Commentary by Albert R. Hunt
Sept. 29 (Bloomberg) -- Ohio is ground zero in the unpredictable 2008 U.S. presidential election. The Buckeye State is the closest thing to a must-win for both John McCain and Barack Obama.
Several days of interviewing a dozen top Democratic and Republican politicians underscores what voters say and polls show: Ohio is dead even and saturated with attention. (The interviews were conducted before Friday night's debate).
There is a case that Obama, who needs to win 18 more electoral votes than Democrats captured in 2004, can win without Ohio's 20 electors, assuming he holds all the states that voted Democratic four years ago. He could then carry Florida or some combination of Iowa, Virginia, Colorado and New Mexico. That leaves little margin for error.
Republican McCain has even less. His only credible winning scenario, without taking Ohio, is to carry every other Republican-leaning state and pick up New Hampshire. That's a long shot.
Republicans and Democrats say the intensely contested 2004 Ohio presidential race, where George W. Bush edged out Democrat John Kerry, is the starting model for this election. The dynamics feature the economy -- a devastating picture in many parts of the state even before the recent financial crisis -- and an ingrained cultural conservatism.
``If this were just about the economy, Barack Obama would win by a huge margin,'' says Ohio's popular Democratic governor, Ted Strickland, acknowledging the cultural challenges Obama faces in connecting with working-class Democrats and rural voters.
Mass Layoffs
Economic issues resonate with a ferocity in the state. The jobless rate is 7.4 percent, the highest in 16 years and the sixth-highest in the country; almost half a million Ohioans are out of work.
The manufacturing base, which long dominated the state, has been shattered, with 758,000 fewer jobs than 10 years ago. This year alone, there have been 117 company layoffs involving 50 or more employees.
Republicans note the economy wasn't terrific four years ago either -- the jobless rate was 6.2 percent -- and say that election is instructive. Kerry focused on the major population centers and achieved all his targets, running up huge victories in Cleveland, Columbus, Toledo, Akron and other cities.
With brilliant grassroots organizing and micro-targeting, though, the Bush campaign did even better in 72 of the 88 generally less-populous Ohio counties. Almost 900,000 more people voted than in the previous election, and this was one of the few places where a larger franchise benefited the Republicans, with Bush winning the state by 118,000 out of 5.7 million votes.
`Better This Time'
``We did a good job in 2004; we're better this time,'' says Bob Bennett, the longtime Ohio Republican Party chairman. ``I'm not over-confident, but I feel confident about this one.''
Bennett and other Republicans say that with McCain's appeal to independent voters, and his selection of Sarah Palin as a running mate to energize the conservative and rural base, the ticket can match Bush's 2004 performance.
One new element is no-fault absentee voting, which means as many as a third of Ohio citizens will cast ballots before Election Day. Secretary of State Jennifer Brunner predicts overall turnout will ``easily'' exceed 80 percent of registrants, suggesting three-quarters of a million more voters than the huge outpouring last time.
`Elephant In Room'
Republicans concede that Obama will do better in urban areas, pulling out blacks and younger voters. Still, they say they doubt that will be enough to offset their margins, especially in southern Ohio counties.
The largely unspoken issue is race. Strickland takes on the matter directly, asking voters: ``What's the elephant in the room'' in this election?
He says when the subject is raised it usually produces a constructive conversation about racial hopes and fears.
Strickland, who two years ago swept most Ohio counties in winning the governorship and backed Hillary Clinton in her victory over Obama in the March presidential primary, believes it's necessary to address that ``elephant.'' He has also told the Obama campaign to use Bill Clinton heavily in southern Ohio.
The governor's own top political operative, Aaron Pickerell, is running the Obama campaign in Ohio, and coordination seems much better than in the past.
Discarding `Old Playbook'
``We've thrown out the old playbook,'' says Ohio Democratic Party Chairman Chris Redfern, ``where we would focus on a few big counties, light a candle, and hope for the best. John Kerry's people never really got Ohio.''
There's an Obama presence in every county, Redfern says, with six times as many paid Democratic workers as four years ago, most of whom reside where they are campaigning, and countless volunteers.
``We're no longer ceding entire regions of the state,'' Redfern says.
Another plus for the Democrats: There's no ballot initiative this November like the 2004 ban on gay marriage, which brought out many culturally conservative voters.
Thus, the Democrats figure Obama will turn out a huge African-American vote, many younger and more independent-minded voters. And while he may lose most of the smaller counties, he'll run as well or slightly better there than the ticket did four years ago. This time, they think an expanded franchise will help Obama.
Economy the Focus
The driving force in that scenario remains the economy. ``Ohio comes down to the economy versus race,'' says Timothy Hagan, a Democrat and Cuyahoga County commissioner.
If you doubt the stakes, look at the schedule. McCain announced his choice of Palin in Dayton, and rarely does a day pass without a presidential or vice presidential candidate in Cleveland, Columbus, Lima, Zanesville, Wilmington or Steubenville. Everyone sees it going to the wire.
``It may be well into election night,'' says Kevin Dewine, the deputy Republican Party chairman, ``before anyone calls Ohio.''
(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)
To contact the writer of this column: Albert R. Hunt in Washington at ahunt1@bloomberg.net
Read more...
Monday, September 29, 2008
Australia's Mortgage Plan May Push Lenders to Pass On Rate Cuts
By Gemma Daley
Sept. 29 (Bloomberg) -- Australia's purchase of A$4 billion ($3.3 billion) of mortgage-backed securities to revive frozen markets for the debt may increase competition in the banking industry and encourage lenders to pass on any interest rate cuts.
``Increased bank competition always adds pressure to pass on rate reductions,'' Hans Kunnen, head of investment market research in Sydney at Colonial First State Global Management, which manages about $128 billion, said in a telephone interview on Sept. 27. ``Competition impacts price decisions.''
The purchases of mortgage securities through the Australian Office of Financial Management are intended to reinvigorate the home-lending market by providing funding for small lenders. Such funding has all but dried up because of the global credit squeeze, Treasurer Wayne Swan, 54, said in Canberra on Sept 26 when announcing the program.
The Reserve Bank of Australia will cut its benchmark borrowing rate by at least 0.25 percentage point on Oct. 7, according to a Credit Suisse Group index based on interest-rate swaps. Bank Governor Glenn Stevens reduced the cash-rate target by 0.25 percentage point to 7 percent this month, the first cut in seven years.
Australia's banking industry is dominated by its largest lenders -- National Australia Bank, Commonwealth Bank of Australia, Westpac Banking Corp. and Australia & New Zealand Banking Group -- who are barred from merging with one another under the government's so-called Four Pillars policy. The four are benefiting as smaller mortgage providers struggle amid rising wholesale funding costs.
``This move will certainly assist competition and may help with a decision to pass on cuts'' by the country's banks, said Su-Lin Ong, a senior economist at RBC Capital Markets Ltd. in Sydney. ``It will put pressure on them, but the bottom line is their cost of funding capital is still hard to get and expensive.''
The four biggest lenders this year each increased their main home-loan rates by at least 1 percentage point as the central bank raised the cash rate by 0.5 percentage point.
Mortgage Bond Sales
Mortgage bond sales slumped 85 percent to A$2.5 billion a quarter since the middle of last year as international investors retreated from property lending after losses and writedowns from the U.S. subprime collapse swelled to $522 billion. That's crippled the ability of smaller banks including Bank of Queensland and Aussie Home Loans to make loans.
Australian short-term funding costs surged this year to the highest since at least 1999, based on the spread between interbank lending rates and government bonds.
Small lenders, who would use the securities to provide mortgages, include Aussie Home Loans, Wizard Home Loans, Bendigo and Adelaide Bank Ltd. and Bank of Queensland. Such lenders don't have large deposits, like the larger banks, to fund their mortgages.
A year ago, smaller lenders accounted for 15 percent of the market, according to Mortgage and Finance Association of Australia. Their share of the market has dropped to 5 percent and Aussie founder John Symond said he hadn't been able to offer a mortgage with competitive rates for 12 months.
Competitive Pressure
``This will give non-bank lenders a chance to come back into the market and apply competitive pressure on interest rates,'' MFAA Chief Executive Officer Phil Naylor said in a telephone interview from Sydney on Sept. 27. ``This will put downward pressure on interest rates.''
The nation's one-month bank bill swap rate, which Australian banks typically use to determine yields on variable- rate loans, reached a 13-year high of 7.80 percent on June 11. It has since dropped to 7.4 percent.
The spread between one-year interbank rates and the one- year Australian government bond touched 1.45 percentage point on March 10, based on Bloomberg data. The spread widened to 1.16 percentage points on Sept. 26, compared with 0.97 on Sept. 1.
Mike Smith, head of ANZ Banking , signaled last week the nation's fourth-largest bank may not pass on to mortgage customers all of any potential central bank rate cuts when policy makers meet next month.
``Wholesale funding costs will determine whether cuts are going to be passed through,'' Joshua Williamson, a senior strategist at TD Securities Ltd. in Sydney, said in a telephone interview on Sept. 27.
Banking Industry
The mortgage debt purchases, supported by the Reserve Bank, are intended to strengthen the nation's banking industry while ensuring that small banks can compete, Swan said. The nation's treasury department will administer the flow of funds; the investments are planned as temporary, Swan said.
``This will free up some liquidity,'' Kunnen said. ``Our financial system is strong.''
Australia's financial system is weathering the global credit turmoil better than many others around the world, the RBA said on Sept. 25. Still, banks are taking a ``more cautious attitude to lending,'' the central bank said in its half-yearly Financial Stability Review published in Sydney.
``This action is appropriate to support competitive lending,'' Swan told reporters in Brisbane on Sept. 27, adding that officials would start work today on the policy. ``This will make our strong banking system even stronger and even more competitive.''
U.S. Plan
The Australian plan coincides with a push by U.S. lawmakers to revive credit markets by authorizing a $700 billion plan to buy troubled assets from financial institutions.
In the case of Australia, the Reserve Bank's recent stability review showed western Sydney homebuyers, who took out prime loans as prices peaked in 2004, have since had the worst rate of arrears in the nation. As a result, western Sydney has seen a sharp rise in property repossessions, the bank said.
The number of borrowers in western Sydney who are late on their repayments is more than double the national average, the bank said.
``A competitive lending market is vital to make sure consumers get the best variety of products, the best service and the lowest interest rates,'' MFAA's Naylor said. ``That's critical at the moment when there are mortgagees in trouble.''
To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net
Read more...
Sept. 29 (Bloomberg) -- Australia's purchase of A$4 billion ($3.3 billion) of mortgage-backed securities to revive frozen markets for the debt may increase competition in the banking industry and encourage lenders to pass on any interest rate cuts.
``Increased bank competition always adds pressure to pass on rate reductions,'' Hans Kunnen, head of investment market research in Sydney at Colonial First State Global Management, which manages about $128 billion, said in a telephone interview on Sept. 27. ``Competition impacts price decisions.''
The purchases of mortgage securities through the Australian Office of Financial Management are intended to reinvigorate the home-lending market by providing funding for small lenders. Such funding has all but dried up because of the global credit squeeze, Treasurer Wayne Swan, 54, said in Canberra on Sept 26 when announcing the program.
The Reserve Bank of Australia will cut its benchmark borrowing rate by at least 0.25 percentage point on Oct. 7, according to a Credit Suisse Group index based on interest-rate swaps. Bank Governor Glenn Stevens reduced the cash-rate target by 0.25 percentage point to 7 percent this month, the first cut in seven years.
Australia's banking industry is dominated by its largest lenders -- National Australia Bank, Commonwealth Bank of Australia, Westpac Banking Corp. and Australia & New Zealand Banking Group -- who are barred from merging with one another under the government's so-called Four Pillars policy. The four are benefiting as smaller mortgage providers struggle amid rising wholesale funding costs.
``This move will certainly assist competition and may help with a decision to pass on cuts'' by the country's banks, said Su-Lin Ong, a senior economist at RBC Capital Markets Ltd. in Sydney. ``It will put pressure on them, but the bottom line is their cost of funding capital is still hard to get and expensive.''
The four biggest lenders this year each increased their main home-loan rates by at least 1 percentage point as the central bank raised the cash rate by 0.5 percentage point.
Mortgage Bond Sales
Mortgage bond sales slumped 85 percent to A$2.5 billion a quarter since the middle of last year as international investors retreated from property lending after losses and writedowns from the U.S. subprime collapse swelled to $522 billion. That's crippled the ability of smaller banks including Bank of Queensland and Aussie Home Loans to make loans.
Australian short-term funding costs surged this year to the highest since at least 1999, based on the spread between interbank lending rates and government bonds.
Small lenders, who would use the securities to provide mortgages, include Aussie Home Loans, Wizard Home Loans, Bendigo and Adelaide Bank Ltd. and Bank of Queensland. Such lenders don't have large deposits, like the larger banks, to fund their mortgages.
A year ago, smaller lenders accounted for 15 percent of the market, according to Mortgage and Finance Association of Australia. Their share of the market has dropped to 5 percent and Aussie founder John Symond said he hadn't been able to offer a mortgage with competitive rates for 12 months.
Competitive Pressure
``This will give non-bank lenders a chance to come back into the market and apply competitive pressure on interest rates,'' MFAA Chief Executive Officer Phil Naylor said in a telephone interview from Sydney on Sept. 27. ``This will put downward pressure on interest rates.''
The nation's one-month bank bill swap rate, which Australian banks typically use to determine yields on variable- rate loans, reached a 13-year high of 7.80 percent on June 11. It has since dropped to 7.4 percent.
The spread between one-year interbank rates and the one- year Australian government bond touched 1.45 percentage point on March 10, based on Bloomberg data. The spread widened to 1.16 percentage points on Sept. 26, compared with 0.97 on Sept. 1.
Mike Smith, head of ANZ Banking , signaled last week the nation's fourth-largest bank may not pass on to mortgage customers all of any potential central bank rate cuts when policy makers meet next month.
``Wholesale funding costs will determine whether cuts are going to be passed through,'' Joshua Williamson, a senior strategist at TD Securities Ltd. in Sydney, said in a telephone interview on Sept. 27.
Banking Industry
The mortgage debt purchases, supported by the Reserve Bank, are intended to strengthen the nation's banking industry while ensuring that small banks can compete, Swan said. The nation's treasury department will administer the flow of funds; the investments are planned as temporary, Swan said.
``This will free up some liquidity,'' Kunnen said. ``Our financial system is strong.''
Australia's financial system is weathering the global credit turmoil better than many others around the world, the RBA said on Sept. 25. Still, banks are taking a ``more cautious attitude to lending,'' the central bank said in its half-yearly Financial Stability Review published in Sydney.
``This action is appropriate to support competitive lending,'' Swan told reporters in Brisbane on Sept. 27, adding that officials would start work today on the policy. ``This will make our strong banking system even stronger and even more competitive.''
U.S. Plan
The Australian plan coincides with a push by U.S. lawmakers to revive credit markets by authorizing a $700 billion plan to buy troubled assets from financial institutions.
In the case of Australia, the Reserve Bank's recent stability review showed western Sydney homebuyers, who took out prime loans as prices peaked in 2004, have since had the worst rate of arrears in the nation. As a result, western Sydney has seen a sharp rise in property repossessions, the bank said.
The number of borrowers in western Sydney who are late on their repayments is more than double the national average, the bank said.
``A competitive lending market is vital to make sure consumers get the best variety of products, the best service and the lowest interest rates,'' MFAA's Naylor said. ``That's critical at the moment when there are mortgagees in trouble.''
To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net
Read more...
Aso, Brown Efforts to Save Themselves May Lend Bush a Hand Too
By Rich Miller and Simon Kennedy
Sept. 29 (Bloomberg) -- Embattled political leaders in Tokyo and London may end up coming to the aid of President George W. Bush in containing the economic fallout from the credit crisis as political self-preservation trumps nationalism.
Confronting a recession, Japan's new prime minister, Taro Aso, is likely to promise tax cuts and higher spending in a bid to win a parliamentary election as early as next month. British Prime Minister Gordon Brown, who faces unrest in his party over its and his sagging popularity, may also opt for budget-busting measures to turn around the weakest U.K. economy since the early 1990s.
That would be welcome news for Bush and Federal Reserve Chairman Ben S. Bernanke because the U.S. has become so dependent on exports to generate growth -- gross domestic product, which expanded at a 2.8 percent annual rate in the second quarter, would have contracted were it not for trade -- that anything foreign governments do to stimulate their own economies is likely to help.
``We're heading into a global recession,'' says Simon Johnson, former chief economist at the International Monetary Fund and now a senior fellow at the Peterson Institute for International Economics in Washington, who adds that ``there's room'' for governments to do more.
Central bankers, meanwhile, are under pressure to ease credit, and investors are betting they'll do so within months. Traders see the Bank of England cutting its benchmark rate, currently 5 percent, in October, according to a financial-market index compiled by Credit Suisse Group. Economists surveyed by Bloomberg News expect the European Central Bank to do likewise early next year after keeping its rate unchanged at 4.25 percent at a meeting this week.
Pull All Strings
``Policy makers may soon be forced to pull all available strings, including rate cuts by all the major central banks,'' says Joachim Fels, co-chief economist at Morgan Stanley in London. The ECB, Bank of Japan and other central banks have already united with Bernanke to pump dollars into money markets.
Leaders in China and Russia, meanwhile, are stepping back from claims that the credit crisis is a U.S. problem and are moving to aid their countries' economies.
When the turbulence began more than a year ago, other countries let the U.S. take the lead in mitigating the impact. While policy makers in Washington cut interest rates at the fastest pace in two decades and adopted a $168 billion economic- stimulus package, their counterparts in other capitals held back.
`I Told You So'
Talk of decoupling -- the seeming ability of the rest of the world to forge ahead while the U.S. faltered -- was fashionable. Some commentary still has an ``I told you so'' tone, suggesting that America is getting its comeuppance after years of lecturing the rest of the world on the benefits of unfettered capitalism.
German Chancellor Angela Merkel chided the U.S. and the U.K. for not listening when she called last year for stronger financial regulations. ``Germany has always pointed out how necessary they are,'' she said in a Sept. 22 speech in Berlin.
But any schadenfreude is accompanied by a realization that other countries aren't immune to America's woes. ``Like everywhere in the world, the French fear for their savings, their jobs, their purchasing power,'' President Nicolas Sarkozy said Sept. 25 in Toulon.
Johnson says he expects global growth to fall ``considerably'' below the 3 percent rate the IMF deems equivalent to a world recession. The international economy grew 4.9 percent last year.
Bad Debts
Treasury Secretary Henry Paulson has called on other countries to follow the U.S. by setting up programs similar to his $700 billion plan to buy bad debts from banks. While none have done so, Japan and the U.K., among others, are shifting their policies by looking for ways to boost growth.
Japanese officials, who earlier this year were advising the U.S. on the lessons they learned bailing out their banks in the 1990s, now are focused on expansion. The world's second-largest economy contracted at a 3.3 percent rate in the second quarter.
Aso, 68, last week named Shoichi Nakagawa, an advocate of increased government spending, as finance minister, a sign the new prime minister wants to move quickly to turn the economy around. Aso's Liberal Democratic Party has historically used spending on bridges and other infrastructure to build support.
LDP officials predict Aso will call an early election to capitalize on any honeymoon period his government enjoys, rather than wait until lawmakers' terms expire next September. The LDP, which has ruled Japan for all but 11 months of the past half- century, trails the opposition Democratic Party of Japan in some polls.
`Boost the Economy'
Japan is going to be ``spending money to boost the economy, ending the strong commitment to balance the budget by 2011,'' says Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo.
The U.K.'s Brown, 57, has his own political and economic problems seven months after his government nationalized mortgage lender Northern Rock Plc. With polls showing his Labour Party trailing the opposition Conservatives by 10 percentage points and more, Brown is already under pressure from restive party members to step down.
