By Christian Schmollinger and Gavin Evans
Aug. 18 (Bloomberg) -- Crude oil rose for the first time in three days as a storm near Cuba prompted evacuations from rigs and platforms in the Gulf of Mexico, which account for about a fifth of U.S. production.
Royal Dutch Shell Plc and Transocean Inc. have evacuated workers as Tropical Storm Fay, with maximum sustained winds of about 50 miles (80 kilometers) an hour, may strengthen to a hurricane before striking Florida's northwestern coast today, the National Hurricane Center said. Crude oil in New York fell to a 15-week low on Aug. 15, its second consecutive weekly decline.
``Fay is causing the market to edge up a bit,'' said Victor Shum, senior principal at consultants Purvin & Gertz Inc. in Singapore. ``The increase is also a result of an oversold market on Friday and some participants see that as a buying opportunity.''
Crude oil for September delivery rose as much as $1.58, or 1.4 percent, to $115.35 a barrel on the New York Mercantile Exchange and was trading at $115.26 at 2:51 p.m. in Singapore. The contract earlier fell as low as $113.25.
New York oil futures fell 1.1 percent on Aug. 15 to settle at $113.77, having earlier in the session touched $111.34, the lowest since May 1. Prices dropped last week as the strengthening dollar curbed the appeal of commodities as a hedge against inflation and on signs of falling demand in the U.S.
Brent crude for October settlement rose as much as $1.58, or 1.4 percent, to $114.13 a barrel on London's ICE Futures Europe exchange. It was at $114.10 a barrel at 2:52 p.m. Singapore time.
The contract fell 9 cents to settle at $112.55 a barrel on Aug. 15. It reached as low as $110.31 a barrel.
Storms Disrupt
Storms routinely disrupt tanker traffic and production in the region in the North Atlantic hurricane season running June through November. In 2005, Hurricane Katrina wrecked platforms and refineries around New Orleans, prompting an international release of fuel from reserve stockpiles.
``We would have to see oil prices spike'' if Fay veers west toward Louisiana, Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut, said in an interview with Bloomberg Television. ``But I don't think they'll be able to hold on to any spike, particularly if damage is minimal.''
Shell evacuated about 360 non-essential staff from the eastern Gulf the past two days. Production hasn't been affected. Transocean, the world's largest offshore oil driller, said it evacuated 130 workers and suspended operations at several rigs in the Gulf as a precaution because of the storm, which was centered 170 miles southeast of Havana, Cuba at 11 p.m. New York time.
Dollar Gains
Prices have declined 22 percent from the record $147.27 a barrel reached on July 11 as the dollar rose for a fifth week against the euro and the Organization of Petroleum Exporting Countries warned of risks to world demand from the slowing global economy.
A report tomorrow will probably show home building in the U.S., the world's largest oil consumer, fell to the lowest pace in 17 years in July amid rising borrowing costs and record foreclosures.
``It's all about the dollar, that's what's pushing prices lower,'' said Beutel. ``If we do see a recovery in housing a lot of people expect that will lead the fed to raise interest rates and again that brings us back to the dollar. If we see weak housing data, then people will say demand seems to be dropping.''
The dollar rose 2.2 percent against the euro last week. It was at $1.4748 at 2:18 p.m. Singapore, from $1.4687 late in New York last week.
Hedge-fund managers and other large speculators increased their net-short position in New York crude-oil futures in the week ended Aug. 12, according to U.S. Commodity Futures Trading Commission data.
Speculative short positions, or bets prices will fall, outnumbered long positions by 9,130 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-short positions rose by 3,580 contracts, or 65 percent, from a week earlier.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Gavin Evans in Wellington at gavinevans@bloomberg.net
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Monday, August 18, 2008
Gold, Silver Climb as Dollar Falls Before Home, Price Reports
By Feiwen Rong
Aug. 18 (Bloomberg) -- Gold and silver climbed as the dollar snapped a three-day advance on speculation U.S. housing and inflation reports this week may limit the ability of the Federal Reserve to increase interest rates.
Gold has gained 21 percent in the past year and silver is up 12 percent as global inflation accelerated, the dollar slumped and the U.S. credit crisis spread to Europe. Still, a 5.6 percent rebound this month in the dollar against the euro drove gold to its lowest for almost 10 months on Aug. 15 and spurred the biggest daily decline in silver for two years.
``We saw some buying this morning from physical dealers or the general public,'' K C Wong, trader at Standard Bank Asia Ltd., said by phone from Singapore. ``The plunge last week was technically oversold.''
Gold for immediate delivery gained for the first day in three, rising as much as $11.25, or 1.4 percent, to $798.95 an ounce before trading at $796.33 at 10:54 a.m. in Singapore. The metal dropped as low as $772.98 Aug. 15, the lowest since October. Silver for immediate delivery jumped as much as 4 percent to $13.26 an ounce and traded at $13.1850.
Higher crude oil prices boosted gold. The fuel climbed for the first day in three in New York as Tropical Storm Fay near Cuba prompted evacuations from rigs and production platforms in the Gulf of Mexico. Oil for September delivery gained 0.7 percent to $114.54 a barrel at 10:58 a.m. in Singapore.
Housing, Inflation
U.S. housing starts probably dropped 9.9 percent to an annual rate of 960,000 in July, the fewest in 17 years, according to a Bloomberg News survey ahead of the Commerce Department report tomorrow. The Labor Department will tomorrow report the producer price index climbed 0.5 percent in July after jumping 1.8 percent in June, a separate survey showed.
The 14-day relative strength index for gold remained below 30 today, a signal that prices are headed higher. Gold's relative strength index fell to as low as 22 on Aug. 12 and remained below 30 throughout last week. The dollar traded at $1.4729 against the euro, down from $1.4688 Aug. 15.
Gold for December delivery was up 1.2 percent at $801.50 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 11 a.m. in Singapore.
Bullion for December delivery on the Shanghai Futures Exchange rose 1.1 percent to 178.87 yuan a gram ($809 an ounce).
In Japan, gold for June delivery on the Tokyo Commodity Exchange gained 0.9 percent to 2,839 yen a gram ($801 an ounce) at 10:26 a.m. local time.
To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net
Read more...
Aug. 18 (Bloomberg) -- Gold and silver climbed as the dollar snapped a three-day advance on speculation U.S. housing and inflation reports this week may limit the ability of the Federal Reserve to increase interest rates.
Gold has gained 21 percent in the past year and silver is up 12 percent as global inflation accelerated, the dollar slumped and the U.S. credit crisis spread to Europe. Still, a 5.6 percent rebound this month in the dollar against the euro drove gold to its lowest for almost 10 months on Aug. 15 and spurred the biggest daily decline in silver for two years.
``We saw some buying this morning from physical dealers or the general public,'' K C Wong, trader at Standard Bank Asia Ltd., said by phone from Singapore. ``The plunge last week was technically oversold.''
Gold for immediate delivery gained for the first day in three, rising as much as $11.25, or 1.4 percent, to $798.95 an ounce before trading at $796.33 at 10:54 a.m. in Singapore. The metal dropped as low as $772.98 Aug. 15, the lowest since October. Silver for immediate delivery jumped as much as 4 percent to $13.26 an ounce and traded at $13.1850.
Higher crude oil prices boosted gold. The fuel climbed for the first day in three in New York as Tropical Storm Fay near Cuba prompted evacuations from rigs and production platforms in the Gulf of Mexico. Oil for September delivery gained 0.7 percent to $114.54 a barrel at 10:58 a.m. in Singapore.
Housing, Inflation
U.S. housing starts probably dropped 9.9 percent to an annual rate of 960,000 in July, the fewest in 17 years, according to a Bloomberg News survey ahead of the Commerce Department report tomorrow. The Labor Department will tomorrow report the producer price index climbed 0.5 percent in July after jumping 1.8 percent in June, a separate survey showed.
The 14-day relative strength index for gold remained below 30 today, a signal that prices are headed higher. Gold's relative strength index fell to as low as 22 on Aug. 12 and remained below 30 throughout last week. The dollar traded at $1.4729 against the euro, down from $1.4688 Aug. 15.
Gold for December delivery was up 1.2 percent at $801.50 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 11 a.m. in Singapore.
Bullion for December delivery on the Shanghai Futures Exchange rose 1.1 percent to 178.87 yuan a gram ($809 an ounce).
In Japan, gold for June delivery on the Tokyo Commodity Exchange gained 0.9 percent to 2,839 yen a gram ($801 an ounce) at 10:26 a.m. local time.
To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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Auto Escape, Belvedere, CCA International: French Stock Preview
By Fabio Benedetti-Valentini
Aug. 18 (Bloomberg) -- The following is a list of companies whose stocks may have unusual price changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's benchmark CAC 40 Index rose 32.71 points, or 0.7 percent, to 4,453.62. The broader SBF 120 Index gained 0.8 percent at 3,222.26.
Auto Escape SA (ALAUT FP): The car-rental broker has 7.6 million euros ($11.2 million) to spend on takeovers in the U.K. and Germany, Chief Financial Officer Jean-Christophe Brun told Le Journal des Finances. The stock rose 3 cents, or 1.1 percent, to 2.88 euros.
Belvedere SA (BVD FP): The maker of Sobieski vodka said first-half sales increased 25 percent to 577.5 million euros. The stock fell 20 cents, or 0.3 percent, to 75.80 euros.
CCA International SA (CCA FP): The provider of client- relation services said first-half net income declined because of the pound's drop and ``technical problems'' at two French production sites in the second quarter. The shares gained 1 cent, or 0.2 percent, to 5.60 euros.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at Fbenedettiva@bloomberg.net.
