 2 percentage point GST hike in July 2007,'' the UBS note read, adding that price pressures is ``best judged'' by the month-on-month number which was the highest since January.
Consumer Prices
Consumer prices rose 6.5 percent last month from a year earlier, compared with 7.5 percent in each of the previous three months, the government said Aug. 25. Economists had expected a 6.1 percent increase, according to a Bloomberg survey. On a month-on-month basis, consumer prices rose 1.2 percent, after declining 0.3 percent during June.
UBS also said comments from the trade ministry following the release of the July inflation which urged policy makers to curb inflation.
The Monetary Authority of Singapore allowed a faster pace of appreciation in October 2007 and announced a one-off strengthening at its last policy meeting in April to rein in inflation. It holds its next biannual policy review in October.
Singapore's government this month cut its 2008 growth and export forecasts and warned of a ``bumpy year ahead.''
The economy may grow at the lower end of the government's 4 percent-to-5 percent forecast range this year, Trade and Industry Minister Lim Hng Kiang said yesterday. Singapore recognizes the risk of very low growth or recessionary conditions globally in the future, he said.
To contact the reporter on this story: Patricia Lui in Singapore at plui4@bloomberg.net
Read more...
Dollar Falls on Speculation Reports to Show Flagging Spending
By Stanley White
Enlarge Image/Details
Aug. 27 (Bloomberg) -- The dollar fell from a six-month high against the euro and dropped versus the yen on speculation weakening U.S. business and consumer spending will delay a Federal Reserve interest-rate increase.
The greenback retreated from a two-year high against the British pound as economists forecast U.S. data this week will show declines in durable goods orders and slowing consumption. The Australian dollar rebounded from an 11-month low as rising Asian stocks gave investors confidence to buy higher-yielding assets overseas.
``The dollar still faces some risks of further declines,'' said Osamu Takashima, chief analyst for global market sales and trading in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's largest publicly listed bank. ``The U.S. economy is sluggish and I don't expect the Fed to hike rates until April or May of next year.''
The dollar declined to $1.4685 per euro at 8:14 a.m. in London from $1.4653 in New York yesterday, when it touched $1.4571, the strongest since Feb. 14. The dollar fell to 109.23 yen from 109.60. The euro was at 160.43 yen from 160.64 yesterday. The dollar slid to $1.8409 versus the pound from $1.84. It rose yesterday to $1.8331, its highest since July 2006.
The U.S. currency rallied yesterday after German business confidence declined this month to the lowest level in three years and the minutes of the Fed's last meeting showed that while policy makers agreed that their next move will be a rate rise they didn't indicate the timing.
Fed Futures
Futures on the Chicago Board of Trade show a 22 percent chance that the Fed will increase its 2 percent target rate for overnight lending between banks by at least a quarter-percentage point at a Dec. 16 meeting, compared with 70 percent odds a month ago. Policy makers next meet Sept. 16
The Australian dollar bought 85.89 U.S. cents from 85.15 cents late yesterday in Asia, when it fell to 84.94, the lowest since Sept. 20. It gained to 93.81 yen from 93.54 yesterday as MSCI's Asia Pacific Index of regional shares rose 0.5 percent, encouraging so-called carry trades.
In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the rates. The risk is that currency market moves can erase those profits.
Australia's benchmark interest rate is 7.25 percent, compared with 0.5 percent in Japan.
Durable Goods Orders
Bookings for U.S. goods made to last several years were unchanged in July, compared with a gain of 0.8 percent in June, according to a Bloomberg News survey of economists before a Commerce Department report at 8:30 a.m. today in Washington. A separate report on Aug. 29 may show personal spending rose 0.2 percent, less than half the 0.6 percent gain in June, according to a separate survey.
``The prospects for the U.S. economy are still poor and it will continue to slow,'' said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``There's not a lot of reasons to own dollars.''
Gains in the euro may be limited by speculation German inflation slowed this month, reducing pressure on the European Central Bank to raise borrowing costs.
Germany's consumer prices rose 3.4 percent in August from a year earlier after a 3.5 percent increase in the previous month, according to a Bloomberg News survey. The report from the Federal Statistics Office is due today.
ECB Rates
The implied yield on the Euribor futures contract expiring in September 2009 fell 6 basis points, or 0.06 percentage point, to 4.32 percent. The yield averaged 18 basis points above the ECB's benchmark, currently 4.25 percent, from 1999 to August 2007.
``The euro is mired in a mid-term downtrend,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``Slowing inflation is yet another reason why we can't expect the ECB to raise rates. Traders will continue to push the euro lower.''
The euro may fall to $1.4570 and 159.90 yen today, he said.
The 15-nation euro was headed for a 5.7 percent decline versus the dollar this month, its biggest monthly drop since its 1999 debut. It has fallen 4.7 percent versus the yen in August, the most since a 5.8 percent drop in March 2004, as a report showed the European economy contracted last quarter.
The dollar's declines against the euro, the yen and the pound accelerated on signs the Dollar Index is forming a double top on its chart, said Toru Tokoyoda, head of foreign-exchange sales in Tokyo at Lehman Brothers Holdings Inc.
Double Top
A double top is when a security makes two successive peaks and often indicates the reversal of a trend. The distance between the peaks and the lowest point of the double top may indicate the next support level a security will fall to.
The ICE futures exchange's Dollar Index, which compares the greenback against the currencies of six U.S. trading partners, was last at 76.880 from 77.251 yesterday. It rose to 77.413 on Aug. 19, fell to 76.022 on Aug. 21 and then rose yesterday to a second peak at 77.619.
``The double top in the Dollar Index was a catalyst to push the dollar lower,'' Tokoyoda said. ``Some players are taking their cue from this chart formation.''
The dollar may fall to $1.4750 versus the euro today, he forecast.
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net
Read more...
Enlarge Image/Details
Aug. 27 (Bloomberg) -- The dollar fell from a six-month high against the euro and dropped versus the yen on speculation weakening U.S. business and consumer spending will delay a Federal Reserve interest-rate increase.
The greenback retreated from a two-year high against the British pound as economists forecast U.S. data this week will show declines in durable goods orders and slowing consumption. The Australian dollar rebounded from an 11-month low as rising Asian stocks gave investors confidence to buy higher-yielding assets overseas.
``The dollar still faces some risks of further declines,'' said Osamu Takashima, chief analyst for global market sales and trading in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's largest publicly listed bank. ``The U.S. economy is sluggish and I don't expect the Fed to hike rates until April or May of next year.''
The dollar declined to $1.4685 per euro at 8:14 a.m. in London from $1.4653 in New York yesterday, when it touched $1.4571, the strongest since Feb. 14. The dollar fell to 109.23 yen from 109.60. The euro was at 160.43 yen from 160.64 yesterday. The dollar slid to $1.8409 versus the pound from $1.84. It rose yesterday to $1.8331, its highest since July 2006.
The U.S. currency rallied yesterday after German business confidence declined this month to the lowest level in three years and the minutes of the Fed's last meeting showed that while policy makers agreed that their next move will be a rate rise they didn't indicate the timing.
Fed Futures
Futures on the Chicago Board of Trade show a 22 percent chance that the Fed will increase its 2 percent target rate for overnight lending between banks by at least a quarter-percentage point at a Dec. 16 meeting, compared with 70 percent odds a month ago. Policy makers next meet Sept. 16
The Australian dollar bought 85.89 U.S. cents from 85.15 cents late yesterday in Asia, when it fell to 84.94, the lowest since Sept. 20. It gained to 93.81 yen from 93.54 yesterday as MSCI's Asia Pacific Index of regional shares rose 0.5 percent, encouraging so-called carry trades.
In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the rates. The risk is that currency market moves can erase those profits.
Australia's benchmark interest rate is 7.25 percent, compared with 0.5 percent in Japan.
Durable Goods Orders
Bookings for U.S. goods made to last several years were unchanged in July, compared with a gain of 0.8 percent in June, according to a Bloomberg News survey of economists before a Commerce Department report at 8:30 a.m. today in Washington. A separate report on Aug. 29 may show personal spending rose 0.2 percent, less than half the 0.6 percent gain in June, according to a separate survey.
``The prospects for the U.S. economy are still poor and it will continue to slow,'' said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``There's not a lot of reasons to own dollars.''
Gains in the euro may be limited by speculation German inflation slowed this month, reducing pressure on the European Central Bank to raise borrowing costs.
Germany's consumer prices rose 3.4 percent in August from a year earlier after a 3.5 percent increase in the previous month, according to a Bloomberg News survey. The report from the Federal Statistics Office is due today.
ECB Rates
The implied yield on the Euribor futures contract expiring in September 2009 fell 6 basis points, or 0.06 percentage point, to 4.32 percent. The yield averaged 18 basis points above the ECB's benchmark, currently 4.25 percent, from 1999 to August 2007.
``The euro is mired in a mid-term downtrend,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``Slowing inflation is yet another reason why we can't expect the ECB to raise rates. Traders will continue to push the euro lower.''
The euro may fall to $1.4570 and 159.90 yen today, he said.
The 15-nation euro was headed for a 5.7 percent decline versus the dollar this month, its biggest monthly drop since its 1999 debut. It has fallen 4.7 percent versus the yen in August, the most since a 5.8 percent drop in March 2004, as a report showed the European economy contracted last quarter.
The dollar's declines against the euro, the yen and the pound accelerated on signs the Dollar Index is forming a double top on its chart, said Toru Tokoyoda, head of foreign-exchange sales in Tokyo at Lehman Brothers Holdings Inc.
Double Top
A double top is when a security makes two successive peaks and often indicates the reversal of a trend. The distance between the peaks and the lowest point of the double top may indicate the next support level a security will fall to.