Meanwhile, a housing slump is pushing the British economy toward its first recession since 1991. Chancellor of the Exchequer Alistair Darling said last week he will put off action to curb the government's mounting budget deficit -- 10.4 billion pounds ($19.2 billion) in August, the largest for that month since records began in 1993 -- arguing that it isn't the ``right time to be taking money out of the economy.''
Radical Steps
Jim O'Neill, head of global economic research at Goldman Sachs Group Inc. in London, says the government should follow the U.S. in taking radical steps to rescue the economy, perhaps by taking over the mortgage-lending activities of troubled banks.
``We need to consider some out-of-the-box things,'' O'Neill says. Leaders in emerging markets, until now the dynamos of the global economy, also are under pressure to offset the spreading economic troubles.
``Asia is not going to come out of this global crisis and slowdown unscathed,'' says Venkatraman Anantha-Nageswaran, head of research at Bank Julius Baer & Co. in Singapore. ``People are on the edge, and there's political pressure to ease the burden.''
Chinese officials, who earlier this year were telling the U.S. to put its house in order, are now moving to counter a slowdown in their own economy.
Slowing Growth
China Investment Corp., the government's $200 billion sovereign-wealth fund, bought shares in leading banks to shore up a stock market that is down almost 60 percent in 2008, according to the official Xinhua News Agency. China's leaders are also working on a plan for as much as 400 billion yuan ($58 billion) of spending and tax cuts following four straight quarters of slowing economic growth.
Russian policy makers have little time for self- congratulation as they struggle to contain a crisis of confidence in the country's economy and markets.
President Dmitry Medvedev this month pledged 500 billion rubles ($19.6 billion) to ensure ``the stability of the stock market.'' This was part of more than $100 billion the government said could become available through loans, tax cuts and other measures. Russia's dollar-denominated RTS Index is the second- worst performer this quarter among 88 markets tracked by Bloomberg.
``You're not seeing a lot of the gloating about the U.S. problems that you heard before,'' says Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Massachusetts. ``Instead, you're starting to see a lot of the countries starting to do some of the stuff that the U.S. has been doing.''
To contact the reporters on this story: Rich Miller in Washington at rmiller28@bloomberg.netSimon Kennedy in Paris at skennedy4@bloomberg.net
Read more...
Sept. 29 (Bloomberg) -- Embattled political leaders in Tokyo and London may end up coming to the aid of President George W. Bush in containing the economic fallout from the credit crisis as political self-preservation trumps nationalism.
Confronting a recession, Japan's new prime minister, Taro Aso, is likely to promise tax cuts and higher spending in a bid to win a parliamentary election as early as next month. British Prime Minister Gordon Brown, who faces unrest in his party over its and his sagging popularity, may also opt for budget-busting measures to turn around the weakest U.K. economy since the early 1990s.
That would be welcome news for Bush and Federal Reserve Chairman Ben S. Bernanke because the U.S. has become so dependent on exports to generate growth -- gross domestic product, which expanded at a 2.8 percent annual rate in the second quarter, would have contracted were it not for trade -- that anything foreign governments do to stimulate their own economies is likely to help.
``We're heading into a global recession,'' says Simon Johnson, former chief economist at the International Monetary Fund and now a senior fellow at the Peterson Institute for International Economics in Washington, who adds that ``there's room'' for governments to do more.
Central bankers, meanwhile, are under pressure to ease credit, and investors are betting they'll do so within months. Traders see the Bank of England cutting its benchmark rate, currently 5 percent, in October, according to a financial-market index compiled by Credit Suisse Group. Economists surveyed by Bloomberg News expect the European Central Bank to do likewise early next year after keeping its rate unchanged at 4.25 percent at a meeting this week.
Pull All Strings
``Policy makers may soon be forced to pull all available strings, including rate cuts by all the major central banks,'' says Joachim Fels, co-chief economist at Morgan Stanley in London. The ECB, Bank of Japan and other central banks have already united with Bernanke to pump dollars into money markets.
Leaders in China and Russia, meanwhile, are stepping back from claims that the credit crisis is a U.S. problem and are moving to aid their countries' economies.
When the turbulence began more than a year ago, other countries let the U.S. take the lead in mitigating the impact. While policy makers in Washington cut interest rates at the fastest pace in two decades and adopted a $168 billion economic- stimulus package, their counterparts in other capitals held back.
`I Told You So'
Talk of decoupling -- the seeming ability of the rest of the world to forge ahead while the U.S. faltered -- was fashionable. Some commentary still has an ``I told you so'' tone, suggesting that America is getting its comeuppance after years of lecturing the rest of the world on the benefits of unfettered capitalism.
German Chancellor Angela Merkel chided the U.S. and the U.K. for not listening when she called last year for stronger financial regulations. ``Germany has always pointed out how necessary they are,'' she said in a Sept. 22 speech in Berlin.
But any schadenfreude is accompanied by a realization that other countries aren't immune to America's woes. ``Like everywhere in the world, the French fear for their savings, their jobs, their purchasing power,'' President Nicolas Sarkozy said Sept. 25 in Toulon.
Johnson says he expects global growth to fall ``considerably'' below the 3 percent rate the IMF deems equivalent to a world recession. The international economy grew 4.9 percent last year.
Bad Debts
Treasury Secretary Henry Paulson has called on other countries to follow the U.S. by setting up programs similar to his $700 billion plan to buy bad debts from banks. While none have done so, Japan and the U.K., among others, are shifting their policies by looking for ways to boost growth.
Japanese officials, who earlier this year were advising the U.S. on the lessons they learned bailing out their banks in the 1990s, now are focused on expansion. The world's second-largest economy contracted at a 3.3 percent rate in the second quarter.
Aso, 68, last week named Shoichi Nakagawa, an advocate of increased government spending, as finance minister, a sign the new prime minister wants to move quickly to turn the economy around. Aso's Liberal Democratic Party has historically used spending on bridges and other infrastructure to build support.
LDP officials predict Aso will call an early election to capitalize on any honeymoon period his government enjoys, rather than wait until lawmakers' terms expire next September. The LDP, which has ruled Japan for all but 11 months of the past half- century, trails the opposition Democratic Party of Japan in some polls.
`Boost the Economy'
Japan is going to be ``spending money to boost the economy, ending the strong commitment to balance the budget by 2011,'' says Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo.
The U.K.'s Brown, 57, has his own political and economic problems seven months after his government nationalized mortgage lender Northern Rock Plc. With polls showing his Labour Party trailing the opposition Conservatives by 10 percentage points and more, Brown is already under pressure from restive party members to step down.
Meanwhile, a housing slump is pushing the British economy toward its first recession since 1991. Chancellor of the Exchequer Alistair Darling said last week he will put off action to curb the government's mounting budget deficit -- 10.4 billion pounds ($19.2 billion) in August, the largest for that month since records began in 1993 -- arguing that it isn't the ``right time to be taking money out of the economy.''
Radical Steps
Jim O'Neill, head of global economic research at Goldman Sachs Group Inc. in London, says the government should follow the U.S. in taking radical steps to rescue the economy, perhaps by taking over the mortgage-lending activities of troubled banks.
``We need to consider some out-of-the-box things,'' O'Neill says. Leaders in emerging markets, until now the dynamos of the global economy, also are under pressure to offset the spreading economic troubles.
``Asia is not going to come out of this global crisis and slowdown unscathed,'' says Venkatraman Anantha-Nageswaran, head of research at Bank Julius Baer & Co. in Singapore. ``People are on the edge, and there's political pressure to ease the burden.''
Chinese officials, who earlier this year were telling the U.S. to put its house in order, are now moving to counter a slowdown in their own economy.
Slowing Growth
China Investment Corp., the government's $200 billion sovereign-wealth fund, bought shares in leading banks to shore up a stock market that is down almost 60 percent in 2008, according to the official Xinhua News Agency. China's leaders are also working on a plan for as much as 400 billion yuan ($58 billion) of spending and tax cuts following four straight quarters of slowing economic growth.
Russian policy makers have little time for self- congratulation as they struggle to contain a crisis of confidence in the country's economy and markets.
President Dmitry Medvedev this month pledged 500 billion rubles ($19.6 billion) to ensure ``the stability of the stock market.'' This was part of more than $100 billion the government said could become available through loans, tax cuts and other measures. Russia's dollar-denominated RTS Index is the second- worst performer this quarter among 88 markets tracked by Bloomberg.
``You're not seeing a lot of the gloating about the U.S. problems that you heard before,'' says Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Massachusetts. ``Instead, you're starting to see a lot of the countries starting to do some of the stuff that the U.S. has been doing.''
To contact the reporters on this story: Rich Miller in Washington at rmiller28@bloomberg.netSimon Kennedy in Paris at skennedy4@bloomberg.net
Read more...
Yen, Korean Won, Baht, Indian Rupee: Asia Currency Preview
By Bob Chen
Sept. 29 (Bloomberg) -- The following events and economic reports may influence trading in Asian currencies today.
Exchange rates are from the previous session.
Japanese yen: Chief Cabinet Secretary Takeo Kawamura will hold briefings at 11 a.m. and 4 p.m. in Tokyo. Vice Finance Minister Kazuyuki Sugimoto is scheduled to give a press conference at 5 p.m.
The yen traded at 106.22 at 7:27 a.m. in Sydney.
South Korean won: The Bank of Korea will report the current-account balance tomorrow. South Korea posted a current- account deficit of $2.45 billion in July, the largest in six months, following a surplus of $1.82 billion in June.
The won was at 1,161.10.
Thai baht: The Bank of Thailand will report August figures tomorrow for exports, imports and the total trade and current- account balances. The trade balance showed a deficit of $762 million in July, after a surplus of $926 million the previous month.
The current-account deficit widened to $822 million in August from $555 million the previous month, economists forecast in a Bloomberg News survey.
The baht was at 33.98.
Indian rupee: The Reserve Bank of India in Mumbai will report the second-quarter current-account balance tomorrow. The deficit narrowed to $1.04 billion in the first quarter from $5.39 billion in the previous three months.
The rupee was at 46.55.
To contact the reporter on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net.
Read more...
Sept. 29 (Bloomberg) -- The following events and economic reports may influence trading in Asian currencies today.
Exchange rates are from the previous session.
Japanese yen: Chief Cabinet Secretary Takeo Kawamura will hold briefings at 11 a.m. and 4 p.m. in Tokyo. Vice Finance Minister Kazuyuki Sugimoto is scheduled to give a press conference at 5 p.m.
The yen traded at 106.22 at 7:27 a.m. in Sydney.
South Korean won: The Bank of Korea will report the current-account balance tomorrow. South Korea posted a current- account deficit of $2.45 billion in July, the largest in six months, following a surplus of $1.82 billion in June.
The won was at 1,161.10.
Thai baht: The Bank of Thailand will report August figures tomorrow for exports, imports and the total trade and current- account balances. The trade balance showed a deficit of $762 million in July, after a surplus of $926 million the previous month.
The current-account deficit widened to $822 million in August from $555 million the previous month, economists forecast in a Bloomberg News survey.
The baht was at 33.98.
Indian rupee: The Reserve Bank of India in Mumbai will report the second-quarter current-account balance tomorrow. The deficit narrowed to $1.04 billion in the first quarter from $5.39 billion in the previous three months.
The rupee was at 46.55.
To contact the reporter on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net.
Read more...
Australia, New Zealand Dollars Slip, Greenback Gains on Rescue
By Candice Zachariahs
Sept. 29 (Bloomberg) -- The Australian dollar fell for a second day and New Zealand's currency slipped as U.S. lawmakers said an agreement has been reached on the $700 billion rescue plan for banks, reviving confidence in the greenback.
The currencies dropped as the U.S. dollar rallied the most since Sept. 16 against the euro after Senator Judd Gregg, a New Hampshire Republican and ranking member of the Budget Committee, said yesterday ``the deal is done.'' The Australian and New Zealand currencies were weaker against the yen as concerns about Fortis, Belgium's largest financial-services firm, dulled investor appetite for higher-yielding assets.
``A generally firmer U.S. dollar should limit the top side,'' for the Australian and New Zealand dollars, said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``At this stage it looks like concerns over the European bank may outweigh any optimism and the currencies will remain heavy.''
The Australian dollar fell 0.3 percent to 82.87 U.S. cents at 8:06 a.m. in Sydney from 83.11 cents in New York on Sept. 26. It traded at 88.07 yen from 88.10 yen on Sept. 26.
New Zealand's dollar slipped to 68.53 U.S. cents from 68.60 cents in New York. It bought 72.85 yen from 72.72 yen.
The currencies fell against the U.S. dollar after Senate Majority Leader Harry Reid said the bank-rescue package will be voted on early this week. The House may vote tomorrow, House Speaker Nancy Pelosi said.
New Zealand's dollar pared earlier losses against the yen after Belgium, The Netherlands and Luxembourg said they would invest 11.2 billion euros ($16.3 billion) in Fortis, partly nationalizing the bank in a move to restore investor confidence.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
Read more...
Sept. 29 (Bloomberg) -- The Australian dollar fell for a second day and New Zealand's currency slipped as U.S. lawmakers said an agreement has been reached on the $700 billion rescue plan for banks, reviving confidence in the greenback.
The currencies dropped as the U.S. dollar rallied the most since Sept. 16 against the euro after Senator Judd Gregg, a New Hampshire Republican and ranking member of the Budget Committee, said yesterday ``the deal is done.'' The Australian and New Zealand currencies were weaker against the yen as concerns about Fortis, Belgium's largest financial-services firm, dulled investor appetite for higher-yielding assets.
``A generally firmer U.S. dollar should limit the top side,'' for the Australian and New Zealand dollars, said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``At this stage it looks like concerns over the European bank may outweigh any optimism and the currencies will remain heavy.''
The Australian dollar fell 0.3 percent to 82.87 U.S. cents at 8:06 a.m. in Sydney from 83.11 cents in New York on Sept. 26. It traded at 88.07 yen from 88.10 yen on Sept. 26.
New Zealand's dollar slipped to 68.53 U.S. cents from 68.60 cents in New York. It bought 72.85 yen from 72.72 yen.
The currencies fell against the U.S. dollar after Senate Majority Leader Harry Reid said the bank-rescue package will be voted on early this week. The House may vote tomorrow, House Speaker Nancy Pelosi said.
New Zealand's dollar pared earlier losses against the yen after Belgium, The Netherlands and Luxembourg said they would invest 11.2 billion euros ($16.3 billion) in Fortis, partly nationalizing the bank in a move to restore investor confidence.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net
Read more...
Dollar Rises as U.S. Lawmakers to Vote on Bank Rescue Package
By Stanley White
Sept. 29 (Bloomberg) -- The dollar rose to a one-week high against the euro as U.S. lawmakers reached a breakthrough on a $700 billion package to revive credit markets by purchasing distressed debt from banks.
The U.S. currency also gained against the yen as the House may vote on the plan today, according to Speaker Nancy Pelosi. The British pound dropped to a one-week low as Bradford & Bingley Plc, Britain's biggest lender to landlords, may be taken over by another bank or nationalized today under a U.K. government-backed plan to protect 21 billion pounds ($39 billion) of customer deposits.
``The dollar is set up for a relief rally,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``The U.S. rescue package is on its way to becoming law. That goes a long way to help improve sentiment for the U.S. financial sector and the dollar.''
The currency rose to $1.4533 per euro at 7:43 a.m. in Tokyo from $1.4614 late in New York on Sept. 26. It earlier reached $1.4513, the highest since Sept. 22. It rose to 106.36 yen from 106.01 yen at the end of last week. Against the pound, the dollar gained to $1.8266, the strongest in a week, and traded at $1.8299 from $1.8445. The U.S. currency may rise to 106.80 yen today, Ishikawa forecast.
The plan would let the Treasury begin buying distressed debt securities from financial companies affected by the record number of home foreclosures.
The breakthrough in negotiations between Republicans and Democrats came during a weekend of talks aimed at reaching agreement before global financial markets reopen today. The package will give Treasury Secretary Henry Paulson an immediate $250 billion to buy bad loans, with the rest to be doled out in stages.
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net
Read more...
Sept. 29 (Bloomberg) -- The dollar rose to a one-week high against the euro as U.S. lawmakers reached a breakthrough on a $700 billion package to revive credit markets by purchasing distressed debt from banks.
The U.S. currency also gained against the yen as the House may vote on the plan today, according to Speaker Nancy Pelosi. The British pound dropped to a one-week low as Bradford & Bingley Plc, Britain's biggest lender to landlords, may be taken over by another bank or nationalized today under a U.K. government-backed plan to protect 21 billion pounds ($39 billion) of customer deposits.
``The dollar is set up for a relief rally,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``The U.S. rescue package is on its way to becoming law. That goes a long way to help improve sentiment for the U.S. financial sector and the dollar.''
The currency rose to $1.4533 per euro at 7:43 a.m. in Tokyo from $1.4614 late in New York on Sept. 26. It earlier reached $1.4513, the highest since Sept. 22. It rose to 106.36 yen from 106.01 yen at the end of last week. Against the pound, the dollar gained to $1.8266, the strongest in a week, and traded at $1.8299 from $1.8445. The U.S. currency may rise to 106.80 yen today, Ishikawa forecast.
The plan would let the Treasury begin buying distressed debt securities from financial companies affected by the record number of home foreclosures.
The breakthrough in negotiations between Republicans and Democrats came during a weekend of talks aimed at reaching agreement before global financial markets reopen today. The package will give Treasury Secretary Henry Paulson an immediate $250 billion to buy bad loans, with the rest to be doled out in stages.
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net
Read more...
Asia Commodities Day Ahead: Nitrogen Trims Fertilizer Profits
Sept. 29 (Bloomberg) -- Terra Industries Inc. plummeted to the lowest in almost a year after Citigroup Inc. said prices for nitrogen-based crop nutrients may extend declines. Corn, soybeans and wheat dropped. U.S. hog farmers cut their breeding herds 2.6 percent in the three months ended Aug. 31. Gold and silver rose, while platinum fell. Celanese Corp. said the shutdown of Texas factories for Hurricane Ike reduced third-quarter profit by as much as $15 million.
AGRICULTURAL COMMODITIES
Terra, CF Drop After Citigroup Says Nitrogen Prices May Fall
Terra Industries Inc. plummeted the most in almost nine years after an analyst at Citigroup Inc. said prices for nitrogen-based crop nutrients may extend declines. Terra dropped $7.48, or 20 percent, to $30.42 in New York.
U.S. Hog Farmers Reduce Breeding Herd on Corn Cost, USDA Says
U.S. hog farmers cut their breeding herds 2.6 percent in the three months ended Aug. 31 as record feed costs led to losses in nine of the past 11 months. It was the second straight quarter of breeding-herd reductions.
Hogs Fall on Signs of Reduced U.S. Pork Demand; Cattle Rise
Hog futures fell to a one-week low on speculation that pork demand will slow as the U.S. economy falters. Hogs dropped 0.075 cent, or 0.1 percent, to 66.05 cents a pound in Chicago. Cattle rose 0.175 cent, or 0.2 percent, to $1.028 a pound. Feeder cattle declined 0.8 cent, or 0.8 percent, to $1.05575 a pound.
Corn, Soybeans Decline on Rescue-Plan Delay, Sagging Economy
Corn and soybeans tumbled the most in a week after the U.S. government's $700 billion financial rescue plan stalled and the economy slowed, signaling reduced demand for grain and oilseeds. Corn fell 15.25 cents, or 2.7 percent, to $5.43 a bushel in Chicago. Soybeans dropped 19 cents, or 1.6 percent, to $11.64 a bushel.
Wheat Falls as Credit Crisis Spurs Commodity, Stock Sell-Off
Wheat fell, marking the fifth-straight weekly decline, on speculation that the deepening U.S. financial crisis will spur investors to shift money to Treasuries from commodity and equity markets. Wheat dropped 20.25 cents, or 2.8 percent, to $7.16 a bushel in Chicago.
