INTRADAY calls for 09th Sep 2009
BUY Educomp-4354 for 4425-4465+ with sl 4320
BUY SBIin-1894 for 1930+ with sl 1882
BUY CenturyTex-471 for 483-489+ with sl 465
BUY Everonn-411 for 425+ with sl 406
NIFTY FUTURE LEVELS
RESISTANCE
4825
4835
4857
4864
4887
SUPPORT
4798
4790
4781
4758
4751
4728
Buy WH BRADY & CO;Buy FARMAX RETAIL
Strong & Weak futures
This is list of 10 strong futures:
Bhushan Steel, Tata Motors, India Bulls Retail, Unitech Ltd, Aban Off shore, Chennai Petro, Hind Petro, BPCL & Orient Bank.
And this is list of 10 Weak futures:
GVKPIL, Mcdowell, Tata Com, BEL, India Cements, ITC, Cipla, ACC Ltd, MTNL & NTPC.
Nifty is in Up trend
BUY Educomp-4354 for 4425-4465+ with sl 4320
BUY SBIin-1894 for 1930+ with sl 1882
BUY CenturyTex-471 for 483-489+ with sl 465
BUY Everonn-411 for 425+ with sl 406
NIFTY FUTURE LEVELS
RESISTANCE
4825
4835
4857
4864
4887
SUPPORT
4798
4790
4781
4758
4751
4728
Buy WH BRADY & CO;Buy FARMAX RETAIL
Strong & Weak futures
This is list of 10 strong futures:
Bhushan Steel, Tata Motors, India Bulls Retail, Unitech Ltd, Aban Off shore, Chennai Petro, Hind Petro, BPCL & Orient Bank.
And this is list of 10 Weak futures:
GVKPIL, Mcdowell, Tata Com, BEL, India Cements, ITC, Cipla, ACC Ltd, MTNL & NTPC.
Nifty is in Up trend
INVESTMENT BUY:
Buy WH BRADY & CO (BSE Cash) Buy with a Stop Loss of 75 level with a Target of 80 level.
Above 83 level, uptrend may continue. If SL got triggered then expect unwinding up to 72 level by non-stop.
Buy FARMAX RETAIL (I) (BSE Cash) Buy with a Stop Loss of 114 level with a Target of 121 level.
Above 126 level, uptrend may continue. If SL got triggered then expect unwinding up to 109 level by non-stop.
NIFTY FUTURES (F & O):
Above 4825 level, rally may continue up to 4833-4835 zone and thereafter expect a jump up to 4855-4857 zone by non-stop.
Support at 4790 & 4798 levels. Below these levels, expect profit booking up to 4781-4783 zone and thereafter slide may continue up to 4758-4760 zone by non-stop.
Below 4751-4753 zone, expect panic up to 4728-4730 zone by non-stop.
On Positive Side, cross above 4862-4864 zone can take it up to 4885-4887 zone. Supply expected at around this zone and have caution.
Short-Term Investors:
Bearish Trend. 3 closes below 4623.80 level, it can tumble up to 4092.20 level by non-stop.
SL triggered. 3 closes above 4623.80 level, expect short covering up to 4889.60 level by non-stop.
BSE SENSEX:
Higher opening expected. Uptrend should continue.
Short-Term Investors:
Short-Term trend is Bearish and target at around 14235 level on down side.
Maintain a Stop Loss at 15973 level for your short positions too.
SL triggered. 3 closed above 15973 level, expect short covering up to 16842 level by non-stop.
SPOT LEVELS
FUNDS DATA
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,497.34. Up by 56.07 points.
The Broader S&P 500 closed at 1,025.39. Up by 8.99 points.
The Nasdaq Composite Index closed at 2,037.77. Up by 18.99 points.
The partially convertible rupee INR=IN ended at 48.47/48 per dollar on yesterday, stronger than Monday's close of 48.66/67.
Interesting findings on web:
The Dow started the week Monday with a 56-point gain.
US stocks rose Tuesday, underpinned by optimism that economic recovery is underway and a surge in commodities prices stoked by a weakening dollar.
Corporate takeover news and rising commodities prices lifted investors' confidence in the global economy Tuesday, sending the Dow Jones index ending for three trading days in a row.