The ICE futures exchange's Dollar Index, which compares the greenback against the currencies of six U.S. trading partners, was last at 76.880 from 77.251 yesterday. It rose to 77.413 on Aug. 19, fell to 76.022 on Aug. 21 and then rose yesterday to a second peak at 77.619.
``The double top in the Dollar Index was a catalyst to push the dollar lower,'' Tokoyoda said. ``Some players are taking their cue from this chart formation.''
The dollar may fall to $1.4750 versus the euro today, he forecast.
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net
Read more...
Thai Baht May Fall Further 3.3% on Politics, State Street Says
By Shanthy Nambiar
Aug. 27 (Bloomberg) -- Thailand's baht may slide more than 3 percent by year-end as attempts to remove Prime Minister Samak Sundaravej and ban his ruling party prompt global funds to pull money from the country, according to State Street Global Markets.
The currency dropped 5.5 percent in the past three months, the worst performance among Asia's 10 most-active currencies excluding the yen, as anti-government protests gathered steam. Overseas investors' sales of Thai stocks exceed their purchases this year by more than $3 billion and the benchmark SET Index has slumped 22 percent.
``One black mark is foreign investor outflows,'' State Street's Hong Kong-based strategist Dwyfor Evans wrote in an e- mailed note today. ``An amalgam of political risk, real money cross-border equity outflows and potential unwinding of Thai baht long positions by institutional investors implies further risks of downward pressure for the baht.''
Evans predicts the baht, which recently traded at 34.13 per dollar in Bangkok, will decline to 35.30 per dollar by the end of 2008. The median estimate of 16 analysts surveyed by Bloomberg News is for a year-end level of 33.8.
Thailand's Election Commission will announce Sept. 2 whether it will seek the dissolution of Samak's People Power Party, formed by supporters of former Prime Minister Thaksin Shinawatra, for vote buying in December elections. The Supreme Court on July 8 convicted senior party executive Yongyuth Tiyapairath of the offence and this month issued arrest warrants for Thaksin and his wife after they skipped bail and fled to the U.K. to avoid corruption charges.
Government Offices Stormed
The Thai currency yesterday touched an 11-month low of 34.29 per dollar as supporters of the People's Alliance for Democracy, which organized rallies that led to Thaksin's ouster in a September 2006 coup, stormed Samak's office and several ministries. Riot police surrounded the premier's compound today and Samak said he won't resign.
The political woes are preventing Samak, who became prime minister in January, from following through on promises to spend about $50 billion in the next four years on infrastructure projects and ease restrictions on foreign investment to help the economy. Growth in Southeast Asia's second-largest economy slowed to 5.3 percent in the second quarter, easing for the first time in more than a year, as spending slumped at home.
To contact the reporter on this story: Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net
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Aug. 27 (Bloomberg) -- Thailand's baht may slide more than 3 percent by year-end as attempts to remove Prime Minister Samak Sundaravej and ban his ruling party prompt global funds to pull money from the country, according to State Street Global Markets.
The currency dropped 5.5 percent in the past three months, the worst performance among Asia's 10 most-active currencies excluding the yen, as anti-government protests gathered steam. Overseas investors' sales of Thai stocks exceed their purchases this year by more than $3 billion and the benchmark SET Index has slumped 22 percent.
``One black mark is foreign investor outflows,'' State Street's Hong Kong-based strategist Dwyfor Evans wrote in an e- mailed note today. ``An amalgam of political risk, real money cross-border equity outflows and potential unwinding of Thai baht long positions by institutional investors implies further risks of downward pressure for the baht.''
Evans predicts the baht, which recently traded at 34.13 per dollar in Bangkok, will decline to 35.30 per dollar by the end of 2008. The median estimate of 16 analysts surveyed by Bloomberg News is for a year-end level of 33.8.
Thailand's Election Commission will announce Sept. 2 whether it will seek the dissolution of Samak's People Power Party, formed by supporters of former Prime Minister Thaksin Shinawatra, for vote buying in December elections. The Supreme Court on July 8 convicted senior party executive Yongyuth Tiyapairath of the offence and this month issued arrest warrants for Thaksin and his wife after they skipped bail and fled to the U.K. to avoid corruption charges.
Government Offices Stormed
The Thai currency yesterday touched an 11-month low of 34.29 per dollar as supporters of the People's Alliance for Democracy, which organized rallies that led to Thaksin's ouster in a September 2006 coup, stormed Samak's office and several ministries. Riot police surrounded the premier's compound today and Samak said he won't resign.
The political woes are preventing Samak, who became prime minister in January, from following through on promises to spend about $50 billion in the next four years on infrastructure projects and ease restrictions on foreign investment to help the economy. Growth in Southeast Asia's second-largest economy slowed to 5.3 percent in the second quarter, easing for the first time in more than a year, as spending slumped at home.
To contact the reporter on this story: Shanthy Nambiar in Bangkok at snambiar1@bloomberg.net
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Australian, N.Z. Dollars Rise as Investors Boost Carry Trades
By Ron Harui and Tracy Withers
Aug. 27 (Bloomberg) -- The Australian dollar climbed from its weakest level in 11 months and the New Zealand dollar rose from near a two-week low as U.S. and Asian stocks advanced, giving investors more confidence to buy higher-yielding assets.
The currencies also snapped two days of losses versus the yen as analysts said Fannie Mae and Freddie Mac have enough capital to last the year, prompting funds to return to so-called carry trades. The Australian and New Zealand dollars gained as prices rose for the commodities the nations export, improving the outlook for the South Pacific economies.
``Investors are probably showing appetite for high-yielding assets in Australia and New Zealand,'' said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. ``This demand seems to be bolstering the Aussie and the kiwi,'' he said, referring to the currencies by their nicknames.
Australia's dollar advanced 0.9 percent to 85.87 U.S. cents as of 4:53 p.m. in Sydney, after dropping yesterday to 84.94 cents, the lowest since Sept. 20. The currency climbed 0.2 percent to 93.76 yen.
New Zealand's dollar gained 1.7 percent to 70.20 U.S. cents. It touched 68.99 cents yesterday, the weakest since Aug. 13. The currency strengthened 1 percent to 76.64 yen.
Benchmark interest rates are 7.25 percent in Australia and 8 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, making the South Pacific nations popular targets for carry trades.
Carry Trades
In carry trades, investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the spread between the two. The risk is that currency market moves can erase those profits.
Gold, Australia's third most-valuable commodity export gained for a second day, adding 0.3 percent. The UBS Bloomberg Constant Maturity Commodity Index rose 0.2 percent yesterday. Raw materials account for 60 percent of Australia's exports and sales of commodities such as lumber make up 70 percent of New Zealand's overseas shipments.
The New Zealand dollar was the best performer today of the 16 most-traded currencies against the yen as U.S. stocks rebounded from the largest drop in a month. The MSCI Asia Pacific Index gained 0.5 percent after the Standard & Poor's 500 Index yesterday strengthened 0.4 percent.
``A recovery in U.S. stock markets helped underpin yen crosses and the New Zealand dollar rebounded off its lows,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``The risks are skewed in favor of the currency extending its gains.''
Confidence Improves
Demand for the New Zealand dollar was also bolstered after an ANZ National Bank Ltd. survey showed local companies were confident about their future sales and profits for the first time in six months.
A net 4.7 percent of companies expect their sales will improve over the next 12 months from a net 8.2 percent expecting a decline in the July survey, according to the report released by ANZ National Bank in Wellington. The net figure subtracts the number of pessimists from the number of optimists.
Australian government bonds gained for a second day. The yield on the 10-year note fell 3 basis points, or 0.03 percentage point, to 5.72 percent, according to data compiled by Bloomberg. The price of the 5.25 percent bond due March 2019 rose 0.259, or A$2.59 per A$1,000 face amount, to 96.339.
New Zealand government debt advanced for a third day with the yield on the benchmark 10-year note falling 2 basis points to 6.04 percent.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Tracy Withers in Wellington at twithers@bloomberg.net.
Read more...
Aug. 27 (Bloomberg) -- The Australian dollar climbed from its weakest level in 11 months and the New Zealand dollar rose from near a two-week low as U.S. and Asian stocks advanced, giving investors more confidence to buy higher-yielding assets.
The currencies also snapped two days of losses versus the yen as analysts said Fannie Mae and Freddie Mac have enough capital to last the year, prompting funds to return to so-called carry trades. The Australian and New Zealand dollars gained as prices rose for the commodities the nations export, improving the outlook for the South Pacific economies.
``Investors are probably showing appetite for high-yielding assets in Australia and New Zealand,'' said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. ``This demand seems to be bolstering the Aussie and the kiwi,'' he said, referring to the currencies by their nicknames.
Australia's dollar advanced 0.9 percent to 85.87 U.S. cents as of 4:53 p.m. in Sydney, after dropping yesterday to 84.94 cents, the lowest since Sept. 20. The currency climbed 0.2 percent to 93.76 yen.
New Zealand's dollar gained 1.7 percent to 70.20 U.S. cents. It touched 68.99 cents yesterday, the weakest since Aug. 13. The currency strengthened 1 percent to 76.64 yen.
Benchmark interest rates are 7.25 percent in Australia and 8 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, making the South Pacific nations popular targets for carry trades.
Carry Trades
In carry trades, investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the spread between the two. The risk is that currency market moves can erase those profits.
Gold, Australia's third most-valuable commodity export gained for a second day, adding 0.3 percent. The UBS Bloomberg Constant Maturity Commodity Index rose 0.2 percent yesterday. Raw materials account for 60 percent of Australia's exports and sales of commodities such as lumber make up 70 percent of New Zealand's overseas shipments.
