(Reuters) - General Motors Corp is open to considering moving its headquarters from Detroit, selling U.S. plants and renegotiating its restructuring plan with its major union as it heads toward probable bankruptcy, the automaker's chief executive said on Monday.
CEO Fritz Henderson said it was more likely that GM was headed for bankruptcy by June 1 -- the U.S. government-imposed deadline for the automaker to restructure or face bankruptcy.
"It's more probable that we would need to accomplish our goals in a bankruptcy," Henderson said on a conference call with reporters. "There's still a chance for it to be done outside a court proceeding."
A move by GM to leave Detroit would represent another blow for the economy of a region already reeling from the bankruptcy of Chrysler LLC and the sharp downturn in auto manufacturing.
GM purchased its glass-towered headquarters building, known as Detroit's Renaissance Center, last year for $625 million. The 100-year-old automaker has been based there since 1996.
"As we look at the structure, look at the business, we're looking at everything, particularly as we slim down," Henderson said. "At this point, I don't have anything to report. We don't have any such plans, but if we did it would be motivated by business rationale, which would be cost-efficiency and speed.
GM needs to reach deals that would slash debt owed to bondholders and the United Auto Workers union and to win concessions from the union that would cut operating costs for its remaining U.S. plants by the end of this month under terms set by the Obama administration's autos task force.
Read more here
Monday, May 11, 2009
Geffen offered to buy NY Times stake: source
(Reuters) - Media mogul David Geffen tried to buy a stake in the New York Times Co from hedge fund Harbinger Capital Partners, but was rejected, a source with knowledge of the matter said on Monday.
Geffen offered to buy the stake at market price, but Harbinger fund manager Philip Falcone wanted him to pay a premium, according to the source.
The two sides are not currently in talks, said the source, who spoke on condition of anonymity.
Fortune magazine first reported the news on its website in an article that said Times board member Scott Galloway, who was nominated by Harbinger, approached Google Inc co-founder Larry Page to try to get the Internet company to try to buy the Times.
Galloway and New York Times spokeswoman Catherine Mathis declined to comment.
Geffen's overture comes at a pivotal moment in the history of the New York Times Co, its namesake newspaper and the family that has controlled the company for 113 years.
One of the most venerated names in world journalism, the Times has fallen on hard financial times in recent years because of falling advertising revenue at its newspapers and looming debt payments that have forced it to borrow money at high interest rates.
Speculation is bubbling among media watchers that the Ochs-Sulzberger family might sell the paper rather than watch their empire shrivel. The move by the billionaire ex-movie producer and pop music label owner Geffen only fuels speculation that the family could bend to an attractive offer.
It also prompts speculation over whether Harbinger might give up its attempt to force the Times to change its business to survive in the 21st century. Interest in the stake has grown as the investment fund reels from losses in its funds.
Harbinger owned 19.94 percent of the Times Co as of March 6. At Monday's closing price of $6.81, the stake would be valued at about $194 million, far less than the $500 million that Harbinger paid for it.
Times shares have fallen along with other newspaper stocks, hurt by the slump in advertising spending and by circulation declines as readers turn to the Internet for free news and information.
Harbinger funded the fight against the Times, but its leader was Web entrepreneur Galloway, who convinced Falcone to front the money. To avoid a proxy battle, the Times expanded its board to allow Galloway and an ally on board.
The Times has made efforts to streamline its business, but Galloway's plan has proved a wash for Harbinger so far.
Read more here
Geffen offered to buy the stake at market price, but Harbinger fund manager Philip Falcone wanted him to pay a premium, according to the source.
The two sides are not currently in talks, said the source, who spoke on condition of anonymity.
Fortune magazine first reported the news on its website in an article that said Times board member Scott Galloway, who was nominated by Harbinger, approached Google Inc co-founder Larry Page to try to get the Internet company to try to buy the Times.
Galloway and New York Times spokeswoman Catherine Mathis declined to comment.
Geffen's overture comes at a pivotal moment in the history of the New York Times Co, its namesake newspaper and the family that has controlled the company for 113 years.
One of the most venerated names in world journalism, the Times has fallen on hard financial times in recent years because of falling advertising revenue at its newspapers and looming debt payments that have forced it to borrow money at high interest rates.
Speculation is bubbling among media watchers that the Ochs-Sulzberger family might sell the paper rather than watch their empire shrivel. The move by the billionaire ex-movie producer and pop music label owner Geffen only fuels speculation that the family could bend to an attractive offer.
