By Berni Moestafa
Nov. 3 (Bloomberg) -- PT Shell Indonesia will not be joining three other companies in distributing subsidized fuels next year, the Jakarta Post reported, citing the nation’s fuel and pipeline regulator.
Shell had missed the deadline to submit a letter stating that it would accept the assignment, the newspaper said, citing BPHilir Migas Chairman Tubagus Haryono.
By Fabio Benedetti-Valentini
Nov. 3 (Bloomberg) -- BNP Paribas SA, France’s biggest bank, pulled further ahead of Societe Generale SA during the financial crisis, emerging twice as large by assets and deposits.
BNP Paribas, like JPMorgan Chase & Co. in the U.S. and Banco Santander SA of Spain, took advantage of competitors’ woes to make acquisitions. The Paris-based bank became the biggest by deposits in the euro region with the 10.4 billion-euro ($15.4 billion) purchase of Fortis units this year.
“The Fortis deal is amazingly attractive for BNP,” said Jaap Meijer, a London-based analyst at Evolution Securities Ltd. who rates BNP Paribas “buy” and Societe Generale “sell.”
Societe Generale, which announced a record trading loss in January 2008, has also been hobbled by at least 8 billion euros of asset writedowns, company reports show. BNP Paribas will probably report third-quarter net income of 1.26 billion euros on Nov. 5, analysts surveyed by Bloomberg estimated. That compares with 399 million euros in profit at Societe Generale, which will publish earnings tomorrow, the analysts said.
BNP Paribas climbed 81 percent this year in Paris trading, while Societe Generale advanced 34 percent. BNP Paribas’s market value, at 62.9 billion euros, is 87 percent larger than Societe Generale’s. In May 2007, before the crisis took hold, the gap was as narrow as 12 percent.
Spokeswomen at BNP Paribas and Societe Generale declined to comment.
Takeover Battle
The rivalry between the two banks, France’s largest by market value, intensified a decade ago when Michel Pebereau, then head of Banque Nationale de Paris SA, snatched investment bank Paribas SA away from Societe Generale in a takeover battle and made a hostile bid for the bank itself. Societe Generale, led at the time by Daniel Bouton, evaded Pebereau’s grasp.
Bouton, 59, embarked on an expansion into eastern European countries including Romania and the Czech Republic, and gained close to 3 million consumer-banking clients in Russia by acquiring control of OAO Rosbank last year. He built the bank’s equity derivatives business into the world’s No. 2 by revenue in 2008, according to a June 10 report by JPMorgan analyst Kian Abouhossein in London.
In January of last year, Societe Generale shocked investors by reporting a 4.9 billion-euro trading loss, which it blamed on unauthorized bets by Jerome Kerviel, a trader on its Delta One desk. The bank announced 2.05 billion euros of writedowns tied to the credit crunch the same day. Societe Generale’s corporate- and investment-banking unit has been unprofitable in five of the last seven quarters.
The 32-year-old Kerviel, who was charged with abuse of trust, forging documents, and hacking into the bank’s computers, has said his superiors knew of his trading activity. His trial order is under appeal.
Management Departures
Societe Generale also met with setbacks including losses of at least 1.5 billion euros on a portfolio of illiquid assets and a 300 million-euro writedown in Russia. Bouton stepped down as chairman in May, after ceding the CEO job to Frederic Oudea the previous year. Oudea, 46, now holds the chairman role as well.
“Societe Generale has found the crisis humbling,” said Simon Maughan, a London-based analyst at MF Global Securities Ltd. who recommends selling the shares.
Jean-Pierre Mustier, 48, the head of Societe Generale’s investment bank at the time of the trading loss, left the bank in August. Philippe Citerne, 60, who oversaw the bank’s Russian activities, also left this year.
Prot, Pebereau
At BNP Paribas, CEO Baudouin Prot, 58, and the 67-year-old Pebereau, now chairman, weathered the crisis. The bank, whose freezing of three funds on Aug. 9, 2007, signaled a deepening of the credit crunch, has posted about 7.2 billion euros of writedowns and provisions related to the financial crisis, according to company reports.
The bank had net income of 3.16 billion euros in the first half, compared with 31 million euros at Societe Generale. BNP Paribas’s assets reached 2.29 trillion euros at the end of June, more than double Societe Generale’s. BNP Paribas deposits totaled 606 billion euros by June 30, compared with 291.5 billion euros at Societe Generale.
In French consumer banking, where the companies’ networks are similar in size by clients, BNP Paribas had more than twice as many new account openings in 2008, company reports showed.
In the third-quarter, analysts estimated that Societe Generale’s writedowns probably amounted to 700 million euros, compared with 100 million euros at BNP Paribas.
“BNP had smaller provisions and writedowns in the first place,” said Jonathan Tyce, a London-based analyst at FBR Capital Markets. “Thanks to the Fortis deal, pre-provisions operating profit is even stronger than before the crisis.”
BNP Paribas and Societe Generale both sold new shares in October to repay a combined 8.5 billion euros of funds they got from the state to boost capital and sustain lending after Lehman Brothers Holdings Inc.’s failure shook markets last year.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net
By James M. Gomez and Agnes Lovasz
Nov. 3 (Bloomberg) -- Poland’s president at the time of the country’s 2004 accession to the European Union says failure to adopt the euro has cost the EU’s largest eastern member years in its efforts to catch up with the west.