The New Zealand dollar was the best performer today of the 16 most-traded currencies against the yen as U.S. stocks rebounded from the largest drop in a month. The MSCI Asia Pacific Index gained 0.5 percent after the Standard & Poor's 500 Index yesterday strengthened 0.4 percent.
``A recovery in U.S. stock markets helped underpin yen crosses and the New Zealand dollar rebounded off its lows,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``The risks are skewed in favor of the currency extending its gains.''
Confidence Improves
Demand for the New Zealand dollar was also bolstered after an ANZ National Bank Ltd. survey showed local companies were confident about their future sales and profits for the first time in six months.
A net 4.7 percent of companies expect their sales will improve over the next 12 months from a net 8.2 percent expecting a decline in the July survey, according to the report released by ANZ National Bank in Wellington. The net figure subtracts the number of pessimists from the number of optimists.
Australian government bonds gained for a second day. The yield on the 10-year note fell 3 basis points, or 0.03 percentage point, to 5.72 percent, according to data compiled by Bloomberg. The price of the 5.25 percent bond due March 2019 rose 0.259, or A$2.59 per A$1,000 face amount, to 96.339.
New Zealand government debt advanced for a third day with the yield on the benchmark 10-year note falling 2 basis points to 6.04 percent.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Tracy Withers in Wellington at twithers@bloomberg.net.
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Asian Currencies Gain, Led by Korean Won, on Intervention Signs
By Aaron Pan and Kim Kyoungwha
Aug. 27 (Bloomberg) -- Asian currencies rose, led by South Korea's won, after a finance ministry official said the government will act to stem a decline. The Philippine peso climbed before a central bank meeting tomorrow.
Policy makers in Korea, concerned that a falling currency will raise the cost of imports, have spent billions of dollars in reserves to stem the won's loss. Nine of the 10-most active Asian currencies advanced today as the dollar weakened. Malaysia's ringgit gained after opposition leader Anwar Ibrahim won a seat in parliament in a local by-election.
``Caution in Korea set in after the verbal intervention,'' said Chu In Young, a currency dealer with state-run Korea Development Bank in Seoul. ``Sales from offshore players who have heavily built up dollar positions were notable.''
The won rose 0.6 percent to 1,083.20 against the dollar as of 1 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The ringgit climbed 0.4 percent to 3.3763 and the peso gained 0.6 percent to 45.72.
The Korean won is the worst performing regional currency this year and in August. Central banks intervene by selling or buying foreign exchange.
Korea's ``government cannot but worry about the recent won decline,'' Choi Jong Ku, director general of the ministry's international finance bureau, said at a briefing in Gwacheon today. ``We will continue to closely monitor the market status and take measures when needed.''
Philippine Rates
The Philippine peso snapped a two-day loss as economists predict policy makers will increase the benchmark interest rate to a one-year high.
The central bank will raise borrowing costs by at least 0.25 percentage point to 6 percent, according to all 15 economists surveyed by Bloomberg News. Governor Amando Tetangco said Aug. 5 that the bank will maintain a ``tight'' monetary policy after a report showed inflation accelerated to a 16-year high of 12.2 percent.
Traders are ``lightening up their long-dollar positions ahead of the meeting,'' said Paul Joseph Garcia, chief investment officer at the Manila unit of ING Investment Management Ltd. who oversees $1.5 billion in funds. ``Everyone was caught long last time'' when the central bank unexpectedly raised its benchmark interest rate by 50 basis points last month.
An investor who is long purchases a currency seeking to benefit from its rise.
The peso will likely trade between 45.60 and 46 for the remainder of the month, Garcia said.
Singapore Dollar, UBS
Elsewhere, Indonesia's rupiah added 0.2 percent to 9,168 and Thailand's baht gained 0.3 percent to 34.15. Singapore's currency advanced 0.6 percent to S$1.4173 per U.S. dollar, according to data compiled by Bloomberg.
Singapore's dollar will rise 1.2 percent in three months to reach S$1.40 as persistent inflation prevents the central bank from stalling the currency's appreciation, UBS AG said.
Singapore's inflation slowed in July by less than economists had estimated, after holding at 26-year highs in each of the three previous months. The trade ministry urged policy makers to maintain vigilance on inflation while ensuring the currency doesn't hurt exports by appreciating too sharply.
``It remains too early for the central bank to contemplate a move to a neutral bias, much less an outright easing by shifting the policy band lower, although we do not rule out a more gradual appreciation at the October meeting,'' New York-based analyst Benedikt Germanier wrote in a research note yesterday.
Malaysia's ringgit rose on speculation the currency's slump to a nine-month low this week was excessive as investor concern surrounding the by-election receded.
Ringgit, By-Election
The ringgit snapped a two-day loss as Anwar yesterday regained a seat in parliament after a 10-year hiatus, boosting his chances of ousting Prime Minister Abdullah Ahmad Badawi.
``People are selling back dollars,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The way I see it, people are discounting the short-term risk premium now that the by-election is out of the way.''
The currency may rise as high as 3.3650 today, Awaluddin said.
Taiwan's dollar dropped for a third day on speculation a deepening global economic slump will hurt exports and prompt investors to dump more of the island's shares.
The currency traded near a six-month low after reports yesterday showed business confidence in Germany, Europe's biggest economy, dropped to a three-year low and mortgage approvals in the U.K. held close to the lowest in 11 years.
Taiwan this week reported the slowest growth in export orders in five years and overseas investors were net sellers of the island's stocks on nine of the last 10 trading days.
``Emerging markets are now the underdogs,'' said Dong Tao, chief Asia economist at Credit Suisse Group AG in Hong Kong. ``Export demand is slowing down, especially for Asian countries such as Taiwan.''
The currency fell 0.1 percent to NT$31.514 against the dollar, according to Taipei Forex Inc. It yesterday touched NT$31.571, the weakest since Feb. 21.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
Read more...
Aug. 27 (Bloomberg) -- Asian currencies rose, led by South Korea's won, after a finance ministry official said the government will act to stem a decline. The Philippine peso climbed before a central bank meeting tomorrow.
Policy makers in Korea, concerned that a falling currency will raise the cost of imports, have spent billions of dollars in reserves to stem the won's loss. Nine of the 10-most active Asian currencies advanced today as the dollar weakened. Malaysia's ringgit gained after opposition leader Anwar Ibrahim won a seat in parliament in a local by-election.
``Caution in Korea set in after the verbal intervention,'' said Chu In Young, a currency dealer with state-run Korea Development Bank in Seoul. ``Sales from offshore players who have heavily built up dollar positions were notable.''
The won rose 0.6 percent to 1,083.20 against the dollar as of 1 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The ringgit climbed 0.4 percent to 3.3763 and the peso gained 0.6 percent to 45.72.
The Korean won is the worst performing regional currency this year and in August. Central banks intervene by selling or buying foreign exchange.
Korea's ``government cannot but worry about the recent won decline,'' Choi Jong Ku, director general of the ministry's international finance bureau, said at a briefing in Gwacheon today. ``We will continue to closely monitor the market status and take measures when needed.''
Philippine Rates
The Philippine peso snapped a two-day loss as economists predict policy makers will increase the benchmark interest rate to a one-year high.
The central bank will raise borrowing costs by at least 0.25 percentage point to 6 percent, according to all 15 economists surveyed by Bloomberg News. Governor Amando Tetangco said Aug. 5 that the bank will maintain a ``tight'' monetary policy after a report showed inflation accelerated to a 16-year high of 12.2 percent.
Traders are ``lightening up their long-dollar positions ahead of the meeting,'' said Paul Joseph Garcia, chief investment officer at the Manila unit of ING Investment Management Ltd. who oversees $1.5 billion in funds. ``Everyone was caught long last time'' when the central bank unexpectedly raised its benchmark interest rate by 50 basis points last month.
An investor who is long purchases a currency seeking to benefit from its rise.
The peso will likely trade between 45.60 and 46 for the remainder of the month, Garcia said.
Singapore Dollar, UBS
Elsewhere, Indonesia's rupiah added 0.2 percent to 9,168 and Thailand's baht gained 0.3 percent to 34.15. Singapore's currency advanced 0.6 percent to S$1.4173 per U.S. dollar, according to data compiled by Bloomberg.
Singapore's dollar will rise 1.2 percent in three months to reach S$1.40 as persistent inflation prevents the central bank from stalling the currency's appreciation, UBS AG said.
Singapore's inflation slowed in July by less than economists had estimated, after holding at 26-year highs in each of the three previous months. The trade ministry urged policy makers to maintain vigilance on inflation while ensuring the currency doesn't hurt exports by appreciating too sharply.
``It remains too early for the central bank to contemplate a move to a neutral bias, much less an outright easing by shifting the policy band lower, although we do not rule out a more gradual appreciation at the October meeting,'' New York-based analyst Benedikt Germanier wrote in a research note yesterday.
Malaysia's ringgit rose on speculation the currency's slump to a nine-month low this week was excessive as investor concern surrounding the by-election receded.
Ringgit, By-Election
The ringgit snapped a two-day loss as Anwar yesterday regained a seat in parliament after a 10-year hiatus, boosting his chances of ousting Prime Minister Abdullah Ahmad Badawi.
``People are selling back dollars,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The way I see it, people are discounting the short-term risk premium now that the by-election is out of the way.''
The currency may rise as high as 3.3650 today, Awaluddin said.
Taiwan's dollar dropped for a third day on speculation a deepening global economic slump will hurt exports and prompt investors to dump more of the island's shares.
The currency traded near a six-month low after reports yesterday showed business confidence in Germany, Europe's biggest economy, dropped to a three-year low and mortgage approvals in the U.K. held close to the lowest in 11 years.
Taiwan this week reported the slowest growth in export orders in five years and overseas investors were net sellers of the island's stocks on nine of the last 10 trading days.
