Dec 31, 2010 12:00 AM GMT+0800
Singapore Airlines Ltd.’s Goh Choon Phong, who takes over as chief executive officer tomorrow, may shed the last major remains of the carrier’s global expansion strategy as he confronts rising competition in Asia.
Goh, 47, may get offers for the airline’s 49 percent stake in Virgin Atlantic after the U.K. carrier said this month it had received tie-up inquiries. Outgoing CEO Chew Choon Seng called the investment “underperforming” two years ago and has said the airline would consider a sale.
In Asia, Goh faces low-fare competition on long-haul routes from Jetstar and AirAsia X Sdn., as well as renewed efforts by Cathay Pacific Airways Ltd. and Korean Air Lines Co. to lure lucrative business-class travelers. Middle East carriers Emirates Airline, Qatar Airways Ltd. and Etihad Airways have also ordered close to 300 planes since 2007 as they build hubs linking Europe and the Asia-Pacific region.
Virgin, 51 percent owned by billionaire Richard Branson, hired Deutsche Bank AG to explore options as British Airways Plc boosts cooperation with American Airlines across the Atlantic and completes a merger with Madrid-based Iberia Lineas Aereas de Espana SA. Singapore Air bought its stake in a 600 million-pound ($930 million) investment concluded in 2000.
Singapore Air would consider “interesting opportunities” for the stake, Nicholas Ionides, a spokesman, said in an e-mail. Goh, who joined the carrier as a cadet administrative officer in 1990 after graduating from the Massachusetts Institute of Technology, declined interview requests, he said.
Virgin Offer
Whether Singapore Air will sell the Virgin stake will largely depend on what price is offered since the carrier isn’t short of funds, said Rohan Suppiah, an analyst at Kim Eng Securities Pte in Singapore.
“SIA isn’t in a hurry to sell, but if they get a fair price they will,” he said. “Virgin hasn’t provided any significant synergies over the years.”
Delta Air Lines Inc. and Middle East airlines are among carriers exploring a Virgin tie-up, Sky News reported this month, without saying where it got the information from. Singapore Air’s stake complicates a deal as local ownership rules limit non-European investors to minority stakes.
“Either Singapore Air sells or Branson loses effective control by selling part of his stake,” said Andrew Miller, chief executive officer of CAPA Consulting LLC, which advises airlines.
Very Supportive
Singapore Air is “very supportive of our business strategy including the review by Deutsche Bank,” Greg Dawson, a Virgin spokesman, said without elaborating. Virgin operates 38 twin- aisle planes, according to its website.
Chew’s predecessor, Cheong Choong Kong, bought stakes in Virgin and Air New Zealand Ltd. to expand overseas. The value of the Air NZ investment was written down in 2001, and the remaining holdings were sold off three years later. Virgin was expected to hold an initial public offering within three to five years of Singapore Air’s investment, Chew said in 2006.
Shares Trailing
Singapore Air, which operates 110 planes, has trailed the 15-stock Bloomberg Asia Pacific Airlines Index this year amid rising competition for premium and low-cost travelers. The shares have climbed 4 percent, compared with the index’s 27 percent gain.
Competition is intensifying in the premium market, which accounts for about 40 percent of Singapore Air’s sales. Hong Kong-based Cathay Pacific is working on a HK$1 billion ($128 million) business-class upgrade to lure executive travelers.
Korean Air, which aims to get 50 percent of passenger sales from premium classes by 2019, will receive its first five Airbus SAS A380s next year. The superjumbos will each be fitted with 94 business-class seats, compared with the 60 found in Singapore Air’s A380s. Emirates is building a fleet of 90 A380s.
Budget Competition
Singapore Air has responded to budget competition through a 33 percent stake in Tiger Airways Holdings Ltd. The low-cost affiliate, which operates from Singapore and Australia, plans to form a budget airline in Bangkok next year with Thai Airways International Pcl.
Tiger, Qantas Airways Ltd.’s Jetstar and AirAsia Bhd. are leading discount carriers’ market share gains in Asia as they add new planes. Budget airlines accounted for about 22 percent of passengers in the first 10 months of the year at Singapore’s Changi airport. That compares with 12 percent in 2008, according to data from operator Changi Airport Group.
Low-fare carriers are also adding intercontinental routes. Jetstar started flights to Melbourne from Singapore this month, touting fares 30 percent cheaper than full-service airlines. It plans to add more long-haul services next year. AirAsia’s long- haul affiliate is offering flights to Australia, London and Japan from its base in Kuala Lumpur.
Singapore Air’s corporate travel base and reputation will be an asset as Goh faces the new competition, said Steven Lim, who manages about $200 million at Daiwa SB Investments Ltd. in Singapore. The carrier, among six airlines with Skytrax’s highest five-star rating, has also been profitable every year since going public in 1985.
“As a business hub, Singapore Air does enjoy the advantage of business travel,” Lim said. “Goh’s immediate challenge is to continue Chew’s good work, keep the company’s profit record intact and maintain the reputation Singapore Air has as a premium airline.”
Source : Bloomberg
Friday, December 31, 2010
Tuesday, December 28, 2010
UK Retails Up by 30% during Christmas Week
LONDON:
Sales in the week to Christmas Day had risen by 30.6% compared to the same period last year, to reach 97.1 million pounds ($149.9 million). Britain's retailers are hoping that shoppers will have turned out in force for the traditional Christmas holiday sales period, despite weather and transport problems.
However, most UK retailers are expecting lower sales in 2011 on the back of weak consumer demand and inflationary pressures, a survey by the British Retail Consortium (BRC) said on Monday.
The BRC's survey said nearly two-thirds of retailers it had contacted expected sales to worsen from 2010, and many also expected next year's rise in the VAT (value added tax) levy to impact consumers' spending.
"Our snapshot shows retailers expect a difficult December to be followed by a tough 2011. They believe the VAT rise will contribute to higher prices and, with fears about government cuts and the wider economy, people will be put off spending," BRC director general Stephen Robertson said in a statement.
The BRC added that retailers were still expected to create new jobs in 2011, although 24% of those surveyed said they expected to employ fewer people.
- Reuters
Sales in the week to Christmas Day had risen by 30.6% compared to the same period last year, to reach 97.1 million pounds ($149.9 million). Britain's retailers are hoping that shoppers will have turned out in force for the traditional Christmas holiday sales period, despite weather and transport problems.
However, most UK retailers are expecting lower sales in 2011 on the back of weak consumer demand and inflationary pressures, a survey by the British Retail Consortium (BRC) said on Monday.
The BRC's survey said nearly two-thirds of retailers it had contacted expected sales to worsen from 2010, and many also expected next year's rise in the VAT (value added tax) levy to impact consumers' spending.
"Our snapshot shows retailers expect a difficult December to be followed by a tough 2011. They believe the VAT rise will contribute to higher prices and, with fears about government cuts and the wider economy, people will be put off spending," BRC director general Stephen Robertson said in a statement.
The BRC added that retailers were still expected to create new jobs in 2011, although 24% of those surveyed said they expected to employ fewer people.
- Reuters
Wednesday, December 15, 2010
US QE2 "Stop Press"
- $600 billion purchase of Treasury continue
- The benchmark interest rate unchange for an “extended period.”
- Gains in manufacturing, retail sales and inflation.
- Dollar Strengthern
$600 billion purchase
The central bank has bought $114.1 billion of Treasuries since Nov. 12, when it began purchases under the program dubbed QE2 for the second round of so-called quantitative easing.
The Fed bought $1.7 trillion of mortgage debt and Treasuries in the first round through March 2010.
Interest Rate Target
Fed officials left their target for the federal funds rate, which covers overnight interbank loans, in a range of zero to 0.25 percent, marking two years of the policy.
Munufacturing and Retail Sales
Sales at U.S. retailers last month rose more than forecast, a government report showed today. Manufacturing expanded for a 16th consecutive month in November, and a measure of consumer confidence increased in December to a six-month high
Inflation
Inflation excluding food and fuel costs, as measured by the personal consumption expenditures price index, fell to 0.9 percent in October, the slowest pace since records began in 1960.
Central bankers prefer a long-run rate of 1.6 percent to 2 percent for the so-called core PCE gauge.
Inflation expectations for the next five years, as measured by the breakeven rate between nominal and inflation-indexed bonds, rose to 1.58 percent yesterday from 1.47 percent on Nov. 3.
Dollar Effect
Dollar strengthening has defied skeptics who said the policy would weaken the currency. Dollar has climbed 3.8 percent against a basket of six currencies.
Note On ... from Fed
The recovery “is continuing, though at a rate that has been insufficient to bring down unemployment,” the Fed statement said. “Household spending is increasing at a moderate pace, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.”
Friday, December 10, 2010
US Latest Deficit Figure And Its Major Export Countries ...
The major US exporters this year are China, India, Mexico, Brazil, South Korea and the rest of the Emerging Market from Latin America and Asia.
The trade deficit in the U.S. shrank more than forecast in October as a weaker dollar and growing economies overseas propelled exports to a two-year high.
The gap narrowed 13 percent to $38.7 billion, less than the lowest estimate of 78 economists surveyed by Bloomberg News and the smallest since January, Commerce Department figures showed today in Washington. Exports were the strongest since August 2008 as Mexico and China bought record amounts of U.S. products.
China, Brazil and South Korea are among the top-10 buyers of American-made goods. Imports stagnated in October as U.S. demand for crude oil plunged, an outcome that may prove to be temporary as the world’s largest economy picks up.
The trade gap was projected to be little-changed at $43.8 billion from an initially reported $44 billion in September, according to the median forecast of economists surveyed. Estimates ranged from deficits of $39.5 billion to $46.6 billion. The Commerce Department revised the September shortfall up to $44.6 billion.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit fell to $45.2 billion, the lowest since April, from $50.3 billion. The figure was smaller than the third-quarter average, indicating trade will contribute to growth this quarter.
Sales Overseas
Exports increased 3.2 percent to $158.7 billion, boosted by sales of foods, automobiles, engines and industrial supplies like fuel oil and natural gas.
Growing overseas economies are also contributing to demand for U.S. goods. China, set to become the world’s second-largest economy this year, had a 9.6 percent gain in third-quarter gross domestic product from a year ago. Singapore, in the running to be the world’s fastest-growing economy this year, expanded 10.6 percent while Brazil, South America’s biggest economy, grew 6.7 percent.
Manufacturers Benefit
General Dynamics, based in Falls Church, Virginia, is seeing “strong international order activity and interest, particularly in the emerging markets,” Chief Executive Officer Jay Johnson said in a Dec. 2 industry conference presentation.
St. Paul, Minnesota-based 3M, the maker of Scotch tape and films to brighten television screens, is expanding in emerging markets, which make up one-third of its sales and may climb to as much as 45 percent by 2015, according to company estimates.
“These opportunities continue to grow,” George W. Buckley, chief executive officer, said in a Dec. 7 conference call. Overseas sales will benefit from “India and Latin America, gathering momentum in sort of China-like style.”
Less Crude Oil
Imports fell 0.5 percent to $197.4 billion from $198.4 billion in the prior month. The value of crude oil purchases fell to $18.9 billion from $21 billion in September as the lowest volume since February swamped an increase in the fuel’s cost.
The trade gap with China shrank to $25.5 billion from $27.8 billion.
Improving U.S. demand and the need to restock inventories led to gains in imports that swamped the rise in exports over the past two quarters. A widening deficit subtracted 1.76 percentage points from GDP in the third quarter as the economy expanded at a 2.5 percent annual rate.
(Source : Bloomberg)
The trade deficit in the U.S. shrank more than forecast in October as a weaker dollar and growing economies overseas propelled exports to a two-year high.
The gap narrowed 13 percent to $38.7 billion, less than the lowest estimate of 78 economists surveyed by Bloomberg News and the smallest since January, Commerce Department figures showed today in Washington. Exports were the strongest since August 2008 as Mexico and China bought record amounts of U.S. products.
China, Brazil and South Korea are among the top-10 buyers of American-made goods. Imports stagnated in October as U.S. demand for crude oil plunged, an outcome that may prove to be temporary as the world’s largest economy picks up.
The trade gap was projected to be little-changed at $43.8 billion from an initially reported $44 billion in September, according to the median forecast of economists surveyed. Estimates ranged from deficits of $39.5 billion to $46.6 billion. The Commerce Department revised the September shortfall up to $44.6 billion.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit fell to $45.2 billion, the lowest since April, from $50.3 billion. The figure was smaller than the third-quarter average, indicating trade will contribute to growth this quarter.
Sales Overseas
Exports increased 3.2 percent to $158.7 billion, boosted by sales of foods, automobiles, engines and industrial supplies like fuel oil and natural gas.
Growing overseas economies are also contributing to demand for U.S. goods. China, set to become the world’s second-largest economy this year, had a 9.6 percent gain in third-quarter gross domestic product from a year ago. Singapore, in the running to be the world’s fastest-growing economy this year, expanded 10.6 percent while Brazil, South America’s biggest economy, grew 6.7 percent.
Manufacturers Benefit
General Dynamics, based in Falls Church, Virginia, is seeing “strong international order activity and interest, particularly in the emerging markets,” Chief Executive Officer Jay Johnson said in a Dec. 2 industry conference presentation.
St. Paul, Minnesota-based 3M, the maker of Scotch tape and films to brighten television screens, is expanding in emerging markets, which make up one-third of its sales and may climb to as much as 45 percent by 2015, according to company estimates.
“These opportunities continue to grow,” George W. Buckley, chief executive officer, said in a Dec. 7 conference call. Overseas sales will benefit from “India and Latin America, gathering momentum in sort of China-like style.”
Less Crude Oil
Imports fell 0.5 percent to $197.4 billion from $198.4 billion in the prior month. The value of crude oil purchases fell to $18.9 billion from $21 billion in September as the lowest volume since February swamped an increase in the fuel’s cost.
The trade gap with China shrank to $25.5 billion from $27.8 billion.
Improving U.S. demand and the need to restock inventories led to gains in imports that swamped the rise in exports over the past two quarters. A widening deficit subtracted 1.76 percentage points from GDP in the third quarter as the economy expanded at a 2.5 percent annual rate.
(Source : Bloomberg)
Monday, December 6, 2010
World's Most Innovative Country by 2020
China is set to become the world's most important centre for innovation by 2020, overtaking both the United States and Japan, according to a public opinion survey to be published on Monday.
China is already the world's second-largest economy, after establishing itself as the global workshop for manufacturing. Now it wants to move up the value chain by leading in invention as well.
Today, the United States ranks as the world's most innovative country, with 30 percent of people surveyed taking that view, followed by Japan on 25 percent and China on 14 percent.
Fast-forward 10 years, however, and 27 percent of people think China will be top dog, followed by India with 17 percent, the United States 14 percent and Japan 12 percent, according to the survey of 6,000 people in six countries done by drugmaker AstraZeneca.
The shift is not because the United States is doing less science and technology, but because countries like China and India are doing more - a fact reflected in a spike-up in successful Asian research efforts in recent years.
A study last month from Thomson Reuters showed China was now the second-largest producer of scientific papers, after the United States, and research and development (R&D) spending by Asian nations as a group in 2008 was $387 billion, compared with $384 billion in the United States and $280 billion in Europe.
Asian confidence
Working out just how fast the world's new emerging market giants are developing their know-how is critical to many technology-focused companies in the West, as they seek to redeploy R&D resources.
The pharmaceutical industry, in particular, has been anxious to tap into China's science base and many companies, including AstraZeneca, have established Chinese centres as they try to reignite R&D productivity in laboratories at home.
The survey across Britain, the United States, Sweden, Japan, India and China found a strong sense of optimism amongst people living in China and India, in contrast to relative pessimism in the developed Western economies.
More than half of those in China and India thought their home countries would be the most innovative in the world by 2020, while just one in 20 Britons thought Britain would be able to claim this title.
There was an notable east-west divide in views of what had been the most important scientific breakthroughs. People in Asia put communications and computing top, while US and European respondents placed equal importance on the invention of vaccines and antibiotics, the survey found.
Source:chinadaily.com.cn/Agencies
China is already the world's second-largest economy, after establishing itself as the global workshop for manufacturing. Now it wants to move up the value chain by leading in invention as well.
Today, the United States ranks as the world's most innovative country, with 30 percent of people surveyed taking that view, followed by Japan on 25 percent and China on 14 percent.
Fast-forward 10 years, however, and 27 percent of people think China will be top dog, followed by India with 17 percent, the United States 14 percent and Japan 12 percent, according to the survey of 6,000 people in six countries done by drugmaker AstraZeneca.
The shift is not because the United States is doing less science and technology, but because countries like China and India are doing more - a fact reflected in a spike-up in successful Asian research efforts in recent years.