Smithfield, Workers Reach Agreement, Averting Strike in Iowa
Smithfield Foods Inc.'s Farmland Foods unit reached an agreement with a United Food and Commercial Workers local, averting a strike at a pork plant in Denison, Iowa, the union said.
CHEMICALS
Celanese Says Hurricane Shutdowns Cost as Much as $15 Million
Celanese Corp., the world's largest maker of acetyls used in textiles and plastics, said the shutdown of Texas factories for Hurricane Ike reduced third-quarter profit by as much as $15 million.
PRECIOUS METALS, GEMS
Gold, Silver Rally in N.Y. as Talks to Ease Credit Crunch Stall
Gold rose, extending gains to a second straight week, as talks on the $700 billion U.S. plan to ease the credit crunch stalled. Gold gained $6.50, or 0.7 percent, to $888.50 an ounce in New York. Silver climbed 22.8 cents, or 1.7 percent, to $13.503 an ounce.
Platinum, Palladium Fall on Signs of Slumping U.S. Economy
Platinum and palladium tumbled, capping the fourth-straight weekly slide, as the sagging U.S. economy signaled declining demand for the metals used in car and truck parts. Platinum futures fell $68.10, or 5.7 percent, to $1,123.10 an ounce in New York. Palladium dropped $16.95, or 7 percent, to $225.50 an ounce.
INDUSTRIAL METALS, MINING
Norilsk Says Units Spent $1.7 Billion to Buy Shares
OAO GMK Norilsk Nickel said three of its units bought as many as 16.5 million shares, tightening billionaire Vladimir Potanin's grip on Russia's biggest mining company in a battle for control with United Co. Rusal.
Sinosteel Says Murchison Purchase to Depend on Market Prices
Sinosteel Corp., China's second-biggest iron-ore trading company, said its decision to buy a stake in Australia's Murchison Metals Ltd. depends on ``market conditions,'' according to president Huang Tianwen.
Copper Drops to One-Week Low in New York as Bailout Plan Stalls
Copper fell to a one-week low after the U.S. government's $700 billion plan to bail out the finance industry faltered and regulators seized lender Washington Mutual Inc., raising concerns that economic growth will stall. Copper dropped 6 cents, or 1.9 percent, to $3.0745 a pound in New York.
SOFT COMMODITIES
Cotton Falls on Concern Demand Will Slide as Bailout Stalls
Cotton fell, capping the fourth-straight weekly slide, as U.S. lawmakers stalled a $700 billion financial-rescue plan, adding to concern that credit-market turmoil may depress demand for the fiber. Cotton dropped 1.28 cents, or 2.1 percent, to 60.38 cents a pound in New York.
Coffee Falls Most in Week as U.S. Financial Rescue Plan Stalls
Coffee fell the most in more than a week in New York amid concern the global economy will keep slowing if the U.S. Congress doesn't pass the proposed $700 billion financial bailout plan. Arabica coffee declined 3.45 cents, or 2.5 percent, to $1.3415 a pound. Robusta coffee fell $42, or 1.9 percent, to $2,137 a metric ton.
Orange Juice Falls to Weekly Low Amid Concern Demand Will Drop
Orange juice fell to the lowest this week amid speculation that a stalemate in the U.S. Congress over a $700 billion bank- rescue plan will weaken the economy, further reducing demand for the beverage. Orange juice dropped 0.8 cent, or 0.9 percent, to 90.5 cents a pound in New York.
Sugar Slips in N.Y. After Surge to 6-Month High Damped Demand
Sugar slid in New York for the first time in three days on speculation that demand will slow after the price reached a six- month high. Raw sugar dropped 0.07 cent, or 0.5 percent, to 14.48 cents a pound.
Cocoa Rises, Gaining a Second Week, on Risk of Crop Disease
Cocoa rose in New York, gaining a second straight week, amid concern that rain is increasing the chances black pod disease will spread in the Ivory Coast, the world's biggest grower of the beans. Cocoa gained $3, or 0.1 percent, to $2,743 a metric ton in New York.
Read more...
AGRICULTURAL COMMODITIES
Terra, CF Drop After Citigroup Says Nitrogen Prices May Fall
Terra Industries Inc. plummeted the most in almost nine years after an analyst at Citigroup Inc. said prices for nitrogen-based crop nutrients may extend declines. Terra dropped $7.48, or 20 percent, to $30.42 in New York.
U.S. Hog Farmers Reduce Breeding Herd on Corn Cost, USDA Says
U.S. hog farmers cut their breeding herds 2.6 percent in the three months ended Aug. 31 as record feed costs led to losses in nine of the past 11 months. It was the second straight quarter of breeding-herd reductions.
Hogs Fall on Signs of Reduced U.S. Pork Demand; Cattle Rise
Hog futures fell to a one-week low on speculation that pork demand will slow as the U.S. economy falters. Hogs dropped 0.075 cent, or 0.1 percent, to 66.05 cents a pound in Chicago. Cattle rose 0.175 cent, or 0.2 percent, to $1.028 a pound. Feeder cattle declined 0.8 cent, or 0.8 percent, to $1.05575 a pound.
Corn, Soybeans Decline on Rescue-Plan Delay, Sagging Economy
Corn and soybeans tumbled the most in a week after the U.S. government's $700 billion financial rescue plan stalled and the economy slowed, signaling reduced demand for grain and oilseeds. Corn fell 15.25 cents, or 2.7 percent, to $5.43 a bushel in Chicago. Soybeans dropped 19 cents, or 1.6 percent, to $11.64 a bushel.
Wheat Falls as Credit Crisis Spurs Commodity, Stock Sell-Off
Wheat fell, marking the fifth-straight weekly decline, on speculation that the deepening U.S. financial crisis will spur investors to shift money to Treasuries from commodity and equity markets. Wheat dropped 20.25 cents, or 2.8 percent, to $7.16 a bushel in Chicago.
Smithfield, Workers Reach Agreement, Averting Strike in Iowa
Smithfield Foods Inc.'s Farmland Foods unit reached an agreement with a United Food and Commercial Workers local, averting a strike at a pork plant in Denison, Iowa, the union said.
CHEMICALS
Celanese Says Hurricane Shutdowns Cost as Much as $15 Million
Celanese Corp., the world's largest maker of acetyls used in textiles and plastics, said the shutdown of Texas factories for Hurricane Ike reduced third-quarter profit by as much as $15 million.
PRECIOUS METALS, GEMS
Gold, Silver Rally in N.Y. as Talks to Ease Credit Crunch Stall
Gold rose, extending gains to a second straight week, as talks on the $700 billion U.S. plan to ease the credit crunch stalled. Gold gained $6.50, or 0.7 percent, to $888.50 an ounce in New York. Silver climbed 22.8 cents, or 1.7 percent, to $13.503 an ounce.
Platinum, Palladium Fall on Signs of Slumping U.S. Economy
Platinum and palladium tumbled, capping the fourth-straight weekly slide, as the sagging U.S. economy signaled declining demand for the metals used in car and truck parts. Platinum futures fell $68.10, or 5.7 percent, to $1,123.10 an ounce in New York. Palladium dropped $16.95, or 7 percent, to $225.50 an ounce.
INDUSTRIAL METALS, MINING
Norilsk Says Units Spent $1.7 Billion to Buy Shares
OAO GMK Norilsk Nickel said three of its units bought as many as 16.5 million shares, tightening billionaire Vladimir Potanin's grip on Russia's biggest mining company in a battle for control with United Co. Rusal.
Sinosteel Says Murchison Purchase to Depend on Market Prices
Sinosteel Corp., China's second-biggest iron-ore trading company, said its decision to buy a stake in Australia's Murchison Metals Ltd. depends on ``market conditions,'' according to president Huang Tianwen.
Copper Drops to One-Week Low in New York as Bailout Plan Stalls
Copper fell to a one-week low after the U.S. government's $700 billion plan to bail out the finance industry faltered and regulators seized lender Washington Mutual Inc., raising concerns that economic growth will stall. Copper dropped 6 cents, or 1.9 percent, to $3.0745 a pound in New York.
SOFT COMMODITIES
Cotton Falls on Concern Demand Will Slide as Bailout Stalls
Cotton fell, capping the fourth-straight weekly slide, as U.S. lawmakers stalled a $700 billion financial-rescue plan, adding to concern that credit-market turmoil may depress demand for the fiber. Cotton dropped 1.28 cents, or 2.1 percent, to 60.38 cents a pound in New York.
Coffee Falls Most in Week as U.S. Financial Rescue Plan Stalls
Coffee fell the most in more than a week in New York amid concern the global economy will keep slowing if the U.S. Congress doesn't pass the proposed $700 billion financial bailout plan. Arabica coffee declined 3.45 cents, or 2.5 percent, to $1.3415 a pound. Robusta coffee fell $42, or 1.9 percent, to $2,137 a metric ton.
Orange Juice Falls to Weekly Low Amid Concern Demand Will Drop
Orange juice fell to the lowest this week amid speculation that a stalemate in the U.S. Congress over a $700 billion bank- rescue plan will weaken the economy, further reducing demand for the beverage. Orange juice dropped 0.8 cent, or 0.9 percent, to 90.5 cents a pound in New York.
Sugar Slips in N.Y. After Surge to 6-Month High Damped Demand
Sugar slid in New York for the first time in three days on speculation that demand will slow after the price reached a six- month high. Raw sugar dropped 0.07 cent, or 0.5 percent, to 14.48 cents a pound.
Cocoa Rises, Gaining a Second Week, on Risk of Crop Disease
Cocoa rose in New York, gaining a second straight week, amid concern that rain is increasing the chances black pod disease will spread in the Ivory Coast, the world's biggest grower of the beans. Cocoa gained $3, or 0.1 percent, to $2,743 a metric ton in New York.
Read more...
Crude Oil Falls in New York Before Vote on U.S. Bank Rescue
By Angela Macdonald-Smith
Sept. 29 (Bloomberg) -- Crude oil fell in New York in advance of a vote on a $700 billion U.S. bank-rescue plan amid concern the measures won't prevent an economic slowdown that would cut demand in the world's biggest energy-consuming nation.
U.S. lawmakers are reviewing a tentative agreement to revive credit markets through the bailout package, which may be voted on by the House tomorrow, House Speaker Nancy Pelosi said. Oil prices dropped as much as 3.5 percent on Sept. 26 after House Republicans rejected the proposed rescue, stalling an agreement.
``Even if the Troubled Asset Rescue Plan is passed, that doesn't necessarily mean there aren't any obstacles on the road to economic recovery,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. ``There are worries about the outlook for the international economy''
Crude oil for November delivery fell as much as 99 cents, or 0.9 percent, to $105.90 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract was at $106.28 a barrel at 7:17 a.m. in Singapore.
Prices have fallen about 28 percent from the record $147.27 a barrel reached on July 11. The contract gained 4 percent last week.
President George W. Bush said in a speech Sept. 27 that the package was needed to prevent a ``deep and painful recession.'' Talks continued through the weekend aimed at reaching agreement before global financial markets reopened this week. The plan would give Treasury Secretary Henry Paulson an immediate $250 billion to buy bad loans from financial companies, with the rest to be doled out in stages.
`Fallen Markedly'
U.S. fuel demand averaged 19.5 million barrels a day during the past four weeks, the lowest since October 2003, the Energy Department said in a Sept. 24 report. Sales of new homes in the U.S. fell in August to a 17-year low and orders for durable goods dropped more than forecast, government reports showed Sept. 25.
``We have a situation where the evidence to date is that in recent months U.S. oil consumption has fallen quite markedly,'' Commonwealth Bank's Moore said.
Oil also fell as companies continued restarting petroleum production plants, refineries and pipelines after hurricanes Gustav and Ike. Royal Dutch Shell Plc, the largest oil producer in the Gulf of Mexico, said Sept. 26 it will have the majority of its offshore output back in one to two weeks.
Crude-oil prices may fall this week on the concern U.S. fuel consumption will weaken because of lower economic growth, a Bloomberg News survey found. Fourteen of 29 analysts surveyed, or 48 percent, said prices will decline through Oct. 3.
In contrast, hedge-fund managers and other large speculators increased their net-long positions in New York crude futures in the week ended Sept. 23, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumber short positions by 41,728 contracts on the New York Mercantile Exchange, the Washington- based commission said in a report Sept. 26.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Sept. 29 (Bloomberg) -- Crude oil fell in New York in advance of a vote on a $700 billion U.S. bank-rescue plan amid concern the measures won't prevent an economic slowdown that would cut demand in the world's biggest energy-consuming nation.
U.S. lawmakers are reviewing a tentative agreement to revive credit markets through the bailout package, which may be voted on by the House tomorrow, House Speaker Nancy Pelosi said. Oil prices dropped as much as 3.5 percent on Sept. 26 after House Republicans rejected the proposed rescue, stalling an agreement.
``Even if the Troubled Asset Rescue Plan is passed, that doesn't necessarily mean there aren't any obstacles on the road to economic recovery,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. ``There are worries about the outlook for the international economy''
Crude oil for November delivery fell as much as 99 cents, or 0.9 percent, to $105.90 a barrel in after-hours electronic trading on the New York Mercantile Exchange. The contract was at $106.28 a barrel at 7:17 a.m. in Singapore.
Prices have fallen about 28 percent from the record $147.27 a barrel reached on July 11. The contract gained 4 percent last week.
President George W. Bush said in a speech Sept. 27 that the package was needed to prevent a ``deep and painful recession.'' Talks continued through the weekend aimed at reaching agreement before global financial markets reopened this week. The plan would give Treasury Secretary Henry Paulson an immediate $250 billion to buy bad loans from financial companies, with the rest to be doled out in stages.
`Fallen Markedly'
U.S. fuel demand averaged 19.5 million barrels a day during the past four weeks, the lowest since October 2003, the Energy Department said in a Sept. 24 report. Sales of new homes in the U.S. fell in August to a 17-year low and orders for durable goods dropped more than forecast, government reports showed Sept. 25.
``We have a situation where the evidence to date is that in recent months U.S. oil consumption has fallen quite markedly,'' Commonwealth Bank's Moore said.
Oil also fell as companies continued restarting petroleum production plants, refineries and pipelines after hurricanes Gustav and Ike. Royal Dutch Shell Plc, the largest oil producer in the Gulf of Mexico, said Sept. 26 it will have the majority of its offshore output back in one to two weeks.
Crude-oil prices may fall this week on the concern U.S. fuel consumption will weaken because of lower economic growth, a Bloomberg News survey found. Fourteen of 29 analysts surveyed, or 48 percent, said prices will decline through Oct. 3.
In contrast, hedge-fund managers and other large speculators increased their net-long positions in New York crude futures in the week ended Sept. 23, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumber short positions by 41,728 contracts on the New York Mercantile Exchange, the Washington- based commission said in a report Sept. 26.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Australia Stocks Preview: BHP, Centro, IAG, Murchison, OneSteel
By Shani Raja
Sept. 29 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed on Friday. Prices are from Friday's close unless otherwise stated.
The S&P/ASX 200 Index futures contract due in December rose 1 percent to 5,004 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index fell 4.5 percent in New York.
The S&P/ASX 200 Index declined 22.60 points, or 0.5 percent, to 4,904.80.
Mining shares: Platinum futures for January delivery fell $68.10, or 5.7 percent, to $1,123.10 an ounce on the New York Mercantile Exchange. Aquarius Platinum Ltd. (AQP AU), a producer of the metal in South Africa and Zimbabwe, slumped 65 cents, or 8.3 percent, to A$7.20.
A measure of six metals traded on the London Metal Exchange fell 1.5 percent. Zinc dropped 1.7 percent and copper 2.2 percent.
American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, plunged 5.5 percent to the equivalent of A$35.50 a share in New York, 34 cents lower than the A$35.84 close in Sydney.
Rio Tinto Group (RIO AU) declined 86 cents, or 0.8 percent, to A$101.
Centro Properties Group (CNP AU): Centro is set to win another extension on A$1.2 billion ($993 million) of overdue borrowings, the Australian Financial Review reported. Chief Executive Officer Glenn Rufrano has said he sees ``no reason to believe the extension will not be made,'' according to the newspaper. Centro rose 0.2 cents, 2.4 percent, to 8.5 cents.
Insurance Australia Group Ltd. (IAG AU): The company's rating was downgraded to ``underperform'' from ``hold'' by analyst Johan Vanderlugt at Daiwa Institute. IAG added 4 cents, or 1 percent, to A$4.10.
Murchison Metals Ltd. (MMX AU): Sinosteel Corp., China's second-biggest iron-ore trading company, said its decision to buy a stake in Murchison depends on ``market conditions,'' according to President Huang Tianwen. Murchison advanced 5 cents, or 3.3 percent, to A$1.57.
OneSteel Ltd. (OST AU): Australia's second-largest steelmaker said it will bid for the 49 percent of New Zealand's Steel & Tube Holdings Ltd. it doesn't already own, offering 33 percent more than the market price. OneSteel fell 23 cents, or 4.1 percent, to A$5.32.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
Read more...
Sept. 29 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed on Friday. Prices are from Friday's close unless otherwise stated.
The S&P/ASX 200 Index futures contract due in December rose 1 percent to 5,004 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index fell 4.5 percent in New York.
The S&P/ASX 200 Index declined 22.60 points, or 0.5 percent, to 4,904.80.
Mining shares: Platinum futures for January delivery fell $68.10, or 5.7 percent, to $1,123.10 an ounce on the New York Mercantile Exchange. Aquarius Platinum Ltd. (AQP AU), a producer of the metal in South Africa and Zimbabwe, slumped 65 cents, or 8.3 percent, to A$7.20.
A measure of six metals traded on the London Metal Exchange fell 1.5 percent. Zinc dropped 1.7 percent and copper 2.2 percent.
American depositary receipts of BHP Billiton Ltd. (BHP AU), the world's largest mining company, plunged 5.5 percent to the equivalent of A$35.50 a share in New York, 34 cents lower than the A$35.84 close in Sydney.
Rio Tinto Group (RIO AU) declined 86 cents, or 0.8 percent, to A$101.
Centro Properties Group (CNP AU): Centro is set to win another extension on A$1.2 billion ($993 million) of overdue borrowings, the Australian Financial Review reported. Chief Executive Officer Glenn Rufrano has said he sees ``no reason to believe the extension will not be made,'' according to the newspaper. Centro rose 0.2 cents, 2.4 percent, to 8.5 cents.
Insurance Australia Group Ltd. (IAG AU): The company's rating was downgraded to ``underperform'' from ``hold'' by analyst Johan Vanderlugt at Daiwa Institute. IAG added 4 cents, or 1 percent, to A$4.10.
Murchison Metals Ltd. (MMX AU): Sinosteel Corp., China's second-biggest iron-ore trading company, said its decision to buy a stake in Murchison depends on ``market conditions,'' according to President Huang Tianwen. Murchison advanced 5 cents, or 3.3 percent, to A$1.57.
OneSteel Ltd. (OST AU): Australia's second-largest steelmaker said it will bid for the 49 percent of New Zealand's Steel & Tube Holdings Ltd. it doesn't already own, offering 33 percent more than the market price. OneSteel fell 23 cents, or 4.1 percent, to A$5.32.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
Read more...
Aeon, Kikkoman, Oriental Land, Sony: Japan Equity Preview
By Norie Kuboyama
Sept. 29 (Bloomberg) -- The following companies may have unusual price changes in Japanese trading on Sept. 29. Stock symbols are in parentheses, and share prices are from the previous close. The information in each item was released after markets shut, unless stated otherwise.
Aeon Co. (8267 JT): Japan's biggest supermarket chain will recall 14,688 private-brand cooking pans made in China because of defective handles. The retailer cited five cases in which the handles of the stainless-steel pans rusted and fell off. One person was scalded and required hospitalization after dropping the pan, Aeon disclosed at a news conference in Tokyo. Aeon rose 22 yen, or 2 percent, to 1,135.