``Emerging markets are now the underdogs,'' said Dong Tao, chief Asia economist at Credit Suisse Group AG in Hong Kong. ``Export demand is slowing down, especially for Asian countries such as Taiwan.''
The currency fell 0.1 percent to NT$31.514 against the dollar, according to Taipei Forex Inc. It yesterday touched NT$31.571, the weakest since Feb. 21.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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Shree Renuka Contracts India's First Sugar Import Since 2006
By Aaron Pan and Kim Kyoungwha
Aug. 27 (Bloomberg) -- Asian currencies rose, led by South Korea's won, after a finance ministry official said the government will act to stem a decline. The Philippine peso climbed before a central bank meeting tomorrow.
Policy makers in Korea, concerned that a falling currency will raise the cost of imports, have spent billions of dollars in reserves to stem the won's loss. Nine of the 10-most active Asian currencies advanced today as the dollar weakened. Malaysia's ringgit gained after opposition leader Anwar Ibrahim won a seat in parliament in a local by-election.
``Caution in Korea set in after the verbal intervention,'' said Chu In Young, a currency dealer with state-run Korea Development Bank in Seoul. ``Sales from offshore players who have heavily built up dollar positions were notable.''
The won rose 0.6 percent to 1,083.20 against the dollar as of 1 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The ringgit climbed 0.4 percent to 3.3763 and the peso gained 0.6 percent to 45.72.
The Korean won is the worst performing regional currency this year and in August. Central banks intervene by selling or buying foreign exchange.
Korea's ``government cannot but worry about the recent won decline,'' Choi Jong Ku, director general of the ministry's international finance bureau, said at a briefing in Gwacheon today. ``We will continue to closely monitor the market status and take measures when needed.''
Philippine Rates
The Philippine peso snapped a two-day loss as economists predict policy makers will increase the benchmark interest rate to a one-year high.
The central bank will raise borrowing costs by at least 0.25 percentage point to 6 percent, according to all 15 economists surveyed by Bloomberg News. Governor Amando Tetangco said Aug. 5 that the bank will maintain a ``tight'' monetary policy after a report showed inflation accelerated to a 16-year high of 12.2 percent.
Traders are ``lightening up their long-dollar positions ahead of the meeting,'' said Paul Joseph Garcia, chief investment officer at the Manila unit of ING Investment Management Ltd. who oversees $1.5 billion in funds. ``Everyone was caught long last time'' when the central bank unexpectedly raised its benchmark interest rate by 50 basis points last month.
An investor who is long purchases a currency seeking to benefit from its rise.
The peso will likely trade between 45.60 and 46 for the remainder of the month, Garcia said.
Singapore Dollar, UBS
Elsewhere, Indonesia's rupiah added 0.2 percent to 9,168 and Thailand's baht gained 0.3 percent to 34.15. Singapore's currency advanced 0.6 percent to S$1.4173 per U.S. dollar, according to data compiled by Bloomberg.
Singapore's dollar will rise 1.2 percent in three months to reach S$1.40 as persistent inflation prevents the central bank from stalling the currency's appreciation, UBS AG said.
Singapore's inflation slowed in July by less than economists had estimated, after holding at 26-year highs in each of the three previous months. The trade ministry urged policy makers to maintain vigilance on inflation while ensuring the currency doesn't hurt exports by appreciating too sharply.
``It remains too early for the central bank to contemplate a move to a neutral bias, much less an outright easing by shifting the policy band lower, although we do not rule out a more gradual appreciation at the October meeting,'' New York-based analyst Benedikt Germanier wrote in a research note yesterday.
Malaysia's ringgit rose on speculation the currency's slump to a nine-month low this week was excessive as investor concern surrounding the by-election receded.
Ringgit, By-Election
The ringgit snapped a two-day loss as Anwar yesterday regained a seat in parliament after a 10-year hiatus, boosting his chances of ousting Prime Minister Abdullah Ahmad Badawi.
``People are selling back dollars,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The way I see it, people are discounting the short-term risk premium now that the by-election is out of the way.''
The currency may rise as high as 3.3650 today, Awaluddin said.
Taiwan's dollar dropped for a third day on speculation a deepening global economic slump will hurt exports and prompt investors to dump more of the island's shares.
The currency traded near a six-month low after reports yesterday showed business confidence in Germany, Europe's biggest economy, dropped to a three-year low and mortgage approvals in the U.K. held close to the lowest in 11 years.
Taiwan this week reported the slowest growth in export orders in five years and overseas investors were net sellers of the island's stocks on nine of the last 10 trading days.
``Emerging markets are now the underdogs,'' said Dong Tao, chief Asia economist at Credit Suisse Group AG in Hong Kong. ``Export demand is slowing down, especially for Asian countries such as Taiwan.''
The currency fell 0.1 percent to NT$31.514 against the dollar, according to Taipei Forex Inc. It yesterday touched NT$31.571, the weakest since Feb. 21.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
Read more...
Aug. 27 (Bloomberg) -- Asian currencies rose, led by South Korea's won, after a finance ministry official said the government will act to stem a decline. The Philippine peso climbed before a central bank meeting tomorrow.
Policy makers in Korea, concerned that a falling currency will raise the cost of imports, have spent billions of dollars in reserves to stem the won's loss. Nine of the 10-most active Asian currencies advanced today as the dollar weakened. Malaysia's ringgit gained after opposition leader Anwar Ibrahim won a seat in parliament in a local by-election.
``Caution in Korea set in after the verbal intervention,'' said Chu In Young, a currency dealer with state-run Korea Development Bank in Seoul. ``Sales from offshore players who have heavily built up dollar positions were notable.''
The won rose 0.6 percent to 1,083.20 against the dollar as of 1 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The ringgit climbed 0.4 percent to 3.3763 and the peso gained 0.6 percent to 45.72.
The Korean won is the worst performing regional currency this year and in August. Central banks intervene by selling or buying foreign exchange.
Korea's ``government cannot but worry about the recent won decline,'' Choi Jong Ku, director general of the ministry's international finance bureau, said at a briefing in Gwacheon today. ``We will continue to closely monitor the market status and take measures when needed.''
Philippine Rates
The Philippine peso snapped a two-day loss as economists predict policy makers will increase the benchmark interest rate to a one-year high.
The central bank will raise borrowing costs by at least 0.25 percentage point to 6 percent, according to all 15 economists surveyed by Bloomberg News. Governor Amando Tetangco said Aug. 5 that the bank will maintain a ``tight'' monetary policy after a report showed inflation accelerated to a 16-year high of 12.2 percent.
Traders are ``lightening up their long-dollar positions ahead of the meeting,'' said Paul Joseph Garcia, chief investment officer at the Manila unit of ING Investment Management Ltd. who oversees $1.5 billion in funds. ``Everyone was caught long last time'' when the central bank unexpectedly raised its benchmark interest rate by 50 basis points last month.
An investor who is long purchases a currency seeking to benefit from its rise.
The peso will likely trade between 45.60 and 46 for the remainder of the month, Garcia said.
Singapore Dollar, UBS
Elsewhere, Indonesia's rupiah added 0.2 percent to 9,168 and Thailand's baht gained 0.3 percent to 34.15. Singapore's currency advanced 0.6 percent to S$1.4173 per U.S. dollar, according to data compiled by Bloomberg.
Singapore's dollar will rise 1.2 percent in three months to reach S$1.40 as persistent inflation prevents the central bank from stalling the currency's appreciation, UBS AG said.
Singapore's inflation slowed in July by less than economists had estimated, after holding at 26-year highs in each of the three previous months. The trade ministry urged policy makers to maintain vigilance on inflation while ensuring the currency doesn't hurt exports by appreciating too sharply.
``It remains too early for the central bank to contemplate a move to a neutral bias, much less an outright easing by shifting the policy band lower, although we do not rule out a more gradual appreciation at the October meeting,'' New York-based analyst Benedikt Germanier wrote in a research note yesterday.
Malaysia's ringgit rose on speculation the currency's slump to a nine-month low this week was excessive as investor concern surrounding the by-election receded.
Ringgit, By-Election
The ringgit snapped a two-day loss as Anwar yesterday regained a seat in parliament after a 10-year hiatus, boosting his chances of ousting Prime Minister Abdullah Ahmad Badawi.
``People are selling back dollars,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``The way I see it, people are discounting the short-term risk premium now that the by-election is out of the way.''
The currency may rise as high as 3.3650 today, Awaluddin said.
Taiwan's dollar dropped for a third day on speculation a deepening global economic slump will hurt exports and prompt investors to dump more of the island's shares.
The currency traded near a six-month low after reports yesterday showed business confidence in Germany, Europe's biggest economy, dropped to a three-year low and mortgage approvals in the U.K. held close to the lowest in 11 years.
Taiwan this week reported the slowest growth in export orders in five years and overseas investors were net sellers of the island's stocks on nine of the last 10 trading days.
``Emerging markets are now the underdogs,'' said Dong Tao, chief Asia economist at Credit Suisse Group AG in Hong Kong. ``Export demand is slowing down, especially for Asian countries such as Taiwan.''
The currency fell 0.1 percent to NT$31.514 against the dollar, according to Taipei Forex Inc. It yesterday touched NT$31.571, the weakest since Feb. 21.
To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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Platinum Futures Gain as Dollar's Drop Spurs Investment Demand
By Dave McCombs
Aug. 27 (Bloomberg) -- Platinum futures in Tokyo advanced for a sixth day in seven as the dollar's drop from a six-month high against the euro and crude oil's gain boosted the appeal of the precious metal as an alternative asset.
Platinum has added 11 percent since dropping to 4,555 yen a gram ($1,296 an ounce) Aug. 19, the lowest in a year. The most- traded contract on Aug. 22 capped its sixth weekly decline, the longest losing streak since Aug. 17, 2001.