A study last month from Thomson Reuters showed China was now the second-largest producer of scientific papers, after the United States, and research and development (R&D) spending by Asian nations as a group in 2008 was $387 billion, compared with $384 billion in the United States and $280 billion in Europe.
Asian confidence
Working out just how fast the world's new emerging market giants are developing their know-how is critical to many technology-focused companies in the West, as they seek to redeploy R&D resources.
The pharmaceutical industry, in particular, has been anxious to tap into China's science base and many companies, including AstraZeneca, have established Chinese centres as they try to reignite R&D productivity in laboratories at home.
The survey across Britain, the United States, Sweden, Japan, India and China found a strong sense of optimism amongst people living in China and India, in contrast to relative pessimism in the developed Western economies.
More than half of those in China and India thought their home countries would be the most innovative in the world by 2020, while just one in 20 Britons thought Britain would be able to claim this title.
There was an notable east-west divide in views of what had been the most important scientific breakthroughs. People in Asia put communications and computing top, while US and European respondents placed equal importance on the invention of vaccines and antibiotics, the survey found.
Source:chinadaily.com.cn/Agencies
Saturday, December 4, 2010
World's Largest Consumer of Gold
China inching closer to replace India as largest gold consumer
BEIJING: China's gold import has soared to a record of 209 tonnes this year, putting it on track to overtake India as the world's largest consumer of the yellow metal and become a significant force in global bullion prices, Press Trust of India (PTI) said.
The surge comes at a time when Chinese investors look for insurance against rising inflation and currency appreciation, the Financial Times reported.
China, already the largest bullion miner, imported more than 209 tonnes of gold during the first 10 months of the year, a five-fold increase from an estimate of 45 tonnes last year, paving the way for Beijing to overtake India as the world's largest consumer of gold.
Shanghai Gold Exchange chairman Shen Xiangrong said uncertainties about the Chinese and global economies and inflationary expectations had "made gold, as a hedging tool, very popular".
China's growing gold consumption came from all factors, including jewellery sales, private investment, as well as industrial and central bank demand.
In 2009, gold consumption in China reached 462 tonnes in all sectors and China's demand for gold has increased an average of 13% annually over the past five years, making China the world's second largest consumer market for gold after India, a local media reported.
China has encouraged retail consumption, with an announcement in August of measures to promote and regulate the local gold market, including expanding the number of banks allowed to import bullion.
The rise in Chinese demand could further inflate gold prices. Bullion hit a nominal all-time high of US$1,424.10 a troy ounce last month. But adjusted for inflation, prices are far from the 1980 peak of US$2,300, the Financial Times said.
Analysts anticipate a further leap this year, putting the country with in a striking distance of India's total gold demand of 612 tonnes in 2009, the paper said. - Bernama.
BEIJING: China's gold import has soared to a record of 209 tonnes this year, putting it on track to overtake India as the world's largest consumer of the yellow metal and become a significant force in global bullion prices, Press Trust of India (PTI) said.
The surge comes at a time when Chinese investors look for insurance against rising inflation and currency appreciation, the Financial Times reported.
China, already the largest bullion miner, imported more than 209 tonnes of gold during the first 10 months of the year, a five-fold increase from an estimate of 45 tonnes last year, paving the way for Beijing to overtake India as the world's largest consumer of gold.
Shanghai Gold Exchange chairman Shen Xiangrong said uncertainties about the Chinese and global economies and inflationary expectations had "made gold, as a hedging tool, very popular".
China's growing gold consumption came from all factors, including jewellery sales, private investment, as well as industrial and central bank demand.
In 2009, gold consumption in China reached 462 tonnes in all sectors and China's demand for gold has increased an average of 13% annually over the past five years, making China the world's second largest consumer market for gold after India, a local media reported.
China has encouraged retail consumption, with an announcement in August of measures to promote and regulate the local gold market, including expanding the number of banks allowed to import bullion.
The rise in Chinese demand could further inflate gold prices. Bullion hit a nominal all-time high of US$1,424.10 a troy ounce last month. But adjusted for inflation, prices are far from the 1980 peak of US$2,300, the Financial Times said.
Analysts anticipate a further leap this year, putting the country with in a striking distance of India's total gold demand of 612 tonnes in 2009, the paper said. - Bernama.
Friday, December 3, 2010
China Rate Hikes And The Yuan
China is tightening after a record expansion of credit countered the effects of the financial crisis. The nation lags behind counterparts from Malaysia to South Korea in boosting borrowing costs after raising the benchmark interest rate for the first time since 2007 in October.
Rate hikes are imminent and expectation is high by the end of the month, with more to come in 2011 according to a Hong Kong-based emerging-market strategist at Royal Bank of Canada
As a result, The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges is expected to slip accordingly.
With the rate increase, the yuan may strengthen at a “slightly” faster pace before year-end, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd. who formerly worked for the International Monetary Fund and the European Central Bank.
‘Fast’ Growth
The one-year lending rate is at 5.56 percent after October’s quarter-point increase. Inflation pressures have been highlighted by companies including McDonald’s Corp., the world’s largest restaurant chain, pushing up prices.
South Korea has raised rates twice this year, Malaysia three times, India six and Thailand third in 2010.
At Bank of America-Merrill Lynch, economist Lu Ting said that continuing a “proactive” fiscal stance while tightening monetary policy will allow the government to maintain economic growth of around 9 percent. The nation’s expansion was 9.6 percent in the third quarter from a year earlier.
Inflation Jumps
China October’s inflation rate of 4.4 percent was the highest in 25 months and the nation has had record property-price gains this year. Luxury-home costs in Beijing and Nanjing and so- called mass-market prices in Shanghai and Shenzhen have become “increasingly disconnected from fundamentals,” according to an International Monetary Fund study released today.
The announcement from the Politburo, the 25-member body that oversees the Communist Party and policy-making, came ahead of an annual economic work conference that will set guidelines for the coming year. That event may take place Dec. 10-12, Xinhua said.
Concern that monetary tightening will cut corporate profits and damp growth spurred a 6 percent sell-off in China’s benchmark stock index in the past month.
Officials have been shifting policy ahead of the change in terminology. Besides raising interest rates, the central bank has ratcheted up banks’ reserve requirements this year and ended the yuan’s temporary peg to the dollar.
Today’s announcement of a shift to a “prudent” policy had been predicted by economists including at Deutsche Bank AG. and China International Capital Corp. Central bank officials and advisers had also used the term.
( Source : Reuter )
Rate hikes are imminent and expectation is high by the end of the month, with more to come in 2011 according to a Hong Kong-based emerging-market strategist at Royal Bank of Canada
As a result, The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges is expected to slip accordingly.
With the rate increase, the yuan may strengthen at a “slightly” faster pace before year-end, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd. who formerly worked for the International Monetary Fund and the European Central Bank.
‘Fast’ Growth
The one-year lending rate is at 5.56 percent after October’s quarter-point increase. Inflation pressures have been highlighted by companies including McDonald’s Corp., the world’s largest restaurant chain, pushing up prices.
South Korea has raised rates twice this year, Malaysia three times, India six and Thailand third in 2010.
At Bank of America-Merrill Lynch, economist Lu Ting said that continuing a “proactive” fiscal stance while tightening monetary policy will allow the government to maintain economic growth of around 9 percent. The nation’s expansion was 9.6 percent in the third quarter from a year earlier.
Inflation Jumps
China October’s inflation rate of 4.4 percent was the highest in 25 months and the nation has had record property-price gains this year. Luxury-home costs in Beijing and Nanjing and so- called mass-market prices in Shanghai and Shenzhen have become “increasingly disconnected from fundamentals,” according to an International Monetary Fund study released today.
The announcement from the Politburo, the 25-member body that oversees the Communist Party and policy-making, came ahead of an annual economic work conference that will set guidelines for the coming year. That event may take place Dec. 10-12, Xinhua said.
Concern that monetary tightening will cut corporate profits and damp growth spurred a 6 percent sell-off in China’s benchmark stock index in the past month.
Officials have been shifting policy ahead of the change in terminology. Besides raising interest rates, the central bank has ratcheted up banks’ reserve requirements this year and ended the yuan’s temporary peg to the dollar.
Today’s announcement of a shift to a “prudent” policy had been predicted by economists including at Deutsche Bank AG. and China International Capital Corp. Central bank officials and advisers had also used the term.
( Source : Reuter )
Monday, November 29, 2010
Timber heavyweight, WTK, Third Qtr Pretax Profit Almost Double from A Year Ago
Quater 3 2010 review
For the quarter under review, the Group’s turnover was RM184.8 million as compared to RM150.7 million in the 3Q2009, representing an increase of RM34.1 million (22.6%), whilst its pre-tax profit was RM15.3 million compared to RM8.4 million in the 3Q2009, an increase of RM6.9 million (82.1%). This is mainly due to the timber division.
Quarter 3, 2010
Timber
For the current quarter, the Group’s timber division registered a turnover of RM152.0 million, representing an increase of 25.2% or RM30.6 million as compared with RM121.4 million in the 3Q2009. Pre-tax profits increased by 88.5% or RM6.9 million to RM14.7 million when compared to RM7.8 million registered in the 3Q2009.
On a year-to-date (YTD) basis, the timber division registered a turnover of RM458.4 million, representing an increase of 47.0%, as compared to the previous year corresponding period of RM311.9 million. Consequently, the division recorded a net profit of RM20.1 million, an increase of 361.0% when compared with RM7.7 million pre-tax losses registered in the previous corresponding period. This is due to the overall improvement in both volume and average selling prices experienced since the beginning of the year.
On a year-on-year (YOY) basis, average round log prices increased approximately 35.0% compared to prices registered in 3Q2009, with, sales volume up by 21.4%. On a YTD basis, average round log prices are higher by approximately 12.3%, whilst volume increased by 39.6%. The Group’s key export markets for round logs is India (75%), China (10%), Hong Kong (5%), Vietnam (5%) and the remaining 5% exported to Japan, Taiwan and other Asian countries.
As for the Group’s plywood division, sales volume for the quarter in review was up by 13.8% as compared to 3Q2009. Average selling prices were up by 21.0% as compared to 3Q2009. On a YTD basis, average plywood prices were higher by 17.0% and volume up by 43.4%. The Group’s key plywood markets for the quarter in review were Japan (85%), Taiwan (13%) and other Asian countries (2%).
Current Year Prospects
Quarter 3, 2010
Timber
The third quarter 2010 saw further improvement in selling prices for timber products. Japan, a major buyer for tropical hardwood plywood products, expanded her economy again in third quarter 2010. The gross domestic product (GDP) grew at an annualized rate of 0.9 percent, higher than second quarter 2010 of 0.4 percent. The third quarter growth relied heavily on domestic demand (60% of GDP), boosted by a stimulus package for the automotive industry that provided incentives for buyers of low-emission cars. Total housing starts in September 2010, although similar to August 2010, were higher than September 2009. Building permits, year-on-year, were approximately 15% higher. Despite the good results, the Japanese government cautioned that softening overseas demand and continued strong yen may hamper the growth in following months in the absence of further incentives to spur Japan’s local consumption. Capital spending is expected to shrink as orders for Japanese goods slow down as a result of the strong yen which makes Japanese good less competitive overseas. This is evident in September 2010 drop in machinery orders as businesses revise their spending plans.
The abnormal weather condition experienced in the third quarter 2010 coupled with the forth coming monsoon at year end is expected to further hamper log production. As such, the tight log supply situation in Sarawak which started during the second half of 2010 is expected to continue in the following months. Accordingly, despite the uncertainties in the future growth of the Japanese economy, average selling prices for tropical timber products are expected to remain firm.
The Group will conscientiously monitor the tight log supply to its plywood mills to ensure its supply of plywood to its buyers is not materially hampered by the shortages of logs. Despite the log situation, the Group will still continue its focus on the production of high quality plywood products, i.e. floorbase plywood products, and strive to maintain its position as a market leader in the Japanese market.
Notwithstanding the above, the Group will remain cautious as to the prospect of the timber industry given the renewed concerns on the world major economies and calls for further economic aids in Europe.
For the quarter under review, the Group’s turnover was RM184.8 million as compared to RM150.7 million in the 3Q2009, representing an increase of RM34.1 million (22.6%), whilst its pre-tax profit was RM15.3 million compared to RM8.4 million in the 3Q2009, an increase of RM6.9 million (82.1%). This is mainly due to the timber division.
Quarter 3, 2010
Timber
For the current quarter, the Group’s timber division registered a turnover of RM152.0 million, representing an increase of 25.2% or RM30.6 million as compared with RM121.4 million in the 3Q2009. Pre-tax profits increased by 88.5% or RM6.9 million to RM14.7 million when compared to RM7.8 million registered in the 3Q2009.
On a year-to-date (YTD) basis, the timber division registered a turnover of RM458.4 million, representing an increase of 47.0%, as compared to the previous year corresponding period of RM311.9 million. Consequently, the division recorded a net profit of RM20.1 million, an increase of 361.0% when compared with RM7.7 million pre-tax losses registered in the previous corresponding period. This is due to the overall improvement in both volume and average selling prices experienced since the beginning of the year.
On a year-on-year (YOY) basis, average round log prices increased approximately 35.0% compared to prices registered in 3Q2009, with, sales volume up by 21.4%. On a YTD basis, average round log prices are higher by approximately 12.3%, whilst volume increased by 39.6%. The Group’s key export markets for round logs is India (75%), China (10%), Hong Kong (5%), Vietnam (5%) and the remaining 5% exported to Japan, Taiwan and other Asian countries.
As for the Group’s plywood division, sales volume for the quarter in review was up by 13.8% as compared to 3Q2009. Average selling prices were up by 21.0% as compared to 3Q2009. On a YTD basis, average plywood prices were higher by 17.0% and volume up by 43.4%. The Group’s key plywood markets for the quarter in review were Japan (85%), Taiwan (13%) and other Asian countries (2%).
Current Year Prospects
Quarter 3, 2010
Timber
The third quarter 2010 saw further improvement in selling prices for timber products. Japan, a major buyer for tropical hardwood plywood products, expanded her economy again in third quarter 2010. The gross domestic product (GDP) grew at an annualized rate of 0.9 percent, higher than second quarter 2010 of 0.4 percent. The third quarter growth relied heavily on domestic demand (60% of GDP), boosted by a stimulus package for the automotive industry that provided incentives for buyers of low-emission cars. Total housing starts in September 2010, although similar to August 2010, were higher than September 2009. Building permits, year-on-year, were approximately 15% higher. Despite the good results, the Japanese government cautioned that softening overseas demand and continued strong yen may hamper the growth in following months in the absence of further incentives to spur Japan’s local consumption. Capital spending is expected to shrink as orders for Japanese goods slow down as a result of the strong yen which makes Japanese good less competitive overseas. This is evident in September 2010 drop in machinery orders as businesses revise their spending plans.
The abnormal weather condition experienced in the third quarter 2010 coupled with the forth coming monsoon at year end is expected to further hamper log production. As such, the tight log supply situation in Sarawak which started during the second half of 2010 is expected to continue in the following months. Accordingly, despite the uncertainties in the future growth of the Japanese economy, average selling prices for tropical timber products are expected to remain firm.
The Group will conscientiously monitor the tight log supply to its plywood mills to ensure its supply of plywood to its buyers is not materially hampered by the shortages of logs. Despite the log situation, the Group will still continue its focus on the production of high quality plywood products, i.e. floorbase plywood products, and strive to maintain its position as a market leader in the Japanese market.
Notwithstanding the above, the Group will remain cautious as to the prospect of the timber industry given the renewed concerns on the world major economies and calls for further economic aids in Europe.
Wednesday, November 24, 2010
Is the "Fear" Fully Manifested into the World Stock Market ?
For the past 2 weeks (after the end of US election), the world share markets are heading to a correction. All the bad news had since been released to the public to test the "Fear" factor among the investors. KLSE was hit south too after breake through the all time historical high at 1524 and marched through to reach a new high at 1531 on 10Nov10.
Has the bull lossing its' steam or it is it just heading to a temporary retracement before it resumes its much awaited run for the new year to come ?
If the Korean conflict slowly fizzle out which it seems likely judging from how the international media reporting the issues, it looks like the bull will continue to run until CNY and further break new high moving forward.
Has the bull lossing its' steam or it is it just heading to a temporary retracement before it resumes its much awaited run for the new year to come ?
If the Korean conflict slowly fizzle out which it seems likely judging from how the international media reporting the issues, it looks like the bull will continue to run until CNY and further break new high moving forward.