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Aug. 18 (Bloomberg) -- The following is a list of companies whose stocks may have unusual price changes in Paris. Symbols are in parentheses after company names and prices are from the last close.
France's benchmark CAC 40 Index rose 32.71 points, or 0.7 percent, to 4,453.62. The broader SBF 120 Index gained 0.8 percent at 3,222.26.
Auto Escape SA (ALAUT FP): The car-rental broker has 7.6 million euros ($11.2 million) to spend on takeovers in the U.K. and Germany, Chief Financial Officer Jean-Christophe Brun told Le Journal des Finances. The stock rose 3 cents, or 1.1 percent, to 2.88 euros.
Belvedere SA (BVD FP): The maker of Sobieski vodka said first-half sales increased 25 percent to 577.5 million euros. The stock fell 20 cents, or 0.3 percent, to 75.80 euros.
CCA International SA (CCA FP): The provider of client- relation services said first-half net income declined because of the pound's drop and ``technical problems'' at two French production sites in the second quarter. The shares gained 1 cent, or 0.2 percent, to 5.60 euros.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at Fbenedettiva@bloomberg.net.
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Germany Stocks Update: DAX Index Falls 30.31 to 6,415.71
By Daniel Hauck
Aug. 18 (Bloomberg) -- Germany's benchmark stock index, the DAX Index, fell 0.47 percent at 9:05 a.m.
The index of 30 companies traded on the Frankfurt Stock Exchange fell 30.31 to 6,415.71. Among the stocks in the index, 5 rose and 25 fell.
Declines in the DAX were led by E.on Ag, Deutsche Bank Ag and Allianz Se. About 1.66 million shares traded in the DAX.
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Aug. 18 (Bloomberg) -- Germany's benchmark stock index, the DAX Index, fell 0.47 percent at 9:05 a.m.
The index of 30 companies traded on the Frankfurt Stock Exchange fell 30.31 to 6,415.71. Among the stocks in the index, 5 rose and 25 fell.
Declines in the DAX were led by E.on Ag, Deutsche Bank Ag and Allianz Se. About 1.66 million shares traded in the DAX.
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Asian Stocks Rise for First Time in Five Days; Komatsu Advances
By Chen Shiyin
Aug. 18 (Bloomberg) -- Asian stocks rose for the first time in five days, led by Japanese manufacturers, as the cheapest valuations in more than a decade prompted brokerages to recommend purchasing shares.
Komatsu Ltd., the world's No. 2 earthmover maker, climbed 3.8 percent as Nikko Citigroup Ltd. upgraded the shares on sales prospects in emerging markets. Sumitomo Metal Industries Ltd., Japan's third-biggest steelmaker, rose 7.4 percent as Mitsubishi UFJ Securities Co. raised its rating. Citic Securities Co. plunged 8.7 percent on concern China's government will avoid measures to support the worst-performing stock market of 2008.
``Valuations are cheap right now and while they're still coming down, the silver lining is that earnings are going to improve,'' said James Chua, an investment analyst at Phillip Capital Management Ltd. in Singapore, which oversees about $450 million. ``It's hard to pick a bottom in the market but it may be nearer than we think.''
The MSCI Asia-Pacific Index added 0.4 percent to 125.30 as of 3:33 p.m. in Tokyo, halting a four-day, 3 percent drop. The sell-off took the value of the index last week to 11 times reported profit, the lowest for the measure since at least 1995, data compiled by Bloomberg show.
The gauge has slumped 21 percent this year as soaring inflation slowed global growth and the world's largest financial companies posted writedowns and credit losses of more than $500 billion. Hong Kong's economy grew in the second quarter at the slowest pace in five years, government figures on Aug. 15 showed. The Hang Seng Index lost 1.2 percent today, led by Sun Hung Kai Properties Ltd., the city's No. 1 developer.
Japan Gains
Japan's Nikkei 225 Stock Average added 1.1 percent to 13,165.45. Benchmarks fell in most other Asian markets, led by China's CSI 300 Index, which slumped 4.3 percent. Indonesia and the Philippines are closed for holidays.
Nippon Sharyo Ltd., Japan's biggest maker of high-speed trains, soared by 30 percent in Tokyo trading after Central Japan Railway Co. offered to take a majority stake. China South Locomotive & Rolling Stock Corp., the nation's biggest maker of trains, surged on its Shanghai trading debut.
U.S. stocks rose on Aug. 15, sending the Standard & Poor's 500 Index to its third weekly gain. Wal-Mart Stores Inc. led retailers higher after oil prices retreated. S&P 500 futures fell 0.1 percent today.
Komatsu jumped 90 yen to 2,445. The stock gained the most since July 22 after Nikko Citigroup analyst Yoshinao Ibara upgraded his recommendation to ``buy'' from ``hold,'' saying the company is countering risks of a slowdown in developed economies by tapping demand from ``resource-rich countries.''
`Excessively Undervalued'
Sumitomo Metal Industries rallied 33 yen to 481, its largest advance since Aug. 23, 2007. Mitsubishi UFJ Securities Co. upgraded the stock to ``outperform'' from ``market perform,'' saying that higher seamless-pipe prices will boost earnings in the second half.
Doosan Construction & Engineering Co. led gains among South Korean builders after Merrill Lynch & Co. said a recent slump may be an opportunity to buy the shares. A measure of construction stocks on the Kospi index has dropped 35 percent this year, the largest loss among 19 industry groups, amid soaring raw-material costs and a lack of government deregulation in the industry.
``The real demands are still intact,'' Merrill analysts Elli Lee and Young-Ah Han wrote in a report today. ``This is time to fish for excessively undervalued engineering and construction names that could survive to enjoy the next round of growth.''
Doosan jumped 7.5 percent to 7,850 won. GS Engineering & Construction Corp., the country's fourth-biggest builder, jumped 4.7 percent to 111,000 won.
Train Stocks Rally
Measures tracking industrial and materials stocks on the MSCI Asia-Pacific Index are valued at less than 13 times reported earnings, the cheapest among the broader gauge's 10 industry groups.
Nippon Sharyo surged 80 yen to 348. Central Japan, the country's largest operator of bullet trains, offered to pay up to 370 yen a share to raise its stake of outstanding shares to 50.1 percent from 1.8 percent.
Central Japan fell 1.2 percent to 1.078 million yen.
China South Locomotive & Rolling jumped 60 percent to 3.48 yuan after raising $1.48 billion in a combined Shanghai and Hong Kong listing. It's set to be the best trading debut in Shanghai since Zijin Mining Group Co.'s 95 percent gain on April 25.
China's Slump
The share sale tested investors' appetite as China's CSI 300 Index plunged 57 percent this year amid concern government measures to contain inflation will stunt growth and earnings. Losses today sent the benchmark to its lowest since February 2007.
Citic Securities, China's biggest brokerage, tumbled 1.58 yuan to 16.61. The country said it will seek to channel investment by pension funds, insurers and other large institutions into stocks, without giving details.
``There is no confidence in the market,'' said Wu Kan, a fund manager in Shanghai at Dazhong Insurance Co., which oversees the equivalent of $285 million. ``Everyone is disappointed that the regulator hasn't done anything concrete to stem the decline.''
In Hong Kong, Sun Hung Kai dropped 3 percent to HK$106.60. Cheung Kong (Holdings) Ltd., the city's No. 2 developer by market value, slipped 2.2 percent to HK$105.80. The city's gross domestic product rose 4.2 percent in the second quarter from a year earlier, the government said on Aug. 15, missing the 5.9 percent median estimate of 15 economists surveyed by Bloomberg.
Foxconn International Holdings Ltd., the world's biggest contract maker of mobile phones, plunged 20 percent to HK$6.12 after saying it will report a ``significant decline in first-half profit.''
To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net.
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Gener, Gissa, Sofisa, Unipar: Latin Equity Market Preview
By Paulo Winterstein and James Attwood
Aug. 18 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares fell 2.4 percent to 3,878.16 on Aug. 15. In Brazil, preferred shares are the most commonly traded class of stock. Markets in Chile were closed Aug. 15 for a holiday.
Brazil
Banco Sofisa SA (SFSA4 BS): The bank controlled by Brazil's Burmaian family cut its profit estimate for 2008 by as much as 30 percent. The Sao Paulo-based bank, which had previously estimated net income of 200 million reais, now forecasts profit of 140 million reais ($86 million) to 160 million reais for this year, according to a filing posted Aug. 15 on the securities regulator Web site. Sofisa fell 0.1 percent to 6.99 reais.
Uniao de Industrias Petroquimicas SA (UNIP6 BS): The Brazilian petrochemicals company's Carbocloro unit will increase annual production of sodium hydroxide by 112,000 tons and chlorine by 100,000 tons. After the 275 million reais expansion, capacity will reach 400,000 tons of sodium hydroxide and 355,000 tons of chlorine, Unipar said in a regulatory filing on Aug. 15. Unipar was unchanged at 1.44 reais.
Chile
AES Gener SA (GENER CC): Chile's second-largest power producer had its ``buy'' rating reiterated at BCI Corredor de Bolsa SA. Gener has ``attractive'' expansion potential at a time of high prices, head of research Alvaro Pereyra wrote in a note to clients. Gener fell 2.7 percent to 181 pesos on Aug. 14.
Mexico
Grupo Industrial Saltillo SAB (GISSA* MM): Standard & Poor's lowered its rating on the Mexican auto parts and building materials company, to mxA-. Weak demand from the North American auto industry may hurt the company's finances, S&P said Aug. 15 in an e-mailed statement. The previous rating was mxA+. Gissa, as the company is known, fell 1.4 percent to 14.49 pesos.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
Read more...
Aug. 18 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares fell 2.4 percent to 3,878.16 on Aug. 15. In Brazil, preferred shares are the most commonly traded class of stock. Markets in Chile were closed Aug. 15 for a holiday.