It also prompts speculation over whether Harbinger might give up its attempt to force the Times to change its business to survive in the 21st century. Interest in the stake has grown as the investment fund reels from losses in its funds.
Harbinger owned 19.94 percent of the Times Co as of March 6. At Monday's closing price of $6.81, the stake would be valued at about $194 million, far less than the $500 million that Harbinger paid for it.
Times shares have fallen along with other newspaper stocks, hurt by the slump in advertising spending and by circulation declines as readers turn to the Internet for free news and information.
Harbinger funded the fight against the Times, but its leader was Web entrepreneur Galloway, who convinced Falcone to front the money. To avoid a proxy battle, the Times expanded its board to allow Galloway and an ally on board.
The Times has made efforts to streamline its business, but Galloway's plan has proved a wash for Harbinger so far.
Read more here
Economists Downgrade U.S. Recovery Outlook, Survey Indicates
(Bloomberg) -- Economists downgraded their projections for a recovery from the deepest U.S. recession in half a century, now seeing the jobless rate exceeding 8 percent through 2011, a Bloomberg News survey showed.
Unemployment will average 8.5 percent in 2011 after a 9.6 percent rate next year, higher than previously expected, according to the median forecast in the survey taken from May 4 to May 11. The economy may expand 2.8 percent in 2011, less than estimated last month, after a 1.9 percent rise in 2010.
“The worse the labor market is and the longer that lasts, the more difficult it’ll be for consumers to recover,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm. “The economy isn’t going to come roaring out of the box here.”
A weaker recovery will keep pressure on the Obama administration, lawmakers and Federal Reserve officials to maintain the emergency lending and stimulus programs implemented in the past year. Shapiro said the danger is that policy makers may “pull out too soon.”
The economy will contract at a 1.9 percent pace this quarter, returning to a growth rate of 0.5 percent in the July to September period and 1.8 percent in the final three months, according to the median forecast of 61 economists surveyed.
Consumer spending, after stagnating this quarter, will not exceed the first three months’ 2.2 percent gain in the second half of the year, the survey showed. Such spending accounts for 70 percent of the economy.
25-Year High
The unemployment rate jumped to 8.9 percent in April, the highest level in 25 years, and the economy has lost 5.7 million jobs since the recession began in December 2007, the most of any economic slump since the Great Depression, according to Labor Department figures.
Some companies have yet to see any signs of recovery. Airgas Inc., the biggest U.S. distributor of industrial gases, last week forecast per-share earnings may fall this year and said April sales failed to pick up as expected.
“We are expecting no improvement in the economy during the calendar year,” Chief Executive Officer Peter McCausland said on a May 6 conference call with analysts. “We’ve never seen a downturn like this. When we see a tick up, then we’ll say things have stabilized.”
More Capital
The credit crunch, while easing, is clouding prospects for a recovery. Ten of the 19 largest U.S. banks will need another $75 billion in capital to withstand deterioration in the economy almost as dire as economists now anticipate, according to results of government tests issued last week. Examiners used an “adverse scenario” of a 3.3 percent decline in gross domestic product this year, and an average unemployment rate of 10.3 percent in 2010.
“The financial crisis is still making people wonder how far and how fast this economy can come back,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Credit is the life blood of the economy and bank balance sheets are still very constrained. That will put a damper on the strength of this recovery.”
A benchmark interest rate that’s already near zero and a yawning government budget gap make it unlikely the government will step in with additional spending, Rupkey said. “We may need more stimulus, but we can’t afford more at this stage,” he said.
Read more here
Unemployment will average 8.5 percent in 2011 after a 9.6 percent rate next year, higher than previously expected, according to the median forecast in the survey taken from May 4 to May 11. The economy may expand 2.8 percent in 2011, less than estimated last month, after a 1.9 percent rise in 2010.
“The worse the labor market is and the longer that lasts, the more difficult it’ll be for consumers to recover,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm. “The economy isn’t going to come roaring out of the box here.”
A weaker recovery will keep pressure on the Obama administration, lawmakers and Federal Reserve officials to maintain the emergency lending and stimulus programs implemented in the past year. Shapiro said the danger is that policy makers may “pull out too soon.”
The economy will contract at a 1.9 percent pace this quarter, returning to a growth rate of 0.5 percent in the July to September period and 1.8 percent in the final three months, according to the median forecast of 61 economists surveyed.