Akebono Brake Industry Co. (7238 JT): The brake products maker lowered its full-year net income outlook 57 percent to 2.5 billion yen ($23.7 million), citing materials costs and a slump in demand for large-sized cars in the U.S. The stock tumbled 52 yen, or 7 percent, to 693.
C's Create Co. (8921 JT): The real estate company said it filed for bankruptcy protection with the Tokyo District Court after accumulating 11.4 billion yen in liabilities. The stock rose 5 yen, or 0.4 percent, to 1,310.
Daiichi Sankyo Co. (4568 JT): Eli Lilly & Co.'s (LLY US) experimental blood thinner, prasugrel, is still being reviewed by U.S. regulators, delaying action. ``This is a very large, complex submission, and it should not be surprising that delays occur,'' said Lilly's vice president for global regulatory affairs, Jennifer Stotka, in a statement issued by Lilly and partner Daiichi Sankyo. Daiichi Sankyo fell 30 yen, or 1 percent, to 2,910.
En-Japan Inc. (4849 JX): The online recruiting service provider reduced its full-year net income outlook 31 percent to 3.1 billion yen and its sales forecast 15 percent to 22.1 billion yen. The company plans to pay a dividend of 4,100 yen, unchanged from the payout last year. The stock declined 4,900 yen, or 4 percent, to 116,700.
Fujitsu General Ltd. (6755 JT): The maker of air- conditioning units boosted its first-half net income outlook 71 percent to 1.2 billion yen, citing foreign-exchange gains and reduced costs. The company cut its operating profit forecast 24 percent to 9.1 billion yen and its sales forecast 5.5 percent to 223 billion yen, citing a possible surge in steel materials costs after the third quarter. The stock declined 13 yen, or 4.1 percent, to 301.
Hokuhoku Financial Group Inc. (8377 JT): The lender raised its full-year net income forecast 21 percent to 46.5 billion yen, citing lower corporate taxes after dissolving two subsidiaries. The stock added 3 yen, or 1.3 percent, to 241.
Honda Motor Co. (7267 JT): The automaker will delay opening its second car factory in India by at least six months to mid- 2010, as the company is concerned growth in the market may slow, the Wall Street Journal said. The stock rose 40 yen, or 1.2 percent, to 3,340.
Kadokawa Group Holdings Inc. (9477 JT): The publisher will sell Japanese comic books in China with a local publisher, the Nikkei newspaper reported. The books will initially be sold in and around Guangzhou, Guangdong Province, and later be made available throughout the country, the report said. Kadokawa slid 60 yen, or 2.5 percent, to 2,380.
Kasumi Co. (8196 JT): The supermarket chain said first-half net income totaled 1.22 billion yen, falling short of its 1.5 billion yen forecast by 19 percent, citing lower-than-expected sales and increased personnel and utility expenses. Kasumi dropped 1 yen, or 0.2 percent, to 614.
Keisei Electric Railway Co. (9009 JT): The rail operator cut its full-year net income outlook 10 percent to 9.6 billion yen, citing a charge from devaluing property in a hotel unit that plans to complete its liquidation by May. The stock added 1 yen, or 0.2 percent, to 602.
Kikkoman Corp. (2801 JT): Japan's biggest soy sauce maker will halve its stake in President Kikkoman Zhenji Foods Co., a Chinese venture to be established next month with a wholly owned unit of Taiwanese foodmaker Uni-President Enterprises Co. (1216 TT), to 45 percent from the original planned 90 percent. Kikkoman was unchanged at 1,454 yen.
Kimura Unity Co. (9368 JT): The transporter of auto parts lowered its full-year net income forecast by 28 percent to 750 million yen, citing lower-than-expected sales and increased fuel, steel and other raw materials costs. The stock fell 12 yen, or 1.4 percent, to 855.
Living Corp. (8998 JT): The property developer said in a released it will add footnotes to its semi-annual financial statements as there are doubts about its viability because real estate prices may affect funding and earnings. The stock declined 1,300 yen, or 5.4 percent, to 22,700.
Milbon Co. (4919 JT): The maker of hair-care products said nine-month net income rose 55 percent to 1.58 billion yen, with a 4.2 percent advance in sales. The company increased its planned second-half dividend to 29 yen from 27 yen. Milbon slipped 20 yen, or 0.9 percent, to 2,255.
Noritz Corp. (5943 JT): Warren Lichtenstein's Steel Partners accepted a request by the maker of gas-fired baths and water heaters to delay for a month its response to the fund's takeover proposal. The U.S. investment fund agreed to wait until Oct. 17 for a reply from Kobe-based Noritz, it said in an e-mailed statement. Noritz slumped 34 yen, or 3.3 percent, to 992.
Oriental Land Co. (4661 JT): The operator of Tokyo Disneyland and Tokyo DisneySea lifted its full-year net income estimate 7.1 percent to 17.4 billion yen, with better-than- expected sales. The stock advanced 50 yen, or 0.7 percent, to 6,970.
Pacific Holdings Co. (8902 JT): Japan's third-largest real estate asset manager widened its full-year net loss forecast to 25 billion yen from 4.6 billion yen and cut its sales forecast 33 percent to 191 billion yen. The stock plunged 2,000 yen, or 11 percent, to 16,200.
Produce Co. (6263 JQ): The machinery maker said it filed for court-led rehabilitation with the Niigata District Court with 7.38 billion yen in liabilities. The stock plunged 60,000 yen, or 30 percent, to 139,000.
SBI Holdings Inc. (8473 JT): The venture capital company said it expects a gain of about 10.6 billion yen in the second quarter from the sale of its entire 71.4 percent stake in E*Trade Korea Co. (078020 KS) to G&A KBIC Private Equity Fund. SBI dropped 250 yen, or 1.5 percent, to 16,800.
Sony Corp. (6758 JT): The company will increase domestic production capacity for Blu-ray disc software by 50 percent to 5.4 million discs a month by March 2010, the Nikkei newspaper reported. Sony rose 20 yen, or 0.6 percent, to 3,410.
Suzuken Co. (9987 JT): The pharmaceutical products wholesaler will transfer full-time employees aged between 35 and 58 to two subsidiaries, expecting to take a charge of as much as 8 billion yen for lump-sum payments to the workers. The company expects to reduce its administration costs by up to 2 billion yen a year, Suzuken said in a release. Suzuken fell 50 yen, or 1.5 percent, to 3,360.
Toyota Boshoku Corp. (3116 JT): The maker of auto parts and textile products cut its full-year net income forecast 29 percent to 25 billion yen and its sales forecast 9.7 percent to 1.12 trillion yen. The stock plummeted 99 yen, or 7.2 percent, to 1,275.
Tsuruya Shoe Store Co. (2686 JN): Aeon Co. (8267 JT), Japan's biggest supermarket chain, offered to pay 861 yen for each Tsuruya Shoe share through Oct. 27, aiming to increase its stake in the shoe store chain to 52.16 percent from 18.03 percent, the companies said in releases. Tsuruya rose 9 yen, or 1 percent, to 880.
Weathernews Inc. (4825 JT): The weather forecasting service boosted its first-half net income forecast 43 percent to 500 million yen, citing a postponement in research and development costs to the second-half period. Weathernews rose 13 yen, or 0.9 percent, to 1,452.
To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net
Read more...
Sept. 29 (Bloomberg) -- The following companies may have unusual price changes in Japanese trading on Sept. 29. Stock symbols are in parentheses, and share prices are from the previous close. The information in each item was released after markets shut, unless stated otherwise.
Aeon Co. (8267 JT): Japan's biggest supermarket chain will recall 14,688 private-brand cooking pans made in China because of defective handles. The retailer cited five cases in which the handles of the stainless-steel pans rusted and fell off. One person was scalded and required hospitalization after dropping the pan, Aeon disclosed at a news conference in Tokyo. Aeon rose 22 yen, or 2 percent, to 1,135.
Akebono Brake Industry Co. (7238 JT): The brake products maker lowered its full-year net income outlook 57 percent to 2.5 billion yen ($23.7 million), citing materials costs and a slump in demand for large-sized cars in the U.S. The stock tumbled 52 yen, or 7 percent, to 693.
C's Create Co. (8921 JT): The real estate company said it filed for bankruptcy protection with the Tokyo District Court after accumulating 11.4 billion yen in liabilities. The stock rose 5 yen, or 0.4 percent, to 1,310.
Daiichi Sankyo Co. (4568 JT): Eli Lilly & Co.'s (LLY US) experimental blood thinner, prasugrel, is still being reviewed by U.S. regulators, delaying action. ``This is a very large, complex submission, and it should not be surprising that delays occur,'' said Lilly's vice president for global regulatory affairs, Jennifer Stotka, in a statement issued by Lilly and partner Daiichi Sankyo. Daiichi Sankyo fell 30 yen, or 1 percent, to 2,910.
En-Japan Inc. (4849 JX): The online recruiting service provider reduced its full-year net income outlook 31 percent to 3.1 billion yen and its sales forecast 15 percent to 22.1 billion yen. The company plans to pay a dividend of 4,100 yen, unchanged from the payout last year. The stock declined 4,900 yen, or 4 percent, to 116,700.
Fujitsu General Ltd. (6755 JT): The maker of air- conditioning units boosted its first-half net income outlook 71 percent to 1.2 billion yen, citing foreign-exchange gains and reduced costs. The company cut its operating profit forecast 24 percent to 9.1 billion yen and its sales forecast 5.5 percent to 223 billion yen, citing a possible surge in steel materials costs after the third quarter. The stock declined 13 yen, or 4.1 percent, to 301.
Hokuhoku Financial Group Inc. (8377 JT): The lender raised its full-year net income forecast 21 percent to 46.5 billion yen, citing lower corporate taxes after dissolving two subsidiaries. The stock added 3 yen, or 1.3 percent, to 241.
Honda Motor Co. (7267 JT): The automaker will delay opening its second car factory in India by at least six months to mid- 2010, as the company is concerned growth in the market may slow, the Wall Street Journal said. The stock rose 40 yen, or 1.2 percent, to 3,340.
Kadokawa Group Holdings Inc. (9477 JT): The publisher will sell Japanese comic books in China with a local publisher, the Nikkei newspaper reported. The books will initially be sold in and around Guangzhou, Guangdong Province, and later be made available throughout the country, the report said. Kadokawa slid 60 yen, or 2.5 percent, to 2,380.
Kasumi Co. (8196 JT): The supermarket chain said first-half net income totaled 1.22 billion yen, falling short of its 1.5 billion yen forecast by 19 percent, citing lower-than-expected sales and increased personnel and utility expenses. Kasumi dropped 1 yen, or 0.2 percent, to 614.
Keisei Electric Railway Co. (9009 JT): The rail operator cut its full-year net income outlook 10 percent to 9.6 billion yen, citing a charge from devaluing property in a hotel unit that plans to complete its liquidation by May. The stock added 1 yen, or 0.2 percent, to 602.
Kikkoman Corp. (2801 JT): Japan's biggest soy sauce maker will halve its stake in President Kikkoman Zhenji Foods Co., a Chinese venture to be established next month with a wholly owned unit of Taiwanese foodmaker Uni-President Enterprises Co. (1216 TT), to 45 percent from the original planned 90 percent. Kikkoman was unchanged at 1,454 yen.
Kimura Unity Co. (9368 JT): The transporter of auto parts lowered its full-year net income forecast by 28 percent to 750 million yen, citing lower-than-expected sales and increased fuel, steel and other raw materials costs. The stock fell 12 yen, or 1.4 percent, to 855.
Living Corp. (8998 JT): The property developer said in a released it will add footnotes to its semi-annual financial statements as there are doubts about its viability because real estate prices may affect funding and earnings. The stock declined 1,300 yen, or 5.4 percent, to 22,700.
Milbon Co. (4919 JT): The maker of hair-care products said nine-month net income rose 55 percent to 1.58 billion yen, with a 4.2 percent advance in sales. The company increased its planned second-half dividend to 29 yen from 27 yen. Milbon slipped 20 yen, or 0.9 percent, to 2,255.
Noritz Corp. (5943 JT): Warren Lichtenstein's Steel Partners accepted a request by the maker of gas-fired baths and water heaters to delay for a month its response to the fund's takeover proposal. The U.S. investment fund agreed to wait until Oct. 17 for a reply from Kobe-based Noritz, it said in an e-mailed statement. Noritz slumped 34 yen, or 3.3 percent, to 992.
Oriental Land Co. (4661 JT): The operator of Tokyo Disneyland and Tokyo DisneySea lifted its full-year net income estimate 7.1 percent to 17.4 billion yen, with better-than- expected sales. The stock advanced 50 yen, or 0.7 percent, to 6,970.
Pacific Holdings Co. (8902 JT): Japan's third-largest real estate asset manager widened its full-year net loss forecast to 25 billion yen from 4.6 billion yen and cut its sales forecast 33 percent to 191 billion yen. The stock plunged 2,000 yen, or 11 percent, to 16,200.
Produce Co. (6263 JQ): The machinery maker said it filed for court-led rehabilitation with the Niigata District Court with 7.38 billion yen in liabilities. The stock plunged 60,000 yen, or 30 percent, to 139,000.
SBI Holdings Inc. (8473 JT): The venture capital company said it expects a gain of about 10.6 billion yen in the second quarter from the sale of its entire 71.4 percent stake in E*Trade Korea Co. (078020 KS) to G&A KBIC Private Equity Fund. SBI dropped 250 yen, or 1.5 percent, to 16,800.
Sony Corp. (6758 JT): The company will increase domestic production capacity for Blu-ray disc software by 50 percent to 5.4 million discs a month by March 2010, the Nikkei newspaper reported. Sony rose 20 yen, or 0.6 percent, to 3,410.
Suzuken Co. (9987 JT): The pharmaceutical products wholesaler will transfer full-time employees aged between 35 and 58 to two subsidiaries, expecting to take a charge of as much as 8 billion yen for lump-sum payments to the workers. The company expects to reduce its administration costs by up to 2 billion yen a year, Suzuken said in a release. Suzuken fell 50 yen, or 1.5 percent, to 3,360.
Toyota Boshoku Corp. (3116 JT): The maker of auto parts and textile products cut its full-year net income forecast 29 percent to 25 billion yen and its sales forecast 9.7 percent to 1.12 trillion yen. The stock plummeted 99 yen, or 7.2 percent, to 1,275.
Tsuruya Shoe Store Co. (2686 JN): Aeon Co. (8267 JT), Japan's biggest supermarket chain, offered to pay 861 yen for each Tsuruya Shoe share through Oct. 27, aiming to increase its stake in the shoe store chain to 52.16 percent from 18.03 percent, the companies said in releases. Tsuruya rose 9 yen, or 1 percent, to 880.
Weathernews Inc. (4825 JT): The weather forecasting service boosted its first-half net income forecast 43 percent to 500 million yen, citing a postponement in research and development costs to the second-half period. Weathernews rose 13 yen, or 0.9 percent, to 1,452.
To contact the reporter on this story: Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net
Read more...
Sunday, September 28, 2008
Morgan Stanley Says Mitsubishi Deal `Moving Ahead'
By Christine Harper
Sept. 26 (Bloomberg) -- Morgan Stanley Chief Executive Officer John Mack told employees the firm, whose stock fell as much as 13 percent in New York trading today, is ``moving ahead as anticipated'' with an agreement to raise capital from Mitsubishi UFJ Financial Group Inc.
The two companies on Sept. 22 announced a ``letter of intent'' to pursue an alliance in which Japan's biggest bank would invest about $8.5 billion for 10 percent to 20 percent of the Wall Street firm. The announcement came the day after New York-based Morgan Stanley said it would boost its deposit base as it transforms itself from the second-biggest U.S. securities firm into the fifth-biggest bank holding company.
Stock and bond investors have become anxious about companies that rely on markets for funding after Lehman Brothers Holdings Inc. filed for bankruptcy protection last week. Goldman Sachs Group Inc., Morgan Stanley's larger rival, moved to shore up market confidence this week by raising $10 billion from Berkshire Hathaway Inc. and a public stock offering. The U.S. Congress is debating a $700 billion financial rescue package proposed less than a week ago by Treasury Secretary Henry Paulson.
``It is critical that all of us stay close to our clients to help them navigate these challenging markets,'' Mack said in the memo today. ``I have no doubt that markets will remain volatile and stock prices -- including our own -- will continue to fluctuate.''
Leverage Ratio
With $8.5 billion of new equity from Tokyo-based Mitsubishi UFJ, Morgan Stanley's leverage ratio would drop to 22.3-to-1 from 27.6-to-1 at the end of August. The leverage ratio measures the amount of assets held with each $1 of shareholder equity, with higher numbers reflecting greater reliance on borrowing.
With its $10 billion of new capital raised this week, Goldman Sachs' leverage ratio dropped to 19.4-to-1 from 23.70- to-1 at the end of August.
Shares of Morgan Stanley dropped $2.35, or 8.7 percent, to $24.75 in New York Stock Exchange composite trading after falling as low as $23.52 earlier in the day. The stock is down 53 percent so far this year.
Financial stocks declined today after Washington Mutual Inc. became the biggest U.S. bank failure in history, with JPMorgan Chase & Co. agreeing to acquire the deposits and branches of the Seattle-based savings and loan.
Mitsubishi UFJ's stock has fallen 11 percent so far this year, giving the company a market value of 10.15 trillion yen ($95.8 billion). The bank has taken $1.6 billion of writedowns and credit losses since the U.S. subprime mortgage market collapsed last year, compared with $15.7 billion at Morgan Stanley.
Morgan Stanley, which yesterday said it hired former U.S. Comptroller of the Currency Eugene Ludwig as an adviser on its transformation into a bank holding company, has teams working ``to explore the most attractive opportunities offered by this new structure,'' Mack wrote in the memo today.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.
Read more...
Sept. 26 (Bloomberg) -- Morgan Stanley Chief Executive Officer John Mack told employees the firm, whose stock fell as much as 13 percent in New York trading today, is ``moving ahead as anticipated'' with an agreement to raise capital from Mitsubishi UFJ Financial Group Inc.
The two companies on Sept. 22 announced a ``letter of intent'' to pursue an alliance in which Japan's biggest bank would invest about $8.5 billion for 10 percent to 20 percent of the Wall Street firm. The announcement came the day after New York-based Morgan Stanley said it would boost its deposit base as it transforms itself from the second-biggest U.S. securities firm into the fifth-biggest bank holding company.
Stock and bond investors have become anxious about companies that rely on markets for funding after Lehman Brothers Holdings Inc. filed for bankruptcy protection last week. Goldman Sachs Group Inc., Morgan Stanley's larger rival, moved to shore up market confidence this week by raising $10 billion from Berkshire Hathaway Inc. and a public stock offering. The U.S. Congress is debating a $700 billion financial rescue package proposed less than a week ago by Treasury Secretary Henry Paulson.
``It is critical that all of us stay close to our clients to help them navigate these challenging markets,'' Mack said in the memo today. ``I have no doubt that markets will remain volatile and stock prices -- including our own -- will continue to fluctuate.''
Leverage Ratio
With $8.5 billion of new equity from Tokyo-based Mitsubishi UFJ, Morgan Stanley's leverage ratio would drop to 22.3-to-1 from 27.6-to-1 at the end of August. The leverage ratio measures the amount of assets held with each $1 of shareholder equity, with higher numbers reflecting greater reliance on borrowing.
With its $10 billion of new capital raised this week, Goldman Sachs' leverage ratio dropped to 19.4-to-1 from 23.70- to-1 at the end of August.
Shares of Morgan Stanley dropped $2.35, or 8.7 percent, to $24.75 in New York Stock Exchange composite trading after falling as low as $23.52 earlier in the day. The stock is down 53 percent so far this year.