Saturday, November 20, 2010
Malaysia Central Bank Foreign Reserves Up US$500m as at 15Nov10
Malaysia Central Bank ( Bank Negara ) foreign reserves up US$500m to US$105.8b
KUALA LUMPUR: Bank Negara Malaysia’s international reserves as at Nov 15 rose to US$105.8 billion (RM326.5 billion) from US$105.3 billion (RM324.9 billion) on Oct 29 during the period the FBM KUALA LUMPUR COMPOSITE INDEX closed at an all-time historic high of 1,529.01.
“The reserves position is sufficient to finance 8.8 months of retained imports and is 4.5 times the short-term external debt,” it said on Friday, Nov 19.
In ringgit terms, the international reserves rose RM1.6 billion during the two-week period.
The market capitalisation of Bursa Malaysia increased from RM1.204 trillion on Oct 29 to RM1.209 trillion on Nov 15.
During the period, the KLCI surged to a all time high in history to reach 1,531.99 on Nov 9 and market capitalisation increased to RM1.228 trillion.
KUALA LUMPUR: Bank Negara Malaysia’s international reserves as at Nov 15 rose to US$105.8 billion (RM326.5 billion) from US$105.3 billion (RM324.9 billion) on Oct 29 during the period the FBM KUALA LUMPUR COMPOSITE INDEX closed at an all-time historic high of 1,529.01.
“The reserves position is sufficient to finance 8.8 months of retained imports and is 4.5 times the short-term external debt,” it said on Friday, Nov 19.
In ringgit terms, the international reserves rose RM1.6 billion during the two-week period.
The market capitalisation of Bursa Malaysia increased from RM1.204 trillion on Oct 29 to RM1.209 trillion on Nov 15.
During the period, the KLCI surged to a all time high in history to reach 1,531.99 on Nov 9 and market capitalisation increased to RM1.228 trillion.
Thursday, November 18, 2010
GM IPO Prices at $33 a Share, to be listed on NYSE and TSE
The hotly-anticipated initial public offering of General Motors priced at $33 a share Wednesday, landing it at the high end of expectations, which stood at $32-33 a share.
The offering will include 478 million shares of common stock. Including $4 billion of preferred stock and a greenshoe option, the total value of the IPO now stands at $15.8 billion, a record in the United States.
GM's stock will begin trading on the New York Stock Exchange Thursday under the symbol "GM." It will also trade on the Toronto Stock Exchange as "GMM."
Late Tuesday, the size of the IPO was expanded by about 30 percent, it was originally anticipated to price in a $26-29 range.
The higher pricing on the stock IPO represents a step toward recouping a $50 billion U.S. government rescue of the 102-year-old company, which had fallen from blue-chip status to bailout basket case in recent years.
The major stakeholders are the U.S. and Canadian governments and the United Auto Workers healthcare trust.
GM, earned a $4.1 billion net profit in the first nine months of the year and is on track for its first full-year profit since 2004.
The successful completion of the IPO will resulted in U.S. government's stake to drop from 61 to 33 percent.
( source CNBC )
The offering will include 478 million shares of common stock. Including $4 billion of preferred stock and a greenshoe option, the total value of the IPO now stands at $15.8 billion, a record in the United States.
GM's stock will begin trading on the New York Stock Exchange Thursday under the symbol "GM." It will also trade on the Toronto Stock Exchange as "GMM."
Late Tuesday, the size of the IPO was expanded by about 30 percent, it was originally anticipated to price in a $26-29 range.
The higher pricing on the stock IPO represents a step toward recouping a $50 billion U.S. government rescue of the 102-year-old company, which had fallen from blue-chip status to bailout basket case in recent years.
The major stakeholders are the U.S. and Canadian governments and the United Auto Workers healthcare trust.
GM, earned a $4.1 billion net profit in the first nine months of the year and is on track for its first full-year profit since 2004.
The successful completion of the IPO will resulted in U.S. government's stake to drop from 61 to 33 percent.
( source CNBC )
Monday, November 15, 2010
"Wilmar" effect on PPB recent share price dip ?
KUALA LUMPUR:
PPB Group saw its 18.34% owned Wilmar’s net profit for 3QFY10 ended Sept 30 dip by 60.3% to US$259.49 million (RM801.82 million) from US$652.95 million a year ago.
The weakness in the 3Q numbers was primarily due to the loss of US$37.1 million from the oilseed & grains segment against a profit before tax (PBT) of US$145.8 million in 2Q.
The decline in net profit was largely due to weaker performance in its oilseeds and grains segment and the absence of exceptional gain.
In FY09, Wilmar booked in gains from the sales of new shares in Wilmar China.
“Wilmar is the core earnings driver of PPB, contributing to about 75% of the group’s net profit for the past two years,” said an analyst with HwangDBS Vickers Research.
The concerns over lower earnings sparked some selling on PPB Group’s shares yesterday. Its share price was down 4.44% or 86 sen to RM18.50.
Trading at a forward price-to-earnings ratio of 14.61 times, the counter recently rocketed to-record high of RM19.58.
HwangDBS expects the conglomerate to register a net profit of RM2.05 billion for FY10 ending Dec 31, which is an increase of 26% from its actual net profit of RM1.63 billion registered in FY2009.
Another analyst with a foreign stockbroking group echoes this view, saying there was no way the remaining 15% earnings contributors could offset the loss of revenue generated by the world’s largest plantation firm to PPB.
In FY09, Wilmar contributed RM1.21 billion or 74% of PPB’s total net profit of RM1.63 billion. This marks a 35.5% increase in profit contribution to PPB.
Nevertheless, the analyst said PPB’s accumulated earnings could still remain relatively strong on a nine-month quarterly basis mainly due to the sale of its sugar businesses that was completed in January 2010.
PPB made a gain of RM1.17 billion from the sale of its sugar business to Felda Global Ventures Holdings Sdn Bhd.
PPB also sold its 50% stake in Kilang Gula Felda Perlis Sdn Bhd (KGFP) for RM26.31 million and its 5,797ha sugar cane plantation in Chuping, Perlis, for RM45 million.
It is worth noting that revenue generated from PPB Group’s other continuing operations (excluding Wilmar and the sugar businesses) amounting to RM2.01 billion for FY2009 was down 19% from a year earlier.
The decrease was mainly due to lower revenue registered by the flour and feed milling divisions in tandem with the decline in soft commodities in 2009, environmental engineering, chemicals trading and manufacturing divisions. PPB’s other divisions include property investment and development, livestock farming and film exhibition and trading.
For the six months ended June 30, PPB’s revenue of RM1.08 billion was about 4% higher than the RM1.04 billion in the same period a year ago.
The increase was mainly due to higher revenue achieved by the film exhibition and distribution division, and the chemicals trading and manufacturing businesses. Both of these divisions contributed about 17% of PPB’s total revenue.
At the profit before tax level, PPB posted a slight increase for 1HFY10 to RM628.49 million from RM626.08 million a year earlier.
The flour and feed milling division contributed higher profit due to an increase in sales volume and better margins, while film exhibition and distribution generated higher profit arising mainly from increased admissions.
CIMB Research downgraded Willmar’s stock to “neutral” from “outperform” and cut its net profit forecast for FY10 by 14% and FY11-12 forecast by 4% to 5% to account for lower crushing profit margins.
“The lack of assurance is only partially mitigated by improving prospects for its palm-refining margins, plantation earnings (from rising CPO prices) and earnings contributions from Sucrogen,” commented CIMB.
However, OSK Research, which recommends its clients to buy in dip, reckons the earnings contraction is a temporary setback.
“We are not overly concerned given Wilmar’s good track record although the results warrant a cut in our earnings forecast for FY10 to factor in weaker performance in the oilseed and grains segment, but cushioned by stronger CPO price,” said OSK Research in a note yesterday.
( Source : Theedge )
PPB Group saw its 18.34% owned Wilmar’s net profit for 3QFY10 ended Sept 30 dip by 60.3% to US$259.49 million (RM801.82 million) from US$652.95 million a year ago.
The weakness in the 3Q numbers was primarily due to the loss of US$37.1 million from the oilseed & grains segment against a profit before tax (PBT) of US$145.8 million in 2Q.
The decline in net profit was largely due to weaker performance in its oilseeds and grains segment and the absence of exceptional gain.
In FY09, Wilmar booked in gains from the sales of new shares in Wilmar China.
“Wilmar is the core earnings driver of PPB, contributing to about 75% of the group’s net profit for the past two years,” said an analyst with HwangDBS Vickers Research.
The concerns over lower earnings sparked some selling on PPB Group’s shares yesterday. Its share price was down 4.44% or 86 sen to RM18.50.
Trading at a forward price-to-earnings ratio of 14.61 times, the counter recently rocketed to-record high of RM19.58.
HwangDBS expects the conglomerate to register a net profit of RM2.05 billion for FY10 ending Dec 31, which is an increase of 26% from its actual net profit of RM1.63 billion registered in FY2009.
Another analyst with a foreign stockbroking group echoes this view, saying there was no way the remaining 15% earnings contributors could offset the loss of revenue generated by the world’s largest plantation firm to PPB.
In FY09, Wilmar contributed RM1.21 billion or 74% of PPB’s total net profit of RM1.63 billion. This marks a 35.5% increase in profit contribution to PPB.
Nevertheless, the analyst said PPB’s accumulated earnings could still remain relatively strong on a nine-month quarterly basis mainly due to the sale of its sugar businesses that was completed in January 2010.
PPB made a gain of RM1.17 billion from the sale of its sugar business to Felda Global Ventures Holdings Sdn Bhd.
PPB also sold its 50% stake in Kilang Gula Felda Perlis Sdn Bhd (KGFP) for RM26.31 million and its 5,797ha sugar cane plantation in Chuping, Perlis, for RM45 million.
It is worth noting that revenue generated from PPB Group’s other continuing operations (excluding Wilmar and the sugar businesses) amounting to RM2.01 billion for FY2009 was down 19% from a year earlier.
The decrease was mainly due to lower revenue registered by the flour and feed milling divisions in tandem with the decline in soft commodities in 2009, environmental engineering, chemicals trading and manufacturing divisions. PPB’s other divisions include property investment and development, livestock farming and film exhibition and trading.
For the six months ended June 30, PPB’s revenue of RM1.08 billion was about 4% higher than the RM1.04 billion in the same period a year ago.
The increase was mainly due to higher revenue achieved by the film exhibition and distribution division, and the chemicals trading and manufacturing businesses. Both of these divisions contributed about 17% of PPB’s total revenue.
At the profit before tax level, PPB posted a slight increase for 1HFY10 to RM628.49 million from RM626.08 million a year earlier.
The flour and feed milling division contributed higher profit due to an increase in sales volume and better margins, while film exhibition and distribution generated higher profit arising mainly from increased admissions.
CIMB Research downgraded Willmar’s stock to “neutral” from “outperform” and cut its net profit forecast for FY10 by 14% and FY11-12 forecast by 4% to 5% to account for lower crushing profit margins.
“The lack of assurance is only partially mitigated by improving prospects for its palm-refining margins, plantation earnings (from rising CPO prices) and earnings contributions from Sucrogen,” commented CIMB.
However, OSK Research, which recommends its clients to buy in dip, reckons the earnings contraction is a temporary setback.
“We are not overly concerned given Wilmar’s good track record although the results warrant a cut in our earnings forecast for FY10 to factor in weaker performance in the oilseed and grains segment, but cushioned by stronger CPO price,” said OSK Research in a note yesterday.
( Source : Theedge )
Friday, November 12, 2010
Petronas Chemical IPO Over price ?
Nov 12, 2010 4:22 AM GMT+0800
Petronas Chemicals Group Bhd., a unit of Malaysia’s state oil company is offering $4.2 billion in initial public offering.
The shares of Petroliam Nasional Bhd.’s chemical unit may price today at the top end of the offering range of 4.50 ringgit ($1.46) to 5.20 ringgit each in what would be Malaysia’s biggest IPO on record, according to two of the people, who declined to be identified before an announcement is made.
The benchmark FTSE Bursa Malaysia KLCI Index rose 19 percent this year and reached a record on Nov. 10, as international investors purchased more of the nation’s stocks than at any time since at least 1995, according to data compiled by EPFR Global. The IPO values Petronas Chemicals at 38.8 billion ringgit, or 16.3 times profit, a 38 percent premium to the industry median.
Biggest Offering
At the midpoint, the IPO would give government-owned Petronas a 184 percent return on its per-share stake valued at 1.71 ringgit, according to the prospectus and Bloomberg data.
The sale would eclipse the record $3.3 billion IPO from Kuala Lumpur-based Maxis Bhd., Malaysia’s biggest mobile-phone operator, last year and lift the nation’s initial offerings to an all-time high, the data show.
Petronas Chemicals, formed through the combination of more than 20 companies, will offer 2.48 billion shares for a 31 percent stake, the prospectus said. Petronas will get 72 percent of the proceeds, while the chemicals unit plans to use the remainder to build facilities and fund acquisitions.
Petronas Chemicals intends to pay 50 percent of annual earnings as dividends to shareholders, the prospectus said.
Relative Value
Wan Zulkiflee Wan Ariffin, chairman of Petronas Chemicals, said on Nov. 2 the company may invest as much as $1 billion in an ammonia and urea plant in eastern Malaysia that will use the nation’s natural-gas reserves in that area. Malaysia is the world’s second-largest supplier of liquefied natural gas.
Petronas’s holding in Petronas Chemicals was valued at 12.47 billion ringgit, or 1.71 ringgit a share, at the time of the unit’s formation, the prospectus said. The midpoint IPO price would make Kuala Lumpur-based Petronas Chemicals one of Malaysia’s 10 largest publicly traded companies, the data show.
Buyers would be paying about 16.3 times profits, based on the 1.19 billion ringgit the unit earned in the six months ended Sept. 30, the prospectus and data compiled by Bloomberg show. That compares with the median 11.8 times estimated earnings for 31 petrochemical companies globally, which gained an average of 47 percent so far this year.
Honam Petrochemical Corp., the Seoul-based maker of ethylene that is acquiring Malaysia’s Titan Chemicals Corp., trades at 8.1 times estimated profit. The shares have more than doubled in 2010.
Not Cheap
The valuation for Petronas Chemicals reflects a premium of 8.9 percent to shares in Malaysia. The 30 companies in the FTSE Bursa Malaysia KLCI Index trade at an average 14.97 times profit in the next 12 months after the gauge climbed to a record 1,528.01 on Nov. 10.
The stock index exceeded the previous high in January 2008 as investors poured more than $355 million into Malaysian equity funds on a net basis in 2010, data compiled by Cambridge, Massachusetts-based EPFR Global show. Asian IPOs have attracted a record $142 billion this year, Bloomberg data show.
The Employees Provident Fund and Kumpulan Wang Persaraan (Diperbadankan), two of Malaysia’s state-controlled retirement funds that oversee more than $150 billion, will buy 18 percent of the offering as strategic investors, the prospectus said.
Malaysia Marine & Heavy Engineering Holdings Bhd., the Kuala Lumpur-based rig-building arm of Petronas’s MISC Bhd., raised about 2 billion ringgit last month in the nation’s biggest IPO so far this year. Institutions placed orders for 27 times the number of shares they were allocated.
The country’s finance ministry may also divest its holdings in Percetakan Nasional Malaysia Bhd., the state-owned printing company, CTRM Aero Composites Sdn., an aerospace components maker, and two biotechnology companies, Najib said in March.
( Source : Bloomberg )
Petronas Chemicals Group Bhd., a unit of Malaysia’s state oil company is offering $4.2 billion in initial public offering.
The shares of Petroliam Nasional Bhd.’s chemical unit may price today at the top end of the offering range of 4.50 ringgit ($1.46) to 5.20 ringgit each in what would be Malaysia’s biggest IPO on record, according to two of the people, who declined to be identified before an announcement is made.
The benchmark FTSE Bursa Malaysia KLCI Index rose 19 percent this year and reached a record on Nov. 10, as international investors purchased more of the nation’s stocks than at any time since at least 1995, according to data compiled by EPFR Global. The IPO values Petronas Chemicals at 38.8 billion ringgit, or 16.3 times profit, a 38 percent premium to the industry median.
Biggest Offering
At the midpoint, the IPO would give government-owned Petronas a 184 percent return on its per-share stake valued at 1.71 ringgit, according to the prospectus and Bloomberg data.
The sale would eclipse the record $3.3 billion IPO from Kuala Lumpur-based Maxis Bhd., Malaysia’s biggest mobile-phone operator, last year and lift the nation’s initial offerings to an all-time high, the data show.
Petronas Chemicals, formed through the combination of more than 20 companies, will offer 2.48 billion shares for a 31 percent stake, the prospectus said. Petronas will get 72 percent of the proceeds, while the chemicals unit plans to use the remainder to build facilities and fund acquisitions.
Petronas Chemicals intends to pay 50 percent of annual earnings as dividends to shareholders, the prospectus said.