“I criticize our previous government because, frankly speaking, we lost a bit of time,” said Aleksander Kwasniewski, president between 1995 and 2005, in an interview in London at a European Bank for Reconstruction and Development conference.
The criticism is directed at former Prime Minister Jaroslaw Kaczynski, who governed from 2006 until 2007, and highlights the deep political differences that divide the nation over euro adoption. Kaczynski’s twin brother, Lech, has been president since 2005 and hasn’t shied from voicing opposition to Prime Minister Donald Tusk’s preference for a quick currency switch.
“If Kaczynski had been more engaged with the euro question and our entry into the euro zone, this road would be shorter,” Kwasniewski said. “Politically speaking, sooner is better than later.”
The country’s prospects of joining the single currency bloc any time soon have been derailed as the credit crisis depleted public finances, forcing Tusk’s government to abandon its 2012 goal without setting a new target.
The European Commission expects Poland’s general government deficit to widen to 6.6 percent of gross domestic product this year and to as much as 7.3 percent of GDP in 2010. The government expects to post a budget deficit of 6.3 percent of GDP this year, more than double the EU’s 3 percent threshold.
Budget Deficit
Poland won’t be ready to swap the zloty for the common currency until at least 2014, Kwasniewski said.
That may not be a bad thing as countries joining the euro risk losing the competitive advantage of a weaker currency, EBRD chief economist Erik Berglof said yesterday at the London conference. Economies that delayed adoption “like the Czech Republic, have fared better. Setting dates is the wrong thing.”
The only eastern countries to have adopted the euro are Slovenia, a former Yugoslav republic, and Slovakia, once part of federal Czechoslovakia. Both have fared worse during the recession than the Czech and Polish economies.
Polish central bank policy maker Dariusz Filar said on Sept. 8 that 2013 is “optimistic” while 2014 is a more realistic date for the currency switch. Nomura International Plc said on Oct. 29 Poland can peg the zloty to the euro as part of the exchange rate mechanism in 2010 and adopt the euro in 2014.
Poland has had to abandon its euro target even after navigating the global crisis as the only EU member to avoid a recession, shielded from a decline in global trade by its large domestic market shielded. Polish exports make up about a third of GDP, compared with about four fifths in the Czech Republic.
Center River
Poland holds local elections at the end of the year, presidential elections next year and parliamentary elections in 2011 and the political will to cut spending may falter, Kwasniewski said. Tusk and Lech Kaczynski will oppose each other in the presidential contest.
“The political price exists,” Kwasniewski said. “How high it is, we don’t know. The timing is complicated. If you ask me if the problems are solved and we are on the other bank of the river, I say that is not true. We are in the center of the crisis and its problems.”
To contact the reporters on this story: James M. Gomez in Prague at jagomez@bloombergt.netAgnes Lovasz in London at alovasz@bloomberg.net
By Andrew MacAskill
Nov. 3 (Bloomberg) -- The U.K. government’s plan to inject a further 25.5 billion pounds ($42 billion) into Royal Bank of Scotland Group Plc will make it the most expensive bank bailout in the world, surpassing Citigroup Inc.
Prime Minister Gordon Brown’s government may today announce the additional funding for RBS and an extra 5.6 billion pounds for Lloyds Banking Group Plc, the two largest U.K. banks that received government money, a person familiar with the matter said. That will increase the amount received by Edinburgh-based RBS to about 45.5 billion pounds, more than the $45 billion pumped into Citigroup and Bank of America Corp.
The government is providing more cash for the banks even as the Bank of England says the country’s recession is nearly over. Today’s 31 billion pounds of additional funding is eight times greater than expenditure this year on Britain’s war effort in Afghanistan, according to the House of Commons Defence Committee figures. The decision is likely to be unpopular with voters angered by the return of bonuses. Bonuses for workers in the financial services industry may rise 50 percent this year, the Centre for Economics & Business Research Ltd. said on Oct. 21.
“The public are reaching the limit of how much government support for the banks they will tolerate,” said Vicky Redwood, U.K. economist at Capital Economics Ltd. in London and a former Bank of England official. “People are getting fed up with reports of a return to high bonuses and banks not lending.”
Lloyds is planning to raise about 13 billion pounds in a rights offering so it can exit the government’s program insuring risky assets, said the person, who declined to be identified because the talks are private. The government, which owns 43 percent of the bank, will take up its rights to buy about 5.6 billion pounds of stock.
Asset Protection Scheme
RBS will insure 280 billion pounds of assets with the Asset Protection Scheme, the person said. The government may buy 25.5 billion pounds of ‘B’ shares in the bank. The bank will use about 13 billion pounds of that money to lift core Tier 1 capital, 6.5 billion pounds to pay the fee for using the APS, and may use the remaining cash to bolster capital.
Linda Harper, a spokeswoman for RBS, declined to comment.
Citigroup, based in New York, came so close to a funding shortfall last year it had to get $45 billion under a federal bailout program. Citigroup is 34 percent government owned, and RBS 70 percent. Bank of America, which is based in Charlotte, North Carolina, took $45 billion in U.S. aid.
‘More Money’
Britain’s 68 billion-pound bailout for RBS and Lloyds may need to be increased still further, said Colin Ellis, European economist at Daiwa Securities SMBC Europe Ltd. in London.
“It’s not inconceivable that we will need to put more money into the banks,” Ellis said in an interview. “One of the lessons from previous crisis is that you just don’t know how much the final bill for the bailout is going to be.”