Financial stocks declined today after Washington Mutual Inc. became the biggest U.S. bank failure in history, with JPMorgan Chase & Co. agreeing to acquire the deposits and branches of the Seattle-based savings and loan.
Mitsubishi UFJ's stock has fallen 11 percent so far this year, giving the company a market value of 10.15 trillion yen ($95.8 billion). The bank has taken $1.6 billion of writedowns and credit losses since the U.S. subprime mortgage market collapsed last year, compared with $15.7 billion at Morgan Stanley.
Morgan Stanley, which yesterday said it hired former U.S. Comptroller of the Currency Eugene Ludwig as an adviser on its transformation into a bank holding company, has teams working ``to explore the most attractive opportunities offered by this new structure,'' Mack wrote in the memo today.
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.
Read more...
Payrolls Probably Fell, Factories Shrank: U.S. Economy Preview
By Shobhana Chandra
Sept. 28 (Bloomberg) -- The U.S. probably lost jobs in September for the ninth consecutive month and manufacturing shrank as the credit crisis intensified, economists said before reports this week.
Payrolls probably fell by 105,000, according to the median estimate in a Bloomberg News survey ahead of Labor Department figures on Oct. 3. A report from a private group may show factories stagnated this month as demand softened.
The worst financial-markets meltdown since the Great Depression is dealing another blow to an economy reeling from mounting job losses, a housing slump in its third year and a pullback in consumer spending. Weakening growth overseas will limit demand for U.S.-made goods, further hurting manufacturing.
``Things are definitely looking worse,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. The credit crisis ``will magnify the degree of the economic downturn. The labor market is weak, and manufacturing is going to slow as some of our trading partners are in a recession like the U.S.''
The employment report may show the jobless rate stayed at a five-year high of 6.1 percent this month, according to the Bloomberg survey. Factory payrolls probably fell by 50,000.
Factory Index
The Institute for Supply Management's factory index probably slid to 49.5, from 49.9 in August, the survey median shows. The Tempe, Arizona-based group's index for service industries, which make up almost 90 percent of the economy, declined to 50 from 50.6 the prior month, economists forecast.
An index reading of 50 is the dividing line between expansion and contraction for ISM's manufacturing report, due on Oct. 1, and for its services report, due two days later.
Companies will get less support from overseas demand in coming months. Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, and Japan's economy shrank in the same period.
U.S. businesses also are limiting spending on new equipment. Factory orders fell in August for the first time in six months, economists in the Bloomberg survey predict ahead of Commerce Department figures due on Oct. 2.
Another Commerce report on Sept. 29 may show automakers' incentives helped to lift personal spending by 0.2 percent in August, according to the median forecast of economists. Still, Americans remain under pressure, and consumer spending may stagnate this quarter, the worst performance since 1991, according to a Bloomberg survey in early September.
Unemployment
The weakening labor market is holding down spending. The projected drop in September payrolls would follow 84,000 reductions in August that brought the total job cuts for the first eight months to 605,000. In 2007, the economy generated 91,000 jobs a month on average.
In the past week, Chrysler LLC said it will fire about 250 employees as part of a plan to eliminate 1,000 salaried positions by Sept. 30, and UAL Corp.'s United Airlines said 1,550 flight attendants volunteered for leaves, eliminating the need for forced layoffs.
The U.S. Postal Service, which has said it may lose $2 billion this year, on Sept. 23 announced it is imposing a hiring and promotions freeze, effective immediately.
Payroll declines in September may be bigger in part because Hurricanes Gustav and Ike threw thousands out of work, economists said. More layoffs may occur following a bankruptcy filing by New York-based Lehman Brothers Holdings Inc. and the government takeover of Fannie Mae and Freddie Mac.
The New York metropolitan area is forecast to lose 64,000 positions by the second quarter of 2010, according to West Chester, Pennsylvania-based Moody's Economy.com.
``I believe that if the credit markets are not functioning, that jobs will be lost, the unemployment rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover,'' Federal Reserve Chairman Ben S. Bernanke told the Senate Banking Committee on Sept. 23.
The Bush administration is working with Congress on a rescue plan for troubled banks to prevent growth from stalling.
Bloomberg Survey
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
Read more...
Sept. 28 (Bloomberg) -- The U.S. probably lost jobs in September for the ninth consecutive month and manufacturing shrank as the credit crisis intensified, economists said before reports this week.
Payrolls probably fell by 105,000, according to the median estimate in a Bloomberg News survey ahead of Labor Department figures on Oct. 3. A report from a private group may show factories stagnated this month as demand softened.
The worst financial-markets meltdown since the Great Depression is dealing another blow to an economy reeling from mounting job losses, a housing slump in its third year and a pullback in consumer spending. Weakening growth overseas will limit demand for U.S.-made goods, further hurting manufacturing.
``Things are definitely looking worse,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. The credit crisis ``will magnify the degree of the economic downturn. The labor market is weak, and manufacturing is going to slow as some of our trading partners are in a recession like the U.S.''
The employment report may show the jobless rate stayed at a five-year high of 6.1 percent this month, according to the Bloomberg survey. Factory payrolls probably fell by 50,000.
Factory Index
The Institute for Supply Management's factory index probably slid to 49.5, from 49.9 in August, the survey median shows. The Tempe, Arizona-based group's index for service industries, which make up almost 90 percent of the economy, declined to 50 from 50.6 the prior month, economists forecast.
An index reading of 50 is the dividing line between expansion and contraction for ISM's manufacturing report, due on Oct. 1, and for its services report, due two days later.
Companies will get less support from overseas demand in coming months. Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago, and Japan's economy shrank in the same period.
U.S. businesses also are limiting spending on new equipment. Factory orders fell in August for the first time in six months, economists in the Bloomberg survey predict ahead of Commerce Department figures due on Oct. 2.
Another Commerce report on Sept. 29 may show automakers' incentives helped to lift personal spending by 0.2 percent in August, according to the median forecast of economists. Still, Americans remain under pressure, and consumer spending may stagnate this quarter, the worst performance since 1991, according to a Bloomberg survey in early September.
Unemployment
The weakening labor market is holding down spending. The projected drop in September payrolls would follow 84,000 reductions in August that brought the total job cuts for the first eight months to 605,000. In 2007, the economy generated 91,000 jobs a month on average.
In the past week, Chrysler LLC said it will fire about 250 employees as part of a plan to eliminate 1,000 salaried positions by Sept. 30, and UAL Corp.'s United Airlines said 1,550 flight attendants volunteered for leaves, eliminating the need for forced layoffs.
The U.S. Postal Service, which has said it may lose $2 billion this year, on Sept. 23 announced it is imposing a hiring and promotions freeze, effective immediately.
Payroll declines in September may be bigger in part because Hurricanes Gustav and Ike threw thousands out of work, economists said. More layoffs may occur following a bankruptcy filing by New York-based Lehman Brothers Holdings Inc. and the government takeover of Fannie Mae and Freddie Mac.
The New York metropolitan area is forecast to lose 64,000 positions by the second quarter of 2010, according to West Chester, Pennsylvania-based Moody's Economy.com.
``I believe that if the credit markets are not functioning, that jobs will be lost, the unemployment rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover,'' Federal Reserve Chairman Ben S. Bernanke told the Senate Banking Committee on Sept. 23.
The Bush administration is working with Congress on a rescue plan for troubled banks to prevent growth from stalling.
Bloomberg Survey
================================================================
===============
Release Period Prior Median
Indicator Date Value Forecast
================================================================
===============
Pers Inc MOM% 9/29 Aug. -0.7% 0.2%
Pers Spend MOM% 9/29 Aug. 0.2% 0.2%
PCE Deflator YOY% 9/29 Aug. 4.5% 4.5%
Core PCE Prices MOM% 9/29 Aug. 0.3% 0.2%
Core PCE Prices YOY% 9/29 Aug. 2.4% 2.4%
Case Shiller Monthly YO 9/30 July -15.9% -16.0%
Case Shiller Monthly In 9/30 July 167.7 166.9
Chicago PM Index 9/30 Sept. 57.9 53.0
Consumer Conf Index 9/30 Sept. 56.9 55.0
NAPM Milwaukee Index 9/30 Sept. 43.0 44.0
ABC Conf Index 9/30 Sept. 29 -41 -43
ADP Payroll ,000's 10/1 Sept. -33 -53
ISM Manu Index 10/1 Sept. 49.9 49.5
ISM Prices Index 10/1 Sept. 77.0 73.0
Construct Spending MOM% 10/1 Aug. -0.6% -0.5%
Vehicle Sales Mlns 10/1 Sept. 13.7 13.5
Domestic Vehicles Mlns 10/1 Sept. 10.4 10.1
Initial Claims ,000's 10/2 Sept. 20 493 475
Cont. Claims ,000's 10/2 Sept. 13 3542 3550
Factory Orders MOM% 10/2 Jan. 1.3% -2.8%
Nonfarm Payrolls ,000's 10/3 Sept. -84 -105
Unemploy Rate % 10/3 Sept. 6.1% 6.1%
Manu Payrolls ,000's 10/3 Sept. -61 -50
Hourly Earnings MOM% 10/3 Sept. 0.4% 0.3%
Hourly Earnings YOY% 10/3 Sept. 3.6% 3.6%
Avg Weekly Hours 10/3 Sept. 33.7 33.7
ISM NonManu Index 10/3 Sept. 50.6 50.0
================================================================
===============
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
Read more...
Lawmakers Say They Have Breakthrough on Rescue Plan
By James Rowley and Alison Vekshin
Sept. 28 (Bloomberg) -- U.S. lawmakers said they made a breakthrough in talks on a $700 billion plan to revive the credit markets and expect to announce an agreement on legislation later today.
Negotiators resolved ``our differences so we can go forward with a package to stabilize the market,'' House Speaker Nancy Pelosi told reporters when talks at the Capitol ended after midnight Washington time. Lawmakers will review a written version of the plan later today, she said. The House may vote tomorrow.
The plan would let the Treasury begin purchasing distressed debt securities from financial companies affected by the record number of home foreclosures.
After five years, if there was a net loss to taxpayers, the president would have to submit a plan to Congress to recoup the funds, according to an outline circulated by congressional aides.
The proposal also includes accountability provisions, limits on executive pay for participating companies, and foreclosure relief, said Senate Banking Committee Chairman Christopher Dodd, a lead negotiator.
Senate Majority Leader Harry Reid, a Nevada Democrat, sought an agreement to reassure investors before Asian financial markets open late today.
Effective in Marketplace
Treasury Secretary Henry Paulson said the proposed deal ``will work and be effective'' in the marketplace. More work needs to be done, ``but I think we're there,'' he said.
Paulson and Federal Reserve Chairman Ben S. Bernanke said the rescue plan was necessary to revive lending and restore the flow of credit to the U.S. economy. President George W. Bush warned yesterday that legislative action was needed to avoid a ``deep and painful recession.''
Bush spokesman Tony Fratto said early this morning that administration officials are ``pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy.'' He said Bush had spoken last night with Pelosi on the negotiations.
Lawmakers had resisted giving Paulson unrestricted power to buy the debt and sought controls to assuage angry constituents who bombarded congressional offices with e-mails and phone calls.
`Don't Want' Bailout
Voters ``don't want a bailout of Wall Street and neither do we,'' Democratic Senator John Kerry of Massachusetts told reporters yesterday. ``What we are talking about is not losing 3 million jobs in a matter of weeks'' and helping ``small banks and small businesses literally keeping their doors open.''
Senator Kent Conrad, a North Dakota Democrat who chairs the Budget Committee, said $250 billion would be immediately available and another $100 billion could be used when requested by the president for debt purchases. Congress could bar the expenditure of the remaining $350 billion only by passing a resolution to block it from being spent.
The package includes a provision aimed at ``preventing golden parachutes'' for executives of companies who leave firms that have sold troubled assets to the government, Conrad said.
Stock Warrants
Companies that sell debt to the government will issue stock warrants to the government so that taxpayers ``can gain as companies recover'' from economic difficulties, Conrad said.
The plan also includes a proposal by House Republicans, whose objections scuttled an earlier agreement in principle, that provides for government insurance of mortgage-backed securities. Paulson has opposed the idea and has testified it wouldn't work.
The measure leaves it up to Treasury how to ``structure the program and they will assure that the premiums will be set at a level that fully protects the taxpayers of the country,'' Conrad said.
``We worked out everything,'' said Senator Judd Gregg, a New Hampshire Republican. He said lawmakers still want to see the text of the accord on paper before announcing a final deal.
``If there are no adjustments'' to that ``we'll be all set,'' he said.
Missouri Representative Roy Blunt, the lead negotiator for House Republicans, voiced satisfaction for his colleagues who were ``very concerned that we would be able to bring both free- market principles and taxpayer protections to the table.''
House Republicans ``will be looking at the final wording of this,'' he said. Still, ``I think we will be able to have an announcement'' later today, Blunt said.
At one point during the negotiations billionaire Warren Buffett spoke by telephone to a lawmaker involved in the talks to offer ``his best thinking about market reaction to various things,'' Conrad said. ``People are trying to reach out to the best minds that they know.''
`Foreclosure Mitigation'
A proposal that would allow judges to modify mortgage terms for struggling borrowers in bankruptcy proceedings wasn't included, said Dodd, a Connecticut Democrat. ``We pushed very hard'' for the bankruptcy provision, ``but we feel we got good foreclosure mitigation language in there,'' Dodd said.
Democratic presidential nominee Barack Obama said the plan ``appears to embrace'' his principles that the legislation include oversight by an independent board; protections for taxpayers to ensure they receive any profits; measures to help homeowners stay in their homes; and rules to make sure ``CEOs are not being rewarded at taxpayers' expense.''
Reid said an announcement would come later today after details are worked out.
Series of Breakthroughs
``There were a series of breakthroughs here in the end'' and the agreement on executive compensation ``was certainly the most important,'' Conrad said. He declined to give further details because the language being drafted by lawyers is ``quite complicated.''
``Get it written and get it voted,'' said Gregg. ``That's the game plan.''
Paulson and Bernanke sought the rescue package after the collapse and bankruptcy of Lehman Brothers Holding Inc. and the Federal Reserve's takeover of American International Group Inc. earlier this month.
Sticking Point
The House Republicans' demand to include insurance for mortgage-backed securities was a major sticking point.
``Nationalizing every bad mortgage in America is a profoundly bad idea,'' Indiana Republican Mike Pence said. He described the plan as ``transferring $700 billion from Main Street to Wall Street.''
Premiums on the insurance would be a way ``for those on Wall Street to help pay for the recovery'' so that the financial industry won't ``just turn to taxpayers'' for the rescue, said Virginia Republican Eric Cantor, a member of his party's leadership in the House.
Democrats blamed Republican presidential candidate John McCain for encouraging the House Republicans' rebellion by traveling to Washington last week to meet with them.
The trip also included a White House meeting on Sept. 25 with Bush and congressional leaders, where a bipartisan consensus on the outlines of a deal broke down.
McCain ``only hurt this process,'' Reid complained to reporters.
McCain's close ally, South Carolina Republican Lindsey Graham, said the Arizona senator was ``enormously helpful'' to the talks when he met with House Republicans who were about to be ``rolled'' by the Senate.
McCain told them ``I hear your message'' so ``let's make the bill better, but let's not go too far,'' Graham told reporters.
To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.netAlison Vekshin in Washington at avekshin@bloomberg.net
Read more...
Sept. 28 (Bloomberg) -- U.S. lawmakers said they made a breakthrough in talks on a $700 billion plan to revive the credit markets and expect to announce an agreement on legislation later today.
Negotiators resolved ``our differences so we can go forward with a package to stabilize the market,'' House Speaker Nancy Pelosi told reporters when talks at the Capitol ended after midnight Washington time. Lawmakers will review a written version of the plan later today, she said. The House may vote tomorrow.
The plan would let the Treasury begin purchasing distressed debt securities from financial companies affected by the record number of home foreclosures.
After five years, if there was a net loss to taxpayers, the president would have to submit a plan to Congress to recoup the funds, according to an outline circulated by congressional aides.
The proposal also includes accountability provisions, limits on executive pay for participating companies, and foreclosure relief, said Senate Banking Committee Chairman Christopher Dodd, a lead negotiator.
Senate Majority Leader Harry Reid, a Nevada Democrat, sought an agreement to reassure investors before Asian financial markets open late today.
Effective in Marketplace
Treasury Secretary Henry Paulson said the proposed deal ``will work and be effective'' in the marketplace. More work needs to be done, ``but I think we're there,'' he said.
Paulson and Federal Reserve Chairman Ben S. Bernanke said the rescue plan was necessary to revive lending and restore the flow of credit to the U.S. economy. President George W. Bush warned yesterday that legislative action was needed to avoid a ``deep and painful recession.''
Bush spokesman Tony Fratto said early this morning that administration officials are ``pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy.'' He said Bush had spoken last night with Pelosi on the negotiations.
Lawmakers had resisted giving Paulson unrestricted power to buy the debt and sought controls to assuage angry constituents who bombarded congressional offices with e-mails and phone calls.
`Don't Want' Bailout
Voters ``don't want a bailout of Wall Street and neither do we,'' Democratic Senator John Kerry of Massachusetts told reporters yesterday. ``What we are talking about is not losing 3 million jobs in a matter of weeks'' and helping ``small banks and small businesses literally keeping their doors open.''
Senator Kent Conrad, a North Dakota Democrat who chairs the Budget Committee, said $250 billion would be immediately available and another $100 billion could be used when requested by the president for debt purchases. Congress could bar the expenditure of the remaining $350 billion only by passing a resolution to block it from being spent.
The package includes a provision aimed at ``preventing golden parachutes'' for executives of companies who leave firms that have sold troubled assets to the government, Conrad said.
Stock Warrants
Companies that sell debt to the government will issue stock warrants to the government so that taxpayers ``can gain as companies recover'' from economic difficulties, Conrad said.
The plan also includes a proposal by House Republicans, whose objections scuttled an earlier agreement in principle, that provides for government insurance of mortgage-backed securities. Paulson has opposed the idea and has testified it wouldn't work.
The measure leaves it up to Treasury how to ``structure the program and they will assure that the premiums will be set at a level that fully protects the taxpayers of the country,'' Conrad said.
``We worked out everything,'' said Senator Judd Gregg, a New Hampshire Republican. He said lawmakers still want to see the text of the accord on paper before announcing a final deal.
``If there are no adjustments'' to that ``we'll be all set,'' he said.
Missouri Representative Roy Blunt, the lead negotiator for House Republicans, voiced satisfaction for his colleagues who were ``very concerned that we would be able to bring both free- market principles and taxpayer protections to the table.''
House Republicans ``will be looking at the final wording of this,'' he said. Still, ``I think we will be able to have an announcement'' later today, Blunt said.
At one point during the negotiations billionaire Warren Buffett spoke by telephone to a lawmaker involved in the talks to offer ``his best thinking about market reaction to various things,'' Conrad said. ``People are trying to reach out to the best minds that they know.''
`Foreclosure Mitigation'
A proposal that would allow judges to modify mortgage terms for struggling borrowers in bankruptcy proceedings wasn't included, said Dodd, a Connecticut Democrat. ``We pushed very hard'' for the bankruptcy provision, ``but we feel we got good foreclosure mitigation language in there,'' Dodd said.
Democratic presidential nominee Barack Obama said the plan ``appears to embrace'' his principles that the legislation include oversight by an independent board; protections for taxpayers to ensure they receive any profits; measures to help homeowners stay in their homes; and rules to make sure ``CEOs are not being rewarded at taxpayers' expense.''
Reid said an announcement would come later today after details are worked out.
Series of Breakthroughs
``There were a series of breakthroughs here in the end'' and the agreement on executive compensation ``was certainly the most important,'' Conrad said. He declined to give further details because the language being drafted by lawyers is ``quite complicated.''