Brazil
Banco Sofisa SA (SFSA4 BS): The bank controlled by Brazil's Burmaian family cut its profit estimate for 2008 by as much as 30 percent. The Sao Paulo-based bank, which had previously estimated net income of 200 million reais, now forecasts profit of 140 million reais ($86 million) to 160 million reais for this year, according to a filing posted Aug. 15 on the securities regulator Web site. Sofisa fell 0.1 percent to 6.99 reais.
Uniao de Industrias Petroquimicas SA (UNIP6 BS): The Brazilian petrochemicals company's Carbocloro unit will increase annual production of sodium hydroxide by 112,000 tons and chlorine by 100,000 tons. After the 275 million reais expansion, capacity will reach 400,000 tons of sodium hydroxide and 355,000 tons of chlorine, Unipar said in a regulatory filing on Aug. 15. Unipar was unchanged at 1.44 reais.
Chile
AES Gener SA (GENER CC): Chile's second-largest power producer had its ``buy'' rating reiterated at BCI Corredor de Bolsa SA. Gener has ``attractive'' expansion potential at a time of high prices, head of research Alvaro Pereyra wrote in a note to clients. Gener fell 2.7 percent to 181 pesos on Aug. 14.
Mexico
Grupo Industrial Saltillo SAB (GISSA* MM): Standard & Poor's lowered its rating on the Mexican auto parts and building materials company, to mxA-. Weak demand from the North American auto industry may hurt the company's finances, S&P said Aug. 15 in an e-mailed statement. The previous rating was mxA+. Gissa, as the company is known, fell 1.4 percent to 14.49 pesos.
To contact the reporters on this story: Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
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Cuomo Auction-Rate Accords May Exclude Some Individual Holders
By Michael McDonald
Aug. 18 (Bloomberg) -- New York State Attorney General Andrew Cuomo's effort to force buybacks by Wall Street banks and brokers of auction-rate securities may not help some individual investors.
In the last two weeks, Cuomo reached agreements with Citigroup Inc., UBS AG, Morgan Stanley, JPMorgan Chase & Co. and Wachovia Corp. to buy back $42 billion of the debt they sold directly to individuals. The accords don't extend to investors holding most of the remaining $160 billion bought from mutual fund firms or brokers that didn't underwrite the debt.
``This is a glaring oversight,'' said Jonathan Kahn, an investor in New York who holds auction-rate debt underwritten by Goldman Sachs Group Inc. that he purchased from a different brokerage he declined to identify.
Cuomo said the New York-based investment bank is still negotiating with regulators. ``The industry is now taking responsibility for correcting a problem they helped create, and we'll continue working to make all investors whole,'' Cuomo, 50, said in a statement on Aug. 15.
Investors have been stuck in the securities, which are long-term debt that have interest rates typically set every seven, 28 or 35 days through periodic auctions, since the market collapsed in February. Dealers, who for two decades bought debt that went unsold at auctions, suddenly pulled back because of widening credit-market losses.
`Taking Responsibility'
Investors who were told the debt was as safe and liquid as money-market funds were left with depreciating securities they couldn't sell as auctions failed. Cuomo says the brokerages continued to market the debt as cash equivalents even though they knew demand was weakening.
``At the heart of this investigation is the simple goal of returning billions of dollars back into the hands of investors, which in turn injects confidence into the entire market,'' Cuomo said in the Aug. 15 statement.
The auction-rate probes focused on the biggest underwriters because those banks have the largest concentration of clients with the debt, Cuomo said. Citigroup was the market's biggest underwriter, arranging $55.3 billion in municipal auction-rate debt sales between 2000 and 2008, followed by UBS at $42.4 billion, according to data from Thomson Reuters.
The market has shrunk to about $200 billion from $330 billion as borrowers refinanced the securities using other types of debt. Individuals are the biggest holders, followed by publicly traded companies, which own about $32 billion, according to Pluris Valuation Advisors LLC in New York.
UBS Responds
``We're accountable for our clients,'' and not the clients of other brokers, Marten Hoekstra, head of the wealth management Americas division at UBS, said in an Aug. 8 interview. The Zurich-based bank agreed that day to pay fines of $150 million to state and federal regulators and buy back as much as $18.6 billion of the debt.
Joseph Evangelisti, a spokesman for New York-based JPMorgan, which agreed to buy back $3 billion, said its settlement didn't extend to customers of other firms. Susan Thomson, a spokeswoman for New York-based Citigroup, didn't return telephone calls for comment. Morgan Stanley spokesman Mark Lake in New York declined to comment.
Missouri Secretary of State Robin Carnahan confirmed the settlement with Charlotte, North Carolina-based Wachovia is limited to the bank's clients.
``Any brokerage firm or bank with a significant wealth- management practice put clients into auction-rate securities,'' said Barry Silbert, chief executive officer of New York-based Restricted Stock Partners, which operates a trading system for hard-to-sell securities. ``Therein lies the challenge on where to draw the line on who would be forced to buy this back.''
Cuomo's List
Cuomo said he subpoenaed about 25 companies that sold auction-rate securities. There are also 12 states coordinating probes into the collapse of the market, as well as the U.S. Securities and Exchange Commission. Cuomo's investigation has expanded to include Fidelity Investments and Charles Schwab Corp. of San Francisco, CNBC reported on Aug. 15, citing people with knowledge of the situation it didn't name.
``We're working our way down the list'' of brokerages, said Cuomo, a Democrat who was elected attorney general of New York in 2006. He said in an Aug. 15 interview that he eventually ``would be in a position to bring action against the smaller brokers.''
Smaller brokerages and mutual fund companies say they were also misled by Wall Street banks about the health of the market.
``We are not in the same situation as the firms who are offering to buy securities they issued or underwrote back from customers to whom they sold them,'' Vincent Loporchio, a spokesman for Fidelity, said in an Aug. 15 e-mail response to questions. He wouldn't comment on any communication between regulators and the Boston-based mutual fund company.
Oppenheimer Inc., a broker-dealer based in New York, told its clients last week it is working with the Washington-based Regional Bond Dealers Association to press for SEC intervention in the probes so banks that neither underwrote securities nor brokered auctions are not forced to buy them back from customers.
``Oppenheimer did not have any advance knowledge of the likely failure'' of the market, the company told clients in an Aug. 14 e-mail. Oppenheimer's general counsel, Dennis McNamara, didn't return calls for comment. Jon Teall, spokesman for the regional bond dealers, declined to comment.
To contact the reporters on this story: Michael McDonald in Boston at mmcdonald10@bloomberg.net.
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U.K. Stocks Update: FTSE 100 Falls 17.30 to 5,437.50
By Daniel Hauck
Aug. 18 (Bloomberg) -- The U.K.'s benchmark stock index, the FTSE 100, fell 0.32 percent at 8:05 a.m.
The index of 102 stocks traded on the London Stock Exchange fell 17.30 to 5,437.50. Among the stocks in the index, 17 rose, 82 fell and 3 were unchanged.
Declines in the FTSE 100 were led by Glaxosmithkline Plc (Gsk Ln), Bp Plc (Bp/ Ln) and Royal Bank Of Scotland Group Plc (Rbs Ln). About shares traded in the FTSE 100.
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Aug. 18 (Bloomberg) -- The U.K.'s benchmark stock index, the FTSE 100, fell 0.32 percent at 8:05 a.m.
The index of 102 stocks traded on the London Stock Exchange fell 17.30 to 5,437.50. Among the stocks in the index, 17 rose, 82 fell and 3 were unchanged.
Declines in the FTSE 100 were led by Glaxosmithkline Plc (Gsk Ln), Bp Plc (Bp/ Ln) and Royal Bank Of Scotland Group Plc (Rbs Ln). About shares traded in the FTSE 100.
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Trade Desk Thoughts: U.K. Rightmove House Prices
Daily Forex Fundamentals | Written by TheLFB-Forex.com | Aug 18 08 03:15 GMT |
Actual -2.3%, Previous -1.8%
Release Explanation: This report gauges the costs of homes in the United Kingdom. The figure is based on surveyors' opinions on the state of the market. As an economic indicator, it measures sales of newly built and existing homes. A fall in house prices indicates a weak housing market, which generally reflects a weakening overall economy.
Trade Desk Thoughts: This report has been in decline since May and this month is no better with a reading of negative 2.3. Average asking prices for homes in the U.K. have fallen 4.8 percent from a year earlier and 2.3 percent from last month alone. Unsold homes are also hitting new highs, rising from last month’s 77 to 78 in August. This may be the lowest number of transactions since 1959. Mortgage approvals also fell to the lowest level since at least June of 1999.
Forex Technical Reaction: Although this is not a top tier release, the sterling is seeing weakness after this release while currently 10 pips above the neutral pivot point.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.
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Actual -2.3%, Previous -1.8%
Release Explanation: This report gauges the costs of homes in the United Kingdom. The figure is based on surveyors' opinions on the state of the market. As an economic indicator, it measures sales of newly built and existing homes. A fall in house prices indicates a weak housing market, which generally reflects a weakening overall economy.
Trade Desk Thoughts: This report has been in decline since May and this month is no better with a reading of negative 2.3. Average asking prices for homes in the U.K. have fallen 4.8 percent from a year earlier and 2.3 percent from last month alone. Unsold homes are also hitting new highs, rising from last month’s 77 to 78 in August. This may be the lowest number of transactions since 1959. Mortgage approvals also fell to the lowest level since at least June of 1999.
Forex Technical Reaction: Although this is not a top tier release, the sterling is seeing weakness after this release while currently 10 pips above the neutral pivot point.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.