``Precious metals have also held most of their recent gains, a confirmation that the losses were overdone on the downside,'' John Reade, an analyst at UBS AG, said in a note to clients dated yesterday.
June-delivery platinum jumped 0.6 percent to 5,036 yen a gram ($1,433 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange. Platinum for immediate delivery advanced $20 to $1,440 an ounce at 11:28 a.m. in Tokyo, a 1.4 percent gain from yesterday in New York.
The dollar today fell from a six-month high against the euro on speculation weakening business and consumer spending will discourage the Federal Reserve from raising interest rates.
The U.S. currency dropped to $1.4699 per euro from $1.4653 yesterday, when it touched $1.4571, the strongest since Feb. 14.
ZKB Platinum advanced to 71,889 ounces in the week ended Aug. 22, Zurich-based ZKB said Aug. 25 in an e-mailed report. That compares with 65,504 ounces for the previous week.
To contact the reporter for this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net
Read more...
Aug. 27 (Bloomberg) -- Platinum futures in Tokyo advanced for a sixth day in seven as the dollar's drop from a six-month high against the euro and crude oil's gain boosted the appeal of the precious metal as an alternative asset.
Platinum has added 11 percent since dropping to 4,555 yen a gram ($1,296 an ounce) Aug. 19, the lowest in a year. The most- traded contract on Aug. 22 capped its sixth weekly decline, the longest losing streak since Aug. 17, 2001.
``Precious metals have also held most of their recent gains, a confirmation that the losses were overdone on the downside,'' John Reade, an analyst at UBS AG, said in a note to clients dated yesterday.
June-delivery platinum jumped 0.6 percent to 5,036 yen a gram ($1,433 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange. Platinum for immediate delivery advanced $20 to $1,440 an ounce at 11:28 a.m. in Tokyo, a 1.4 percent gain from yesterday in New York.
The dollar today fell from a six-month high against the euro on speculation weakening business and consumer spending will discourage the Federal Reserve from raising interest rates.
The U.S. currency dropped to $1.4699 per euro from $1.4653 yesterday, when it touched $1.4571, the strongest since Feb. 14.
ZKB Platinum advanced to 71,889 ounces in the week ended Aug. 22, Zurich-based ZKB said Aug. 25 in an e-mailed report. That compares with 65,504 ounces for the previous week.
To contact the reporter for this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net
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Corn, Soybeans Advance as Dollar's Gain Stalls, Crude Oil Rises
By Jae Hur
Aug. 27 (Bloomberg) -- Corn and soybeans rallied as a drop in the dollar boosted the appeal of U.S. supplies for overseas importers and rising energy costs increased demand prospects for biofuel. Wheat gained for the first time in four days.
The dollar declined against the euro after rising as much as 1.2 percent yesterday to $1.4571, the strongest since Feb. 14. A stronger U.S. currency erodes the purchasing power of overseas buyers. Crude oil climbed as much as 0.6 percent after rising 1 percent yesterday.
``The halt of the dollar's advance and rising crude oil prices helped grains and other commodities rebound,'' Nicholas Chung, senior manager of the commodity derivatives team at Korea Development Bank, said today from Seoul. ``For corn, it's also a technical correction after declining in the past three days.''
Corn for December delivery advanced as much as 10.5 cents, or 1.8 percent, to $6.045 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $5.995 as of 10:51 a.m. in Singapore. The price has risen 70 percent in the past 12 months, reaching a record $7.9925 on June 27.
Soybeans for November delivery added as much as 23.75 cents, or 1.8 percent, to $13.6825 a bushel and was at $13.61 as of 10:52 a.m. in Singapore. Futures have gained 59 percent in the past year, reaching a record $16.3675 on July 3.
Soybean production in Argentina and Brazil, which account for more than half the world's output of the oilseed, may be hurt this year by dry weather and a campaign to end farming on deforested Amazon land, a forecaster said.
Argentina Drought
Parts of Argentina are facing the worst drought in 40 years, Thomas Mielke, an analyst at Oil World, a Hamburg-based forecaster, said yesterday. Planting in Brazil may be little changed as the government cuts aid to farmers who can't prove that their land was obtained legally.
Reduced output in South America combined with a dry spell that is threatening crops in the U.S., the world's largest soybean grower, could drive global prices of the oilseed higher, said Mielke.
Wheat for December delivery was up 4.75 cents, or 0.6 percent, at $8.5925 a bushel as of 10:54 a.m. Singapore time after trading between $8.52 and $8.6275. The contract has gained 19 percent in the past year, reaching a record $13.495 on Feb. 27.
Farmers in Argentina, the fourth-largest wheat exporter last year, may harvest 20 percent less wheat this year because of drought and a conflict over taxes, the Buenos Aires Cereals Exchange said.
The crop may total 12.5 million metric tons, down from 15.6 million tons a year earlier, Eduardo Anchubidart, head of the exchange's forecasting department, said yesterday. The crop is harvested starting in December.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Aug. 27 (Bloomberg) -- Corn and soybeans rallied as a drop in the dollar boosted the appeal of U.S. supplies for overseas importers and rising energy costs increased demand prospects for biofuel. Wheat gained for the first time in four days.
The dollar declined against the euro after rising as much as 1.2 percent yesterday to $1.4571, the strongest since Feb. 14. A stronger U.S. currency erodes the purchasing power of overseas buyers. Crude oil climbed as much as 0.6 percent after rising 1 percent yesterday.
``The halt of the dollar's advance and rising crude oil prices helped grains and other commodities rebound,'' Nicholas Chung, senior manager of the commodity derivatives team at Korea Development Bank, said today from Seoul. ``For corn, it's also a technical correction after declining in the past three days.''
Corn for December delivery advanced as much as 10.5 cents, or 1.8 percent, to $6.045 a bushel in after-hours electronic trading on the Chicago Board of Trade and traded at $5.995 as of 10:51 a.m. in Singapore. The price has risen 70 percent in the past 12 months, reaching a record $7.9925 on June 27.
Soybeans for November delivery added as much as 23.75 cents, or 1.8 percent, to $13.6825 a bushel and was at $13.61 as of 10:52 a.m. in Singapore. Futures have gained 59 percent in the past year, reaching a record $16.3675 on July 3.
Soybean production in Argentina and Brazil, which account for more than half the world's output of the oilseed, may be hurt this year by dry weather and a campaign to end farming on deforested Amazon land, a forecaster said.
Argentina Drought
Parts of Argentina are facing the worst drought in 40 years, Thomas Mielke, an analyst at Oil World, a Hamburg-based forecaster, said yesterday. Planting in Brazil may be little changed as the government cuts aid to farmers who can't prove that their land was obtained legally.
Reduced output in South America combined with a dry spell that is threatening crops in the U.S., the world's largest soybean grower, could drive global prices of the oilseed higher, said Mielke.
Wheat for December delivery was up 4.75 cents, or 0.6 percent, at $8.5925 a bushel as of 10:54 a.m. Singapore time after trading between $8.52 and $8.6275. The contract has gained 19 percent in the past year, reaching a record $13.495 on Feb. 27.
Farmers in Argentina, the fourth-largest wheat exporter last year, may harvest 20 percent less wheat this year because of drought and a conflict over taxes, the Buenos Aires Cereals Exchange said.
The crop may total 12.5 million metric tons, down from 15.6 million tons a year earlier, Eduardo Anchubidart, head of the exchange's forecasting department, said yesterday. The crop is harvested starting in December.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Gold Rises as the Dollar Falls Versus Euro, Crude Oil Advances
By Feiwen Rong and Glenys Sim
Aug. 27 (Bloomberg) -- Gold rose for the second day in Asia as the dollar's decline from a six-month high against the euro and crude oil's advance boosted the appeal of the precious metal as an alternative asset.
Gold is priced in dollars and often moves in the opposite direction to the U.S. currency, which fell for the first time in four days against the euro before a U.S. government report that economists forecast will show orders for durable goods stalled in July. Crude oil added more than $1 a barrel yesterday.
``Hurricane worries pushed crude oil prices higher, prompting buying of bullion that more than offset selling related to the U.S. dollar rally,'' Darren Heathcote, head of trading at Investec Bank Ltd.
Bullion for immediate delivery gained 0.3 percent to $827.22 an ounce at 2:15 p.m. in Singapore. Silver for immediate delivery advanced 0.4 percent to $13.6475 an ounce.
The dollar fell from a six-month high against the euro on speculation weakening business and consumer spending will discourage the Federal Reserve from raising interest rates.
The dollar declined to $1.4708 per euro from $1.4653 yesterday, when it touched $1.4571, the strongest since Feb. 14. Crude oil in New York rallied 0.3 percent to $116.65 a barrel after advancing 1 percent yesterday. Prices are up 61 percent from a year ago.
`Relief Rally'
Still, ``gold should fall, with last week's rebound looking like a relief rally before the onset of further declines,'' Mark Pervan, analyst at Australia and New Zealand Banking Group Ltd. in Melbourne, said in a report yesterday.
``The U.S. dollar appears to be climbing higher with the market looking for more reasons to buy rather than sell the previously unloved currency,'' he said, adding that ``a choppy oil price may limit price declines'' in bullion.
JPMorgan Securities Ltd., a unit of JPMorgan Chase & Co., lowered its price forecasts this year for gold and platinum, citing an improved outlook for the dollar and reduced inflation expectations.
Gold may average $884 an ounce in 2008, London-based analyst Michael Jansen said in a report today, down 3.3 percent from an earlier forecast of $914 an ounce.
Gold for December delivery gained 0.6 at $832.80 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 2:12 p.m. in Singapore.