``Get it written and get it voted,'' said Gregg. ``That's the game plan.''
Paulson and Bernanke sought the rescue package after the collapse and bankruptcy of Lehman Brothers Holding Inc. and the Federal Reserve's takeover of American International Group Inc. earlier this month.
Sticking Point
The House Republicans' demand to include insurance for mortgage-backed securities was a major sticking point.
``Nationalizing every bad mortgage in America is a profoundly bad idea,'' Indiana Republican Mike Pence said. He described the plan as ``transferring $700 billion from Main Street to Wall Street.''
Premiums on the insurance would be a way ``for those on Wall Street to help pay for the recovery'' so that the financial industry won't ``just turn to taxpayers'' for the rescue, said Virginia Republican Eric Cantor, a member of his party's leadership in the House.
Democrats blamed Republican presidential candidate John McCain for encouraging the House Republicans' rebellion by traveling to Washington last week to meet with them.
The trip also included a White House meeting on Sept. 25 with Bush and congressional leaders, where a bipartisan consensus on the outlines of a deal broke down.
McCain ``only hurt this process,'' Reid complained to reporters.
McCain's close ally, South Carolina Republican Lindsey Graham, said the Arizona senator was ``enormously helpful'' to the talks when he met with House Republicans who were about to be ``rolled'' by the Senate.
McCain told them ``I hear your message'' so ``let's make the bill better, but let's not go too far,'' Graham told reporters.
To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.netAlison Vekshin in Washington at avekshin@bloomberg.net
Read more...
Taqa Completes $174 Million Power-Plant Stake Sale to Sumitomo
By Ayesha Daya
Sept. 28 (Bloomberg) -- Abu Dhabi National Energy Co., the state-controlled investor known as Taqa, sold stakes in the Shuweihat power and water project to Sumitomo Corp., Japan's third-largest trading group, for $174 million.
Taqa completed all contractual procedures for the sale of 20 percent of the Shuweihat S1 power plant and 50 percent of the venture that operates and maintains the plant, the company said today in a statement on the Abu Dhabi bourse Web site.
Taqa and Abu Dhabi Water & Electricity Authority will keep majority control of the project owning 60 percent, and Sumitomo and U.K.'s International Power Plc will hold 20 percent each, Sumitomo said Sept. 4.
Sumitomo will operate the Shuweihat S1 facility that generates 1,500 megawatts of electricity and processes 460,000 metric tons of water a day, together with the International Power.
To contact the reporter on this story:
Read more...
Sept. 28 (Bloomberg) -- Abu Dhabi National Energy Co., the state-controlled investor known as Taqa, sold stakes in the Shuweihat power and water project to Sumitomo Corp., Japan's third-largest trading group, for $174 million.
Taqa completed all contractual procedures for the sale of 20 percent of the Shuweihat S1 power plant and 50 percent of the venture that operates and maintains the plant, the company said today in a statement on the Abu Dhabi bourse Web site.
Taqa and Abu Dhabi Water & Electricity Authority will keep majority control of the project owning 60 percent, and Sumitomo and U.K.'s International Power Plc will hold 20 percent each, Sumitomo said Sept. 4.
Sumitomo will operate the Shuweihat S1 facility that generates 1,500 megawatts of electricity and processes 460,000 metric tons of water a day, together with the International Power.
To contact the reporter on this story:
Read more...
Lawmakers Say They Have Breakthrough on Rescue Plan
By James Rowley and Alison Vekshin
Sept. 28 (Bloomberg) -- U.S. lawmakers said they made a breakthrough in talks on a $700 billion plan to revive the credit markets and expect to announce an agreement on legislation later today.
Negotiators resolved ``our differences so we can go forward with a package to stabilize the market,'' House Speaker Nancy Pelosi told reporters when talks at the Capitol ended after midnight Washington time. Lawmakers will review a written version of the plan later today, she said. The House may vote tomorrow.
The plan would let the Treasury begin purchasing distressed debt securities from financial companies affected by the record number of home foreclosures.
After five years, if there was a net loss to taxpayers, the president would have to submit a plan to Congress to recoup the funds, according to an outline circulated by congressional aides.
The proposal also includes accountability provisions, limits on executive pay for participating companies, and foreclosure relief, said Senate Banking Committee Chairman Christopher Dodd, a lead negotiator.
Senate Majority Leader Harry Reid, a Nevada Democrat, sought an agreement to reassure investors before Asian financial markets open late today.
Effective in Marketplace
Treasury Secretary Henry Paulson said the proposed deal ``will work and be effective'' in the marketplace. More work needs to be done, ``but I think we're there,'' he said.
Paulson and Federal Reserve Chairman Ben S. Bernanke said the rescue plan was necessary to revive lending and restore the flow of credit to the U.S. economy. President George W. Bush warned yesterday that legislative action was needed to avoid a ``deep and painful recession.''
Bush spokesman Tony Fratto said early this morning that administration officials are ``pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy.'' He said Bush had spoken last night with Pelosi on the negotiations.
Lawmakers had resisted giving Paulson unrestricted power to buy the debt and sought controls to assuage angry constituents who bombarded congressional offices with e-mails and phone calls.
`Don't Want' Bailout
Voters ``don't want a bailout of Wall Street and neither do we,'' Democratic Senator John Kerry of Massachusetts told reporters yesterday. ``What we are talking about is not losing 3 million jobs in a matter of weeks'' and helping ``small banks and small businesses literally keeping their doors open.''
Senator Kent Conrad, a North Dakota Democrat who chairs the Budget Committee, said $250 billion would be immediately available and another $100 billion could be used when requested by the president for debt purchases. Congress could bar the expenditure of the remaining $350 billion only by passing a resolution to block it from being spent.
The package includes a provision aimed at ``preventing golden parachutes'' for executives of companies who leave firms that have sold troubled assets to the government, Conrad said.
Stock Warrants
Companies that sell debt to the government will issue stock warrants to the government so that taxpayers ``can gain as companies recover'' from economic difficulties, Conrad said.
The plan also includes a proposal by House Republicans, whose objections scuttled an earlier agreement in principle, that provides for government insurance of mortgage-backed securities. Paulson has opposed the idea and has testified it wouldn't work.
The measure leaves it up to Treasury how to ``structure the program and they will assure that the premiums will be set at a level that fully protects the taxpayers of the country,'' Conrad said.
``We worked out everything,'' said Senator Judd Gregg, a New Hampshire Republican. He said lawmakers still want to see the text of the accord on paper before announcing a final deal.
``If there are no adjustments'' to that ``we'll be all set,'' he said.
Missouri Representative Roy Blunt, the lead negotiator for House Republicans, voiced satisfaction for his colleagues who were ``very concerned that we would be able to bring both free- market principles and taxpayer protections to the table.''
House Republicans ``will be looking at the final wording of this,'' he said. Still, ``I think we will be able to have an announcement'' later today, Blunt said.
At one point during the negotiations billionaire Warren Buffett spoke by telephone to a lawmaker involved in the talks to offer ``his best thinking about market reaction to various things,'' Conrad said. ``People are trying to reach out to the best minds that they know.''
`Foreclosure Mitigation'
A proposal that would allow judges to modify mortgage terms for struggling borrowers in bankruptcy proceedings wasn't included, said Dodd, a Connecticut Democrat. ``We pushed very hard'' for the bankruptcy provision, ``but we feel we got good foreclosure mitigation language in there,'' Dodd said.
Democratic presidential nominee Barack Obama said the plan ``appears to embrace'' his principles that the legislation include oversight by an independent board; protections for taxpayers to ensure they receive any profits; measures to help homeowners stay in their homes; and rules to make sure ``CEOs are not being rewarded at taxpayers' expense.''
Reid said an announcement would come later today after details are worked out.
Series of Breakthroughs
``There were a series of breakthroughs here in the end'' and the agreement on executive compensation ``was certainly the most important,'' Conrad said. He declined to give further details because the language being drafted by lawyers is ``quite complicated.''
``Get it written and get it voted,'' said Gregg. ``That's the game plan.''
Paulson and Bernanke sought the rescue package after the collapse and bankruptcy of Lehman Brothers Holding Inc. and the Federal Reserve's takeover of American International Group Inc. earlier this month.
Sticking Point
The House Republicans' demand to include insurance for mortgage-backed securities was a major sticking point.
``Nationalizing every bad mortgage in America is a profoundly bad idea,'' Indiana Republican Mike Pence said. He described the plan as ``transferring $700 billion from Main Street to Wall Street.''
Premiums on the insurance would be a way ``for those on Wall Street to help pay for the recovery'' so that the financial industry won't ``just turn to taxpayers'' for the rescue, said Virginia Republican Eric Cantor, a member of his party's leadership in the House.
Democrats blamed Republican presidential candidate John McCain for encouraging the House Republicans' rebellion by traveling to Washington last week to meet with them.
The trip also included a White House meeting on Sept. 25 with Bush and congressional leaders, where a bipartisan consensus on the outlines of a deal broke down.
McCain ``only hurt this process,'' Reid complained to reporters.
McCain's close ally, South Carolina Republican Lindsey Graham, said the Arizona senator was ``enormously helpful'' to the talks when he met with House Republicans who were about to be ``rolled'' by the Senate.
McCain told them ``I hear your message'' so ``let's make the bill better, but let's not go too far,'' Graham told reporters.
To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.netAlison Vekshin in Washington at avekshin@bloomberg.net
Read more...
Sept. 28 (Bloomberg) -- U.S. lawmakers said they made a breakthrough in talks on a $700 billion plan to revive the credit markets and expect to announce an agreement on legislation later today.
Negotiators resolved ``our differences so we can go forward with a package to stabilize the market,'' House Speaker Nancy Pelosi told reporters when talks at the Capitol ended after midnight Washington time. Lawmakers will review a written version of the plan later today, she said. The House may vote tomorrow.
The plan would let the Treasury begin purchasing distressed debt securities from financial companies affected by the record number of home foreclosures.
After five years, if there was a net loss to taxpayers, the president would have to submit a plan to Congress to recoup the funds, according to an outline circulated by congressional aides.
The proposal also includes accountability provisions, limits on executive pay for participating companies, and foreclosure relief, said Senate Banking Committee Chairman Christopher Dodd, a lead negotiator.
Senate Majority Leader Harry Reid, a Nevada Democrat, sought an agreement to reassure investors before Asian financial markets open late today.
Effective in Marketplace
Treasury Secretary Henry Paulson said the proposed deal ``will work and be effective'' in the marketplace. More work needs to be done, ``but I think we're there,'' he said.
Paulson and Federal Reserve Chairman Ben S. Bernanke said the rescue plan was necessary to revive lending and restore the flow of credit to the U.S. economy. President George W. Bush warned yesterday that legislative action was needed to avoid a ``deep and painful recession.''
Bush spokesman Tony Fratto said early this morning that administration officials are ``pleased with the progress tonight and appreciate the bipartisan effort to stabilize our financial markets and protect our economy.'' He said Bush had spoken last night with Pelosi on the negotiations.
Lawmakers had resisted giving Paulson unrestricted power to buy the debt and sought controls to assuage angry constituents who bombarded congressional offices with e-mails and phone calls.
`Don't Want' Bailout
Voters ``don't want a bailout of Wall Street and neither do we,'' Democratic Senator John Kerry of Massachusetts told reporters yesterday. ``What we are talking about is not losing 3 million jobs in a matter of weeks'' and helping ``small banks and small businesses literally keeping their doors open.''
Senator Kent Conrad, a North Dakota Democrat who chairs the Budget Committee, said $250 billion would be immediately available and another $100 billion could be used when requested by the president for debt purchases. Congress could bar the expenditure of the remaining $350 billion only by passing a resolution to block it from being spent.
The package includes a provision aimed at ``preventing golden parachutes'' for executives of companies who leave firms that have sold troubled assets to the government, Conrad said.
Stock Warrants
Companies that sell debt to the government will issue stock warrants to the government so that taxpayers ``can gain as companies recover'' from economic difficulties, Conrad said.
The plan also includes a proposal by House Republicans, whose objections scuttled an earlier agreement in principle, that provides for government insurance of mortgage-backed securities. Paulson has opposed the idea and has testified it wouldn't work.
The measure leaves it up to Treasury how to ``structure the program and they will assure that the premiums will be set at a level that fully protects the taxpayers of the country,'' Conrad said.
``We worked out everything,'' said Senator Judd Gregg, a New Hampshire Republican. He said lawmakers still want to see the text of the accord on paper before announcing a final deal.
``If there are no adjustments'' to that ``we'll be all set,'' he said.
Missouri Representative Roy Blunt, the lead negotiator for House Republicans, voiced satisfaction for his colleagues who were ``very concerned that we would be able to bring both free- market principles and taxpayer protections to the table.''
House Republicans ``will be looking at the final wording of this,'' he said. Still, ``I think we will be able to have an announcement'' later today, Blunt said.
At one point during the negotiations billionaire Warren Buffett spoke by telephone to a lawmaker involved in the talks to offer ``his best thinking about market reaction to various things,'' Conrad said. ``People are trying to reach out to the best minds that they know.''
`Foreclosure Mitigation'
A proposal that would allow judges to modify mortgage terms for struggling borrowers in bankruptcy proceedings wasn't included, said Dodd, a Connecticut Democrat. ``We pushed very hard'' for the bankruptcy provision, ``but we feel we got good foreclosure mitigation language in there,'' Dodd said.
Democratic presidential nominee Barack Obama said the plan ``appears to embrace'' his principles that the legislation include oversight by an independent board; protections for taxpayers to ensure they receive any profits; measures to help homeowners stay in their homes; and rules to make sure ``CEOs are not being rewarded at taxpayers' expense.''
Reid said an announcement would come later today after details are worked out.
Series of Breakthroughs
``There were a series of breakthroughs here in the end'' and the agreement on executive compensation ``was certainly the most important,'' Conrad said. He declined to give further details because the language being drafted by lawyers is ``quite complicated.''
``Get it written and get it voted,'' said Gregg. ``That's the game plan.''
Paulson and Bernanke sought the rescue package after the collapse and bankruptcy of Lehman Brothers Holding Inc. and the Federal Reserve's takeover of American International Group Inc. earlier this month.
Sticking Point
The House Republicans' demand to include insurance for mortgage-backed securities was a major sticking point.
``Nationalizing every bad mortgage in America is a profoundly bad idea,'' Indiana Republican Mike Pence said. He described the plan as ``transferring $700 billion from Main Street to Wall Street.''
Premiums on the insurance would be a way ``for those on Wall Street to help pay for the recovery'' so that the financial industry won't ``just turn to taxpayers'' for the rescue, said Virginia Republican Eric Cantor, a member of his party's leadership in the House.
Democrats blamed Republican presidential candidate John McCain for encouraging the House Republicans' rebellion by traveling to Washington last week to meet with them.
The trip also included a White House meeting on Sept. 25 with Bush and congressional leaders, where a bipartisan consensus on the outlines of a deal broke down.
McCain ``only hurt this process,'' Reid complained to reporters.
McCain's close ally, South Carolina Republican Lindsey Graham, said the Arizona senator was ``enormously helpful'' to the talks when he met with House Republicans who were about to be ``rolled'' by the Senate.
McCain told them ``I hear your message'' so ``let's make the bill better, but let's not go too far,'' Graham told reporters.
To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.netAlison Vekshin in Washington at avekshin@bloomberg.net
Read more...
Gulf Shares Gain on U.S. Bank Rescue Plan; Emirates NBD Rises
By Zainab Fattah
Sept. 28 (Bloomberg) -- Persian Gulf shares advanced after U.S. lawmakers said they made a breakthrough in talks on a $700 billion plan to revive the credit markets and as the United Arab Emirates' central bank allowed lenders to withdraw 100 percent of their reserve requirements to ease liquidity constraints.
Emirates NBD PJSC, the U.A.E.'s biggest bank by assets, led financial stocks higher. Abu Dhabi Commercial Bank PJSC had its biggest gain since Sept. 21, while Emirates Telecommunications Corp. rose for the first time in four days. Industries Qatar also climbed.
``What happens in the U.S. is very important because the more institutions go bust there, the higher is our companies' risk of exposure,'' Mohammed Ali Yasin, the managing director of Shuaa Securities in Dubai, said in a telephone interview today. ``We've also seen liquidity returning through government institutions as more people understand the central bank's plan.''
The Dubai Financial Market General Index rose 2.5 percent to 4,060.38, bringing the two-day gain to 4.4 percent. The Abu Dhabi Securities Exchange General Index increased 2.7 percent and Qatar's Doha Securities Market 20 Index added 2 percent.
Negotiators resolved ``our differences so we can go forward with a package to stabilize the market,'' U.S. House Speaker Nancy Pelosi told reporters when negotiations ended after midnight Washington time. Lawmakers will review a written version of the plan later today, she said. The House may vote tomorrow.
Kuwait's Central Bank
U.A.E. banks are no longer required to square up their positions with the central bank at the end of the week, the central bank said Sept. 25. The monetary authority announced a 50 billion-dirham ($14 billion) fund on Sept. 22 to ease liquidity constraints caused by the seizure of global credit markets following the collapse of Lehman Brothers Holdings Inc.
Kuwait's central bank said it was ready to provide liquidity to the country's banking system if required. The Kuwait Stock Exchange Index ended a four-day drop, rising 2 percent.
The Dubai Financial Market Financial Banks Index climbed 3.5 percent, its biggest jump since Sept. 21 when the U.S. government first announced the $700 billion rescue plan.
`Most to Gain'
Emirates NBD added 4.8 percent to 8.75 dirhams. Dubai Islamic Bank PJSC, the U.A.E.'s biggest bank complying with Muslim banking rules, advanced 5.6 percent to 5.82 dirhams. Abu Dhabi Commercial Bank PJSC, the U.A.E.'s third-biggest bank by assets, gained 6.9 percent to 3.3 dirhams.
``ADCB, which is rumored to be among the most highly exposed among local banks to U.S. subprime assets, has the most to gain if a U.S. bailout is confirmed,'' Ali Khan, head of equity trading at Dubai's Arqaam Capital Ltd., said in a phone interview today.
Saudi Arabia's Tadawul All Share Index climbed 6.7 percent, the biggest one-day gain since November 2006. The measure still dropped 20 percent this quarter. The Saudi market will be closed from tomorrow for the Eid Al-Fitr holiday and will reopen on Oct. 6.
``Investors are optimistic that the international markets will rally over the holiday as an agreement on the U.S. rescue plan has been reached,'' Abdulla al-Aqil, a trader at Samba Financial Group in Riyadh, said in a telephone interview.
January 12
Saudi Basic Industries Corp. added 5.3 percent to 105.25 riyals. Al-Rajhi Bank, the kingdom's largest bank by market value, surged 9.3 percent to 79.5 riyals, its biggest jump since Jan. 5 and Saudi Telecom Co. soared 9.4 percent to 64.25 riyals, its biggest gain since Jan. 12.
Saudi Basic, the region's biggest company by market value, Al-Rajhi Bank and Saudi Telecom, the Arab world's biggest phone company, may report an increase in nine-month profit Asharq al- Awsat reported, citing forecasts by Kasab Financial Group.
Oman's Muscat Securities Market 30 Index increased 0.3 percent, while the Bahrain All Share Index fell 0.2 percent
Emirates Telecommunications, known as Etisalat, added 3.1 percent to 16.6 dirhams. Sorouh Real Estate Co., Abu Dhabi's second-biggest property company, surged 6.9 percent to 6.81 dirhams.
Industries Qatar, the largest publicly traded company in the Persian Gulf emirate, gained 3.1 percent to 137.7 riyals.
``Funds are buying the shares because they are quite cheap, especially considering its expected profit,'' Amro Motasim, head broker at Al-Ahli Bank of Qatar, wrote about Industries Qatar in an e-mail today. The shares trades at 10.1 estimated earnings, according to data compiled by Bloomberg. That compares with an average of 12.1 for stocks listed in the DSM 20 Index.