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Dollar Lower In The Asian Session
Daily Forex Fundamentals | Written by TheLFB-Forex.com | Aug 18 08 03:10 GMT |
Overall, the dollar weakened in the overnight session; losing some of the ground it gained in the last 4 weeks. Today's calendar is light, so it is likely the market will slow a little in the European and US session.
The Euro (Eur/Usd) is posting gains for the first time in three days, reflecting a weak dollar in the Asian session. Since the new trading week started, the euro gained 40 pips after it bounced off the previous session low. In the last days, the volume recorded for the euro has been above the average, showing there has been more interest in this pair.
The Pound (Gbp/Usd) is advancing against the dollar and at one point the pair gained 90 pips, very close to TheLFB R1. In the last weeks, the pound has been under an immense selling pressure, because of the problems from the housing market and a slowing economy.
The Aussie (Aud/Usd) is trading near a 7-month low as the pair dropped like a rock in the last 4 weeks. In the Asian session, the pair gained 40 pips, reversing some losses from the last days.
The Cad (Usd/Cad) fell a few pips since the beginning of the new session, but soon reached the low of the previous session that acted as a support area. In the last days, the pair traded just between the TheLFB S1 and R1, reflecting the market's indecision.
The Swissy (Usd/Chf) loss 35 pips in the overnight session but still could not find the strength to break TheLFB S1. Trending lower, the pair reflects the dollar's weakness in the Asian session, since the swissy has a strong correlation with the bond market.
The Yen (Usd/Yen) had lost some ground in the Asian session, dropping 50 pips since the new trading week started. The yen calendar is light today, but tomorrow the markets await the interest rate decision from Bank of Japan, and this will certainly affect the pair's behavior in the following sessions
Asian shares higher
Asian trade: Equity indexes in Asia advanced for the first time in 5 days, as investors found shares cheap. The recent selling had reduced share prices in the MSCI Asia Pacific Index to 13.9 times profit, the cheapest in at least 13 years. The industrial companies were the most hunted by traders as they speculate the economy will avoid the global slowdown and these companies will be able to post profit in line with analyst estimations in the coming quarters.
In Japan, the equity market is trading higher, lead by technology shares. The Nikkei rose 212.13 points (1.63%) to 13,231.54. The Australian S&P/Asx advanced 29.90 points (0.54%) to 5,008.60, despite that Babcock & Brown Power, one of the biggest Australian companies, will post weaker than expected earnings
Gold may fall for a sixth straight week, the longest slide in four years, as a strengthening dollar erodes the precious metal's appeal as an alternative investment. Bullion for immediate delivery rose $9.90 (1.25%) to $802.00.
Crude oil rose for the first time in three days as a storm prompted evacuations from rigs and production platforms in the Gulf of Mexico. Crude oil for September delivery advanced $0.82 (0.72%) to $114.59
Previous Wall Street trade: The major indexes managed to eek out small gains for the week, and the S&P made a weekly close above two significant technical levels which indicate the market may continue to make gains. Using Fibonacci to study the retracement of the May to July sell off, the S&P closed the week above the .382 extension (on 1292.36). This level also served as an area of resistance on June 27 and 30, July 2 and 23 along with August 6 and 13. Last week, it closed above the .236 extension (on 1286.39) of a Fibonacci study measuring the retracement of the sell off from the peak on October 11 2007 to the July 15 low.
Previous European trade: European stocks advanced as the global equity markets see the recent dollar strength as a positive thing. A weaker currency will boost the oversea sales for the European companies, giving a much-needed push to the balance sheet. Another side effect of the dollar's gains is commodity prices are falling. Oil is trading near a 14-week low, reducing the central bank's outlook for inflation, and the need for the ECB to raise rates. Lower rates means easier access to liquidity and credit for companies, something that allows additional investments to be made. The financial shares were also boosted after legislators supported Freddie and Fannie to join the mortgage market.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.
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Overall, the dollar weakened in the overnight session; losing some of the ground it gained in the last 4 weeks. Today's calendar is light, so it is likely the market will slow a little in the European and US session.
The Euro (Eur/Usd) is posting gains for the first time in three days, reflecting a weak dollar in the Asian session. Since the new trading week started, the euro gained 40 pips after it bounced off the previous session low. In the last days, the volume recorded for the euro has been above the average, showing there has been more interest in this pair.
The Pound (Gbp/Usd) is advancing against the dollar and at one point the pair gained 90 pips, very close to TheLFB R1. In the last weeks, the pound has been under an immense selling pressure, because of the problems from the housing market and a slowing economy.
The Aussie (Aud/Usd) is trading near a 7-month low as the pair dropped like a rock in the last 4 weeks. In the Asian session, the pair gained 40 pips, reversing some losses from the last days.
The Cad (Usd/Cad) fell a few pips since the beginning of the new session, but soon reached the low of the previous session that acted as a support area. In the last days, the pair traded just between the TheLFB S1 and R1, reflecting the market's indecision.
The Swissy (Usd/Chf) loss 35 pips in the overnight session but still could not find the strength to break TheLFB S1. Trending lower, the pair reflects the dollar's weakness in the Asian session, since the swissy has a strong correlation with the bond market.
The Yen (Usd/Yen) had lost some ground in the Asian session, dropping 50 pips since the new trading week started. The yen calendar is light today, but tomorrow the markets await the interest rate decision from Bank of Japan, and this will certainly affect the pair's behavior in the following sessions
Asian shares higher
Asian trade: Equity indexes in Asia advanced for the first time in 5 days, as investors found shares cheap. The recent selling had reduced share prices in the MSCI Asia Pacific Index to 13.9 times profit, the cheapest in at least 13 years. The industrial companies were the most hunted by traders as they speculate the economy will avoid the global slowdown and these companies will be able to post profit in line with analyst estimations in the coming quarters.
In Japan, the equity market is trading higher, lead by technology shares. The Nikkei rose 212.13 points (1.63%) to 13,231.54. The Australian S&P/Asx advanced 29.90 points (0.54%) to 5,008.60, despite that Babcock & Brown Power, one of the biggest Australian companies, will post weaker than expected earnings
Gold may fall for a sixth straight week, the longest slide in four years, as a strengthening dollar erodes the precious metal's appeal as an alternative investment. Bullion for immediate delivery rose $9.90 (1.25%) to $802.00.
Crude oil rose for the first time in three days as a storm prompted evacuations from rigs and production platforms in the Gulf of Mexico. Crude oil for September delivery advanced $0.82 (0.72%) to $114.59
Previous Wall Street trade: The major indexes managed to eek out small gains for the week, and the S&P made a weekly close above two significant technical levels which indicate the market may continue to make gains. Using Fibonacci to study the retracement of the May to July sell off, the S&P closed the week above the .382 extension (on 1292.36). This level also served as an area of resistance on June 27 and 30, July 2 and 23 along with August 6 and 13. Last week, it closed above the .236 extension (on 1286.39) of a Fibonacci study measuring the retracement of the sell off from the peak on October 11 2007 to the July 15 low.
Previous European trade: European stocks advanced as the global equity markets see the recent dollar strength as a positive thing. A weaker currency will boost the oversea sales for the European companies, giving a much-needed push to the balance sheet. Another side effect of the dollar's gains is commodity prices are falling. Oil is trading near a 14-week low, reducing the central bank's outlook for inflation, and the need for the ECB to raise rates. Lower rates means easier access to liquidity and credit for companies, something that allows additional investments to be made. The financial shares were also boosted after legislators supported Freddie and Fannie to join the mortgage market.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.