Relative Value
Wan Zulkiflee Wan Ariffin, chairman of Petronas Chemicals, said on Nov. 2 the company may invest as much as $1 billion in an ammonia and urea plant in eastern Malaysia that will use the nation’s natural-gas reserves in that area. Malaysia is the world’s second-largest supplier of liquefied natural gas.
Petronas’s holding in Petronas Chemicals was valued at 12.47 billion ringgit, or 1.71 ringgit a share, at the time of the unit’s formation, the prospectus said. The midpoint IPO price would make Kuala Lumpur-based Petronas Chemicals one of Malaysia’s 10 largest publicly traded companies, the data show.
Buyers would be paying about 16.3 times profits, based on the 1.19 billion ringgit the unit earned in the six months ended Sept. 30, the prospectus and data compiled by Bloomberg show. That compares with the median 11.8 times estimated earnings for 31 petrochemical companies globally, which gained an average of 47 percent so far this year.
Honam Petrochemical Corp., the Seoul-based maker of ethylene that is acquiring Malaysia’s Titan Chemicals Corp., trades at 8.1 times estimated profit. The shares have more than doubled in 2010.
Not Cheap
The valuation for Petronas Chemicals reflects a premium of 8.9 percent to shares in Malaysia. The 30 companies in the FTSE Bursa Malaysia KLCI Index trade at an average 14.97 times profit in the next 12 months after the gauge climbed to a record 1,528.01 on Nov. 10.
The stock index exceeded the previous high in January 2008 as investors poured more than $355 million into Malaysian equity funds on a net basis in 2010, data compiled by Cambridge, Massachusetts-based EPFR Global show. Asian IPOs have attracted a record $142 billion this year, Bloomberg data show.
The Employees Provident Fund and Kumpulan Wang Persaraan (Diperbadankan), two of Malaysia’s state-controlled retirement funds that oversee more than $150 billion, will buy 18 percent of the offering as strategic investors, the prospectus said.
Malaysia Marine & Heavy Engineering Holdings Bhd., the Kuala Lumpur-based rig-building arm of Petronas’s MISC Bhd., raised about 2 billion ringgit last month in the nation’s biggest IPO so far this year. Institutions placed orders for 27 times the number of shares they were allocated.
The country’s finance ministry may also divest its holdings in Percetakan Nasional Malaysia Bhd., the state-owned printing company, CTRM Aero Composites Sdn., an aerospace components maker, and two biotechnology companies, Najib said in March.
( Source : Bloomberg )
Friday, November 5, 2010
Mini Super bull run in the making before Chinese New Year ?
Comparing the circumstances back in 1993 against the current situation.
In the early 1990s, despite slowdown in the global economy, as the third largest economy in South-East Asia, after Indonesia and Thailand, Malaysia was supported by relatively strong macroeconomic fundamentals and resilient financial system. With the real GDP growing at 9.9%, ringgit appreciation, strong export growth and the Government’s measures to hold inflation low at 3.6%, the local stock market became an attractive alternative to foreign investors.
In 1991, Tun Dr Mahathir Mohamad unveiled the philosophy of “Malaysia Incorporated” which was a development strategy for Malaysia to achieve a developed nation by 2020.
Before 1993
Foreign investment in Malaysia was - long-term direct investment in manufacturing sector.
However, massive influx of foreign capital inflow helped fuel the super bull-run in 1993.
Within the year, the market increased by 98% to reach an all-time high of 1,275.3 points and foreign investors’ participation accounted for 15% of total trading value of our local bourse. Lured many retailers into the market
1993
Government planned several mega projects, such as
KL International Airport (RM8bil), Johor-Singapore Second Link (RM1.6bil) and Kuala Lumpur Light Rail Transit (RM1.1bil).
Government planning on privatising its own corporations, such as Petronas, KTM and Pos Malaysia had also driven these counters into prime trading targets.
Besides, the ease of accessing bank credit by investors also contributed to the market rally.
High percentage of loans was channelled to broad property sector as well as the purchase of securities.
1994.
Bank Negara introduced a number of selective capital controls in early 1994 to stabilise the financial system,
2010
Economic Transformation Programme (ETP) with the aim to boost our gross national income (GNI) to US$523bil in 2020 from US$188bil in 2009. GDP growth is anticipated to increase by 6% this year.
September 2010 saw net inflow of foreign funds again in our equity market. Over the past few weeks, the average stock market daily volume had been hovering above one billion shares per day.
According to Andrew Sheng in his book titled From Asian To Global Financial Crisis, there were two main indicators to irrational exuberance during the super bull run in 1993. The first was the amah (domestic maid) syndrome. We need to be careful when amahs got excited about the stock market. This was because they did not know what they were buying and would always be the last to sell. The second indicator was when businessmen began to speculate stocks in the stock market. This was because they might neglect their businesses and use some of their cash for speculation.
Comparing our current market situation with the 1993 bull run, there are certain similarities that we see, such as strong economic growth, ringgit appreciation, inflow of foreign capital and ease of credit.
Local retailer participation may be the last push factor towards the bull run.
( source : The star )
In the early 1990s, despite slowdown in the global economy, as the third largest economy in South-East Asia, after Indonesia and Thailand, Malaysia was supported by relatively strong macroeconomic fundamentals and resilient financial system. With the real GDP growing at 9.9%, ringgit appreciation, strong export growth and the Government’s measures to hold inflation low at 3.6%, the local stock market became an attractive alternative to foreign investors.
In 1991, Tun Dr Mahathir Mohamad unveiled the philosophy of “Malaysia Incorporated” which was a development strategy for Malaysia to achieve a developed nation by 2020.
Before 1993
Foreign investment in Malaysia was - long-term direct investment in manufacturing sector.
However, massive influx of foreign capital inflow helped fuel the super bull-run in 1993.
Within the year, the market increased by 98% to reach an all-time high of 1,275.3 points and foreign investors’ participation accounted for 15% of total trading value of our local bourse. Lured many retailers into the market
1993
Government planned several mega projects, such as
KL International Airport (RM8bil), Johor-Singapore Second Link (RM1.6bil) and Kuala Lumpur Light Rail Transit (RM1.1bil).
Government planning on privatising its own corporations, such as Petronas, KTM and Pos Malaysia had also driven these counters into prime trading targets.
Besides, the ease of accessing bank credit by investors also contributed to the market rally.
High percentage of loans was channelled to broad property sector as well as the purchase of securities.
1994.
Bank Negara introduced a number of selective capital controls in early 1994 to stabilise the financial system,
2010
Economic Transformation Programme (ETP) with the aim to boost our gross national income (GNI) to US$523bil in 2020 from US$188bil in 2009. GDP growth is anticipated to increase by 6% this year.
September 2010 saw net inflow of foreign funds again in our equity market. Over the past few weeks, the average stock market daily volume had been hovering above one billion shares per day.
According to Andrew Sheng in his book titled From Asian To Global Financial Crisis, there were two main indicators to irrational exuberance during the super bull run in 1993. The first was the amah (domestic maid) syndrome. We need to be careful when amahs got excited about the stock market. This was because they did not know what they were buying and would always be the last to sell. The second indicator was when businessmen began to speculate stocks in the stock market. This was because they might neglect their businesses and use some of their cash for speculation.
Comparing our current market situation with the 1993 bull run, there are certain similarities that we see, such as strong economic growth, ringgit appreciation, inflow of foreign capital and ease of credit.
Local retailer participation may be the last push factor towards the bull run.
( source : The star )
Jim Roger on US "Printing Money"
http://www.bloomberg.com/video/63885746/
Oct. 21 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy for commodities and the outlook for the Chinese economy. Rogers speaks from Singapore with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Also he is not favourable to recent US Fed reserves move to "Print more money" to revise the economy
Oct. 21 (Bloomberg) -- Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy for commodities and the outlook for the Chinese economy. Rogers speaks from Singapore with Andrea Catherwood on Bloomberg Television's "The Pulse." (Source: Bloomberg)
Also he is not favourable to recent US Fed reserves move to "Print more money" to revise the economy
Thursday, November 4, 2010
The Biggest Holders of US Government Debt
15. Taiwan
US debt holdings: $130.2 billion
Taiwan's holdings of US debt have fluctuated between $120.5 billion and $152.4 billion over the past year.
To date, Taiwan holds $130.2 billion in Treasury securities, which is only $1.2 billion more than the next highest national debt purchaser, Russia, whose holdings stand at $129 billion.
14. Hong Kong
US debt holdings: $137.8 billion
Hong Kong is one of the world's largest holders of US debt, although in 2010 the region has cut its holdings by approximately $10 billion from January levels.
13. Caribbean Banking Centers
US debt holdings: $159.1 billion
The US Treasury identifies this group as institutions in the Bahamas, Bermuda, the Cayman Islands, Netherlands Antilles, Panama and the British Virgin Islands.
Holdings are currently listed at $159.1 billion, up about $30 billion from a year earlier, but still off the group's high of $213.6 billion in March 2009.
12. Brazil
US debt holdings: $165 billion
The South American economic giant has $165 billion in holdings, according to the Treasury.
Brazil’s investment into US debt has been fluctuating slightly over the past two years, with current holdings testing the high of $170.8 billion hit in Feb 2010.
11. Oil Exporters
US debt holdings: $226.6 billion
Big oil means big money... and big investment into US debt.
Included in the group of oil exporters are Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.
The group combines for a total of $226.6 billion, which is a slight increase from the $190 billion to $220 billion range they have maintained in recent history.
10. Insurance Companies
US debt holdings: $260.6 billion
According to the Federal Reserve Board of Governors, insurance companies hold $260.6 billion in Treasury securities. This group includes property-casualty and life insurance firms.
9. Depository Institutions
US debt holdings: $273.7 billion
As of March 2010 (the most recent numbers currently available), the Federal Reserve Board of Governors lists depository institutions as holding approximately $273.7 billion in US debt.
This group includes commercial banks, savings banks and credit unions and has nearly tripled from Q4 2008, when holdings stood at $105 billion.
8. United Kingdom
US debt holdings: $448.4 billion
Britain currently holds $448.4 billion in US debt. The country has been ramping up its debt in 2010, rising from $218.8 billion in January to $448.4 billion in the most recent numbers, which have them doubling in an 8 month span.
7. State and Local Governments
US debt holdings: $534.7 billion
US state and local governments have over a half-trillion dollars invested in American debt, according to the Federal Reserve.
The level of investment has remained very stable over the past three years, moving within the range of $534.7 billion and $550.3 billion from 2006 to 2009, and although the amount has been increasing, the total value of holdings are off the highs.
However, this number does not include an additional $181.6 billion of holdings of treasury notes in state and local government pension funds.
6. Pension Funds
US debt holdings: $643.8 billion
Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make relatively safe investments.
This group includes both private and local government pension funds, totaling $643.8 billion. The private pension fund category also includes US Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan "G Fund."
5. Mutual Funds
US debt holdings: $648.6 billion
According to the Federal Reserve, mutual funds hold the fifth largest amount of US debt compared to any other group, although mutual fund holdings have diminished by nearly $120 billion since December 2008.
Including money market funds, mutual funds and closed-end funds, this group of investments manages approximately $648.6 billion of US Treasury securities as of March 2010, which are the most recent numbers available.
4. Japan
US debt holdings: $836.6 billion
A major US trade partner, Japan holds a huge amount of American debt, and has traditionally been one of the US's largest debt holders, currently owning $836.6 billion of treasury securities.
3. China
US debt holdings: $868.4 billion
The largest foreign holder of US Treasury securities, China currently holds $868.4 billion in American debt, although it is off the all time highs of $900.2 billion in April 2010.
2. Other Investors/Savings Bonds
US debt holdings $1.266 trillion
With the most recent numbers from June 2010, this extremely diverse group includes individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts, estates, savings bonds, corporate and non-corporate businesses for a total of $1.266 trillion.
Although the level of debt held in U.S. savings bonds has remained relatively constant since 2000, the broad category of "Other" investors has nearly quadrupled since reaching a four-year low in September 2007
1. Federal Reserve and Intragovernmental Holdings
US debt holdings: $5.345 trillion
That’s right, the biggest holder of US government debt is actually within the United States. The Federal Reserve system of banks and other US intragovernmental holdings account for a stunning $5.345 trillion in US Treasury debt. This is the most recent number available (June 2010), and marks an all-time high.
About a decade ago, the total government holdings were "only" $2.5 trillion.
US debt holdings: $130.2 billion
Taiwan's holdings of US debt have fluctuated between $120.5 billion and $152.4 billion over the past year.
To date, Taiwan holds $130.2 billion in Treasury securities, which is only $1.2 billion more than the next highest national debt purchaser, Russia, whose holdings stand at $129 billion.
14. Hong Kong
US debt holdings: $137.8 billion
Hong Kong is one of the world's largest holders of US debt, although in 2010 the region has cut its holdings by approximately $10 billion from January levels.
13. Caribbean Banking Centers
US debt holdings: $159.1 billion
The US Treasury identifies this group as institutions in the Bahamas, Bermuda, the Cayman Islands, Netherlands Antilles, Panama and the British Virgin Islands.
Holdings are currently listed at $159.1 billion, up about $30 billion from a year earlier, but still off the group's high of $213.6 billion in March 2009.
12. Brazil
US debt holdings: $165 billion
The South American economic giant has $165 billion in holdings, according to the Treasury.
Brazil’s investment into US debt has been fluctuating slightly over the past two years, with current holdings testing the high of $170.8 billion hit in Feb 2010.
11. Oil Exporters
US debt holdings: $226.6 billion
Big oil means big money... and big investment into US debt.
Included in the group of oil exporters are Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.
The group combines for a total of $226.6 billion, which is a slight increase from the $190 billion to $220 billion range they have maintained in recent history.
10. Insurance Companies
US debt holdings: $260.6 billion
According to the Federal Reserve Board of Governors, insurance companies hold $260.6 billion in Treasury securities. This group includes property-casualty and life insurance firms.
9. Depository Institutions
US debt holdings: $273.7 billion
As of March 2010 (the most recent numbers currently available), the Federal Reserve Board of Governors lists depository institutions as holding approximately $273.7 billion in US debt.
This group includes commercial banks, savings banks and credit unions and has nearly tripled from Q4 2008, when holdings stood at $105 billion.
8. United Kingdom
US debt holdings: $448.4 billion
Britain currently holds $448.4 billion in US debt. The country has been ramping up its debt in 2010, rising from $218.8 billion in January to $448.4 billion in the most recent numbers, which have them doubling in an 8 month span.
7. State and Local Governments
US debt holdings: $534.7 billion
US state and local governments have over a half-trillion dollars invested in American debt, according to the Federal Reserve.
The level of investment has remained very stable over the past three years, moving within the range of $534.7 billion and $550.3 billion from 2006 to 2009, and although the amount has been increasing, the total value of holdings are off the highs.
However, this number does not include an additional $181.6 billion of holdings of treasury notes in state and local government pension funds.
6. Pension Funds
US debt holdings: $643.8 billion
Pension funds control large amounts of money, reserved for personal retirements, and thus are obligated to make relatively safe investments.
This group includes both private and local government pension funds, totaling $643.8 billion. The private pension fund category also includes US Treasury securities held by the Federal Employees Retirement System Thrift Savings Plan "G Fund."
5. Mutual Funds
US debt holdings: $648.6 billion
According to the Federal Reserve, mutual funds hold the fifth largest amount of US debt compared to any other group, although mutual fund holdings have diminished by nearly $120 billion since December 2008.
Including money market funds, mutual funds and closed-end funds, this group of investments manages approximately $648.6 billion of US Treasury securities as of March 2010, which are the most recent numbers available.
4. Japan
US debt holdings: $836.6 billion
A major US trade partner, Japan holds a huge amount of American debt, and has traditionally been one of the US's largest debt holders, currently owning $836.6 billion of treasury securities.
3. China
US debt holdings: $868.4 billion
The largest foreign holder of US Treasury securities, China currently holds $868.4 billion in American debt, although it is off the all time highs of $900.2 billion in April 2010.
2. Other Investors/Savings Bonds
US debt holdings $1.266 trillion
With the most recent numbers from June 2010, this extremely diverse group includes individuals, government-sponsored enterprises, brokers and dealers, bank personal trusts, estates, savings bonds, corporate and non-corporate businesses for a total of $1.266 trillion.
Although the level of debt held in U.S. savings bonds has remained relatively constant since 2000, the broad category of "Other" investors has nearly quadrupled since reaching a four-year low in September 2007
1. Federal Reserve and Intragovernmental Holdings
US debt holdings: $5.345 trillion
That’s right, the biggest holder of US government debt is actually within the United States. The Federal Reserve system of banks and other US intragovernmental holdings account for a stunning $5.345 trillion in US Treasury debt. This is the most recent number available (June 2010), and marks an all-time high.