Bullion for December delivery on the Shanghai Futures Exchange jumped 1.4 percent at 184.80 yuan a gram ($839 an ounce).
In Japan, gold for June delivery on the Tokyo Commodity Exchange added 0.9 percent to 2,918 yen a gram ($832 an ounce).
To contact the reporters on this story: Feiwen Rong in Singapore at frong2@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
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Aug. 27 (Bloomberg) -- Gold rose for the second day in Asia as the dollar's decline from a six-month high against the euro and crude oil's advance boosted the appeal of the precious metal as an alternative asset.
Gold is priced in dollars and often moves in the opposite direction to the U.S. currency, which fell for the first time in four days against the euro before a U.S. government report that economists forecast will show orders for durable goods stalled in July. Crude oil added more than $1 a barrel yesterday.
``Hurricane worries pushed crude oil prices higher, prompting buying of bullion that more than offset selling related to the U.S. dollar rally,'' Darren Heathcote, head of trading at Investec Bank Ltd.
Bullion for immediate delivery gained 0.3 percent to $827.22 an ounce at 2:15 p.m. in Singapore. Silver for immediate delivery advanced 0.4 percent to $13.6475 an ounce.
The dollar fell from a six-month high against the euro on speculation weakening business and consumer spending will discourage the Federal Reserve from raising interest rates.
The dollar declined to $1.4708 per euro from $1.4653 yesterday, when it touched $1.4571, the strongest since Feb. 14. Crude oil in New York rallied 0.3 percent to $116.65 a barrel after advancing 1 percent yesterday. Prices are up 61 percent from a year ago.
`Relief Rally'
Still, ``gold should fall, with last week's rebound looking like a relief rally before the onset of further declines,'' Mark Pervan, analyst at Australia and New Zealand Banking Group Ltd. in Melbourne, said in a report yesterday.
``The U.S. dollar appears to be climbing higher with the market looking for more reasons to buy rather than sell the previously unloved currency,'' he said, adding that ``a choppy oil price may limit price declines'' in bullion.
JPMorgan Securities Ltd., a unit of JPMorgan Chase & Co., lowered its price forecasts this year for gold and platinum, citing an improved outlook for the dollar and reduced inflation expectations.
Gold may average $884 an ounce in 2008, London-based analyst Michael Jansen said in a report today, down 3.3 percent from an earlier forecast of $914 an ounce.
Gold for December delivery gained 0.6 at $832.80 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 2:12 p.m. in Singapore.
Bullion for December delivery on the Shanghai Futures Exchange jumped 1.4 percent at 184.80 yuan a gram ($839 an ounce).
In Japan, gold for June delivery on the Tokyo Commodity Exchange added 0.9 percent to 2,918 yen a gram ($832 an ounce).
To contact the reporters on this story: Feiwen Rong in Singapore at frong2@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
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Crude Oil Rises a Third Day on Storm Threat in Gulf of Mexico
By Christian Schmollinger
Aug. 27 (Bloomberg) -- Crude oil rose for a third day in New York as meteorologists forecast that Tropical Storm Gustav will enter the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Gustav has weakened from a hurricane to tropical storm with sustained winds of 60 miles (95 kilometers) an hour, the National Hurricane Center said in an advisory at 2 a.m. Miami time. It is expected to increase back to a hurricane before reaching the Gulf platforms, said Jim Rouiller, a senior energy meteorologist with Planalytics Inc., a forecaster based in Wayne, Pennsylvania, whose clients include oil companies.
``There is a perception in the market of a real threat,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``It's not supposed to make land fall until Monday and what's that going to do is inject a lot of volatility in the market for the next few days.''
Crude oil for October delivery rose as much as 85 cents, or 0.7 percent, to $117.12 a barrel on the New York Mercantile Exchange. It was trading at $116.49 at 2:56 p.m. Singapore time. Prices are up 62 percent from a year ago.
Futures have dropped 21 percent from a record $147.27 barrel reached on July 11, the highest since trading began in 1983. Yesterday, oil rose $1.16, or 1 percent, to settle at $116.27 a barrel.
``Without any solid news on the storm, the top will be $118 to $120, and I don't think we can get below $112 either,'' Kornafel said.
Gustav was about 80 miles (125 kilometers) west of the Haitian capital, Port-au-Prince, and was heading northwest at about 8 miles per hours. Forecasts from the Hurricane Center show Gustav approaching eastern Cuba today and heading into the central Gulf of Mexico by Aug. 31.
Category 4 Hurricane
Gustav has the potential to grow to a Category 4 hurricane with winds of at least 131 miles per hour by the time it enters the Gulf, Planalytics's Rouiller said.
Companies will begin evacuations of their rigs and platforms today ahead of the hurricane. Transocean Inc., the world's largest offshore oil driller, started suspending operations yesterday. Royal Dutch Shell Plc started making arrangements to remove non-essential staff as well.
U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf of Mexico coast in August and September 2005. Katrina closed 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.
Breakaway Regions
Prices were also supported by Russia's dispute with the U.S. and European Union on Georgia's breakaway regions and the possibility that it could lead to supply disruptions. Russia is the world's second-largest oil producer.
German Chancellor Angela Merkel said that Russia's decision to recognize South Ossetia and Abkhazia breaches international law and will not be accepted by European Union members meeting to discuss the fallout from the war in Georgia.
``Everyone has moved past Georgia and are looking at the bigger picture of the tension between Russia and Nato and that's made it worse,'' said Kornafel.
Two tankers at the Turkish port of Ceyhan are loading crude pumped through the Baku-Tbilisi-Ceyhan pipeline for the first time since the 1 million-barrel-a-day link was shut by a fire on Aug. 5.
Brent crude oil for October settlement rose as much as 87 cents, or 0.8 percent, to $115.50 a barrel on London's ICE Futures Europe exchange. It was at $114.90 a barrel at 2:56 p.m. Singapore time.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Aug. 27 (Bloomberg) -- Crude oil rose for a third day in New York as meteorologists forecast that Tropical Storm Gustav will enter the Gulf of Mexico, home to more than a fifth of U.S. oil production.
Gustav has weakened from a hurricane to tropical storm with sustained winds of 60 miles (95 kilometers) an hour, the National Hurricane Center said in an advisory at 2 a.m. Miami time. It is expected to increase back to a hurricane before reaching the Gulf platforms, said Jim Rouiller, a senior energy meteorologist with Planalytics Inc., a forecaster based in Wayne, Pennsylvania, whose clients include oil companies.
``There is a perception in the market of a real threat,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``It's not supposed to make land fall until Monday and what's that going to do is inject a lot of volatility in the market for the next few days.''
Crude oil for October delivery rose as much as 85 cents, or 0.7 percent, to $117.12 a barrel on the New York Mercantile Exchange. It was trading at $116.49 at 2:56 p.m. Singapore time. Prices are up 62 percent from a year ago.
Futures have dropped 21 percent from a record $147.27 barrel reached on July 11, the highest since trading began in 1983. Yesterday, oil rose $1.16, or 1 percent, to settle at $116.27 a barrel.
``Without any solid news on the storm, the top will be $118 to $120, and I don't think we can get below $112 either,'' Kornafel said.
Gustav was about 80 miles (125 kilometers) west of the Haitian capital, Port-au-Prince, and was heading northwest at about 8 miles per hours. Forecasts from the Hurricane Center show Gustav approaching eastern Cuba today and heading into the central Gulf of Mexico by Aug. 31.
Category 4 Hurricane
Gustav has the potential to grow to a Category 4 hurricane with winds of at least 131 miles per hour by the time it enters the Gulf, Planalytics's Rouiller said.
Companies will begin evacuations of their rigs and platforms today ahead of the hurricane. Transocean Inc., the world's largest offshore oil driller, started suspending operations yesterday. Royal Dutch Shell Plc started making arrangements to remove non-essential staff as well.
U.S. crude oil and fuel production plunged and prices rose to records when hurricanes Katrina and Rita shut refineries and platforms as they struck the Gulf of Mexico coast in August and September 2005. Katrina closed 95 percent of offshore output in the region. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by the hurricanes.
Breakaway Regions
Prices were also supported by Russia's dispute with the U.S. and European Union on Georgia's breakaway regions and the possibility that it could lead to supply disruptions. Russia is the world's second-largest oil producer.
German Chancellor Angela Merkel said that Russia's decision to recognize South Ossetia and Abkhazia breaches international law and will not be accepted by European Union members meeting to discuss the fallout from the war in Georgia.
``Everyone has moved past Georgia and are looking at the bigger picture of the tension between Russia and Nato and that's made it worse,'' said Kornafel.
Two tankers at the Turkish port of Ceyhan are loading crude pumped through the Baku-Tbilisi-Ceyhan pipeline for the first time since the 1 million-barrel-a-day link was shut by a fire on Aug. 5.
Brent crude oil for October settlement rose as much as 87 cents, or 0.8 percent, to $115.50 a barrel on London's ICE Futures Europe exchange. It was at $114.90 a barrel at 2:56 p.m. Singapore time.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.
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Fannie, Freddie Post Biggest Profits on Mortgages Since 1998
By Jody Shenn
Aug. 27 (Bloomberg) -- The crisis of confidence that sent Fannie Mae and Freddie Mac debt costs to record highs above U.S. Treasuries is also providing the mortgage-finance companies with the biggest profits on new investments since at least 1998.
The current-coupon mortgage bonds Fannie and Freddie buy yield about 40 basis points, or 0.40 percentage point, more than what they pay to borrow by selling benchmark bonds, according to Citigroup Inc. The difference exceeded 20 basis points only twice in the 10 years through 2007 -- in 1998 and 2003.