Consumer spending, after stagnating this quarter, will not exceed the first three months’ 2.2 percent gain in the second half of the year, the survey showed. Such spending accounts for 70 percent of the economy.
25-Year High
The unemployment rate jumped to 8.9 percent in April, the highest level in 25 years, and the economy has lost 5.7 million jobs since the recession began in December 2007, the most of any economic slump since the Great Depression, according to Labor Department figures.
Some companies have yet to see any signs of recovery. Airgas Inc., the biggest U.S. distributor of industrial gases, last week forecast per-share earnings may fall this year and said April sales failed to pick up as expected.
“We are expecting no improvement in the economy during the calendar year,” Chief Executive Officer Peter McCausland said on a May 6 conference call with analysts. “We’ve never seen a downturn like this. When we see a tick up, then we’ll say things have stabilized.”
More Capital
The credit crunch, while easing, is clouding prospects for a recovery. Ten of the 19 largest U.S. banks will need another $75 billion in capital to withstand deterioration in the economy almost as dire as economists now anticipate, according to results of government tests issued last week. Examiners used an “adverse scenario” of a 3.3 percent decline in gross domestic product this year, and an average unemployment rate of 10.3 percent in 2010.
“The financial crisis is still making people wonder how far and how fast this economy can come back,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Credit is the life blood of the economy and bank balance sheets are still very constrained. That will put a damper on the strength of this recovery.”
A benchmark interest rate that’s already near zero and a yawning government budget gap make it unlikely the government will step in with additional spending, Rupkey said. “We may need more stimulus, but we can’t afford more at this stage,” he said.
Read more here
China’s Export Decline Worsens, Hampering Recovery
(Bloomberg) -- China’s export slump worsened in April, making it harder for the government to revive the world’s third-biggest economy.
Overseas sales declined 22.6 percent to $91.94 billion from a year earlier, the official Xinhua News Agency said. Imports fell 23 percent.
The collapse of world trade has cost millions of jobs in China and dragged growth to its weakest pace since at least 1999. Surging lending and a 4 trillion yuan ($586 billion) stimulus package are yet to establish solid foundations for an economic recovery, the central bank said last week.
“The export outlook remains highly uncertain and downbeat,” said Tao Dong, chief Asia economist at Credit Suisse in Hong Kong. China will still be the first major economy to “crawl out of recession” as lending and stimulus spending fuel growth, he added.
The yuan was little changed after the report, trading at 6.8252 per dollar as of 10:19 a.m. in Shanghai, compared with 6.8230 yesterday.
April’s export decline compared with March’s 17.1 percent slump. The median forecast of 19 economists surveyed by Bloomberg News was for a 15.3 percent drop.
Seasonally-adjusted, exports rose 6.9 percent from the previous month and imports climbed 15.1 percent, Xinhua reported.
Read more here
Overseas sales declined 22.6 percent to $91.94 billion from a year earlier, the official Xinhua News Agency said. Imports fell 23 percent.
The collapse of world trade has cost millions of jobs in China and dragged growth to its weakest pace since at least 1999. Surging lending and a 4 trillion yuan ($586 billion) stimulus package are yet to establish solid foundations for an economic recovery, the central bank said last week.
“The export outlook remains highly uncertain and downbeat,” said Tao Dong, chief Asia economist at Credit Suisse in Hong Kong. China will still be the first major economy to “crawl out of recession” as lending and stimulus spending fuel growth, he added.
The yuan was little changed after the report, trading at 6.8252 per dollar as of 10:19 a.m. in Shanghai, compared with 6.8230 yesterday.
April’s export decline compared with March’s 17.1 percent slump. The median forecast of 19 economists surveyed by Bloomberg News was for a 15.3 percent drop.
Seasonally-adjusted, exports rose 6.9 percent from the previous month and imports climbed 15.1 percent, Xinhua reported.
Read more here
Sunday, May 10, 2009
Oil Falls From Six-Month High as Global Supplies to Increase
(Bloomberg) -- Crude oil fell from a six-month high on speculation last week’s 10 percent advance won’t be sustained as global output increases.
Exports from Iraq’s Kurdistan region will begin June 1 after the state oil ministry agreed to “expedite” shipments, the provincial government said on its Web site yesterday. Venezuela, OPEC’s fifth-largest producer, seized the assets of 60 oil-field service companies on May 8 to restore operations shut over contract disputes.