About a decade ago, the total government holdings were "only" $2.5 trillion.
The impact on US Fed latest move on world economy
The Federal Reserve launched a fresh effort on Wednesday to support the struggling U.S. economy, committing to buy $600 billion in government bonds with new money.
1) US dollar will be weaken and hence increase capital inflows into Latin America and Asia especially China, causing hot money to boom in those countries especially in those respective stock market.
2) It will put pressure on the dollar to weaken, thus pushing up global commodity prices, including oil. So it will increase imported inflation pressure in some countries, including China
What the Fed's $600 Billion Plan Really Means
Why is the Federal Reserve buying bonds?
It wants to lower interest rates, in the hopes that doing so will loosen the supply of credit and spur more economic activity. The central bank’s main tool for reducing rates is to slash the short-term overnight lending that banks charge to one another, the so-called Federal Funds rate. Bring short-term rates down, and long-term rates tend to follow. In normal times, that’s as far as the Fed usually goes. In the past three years, the Fed has reduced the Fed Funds target rate 10 times, from 5.25 percent to between zero and .25 percent. It’s been at that extremely low level since the fall of 2008.
Once the Fed Funds rate can’t get any lower, what else can the Fed do?
It can buy assets, or engage in what’s known as quantitative easing (QE). Adjusting the Fed Funds directly influences short-term rates. The Fed can also influence long-term rates by purchasing (or selling) long-term debt in the open market. When lots of people -- or one big buyer -- buy bonds at the same time, it drives prices up and interest rates down. As the nation’s central bank, the Fed can create money and simply announce that it will buy large quantities of bonds.
Hasn’t it done something like that already?
Yes. In its first effort at quantitative easing, the Fed in 2009 and early 2010 bought more than $1 trillion in mortgage-backed securities in an effort to reduce interest rates on home mortgages. Partially in response to the purchases, mortgage rates fell to historically low levels.
So what is it doing now?
This is a smaller effort. The Fed says that, as part of an effort to lower interest rates, it will buy $600 billion of Treasury bonds between now and the end of June 2011, at a rate of about $75 billion per month. (The New York Fed has the details of the purchases here.)
But the market reacted at first by pushing interest rates on the 10-year and 30-year government bonds higher. What gives?
The Fed said it would focus its buying power on bonds that mature in four to six years,
with more than 85 percent of the purchases concentrated in bonds that mature between 2.5 and 10 years from now. Investors were expecting that the Fed might spend more on longer-dated Treasury securities, and sold them once they learned of the Fed’s plans.
Will these purchases alone guarantee that interest rates will fall?
No. Investors love to repeat the mantra: Don’t fight the Fed. But as much firepower as the central bank possesses, the Fed isn’t the only powerful economic force in the world. And interest rates can be impacted by all sorts of factors. If China’s central bank cuts back sharply on its purchases of U.S. government bonds, interest rates will rise. Investors’ attitudes about the pace of growth, or inflation, play an important role in determining market interest rates.
Whom is this good for?
In theory, it should be good news for borrowers of all types, but in particular corporate ones. If mid-term borrowing costs fall across the board, more companies should be able to refinance existing debt at lower levels, or take on new debt at lower cost. In theory, lower rates for big borrowers (i.e. banks) should mean credit will be more plentiful, or available on easier terms to businesses and individuals. And of course, any move the Fed makes to reduce interest rates tends to be a positive for stocks.
Whom is this bad for?
Savers. In this low-interest-rate environment, people who live on fixed incomes have had great difficulty finding safe instruments that deliver significant returns. To the extent this effort succeeds at holding longer-term interest down, it makes that task all the more difficult.
Government bonds are risk-free investments. What are the risks the Fed runs by taking more government bonds onto its balance sheet?
There are a couple of risks. First, low interest rates and the expansion of the Fed’s balance sheet tend to weaken the dollar. But the second -- and larger -- risk is that it won’t work. Interest rates are already exceedingly low, and it’s unclear how lowering them a bit more will induce companies and individuals to change their behavior significantly. Quantitative easing doesn’t directly address the underlying problem in the economy: that demand is too weak to fuel satisfactory growth. To combat weak demand, fiscal policy -- e.g., tax cuts, rebates, a payroll tax holiday, jobs program -- is often more effective than monetary policy. But fiscal policy remains paralyzed. Ideally, fiscal and monetary policy should be working in tandem. In the current situation, Bernanke is cranking up the volume while the political system is sitting on its hands. Imagine a two-engine jet trying to fly with only one engine revving.
( Courtecy of Yahoo Finance )
1) US dollar will be weaken and hence increase capital inflows into Latin America and Asia especially China, causing hot money to boom in those countries especially in those respective stock market.
2) It will put pressure on the dollar to weaken, thus pushing up global commodity prices, including oil. So it will increase imported inflation pressure in some countries, including China
What the Fed's $600 Billion Plan Really Means
Why is the Federal Reserve buying bonds?
It wants to lower interest rates, in the hopes that doing so will loosen the supply of credit and spur more economic activity. The central bank’s main tool for reducing rates is to slash the short-term overnight lending that banks charge to one another, the so-called Federal Funds rate. Bring short-term rates down, and long-term rates tend to follow. In normal times, that’s as far as the Fed usually goes. In the past three years, the Fed has reduced the Fed Funds target rate 10 times, from 5.25 percent to between zero and .25 percent. It’s been at that extremely low level since the fall of 2008.
Once the Fed Funds rate can’t get any lower, what else can the Fed do?
It can buy assets, or engage in what’s known as quantitative easing (QE). Adjusting the Fed Funds directly influences short-term rates. The Fed can also influence long-term rates by purchasing (or selling) long-term debt in the open market. When lots of people -- or one big buyer -- buy bonds at the same time, it drives prices up and interest rates down. As the nation’s central bank, the Fed can create money and simply announce that it will buy large quantities of bonds.
Hasn’t it done something like that already?
Yes. In its first effort at quantitative easing, the Fed in 2009 and early 2010 bought more than $1 trillion in mortgage-backed securities in an effort to reduce interest rates on home mortgages. Partially in response to the purchases, mortgage rates fell to historically low levels.
So what is it doing now?
This is a smaller effort. The Fed says that, as part of an effort to lower interest rates, it will buy $600 billion of Treasury bonds between now and the end of June 2011, at a rate of about $75 billion per month. (The New York Fed has the details of the purchases here.)
But the market reacted at first by pushing interest rates on the 10-year and 30-year government bonds higher. What gives?
The Fed said it would focus its buying power on bonds that mature in four to six years,
with more than 85 percent of the purchases concentrated in bonds that mature between 2.5 and 10 years from now. Investors were expecting that the Fed might spend more on longer-dated Treasury securities, and sold them once they learned of the Fed’s plans.
Will these purchases alone guarantee that interest rates will fall?
No. Investors love to repeat the mantra: Don’t fight the Fed. But as much firepower as the central bank possesses, the Fed isn’t the only powerful economic force in the world. And interest rates can be impacted by all sorts of factors. If China’s central bank cuts back sharply on its purchases of U.S. government bonds, interest rates will rise. Investors’ attitudes about the pace of growth, or inflation, play an important role in determining market interest rates.
Whom is this good for?
In theory, it should be good news for borrowers of all types, but in particular corporate ones. If mid-term borrowing costs fall across the board, more companies should be able to refinance existing debt at lower levels, or take on new debt at lower cost. In theory, lower rates for big borrowers (i.e. banks) should mean credit will be more plentiful, or available on easier terms to businesses and individuals. And of course, any move the Fed makes to reduce interest rates tends to be a positive for stocks.
Whom is this bad for?
Savers. In this low-interest-rate environment, people who live on fixed incomes have had great difficulty finding safe instruments that deliver significant returns. To the extent this effort succeeds at holding longer-term interest down, it makes that task all the more difficult.
Government bonds are risk-free investments. What are the risks the Fed runs by taking more government bonds onto its balance sheet?
There are a couple of risks. First, low interest rates and the expansion of the Fed’s balance sheet tend to weaken the dollar. But the second -- and larger -- risk is that it won’t work. Interest rates are already exceedingly low, and it’s unclear how lowering them a bit more will induce companies and individuals to change their behavior significantly. Quantitative easing doesn’t directly address the underlying problem in the economy: that demand is too weak to fuel satisfactory growth. To combat weak demand, fiscal policy -- e.g., tax cuts, rebates, a payroll tax holiday, jobs program -- is often more effective than monetary policy. But fiscal policy remains paralyzed. Ideally, fiscal and monetary policy should be working in tandem. In the current situation, Bernanke is cranking up the volume while the political system is sitting on its hands. Imagine a two-engine jet trying to fly with only one engine revving.
( Courtecy of Yahoo Finance )
Monday, November 1, 2010
Timber stock on the run ..... WTK !
WTK ... a pure timber related stock with major export to India and Japan, rebounded from its recent low after 1 US fund sold off its share holding to below 5%. WTK share price was badly cap as a result of such selldown.
If this breakout is real, the share price will shoot pass its recent high at 1.53 and thereafter headed north all the way to 2.70, giving a return of more than 100% in less than a year ...lets put our finger cross amist the world economy uncertainty ....check mate ?!
If this breakout is real, the share price will shoot pass its recent high at 1.53 and thereafter headed north all the way to 2.70, giving a return of more than 100% in less than a year ...lets put our finger cross amist the world economy uncertainty ....check mate ?!
Jaya Jusco over the top ?
AEON Bhd, the listed entity that hold Jaya Jusco brand of super and hyper market in Malaysia, saw its share price peak at all time high, 6.08. According to grapevine, this is related to the bid to take over Carrefour Operation in Malaysia, Thailand and Singapore. However, after reaching its peak at 6.08, it is down down all the way. It had fell through its MA 50. Will it continue to dip further or a rebounce is around the corner ?
Time to pause and monitor ....
Time to pause and monitor ....
Wednesday, October 27, 2010
CPO uptrend cycles near its end ?
Over the past 10 years, palm oil prices have troughed in July-September and peaked in December-March, more than three quarters of the time.
Credit Suisse said it sticks to its view spelt out in its August 2010 report, “The rise before the fall”.
“We believe palm oil prices will seasonally increase over the next few months, but remain bearish in 2011,” it said.
Credit Suisse Research said for investors looking to take advantage of the seasonal rally, it highlighted high-beta stocks: Indofood Agri Resources Ltd (IFAR beta of 1.7); PT London Sumatra Indonesia (LSPI beta of 1.3) and IOI Corporation (beta of 1.3).
PLANTATION [] companies with the highest leverage to rising palm oil prices are PT Astra Agro Lestari Tbk , Sampoerna Agro Tbk, IFAR, Genting Plantations Bhd and Kuala Lumpur Kepong.
(Courtecy of : TheEdge, Credit Suisse Research)
Credit Suisse said it sticks to its view spelt out in its August 2010 report, “The rise before the fall”.
“We believe palm oil prices will seasonally increase over the next few months, but remain bearish in 2011,” it said.
Credit Suisse Research said for investors looking to take advantage of the seasonal rally, it highlighted high-beta stocks: Indofood Agri Resources Ltd (IFAR beta of 1.7); PT London Sumatra Indonesia (LSPI beta of 1.3) and IOI Corporation (beta of 1.3).
PLANTATION [] companies with the highest leverage to rising palm oil prices are PT Astra Agro Lestari Tbk , Sampoerna Agro Tbk, IFAR, Genting Plantations Bhd and Kuala Lumpur Kepong.
(Courtecy of : TheEdge, Credit Suisse Research)
Tuesday, October 26, 2010
Top 10 Fastest Growing Companies in Shanghai Composite Index China
10. Tianjin Benefo Tejing Electric
Share growth: 645.5%
Sector: Materials
Share price: $5.19
Market cap: $1.97 billion
Established in 1999, the stock was first listed on the Shanghai Stock Exchange in 2001. The company manufactures power transmission and electrical equipment. They are the flagship firm owned by Tianjin Benefo Machinery and Electric Industrial Holding Group, and according to the company they currently have 1,400 employees and have been identified as the most competitive corporation in the Chinese electrical equipment industry.
Benefo has provided products and services to a series of major projects in China, including the Three Gorges Dam, the Beijing Capital International Airport and the Jiuquan & Taiyuan Satellite Launch Center, according to the company. Benefo also offers its services to the US and other countries outside China through networks such as Alibaba.com.
9. Taian Lurun Co.
Share growth: 666.9%
Sector: Energy
Share price: $4.01
Market cap: $1.18 billion
Taian Lurun is engaged in the manufacture of oil products as well as coal mining and distribution. Aside from its core business, Taian also engages in property development, gold mining and energy investment through subsidiaries.
Taian operates primarily in the Shandong province of eastern China and conducts its business almost entirely within China. The company trades on the Shanghai Stock Exchange under the code 600157.
8. Anhui Sun Create Electronics
Share growth: 727.1%
Sector: Information Technology
Share price: $6.19
Market cap: $729 million
Located in Anhui Provence in Eastern China, the company is involved with production, design, research and sale of radar components, radio and television broadcast equipment and integrated electronic systems. The company also lists the design of ground-based satellite receivers, school campus networking, security system construction and home electronic equipment among its other businesses capacities.
The company was established in August 2000 and has been listed on the Shanghai Stock Exchange since May 2004. In the past two years listing sales for 2009 at $86.27 million and explosive share price growth this year, growing over 100% so far in 2010.
7. Sichuan Western Resources
Share growth: 763.8%
Sector: Materials
Share price: $5.26
Market cap: $1.25 billion
Sichuan Western Resources is primarily engaged in copper mining operatings and the distribution of copper concentrate powder, operating in the Gansu Provence in Central China.
The company was established in 1995 and reports annual ore processing capacity of 350,000 tons. Sichuan has been expanding in 2010, including the purchase of 80% of Nanjing Yin Mai Lead-Zinc mine, which it expects to generate $21 million per year through 2012. Since January 2009, the company’s share price has grown an astounding 763.8%.
6. Haitong Food Group Co.
Share growth: 777.4%
Sector: Consumer Staples
Share price: $4.79
Market cap: $1.1 billion
Haitong Food group is involved in the processing, production and distribution of frozen, dehydrated and canned food products, distributing in both domestic and overseas markets. It’s most notable brand is the “Kaiz” series, which has seven major categories and over 200 varieties, which are also sold in Japan and the US.
The company is also involved in promoting “modern agriculture” in China, developing safety and sanitary standards, but acknowledges that its progress and development depends on continuing support from the Chinese government.
5. Guangxi Wuzhou Zhongheng
Share growth: 801%
Sector: Healthcare
Share price: $3.38
Market cap: $1.84 billion
The Guangxi Wuzhou Zhongheng Group engages in the manufacture and sale of pharmaceutical products in China, producing medicines for cardiovascular and cerebrovascular diseases and respiratory diseases, among others.
As most fast-growing Chinese companies, Guangxi is involved in a number of disparate areas, including real estate development, beverages and entertainment businesses, according to the company. The pharmaceuticals industry in China has been helped via stimulus from the government’s reforms of the country’s medical system, which caused explosive growth in the second half of 2009, according to Research in China.
4. Sanan Optoelectronics Co.
Share growth: 804.3%
Sector: Information Technology
Share price: $6.50
Market cap: $4.27 billion
Sanan Optoelectronics is involved with the research, development and production of light emitting diode (LED) products in Central China and is one of the largest manufacturers of LEDs in the country.
Sanan’s products range from LED panel lights and LED bulbs to LED street lamps and tunnel lamps. The company holds 64 global patents and retains an R&D team composed of 190 engineers from the US, Japan and Taiwan.
They report production of 500,000 units per month, exporting 40% of their products to the US, Europe and Southeast Asia, according to the company. The company is also a bulk supplier, with a minimum order requirement of 300 units, offering a range of 53 products.
3. Ningxia Dayuan Chemical
Share growth: 940.5%
Sector: Materials
Share price: $5.42
Market cap: $1.08 billion
Ningxia Dayuan Chemical manufactures and distributes plastic and biochemical products, providing plastic products for engineering, as well as raw materials, carbon fiber and reusable byproducts.
The company has seen its share price rise over 940% since the beginning of 2009. In early 2010, the company announced an acquisition of Alashan Left Banner Zhula Gold Development Co, a deal estimated at $245.35 million, according to the Financial Times. The deal has not yet closed, but since the announcement, Ningxia’s share price has increased by nearly 43%.