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Chart of the Day - Eur/Cad
| Daily Forex Technicals | Written by TheLFB-Forex.com | Aug 18 08 03:05 GMT | | |
| The Loonie appears to have entered into a holding pattern with 1.0730 as a top and 1.0560 as the bottom. The pair had been on a tear upwards since the middle of July and abruptly hit the 1.0730 roadblock two weeks later. The daily RSI has reached overbought territory while volume and ATR are on the increase. The loonie will have core retail sales on Wednesday, and core CPI on Thursday. Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174. The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC. | |
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The Daily Forecaster: AUDUSD
| Daily Forex Technicals | Written by FX-Forecaster | Aug 18 08 02:40 GMT | | |||||||||||||||||||||||||||||||||||||||||||||||
| Price: 0.8713
ELLIOTT WAVE COMMENTS14th August: The wave structure has remained totally confusing but with the 0.8511 major corrective low now within reach I suspect we are close to the end of a 5 wave decline. I am not 100% comfortable with the wave count shown but even so, the 76.4% projection in Wave -v- at 0.8526 does seem to present a target that seems irresistible. In the meantime we should see the 0.8802-25 area cap for losses to remain on their way to target. 15th August: The only barrier to the 0.8526-42 target is an earlier corrective bounce from the 0.8590 low. This still maintains the target at 0.8511-26 which is a major weekly corrective low that should normally provide a reaction higher. 18th August: The 0.8611 low appears to be Wave a of Wave v of Wave c in Wave -c- of Wave -v-… Thus while the correction in Wave b is quite deep at 0.8732 (76.4% at 0.8750) I still feel we should see the downside maintained to the target area. Ian Copsey Legal disclaimer and risk disclosure The Daily Forecaster is an analytical tool only and is not intended to replace individual research. The service is offered as an opinion on the current state of the market with anticipated trading signals but not recommendations. The information provided in The Daily Forecaster should not be relied on as a substitute for extensive independent research before making your trading/investment decisions. Ian Copsey is merely providing this service for your general information. No representation is being made that any view or opinion will guarantee profits or not result in losses from trading. In addition any projections or views of the market provided may not prove to be accurate. The opinions are subject to change without notice. Opinions or views expressed in The Daily Forecaster are not meant to be either investment advice or a solicitation or recommendation to establish market positions. Ian Copsey will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this service. The information contained is private and may not be distributed or shared. | |||||||||||||||||||||||||||||||||||||||||||||||
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Daily Forex Market Commentary
| Daily Forex Technicals | Written by Global Forex Trading | Aug 18 08 01:44 GMT | | |
| It was a strange day of trading on Friday for the dollar, as the crosses had the upper hand. The yen crosses fell further as expected, and EUR/CHF collapsed in view of the weekend risk from Russia. But things apparently cooled off now. The dollar climbed to new highs for the uptrend versus the majors, but held its gains only against the euro and yen. And the commodity currencies faired well to relatively well despite sliding commodity prices. Following a pullback today, the dollar should attempt to pad its gains. Euro/dollarEuro/dollar fell for the fifth straight week and closed below its rising trendline. The pair remains on track of a double top targeting the 1.4600 area. My model remains short since July 22. The immediate risk is higher. Immediate resistance is seen at 1.4755. This is followed by 1.4832 and 1.4950. Initial support is seen at 1.4640. Below the target at 1.4600, support now comes at 1.4505 and 1.4440. Oscillators are declining. NEAR-TERM: Mixed with upside risk Dollar/yenDollar/yen surged on Friday to a new high for the year and my model remains long. The Gann pivot at 110.35 will give direction, but the initial risk is down. Immediate resistance is now at 110.35 from my 50-point pivot, which targets 109.85 and 110.85. The next key level remains 111.60 from another 50-point pivot, which targets 112.10 and 111.10. Strong support is now pegged at109.85. Further strong support is at 109.15 from a 50-point pivot, which targets 109.65 and 108.65. Oscillators are rising. NEAR-TERM: Mixed with downside risk Sterling/dollarSterling/dollar consolidated after sliding to a new low for the downtrend. The selling pressure should pause today. In the medium term, cable remains on track for the target of a long-term head-and-shoulders pattern that targets the 1.7550 area. The immediate risk is higher. Initial resistance now comes at 1.8700. Above 1.8786, further resistance comes at 1.8867. Below the immediate support at 1.8624, there is a pivot low at 1.8514. Further supports are seen at 1.8480 and 1.8405. Oscillators are falling. NEAR-TERM: Mixed with upside risk Dollar/Swiss francDollar/Swiss franc rallied to a new high for the uptrend on Friday before surrendering most of the losses. My model remains long but the immediate risk is down. Initial support is pegged at 1.0890. Below 1.0855, support is now seen at 1.0725. Immediate resistance is at 1.1008. Above 1.1055, key resistance comes at 1.1185. Oscillators are rising. NEAR-TERM: Mixed with downside risk Cornelius Luca DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought. | |
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The Daily Forecaster: AUDUSD
| Daily Forex Technicals | Written by FX-Forecaster | Aug 18 08 02:40 GMT | | |||||||||||||||||||||||||||||||||||||||||||||||
| Price: 0.8713
ELLIOTT WAVE COMMENTS14th August: The wave structure has remained totally confusing but with the 0.8511 major corrective low now within reach I suspect we are close to the end of a 5 wave decline. I am not 100% comfortable with the wave count shown but even so, the 76.4% projection in Wave -v- at 0.8526 does seem to present a target that seems irresistible. In the meantime we should see the 0.8802-25 area cap for losses to remain on their way to target. 15th August: The only barrier to the 0.8526-42 target is an earlier corrective bounce from the 0.8590 low. This still maintains the target at 0.8511-26 which is a major weekly corrective low that should normally provide a reaction higher. 18th August: The 0.8611 low appears to be Wave a of Wave v of Wave c in Wave -c- of Wave -v-… Thus while the correction in Wave b is quite deep at 0.8732 (76.4% at 0.8750) I still feel we should see the downside maintained to the target area. Ian Copsey Legal disclaimer and risk disclosure The Daily Forecaster is an analytical tool only and is not intended to replace individual research. The service is offered as an opinion on the current state of the market with anticipated trading signals but not recommendations. The information provided in The Daily Forecaster should not be relied on as a substitute for extensive independent research before making your trading/investment decisions. Ian Copsey is merely providing this service for your general information. No representation is being made that any view or opinion will guarantee profits or not result in losses from trading. In addition any projections or views of the market provided may not prove to be accurate. The opinions are subject to change without notice. Opinions or views expressed in The Daily Forecaster are not meant to be either investment advice or a solicitation or recommendation to establish market positions. Ian Copsey will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this service. The information contained is private and may not be distributed or shared. | |||||||||||||||||||||||||||||||||||||||||||||||
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Dollar Consolidates Gains Into The Weekend
| Daily Forex Fundamentals | Written by Easy Forex | Aug 18 08 01:24 GMT | | |
| U.S. Dollar Trading (USD) made new 7 month highs according to the Dollar index on the back of surprisingly strong economic data. Empire State Manufacturing rebounded into positive territory in August at 2.8 vs. expectations of -2.8 and a -4.9 reading in July. July Industrial Production also beat expectations at 0.2% vs. forecasts of 0.0%. August Preliminary Consumer sentiment was also firm at 61.7 slightly less than the 62 forecast. In the U.S. share markets, the NASDAQ was down 1 point (0.05%) and the Dow Jones was up 43 points (0.38%). Crude Oil closed down $1.24 ending the New York session at $113.77 per barrel. The Euro (EUR) tracked lower throughout the day although markets were thin as Europe had a bank holiday on Friday. US data added pressure denying any relief rally into the weekend. Overall the EUR/USD traded with a low of 1.4659 and a high of 1.4826 before closing the day at 1.4680 in the New York session. Looking ahead, Euro zone Trade Balance expected to be +0.5 Billion in June. The Japanese Yen (JPY) was sold heavily against the USD breaking through resistance at 110.50 but was relatively unchanged against other currencies as continuing weakness in the majors offset. GBP/JPY was able to bounce of recent lows but EUR/JPY and AUD/JPY remained heavy. Overall the USDJPY traded with a low of 109.63 and a high of 110.67 before closing the day around 110.50 in the New York session. The Sterling (GBP) bounce off support at 1.8520 trading up to 1.8680 as market was seen a little short after large waves of selling early in the week. Rightmove House Price Index down -2.3% in July. Overall the GDP/USD traded with a low of 1.8510 and a high of 1.8685 before closing the day at 1.8660 in the New York session. Looking ahead, Public holiday in UK. The Australian Dollar (AUD) fell heavily once again after managing to recover from heavy sales and a low 0.8590 earlier in the week. Gold falling below $800 being the main catalyst. Support in the low 0.86 levels held for the time being as Oil bounced off lows and Gold stabilized. Overall the AUD/USD traded with a low of 0.8610 and a high of 0.8707 before closing the US session at 0.8660. Gold (XAU) broke below $800 an ounce during the Asian session and was unable to recover as US data supported the Greenback. Overall trading with a low of USD$774.90 and high of USD$805.50 before ending the New York session at USD$787 an ounce. Easy Forex Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products | |
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Japan Wages Revised to 0.4% Increase in June, Helping Consumers
By Toru Fujioka
Aug. 18 (Bloomberg) -- Japan's wages rose for a sixth month in June, revised figures showed today, easing concern for households facing decade-high inflation.
Monthly wages, including overtime and bonuses, climbed 0.4 percent from a year earlier, compared with a 0.6 percent drop reported last month, the Labor Ministry said in Tokyo today.
To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
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Aug. 18 (Bloomberg) -- Japan's wages rose for a sixth month in June, revised figures showed today, easing concern for households facing decade-high inflation.
Monthly wages, including overtime and bonuses, climbed 0.4 percent from a year earlier, compared with a 0.6 percent drop reported last month, the Labor Ministry said in Tokyo today.
To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
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Bull Market in Bankruptcies Darkens BOJ's Year: William Pesek
Commentary by William Pesek
Aug. 18 (Bloomberg) -- Bank of Japan officials can be excused for feeling a bit disoriented.
When Masaaki Shirakawa became BOJ governor in April, Japan was holding its ground amid a worsening global credit crisis. He and his fellow policy makers were predisposed toward raising Japan's 0.5 percent overnight lending rate.
As the BOJ tomorrow begins a two-day policy meeting, it is looking at a very different scenario. Asia's biggest economy -- which contracted an annualized 2.4 percent last quarter -- is on the verge of a recession. It also may be in the midst of its worst year of bankruptcies since a banking crisis that ended early this decade.
That kind of economic whiplash would be bad enough if not for the return of inflation. After a decade of falling prices, higher energy and commodity costs are eroding households' purchasing power and companies' profits. Consumer prices, excluding fresh food, climbed 1.9 percent in June, the fastest pace in a decade.
All this puts the BOJ in quite a bind. It can forget its strategy to get short-term rates further away from zero. The ultra-low level of borrowing costs also means there's little ammunition for monetary stimulus.
The odds of a rate cut are growing, and last week's bankruptcy filing by property developer Urban Corp. demonstrates why. With $2.35 billion in debt, Urban marks Japan's biggest corporate failure this year. It joined builders Zephyr Co. and Kyoei Sangyo Co. that went bankrupt last month and raises the stakes for the BOJ.
Confidence Booster
A quarter or even half a percentage point move wouldn't revitalize Japan's economy. Cutting rates would be more of a confidence-boosting exercise to soothe four constituencies: business executives, households, politicians and investors. Expect the BOJ to come under more pressure to act as U.S. growth wanes and chips away at Asia's prospects.
Japan, which has the world's largest public debt, has little room to come up with a generous stimulus package. Yet elected officials and regulators would be negligent if they ignored worrisome signs from the real-estate and construction industries.