In return for taxpayer assistance, the two banks have pledged to provide 78 billion pounds of increased lending over this year and next. Britain’s economy should return to growth by the end of the year, Bank of England Governor Mervyn King said in a speech on Oct. 20.
Trailing in the opinion polls for almost two years, the ruling Labour Party is attempting to regain credibility with voters on the economy. While the opposition Conservative Party says the biggest threat to the U.K. economy is the deficit, Brown says expenditure must remain high until economic recovery is assured.
The public finances are already under strain even before today’s announcements. The government’s budget deficit was forecast to reach 175 billion pounds in the year ending March 2010, or 12.4 percent of gross domestic product, the most in the Group of 20, according to figures from the U.K. Treasury in April.
‘Extremely Severe’
“The problems are extremely severe,” said Jamie Dannhauser, an economist at Lombard Street Research Ltd. in London. “Given the sheer scale of the mess that the U.K. banking system got itself into, it would be absurd to think that we could sort these things out quickly.”
Before today’s announcement, each household in the U.K. had about 3,000 pounds invested in the banks. The government’s paper loss on its stakes in RBS and Lloyds dropped to 10.9 billion pounds in June from 18 billion pounds in February as the banks’ shares advanced, according to government figures.
The International Monetary Fund has estimated the final cost of the bailout to British taxpayers may climb to 9.1 percent of GDP, or about 132 billion pounds.
To contact the reporters on this story: Andrew MacAskill in London at amacaskill@bloomberg.netJon Menon in London at jmenon1@bloomberg.net
By Yasuhiko Seki
Nov. 3 (Bloomberg) -- The euro may decline against Japan’s currency, approaching a three-month low, Bank of Tokyo- Mitsubishi UFJ Ltd. said, citing trading patterns.
The 16-nation currency on Oct. 30 completed its first weekly loss in a month against the yen, sliding below the 13-and 26-week moving averages, a sign the euro will drop further, said Masashi Hashimoto, a senior analyst in Tokyo at the unit of Japan’s biggest publicly traded bank. Indicators such as the stochastic oscillator and moving average convergence/divergence, also signal investors should sell the euro, he said.
“The key to ascertaining the trend for the following months is whether the euro can recover to 134 yen,” Hashimoto said. “A failure to reach the level may create opportunities for further declines, possibly pushing the currency toward the 52-week moving average or the bottom line of Bollinger bands.”
The euro traded at 133.55 yen as of 8:54 a.m. in Tokyo, from 133.32 yen yesterday in New York. It reached 129.05 yen on Oct. 2, the lowest level since July 13, when the single currency reached 128.01. The currency’s 52-week moving average stood at 129.09 yen at the end of last week and the bottom-line of Bollinger bands was at 128.94.
Bollinger bands, developed by analyst John Bollinger, are based on historical price swings. The bands narrow and widen to reflect the size of those moves, and represent possible support and resistance levels. MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods.
A stochastic oscillator chart measures the closing price of a security relative to its highs and lows during a particular period to try to predict whether it will rise or fall.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net
By Anna Rascouet
Nov. 3 (Bloomberg) -- The yen advanced as stocks fell on evidence banks and companies are struggling to shake off the effects of the global recession, damping demand for higher- yielding currencies.
The yen gained most against the Australian dollar and the British pound after UBS AG reported a wider-than-estimated loss and profit at Germany’s Metro AG slumped, sending the MSCI World Index down 0.5 percent. The rand climbed against all 16 most- traded currencies tracked by Bloomberg as gold approached a record high. The Aussie tumbled as the central bank raised interest rates without signaling faster increases to come.
“Risk markets have gone too much, too fast,” said Geoffrey Yu, a currency strategist in London at UBS, the world’s second-largest foreign-exchange trader. Markets “can’t expect good days to continue indefinitely, especially in this environment. People are right to be cautious.”
The yen strengthened to 90.07 per dollar as of 7:58 a.m. in London, from 90.21 yesterday in New York. It appreciated to 132.96 per euro, from 133.32. The South African rand traded at 7.9037 per dollar, from 7.9653. The Australian dollar dropped to 89.66 U.S. cents, from 90.40.
To contact the reporters on this story: Anna Rascouet in London at arascouet@bloomberg.net
By Bloomberg News
Nov. 3 (Bloomberg) -- Steel output in China may rise 10 percent this year, worsening a domestic oversupply in the world’s largest producing nation, the China Iron & Steel Association said today.
Production may rise by 50 million metric tons to 550 million tons, the association also known as CISA, said in a statement today on its Web site. China may import as much steel as it exports this year, compared with net exports of 48 million tons last year, it also said.
Benchmark Chinese steel prices have fallen 20 percent from a 10-month high on Aug. 4 as production overwhelmed demand fueled by the nation’s 4 trillion-yuan ($586 billion) stimulus spending. Baoshan Iron & Steel Co., China’s biggest mill, said yesterday fourth-quarter profit would be hurt as mills slashed prices amid higher inventories.
“The oversupply problem will be worse if China’s steel output exceeds 550 million tons,” the Beijing-based association said in the statement. Higher steel output and reduced exports is having a “huge impact on the domestic market,” it said.
Steel output jumped 7.5 percent to 420 million tons in the first nine months of the year, according to the government. Demand in the Asian nation, the largest consumer of steel, may expand by 19 percent this year to 526 million tons, the World Steel Association predicted Oct. 12.