2. Jiangsu Gaochun Ceramics
Share growth: 1,025%
Sector: Industrials
Share price: $7.49
Market cap: $629.6 million
Located in the Jiangsu Gaochun Economic Development Zone, Jiangsu Gaochun Ceramics is one of the beneficiaries of rapid industrialization in Nanjing, which is developing industrial parks and drawing large amounts of foreign investment. Jiangsu is less than 100km (62 miles) from Nanjing’s port and 50km (31 miles) from the Nanjing Lukou International Airport, giving it convenient access to global markets.
Products include industrial ceramics, such as honeycomb ceramics used in catalytic converters, as well as environmentally friendly and “daily use” ceramics such as dinner sets, tableware and coffee sets, according to the company. Their products have a high volume of sales in American department stores and are a large supplier to the Japanese market, according to the company.
1. Inner Mongolia Baotou Steel
Share growth: 1,127%
Sector: Materials
Share price: $12.96
Market cap: $10.47 billion
The company with the fastest growing share price on the Shanghai Stock Exchange since January 2009 is Inner Mongolia Baotaou Steel, which has a market capitalization of approximately $10.47 billion.
The company is a state-owned enterprise in Boutou, in Northern China and part of the Baotou Iron & Steel group. Part of the Baogang group, which operates in the “largest rare earth industrial base in China and the biggest industrial enterprise in Inner Mongolia,” it produces a variety of steel products, including rods, beams, columns, tracks and seamless pipes, along with consulting services.
The Baogang group as a while produces 5 million tons of steel products annually, which comprises a significant percentage of the rails required for China’s high-speed train system. Inner Mongolia Baotou Steel showed explosive growth through 2009, but has seen its share price more than double over the past 6 months, trading at an average volume of 30.8 million shares per day.
Since January 1, 2009, out of the 870 components on the Shanghai Composite Index, 19 have experienced share price growth of over 500%, while 553 companies have seen share price growth above 100%. Over this period, the Shanghai Index is up 65%, while the NYSE Composite is up 29% and only one US stock, Ford Motor (+502.6%), can rival the share price appreciation of the fastest-growing Chinese companies. But even Ford would still only just barely crack the top 20.
The fastest growing companies are listed here as the firms with the highest share price appreciation from market close on December 31, 2008 through October 20, 2010 on the Shanghai Composite Index. These companies must also have a current share price above $3 (USD). All prices and market caps are displayed in US dollars.
( Courtesy of CNBC )
Share growth: 645.5%
Sector: Materials
Share price: $5.19
Market cap: $1.97 billion
Established in 1999, the stock was first listed on the Shanghai Stock Exchange in 2001. The company manufactures power transmission and electrical equipment. They are the flagship firm owned by Tianjin Benefo Machinery and Electric Industrial Holding Group, and according to the company they currently have 1,400 employees and have been identified as the most competitive corporation in the Chinese electrical equipment industry.
Benefo has provided products and services to a series of major projects in China, including the Three Gorges Dam, the Beijing Capital International Airport and the Jiuquan & Taiyuan Satellite Launch Center, according to the company. Benefo also offers its services to the US and other countries outside China through networks such as Alibaba.com.
9. Taian Lurun Co.
Share growth: 666.9%
Sector: Energy
Share price: $4.01
Market cap: $1.18 billion
Taian Lurun is engaged in the manufacture of oil products as well as coal mining and distribution. Aside from its core business, Taian also engages in property development, gold mining and energy investment through subsidiaries.
Taian operates primarily in the Shandong province of eastern China and conducts its business almost entirely within China. The company trades on the Shanghai Stock Exchange under the code 600157.
8. Anhui Sun Create Electronics
Share growth: 727.1%
Sector: Information Technology
Share price: $6.19
Market cap: $729 million
Located in Anhui Provence in Eastern China, the company is involved with production, design, research and sale of radar components, radio and television broadcast equipment and integrated electronic systems. The company also lists the design of ground-based satellite receivers, school campus networking, security system construction and home electronic equipment among its other businesses capacities.
The company was established in August 2000 and has been listed on the Shanghai Stock Exchange since May 2004. In the past two years listing sales for 2009 at $86.27 million and explosive share price growth this year, growing over 100% so far in 2010.
7. Sichuan Western Resources
Share growth: 763.8%
Sector: Materials
Share price: $5.26
Market cap: $1.25 billion
Sichuan Western Resources is primarily engaged in copper mining operatings and the distribution of copper concentrate powder, operating in the Gansu Provence in Central China.
The company was established in 1995 and reports annual ore processing capacity of 350,000 tons. Sichuan has been expanding in 2010, including the purchase of 80% of Nanjing Yin Mai Lead-Zinc mine, which it expects to generate $21 million per year through 2012. Since January 2009, the company’s share price has grown an astounding 763.8%.
6. Haitong Food Group Co.
Share growth: 777.4%
Sector: Consumer Staples
Share price: $4.79
Market cap: $1.1 billion
Haitong Food group is involved in the processing, production and distribution of frozen, dehydrated and canned food products, distributing in both domestic and overseas markets. It’s most notable brand is the “Kaiz” series, which has seven major categories and over 200 varieties, which are also sold in Japan and the US.
The company is also involved in promoting “modern agriculture” in China, developing safety and sanitary standards, but acknowledges that its progress and development depends on continuing support from the Chinese government.
5. Guangxi Wuzhou Zhongheng
Share growth: 801%
Sector: Healthcare
Share price: $3.38
Market cap: $1.84 billion
The Guangxi Wuzhou Zhongheng Group engages in the manufacture and sale of pharmaceutical products in China, producing medicines for cardiovascular and cerebrovascular diseases and respiratory diseases, among others.
As most fast-growing Chinese companies, Guangxi is involved in a number of disparate areas, including real estate development, beverages and entertainment businesses, according to the company. The pharmaceuticals industry in China has been helped via stimulus from the government’s reforms of the country’s medical system, which caused explosive growth in the second half of 2009, according to Research in China.
4. Sanan Optoelectronics Co.
Share growth: 804.3%
Sector: Information Technology
Share price: $6.50
Market cap: $4.27 billion
Sanan Optoelectronics is involved with the research, development and production of light emitting diode (LED) products in Central China and is one of the largest manufacturers of LEDs in the country.
Sanan’s products range from LED panel lights and LED bulbs to LED street lamps and tunnel lamps. The company holds 64 global patents and retains an R&D team composed of 190 engineers from the US, Japan and Taiwan.
They report production of 500,000 units per month, exporting 40% of their products to the US, Europe and Southeast Asia, according to the company. The company is also a bulk supplier, with a minimum order requirement of 300 units, offering a range of 53 products.
3. Ningxia Dayuan Chemical
Share growth: 940.5%
Sector: Materials
Share price: $5.42
Market cap: $1.08 billion
Ningxia Dayuan Chemical manufactures and distributes plastic and biochemical products, providing plastic products for engineering, as well as raw materials, carbon fiber and reusable byproducts.
The company has seen its share price rise over 940% since the beginning of 2009. In early 2010, the company announced an acquisition of Alashan Left Banner Zhula Gold Development Co, a deal estimated at $245.35 million, according to the Financial Times. The deal has not yet closed, but since the announcement, Ningxia’s share price has increased by nearly 43%.
2. Jiangsu Gaochun Ceramics
Share growth: 1,025%
Sector: Industrials
Share price: $7.49
Market cap: $629.6 million
Located in the Jiangsu Gaochun Economic Development Zone, Jiangsu Gaochun Ceramics is one of the beneficiaries of rapid industrialization in Nanjing, which is developing industrial parks and drawing large amounts of foreign investment. Jiangsu is less than 100km (62 miles) from Nanjing’s port and 50km (31 miles) from the Nanjing Lukou International Airport, giving it convenient access to global markets.
Products include industrial ceramics, such as honeycomb ceramics used in catalytic converters, as well as environmentally friendly and “daily use” ceramics such as dinner sets, tableware and coffee sets, according to the company. Their products have a high volume of sales in American department stores and are a large supplier to the Japanese market, according to the company.
1. Inner Mongolia Baotou Steel
Share growth: 1,127%
Sector: Materials
Share price: $12.96
Market cap: $10.47 billion
The company with the fastest growing share price on the Shanghai Stock Exchange since January 2009 is Inner Mongolia Baotaou Steel, which has a market capitalization of approximately $10.47 billion.
The company is a state-owned enterprise in Boutou, in Northern China and part of the Baotou Iron & Steel group. Part of the Baogang group, which operates in the “largest rare earth industrial base in China and the biggest industrial enterprise in Inner Mongolia,” it produces a variety of steel products, including rods, beams, columns, tracks and seamless pipes, along with consulting services.
The Baogang group as a while produces 5 million tons of steel products annually, which comprises a significant percentage of the rails required for China’s high-speed train system. Inner Mongolia Baotou Steel showed explosive growth through 2009, but has seen its share price more than double over the past 6 months, trading at an average volume of 30.8 million shares per day.
Since January 1, 2009, out of the 870 components on the Shanghai Composite Index, 19 have experienced share price growth of over 500%, while 553 companies have seen share price growth above 100%. Over this period, the Shanghai Index is up 65%, while the NYSE Composite is up 29% and only one US stock, Ford Motor (+502.6%), can rival the share price appreciation of the fastest-growing Chinese companies. But even Ford would still only just barely crack the top 20.
The fastest growing companies are listed here as the firms with the highest share price appreciation from market close on December 31, 2008 through October 20, 2010 on the Shanghai Composite Index. These companies must also have a current share price above $3 (USD). All prices and market caps are displayed in US dollars.
( Courtesy of CNBC )
Tuesday, August 24, 2010
Basic share learning 101 - Share Capital
Share Capital ?
Funds raised by issuing shares in return for cash or other considerations. The amount of share capital a company has can change over time.
The amount of share capital will increase each time a business sells new shares to the public in exchange for cash, .
In other terms, this kind of fund raising via share is call equity financing.
The amount of share capital a company reports on its balance sheet only accounts for the initial amount for which the original shareholders purchased the shares from the issuing company.
Any price differences arising from price appreciation/depreciation as a result of transactions in the secondary market are not included.
For example, suppose ABC Bhd raised RM 2 billion from its initial public offering ( IPO ). If market today value the shares at RM 5 billion, the value of the share capital is still only RM 2 billion.
Funds raised by issuing shares in return for cash or other considerations. The amount of share capital a company has can change over time.
The amount of share capital will increase each time a business sells new shares to the public in exchange for cash, .
In other terms, this kind of fund raising via share is call equity financing.
The amount of share capital a company reports on its balance sheet only accounts for the initial amount for which the original shareholders purchased the shares from the issuing company.
Any price differences arising from price appreciation/depreciation as a result of transactions in the secondary market are not included.
For example, suppose ABC Bhd raised RM 2 billion from its initial public offering ( IPO ). If market today value the shares at RM 5 billion, the value of the share capital is still only RM 2 billion.
Monday, July 26, 2010
Europe Bank Stress Test Results - Round 1 - overall not alarming ...
The results of EU stress tests on 91 banks were published on Friday. 7 of them failed, below each country info, only a handful had very min failed the stress test
Austria - 0 failed, 2 passed
Failed: 0
Passed: Erste Group, Raiffeisen Zentralbank Oesterreich
Belgium - 0 failed, 2 passed
Failed: 0
Passed: KBC Bank, Dexia
Cyprus - 0 failed, 2 passed
Failed: 0
Passed: Marfin Popular Bank, Bank of Cyprus
Denmark - 0 failed, 3 passed
Failed: 0
Passed: Danske Bank, Jyske Bank, Sydbank
Finland - 0 failed, 1 passed
Failed: 0
Passed: OP-Pohjola Group
France – 0 failed, 4 passed
Failed: 0
Passed: BNP Paribas, Credit Agricole, BPCE, Societe Generale
Germany - 1 failed, 13 passed
Failed: Hypo Real Estate Group
Passed:
Deutsche Bank , Commerzbank, Landesbank Baden- Wurttemberg, Bayerische Landesbank, DZ Bank, Norddeutsche Landesbank, Deutsche Postbank, WestLB, HSH Nordbank, Landesbank Hessen- Thuringen, Landesbank Berlin, Dekabank Deutsche Girozentrale, WGZ Bank
Greece – 1 failed, 5 passed
Failed: ATEBank
Passed: National Bank of Greece, EFG Eurobank Ergasias , Alpha Bank, Piraeus Bank, TT Hellenic Postbank
Hungary - 0 failed, 2 passed
Failed: 0
Passed: OTP Bank, FHB Jelzalogbank Nyiilvanosan Mukodo
Ireland - 0 failed, 2 passed
Failed: 0
Passed: Bank of Ireland, Allied Irish Banks
Italy -0 failed, 5 passed
Failed: 0
Passed: Unicredit, Intesa Sanpaolo, Banca Monte Dei Paschi Di Siena, Banco Popolare, Unione Di Banche Italiane
Luxembourg - 0 failed, 2 passed
Failed: 0
Passed: Banque Et Caisse D'Epargne De L'Etat, Banque Raiffeisen
Malta - 0 failed, 1 passed
Failed: 0
Passed: Bank of Valletta
Netherlands - 0 failed, 4 passed
Failed: 0
Passed: ING Bank, Rabobank Group, Fortis Bank Nederland Holding , SNS Reaal
Poland – 0 failed, 1 passed
Failed: 0
Passed: Powszechna Kasa Oszczednosci Bank Polski
Portugal - 0 failed, 4 passed
Failed: 0
Passed: Caixa Geral De Depositos, Banco Comercial Portugues , Espirito Santo, Banco BPI
Slovenia – 0 failed, 1 passed
Failed: 0
Passed: Nova Ljubljanska Banka
Spain - 5 failed, 22 passed
Failed: Unnim, Diada, Espiga, Banca Civica, Cajasur
Passed: Banco Santander, Banco Bilbao Vizcaya Argentaria , Jupiter, Caixa, CAM, Banco Popular Espanol, Banco de Sabadell, Breogan, Mare Nostrum, Bankinter, Caja De Ahorros YMP De Zaragoza, Antequera Y Jaen, Banco Pastor , Caja Sol, Bilbao Bizkaia Kutxa, Caja de Ahorros YMP De Gipuzkoa Y San Sebastian, CAI, Banca March, Banco Guipuzcoano, Caja de Ahorros De Vitoria Y Alava, Caja de Ahorros YMP De Ontinyent, Colonya - Caixa D'Estalvis De Pollensa
Sweden – 0 failed, 4 passed
Failed: 0
Passed: Nordea Bank, Skandinaviska Enskilda Banken , Svenska Handelsbanken, Swedbank
UK – 0 failed, 4 passed
Failed: 0
Passed: HSBC Holdings, Barclays, Royal Bank of Scotland Group, Lloyds Banking Group
Austria - 0 failed, 2 passed
Failed: 0
Passed: Erste Group, Raiffeisen Zentralbank Oesterreich
Belgium - 0 failed, 2 passed
Failed: 0
Passed: KBC Bank, Dexia
Cyprus - 0 failed, 2 passed
Failed: 0
Passed: Marfin Popular Bank, Bank of Cyprus
Denmark - 0 failed, 3 passed
Failed: 0
Passed: Danske Bank, Jyske Bank, Sydbank
Finland - 0 failed, 1 passed
Failed: 0
Passed: OP-Pohjola Group
France – 0 failed, 4 passed
Failed: 0
Passed: BNP Paribas, Credit Agricole, BPCE, Societe Generale
Germany - 1 failed, 13 passed
Failed: Hypo Real Estate Group
Passed:
Deutsche Bank , Commerzbank, Landesbank Baden- Wurttemberg, Bayerische Landesbank, DZ Bank, Norddeutsche Landesbank, Deutsche Postbank, WestLB, HSH Nordbank, Landesbank Hessen- Thuringen, Landesbank Berlin, Dekabank Deutsche Girozentrale, WGZ Bank
Greece – 1 failed, 5 passed
Failed: ATEBank
Passed: National Bank of Greece, EFG Eurobank Ergasias , Alpha Bank, Piraeus Bank, TT Hellenic Postbank
Hungary - 0 failed, 2 passed
Failed: 0
Passed: OTP Bank, FHB Jelzalogbank Nyiilvanosan Mukodo
Ireland - 0 failed, 2 passed
Failed: 0
Passed: Bank of Ireland, Allied Irish Banks
Italy -0 failed, 5 passed
Failed: 0
Passed: Unicredit, Intesa Sanpaolo, Banca Monte Dei Paschi Di Siena, Banco Popolare, Unione Di Banche Italiane
Luxembourg - 0 failed, 2 passed
Failed: 0
Passed: Banque Et Caisse D'Epargne De L'Etat, Banque Raiffeisen
Malta - 0 failed, 1 passed
Failed: 0
Passed: Bank of Valletta
Netherlands - 0 failed, 4 passed
Failed: 0
Passed: ING Bank, Rabobank Group, Fortis Bank Nederland Holding , SNS Reaal
Poland – 0 failed, 1 passed
Failed: 0
Passed: Powszechna Kasa Oszczednosci Bank Polski
Portugal - 0 failed, 4 passed
Failed: 0
Passed: Caixa Geral De Depositos, Banco Comercial Portugues , Espirito Santo, Banco BPI
Slovenia – 0 failed, 1 passed
Failed: 0
Passed: Nova Ljubljanska Banka
Spain - 5 failed, 22 passed
Failed: Unnim, Diada, Espiga, Banca Civica, Cajasur
Passed: Banco Santander, Banco Bilbao Vizcaya Argentaria , Jupiter, Caixa, CAM, Banco Popular Espanol, Banco de Sabadell, Breogan, Mare Nostrum, Bankinter, Caja De Ahorros YMP De Zaragoza, Antequera Y Jaen, Banco Pastor , Caja Sol, Bilbao Bizkaia Kutxa, Caja de Ahorros YMP De Gipuzkoa Y San Sebastian, CAI, Banca March, Banco Guipuzcoano, Caja de Ahorros De Vitoria Y Alava, Caja de Ahorros YMP De Ontinyent, Colonya - Caixa D'Estalvis De Pollensa
Sweden – 0 failed, 4 passed
Failed: 0
Passed: Nordea Bank, Skandinaviska Enskilda Banken , Svenska Handelsbanken, Swedbank
UK – 0 failed, 4 passed
Failed: 0
Passed: HSBC Holdings, Barclays, Royal Bank of Scotland Group, Lloyds Banking Group
Monday, July 5, 2010
Citi group share movement ...