Nationwide corporate bankruptcies rose to 1,372 cases in July, the highest since July 2003, Tokyo Shoko Research Ltd. said in an Aug. 8 report. To analysts such as Nobuo Tomoda of Tokyo Shoko, ``bankruptcies are very clearly on a rising trend'' with real-estate and construction companies at the forefront of a recent wave of failures.
Worse, the trend is set to accelerate. Expect additional collapses of mid- and small-size companies as banks cut off funds to businesses with poor management.
Corporate Failures
The biggest question is how the increased appearance of the word ``bankruptcy'' in headlines affects the economy. That's especially so as the global credit squeeze intensifies, Japanese land prices fall further, and companies suffer greater losses.
The dynamic is a work in progress. Failures among property enterprises are having a ripple effect on construction firms and banks with large loans outstanding. The industry is struggling as banks cut lending and the economy slows. On Aug. 6, the government said there is a ``high possibility'' the economy has entered a recession after six years of growth.
``Due to the series of bankruptcies over a short period of time and because Urban Corp. is relatively large, we think banks will become even more conservative with regard to loan policy to the real estate sector,'' says Koichi Iwama, a credit-research analyst at UBS Securities Japan Ltd.
Property Values
Much has been made in recent years of rising real-estate values in major cities. Condominiums for sale in the Tokyo region in July dropped 45 percent to mark the 11th month of declines, the longest stretch since a 15-month drop through December 1991, according to Japan's Real Estate Economic Research Institute.
Such trends would be less of a concern if other forces seemed likely to drive growth. Japan has been pledging to balance the budget by 2011, and so fiscal options are limited. So are monetary options. Slowing global growth also means Japan can't rely on exports.
BOJ's policies appear to be benefiting folks overseas more than those in Japan. The lowest government-bond yields in three years are prompting investors in Japan to buy higher-coupon debt. That has corporate borrowers turning to Japan for cash they are hard-pressed to get anywhere else.
From Zurich-based bank UBS AG to Bentonville, Arkansas-based Wal-Mart Stores Inc., debt sales in Japan by overseas issuers are up 37 percent this year from the same period of 2007, data compiled by Bloomberg show. Merrill Lynch & Co. says sales of so- called samurai bonds this year may be the highest since 1996.
If only Japan's monetary largess were benefiting its own economy more. The problem is scant confidence among executives and consumers about the future, and rising bankruptcies won't help. If BOJ officials were expecting an uneventful end to 2008, they aren't likely to get it.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
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Aug. 18 (Bloomberg) -- Bank of Japan officials can be excused for feeling a bit disoriented.
When Masaaki Shirakawa became BOJ governor in April, Japan was holding its ground amid a worsening global credit crisis. He and his fellow policy makers were predisposed toward raising Japan's 0.5 percent overnight lending rate.
As the BOJ tomorrow begins a two-day policy meeting, it is looking at a very different scenario. Asia's biggest economy -- which contracted an annualized 2.4 percent last quarter -- is on the verge of a recession. It also may be in the midst of its worst year of bankruptcies since a banking crisis that ended early this decade.
That kind of economic whiplash would be bad enough if not for the return of inflation. After a decade of falling prices, higher energy and commodity costs are eroding households' purchasing power and companies' profits. Consumer prices, excluding fresh food, climbed 1.9 percent in June, the fastest pace in a decade.
All this puts the BOJ in quite a bind. It can forget its strategy to get short-term rates further away from zero. The ultra-low level of borrowing costs also means there's little ammunition for monetary stimulus.
The odds of a rate cut are growing, and last week's bankruptcy filing by property developer Urban Corp. demonstrates why. With $2.35 billion in debt, Urban marks Japan's biggest corporate failure this year. It joined builders Zephyr Co. and Kyoei Sangyo Co. that went bankrupt last month and raises the stakes for the BOJ.
Confidence Booster
A quarter or even half a percentage point move wouldn't revitalize Japan's economy. Cutting rates would be more of a confidence-boosting exercise to soothe four constituencies: business executives, households, politicians and investors. Expect the BOJ to come under more pressure to act as U.S. growth wanes and chips away at Asia's prospects.
Japan, which has the world's largest public debt, has little room to come up with a generous stimulus package. Yet elected officials and regulators would be negligent if they ignored worrisome signs from the real-estate and construction industries.
Nationwide corporate bankruptcies rose to 1,372 cases in July, the highest since July 2003, Tokyo Shoko Research Ltd. said in an Aug. 8 report. To analysts such as Nobuo Tomoda of Tokyo Shoko, ``bankruptcies are very clearly on a rising trend'' with real-estate and construction companies at the forefront of a recent wave of failures.
Worse, the trend is set to accelerate. Expect additional collapses of mid- and small-size companies as banks cut off funds to businesses with poor management.
Corporate Failures
The biggest question is how the increased appearance of the word ``bankruptcy'' in headlines affects the economy. That's especially so as the global credit squeeze intensifies, Japanese land prices fall further, and companies suffer greater losses.
The dynamic is a work in progress. Failures among property enterprises are having a ripple effect on construction firms and banks with large loans outstanding. The industry is struggling as banks cut lending and the economy slows. On Aug. 6, the government said there is a ``high possibility'' the economy has entered a recession after six years of growth.
``Due to the series of bankruptcies over a short period of time and because Urban Corp. is relatively large, we think banks will become even more conservative with regard to loan policy to the real estate sector,'' says Koichi Iwama, a credit-research analyst at UBS Securities Japan Ltd.
Property Values
Much has been made in recent years of rising real-estate values in major cities. Condominiums for sale in the Tokyo region in July dropped 45 percent to mark the 11th month of declines, the longest stretch since a 15-month drop through December 1991, according to Japan's Real Estate Economic Research Institute.
Such trends would be less of a concern if other forces seemed likely to drive growth. Japan has been pledging to balance the budget by 2011, and so fiscal options are limited. So are monetary options. Slowing global growth also means Japan can't rely on exports.
BOJ's policies appear to be benefiting folks overseas more than those in Japan. The lowest government-bond yields in three years are prompting investors in Japan to buy higher-coupon debt. That has corporate borrowers turning to Japan for cash they are hard-pressed to get anywhere else.
From Zurich-based bank UBS AG to Bentonville, Arkansas-based Wal-Mart Stores Inc., debt sales in Japan by overseas issuers are up 37 percent this year from the same period of 2007, data compiled by Bloomberg show. Merrill Lynch & Co. says sales of so- called samurai bonds this year may be the highest since 1996.
If only Japan's monetary largess were benefiting its own economy more. The problem is scant confidence among executives and consumers about the future, and rising bankruptcies won't help. If BOJ officials were expecting an uneventful end to 2008, they aren't likely to get it.
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)
To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net
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South Korea's Store Sales Rise By Least in 5 Months
By Seyoon Kim
Aug. 18 (Bloomberg) -- South Korea's department store sales increased at the slowest pace in five months in July, adding to evidence that economic growth is cooling.
Sales at the nation's three biggest chains rose 5.9 percent from a year earlier, easing from June's 11.2 percent gain, the Ministry of Knowledge Economy said in Gwacheon today.
Households, struggling with surging living costs, have reined in purchases of non-essential goods, which may erode earnings at retailers such as Lotte Shopping Co. Moderating spending will further cool an economy that grew at the slowest annual pace in more than a year last quarter.
``Consumer spending will likely remain weak for a while on the weak labor market and higher fuel and borrowing costs,'' said Go You Sun, an economist at Daewoo Securities Co. in Seoul. ``Sentiment may start to improve as oil prices are falling.''
The Kospi stock index has dropped 17 percent this year as Asia's fourth-largest economy shows signs of cooling. Shares in Lotte Shopping, the nation's largest department store operator, have fallen 28 percent in 2008, and those in Hyundai Department Store Co., the second biggest, have slumped 26 percent.
Consumer confidence declined to the lowest level in eight years in July. The economy expanded 4.8 percent last quarter from a year earlier, the slowest pace since the start of 2007. The jobless rate was 3.2 percent last month, up from 3 percent at the start of the year.
Prices Surge
Spiraling food and fuel prices are eating into household budgets. Consumer prices climbed 5.9 percent in July, the biggest gain since 1998.
The Bank of Korea lifted its benchmark interest rate to an eight-year high of 5.25 percent this month, the first increase in a year, to quell inflation.
Spending on men's clothes fell 6.6 percent in July from last year, today's report showed. In contrast, sales of luxury goods at department stores gained 30.7 percent.
Sales at discount stores rose 2.1 percent last month from a year earlier, reversing a 1.9 percent drop in June.
To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net
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Shenzhen Energy Plans to Buy Electricity Producer From Parent
By Jiang Jianguo
Aug. 18 (Bloomberg) -- Shenzhen Energy Group Co., the utility partly owned by Huaneng Power International Inc., may acquire Shenzhen Nanshan Power Co. from its parent company to expand electricity production in the southern Chinese city.
Shenzhen Energy didn't say how much it would pay for Shenzhen Nanshan in a statement to the city's stock exchange late yesterday. The companies are units of Shenzhen Energy Group Corp.
Shenzhen Nanshan's shares will be suspended from trading from today until no later than Sept. 2, a separate statement shows. Shenzhen Nanshan was valued at about 2.5 billion yuan ($364 million) at the market's Aug. 15 close. Shenzhen Energy shares gained for a fifth day, advancing 0.8 percent to 7.77 yuan at 10 a.m. local time.
Hong Kong-listed Huaneng Power, China's largest power producer, last year paid 1.52 billion yuan for a 9.08 percent stake in Shenzhen Energy, formerly called Shenzhen Energy Investment Co., to become the second-largest shareholder.