Profit Drops
The aggregate profit of China’s 70 biggest steelmakers fell 78 percent to 30 billion yuan ($4.4 billion) in the first nine months from a year ago, the statement also said. Mills recorded profits from May through September, it said.
Steel-product inventories at China’s 26 major cities have risen by 5.3 million tons, or 91 percent, to 11.1 million tons as of the end of September from the start of 2009, the association said.
Stockpiles of steel products and semi-finished products, including billets and slabs, have risen 14 percent to 11.5 million tons in the same period at China’s 68 major steelmakers, CISA said.
“Continuous rising inventories will force prices to drop further, hurting profits at steelmakers,” CISA said. “The business situation would be harder for the industry in the fourth quarter through early next year.”
The government should implement more controls on steel imports, it said.
Iron Ore Prices
The outlook for steelmakers suggests they won’t be able to pay more for iron ore, a key raw material, next year, Luo Bingsheng, vice chairman of CISA, said by phone from Beijing.
Contract iron ore prices may jump 14 percent next year to the second-highest on record, according to a Bloomberg survey of 11 analysts last month.
“Even if iron ore prices rise as institutions estimate, the room for gains would be very limited because of an oversupply of the raw material,” Luo said. “It’s also because steelmakers are struggling to break even after steel prices fell.”
Luo declined to give a specific forecast. The association negotiates on behalf of Chinese steelmakers in price talks with iron ore producers.
Iron ore imports by China jumped 36 percent to 469 million tons in the first nine months from a year ago, according to customs data. The imports, partly by traders, have exceeded actual demand by 66 million tons, CISA previously said.
--Helen Yuan. Editors: Tan Hwee Ann, Richard Dobson.
To contact the Bloomberg News Staff on this story: Helen Yuan in Shanghai at hyuan@bloomberg.net
By Luzi Ann Javier
Nov. 3 (Bloomberg) -- Soybeans and corn dropped on speculation the Department of Agriculture may raise its yield estimate for the crops in the U.S., the world’s largest exporter.
Corn yields may be 0.2 bushels an acre higher than USDA’s October estimate of 164.2 bushels and soybean yields may average 0.1 bushel more than the USDA estimate of 42.4 bushels an acre, Allendale Inc., a McHenry, Illinois-based commodity research advisory firm, said in an e-mail yesterday.
The market was “expecting lower yields,” Rakesh Singh, a grain trader at Emmsons International Ltd., said by phone from New Delhi today. “It looks like it isn’t all that bad.”
January-delivery soybeans fell 0.3 percent to $9.95 a bushel in after-hours electronic trading on the Chicago Board of Trade at 1:43 p.m. Singapore time, after closing 2.2 percent higher yesterday.
Corn for December delivery declined 0.7 percent to $3.795 a bushel, after ending 4.4 percent higher yesterday as a slumping dollar boosted investment demand for commodities as a hedge against inflation.
December-delivery wheat dropped 0.6 percent to $5.1375 a bushel. The grain advanced 4.6 percent yesterday.
The USDA is expected to release its latest forecast on U.S. and global supply and demand for grains and soybeans next week.
To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net
By Luzi Ann Javier
Nov. 3 (Bloomberg) -- Palm oil declined as mounting stockpiles in Indonesia, the world’s biggest producer, boosted investor concern about excess supply.
“Increasing palm oil stocks over in Indonesia are starting to get on people’s radar screen,” Carey Wong, an analyst at Oversea-Chinese Banking Corp., said by phone from Singapore today. “The problem is demand hasn’t really picked up faster than the increase in production.”
Inventories in the country probably climbed to 1.7 million tons in October from an average of 1.3 million to 1.4 million tons in August and September, Derom Bangun, a deputy chairman of Indonesia’s Palm Oil Board, said yesterday in Kuala Lumpur.
Palm oil for January delivery dropped as much as 1 percent to 2,186 ringgit ($639) a ton on the Malaysia Derivatives Exchange and traded at 2,196 ringgit by the 12:30 p.m. break. Crude oil and soybean oil for December delivery were little changed at $77.99 a barrel in New York and 36.78 cents a pound in Chicago.
Soybean oil’s premium over palm oil was 26 percent today, down from a three-month high of 32 percent on Oct. 21. Rising inventories may curb a 30 percent rally in palm oil futures this year, which outpaced a 9.4 percent gain in soybean oil. Crude oil advanced 75 percent.
Palm oil production in Indonesia may reach 21.5 million tons to 22 million tons in 2010 as more plantations mature, from an expected 20.5 million tons this year, Bangun said. Exports will also be higher as economic growth boosts demand in China and India, he said.
New Rule Delayed
Indonesia postponed to July 2010 a requirement for commodity exporters to use letters of credit for shipments exceeding $1 million.
The condition, scheduled to take effect Nov. 1, was postponed “because the aim of the rule should be reached without causing excessive burden to exporters amid a global recession that has not recovered,” a statement from Indonesia’s Department of Trade said today.
PT Sinar Mas Agro Resources and Technology may build two palm oil processing plants for a total of $150 million, Bisnis Indonesia reported. Sinar Mas plans to build a palm oil-based food-processing plant in Jakarta and an oleochemical plant in Medan, North Sumatra, it reported.
-- With assistance from Soraya Permatasari in Kuala Lumpur Editor: James Poole
To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net
By James Ludden
Nov. 3 (Bloomberg) -- Copper led industrial metals lower in London as concern about the possible withdrawal of stimulus measures outweighed better-than-expected manufacturing data in China and the U.S., the world’s two largest consumers of the metal.