1 Jul 2010
The US Department of the Treasury today announced the sale of approximately 1.1 billion shares of Citigroup [C 3.79 0.01 (+0.26%) ] common stock pursuant to the completion of its second trading plan with Morgan Stanley as sales agent. Treasury has now sold about 2.6 billion shares of Citigroup common stock at an average price per share of $4.03.
2.6 billion shares sold, 5.1 billion still to go.
The US Department of the Treasury today announced the sale of approximately 1.1 billion shares of Citigroup [C 3.79 0.01 (+0.26%) ] common stock pursuant to the completion of its second trading plan with Morgan Stanley as sales agent. Treasury has now sold about 2.6 billion shares of Citigroup common stock at an average price per share of $4.03.
2.6 billion shares sold, 5.1 billion still to go.
Friday, July 2, 2010
Jim Rogers Sees Bond Market Bubble Developing
Published: Thursday, 1 Jul 2010
4:44 AM ET Text Size By: Antonia Oprita
Web Producer, CNBC.com
DiggBuzz FacebookTwitter More Share
Bond markets are a bubble waiting to burst because the world economy is facing even worse problems after central banks flooded markets with cash to try to get out of the crisis, famous investor Jim Rogers told CNBC Thursday.
--------------------------
On Wednesday, banks borrowed less money than markets expected from the European Central Bank, in what investors saw as a reassuring sign that Europe's banking system is not as weak as previously feared.
"I don't quite see that myself," Rogers said, adding that the problems are worse now than at the beginning of the crisis. "Markets are looking ahead to more difficulties."
And he said he does not see why investors look at bonds as safe havens.
"I'm watching the bond market, I have no longs and no shorts," Rogers said. "It is a bubble which is developing; it's one of the few bubbles in the world which is developing."
"I think it's going to be a disaster and I plan to be selling them short sometime in the foreseeable future," he added.
Some economists have been calling for more stimulus money to be poured into the economy, but Rogers said this would be bad as it would help only certain categories and will have to be paid for by others.
"The people who receive the money think things are better, and they are better for them, but the rest of us have to pay the price," he warned.
'We Have Inflation Now'
In the US, officials and pundits recently said the bailout of Fannie Mae and Freddie Mac may end up costing taxpayers $1 trillion.
Prices are creeping up all over the world but some governments "lie" about inflation, according to Rogers.
"We have inflation now. Everybody who shops knows there is inflation… prices are going up," he said.
The US and the UK are among governments who "lie" about inflation, while Australia, China and Norway – countries that tightened monetary policy – are facing up to it, he added.
"My investment outlook is I am long commodities and short stocks. I don't own stocks in any place at all," Rogers said.
Geographically, he said he prefers assets in the countries that have the cash, rather than in the ones that have the debt.
"The creditor nations are all in Asia now … I'd rather be invested with the creditors than the debtors," Rogers said.
Food Prices Rising
Printing money has been good for hard assets and food prices "are going through the roof," he added.
"You should all become farmers. Agriculture's been a disaster for 30 years. We have a shortage of farmers now," Rogers said.
He said he is long the US dollar, despite the fact that there are huge negative feelings in the markets about the greenback and currencies are "suspect" everywhere.
"We now know that Greece is bankrupt. We know now that many companies and states in the US have been lying about their finances," Rogers said.
"Governments have poured huge amounts of money in the system… that money has to come from somewhere. This is not over yet. The debts have gone higher," he added.
The recent data on China showed signs of economic cooling as the central bank tightened policy.
"The Chinese government realizes they have problems in real estate and they're trying to solve these problems," he said.
But even though China's economy is in better shape than the euro zone and the US economies, the country can not pull the world out of recession, he added.
4:44 AM ET Text Size By: Antonia Oprita
Web Producer, CNBC.com
DiggBuzz FacebookTwitter More Share
Bond markets are a bubble waiting to burst because the world economy is facing even worse problems after central banks flooded markets with cash to try to get out of the crisis, famous investor Jim Rogers told CNBC Thursday.
--------------------------
On Wednesday, banks borrowed less money than markets expected from the European Central Bank, in what investors saw as a reassuring sign that Europe's banking system is not as weak as previously feared.
"I don't quite see that myself," Rogers said, adding that the problems are worse now than at the beginning of the crisis. "Markets are looking ahead to more difficulties."
And he said he does not see why investors look at bonds as safe havens.
"I'm watching the bond market, I have no longs and no shorts," Rogers said. "It is a bubble which is developing; it's one of the few bubbles in the world which is developing."
"I think it's going to be a disaster and I plan to be selling them short sometime in the foreseeable future," he added.
Some economists have been calling for more stimulus money to be poured into the economy, but Rogers said this would be bad as it would help only certain categories and will have to be paid for by others.
"The people who receive the money think things are better, and they are better for them, but the rest of us have to pay the price," he warned.
'We Have Inflation Now'
In the US, officials and pundits recently said the bailout of Fannie Mae and Freddie Mac may end up costing taxpayers $1 trillion.
Prices are creeping up all over the world but some governments "lie" about inflation, according to Rogers.
"We have inflation now. Everybody who shops knows there is inflation… prices are going up," he said.
The US and the UK are among governments who "lie" about inflation, while Australia, China and Norway – countries that tightened monetary policy – are facing up to it, he added.
"My investment outlook is I am long commodities and short stocks. I don't own stocks in any place at all," Rogers said.
Geographically, he said he prefers assets in the countries that have the cash, rather than in the ones that have the debt.
"The creditor nations are all in Asia now … I'd rather be invested with the creditors than the debtors," Rogers said.
Food Prices Rising
Printing money has been good for hard assets and food prices "are going through the roof," he added.
"You should all become farmers. Agriculture's been a disaster for 30 years. We have a shortage of farmers now," Rogers said.
He said he is long the US dollar, despite the fact that there are huge negative feelings in the markets about the greenback and currencies are "suspect" everywhere.
"We now know that Greece is bankrupt. We know now that many companies and states in the US have been lying about their finances," Rogers said.
"Governments have poured huge amounts of money in the system… that money has to come from somewhere. This is not over yet. The debts have gone higher," he added.
The recent data on China showed signs of economic cooling as the central bank tightened policy.
"The Chinese government realizes they have problems in real estate and they're trying to solve these problems," he said.
But even though China's economy is in better shape than the euro zone and the US economies, the country can not pull the world out of recession, he added.
Tuesday, June 29, 2010
Fears Of Economic Double Dip Ease Among Japanese Corporate Bosses
TOKYO (Nikkei)--Concerns about a double dip in the economy appear to be weighing less on the minds of business leaders compared to six months ago, according to the results of a quarterly survey conducted by Nikkei Inc.
A total of 34.2% of respondents said they see a double dip as an on going risk, a 6.7 percentage point decline from the 40.9% who saw such risk in March. On the other hand, 25% said they see "almost no" risk of a double dip, while 3.6% said they see "none."
But some respondents warned that conditions were still uncertain. "The domestic economy could continue treading water," warned a top executive at a major nonlife insurer. The chief of a major homebuilding company also asserted that domestic conditions could depend on "political developments and fiscal policy."
Among the 2.1% who pointed to "considerable" risk of a double dip and the 32.1% who cited "some" risk, the largest percentage, 39.5%, predicted it could occur this year, in the October-December quarter, while 31.2% said the first quarter of next year. Respondents thought the main catalyst likely to trigger another downslide would be "fiscal woes in Europe," cited by 77.1%.
Meanwhile, nearly 60% of bosses said the impact of the yuan's appreciation, resulting from the Chinese government's plan to allow the currency more flexibility, on their operations has been "minimal" so far. A mere 0.7% cited the currency's strength as "a major minus," while 17.9% said it was a "slight minus."
And the percentage of chiefs citing excessive facilities at their companies improved to 22.9% in the latest survey compared to a previous 37.3%. A total of 49.3% said they would focus their fiscal 2010 capital spending in Japan. But the emphasis on emerging markets was made clear by the 23.6% who will spend in "China and other regions in East Asia."
A total of 34.2% of respondents said they see a double dip as an on going risk, a 6.7 percentage point decline from the 40.9% who saw such risk in March. On the other hand, 25% said they see "almost no" risk of a double dip, while 3.6% said they see "none."
But some respondents warned that conditions were still uncertain. "The domestic economy could continue treading water," warned a top executive at a major nonlife insurer. The chief of a major homebuilding company also asserted that domestic conditions could depend on "political developments and fiscal policy."
Among the 2.1% who pointed to "considerable" risk of a double dip and the 32.1% who cited "some" risk, the largest percentage, 39.5%, predicted it could occur this year, in the October-December quarter, while 31.2% said the first quarter of next year. Respondents thought the main catalyst likely to trigger another downslide would be "fiscal woes in Europe," cited by 77.1%.
Meanwhile, nearly 60% of bosses said the impact of the yuan's appreciation, resulting from the Chinese government's plan to allow the currency more flexibility, on their operations has been "minimal" so far. A mere 0.7% cited the currency's strength as "a major minus," while 17.9% said it was a "slight minus."
And the percentage of chiefs citing excessive facilities at their companies improved to 22.9% in the latest survey compared to a previous 37.3%. A total of 49.3% said they would focus their fiscal 2010 capital spending in Japan. But the emphasis on emerging markets was made clear by the 23.6% who will spend in "China and other regions in East Asia."
Tuesday, June 22, 2010
Yuan Appreciation and the affected NYSE Co.
DateTime: 03:33:15 21 Jun 2010
China's signal it will let its yuan currency appreciate is good news for global manufacturers and resource companies that supply the world's third-biggest economy with the equipment and commodities it needs to fuel growth.
China's signal that it will allow its yuan currency to appreciate could make winners out of companies with strong foreign businesses, like machinery maker Caterpillar.
On the other hand, it could dampen the outlook for China's own exporters and commodity producers. A relatively mild yuan appreciation against the dollar of about 5 percent would cause losses at these companies, according to a Reuters poll conducted at China's top trade fair in April.
Following is a list of some likely winners from any yuan appreciation.
Foreign Resource Companies
The shares of Brazilian mining giant Vale [VALE 27.73 0.85 (+3.16%) ] traded in New York picked up gains and were the seventh most actively traded issue on the New York Stock Exchange on Monday.
Freeport-McMoRan Copper & Gold [VALE 27.73 0.85 (+3.16%) ] rose more than three percent and was among the 15 most active stocks in New York.
In Canada, base metal producers Inmet Mining [IEMMF 49.293 3.4593 (+7.55%) ], First Quantum Minerals [FQM-LN 4379.00 245.00 (+5.93%) ] and Teck Resources [TCK 35.81 1.04 (+2.99%) ] all rose on Monday on hopes China's move would increase its resource imports.
Foreign Heavy Machinery Makers
The world's largest maker of earth-moving equipment, Caterpillar [CAT 66.07 0.22 (+0.33%) ], could be a major winner. The U.S. machinery giant sells billions of dollars worth of machinery and products to China each year.
Its group president said on Saturday that Beijing's move would help lift U.S. exports.
Second-ranked Komatsu said every 1 percent rise in the yuan would boost its operating profit by 1.1 billion yen ($12.1 million).
Caterpillar shares were up 0.4 percent late on Monday and Komatsu rose 4.6 percent in Tokyo.
Foreign Automakers
Foreign automakers that sell cars in the world's largest vehicle market, such as BMW, Volkswagen, General Motors, PSA Peugeot Citroen, the Renault-Nissan alliance and Fiat, should also gain.
BMW would benefit the most if the yuan continues to rise against the euro—an outcome that is far from certain—as its auto manufacturing joint venture with Brilliance China imports about half its parts, mainly from Germany.
BMW shares were up 2.7 percent, Volkswagen rose 1 percent, Renault rose 3.6 percent, Nissan rose 2.8 percent, Fiat fell 0.2 percent and Brilliance rose 4.8 percent.
Consumers, Techs
U.S. companies such as General Electric [GE 16.10 0.15 (+0.94%) ], the parent company of CNBC.com, and Procter & Gamble [PG 61.10 -0.20 (-0.33%) ] are likely to make currency exchange gains when their China profits are converted into U.S. dollars.
A spokeswoman for GE, which makes many of the products it sells in China in that country, said the U.S. conglomerate does not expect "any material impact" to its earnings from the change.
Credit Suisse analysts estimated every 10 percent of appreciation of the yuan versus the dollar would boost the revenue and earnings of U.S. electric equipment makers by about 1 percent.
PC maker Lenovo Group [PG 61.10 -0.20 (-0.33%) ], which earned 47 percent of its sales in China in 2009, reports earnings in U.S. dollars. Lenovo shares were up more than 5 percent on Monday.
Yum Brands [YUM 42.79 0.30 (+0.71%) ], which owns the KFC and Pizza Hut fast-food chains and generates more than one-third of its profits from its 3,500 locations in China, regards the move as good news, said spokesman Jonathan Blum.
"China represents our No. 1 growth opportunity and we expect this to be a very positive development over the long-term," Blum said.
No. 1 chipmaker Intel [INTC 21.19 -0.21 (-0.98%) ] expects limited effect from the change, a spokesman said.
"All of Intel's transactions worldwide are conducted in dollars so the effect of currency fluctuations is not a direct one on the company," said spokesman Tom Beermann. "There would be secondary effects if currency valuations caused demand for our products (or products that use our chips) to increase or decline overseas."
Shares of Baidu [BIDU 76.36 2.27 (+3.06%) ], China's top search engine, closed up 3 percent on the Nasdaq Monday. GE, Yum and Lenovo all rose; Procter & Gamble ended down for the day.
(source : CNBC)
China's signal it will let its yuan currency appreciate is good news for global manufacturers and resource companies that supply the world's third-biggest economy with the equipment and commodities it needs to fuel growth.
China's signal that it will allow its yuan currency to appreciate could make winners out of companies with strong foreign businesses, like machinery maker Caterpillar.
On the other hand, it could dampen the outlook for China's own exporters and commodity producers. A relatively mild yuan appreciation against the dollar of about 5 percent would cause losses at these companies, according to a Reuters poll conducted at China's top trade fair in April.
Following is a list of some likely winners from any yuan appreciation.
Foreign Resource Companies
The shares of Brazilian mining giant Vale [VALE 27.73 0.85 (+3.16%) ] traded in New York picked up gains and were the seventh most actively traded issue on the New York Stock Exchange on Monday.
Freeport-McMoRan Copper & Gold [VALE 27.73 0.85 (+3.16%) ] rose more than three percent and was among the 15 most active stocks in New York.
In Canada, base metal producers Inmet Mining [IEMMF 49.293 3.4593 (+7.55%) ], First Quantum Minerals [FQM-LN 4379.00 245.00 (+5.93%) ] and Teck Resources [TCK 35.81 1.04 (+2.99%) ] all rose on Monday on hopes China's move would increase its resource imports.
Foreign Heavy Machinery Makers
The world's largest maker of earth-moving equipment, Caterpillar [CAT 66.07 0.22 (+0.33%) ], could be a major winner. The U.S. machinery giant sells billions of dollars worth of machinery and products to China each year.
Its group president said on Saturday that Beijing's move would help lift U.S. exports.