To contact the reporter on this story: Jiang Jianguo in Shanghai at jjiang@bloomberg.net
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Aug. 18 (Bloomberg) -- Shenzhen Energy Group Co., the utility partly owned by Huaneng Power International Inc., may acquire Shenzhen Nanshan Power Co. from its parent company to expand electricity production in the southern Chinese city.
Shenzhen Energy didn't say how much it would pay for Shenzhen Nanshan in a statement to the city's stock exchange late yesterday. The companies are units of Shenzhen Energy Group Corp.
Shenzhen Nanshan's shares will be suspended from trading from today until no later than Sept. 2, a separate statement shows. Shenzhen Nanshan was valued at about 2.5 billion yuan ($364 million) at the market's Aug. 15 close. Shenzhen Energy shares gained for a fifth day, advancing 0.8 percent to 7.77 yuan at 10 a.m. local time.
Hong Kong-listed Huaneng Power, China's largest power producer, last year paid 1.52 billion yuan for a 9.08 percent stake in Shenzhen Energy, formerly called Shenzhen Energy Investment Co., to become the second-largest shareholder.
To contact the reporter on this story: Jiang Jianguo in Shanghai at jjiang@bloomberg.net
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Australia's Newcastle Coal Gains, Snaps Five-Week Losing Streak
By Jesse Riseborough
Aug. 18 (Bloomberg) -- Power-station coal prices at Australia's Newcastle port, a benchmark for Asia, snapped a five- week losing streak to rise 5 percent after a storm damaged Vietnam's largest harbor and cut exports.
The weekly index of thermal coal prices at the New South Wales port rose $7.74 cents to $163.90 a metric ton in the week ended Aug. 15, according to the globalCOAL NEWC Index. Prior to that, the measure had dropped 20 percent from a record $194.79 a ton reached in the week ended July 4.
Prices of the fuel may rebound after a cyclone damaged the Cam Cha port in Vietnam, the largest supplier of coal used in power stations to neighboring China, analysts at Macquarie Group Ltd. said in an Aug. 8 report. Vietnam accounts for about 3 percent of global seaborne coal supply and the port closure may cut exports by as much as 12 million tons, they wrote.
Xstrata Plc, the world's largest exporter of power-station coal, BHP Billiton Ltd. and Rio Tinto Group are among mining companies that ship coal through Newcastle.
The weekly globalCOAL index is up 83 percent so far this year. The monthly index for July gained 13 percent to $184.51.
To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net
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Aug. 18 (Bloomberg) -- Power-station coal prices at Australia's Newcastle port, a benchmark for Asia, snapped a five- week losing streak to rise 5 percent after a storm damaged Vietnam's largest harbor and cut exports.
The weekly index of thermal coal prices at the New South Wales port rose $7.74 cents to $163.90 a metric ton in the week ended Aug. 15, according to the globalCOAL NEWC Index. Prior to that, the measure had dropped 20 percent from a record $194.79 a ton reached in the week ended July 4.
Prices of the fuel may rebound after a cyclone damaged the Cam Cha port in Vietnam, the largest supplier of coal used in power stations to neighboring China, analysts at Macquarie Group Ltd. said in an Aug. 8 report. Vietnam accounts for about 3 percent of global seaborne coal supply and the port closure may cut exports by as much as 12 million tons, they wrote.
Xstrata Plc, the world's largest exporter of power-station coal, BHP Billiton Ltd. and Rio Tinto Group are among mining companies that ship coal through Newcastle.
The weekly globalCOAL index is up 83 percent so far this year. The monthly index for July gained 13 percent to $184.51.
To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net
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BHP's Profit May Rise 30%, Underperforming Target Rio
By Rebecca Keenan and Brett Foley
Aug. 18 (Bloomberg) -- BHP Billiton Ltd., the world's largest mining company, may report a 30 percent gain in second- half profit, underperforming its takeover target Rio Tinto Group for the second straight period since making an offer last year.
Net income may reach $9.4 billion in the six months ended June 30, compared with $7.25 billion a year ago, according to calculations from the mean estimate of 11 analysts for full-year profit compiled by Bloomberg. The Melbourne-based company reports today at 4 p.m. Sydney time.
BHP Chief Executive Officer Marius Kloppers, 45, needs to deliver superior earnings growth to convince shareholders they will benefit from his $132 billion bid. Rio, which produces 40 percent more iron ore than its rival, may report a 46 percent gain in profit, according to Austock Securities Ltd.
``BHP will be pulling out all the stops to produce what we might say is a gold medal-type profit,'' said Eric Betts, head of research and strategist at Nomura Australia Ltd. ``They will try to paint themselves as having better prospects than Rio on a standalone basis.''
Shares of BHP rose 2 percent to A$38.72 as of 12:36 p.m. Sydney time on the Australian stock exchange, after gaining as much as 2.6 percent. The stock has declined 3.6 percent this year and Rio's Australian-traded shares have fallen 13 percent.
The key S&P/ASX 200 Index has lost 21 percent this year. London-based Rio's profit in the six months ended Dec. 31 rose 11 percent, compared to a 2.5 percent decline reported by BHP.
`Asian Bubble'
Kloppers is spending $85 billion to expand metal production to meet demand led by China. Commodity prices in July fell 10 percent, the biggest monthly decline since March 1980, as measured by the Reuters/Jefferies CRB Index, after their best first half in 35 years. BHP Chairman Don Argus said last month commodity prices aren't in an ``Asian bubble.''
``We expect that the company will retain its confidence in overall market fundamentals,'' ING Bank NV analysts led by Nick Hatch wrote in a report on August 7. He forecast BHP's annual profit would be $16.3 billion. The company may report a profit of $15.4 billion, according to 20 analysts surveyed by BHP.
Prices for iron ore, coal, copper and aluminum reached all- time highs during the half. BHP reported record consecutive quarterly iron ore production records along with record fourth- quarter output of alumina, copper and manganese ore.
The gain in second-half profit will be driven by ``petroleum, which would be a big help,'' Tim Gerrard, an analyst at Austock Securities Ltd., said by phone from Sydney. ``The other big winner will be manganese.''
He's forecasting second-half underlying earnings of $9.3 billion, up 24 percent on the year before.
Key Driver
BHP increased output of petroleum products by 19 percent in the six months ended June 30, compared with a year earlier, after starting up fields in the Gulf of Mexico and Australia. It wants to raise oil and gas output by 10 percent a year through to 2011. The oil price gained 24 percent in the half.
``The volume growth in iron ore and the oil price has been a key driver'' in BHP's profit, said Ken West, a partner at Melbourne-based Perennial Investment Partners Ltd. where he helps manage the equivalent of A$2.8 billion. He's expecting full-year profit between $15 billion and $16 billion.
Production of iron ore also increased by 19 percent in the half. This compares with Rio's 14 percent growth for the same period. Iron ore prices have increased fivefold since 2001 and this year BHP and Rio won price gains of as much as 97 percent. BHP predicts its production of the steelmaking material will increase 23 percent this fiscal year to 137 million tons.
`Disastrous'
BHP's profit growth for consecutive halves will outperform Rio's, gaining 55 percent from the six months ended December compared to 30 percent, according to Austock's Gerrard.
``Rio had a disastrous June half last year and was coming from an unusually low period,'' he said. Rio reported a 14 percent decline in the six months ended June 30, 2007, compared with the year earlier. BHP's profit increased by 19 percent.
Full-year profit may rise 15 percent to $15.4 billion, according to mean of 11 analyst estimates compiled by Bloomberg. Rio's profit for the 12 months ending Dec. 31 may rise 76 percent to $12.9 billion.
``We would expect (Rio) to be slightly faster on their feet, partly because of the pressures of the bid and partly on their rapid expansion plans in iron ore,'' John Meyer, head of resources at U.K. investment bank Fairfax I.S. Plc, said by telephone on Aug. 13.
To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net; Brett Foley in London bfoley8@bloomberg.net.
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Iran Launches Home-Built Space Rocket, Sparking U.S. Concerns
By Ed Johnson
Aug. 18 (Bloomberg) -- The Iranian government said it successfully fired a rocket into space, triggering concern in the U.S. where the Bush administration described the announcement as ``troubling.''
The Safir satellite-carrier rocket was built by Iranian specialists and tested yesterday, the state-run Islamic Republic News Agency reported.
``The Iranian development and testing of rockets is troubling and raises further questions about their intentions,'' White House spokesman Gordon Johndroe said in an e-mailed statement today, adding the technology could also be used in Iran's ballistic missile program.
The U.S. and its European allies are trying to persuade Iran to halt its uranium enrichment program and say it is a cover for developing nuclear weapons. The government in Tehran says its intentions are peaceful and legal according to the nuclear Non-Proliferation Treaty, which it has signed.
The United Nations Security Council has passed three rounds of sanctions against Iran over its refusal to suspend enrichment and open its program to more scrutiny.
``This action and dual use possibilities for their ballistic missile program have been a subject of'' discussions by the UN's International Atomic Energy Agency and are ``inconsistent with their UN Security Council obligations,'' said Johndroe in the statement.
The rocket was carrying a test satellite, Reza Taghipour, the head of Iran's space agency, told state television, Agence France-Presse reported.
To contact the reporter on this story: Ed Johnson in Sydney at ejohnson28@bloomberg.net.
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Aug. 18 (Bloomberg) -- The Iranian government said it successfully fired a rocket into space, triggering concern in the U.S. where the Bush administration described the announcement as ``troubling.''
The Safir satellite-carrier rocket was built by Iranian specialists and tested yesterday, the state-run Islamic Republic News Agency reported.
``The Iranian development and testing of rockets is troubling and raises further questions about their intentions,'' White House spokesman Gordon Johndroe said in an e-mailed statement today, adding the technology could also be used in Iran's ballistic missile program.