Copper fell $95 a metric ton, or 1.5 percent, to $6,460 a ton as of 8:03 a.m. local time.
By Saeromi Shin
Nov. 3 (Bloomberg) -- Global stocks may post further gains next year, boosted by economic growth and low interest rates, according to Prudential International Investments Advisers LLC.
Investors should buy stocks in the first half, especially those in emerging markets, instead of bonds and cash, John Praveen, Prudential’s chief investment strategist, said in a statement ahead of his speech in Seoul today. Prudential International Investments is a unit of Prudential Financial Inc., which managed about $580 billion of assets as of June.
“After strong gains in 2009, stocks are likely to post further modest gains in 2010,” according to Praveen’s presentation slides. “A substantial amount of fiscal stimulus is still in the 2010 pipeline” and borrowing costs are substantially lower than at the start of past recoveries, he said.
The MSCI World Index has risen 61 percent from March 9, its lowest level this year, and is set for its biggest gain in six years. Equities have rallied as governments poured in $2 trillion in stimulus measures and central banks cut interest rates to near zero to kick-start their economies. Last year, the measure dropped by a record 42 percent.
Other investors are less optimistic, with Scotland’s two biggest fund managers saying it’s getting tougher to make money from Asian stocks. Aberdeen Asset Management Plc has been reducing its holdings because of their valuations compared with other parts of the world, said Mike Turner, head of strategy. Ronnie Petrie, head of Asian stocks at Standard Life Investments, sold shares such as Globe Telecom Inc. in the Philippines.
Ripe For Consolidation
“We have taken our foot off the accelerator, but we are a long way away from putting our foot on the brake,” Turner, whose company managed 129 billion pounds ($212 billion) on June 30, said in an interview at his office in Edinburgh yesterday. “It’s ripe for a little consolidation in Asian markets.”
Praveen also expects stocks to be “volatile” next year because valuations are rising and as investors become concerned that central banks may reverse their expansionary measures. South Korea, India and China may start to “normalize” interest rates in the first half after cuts in the past year, followed by the U.K. and the U.S. later in the year, the strategist said.
Praveen has an “overweight” recommendation on emerging- market stocks and is “underweight” in U.S. equities for the first half of 2010. He also said investors should switch from emerging markets to U.S. stocks in the second half of 2010.
He also advises investors to buy financial, technology, industrials and materials stocks in the first half, and sell companies that are in the consumer staples, health-care and utilities industries, according to the statement.
Subdued inflation, liquidity and expected earnings growth may also help equities, according to the Prudential statement.
To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net
By Darren Boey and Jonathan Burgos
Nov. 3 (Bloomberg) -- Asian stocks fell, led by banks and energy companies, as UBS AG and Suzlon Energy Ltd. posted wider- than-estimated losses amid investor concern the withdrawal of stimulus measures will cause the global recovery to falter.
National Australia Bank Ltd. sank 1.8 percent as the country’s central bank raised interest rates for the second time in four weeks. Sino Land Co. dropped 4.1 percent in Hong Kong on concern the government will enact measures to curb property speculation. India’s Suzlon Energy and Reliance Communications Ltd. slumped more than 3 percent after their quarterly results missed analyst estimates.
The MSCI Asia Pacific excluding Japan Index lost 1.3 percent to 383.83 as of 4:58 p.m. in Hong Kong, with two stocks declining for each that rose. The gauge has surged 87 percent from a three-month low on March 2 on signs government stimulus measures are reviving the global economy.
“We’re tending towards the view that we will see some relapse next year as people basically lose faith in governments’ ability to continue to come to the rescue,” said Peter Elston, a Singapore-based strategist at Aberdeen Asset Management Plc, which had about $234 billon under management as of Sept. 30.
Japanese markets are closed for a holiday. Hong Kong’s Hang Seng Index fell 1.8 percent, South Korea’s Kospi Index lost 0.6 percent and India’s Sensitive Index declined 1.6 percent. China’s Shanghai Composite Index climbed 1.2 percent.
Among stocks that gained today, Hyundai Motor Co. added 2.9 percent in Seoul as Ford said it expects to be “solidly profitable” in 2011. Zijin Mining Group Co., China’s No. 1 gold producer, rose 1.4 percent in Hong Kong after the precious metal climbed to a one-week high.
U.S. Factory Index
Futures on the U.S. Standard & Poor’s 500 Index lost 0.6 percent, reversing earlier gains, as UBS, Switzerland’s largest bank, reported a fourth consecutive quarterly loss and Lloyds Banking Group Plc announced a $34 billion rights offer. The S&P 500 advanced 0.7 percent yesterday as the Institute for Supply Management’s factory index rose to a three-year high.
National Australia Bank, the country’s third-largest by market value, lost 1.8 percent to A$28.39, while Westpac Banking Corp., the second biggest, dropped 0.6 percent to A$25.43.
Australia’s central bank raised its overnight cash rate target to 3.5 percent from 3.25 percent, as forecast by 18 of 22 economists surveyed by Bloomberg News. The rest expect a half- point increase.
Australia on Oct. 6 became the first Group of 20 nation to raise interest rates amid signs of strength in its economy, while the Bank of Japan said last week it will let its programs of buying corporate debt expire at the end of the year.
October Decline
Investor concern about the withdrawal of stimulus policies have helped drag the MSCI Asia Pacific Index, which includes Japan, down by 5.2 percent from this year’s high on Oct. 20. The U.S. must increase stimulus spending or risk “many years of high unemployment,” Nobel Prize-winning economist Paul Krugman wrote in the New York Times yesterday.