“At some point you do have to be asking the question as to just how far this can go,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “The supply side really isn’t the focus of the market at the moment.”
Crude oil for June delivery fell as much as 68 cents, or 1.2 percent, to $57.95 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $57.99 at 11:58 a.m. in Singapore.
The contract rose 3.4 percent to $58.63 a barrel on May 8, the highest settlement since Nov. 11, as slowing job losses in the U.S. increased investor confidence and a drop in the dollar boosted the appeal of commodity investments.
Brent crude oil for June settlement declined as much as 54 cents, or 0.9 percent, to $57.60 a barrel on London’s ICE Futures Europe exchange.
U.S. Economy
Last week’s jobs report in the U.S., the world’s largest oil consumer, added to investor confidence that the worst of the recession there may be over, boosting demand expectations, Hassall said.
Ongoing weakness in the dollar will support commodities and oil may resume its rally if U.S. summer fuel demand is sufficient to start drawing down stockpiles there, he said.
Today, the euro has surged to a six-week high against the dollar as the gains in global equities has increased investors’ risk appetite.
Hedge-fund managers and other large speculators changed their bets on the direction of oil prices for a second time last week, according to U.S. Commodity Futures Trading Commission data.
Speculative short positions, or bets prices will fall, outnumbered long positions by 11,285 contracts on the New York Mercantile Exchange on May 5, the commission said May 8. A week earlier, traders had bet on rising prices.
New York oil futures plunged to a four-year low of $32.40 on Dec. 19 as global recession slashed demand and producers cut production to slow rising stockpiles. Prices have gained 39 percent in the past two months as measures to restore global credit markets lifted global equity markets.
Read more here
Exports from Iraq’s Kurdistan region will begin June 1 after the state oil ministry agreed to “expedite” shipments, the provincial government said on its Web site yesterday. Venezuela, OPEC’s fifth-largest producer, seized the assets of 60 oil-field service companies on May 8 to restore operations shut over contract disputes.
“At some point you do have to be asking the question as to just how far this can go,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “The supply side really isn’t the focus of the market at the moment.”
Crude oil for June delivery fell as much as 68 cents, or 1.2 percent, to $57.95 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $57.99 at 11:58 a.m. in Singapore.
The contract rose 3.4 percent to $58.63 a barrel on May 8, the highest settlement since Nov. 11, as slowing job losses in the U.S. increased investor confidence and a drop in the dollar boosted the appeal of commodity investments.
Brent crude oil for June settlement declined as much as 54 cents, or 0.9 percent, to $57.60 a barrel on London’s ICE Futures Europe exchange.
U.S. Economy
Last week’s jobs report in the U.S., the world’s largest oil consumer, added to investor confidence that the worst of the recession there may be over, boosting demand expectations, Hassall said.
Ongoing weakness in the dollar will support commodities and oil may resume its rally if U.S. summer fuel demand is sufficient to start drawing down stockpiles there, he said.
Today, the euro has surged to a six-week high against the dollar as the gains in global equities has increased investors’ risk appetite.
Hedge-fund managers and other large speculators changed their bets on the direction of oil prices for a second time last week, according to U.S. Commodity Futures Trading Commission data.
Speculative short positions, or bets prices will fall, outnumbered long positions by 11,285 contracts on the New York Mercantile Exchange on May 5, the commission said May 8. A week earlier, traders had bet on rising prices.
New York oil futures plunged to a four-year low of $32.40 on Dec. 19 as global recession slashed demand and producers cut production to slow rising stockpiles. Prices have gained 39 percent in the past two months as measures to restore global credit markets lifted global equity markets.
Read more here
Santos Seeks to Raise A$3 Billion for LNG Project
(Bloomberg) -- Santos Ltd. is seeking to raise A$3 billion ($2.3 billion) from a share sale to fund its portion of Exxon Mobil Corp.’s liquefied natural gas venture in Papua New Guinea, the largest investment in the Pacific nation.
Santos is offering investors two shares for every five they own at A$12.50 apiece, 27 percent below the last traded price of A$17.09, the Adelaide-based company said in a statement to the Australian stock exchange today. It would be the country’s largest share sale since National Australia Bank Ltd. raised A$3 billion in November.