Taqa Advances
Agility rose 2.5 percent to 830 fils. The Middle East's biggest storage and logistics company said it will pay $50.5 million to buy all of Baisui United Logistics (Shanghai) Co., a Chinese logistics provider.
Abu Dhabi National Energy Co. climbed 2.1 percent to 2.42 dirhams. The state-controlled investor known as Taqa sold stakes in the Shuweihat power and water project to Sumitomo Corp., Japan's third-largest trading group, for $174 million.
Islamic Arab Insurance Co. added 2.2 percent to 1.89 dirhams. The world's biggest Islamic insurer plans to offer Islamic funds from a unit of Deutsche Bank AG.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.
Read more...
Sept. 28 (Bloomberg) -- Persian Gulf shares advanced after U.S. lawmakers said they made a breakthrough in talks on a $700 billion plan to revive the credit markets and as the United Arab Emirates' central bank allowed lenders to withdraw 100 percent of their reserve requirements to ease liquidity constraints.
Emirates NBD PJSC, the U.A.E.'s biggest bank by assets, led financial stocks higher. Abu Dhabi Commercial Bank PJSC had its biggest gain since Sept. 21, while Emirates Telecommunications Corp. rose for the first time in four days. Industries Qatar also climbed.
``What happens in the U.S. is very important because the more institutions go bust there, the higher is our companies' risk of exposure,'' Mohammed Ali Yasin, the managing director of Shuaa Securities in Dubai, said in a telephone interview today. ``We've also seen liquidity returning through government institutions as more people understand the central bank's plan.''
The Dubai Financial Market General Index rose 2.5 percent to 4,060.38, bringing the two-day gain to 4.4 percent. The Abu Dhabi Securities Exchange General Index increased 2.7 percent and Qatar's Doha Securities Market 20 Index added 2 percent.
Negotiators resolved ``our differences so we can go forward with a package to stabilize the market,'' U.S. House Speaker Nancy Pelosi told reporters when negotiations ended after midnight Washington time. Lawmakers will review a written version of the plan later today, she said. The House may vote tomorrow.
Kuwait's Central Bank
U.A.E. banks are no longer required to square up their positions with the central bank at the end of the week, the central bank said Sept. 25. The monetary authority announced a 50 billion-dirham ($14 billion) fund on Sept. 22 to ease liquidity constraints caused by the seizure of global credit markets following the collapse of Lehman Brothers Holdings Inc.
Kuwait's central bank said it was ready to provide liquidity to the country's banking system if required. The Kuwait Stock Exchange Index ended a four-day drop, rising 2 percent.
The Dubai Financial Market Financial Banks Index climbed 3.5 percent, its biggest jump since Sept. 21 when the U.S. government first announced the $700 billion rescue plan.
`Most to Gain'
Emirates NBD added 4.8 percent to 8.75 dirhams. Dubai Islamic Bank PJSC, the U.A.E.'s biggest bank complying with Muslim banking rules, advanced 5.6 percent to 5.82 dirhams. Abu Dhabi Commercial Bank PJSC, the U.A.E.'s third-biggest bank by assets, gained 6.9 percent to 3.3 dirhams.
``ADCB, which is rumored to be among the most highly exposed among local banks to U.S. subprime assets, has the most to gain if a U.S. bailout is confirmed,'' Ali Khan, head of equity trading at Dubai's Arqaam Capital Ltd., said in a phone interview today.
Saudi Arabia's Tadawul All Share Index climbed 6.7 percent, the biggest one-day gain since November 2006. The measure still dropped 20 percent this quarter. The Saudi market will be closed from tomorrow for the Eid Al-Fitr holiday and will reopen on Oct. 6.
``Investors are optimistic that the international markets will rally over the holiday as an agreement on the U.S. rescue plan has been reached,'' Abdulla al-Aqil, a trader at Samba Financial Group in Riyadh, said in a telephone interview.
January 12
Saudi Basic Industries Corp. added 5.3 percent to 105.25 riyals. Al-Rajhi Bank, the kingdom's largest bank by market value, surged 9.3 percent to 79.5 riyals, its biggest jump since Jan. 5 and Saudi Telecom Co. soared 9.4 percent to 64.25 riyals, its biggest gain since Jan. 12.
Saudi Basic, the region's biggest company by market value, Al-Rajhi Bank and Saudi Telecom, the Arab world's biggest phone company, may report an increase in nine-month profit Asharq al- Awsat reported, citing forecasts by Kasab Financial Group.
Oman's Muscat Securities Market 30 Index increased 0.3 percent, while the Bahrain All Share Index fell 0.2 percent
Emirates Telecommunications, known as Etisalat, added 3.1 percent to 16.6 dirhams. Sorouh Real Estate Co., Abu Dhabi's second-biggest property company, surged 6.9 percent to 6.81 dirhams.
Industries Qatar, the largest publicly traded company in the Persian Gulf emirate, gained 3.1 percent to 137.7 riyals.
``Funds are buying the shares because they are quite cheap, especially considering its expected profit,'' Amro Motasim, head broker at Al-Ahli Bank of Qatar, wrote about Industries Qatar in an e-mail today. The shares trades at 10.1 estimated earnings, according to data compiled by Bloomberg. That compares with an average of 12.1 for stocks listed in the DSM 20 Index.
Taqa Advances
Agility rose 2.5 percent to 830 fils. The Middle East's biggest storage and logistics company said it will pay $50.5 million to buy all of Baisui United Logistics (Shanghai) Co., a Chinese logistics provider.
Abu Dhabi National Energy Co. climbed 2.1 percent to 2.42 dirhams. The state-controlled investor known as Taqa sold stakes in the Shuweihat power and water project to Sumitomo Corp., Japan's third-largest trading group, for $174 million.
Islamic Arab Insurance Co. added 2.2 percent to 1.89 dirhams. The world's biggest Islamic insurer plans to offer Islamic funds from a unit of Deutsche Bank AG.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.
Read more...
Japan Air to Cut Cargo Flights to U.S. Next Year, Nikkei Says
By Makiko Kitamura
Sept. 28 (Bloomberg) -- Japan Airlines Corp., Asia's most- indebted carrier, will reduce cargo flights to the U.S. as a slowdown in the economy cuts demand, the Nikkei newspaper reported.
The airline will end cargo flights between Narita and New York and cut flights to Los Angeles to 10 a week from 19, Nikkei said, without saying where it obtained the information.
The reductions will start in January, Nikkei said. The airline cut cargo routes to Atlanta and San Francisco this past January, the newspaper reported.
To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net.
Read more...
Sept. 28 (Bloomberg) -- Japan Airlines Corp., Asia's most- indebted carrier, will reduce cargo flights to the U.S. as a slowdown in the economy cuts demand, the Nikkei newspaper reported.
The airline will end cargo flights between Narita and New York and cut flights to Los Angeles to 10 a week from 19, Nikkei said, without saying where it obtained the information.
The reductions will start in January, Nikkei said. The airline cut cargo routes to Atlanta and San Francisco this past January, the newspaper reported.
To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net.
Read more...
Correa May Tighten Grip on Banks, Oil With Ecuador Charter Vote
By Stephan Kueffner
Sept. 28 (Bloomberg) -- Ecuadoreans head to polls today to vote on a new Constitution that would strengthen the president's grip over the energy, telecommunications, and banking industries, and strip the central bank of its independence.
President Rafael Correa says the new charter, which opinion polls indicate is likely to pass, is needed to help alleviate poverty and put an end to the country's cycle of collapsing governments. It would also enable Correa to extend his time in office by allowing a second consecutive four-year term.
The 45-year-old economist, an ally of Venezuela's President Hugo Chavez, says the proposed Constitution will more fairly distribute oil revenue to the 40 percent of the population that lives in poverty, and smooth the workings of government by allowing him to dissolve the legislature once per term. Correa has vowed to quit office if voters reject what he calls his ``citizens' revolution.''
``It consolidates Correa's political power,'' said Riordan Roett, director of Western Hemisphere Studies at Johns Hopkins School of Advanced International Studies. ``It's the end of the traditional oligarchy as we've known it for decades in Ecuador.''
The new Constitution, the country's 20th, requires immediate new elections if a president is impeached or the legislature is dissolved and allows recall referendums. Correa says the change would prevent the chaos that came after street protests forced all three elected presidents since 1996 to resign because the provisions puts the jobs of all politicians on the line.
Free Trade
Correa has denounced free trade and globalization, along the same lines as Chavez and Bolivia's Evo Morales. He speaks the indigenous Quichua language, and draws much of his support from the poor. The opposition is concentrated in oil-producing regions and in Guayaquil, the country's biggest city and its business center.
The charter, by giving Correa control of the central bank, will allow him to set interest rates. It also guarantees all citizens access to water and universal health care, pensions, and free state-run education through university.
Patricio Donoso, president of Ecuador's umbrella Council of Chambers and Associations of Industry, said the increased spending required by those broadened rights may force Ecuador to abandon the dollar as its currency if prices for crude oil, its biggest export, fall. Ecuador produces about 500,000 barrels a day, which accounts for 61 percent of the country's exports.
`Low Growth'
``It could create conditions for de-dollarization -- lack of liquidity from a fall in exports and remittances, a low growth rate, high inflation and an enormous budget deficit,'' Donoso said.
Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, had the slowest economic growth in the Western Hemisphere last year, 2.52 percent, even as oil prices rose to a record. Meanwhile, annual inflation has accelerated to 10 percent in August, driven by higher food prices.
``I'm voting `no' because everything has gotten so expensive,'' said Marco Tage, 42, a villager from the Huaroani ethnic group that lives in Ecuador's Amazon region. Ecuador law compels him to cast a vote because he can read and write. Going to the polling station is a three-hour trip by canoe and bus.
A poll by Cedatos Gallup found 60 percent of voters who had made up their mind backed the charter, with 27 percent against and the rest saying they would leave the ballot blank or void, following advice from opposition parties that urged citizens to make a protest vote if they favor neither the current charter nor the one proposed by Correa. The poll of 2,180 people, taken Sept. 13 to 16, had a margin of error of 3 percentage points.
Poll Results
A survey by researcher Santiago Perez from Sept. 18 to 21 put support at 57 percent, ``no'' at 24 percent, and the rest null or blank. It tallied the opinions of 1,800 people, and also had a margin of error of 3 percentage points.
``If we say `no' to the Constitution, we're saying no to our own rights,'' said Artidoro Cabrera, 48, a painter and farmer in San Vicente del Rio, a dusty Andean village near the border with Peru. On the front door of his house are posters of Correa with members of the assembly that wrote the new Constitution.
The new Constitution focuses on redistributing wealth rather than growth, and allows too much state interference in the economy, said Jaime Carrera, an economist at the Quito-based Fiscal Policy Observatory. ``It will set Ecuador back 30 years,'' he said.
`Strategic Sectors'
Correa's proposed charter ``reserves the right'' for the government to manage ``strategic sectors'' through state-owned companies, including energy, refining, telecommunications, and refining, allowing the government to privatize them only under ``exceptional circumstances.''
The president has already expanded his control of the economy. He secured financial concessions from America Movil SA, which holds the biggest share of Ecuador's mobile phone market.
Correa forced foreign oil companies to give the government a bigger share of oil revenue by imposing a 99 percent windfall tax, which was later reduced to 70 percent. He revoked more than 1,500 mining concessions and halted most mine operations in April.
``If the Constitution is adopted, it won't encourage much foreign investment,'' said Michael Shifter, vice president of Inter-American Dialogue, a policy research group in Washington. As for the enhanced role of the state in the economy, ``for the time being, this is very popular,'' Shifter said.
To contact the reporter on this story: Stephan Kueffner in Quito at skueffner@bloomberg.net
Read more...
Sept. 28 (Bloomberg) -- Ecuadoreans head to polls today to vote on a new Constitution that would strengthen the president's grip over the energy, telecommunications, and banking industries, and strip the central bank of its independence.
President Rafael Correa says the new charter, which opinion polls indicate is likely to pass, is needed to help alleviate poverty and put an end to the country's cycle of collapsing governments. It would also enable Correa to extend his time in office by allowing a second consecutive four-year term.
The 45-year-old economist, an ally of Venezuela's President Hugo Chavez, says the proposed Constitution will more fairly distribute oil revenue to the 40 percent of the population that lives in poverty, and smooth the workings of government by allowing him to dissolve the legislature once per term. Correa has vowed to quit office if voters reject what he calls his ``citizens' revolution.''
``It consolidates Correa's political power,'' said Riordan Roett, director of Western Hemisphere Studies at Johns Hopkins School of Advanced International Studies. ``It's the end of the traditional oligarchy as we've known it for decades in Ecuador.''
The new Constitution, the country's 20th, requires immediate new elections if a president is impeached or the legislature is dissolved and allows recall referendums. Correa says the change would prevent the chaos that came after street protests forced all three elected presidents since 1996 to resign because the provisions puts the jobs of all politicians on the line.
Free Trade
Correa has denounced free trade and globalization, along the same lines as Chavez and Bolivia's Evo Morales. He speaks the indigenous Quichua language, and draws much of his support from the poor. The opposition is concentrated in oil-producing regions and in Guayaquil, the country's biggest city and its business center.
The charter, by giving Correa control of the central bank, will allow him to set interest rates. It also guarantees all citizens access to water and universal health care, pensions, and free state-run education through university.
Patricio Donoso, president of Ecuador's umbrella Council of Chambers and Associations of Industry, said the increased spending required by those broadened rights may force Ecuador to abandon the dollar as its currency if prices for crude oil, its biggest export, fall. Ecuador produces about 500,000 barrels a day, which accounts for 61 percent of the country's exports.
`Low Growth'
``It could create conditions for de-dollarization -- lack of liquidity from a fall in exports and remittances, a low growth rate, high inflation and an enormous budget deficit,'' Donoso said.
Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, had the slowest economic growth in the Western Hemisphere last year, 2.52 percent, even as oil prices rose to a record. Meanwhile, annual inflation has accelerated to 10 percent in August, driven by higher food prices.
``I'm voting `no' because everything has gotten so expensive,'' said Marco Tage, 42, a villager from the Huaroani ethnic group that lives in Ecuador's Amazon region. Ecuador law compels him to cast a vote because he can read and write. Going to the polling station is a three-hour trip by canoe and bus.
A poll by Cedatos Gallup found 60 percent of voters who had made up their mind backed the charter, with 27 percent against and the rest saying they would leave the ballot blank or void, following advice from opposition parties that urged citizens to make a protest vote if they favor neither the current charter nor the one proposed by Correa. The poll of 2,180 people, taken Sept. 13 to 16, had a margin of error of 3 percentage points.
Poll Results
A survey by researcher Santiago Perez from Sept. 18 to 21 put support at 57 percent, ``no'' at 24 percent, and the rest null or blank. It tallied the opinions of 1,800 people, and also had a margin of error of 3 percentage points.
``If we say `no' to the Constitution, we're saying no to our own rights,'' said Artidoro Cabrera, 48, a painter and farmer in San Vicente del Rio, a dusty Andean village near the border with Peru. On the front door of his house are posters of Correa with members of the assembly that wrote the new Constitution.
The new Constitution focuses on redistributing wealth rather than growth, and allows too much state interference in the economy, said Jaime Carrera, an economist at the Quito-based Fiscal Policy Observatory. ``It will set Ecuador back 30 years,'' he said.
`Strategic Sectors'
Correa's proposed charter ``reserves the right'' for the government to manage ``strategic sectors'' through state-owned companies, including energy, refining, telecommunications, and refining, allowing the government to privatize them only under ``exceptional circumstances.''
The president has already expanded his control of the economy. He secured financial concessions from America Movil SA, which holds the biggest share of Ecuador's mobile phone market.
Correa forced foreign oil companies to give the government a bigger share of oil revenue by imposing a 99 percent windfall tax, which was later reduced to 70 percent. He revoked more than 1,500 mining concessions and halted most mine operations in April.
``If the Constitution is adopted, it won't encourage much foreign investment,'' said Michael Shifter, vice president of Inter-American Dialogue, a policy research group in Washington. As for the enhanced role of the state in the economy, ``for the time being, this is very popular,'' Shifter said.
To contact the reporter on this story: Stephan Kueffner in Quito at skueffner@bloomberg.net
Read more...
Olmert, Now Israeli Caretaker, Will Travel to Moscow
By Jonathan Ferziger
Sept. 28 (Bloomberg) -- Israeli Prime Minister Ehud Olmert, who resigned and now serves as government caretaker, will travel to Russia to meet President Dmitry Medvedev.
Olmert will leave Israel Oct. 6 for a two-day visit to Moscow, his office said today in an e-mailed statement.
``The prime minister will meet with the Russian government's top leadership,'' Olmert's office said, without identifying topics of discussion.
Olmert last traveled to Moscow a year ago when he met with Vladimir Putin, the former president and present prime minister, and asked him to support stronger sanctions to stop Iran's development of nuclear capabilities.
Olmert resigned Sept. 21 in the face of police recommendations that he be indicted for bribery and money laundering. He says he is innocent.
Foreign Minister Tzipi Livni replaced Olmert as Kadima Party leader after winning a Sept. 17 primary and is trying to assemble a governing coalition so she can take the prime minister position.
Attorney General Menachem Mazuz today asked Olmert and his Cabinet ministers to ``act with restraint'' during the time that they constitute a caretaker government. Olmert should refrain from acting on ``issues that are not so urgent that they require being addressed during this transitional period,'' Mazuz said, according to the e-mailed text of a letter he sent to Olmert.
To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net
Read more...
Sept. 28 (Bloomberg) -- Israeli Prime Minister Ehud Olmert, who resigned and now serves as government caretaker, will travel to Russia to meet President Dmitry Medvedev.
Olmert will leave Israel Oct. 6 for a two-day visit to Moscow, his office said today in an e-mailed statement.
``The prime minister will meet with the Russian government's top leadership,'' Olmert's office said, without identifying topics of discussion.
Olmert last traveled to Moscow a year ago when he met with Vladimir Putin, the former president and present prime minister, and asked him to support stronger sanctions to stop Iran's development of nuclear capabilities.
Olmert resigned Sept. 21 in the face of police recommendations that he be indicted for bribery and money laundering. He says he is innocent.
Foreign Minister Tzipi Livni replaced Olmert as Kadima Party leader after winning a Sept. 17 primary and is trying to assemble a governing coalition so she can take the prime minister position.
Attorney General Menachem Mazuz today asked Olmert and his Cabinet ministers to ``act with restraint'' during the time that they constitute a caretaker government. Olmert should refrain from acting on ``issues that are not so urgent that they require being addressed during this transitional period,'' Mazuz said, according to the e-mailed text of a letter he sent to Olmert.
To contact the reporter on this story: Jonathan Ferziger in Tel Aviv at jferziger@bloomberg.net
Read more...
Japan Cabinet's Casualty Injures Aso's Election Hopes
By Makiko Kitamura
Sept. 28 (Bloomberg) -- Taro Aso's transport minister quit after four days on the job, threatening to undermine the Japanese leader's ability to gain support ahead of elections that may come as early as next month.
Nariaki Nakayama stepped down today after a series of remarks widely viewed as political gaffes, the latest in a long line of Liberal Democratic Party cabinet ministers who aroused opposition and public ire that cost them their posts.
The resignation is a blow to Aso, who took office last week seeking to raise his party's public approval record before going to the voters against an opposition that enjoys an edge in some opinion polls. The Democratic Party of Japan, led by Ichiro Ozawa, had support from 31 percent of voters in an Asahi newspaper poll published on Sept. 2, compared with 27 percent for the LDP.