The MSCI measure lost 1.3 percent last month, the first drop since February. Stocks on the gauge trade at an average 22 times estimated profit, the lowest level since May 14, according to Bloomberg data. That’s still higher than the 13.7 times at the start of the year.
“Further improvements in the economic and corporate news will help justify valuations,” said Jason Teh, who helps manage $3.2 billion at Investors Mutual in Sydney. “A lot of stocks have had a good run, making it harder to find value in this market.”
Suzlon, the country’s biggest maker of wind-turbine generators, tumbled 11 percent to 59.70 rupees as its loss in the three months ended Sept. 30, including that of units, widened on slowing equipment orders.
Government Stabilization
Reliance Communications, India’s second-largest mobile- phone operator, slumped 3.3 percent to 170.05 rupees. The company on Oct. 31 reported a 52 percent tumble in second- quarter net income.
In Hong Kong, Sino Land dropped 4.1 percent to HK$14.10. Sun Hung Kai Properties Ltd., Hong Kong’s No. 1 property developer by market value, declined 3.6 percent to HK$113.60.
Hong Kong Chief Executive Donald Tsang said yesterday the government is “closely” monitoring the local property market and has tools available to stabilize it if necessary. The Hong Kong Monetary Authority last month raised down-payment requirements for luxury homes for the first time since 1991.
“People seem to have recognized that their dream about continually rising property shares has burst,” said Castor Pang, a research director at CINDA International Holdings Ltd., a Hong Kong brokerage.
Hyundai Motor
In Seoul, Hyundai Motor rose 2.9 percent to 105,000 won. The company controlled 4.4 percent of the U.S. auto market at the end of September, according to Autodata Corp. Kia Motors Corp., which got 30 percent of its revenue last year in North America, gained 2.8 percent to 18,150 won.
Ford, the only major U.S. automaker to avoid bankruptcy, posted a quarterly pretax profit of $1.1 billion, or 26 cents a share, compared with a year-earlier loss of $3 billion, or $1.32. Ford beat the 20 cents a share adjusted loss estimated by an average of 11 analysts surveyed by Bloomberg.
Zijin Mining rose 1.4 percent to HK$7.77 after gold futures in New York gained 1 percent in after-hours trading. Prices jumped 1.3 percent to $1,054 an ounce in New York yesterday, the highest closing level since Oct. 23.
Newcrest Mining Ltd., Australia’s largest gold producer, climbed 3.9 percent to A$33.38, while Lihir Gold Ltd. added 4.3 percent to A$3.17.
To contact the reporters for this story: Darren Boey in Hong Kong at dboey@bloomberg.net; Jonathan Burgos in Singapore at jburgos4@bloomberg.net.
By Maud van Gaal and Elisa Martinuzzi
Nov. 3 (Bloomberg) -- Delta Lloyd NV fell as much as 4.8 percent in its first day of trading after Aviva Plc raised 1.02 billion euros ($1.5 billion) selling shares of its Dutch unit during the worst slump for European insurers in eight months.
Delta Lloyd slid as low as 15.23 euros as of 9:25 a.m. in Amsterdam after Aviva, the U.K.’s second-biggest insurer by market value, sold 63.5 million Delta Lloyd shares at 16 euros each, valuing the company at 2.65 billion euros. London-based Aviva had sought 15.50 euros to 19 euros a share in western Europe’s biggest IPO this year.
Delta Lloyd began trading today on NYSE Euronext’s Amsterdam Stock Exchange under the ticker DL after European insurers posted their biggest weekly drop since March on ING Groep NV’s plan to sell its insurance units to win European Union approval for a taxpayer-funded bailout. Aviva slipped as much as 10.6 pence, or 2.7 percent, to 378.5 pence in London.
New York-based Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co., Charlotte, North Carolina-based Bank of America Corp.’s Merrill Lynch & Co. unit and Edinburgh-based Royal Bank of Scotland Group Plc managed the IPO.
Delta Lloyd went public after the Dow Jones Stoxx Insurance 600 Index slid 8.2 percent last week, the steepest retreat since March 6, just before global equities began their eight-month surge. The gauge retreated for the sixth time in seven days today, losing as much as 1.9 percent.
ING, AEI
ING, the biggest Dutch financial-services company, sparked last week’s decline after the Amsterdam-based company said it planned to raise 7.5 billion euros in a rights offering and shed its insurance units through IPOs and sales to other firms to garner approval for state aid. ING slipped as much as 21 cents, or 2.4 percent, to 8.65 euros today.
The listing also comes after AEI, the owner of Enron Corp.’s former international energy business, pulled its offering last week amid the worst returns in at least 14 years for American IPOs. Europe’s Stoxx 600 suffered its first monthly drop since June in October after declines in U.S. consumer confidence, personal spending and home sales spurred concern over the durability of the economic rebound.
Delta Lloyd posted a net loss in the three months ended Sept. 30 that led to a loss of more than 100 million euros for the first nine months of the year, the Amsterdam-based company said on Oct. 19. That was the result of a move in the interest- rate curve used to value the insurer’s liabilities, according to the company’s Chief Financial Officer Peter Kok.
Lehman Brothers, PGE
The European IPO market has been slower to recover than the U.S. after New York-based Lehman Brothers Holdings Inc.’s collapse in September 2008 spurred a credit-market freeze. PGE SA, Poland’s largest power group, priced its IPO at 5.97 billion zloty ($2.1 billion) last week, making it the largest in eastern and western Europe this year.