Australia’s third-biggest oil and gas producer will use A$1.05 billion of the sale proceeds to fund spending at the $12.5 billion Exxon-led project. Santos expects a “step- change” in production in 2014 once the Papua New Guinea venture and a proposed gas-export project in Queensland with Petroliam Nasional Bhd. come online, it said May 6.
“Exxon putting their horsepower behind it makes this a very good project to be involved in,” said Peter Arden, a Melbourne-based analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co. “It will be a stepping stone for Santos; it will help get them a lot of credibility.”
Of the stock on offer, A$1.65 billion for sale to institutional investors is fully underwritten. The A$1.35 billion retail portion of the sale isn’t underwritten, Santos said. Caliburn is advising Santos, while JPMorgan, Citigroup and Deutsche Bank are managing the sale, the Australian Financial Review reported earlier.
Queensland Project
Additional capital raised would fund other growth projects, which include a proposed LNG venture at Gladstone in Queensland with Petronas, as Kuala Lumpur-based Petroliam Nasional is known. Their A$7.7 billion venture is due to deliver its first LNG cargoes in 2014, Santos said today. It is one of five rival projects planning to convert gas extracted from coal seams into LNG for export to Asia.
“I think Gladstone is really going to stretch Santos funding-wise,” Arden of Ord Minnett said. “It is also a bit of a crowded space there, and it might be that not everyone gets their project up.”
Santos has gained 25 percent in the past six months in Sydney, compared with the 0.5 percent decline in the local benchmark index.
LNG is natural gas that has been chilled to liquid form for transportation by ship to destinations not connected by pipeline.
Read more here
Santos is offering investors two shares for every five they own at A$12.50 apiece, 27 percent below the last traded price of A$17.09, the Adelaide-based company said in a statement to the Australian stock exchange today. It would be the country’s largest share sale since National Australia Bank Ltd. raised A$3 billion in November.
Australia’s third-biggest oil and gas producer will use A$1.05 billion of the sale proceeds to fund spending at the $12.5 billion Exxon-led project. Santos expects a “step- change” in production in 2014 once the Papua New Guinea venture and a proposed gas-export project in Queensland with Petroliam Nasional Bhd. come online, it said May 6.
“Exxon putting their horsepower behind it makes this a very good project to be involved in,” said Peter Arden, a Melbourne-based analyst at Ord Minnett Ltd., an affiliate of JPMorgan Chase & Co. “It will be a stepping stone for Santos; it will help get them a lot of credibility.”
Of the stock on offer, A$1.65 billion for sale to institutional investors is fully underwritten. The A$1.35 billion retail portion of the sale isn’t underwritten, Santos said. Caliburn is advising Santos, while JPMorgan, Citigroup and Deutsche Bank are managing the sale, the Australian Financial Review reported earlier.
Queensland Project
Additional capital raised would fund other growth projects, which include a proposed LNG venture at Gladstone in Queensland with Petronas, as Kuala Lumpur-based Petroliam Nasional is known. Their A$7.7 billion venture is due to deliver its first LNG cargoes in 2014, Santos said today. It is one of five rival projects planning to convert gas extracted from coal seams into LNG for export to Asia.
“I think Gladstone is really going to stretch Santos funding-wise,” Arden of Ord Minnett said. “It is also a bit of a crowded space there, and it might be that not everyone gets their project up.”
Santos has gained 25 percent in the past six months in Sydney, compared with the 0.5 percent decline in the local benchmark index.
LNG is natural gas that has been chilled to liquid form for transportation by ship to destinations not connected by pipeline.
Read more here
Asian Bank Stocks Rise as Goldman Sachs Tips HSBC; Toyota Falls
(Bloomberg) -- Asian bank stocks rose as Goldman Sachs Group Inc. recommended investors buy HSBC Holdings Plc. Automakers fell after Toyota Motor Corp. cut its dividend and predicted a second annual loss.
HSBC, Europe’s biggest bank, climbed 3.3 percent in Hong Kong as Goldman Sachs said the company may benefit from possible write-backs as asset markets stabilize. Mitsubishi Corp., Japan’s No.1 trading company, gained 2.4 percent after crude- oil prices climbed on May 8. Toyota, the world’s largest automaker, slumped 5 percent in Tokyo, as it forecast a wider loss than analysts estimated.
“Banks are cyclical shares and investors buy them when they expect the economy to bottom out,” said Hisakazu Amano, who helps oversee about $39 billion at T&D Asset Management Co. “On the other hand, people are getting nervous as they aren’t sure if company profits justify current share prices.”