``This gives Ozawa an opportunity to use this to show that Aso is incompetent,'' said Robert Dujarric, director of the Institute of Contemporary Japanese Studies at Temple University's Japan Campus. ``It gives him ammunition to attack the LDP.''
Aso will likely name Kazuyoshi Kaneko, 65, who led administrative reform efforts in the administration of former Prime Minister Junichiro Koizumi, to replace Nakayama, Chief Cabinet Secretary Takeo Kawamura told reporters today.
Aso last week replaced Yasuo Fukuda, the second premier in a year to quit the post citing an inability to overcome political gridlock. Aso and his Cabinet received an initial approval rating of 49.5 percent in a Yomiuri newspaper poll published Sept. 26, less than the 57.5 percent Fukuda had after taking office in September last year.
Union `Cancer'
Nakayama, a former education minister, called the nation's biggest teachers' union ``a cancer on Japanese education'' and said it should be disbanded, Kyodo News reported.
He also called opponents of expanding Tokyo's Narita airport ``more or less squeaky wheels,'' Kyodo reported. ``I believe they are (the product) of bad postwar education,'' the report said.
The remarks may further erode public favor for an LDP facing a tough fight to extend its more than half-century-long rule. LDP officials have predicted Aso will call a lower-house election as early as next month to capitalize on any honeymoon period his administration enjoys.
``If we said there was no damage from this, it would be a lie,'' said Hiroyuki Hosoda, secretary-general of the LDP, on NHK television today.
Scandals and Gaffes
Including Nakayama, six ministers have resigned in the past two years over scandals and gaffes.
Last year, former Defense Minister Fumio Kyuma quit the Cabinet of then-Prime Minister Shinzo Abe after a public outcry over comments suggesting the U.S. atomic bombings of Hiroshima and Nagasaki were justified because they helped end World War II.
As education minister, Nakayama made repeated gaffes, such as supporting a reduction in references to so-called comfort women in textbooks, Communist Party member Keiji Kokuta said on Sept. 26.
The European Parliament and U.S. House of Representatives have called on Japan to apologize for forcing women to serve as sex slaves during World War II.
``Prime Minister Aso's responsibility in making the appointment is exceedingly large,'' DPJ Secretary General Yukio Hatoyama said at a press conference on Sept. 26, calling Nakayama ``a terrible minister.''
Aso has made some controversial remarks himself, including a suggestion last December that Japan should debate whether to develop nuclear weapons. In 2006, he provoked a protest from South Korea by saying he wanted the emperor to visit Yasukuni, a shrine that counts war criminals among the honored war dead.
Nakayama confirmed his resignation at a press conference in Tokyo today, broadcast by NHK television.
To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net.
Read more...
Sept. 28 (Bloomberg) -- Taro Aso's transport minister quit after four days on the job, threatening to undermine the Japanese leader's ability to gain support ahead of elections that may come as early as next month.
Nariaki Nakayama stepped down today after a series of remarks widely viewed as political gaffes, the latest in a long line of Liberal Democratic Party cabinet ministers who aroused opposition and public ire that cost them their posts.
The resignation is a blow to Aso, who took office last week seeking to raise his party's public approval record before going to the voters against an opposition that enjoys an edge in some opinion polls. The Democratic Party of Japan, led by Ichiro Ozawa, had support from 31 percent of voters in an Asahi newspaper poll published on Sept. 2, compared with 27 percent for the LDP.
``This gives Ozawa an opportunity to use this to show that Aso is incompetent,'' said Robert Dujarric, director of the Institute of Contemporary Japanese Studies at Temple University's Japan Campus. ``It gives him ammunition to attack the LDP.''
Aso will likely name Kazuyoshi Kaneko, 65, who led administrative reform efforts in the administration of former Prime Minister Junichiro Koizumi, to replace Nakayama, Chief Cabinet Secretary Takeo Kawamura told reporters today.
Aso last week replaced Yasuo Fukuda, the second premier in a year to quit the post citing an inability to overcome political gridlock. Aso and his Cabinet received an initial approval rating of 49.5 percent in a Yomiuri newspaper poll published Sept. 26, less than the 57.5 percent Fukuda had after taking office in September last year.
Union `Cancer'
Nakayama, a former education minister, called the nation's biggest teachers' union ``a cancer on Japanese education'' and said it should be disbanded, Kyodo News reported.
He also called opponents of expanding Tokyo's Narita airport ``more or less squeaky wheels,'' Kyodo reported. ``I believe they are (the product) of bad postwar education,'' the report said.
The remarks may further erode public favor for an LDP facing a tough fight to extend its more than half-century-long rule. LDP officials have predicted Aso will call a lower-house election as early as next month to capitalize on any honeymoon period his administration enjoys.
``If we said there was no damage from this, it would be a lie,'' said Hiroyuki Hosoda, secretary-general of the LDP, on NHK television today.
Scandals and Gaffes
Including Nakayama, six ministers have resigned in the past two years over scandals and gaffes.
Last year, former Defense Minister Fumio Kyuma quit the Cabinet of then-Prime Minister Shinzo Abe after a public outcry over comments suggesting the U.S. atomic bombings of Hiroshima and Nagasaki were justified because they helped end World War II.
As education minister, Nakayama made repeated gaffes, such as supporting a reduction in references to so-called comfort women in textbooks, Communist Party member Keiji Kokuta said on Sept. 26.
The European Parliament and U.S. House of Representatives have called on Japan to apologize for forcing women to serve as sex slaves during World War II.
``Prime Minister Aso's responsibility in making the appointment is exceedingly large,'' DPJ Secretary General Yukio Hatoyama said at a press conference on Sept. 26, calling Nakayama ``a terrible minister.''
Aso has made some controversial remarks himself, including a suggestion last December that Japan should debate whether to develop nuclear weapons. In 2006, he provoked a protest from South Korea by saying he wanted the emperor to visit Yasukuni, a shrine that counts war criminals among the honored war dead.
Nakayama confirmed his resignation at a press conference in Tokyo today, broadcast by NHK television.
To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net.
Read more...
Kuwaiti Inflation Accelerates to 11.35% in June on Food Costs
By Fiona MacDonald
Sept. 28 (Bloomberg) -- Kuwait's inflation rate accelerated to 11.35 percent in June from 11.1 percent in May on increases in the cost of housing and food.
The inflation rate on food rose to 14.2 percent in June from 10.8 percent a month earlier, a government official said in a telephone interview from Kuwait today, speaking on condition of anonymity. Housing costs gained an annual 13.1 percent, compared to 14.9 percent in May. The costs of tobacco and soft drinks surged an annual 24.4 percent.
Inflation in Kuwait, the only Gulf Arab state to have dropped its currency's peg to the dollar, accelerated to a record 11.4 percent in April.
To contact the reporter on this story: Fiona MacDonald in Kuwait FmacDonald4@bloomberg.net
Read more...
Sept. 28 (Bloomberg) -- Kuwait's inflation rate accelerated to 11.35 percent in June from 11.1 percent in May on increases in the cost of housing and food.
The inflation rate on food rose to 14.2 percent in June from 10.8 percent a month earlier, a government official said in a telephone interview from Kuwait today, speaking on condition of anonymity. Housing costs gained an annual 13.1 percent, compared to 14.9 percent in May. The costs of tobacco and soft drinks surged an annual 24.4 percent.
Inflation in Kuwait, the only Gulf Arab state to have dropped its currency's peg to the dollar, accelerated to a record 11.4 percent in April.
To contact the reporter on this story: Fiona MacDonald in Kuwait FmacDonald4@bloomberg.net
Read more...
India Condemns New Delhi Bomb Blasts as Second Person Dies
By Jay Shankar
Sept. 28 (Bloomberg) -- Indian Home Minister Shivraj Patil condemned yesterday's bomb attack in the capital New Delhi, as a 60-year-old man died from injuries, taking the death toll to two.
The government has taken a series of measures to beef up security in New Delhi and ``whatever more is required to be done will be done expeditiously,'' Patil said today in an e-mailed statement.
The explosion, which also injured 17 people, occurred at about 2:15 p.m. local time in a Mehrauli flower market near Qutub Minar, the world's tallest brick-and-stone minaret, built in the 12th century. No one has claimed responsibility for the blast.
``I appeal to the people of Delhi to remain calm,'' Patil said. Security in New Delhi has been tightened in the run-up to the Muslim and Hindu festivities of Eid-ul-Fitr and Dussehra, police spokesman Rajan Bhagat said yesterday.
Two unidentified people on a motorcycle left the bomb in the market, Madhukar Gupta, home secretary, said in an e-mailed statement. A child who picked up the bomb was killed, he said.
On Sept. 13, a series of bomb blasts rocked New Delhi, killing 21 people. The bombings were the worst terrorist attack in India since 50 people died in an explosion in the western city of Ahmedabad on July 26.
Recent terrorist attacks in India have been carried out by a group called the Indian Mujahideen, which claimed responsibility for the earlier explosions in Ahmedabad and New Delhi.
Five men suspected of being behind the Ahmedabad blasts were arrested on Sept. 24 in the western city of Mumbai.
Two suspects in the Sept. 13 New Delhi attacks were killed in a gun battle with police on Sept. 19.
To contact the reporter on this story: Jay Shankar in Bangalore at jshankar1@bloomberg.net
Read more...
Sept. 28 (Bloomberg) -- Indian Home Minister Shivraj Patil condemned yesterday's bomb attack in the capital New Delhi, as a 60-year-old man died from injuries, taking the death toll to two.
The government has taken a series of measures to beef up security in New Delhi and ``whatever more is required to be done will be done expeditiously,'' Patil said today in an e-mailed statement.
The explosion, which also injured 17 people, occurred at about 2:15 p.m. local time in a Mehrauli flower market near Qutub Minar, the world's tallest brick-and-stone minaret, built in the 12th century. No one has claimed responsibility for the blast.
``I appeal to the people of Delhi to remain calm,'' Patil said. Security in New Delhi has been tightened in the run-up to the Muslim and Hindu festivities of Eid-ul-Fitr and Dussehra, police spokesman Rajan Bhagat said yesterday.
Two unidentified people on a motorcycle left the bomb in the market, Madhukar Gupta, home secretary, said in an e-mailed statement. A child who picked up the bomb was killed, he said.
On Sept. 13, a series of bomb blasts rocked New Delhi, killing 21 people. The bombings were the worst terrorist attack in India since 50 people died in an explosion in the western city of Ahmedabad on July 26.
Recent terrorist attacks in India have been carried out by a group called the Indian Mujahideen, which claimed responsibility for the earlier explosions in Ahmedabad and New Delhi.
Five men suspected of being behind the Ahmedabad blasts were arrested on Sept. 24 in the western city of Mumbai.
Two suspects in the Sept. 13 New Delhi attacks were killed in a gun battle with police on Sept. 19.
To contact the reporter on this story: Jay Shankar in Bangalore at jshankar1@bloomberg.net
Read more...
Regulators Seek to Increase Confidence in Fortis
By Jurjen van de Pol and Martijn van der Starre
Sept. 28 (Bloomberg) -- Belgian and Dutch central banks and regulators were discussing measures to restore confidence in Fortis, the financial-services company whose stock plunged 35 percent in Brussels trading last week.
``We are working on enhancing the confidence in the market of the Fortis share,'' Hein Lannoy, a spokesman for the Belgian financial regulator CBFA, said today by telephone. He declined to be more specific. The parties will hold a conference call and ``if necessary there will be a physical meeting,'' Lannoy said.
Brussels and Amsterdam-based Fortis needs more capital after spending 24 billion euros ($35 billion) on ABN Amro Holding NV assets last year just as the U.S. subprime-mortgage market started to collapse. Fortis tumbled a record 20 percent two days ago, when the company picked Filip Dierckx to replace Herman Verwilst as chief executive officer. The move was aimed at reassuring investors concerned that a plan to raise 8.3 billion euros would force Fortis to sell assets at knock-down prices.
``Fortis failed to restore confidence on its own and that can only be done now with the help of the regulatory institutions or rivals,'' said Corne van Zeijl, a senior portfolio manager at SNS Asset Management in Den Bosch, the Netherlands, who oversees about 750 million euros and owns Fortis shares.
The Dutch central bank governing board met late yesterday with Finance Minister Wouter Bos, Het Financieele Dagblad and news service ANP reported.
Takeover Talks Stall
``Bos is being informed meticulously by the Dutch central bank,'' ministry spokesman Jilles Heringa said. Heringa and Herman Lutke Schipholt, a spokesman for the Dutch central bank, declined to confirm the meeting.
Talks about a takeover of Fortis by ING Groep NV and BNP Paribas SA stalled late yesterday amid demands for state guarantees, De Standaard reported on its Web site, without saying where it got the information. The Sunday Times reported the Belgian central bank and regulator are preparing to bail out Fortis. The newspaper didn't say where it got the information.
Peter Jong, a spokesman for Amsterdam-based ING, and Jonathan Mullen, a spokesman for BNP Paribas in Paris, declined to comment. Wilfried Remans, a spokesman for Fortis, also declined to comment and referred to the company's statements on Sept. 26.
Fortis last week said it had earmarked for sale banking and insurance businesses that may be valued as high as 10 billion euros. The Belgian company said it won't sell assets at fire-sale prices and doesn't have an urgent need for funds.
Asset Sales
The financial-services company said on June 26 it would sell so-called non-core assets, notes and asset-backed debt to raise money. Fortis planned to part with 2 billion euros of assets this year and next. The lender also scrapped a 1.4 billion-euro dividend and sold 1.5 billion euros of shares to investors, including Ping An Insurance (Group) Co.
Verwilst and Dierckx appeared together at an impromptu press conference in Brussels on Sept. 26 to reassure investors about the capital-raising plan.
While the company may sell more assets than it earlier expected as it becomes harder to raise money by other means, the bank's financial position is ``solid,'' Verwilst said. Customer moves at its Benelux banking unit have remained limited to less than 3 percent of assets since the start of the year, Fortis said.
Funding Base
Fortis has about 3 billion euros of bonds maturing this year and needs to refinance an additional 7 billion euros next year, said Ivan Lathouders, an analyst at Banque Degroof SA in Brussels, in a report last week.
Fortis, formed in the 1990 merger of the Dutch insurance company NV Amev, Belgian insurer AG Group and the Dutch bank VSB, said last week it had a funding base of more than 300 billion euros from sources including retail and private deposits and institutional investors.
Fortis has about 5.2 million retail customers. It employs about 85,000 people and operates 2,500 retail branches including ABN Amro.
The company reported a 49 percent decline in second-quarter profit on credit-related writedowns on Aug. 4.
The banking business's core Tier I ratio, which measures a bank's ability to absorb losses, was 7.4 percent at the end of June compared with Fortis's own target of 6 percent.
The company's structured credit portfolio, which includes collateralized debt obligations and U.S. mortgage-backed securities, amounted to 41.7 billion euros at the end of June. Fortis said Aug. 4 the pretax impact of the credit market turmoil on its earnings was 918 million euros in the first half.
Belgian and Dutch regulators restricted short-selling in the shares and derivatives of financial companies for three months last week to curtail a market rout. The rules require investors betting on a decline in stock prices to arrange to borrow the shares before selling them. The Belgian and Dutch regulators also requested investors to refrain from lending the securities.
To contact the reporters on this story: Jurjen van de Pol in Amsterdam jvandepol@bloomberg.netMartijn van der Starre in Amsterdam at vanderstarre@bloomberg.net
Read more...
Sept. 28 (Bloomberg) -- Belgian and Dutch central banks and regulators were discussing measures to restore confidence in Fortis, the financial-services company whose stock plunged 35 percent in Brussels trading last week.
``We are working on enhancing the confidence in the market of the Fortis share,'' Hein Lannoy, a spokesman for the Belgian financial regulator CBFA, said today by telephone. He declined to be more specific. The parties will hold a conference call and ``if necessary there will be a physical meeting,'' Lannoy said.
Brussels and Amsterdam-based Fortis needs more capital after spending 24 billion euros ($35 billion) on ABN Amro Holding NV assets last year just as the U.S. subprime-mortgage market started to collapse. Fortis tumbled a record 20 percent two days ago, when the company picked Filip Dierckx to replace Herman Verwilst as chief executive officer. The move was aimed at reassuring investors concerned that a plan to raise 8.3 billion euros would force Fortis to sell assets at knock-down prices.
``Fortis failed to restore confidence on its own and that can only be done now with the help of the regulatory institutions or rivals,'' said Corne van Zeijl, a senior portfolio manager at SNS Asset Management in Den Bosch, the Netherlands, who oversees about 750 million euros and owns Fortis shares.
The Dutch central bank governing board met late yesterday with Finance Minister Wouter Bos, Het Financieele Dagblad and news service ANP reported.
Takeover Talks Stall
``Bos is being informed meticulously by the Dutch central bank,'' ministry spokesman Jilles Heringa said. Heringa and Herman Lutke Schipholt, a spokesman for the Dutch central bank, declined to confirm the meeting.
Talks about a takeover of Fortis by ING Groep NV and BNP Paribas SA stalled late yesterday amid demands for state guarantees, De Standaard reported on its Web site, without saying where it got the information. The Sunday Times reported the Belgian central bank and regulator are preparing to bail out Fortis. The newspaper didn't say where it got the information.
Peter Jong, a spokesman for Amsterdam-based ING, and Jonathan Mullen, a spokesman for BNP Paribas in Paris, declined to comment. Wilfried Remans, a spokesman for Fortis, also declined to comment and referred to the company's statements on Sept. 26.
Fortis last week said it had earmarked for sale banking and insurance businesses that may be valued as high as 10 billion euros. The Belgian company said it won't sell assets at fire-sale prices and doesn't have an urgent need for funds.
Asset Sales
The financial-services company said on June 26 it would sell so-called non-core assets, notes and asset-backed debt to raise money. Fortis planned to part with 2 billion euros of assets this year and next. The lender also scrapped a 1.4 billion-euro dividend and sold 1.5 billion euros of shares to investors, including Ping An Insurance (Group) Co.
Verwilst and Dierckx appeared together at an impromptu press conference in Brussels on Sept. 26 to reassure investors about the capital-raising plan.
While the company may sell more assets than it earlier expected as it becomes harder to raise money by other means, the bank's financial position is ``solid,'' Verwilst said. Customer moves at its Benelux banking unit have remained limited to less than 3 percent of assets since the start of the year, Fortis said.
Funding Base
Fortis has about 3 billion euros of bonds maturing this year and needs to refinance an additional 7 billion euros next year, said Ivan Lathouders, an analyst at Banque Degroof SA in Brussels, in a report last week.
Fortis, formed in the 1990 merger of the Dutch insurance company NV Amev, Belgian insurer AG Group and the Dutch bank VSB, said last week it had a funding base of more than 300 billion euros from sources including retail and private deposits and institutional investors.
Fortis has about 5.2 million retail customers. It employs about 85,000 people and operates 2,500 retail branches including ABN Amro.
The company reported a 49 percent decline in second-quarter profit on credit-related writedowns on Aug. 4.
The banking business's core Tier I ratio, which measures a bank's ability to absorb losses, was 7.4 percent at the end of June compared with Fortis's own target of 6 percent.
The company's structured credit portfolio, which includes collateralized debt obligations and U.S. mortgage-backed securities, amounted to 41.7 billion euros at the end of June. Fortis said Aug. 4 the pretax impact of the credit market turmoil on its earnings was 918 million euros in the first half.
Belgian and Dutch regulators restricted short-selling in the shares and derivatives of financial companies for three months last week to curtail a market rout. The rules require investors betting on a decline in stock prices to arrange to borrow the shares before selling them. The Belgian and Dutch regulators also requested investors to refrain from lending the securities.
To contact the reporters on this story: Jurjen van de Pol in Amsterdam jvandepol@bloomberg.netMartijn van der Starre in Amsterdam at vanderstarre@bloomberg.net
Read more...
Subscribe to:
Posts (Atom)
Posts