Six western European companies raised capital through IPOs on exchanges in the region since the start of this year, compared with 33 in the U.S., data compiled by Bloomberg show. There were 18 American offerings in the past two months, the most since the period ended January 2008, the data show.
The revival for U.S. IPOs hasn’t coincided with bigger returns. The offerings of American companies since September outperformed the Standard & Poor’s 500 Index by 0.2 percentage point on average in the first month of trading, the worst performance in Bloomberg data going back 14 years. IPOs by U.S. companies have beaten the S&P 500 by an average 21.3 percentage points since 1995, the data show.
Listing Postponed
Investors have shunned the listings of companies laden with debt, forcing bankers last week to postpone the offering by George Town, Cayman Islands-based AEI. The IPO unraveled after Ashmore Group Plc, the London-based fund manager that controls AEI, withdrew when institutional buyers refused to pay the $16-a-share it sought for the deal.
To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net; Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net.
By Adria Cimino
Nov. 3 (Bloomberg) -- German stocks fell, led by banks after UBS AG, Switzerland’s biggest, reported a wider-than- estimated loss. Bayerische Motoren Werke AG declined after reporting a drop in third-quarter profit.
Deutsche Bank AG and Commerzbank AG both slipped more than 2 percent. BMW, the world’s largest maker of luxury cars, fell 5.2 percent.
The DAX Index slid 1.2 percent to 5,365.2 at 10:07 a.m. in Frankfurt. The gauge tumbled 5.7 percent last week amid concern the European Union may impose restrictions on financial companies in return for state aid and speculation a near eight- month rally has outpaced economic growth prospects. The broader HDAX Index also lost 1.2 percent today.
European bank shares fell after UBS reported its fourth consecutive quarterly loss.
The UBS report “isn’t a very favorable signal,” said Arnaud Scarpaci, a fund manager at Agilis Gestion in Paris, which oversees about $147 million. “We can expect two or three difficult weeks for bank stocks.”
Deutsche Bank, Germany’s biggest, slid 2.1 percent to 48.45 euros. Commerzbank, the second largest, retreated 2.4 percent to 7.02 euros. The bank yesterday reported a third-quarter net loss because of costs tied to the integration of Dresdner Bank and writedowns stemming from its Eurohypo commercial-property unit.
BMW sank 5.2 percent to 31.88 euros. The carmaker reported a 74 percent plunge in third-quarter profit to 78 million euros ($115 million) as the recession sapped demand for higher-priced models.
The following shares rose or fell in Frankfurt. Stock symbols are in parentheses.
Escada AG (ESC GY) tumbled 8.6 percent to 53 cents, falling for a second day. Escada’s insolvency administrator Christian Gerloff will decide on a sale of the fashion company by the middle of the week, Sueddeutsche Zeitung said, without being more specific. Four bids have been submitted for Escada, the German newspaper reported, without saying where it got the information.
Fresenius SE (FRE3 GY) climbed 2.4 percent to 40.26 euros, for the biggest gain in three weeks. The world’s biggest provider of kidney dialysis reported an increase in third- quarter profit adjusted to reflect mark-to-market accounting for exchangeable bonds and the acquisition of APP Pharmaceuticals to 128 million euros from 112 million euros.
Metro AG (MEO GY) added 2.5 percent to 38.42 euros for the biggest gain in almost a month. Germany’s largest retailer said savings from the “Shape 2012” cost-reduction program were 70 million euros in the third quarter.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
By Sarah Jones
Nov. 3 (Bloomberg) -- U.K. stocks retreated, led by Royal Bank of Scotland Group Plc after the government increased its stake in Britain’s largest lender and mining companies followed metals prices lower.
RBS lost more than 3 percent after saying it will sell its insurance division and bank branches following negotiations with the European Commission and the U.K. Treasury. Xstrata Plc and Kazakhmys Plc declined 3.2 percent as copper, lead and nickel fell in London.
The benchmark FTSE 100 Index lost 67.73, or 1.3 percent, to 5,036.77 at 8:44 a.m. in London, erasing all of yesterday’s 1.2 advance. The FTSE All-Share Index slipped 1.3 percent and Ireland’s ISEQ Index dropped 1.9 percent.
The FTSE 100 has surged 43 percent since this year’s low in March as companies reported better-than-expected earnings and investors speculated the worst recession since World War II is abating.
RBS dropped 3.5 percent to 37.31 pence, extending yesterday’s 7.8 percent decline. The lender agreed to take an additional 25.5 billion pounds ($41.6 billion) from the government, making its rescue the most expensive bailout in the world.
The increased aid will boost the state’s stake to 84.4 percent from 70 percent after restructuring talks with the European Commission, the European Union’s executive arm. RBS said it will put 282 billion pounds of assets into the government’s insurance program, less than previously announced.
‘Serious Consequences’
In Ireland, Allied Irish Banks Plc and Bank of Ireland Plc, which have received 7 billion euros ($10.3 billion) from the Irish government, slumped 10 percent to 1.51 euros and 8.8 percent to 1.46 euros, respectively. Allied Irish Chairman Dan O’Connor last week said the bank could face “serious consequences” from its negotiations with Europe.
Lloyds Banking Group Plc rallied 2.1 percent to 86.75 pence. The country’s largest mortgage lender plans to raise 21 billion pounds ($34 billion) in Britain’s biggest rights offering, denying the government majority control.