The gap enables the government-chartered companies to offset some of the credit losses on mortgages they own or guarantee and eases pressure on U.S. Treasury Secretary Henry Paulson to step in with a bailout. The companies, which profit from their $1.6 trillion of mortgage investments, have tumbled more than 85 percent this year as investors became alarmed at growing mortgage delinquencies and the rising cost of their debt.
``It's ironic,'' said Moshe Orenbuch, an analyst at Credit Suisse Group in New York, adding that their interest margin is likely to continue to widen. ``From Fannie and Freddie's perspective, there's actually better investments now.''
Congress created Fannie and Freddie to expand homeownership and provide market stability. They make money by financing mortgage-asset purchases with low-cost debt and on guarantees of home-loan securities they create out of loans from lenders.
Interest Income
Washington-based Fannie said last month net interest income rose to $2.1 billion in the second quarter, from $1.7 billion in the first quarter. The company's profit on its investments expanded to 100 basis points from 82 basis points, according to Credit Suisse.
Freddie's net interest income jumped 92 percent to $1.5 billion. The annualized profit per dollar of investments rose to 80 basis points from 48 basis points.
``They, at the increment, are very, very profitable,'' said Dan Fuss, vice chairman of Loomis Sayles & Co. in Boston and co- manager of the $17 billion Loomis Sayles Bond Fund. ``If they can continue to do anything close to business as usual, they are immensely profitable.''
The Loomis Sayles fund owned $260.3 million in Fannie and Freddie equity and $141.3 million in debt as of June 30, according to the firm's Web Site.
Attractive Funding
``Our funding costs remain attractive, particularly based on the opportunities to purchase mortgage assets at attractive spreads,'' Freddie spokesman Michael Cosgrove said. A Fannie spokesman, Jason Lobo, declined to comment.
Fannie and Freddie shares fell this year and their borrowing costs rose amid concern they don't have enough capital to weather the biggest housing downturn since the Great Depression. The companies had $14.9 billion of losses in the past four quarters as late payments on mortgages rose to the highest on record.
Freddie on Aug. 19 sold $3 billion of five-year reference notes to yield 113 basis points more than five-year Treasuries, the most in at least 10 years. Fannie sold $3.5 billion of three-year notes at a record spread of 122.5 basis points on Aug. 13.
The crisis of confidence prompted Paulson to draw up a rescue plan last month giving him authority to inject unlimited amounts of capital into the companies.
While the difference between their cost to borrow and the returns they get on new investments has widened, losses are depleting capital and causing the companies to rein in their purchases of securities.
Both said they plan to limit growth in their portfolios to preserve capital, after boosting holdings by $115 billion in the first seven months of this year. Their reluctance to purchase is contributing to higher yields on mortgage assets
Cutting Back
Fewer purchases by Fannie and Freddie means the companies' debt costs are having little influence on mortgage bond prices and home-loan rates, according to some analysts. Yields in the $4.5 trillion market for agency mortgage bonds, those issued by Fannie, Freddie and Ginnie Mae, guide rates on new home loans.
``It would make a difference if they were increasing their portfolios,'' said UBS AG mortgage analyst Laurie Goodman in New York, whose team was ranked No. 1 in a 2007 poll by Institutional Investor magazine for ``pass-through'' agency mortgage bonds.
Fannie and Freddie's holdings are shrinking at a monthly rate of about $20 billion because of refinancings, home sales and borrower defaults, according to an Aug. 21 report from New York-based Citigroup analysts Scott Peng, Brad Henis, and Brett Rose. That money can be reinvested into higher yielding securities.
That is one reason ``there is no pressing need'' for a bailout, they wrote in the report, titled ``All That Sound and Fury, Signifying Nothing New.''
The companies are also boosting fees to guarantee home-loan securities, off-balance-sheet obligations for which they don't need to borrow. Fannie plans on Oct. 1 it will double to 50 basis points an upfront ``adverse market delivery charge,'' introduced this year for every mortgage the company buys or guarantees.
To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net.
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Temasek Has `Great Confidence' in Merrill's CEO Thain
By Jean Chua and Haslinda Amin
Aug. 27 (Bloomberg) -- Temasek Holdings Pte, Singapore's $130 billion sovereign wealth fund, said it has ``great confidence'' in Merrill Lynch & Co.'s Chief Executive Officer John Thain and plans to raise its stake.
Temasek, Merrill's biggest shareholder, received U.S. antitrust approval yesterday to increase its holding in the third-largest U.S. securities firm from 9.4 percent. Temasek said it wants to lift it to between 13 percent and 14 percent.
Merrill has a ``great franchise which has existed through many crises through a long period of time,'' Michael Dee, Temasek's senior managing director of international, said in a Bloomberg Television interview yesterday.
Temasek invested about $5 billion in Merrill since Dec. 24 after Thain, 53, replaced Stan O'Neal, who was ousted following the firm's biggest quarterly loss in its 93-year history. Merrill's writedowns make up a 10th of the more than $500 billion of credit losses by banks amid the subprime meltdown.
``The bottom line is financial institutions are still asking for more capital,'' said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which manages about $108 billion. With sovereign funds, ``there's still plenty of capital out there, so they're looking for somewhere to park that money.''
Merrill spokeswoman Danielle Robinson declined to comment yesterday, referring calls to Temasek.
Shares Fall
Temasek, wholly owned by Singapore's finance ministry, has been increasing investments in global financial services companies to take advantage of a stock-market slump that erased about $10 trillion in market value in the past year. The MSCI World/Financials Index has dropped 33 percent in the period.
The sovereign fund, run by Chief Executive Officer Ho Ching, 55, said last month it was putting a further $900 million in Merrill after it was compensated for the initial investment. Temasek said it will use a $2.5 billion reset payment for losses from its earlier purchase toward buying $3.4 billion of Merrill stock, and the securities firm will book the reset as an expense.
Merrill shares have fallen 55 percent since Temasek's first investment on Dec. 24. The stock fell 10 cents to $24.10 in New York Stock Exchange composite trading yesterday.
Temasek, which yesterday said profit doubled in the year ended March, said its decision to further increase its stake was based on Thain and his management team.
Diversity of Banks
``We had great confidence in John Thain; we had great confidence in the rest of the management and the board,'' said Dee, a former Morgan Stanley banker who joined Temasek this month.
At least a dozen U.S. lenders and credit unions have been closed by state and national regulators since 2007 as mortgage markets collapsed. Columbian Bank and Trust Co. of Topeka, Kansas, closed Aug. 22, becoming the ninth U.S. bank to collapse this year. Columbia had $752 million in assets and $622 million in deposits.
Temasek is confident about its Merrill investment because the U.S. banking system is diversified enough with thousands of lenders to handle the failure of a small group, Dee, 52, said.
``The strength of the American financial system is the diversity and that no single bank or no single group of banks is really that large,'' he said.
Banking Stakes
The U.S. Federal Trade Commission said in a statement that it cleared the transaction early, letting Temasek make an investment. Thain, the former Goldman Sachs Group Inc. president who also ran the New York Stock Exchange, was named chief executive officer of Merrill in November, the first outsider to lead the firm. His appointment was effective Dec. 1.
Temasek is also the biggest shareholder of London-based Standard Chartered Plc and Singapore's DBS Group Holdings Ltd., and owns stakes in Barclays Plc, India's ICICI Bank and lenders in Indonesia, South Korea and Pakistan. The banks make up 40 percent of its portfolio.
Chairman S. Dhanabalan said on Aug. 21 Temasek may buy more shares in Merrill and expects the stake will boost the value of its portfolio in the ``long term.''
Banks and securities firms have raised more than $350 billion in the past year after the writedowns and credit losses caused by the collapse of the U.S. subprime mortgage market, data compiled by Bloomberg show.
To contact the reporter on this story: Jean Chua in Singapore at jchua4@bloomberg.net
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America Movil, MMX, Southern Copper, Vivo: Latin Equity Preview
By [bn:PRSN=1] William Freebairn []
Aug. 27 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index fell 0.9 percent yesterday to 3,875.43.
Brazil
MMX Mineracao e Metalicos SA (MMXM3 BS): The iron-ore producer controlled by Brazilian billionaire Eike Batista bought about 1 million cubic meters of pine forest to provide fuel for pig-iron output. The company did not give a price for the transaction in a statement sent via Market Wire yesterday. MMX fell 8.4 percent to 14.20 reais.
Vivo Participacoes SA (VIVO4 BS): Brazil's largest mobile- phone company plans a 1-for-4 reverse stock split. The transaction must be approved by shareholders, Vivo said in a regulatory filing yesterday. Vivo rose 0.1 percent to 8.03 reais.
Mexico
America Movil SAB (AMXL MM): Latin America's largest mobile phone company paid $289 million upfront for a new 15-year operating license in Ecuador. The company will pay the remaining $191 million owed over five years, Daniel Bernal, legal representative of America Movil's Ecuador unit, told reporters yesterday in Quito. America Movil declined 1.5 percent to 25.49 pesos.
Peru
Southern Copper Corp. (PCU/C PE): Peru's largest copper producer must rehire workers fired for taking part in a strike, Cabinet Chief Jorge del Castillo told reporters yesterday in Lima. Southern Copper and two other mining companies must rehire the 31 workers who took part in a June national strike, the government ordered. Southern Copper rose 0.6 percent to $25.06.
To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net.
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Aug. 27 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index fell 0.9 percent yesterday to 3,875.43.
Brazil
MMX Mineracao e Metalicos SA (MMXM3 BS): The iron-ore producer controlled by Brazilian billionaire Eike Batista bought about 1 million cubic meters of pine forest to provide fuel for pig-iron output. The company did not give a price for the transaction in a statement sent via Market Wire yesterday. MMX fell 8.4 percent to 14.20 reais.