Second-ranked Komatsu said every 1 percent rise in the yuan would boost its operating profit by 1.1 billion yen ($12.1 million).
Caterpillar shares were up 0.4 percent late on Monday and Komatsu rose 4.6 percent in Tokyo.
Foreign Automakers
Foreign automakers that sell cars in the world's largest vehicle market, such as BMW, Volkswagen, General Motors, PSA Peugeot Citroen, the Renault-Nissan alliance and Fiat, should also gain.
BMW would benefit the most if the yuan continues to rise against the euro—an outcome that is far from certain—as its auto manufacturing joint venture with Brilliance China imports about half its parts, mainly from Germany.
BMW shares were up 2.7 percent, Volkswagen rose 1 percent, Renault rose 3.6 percent, Nissan rose 2.8 percent, Fiat fell 0.2 percent and Brilliance rose 4.8 percent.
Consumers, Techs
U.S. companies such as General Electric [GE 16.10 0.15 (+0.94%) ], the parent company of CNBC.com, and Procter & Gamble [PG 61.10 -0.20 (-0.33%) ] are likely to make currency exchange gains when their China profits are converted into U.S. dollars.
A spokeswoman for GE, which makes many of the products it sells in China in that country, said the U.S. conglomerate does not expect "any material impact" to its earnings from the change.
Credit Suisse analysts estimated every 10 percent of appreciation of the yuan versus the dollar would boost the revenue and earnings of U.S. electric equipment makers by about 1 percent.
PC maker Lenovo Group [PG 61.10 -0.20 (-0.33%) ], which earned 47 percent of its sales in China in 2009, reports earnings in U.S. dollars. Lenovo shares were up more than 5 percent on Monday.
Yum Brands [YUM 42.79 0.30 (+0.71%) ], which owns the KFC and Pizza Hut fast-food chains and generates more than one-third of its profits from its 3,500 locations in China, regards the move as good news, said spokesman Jonathan Blum.
"China represents our No. 1 growth opportunity and we expect this to be a very positive development over the long-term," Blum said.
No. 1 chipmaker Intel [INTC 21.19 -0.21 (-0.98%) ] expects limited effect from the change, a spokesman said.
"All of Intel's transactions worldwide are conducted in dollars so the effect of currency fluctuations is not a direct one on the company," said spokesman Tom Beermann. "There would be secondary effects if currency valuations caused demand for our products (or products that use our chips) to increase or decline overseas."
Shares of Baidu [BIDU 76.36 2.27 (+3.06%) ], China's top search engine, closed up 3 percent on the Nasdaq Monday. GE, Yum and Lenovo all rose; Procter & Gamble ended down for the day.
(source : CNBC)
Monday, June 21, 2010
Stronger Yuan and its Impact To Share Market
China’s airlines and commodities companies, which would benefit from yuan gains that reduce the cost of their overseas purchases, may lead stock gains after the central bank signaled an end to the currency’s peg to the dollar.
The People’s Bank of China pledged to make the yuan more flexible, while ruling out a one-time revaluation of the currency that’s been held at about 6.83 yuan per dollar since mid-2008. A stronger yuan would help airlines reduce dollar- denominated fuel bills and debt incurred from buying Boeing Co. and Airbus SAS planes. Raw materials costs for companies such as China Petroleum & Chemical Corp. would also fall.
Yuan-denominated shares in Shanghai and Shenzhen will rise today as an appreciation of the currency will also help curb inflation and bolster purchasing power in the world’s fastest- growing major economy, according to China International Capital Corp. and Societe Generale SA. China’s benchmark Shanghai Composite Index gained 2.5 percent the day after the nation ended a decade-long peg to the dollar in July 2005.
“An appreciation in the yuan will reduce inflationary pressures and benefit consumption by increasing purchasing power,” said Shi Bo, general manager of Shanghai Elegant Investment Co., which oversees about $278 million in assets. “On balance, a strong yuan is good for China’s efforts to rebalance its economy away from exports to domestic consumption.”
The central bank said June 19 that it will “increase the renminbi’s exchange-rate flexibility” after the economy grew 11.9 percent in the first quarter.
Benefits Employment
An appreciation of the yuan, also known as the renminbi, will benefit exporters and the nation’s employment situation more than it hurts them, the central bank said in a statement. A more flexible currency would also help to curb consumer-price gains, asset bubbles and dependence on exports for growth, it said.
After China’s revaluation of the yuan in July 2005, China Eastern Airlines Corp. climbed 7.1 percent in Shanghai trading and China Southern Airlines Co. rose 4.8 percent. China Petroleum & Chemical, also known as Sinopec, gained 5.8 percent.
“If it leads to appreciation for the yuan, it’s good news for the market,” Hao Hong, global equity strategist for CICC in Beijing, said in a report yesterday. “Investors will want to get into Chinese assets because they will be worth more.”
An appreciation of the yuan would benefit Chinese airlines, Luo Zhuping, China Eastern Airlines Corp.’s board secretary, said in an interview yesterday. Foreign-currency debt accounts for about 60 percent of the company’s total debt, Luo said. Yuan gains “will help reduce the burden,” he said.
Biggest Boost China Eastern, the nation’s second-biggest airline, would get the biggest profit boost from yuan appreciation of the country’s three largest carriers, Citigroup Inc. said in April. China Southern, the biggest carrier, would gain most in absolute terms as it has the largest debt and fleet, Citigroup analyst Ally Ma said. Air China Ltd. would benefit least as it has the highest proportion of overseas sales, Ma said.
Sinopec, Asia’s biggest refiner, would also benefit as 75 percent to 80 percent of oil it processes by volume is purchased from overseas in U.S. dollars, spokesman Huang Wensheng said.
“If the ability of domestic consumers to take on higher costs increases and the cost of our overseas purchases decreases, then the result for us is an obvious one,” Huang said yesterday.
BHP, Rio Tinto
BHP Billiton Ltd., Rio Tinto Group and other raw materials suppliers to China may also benefit as a stronger yuan reduces the cost of importing commodities from overseas. The nation is the world’s largest consumer of materials including iron ore, copper and soy beans, and the second-biggest energy consumer. Australian mining companies BHP Billiton and Rio Tinto are the world’s largest iron ore suppliers.
“You’d have to nominate BHP and Rio Tinto as the two main candidates to benefit,” said Saxon Nicholls, a fund manager at Herschel Asset Management Ltd. in Melbourne who helps oversee $785 million. “We think it’s good for commodity prices themselves. We also think it’s actually good for the value of the commodity equities.”
As an appreciation of the yuan reduces the cost of importing commodities, it may also make Chinese exports of clothing, shoes and electronics less attractive, said David Cohen, an economist at Action Economics in Singapore. Companies that may be affected include Shanghai Zhenhua Heavy Industry Co. and Hon Hai Precision Industry Co., based in Taipei.
The People’s Bank of China pledged to make the yuan more flexible, while ruling out a one-time revaluation of the currency that’s been held at about 6.83 yuan per dollar since mid-2008. A stronger yuan would help airlines reduce dollar- denominated fuel bills and debt incurred from buying Boeing Co. and Airbus SAS planes. Raw materials costs for companies such as China Petroleum & Chemical Corp. would also fall.
Yuan-denominated shares in Shanghai and Shenzhen will rise today as an appreciation of the currency will also help curb inflation and bolster purchasing power in the world’s fastest- growing major economy, according to China International Capital Corp. and Societe Generale SA. China’s benchmark Shanghai Composite Index gained 2.5 percent the day after the nation ended a decade-long peg to the dollar in July 2005.
“An appreciation in the yuan will reduce inflationary pressures and benefit consumption by increasing purchasing power,” said Shi Bo, general manager of Shanghai Elegant Investment Co., which oversees about $278 million in assets. “On balance, a strong yuan is good for China’s efforts to rebalance its economy away from exports to domestic consumption.”
The central bank said June 19 that it will “increase the renminbi’s exchange-rate flexibility” after the economy grew 11.9 percent in the first quarter.
Benefits Employment
An appreciation of the yuan, also known as the renminbi, will benefit exporters and the nation’s employment situation more than it hurts them, the central bank said in a statement. A more flexible currency would also help to curb consumer-price gains, asset bubbles and dependence on exports for growth, it said.
After China’s revaluation of the yuan in July 2005, China Eastern Airlines Corp. climbed 7.1 percent in Shanghai trading and China Southern Airlines Co. rose 4.8 percent. China Petroleum & Chemical, also known as Sinopec, gained 5.8 percent.
“If it leads to appreciation for the yuan, it’s good news for the market,” Hao Hong, global equity strategist for CICC in Beijing, said in a report yesterday. “Investors will want to get into Chinese assets because they will be worth more.”
An appreciation of the yuan would benefit Chinese airlines, Luo Zhuping, China Eastern Airlines Corp.’s board secretary, said in an interview yesterday. Foreign-currency debt accounts for about 60 percent of the company’s total debt, Luo said. Yuan gains “will help reduce the burden,” he said.
Biggest Boost China Eastern, the nation’s second-biggest airline, would get the biggest profit boost from yuan appreciation of the country’s three largest carriers, Citigroup Inc. said in April. China Southern, the biggest carrier, would gain most in absolute terms as it has the largest debt and fleet, Citigroup analyst Ally Ma said. Air China Ltd. would benefit least as it has the highest proportion of overseas sales, Ma said.
Sinopec, Asia’s biggest refiner, would also benefit as 75 percent to 80 percent of oil it processes by volume is purchased from overseas in U.S. dollars, spokesman Huang Wensheng said.
“If the ability of domestic consumers to take on higher costs increases and the cost of our overseas purchases decreases, then the result for us is an obvious one,” Huang said yesterday.
BHP, Rio Tinto
BHP Billiton Ltd., Rio Tinto Group and other raw materials suppliers to China may also benefit as a stronger yuan reduces the cost of importing commodities from overseas. The nation is the world’s largest consumer of materials including iron ore, copper and soy beans, and the second-biggest energy consumer. Australian mining companies BHP Billiton and Rio Tinto are the world’s largest iron ore suppliers.
“You’d have to nominate BHP and Rio Tinto as the two main candidates to benefit,” said Saxon Nicholls, a fund manager at Herschel Asset Management Ltd. in Melbourne who helps oversee $785 million. “We think it’s good for commodity prices themselves. We also think it’s actually good for the value of the commodity equities.”
As an appreciation of the yuan reduces the cost of importing commodities, it may also make Chinese exports of clothing, shoes and electronics less attractive, said David Cohen, an economist at Action Economics in Singapore. Companies that may be affected include Shanghai Zhenhua Heavy Industry Co. and Hon Hai Precision Industry Co., based in Taipei.
Monday, June 7, 2010
Telco in India - Reliance
By Saikat Chatterjee
June 7 (Bloomberg) -- Reliance Communications Ltd., controlled by Indian billionaire Anil Ambani, may raise 90.5 billion rupees ($1.9 billion) if it sells a 26 percent stake at the current market price to fund expansion after it acquired 3G licenses.
Mumbai-based Reliance Communications, which paid 85.9 billion rupees to the government in license fees for third- generation mobile-phone frequencies, said yesterday its board “in principle” approved the sale of as much as 26 percent to a strategic or private-equity investor. AT&T Inc. had preliminary talks to buy a stake in Reliance, the Wall Street Journal reported yesterday, citing people familiar with the situation.
The stake sale may help India’s second-biggest mobile-phone operator to cut debt and expand in the world’s largest wireless market by subscribers after China. The license fees paid by operators such as Reliance have stoked concerns that the companies won’t be able to recoup their investments and that interest costs on their debt will surge.
“With the kind of capital expenditure that the company would need going forward it may require an infusion of funds,” said Rahul Jain, a Mumbai-based analyst with Angel Broking Ltd., who has a “neutral” recommendation on the stock. Reliance’s plan to sell a stake in its mobile-phone tower business to the public “may not happen” because of the current market, he said.
Reliance Communications, the nation’s second-largest mobile phone operator, has filed a draft prospectus for an initial share sale of 10 percent of tower operator Reliance Infratel Ltd. on Sept. 24.
Price Competition
Revenue in the mobile-phone services industry is poised to fall 22 percent for the year after declining 25 percent in 2009, according to estimates from Bank of America Corp.’s Merrill Lynch unit. Vodafone Group Plc on May 18 booked a $3.3 billion charge for its Indian unit, citing “intense” price competition. Mobile-phone calls cost as little as 1 U.S. cent per minute in India.
“The competition in the Indian market is getting intense and is showing no signs of stabilizing at all,” said Jain.
At the close of trading in Mumbai on Friday, Reliance Communications was worth $7.4 billion. The stock has dropped 49 percent in the past 12 months compared with a 15 percent gain for the Bombay Stock Exchange’s benchmark Sensitive Index. Larger rival Bharti Airtel Ltd. shed 31 percent during the same period.
‘Various Proposals’
In India, 3G offers carriers the opportunity to revive earnings growth and generate more revenue through faster data services used to download music and surf the Internet.
Reliance Communications said June 2 it had received “various proposals” from overseas companies, commenting after the Times of India newspaper reported Emirates Telecommunications Corp., known as Etisalat, was in advanced talks to buy a 25 percent stake. Etisalat spokesman Ahmed Bin Ali said on June 2 that Indian operators were among companies being looked at for possible investment, without specifying Reliance Communications or a timeframe for any deals.
The Economic Times reported on June 1 that the Indian company may restart merger talks with South Africa’s MTN Group Ltd., after earlier negotiations collapsed in July 2008.
Reliance will sell shares at an “appropriate premium to the prevailing market price” and “examine and pursue other appropriate strategic combination or consolidation opportunities,” the company said in its statement yesterday. It didn’t provide any names of potential buyers.
(source - Bloomberg)
June 7 (Bloomberg) -- Reliance Communications Ltd., controlled by Indian billionaire Anil Ambani, may raise 90.5 billion rupees ($1.9 billion) if it sells a 26 percent stake at the current market price to fund expansion after it acquired 3G licenses.
Mumbai-based Reliance Communications, which paid 85.9 billion rupees to the government in license fees for third- generation mobile-phone frequencies, said yesterday its board “in principle” approved the sale of as much as 26 percent to a strategic or private-equity investor. AT&T Inc. had preliminary talks to buy a stake in Reliance, the Wall Street Journal reported yesterday, citing people familiar with the situation.
The stake sale may help India’s second-biggest mobile-phone operator to cut debt and expand in the world’s largest wireless market by subscribers after China. The license fees paid by operators such as Reliance have stoked concerns that the companies won’t be able to recoup their investments and that interest costs on their debt will surge.
“With the kind of capital expenditure that the company would need going forward it may require an infusion of funds,” said Rahul Jain, a Mumbai-based analyst with Angel Broking Ltd., who has a “neutral” recommendation on the stock. Reliance’s plan to sell a stake in its mobile-phone tower business to the public “may not happen” because of the current market, he said.
Reliance Communications, the nation’s second-largest mobile phone operator, has filed a draft prospectus for an initial share sale of 10 percent of tower operator Reliance Infratel Ltd. on Sept. 24.
Price Competition
Revenue in the mobile-phone services industry is poised to fall 22 percent for the year after declining 25 percent in 2009, according to estimates from Bank of America Corp.’s Merrill Lynch unit. Vodafone Group Plc on May 18 booked a $3.3 billion charge for its Indian unit, citing “intense” price competition. Mobile-phone calls cost as little as 1 U.S. cent per minute in India.
“The competition in the Indian market is getting intense and is showing no signs of stabilizing at all,” said Jain.
At the close of trading in Mumbai on Friday, Reliance Communications was worth $7.4 billion. The stock has dropped 49 percent in the past 12 months compared with a 15 percent gain for the Bombay Stock Exchange’s benchmark Sensitive Index. Larger rival Bharti Airtel Ltd. shed 31 percent during the same period.
‘Various Proposals’
In India, 3G offers carriers the opportunity to revive earnings growth and generate more revenue through faster data services used to download music and surf the Internet.
Reliance Communications said June 2 it had received “various proposals” from overseas companies, commenting after the Times of India newspaper reported Emirates Telecommunications Corp., known as Etisalat, was in advanced talks to buy a 25 percent stake. Etisalat spokesman Ahmed Bin Ali said on June 2 that Indian operators were among companies being looked at for possible investment, without specifying Reliance Communications or a timeframe for any deals.
The Economic Times reported on June 1 that the Indian company may restart merger talks with South Africa’s MTN Group Ltd., after earlier negotiations collapsed in July 2008.
Reliance will sell shares at an “appropriate premium to the prevailing market price” and “examine and pursue other appropriate strategic combination or consolidation opportunities,” the company said in its statement yesterday. It didn’t provide any names of potential buyers.
(source - Bloomberg)
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