The MSCI Asia Pacific Index gained 0.4 percent to 98.34 as of 12:30 p.m. in Tokyo. The gauge has rallied 39 percent from a five-year low on March 9 amid mounting confidence the global economy is recovering. The index slumped by a record 43 percent in 2008.
Hong Kong’s Hang Seng Index rose 0.3 percent. Japan’s Nikkei 225 Stock Average lost 0.6 percent. Australia’s S&P/ASX 200 Index dropped 0.6 percent. Other markets in Asia advanced except New Zealand and Singapore.
Futures on the Standard & Poor’s 500 Index lost 0.8 percent. The gauge climbed 2.4 percent as Federal Reserve Chairman Ben S. Bernanke said a review of banks’ financial health should provide “considerable comfort” and a report showing fewer job losses than forecast signaled the worst of the recession is over.
Rising Valuations
The U.S. Labor Department said on May 8 that payrolls dropped by 539,000 last month after a 699,000 loss in March. The two-month rally in equities has driven the average valuation of companies in the MSCI Asia Pacific Index to 27 times reported profit, the highest since March 30, 2004.
“The overall message of the U.S. jobless report is that things are getting better,” said Tomochika Kitaoka, a strategist at Mizuho Securities Co. in Tokyo. “Government aid and a recovery in earnings will put American banks back on their feet.”
HSBC climbed 3.3 percent to HK$68.05 as Goldman Sachs raised its recommendation on the stock to “buy” from “neutral” and its share-price target to HK$84 from HK$55, according to a report today. HSBC may also benefit from a yuan trade settlement program, the report said.
China Citic Bank Co., the nation’s sixth-largest lender by market value, gained 2 percent to HK$4.09. The company will pay parent China Citic Group HK$13.6 billion ($1.8 billion) for control of a Hong Kong banking affiliate.
Read more here
HSBC, Europe’s biggest bank, climbed 3.3 percent in Hong Kong as Goldman Sachs said the company may benefit from possible write-backs as asset markets stabilize. Mitsubishi Corp., Japan’s No.1 trading company, gained 2.4 percent after crude- oil prices climbed on May 8. Toyota, the world’s largest automaker, slumped 5 percent in Tokyo, as it forecast a wider loss than analysts estimated.
“Banks are cyclical shares and investors buy them when they expect the economy to bottom out,” said Hisakazu Amano, who helps oversee about $39 billion at T&D Asset Management Co. “On the other hand, people are getting nervous as they aren’t sure if company profits justify current share prices.”
The MSCI Asia Pacific Index gained 0.4 percent to 98.34 as of 12:30 p.m. in Tokyo. The gauge has rallied 39 percent from a five-year low on March 9 amid mounting confidence the global economy is recovering. The index slumped by a record 43 percent in 2008.
Hong Kong’s Hang Seng Index rose 0.3 percent. Japan’s Nikkei 225 Stock Average lost 0.6 percent. Australia’s S&P/ASX 200 Index dropped 0.6 percent. Other markets in Asia advanced except New Zealand and Singapore.
Futures on the Standard & Poor’s 500 Index lost 0.8 percent. The gauge climbed 2.4 percent as Federal Reserve Chairman Ben S. Bernanke said a review of banks’ financial health should provide “considerable comfort” and a report showing fewer job losses than forecast signaled the worst of the recession is over.
Rising Valuations
The U.S. Labor Department said on May 8 that payrolls dropped by 539,000 last month after a 699,000 loss in March. The two-month rally in equities has driven the average valuation of companies in the MSCI Asia Pacific Index to 27 times reported profit, the highest since March 30, 2004.
“The overall message of the U.S. jobless report is that things are getting better,” said Tomochika Kitaoka, a strategist at Mizuho Securities Co. in Tokyo. “Government aid and a recovery in earnings will put American banks back on their feet.”
HSBC climbed 3.3 percent to HK$68.05 as Goldman Sachs raised its recommendation on the stock to “buy” from “neutral” and its share-price target to HK$84 from HK$55, according to a report today. HSBC may also benefit from a yuan trade settlement program, the report said.
China Citic Bank Co., the nation’s sixth-largest lender by market value, gained 2 percent to HK$4.09. The company will pay parent China Citic Group HK$13.6 billion ($1.8 billion) for control of a Hong Kong banking affiliate.
Read more here
Subscribe to:
Posts (Atom)