Vivo Participacoes SA (VIVO4 BS): Brazil's largest mobile- phone company plans a 1-for-4 reverse stock split. The transaction must be approved by shareholders, Vivo said in a regulatory filing yesterday. Vivo rose 0.1 percent to 8.03 reais.
Mexico
America Movil SAB (AMXL MM): Latin America's largest mobile phone company paid $289 million upfront for a new 15-year operating license in Ecuador. The company will pay the remaining $191 million owed over five years, Daniel Bernal, legal representative of America Movil's Ecuador unit, told reporters yesterday in Quito. America Movil declined 1.5 percent to 25.49 pesos.
Peru
Southern Copper Corp. (PCU/C PE): Peru's largest copper producer must rehire workers fired for taking part in a strike, Cabinet Chief Jorge del Castillo told reporters yesterday in Lima. Southern Copper and two other mining companies must rehire the 31 workers who took part in a June national strike, the government ordered. Southern Copper rose 0.6 percent to $25.06.
To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net.
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Hong Kong Stocks Climb; Cnooc, China Mobile Rise on Profit
By Hanny Wan
Aug. 27 (Bloomberg) -- Hong Kong's stocks rose to the highest in more than a week, led by oil producers, on speculation Cnooc Ltd. will today report a surge in first-half profit.
Cnooc, China's third-largest oil company, climbed 3.2 percent before announcing earnings and after crude prices advanced. China Cosco Holdings Co., Asia's largest shipping company by market value, added 2.3 percent after saying first- half profit more than doubled.
China Mobile Ltd. advanced 1 percent ahead of its earnings announcement. The company reported during the lunchtime trading break that first-half profit advanced 45 percent, beating analysts' estimates.
After positive earnings reports, ``markets are getting a technical rebound in the short-term,'' said Carmen Au-Yeung, a portfolio manager at Comgest (Far East) Ltd. in Hong Kong, which manages the equivalent of $12 billion in global equities. ``There are many stocks that are becoming attractive.''
The Hang Seng Index added 148.14, or 0.7 percent, to 21,204.80 at the 12:30 p.m. break, its highest since Aug. 14. The measure has fallen 24 percent this year on concern soaring inflation and $500 billion in writedowns and credit losses at global financial companies will slow economic and profit growth.
Credit Suisse Group lifted its 12-month estimate for the Hang Seng Index to 27,600, Peggy Chan and Vincent Chan, analysts at the brokerage, wrote in a report today. Credit Suisse's end- 2008 estimate for the gauge was previously 26,100, according to a July 23 research note.
The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, rose 1.6 percent to 11,585.81.
Cnooc added 3.2 percent to HK$11.56. The company increased its reserves and output during the first half as crude prices rose. Net income probably climbed 52 percent to 22.1 billion yuan ($3.2 billion), according to the median estimate of analysts surveyed by Bloomberg News.
China Cosco
Crude oil futures climbed 1 percent to $116.27 a barrel in New York yesterday. The contract was recently at $116.93 in after-hours trading.
PetroChina Co. advanced 2.2 percent to HK$10.18. Asia's biggest oil company may post a 34 percent drop in profit to 54 billion yuan, according to the median estimates of seven analysts.
Cnooc and PetroChina, among the top 10 gainers on the Hang Seng Index, are scheduled to report results today.
China Cosco added 2.3 percent to HK$14.92. The company said yesterday it more than doubled first-half profit to 15.1 billion yuan ($2.2 billion) after buying the world's largest dry-bulk fleet to ship China's surging imports of iron ore and coal.
Record Users
China Mobile advanced 1 percent to HK$94.20. The world's biggest phone company by market value said first-half profit rose 45 percent to 54.8 billion yuan after price cuts helped attract record numbers of subscribers. That beat the 52.4 billion yuan median estimate of seven analysts in a Bloomberg survey.
More than five stocks on the 43-member Hang Seng Index advanced for every three that dropped. August futures climbed 0.4 percent to 21,160.
The following stocks were among the biggest winners and losers. Stock symbols are in parenthesis after company names.
China Eastern Airlines Corp. (670 HK) slipped 4 cents, or 2.4 percent, to HK$1.66. The country's third-largest carrier said yesterday first-half profit fell 29 percent to 41.6 million yuan as it carried fewer passengers and paid more for jet fuel.
China Yurun Food Group Ltd. (1068 HK) added 20 cents, or 1.6 percent, to HK$12.84. The country's biggest hog processor said yesterday first-half profit surged 71 percent to HK$672 million ($86 million) as it sold more chilled pork and processed meat products. That beats the HK$405 million median estimate of three analysts surveyed by Bloomberg.
Dah Chong Hong Holdings Ltd. (1828 HK) surged 14 cents, or 6.9 percent, to HK$2.17, its sharpest jump since Jan. 25. The Hong Kong-based car and food distributor said yesterday first- half profit climbed 38 percent to HK$289 million. The company said it plans to buy stakes in Toyota Motor Corp. and Lexus brand dealers in China.
Jiangxi Copper Co. (358 HK) advanced 32 cents, or 2.8 percent, to HK$11.86. China's second-biggest smelter of the metal increased first-half profit by 32 percent to 2.77 billion yuan because of a surge in byproduct prices, the company said yesterday.
Sinofert Holdings Ltd. (297 HK), China's biggest fertilizer importer, added 14 cents, or 3.2 percent, to HK$4.54 after saying yesterday first-half profit may double as it increased sales and raised prices. The company didn't provide the profit figure.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net.
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Aug. 27 (Bloomberg) -- Hong Kong's stocks rose to the highest in more than a week, led by oil producers, on speculation Cnooc Ltd. will today report a surge in first-half profit.
Cnooc, China's third-largest oil company, climbed 3.2 percent before announcing earnings and after crude prices advanced. China Cosco Holdings Co., Asia's largest shipping company by market value, added 2.3 percent after saying first- half profit more than doubled.
China Mobile Ltd. advanced 1 percent ahead of its earnings announcement. The company reported during the lunchtime trading break that first-half profit advanced 45 percent, beating analysts' estimates.
After positive earnings reports, ``markets are getting a technical rebound in the short-term,'' said Carmen Au-Yeung, a portfolio manager at Comgest (Far East) Ltd. in Hong Kong, which manages the equivalent of $12 billion in global equities. ``There are many stocks that are becoming attractive.''
The Hang Seng Index added 148.14, or 0.7 percent, to 21,204.80 at the 12:30 p.m. break, its highest since Aug. 14. The measure has fallen 24 percent this year on concern soaring inflation and $500 billion in writedowns and credit losses at global financial companies will slow economic and profit growth.
Credit Suisse Group lifted its 12-month estimate for the Hang Seng Index to 27,600, Peggy Chan and Vincent Chan, analysts at the brokerage, wrote in a report today. Credit Suisse's end- 2008 estimate for the gauge was previously 26,100, according to a July 23 research note.
The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, rose 1.6 percent to 11,585.81.
Cnooc added 3.2 percent to HK$11.56. The company increased its reserves and output during the first half as crude prices rose. Net income probably climbed 52 percent to 22.1 billion yuan ($3.2 billion), according to the median estimate of analysts surveyed by Bloomberg News.
China Cosco
Crude oil futures climbed 1 percent to $116.27 a barrel in New York yesterday. The contract was recently at $116.93 in after-hours trading.
PetroChina Co. advanced 2.2 percent to HK$10.18. Asia's biggest oil company may post a 34 percent drop in profit to 54 billion yuan, according to the median estimates of seven analysts.
Cnooc and PetroChina, among the top 10 gainers on the Hang Seng Index, are scheduled to report results today.
China Cosco added 2.3 percent to HK$14.92. The company said yesterday it more than doubled first-half profit to 15.1 billion yuan ($2.2 billion) after buying the world's largest dry-bulk fleet to ship China's surging imports of iron ore and coal.
Record Users
China Mobile advanced 1 percent to HK$94.20. The world's biggest phone company by market value said first-half profit rose 45 percent to 54.8 billion yuan after price cuts helped attract record numbers of subscribers. That beat the 52.4 billion yuan median estimate of seven analysts in a Bloomberg survey.
More than five stocks on the 43-member Hang Seng Index advanced for every three that dropped. August futures climbed 0.4 percent to 21,160.
The following stocks were among the biggest winners and losers. Stock symbols are in parenthesis after company names.
China Eastern Airlines Corp. (670 HK) slipped 4 cents, or 2.4 percent, to HK$1.66. The country's third-largest carrier said yesterday first-half profit fell 29 percent to 41.6 million yuan as it carried fewer passengers and paid more for jet fuel.
China Yurun Food Group Ltd. (1068 HK) added 20 cents, or 1.6 percent, to HK$12.84. The country's biggest hog processor said yesterday first-half profit surged 71 percent to HK$672 million ($86 million) as it sold more chilled pork and processed meat products. That beats the HK$405 million median estimate of three analysts surveyed by Bloomberg.
Dah Chong Hong Holdings Ltd. (1828 HK) surged 14 cents, or 6.9 percent, to HK$2.17, its sharpest jump since Jan. 25. The Hong Kong-based car and food distributor said yesterday first- half profit climbed 38 percent to HK$289 million. The company said it plans to buy stakes in Toyota Motor Corp. and Lexus brand dealers in China.
Jiangxi Copper Co. (358 HK) advanced 32 cents, or 2.8 percent, to HK$11.86. China's second-biggest smelter of the metal increased first-half profit by 32 percent to 2.77 billion yuan because of a surge in byproduct prices, the company said yesterday.
Sinofert Holdings Ltd. (297 HK), China's biggest fertilizer importer, added 14 cents, or 3.2 percent, to HK$4.54 after saying yesterday first-half profit may double as it increased sales and raised prices. The company didn't provide the profit figure.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net.
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