Xstrata, the world’s fourth-largest copper producer, lost 3.2 percent to 892 pence. Kazakhmys, Kazakhstan’s bigger copper producer, sank 3.2 percent to 1,102 pence.
Copper declined as concern about the possible withdrawal of stimulus measures outweighed better-than-expected manufacturing data in China and the U.S., the world’s two largest consumers of the metal.
The base metal fell $95 a metric ton, or 1.5 percent, to $6,460 a ton as of 8:03 a.m. local time.
To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net.
By Adam Haigh
Nov. 3 (Bloomberg) -- Stocks in Europe and Asia dropped as UBS AG reported a wider-than-estimated loss and the U.K. government increased its stake in Royal Bank of Scotland Group Plc. U.S. index futures declined.
UBS sank 4.4 percent as Switzerland’s largest bank posted its fourth consecutive quarterly loss. RBS retreated 1.5 percent after agreeing to put 282 billion pounds ($460 billion) of loans and securities into the government’s Asset Protection Scheme and take an additional 25.5 billion pounds of investment from the Treasury. Bayerische Motoren Werke AG tumbled 6.5 percent after reporting decreased profit.
Europe’s Dow Jones Stoxx 600 Index lost 1.4 percent to 234.29 as of 9:19 a.m. in London. The regional measure has climbed 48 percent since March as the French and German economies unexpectedly exited recessions. The gauge is down 6 percent from this year’s high on Oct. 19 amid speculation the eight-month rebound has outpaced the prospects for earnings and economic growth.
“The basis for the correction seems to rest on three legs,” said Bill O’Neill, a London-based strategist at Merrill Lynch Global Wealth Management, which has $1.1 trillion in assets. “Worries over prospects for holders of equity in banks, concern that interest rate hikes are imminent, and paradoxically that recovery in 2010 will be crippled by a U.S. consumer unwilling or unable to open his or her wallet.”
Australian Interest Rates
The MSCI Asia Pacific excluding Japan Index lost 1.3 percent as Australia raised its benchmark interest rate by a quarter percentage point, becoming the first nation to increase borrowing costs twice this year as the global economy recovers. Japanese markets are closed for a holiday.
Standard & poor’s 500 Index futures expiring next month slipped 0.5 percent.
Governments and central banks are preparing to remove stimulus measures after spending a total of $12 trillion, by International Monetary Fund estimates, to haul economies out of recession. China’s banking regulator plans to review debt levels at some real-estate developers on concern the companies’ borrowings are fueling excessive gains in property prices, a person familiar with the matter said.
The Bank of England should cap its bond purchase plan at 200 billion pounds this week in a signal that it will stop buying assets in the next quarter, former policy maker DeAnne Julius said. The U.K. central bank will expand the program to 225 billion pounds from the current 175 billion pounds on Nov. 5, according to the median estimate of 48 economists in a Bloomberg News survey.
UBS, RBS
UBS retreated 4.4 percent to 16.58 Swiss francs as it reported a net loss of 564 million francs ($552 million), wider than the 337 million-franc median estimate of 12 analysts surveyed by Bloomberg.
RBS dropped 1.5 percent to 38.07 pence. The lender will sell its insurance division and bank branches after negotiations with the European Commission and the U.K. Treasury, pushing it further into government hands. The government’s stake will increase to 84.4 percent as a result of the transaction.
BMW tumbled 6.5 percent to 31.42 euros as the world’s largest maker of luxury cars reported a 74 percent plunge in third-quarter profit to 78 million euros ($115 million).
GlaxoSmithKline Plc declined 1.8 percent to 1,225 pence after the U.K.’s biggest drugmaker was downgraded to “underperform” from “neutral” at BofA Merrill Lynch Global Research, which cited the stock’s outperformance to other health-care companies in the past year.
Delta Lloyd
Delta Lloyd NV fell 2.8 percent to 15.56 in its first day of trading after Aviva Plc raised 1.02 billion euros selling shares of its Dutch unit during the worst slump for European insurers in eight months.
Aviva, the U.K.’s second-biggest insurer by market value, slipped 3.1 percent to 377.1 pence.
Swiss Reinsurance Co. advanced 7.7 percent to 45.68 francs. The world’s second-largest reinsurer reported an unexpected third-quarter profit after more than 3.16 billion francs of investment gains.
Metro AG, Germany’s largest retailer, rose 2.4 percent to 38.40 euros after reporting third-quarter operating earnings that beat some analysts’ estimates and saying a cost-cutting program has started to pay off.
Factory orders in the U.S. climbed 0.8 percent in September after a 0.8 percent decline in August, a Bloomberg News survey of economists showed before the Commerce Department releases the report in Washington today.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
| Daily Forex Fundamentals | Written by Saxo Bank | Nov 02 09 07:50 GMT | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CIT filed for bankruptcy, despite government bail-out. Also watch out for earnings from Ford today Calendar
What's going on?A real whipsaw in markets Thursday/Friday. Our take: The market isn't too impressed by the US GDP figures on Thursday. They looked good on the surface, but showed discomforting details on closer scrutiny: Disposable Income is down and the impact from CFC is temporary. Government spending was again going through the roof. All in all: unsustainable and not showing a real recovery. CIT filed for bankruptcy, despite government bail-out. Our stance is now a sell on rallies and we skip the 1121 target. Look for 50/55 DMA to cap the upside today and the days to come. FX
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