The U.S. and its European allies are trying to persuade Iran to halt its uranium enrichment program and say it is a cover for developing nuclear weapons. The government in Tehran says its intentions are peaceful and legal according to the nuclear Non-Proliferation Treaty, which it has signed.
The United Nations Security Council has passed three rounds of sanctions against Iran over its refusal to suspend enrichment and open its program to more scrutiny.
``This action and dual use possibilities for their ballistic missile program have been a subject of'' discussions by the UN's International Atomic Energy Agency and are ``inconsistent with their UN Security Council obligations,'' said Johndroe in the statement.
The rocket was carrying a test satellite, Reza Taghipour, the head of Iran's space agency, told state television, Agence France-Presse reported.
To contact the reporter on this story: Ed Johnson in Sydney at ejohnson28@bloomberg.net.
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Babcock Power Shares Slump on Charges for Plant Sale, Alinta
By Angela Macdonald-Smith
Aug. 18 (Bloomberg) -- Babcock & Brown Power, Australia's biggest publicly traded generator, fell to a record low in Sydney trading after saying it will take A$452 million ($393 million) of charges on a retailing unit and the sale of a plant.
Babcock Power dropped as much as 52 percent to 20.5 cents in Sydney trading, a record decline. The shares, which have fallen from A$2.02 three months ago, were at 29 cents at 11:17 a.m. local time, cutting the company's market value to about A$214 million from A$1.5 billion in May.
The power producer managed by Babcock & Brown Ltd. today said it will take a non-cash charge of A$410 million in its 2008 earnings to write down the value of the Alinta retail unit, set at A$1.6 billion in November, in addition to a A$42 million loss on the sale of a generator in Tasmania. The company has been selling plants to cut debt and bolster its balance sheet.
``No-one ever valued Alinta at what they paid for it,'' said Paul Johnston, a utilities analyst at Commonwealth Securities Ltd. in Melbourne. The sale of the Tamar plant for A$100 million after spending A$223 million on its construction ``is an awful outcome,'' he said.
Sydney-based Babcock & Brown Ltd., the Australian manager of infrastructure assets, dropped as much as 12 percent to A$3.91 in Sydney. The stock fell 35 percent last week as the company struggles to win back investors' confidence after the global credit seizure brought into question its strategy of borrowing to buy utilities, such as wind farms, and bundling them into funds.
`Expressions of Interest'
Babcock Power has cut net debt by more than A$770 million in the last six weeks by selling plants in an effort to bolster its balance sheet. The latest sale, of the Tamar project, is to the Tasmanian state government.
The company hired UBS AG to carry out a strategic review, including advice on capital structure and dividends.
``UBS will consider various expressions of interest that have been received from third parties, as well as other value- enhancing structural alternatives,'' the company said in today's statement, sent to the Australian stock exchange.
The company won approval from existing lenders to extend a A$120 million loan to March 31, 2009. The debt will be repaid from cash reserves and planned asset sales before that date, it said.
After the sale of the Tamar power project, the company will have total outstanding drawn debt of about A$3.7 billion, it said. Babcock Power said earnings before interest, tax, depreciation and amortization were between A$330 million to A$340 million in the year ended June 30, before costs related to the Alinta transaction and one-time charges.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Aug. 18 (Bloomberg) -- Babcock & Brown Power, Australia's biggest publicly traded generator, fell to a record low in Sydney trading after saying it will take A$452 million ($393 million) of charges on a retailing unit and the sale of a plant.
Babcock Power dropped as much as 52 percent to 20.5 cents in Sydney trading, a record decline. The shares, which have fallen from A$2.02 three months ago, were at 29 cents at 11:17 a.m. local time, cutting the company's market value to about A$214 million from A$1.5 billion in May.
The power producer managed by Babcock & Brown Ltd. today said it will take a non-cash charge of A$410 million in its 2008 earnings to write down the value of the Alinta retail unit, set at A$1.6 billion in November, in addition to a A$42 million loss on the sale of a generator in Tasmania. The company has been selling plants to cut debt and bolster its balance sheet.
``No-one ever valued Alinta at what they paid for it,'' said Paul Johnston, a utilities analyst at Commonwealth Securities Ltd. in Melbourne. The sale of the Tamar plant for A$100 million after spending A$223 million on its construction ``is an awful outcome,'' he said.
Sydney-based Babcock & Brown Ltd., the Australian manager of infrastructure assets, dropped as much as 12 percent to A$3.91 in Sydney. The stock fell 35 percent last week as the company struggles to win back investors' confidence after the global credit seizure brought into question its strategy of borrowing to buy utilities, such as wind farms, and bundling them into funds.
`Expressions of Interest'
Babcock Power has cut net debt by more than A$770 million in the last six weeks by selling plants in an effort to bolster its balance sheet. The latest sale, of the Tamar project, is to the Tasmanian state government.
The company hired UBS AG to carry out a strategic review, including advice on capital structure and dividends.
``UBS will consider various expressions of interest that have been received from third parties, as well as other value- enhancing structural alternatives,'' the company said in today's statement, sent to the Australian stock exchange.
The company won approval from existing lenders to extend a A$120 million loan to March 31, 2009. The debt will be repaid from cash reserves and planned asset sales before that date, it said.
After the sale of the Tamar power project, the company will have total outstanding drawn debt of about A$3.7 billion, it said. Babcock Power said earnings before interest, tax, depreciation and amortization were between A$330 million to A$340 million in the year ended June 30, before costs related to the Alinta transaction and one-time charges.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
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Japan's Stocks Rise, Led by Phone Companies; Komatsu Rises
By Masaki Kondo
Aug. 18 (Bloomberg) -- Japan's stocks rose, led by telecommunications carriers, as some investors bought shares of companies whose earnings can weather an economic slowdown.
Nippon Telegraph & Telephone Corp. and KDDI Corp., Japan's biggest phone operators, advanced. Komatsu Ltd., the world's second-largest maker of earthmoving equipment, climbed as much as 5.1 percent after Nikko Citigroup Ltd. recommended investors buy the stock. Sumitomo Metal Industries Ltd. jumped after Mitsubishi UFJ Securities Co. raised its rating to ``outperform.''
The Nikkei 225 Stock Average climbed 27.82, or 0.2 percent, to 13,047.23 as of 9:39 a.m. in Tokyo, after falling as much as 0.7 percent in early trading. The broader Topix index rose 9.99, or 0.8 percent, to 1,257.30. Three stocks advanced for each that fell on the Topix.
``We'll likely see a stock rally amid a slowing economy as investors shift their money to defensive stocks that generate stable cash flow,'' Ryoji Musha, chief investment officer at Deutsche Securities Inc. in Tokyo, said in an interview with Bloomberg Television.
Nikkei futures expiring in September gained 0.2 percent to 13,060 in Osaka and added 0.4 percent to 13,060 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Aug. 18 (Bloomberg) -- Japan's stocks rose, led by telecommunications carriers, as some investors bought shares of companies whose earnings can weather an economic slowdown.
Nippon Telegraph & Telephone Corp. and KDDI Corp., Japan's biggest phone operators, advanced. Komatsu Ltd., the world's second-largest maker of earthmoving equipment, climbed as much as 5.1 percent after Nikko Citigroup Ltd. recommended investors buy the stock. Sumitomo Metal Industries Ltd. jumped after Mitsubishi UFJ Securities Co. raised its rating to ``outperform.''
The Nikkei 225 Stock Average climbed 27.82, or 0.2 percent, to 13,047.23 as of 9:39 a.m. in Tokyo, after falling as much as 0.7 percent in early trading. The broader Topix index rose 9.99, or 0.8 percent, to 1,257.30. Three stocks advanced for each that fell on the Topix.
``We'll likely see a stock rally amid a slowing economy as investors shift their money to defensive stocks that generate stable cash flow,'' Ryoji Musha, chief investment officer at Deutsche Securities Inc. in Tokyo, said in an interview with Bloomberg Television.
Nikkei futures expiring in September gained 0.2 percent to 13,060 in Osaka and added 0.4 percent to 13,060 in Singapore.
To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
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Hong Kong's Stocks Decline to One-Year Low; Foxconn Slumps
By Hanny Wan
Aug. 18 (Bloomberg) -- Hong Kong stocks fell, dragging the benchmark index to a one-year low. Foxconn International Holdings Ltd., the world's biggest contract maker of mobile phones, plunged 10 percent after saying it will report a ``significant decline'' in first-half profit.
New World Development Co. lost 3.3 percent following the resignation of Hong Kong's former housing chief Leung Chin-man from a unit of the company after the city's chief executive officer ordered a review of possible conflicts of interest related to the job. Cnooc Ltd., China's biggest offshore oil producer, led oil producers lower after crude oil prices retreated on Aug. 15.
The Hang Seng Index lost 96.06, or 0.5 percent, to 21,064.52 as of 10:19 a.m. local time, set for its lowest close since Aug. 17, 2007. The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, fell 1.1 percent to 11,049.12.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
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Aug. 18 (Bloomberg) -- Hong Kong stocks fell, dragging the benchmark index to a one-year low. Foxconn International Holdings Ltd., the world's biggest contract maker of mobile phones, plunged 10 percent after saying it will report a ``significant decline'' in first-half profit.
New World Development Co. lost 3.3 percent following the resignation of Hong Kong's former housing chief Leung Chin-man from a unit of the company after the city's chief executive officer ordered a review of possible conflicts of interest related to the job. Cnooc Ltd., China's biggest offshore oil producer, led oil producers lower after crude oil prices retreated on Aug. 15.
The Hang Seng Index lost 96.06, or 0.5 percent, to 21,064.52 as of 10:19 a.m. local time, set for its lowest close since Aug. 17, 2007. The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, fell 1.1 percent to 11,049.12.
To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net
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