Investors were spirited by a takeover bid from Kraft Foods Ink for Cadbury PLC and a decision by Deutsche Telekom and France Telecom to merge their British mobile phone units.
Investors' confidence in the world economy was also bolstered as prices of such commodities as gold and crude oil surged, said market analysts.
Stocks closed higher as oil prices surged more than $3 a barrel and gold made a run at $1,000 an ounce before backing off.
The day's trading was driven by stronger commodity prices generated off a weaker dollar, and the relationship's flux helped keep gains in check.
Weakness in the U.S. dollar helped send gold over $1,000 an ounce before a pullback, while. Crude roared over the $71 mark.
The dollar hit its lowest level in nearly a year against a basket of currencies, a move that may have been sparked over concerns that the greenback's status as the world's reserve currency was in danger.
The Dow Jones Industrial Average finished the trading day at 9,497.34, up 56.07 points (0.59 percent).
The S&P 500 closed at 1,025.39, up 8.99 points (0.88 percent). Its strongest category was energy, which rose 2.8 per cent as money spilled back into commodities.
The NASDAQ Composite finished at 2,037.77, up 18.99 points (0.94 percent).
"Investors believe that the global stimulus-induced economic recovery will last and are bidding up riskier assets such as equities," said Chris Lafakis of Moody's Economy.com.
The optimistic outlook and a faltering dollar propelled dollar-priced commodities higher, particular oil, which jumped three dollars to 71 dollars a barrel in New York and gold, trading at an 18-month high above 1,000 dollars an ounce.
Wall Street struggled to hold opening gains as trading resumed after Monday's Labor Day holiday, the unofficial end of the summer holiday season.
Briefing.com analysts said that although energy and materials stocks "performed well" throughout the session, the broader market was hit by a few fits of choppy trading.
"The more dramatic moves to the downside came as stocks approached last week's highs. However, buyers did show some resolve by bidding stocks back toward session highs ahead of the closing bell," they said in a note to clients.
The surge in crude oil futures lifted energy and materials stocks.
Oil giant ExxonMobil shares jumped 2.12 percent to 70.65 dollars, Chevron gained 2.20 percent to 70.48 dollars and aluminum giant Alcoa leapt 3.45 percent to 12.60 dollars.
Alcoa gained 3.5 per cent and Chevron and Exxon Mobil climbed more than 2 per cent. General Electric rose 4.5 per cent after JPMorgan Chase analysts upgraded their shares.
With the broad market up around 50 percent from lows in early March, some analysts argue that stocks have risen too much and too quickly.
The head of the UN Conference on Trade and Development, Supachai Panitchpakdi, cautioned that governmental stimulus spending was creating "bubbles" in the equities markets.
The market was focused on a major takeover battle in the candy sector.
Kraft Foods, a blue-chip Dow component, dropped 5.87 percent to 26.45 dollars after its unsolicited takeover bid was rejected by Britain's Cadbury.
Kraft Foods sank 5.9 per cent after its cash-and-stock takeover bid for Cadbury was rejected. But many traders welcomed the news, which came amid a spate of other large merger developments in recent weeks, as a sign of an improving market landscape.
Cadbury's US shares shot up 38.49 percent to 51.88 dollars.
Hershey, reportedly interested in making a bid for Cadbury, rose 1.29 percent to 39.13 dollars.
Conglomerate General Electric, sometimes considered a bellwether of the US economy, surged 4.54 percent to 14.50 dollars after an analyst upgrade.
Insurer AIG, nationalized in a government rescue a year ago and whose share price has increased fivefold in recent months, plunged 10.49 percent to 35.85 dollars after a Credit Suisse downgrade.
Gold miners were getting a boost from the metal's run, with Couer D'Alene [CDE 18.97 1.80 (+10.48%) ] setting the pace.
GE led gainers on the Dow industrials while Kraft was the index's worst performer.
Among the market's biggest movers:
Advanced Micro Devices [AMD 5.19 0.66 (+14.57%)] shares jumped after Barclays upgraded the chip giant to outperform.
MGM [MGM 9.41 0.65 (+7.42%)] shares gained along with the rest of the luxury hotel industry on a generally higher outlook for hotel real estate investment trusts.
Government-sponsored entities Fannie Mae [FNM 1.63 -0.14 (-7.91%)] and Freddie Mac [FRE 1.86 -0.11 (-5.58%)] continued to be high-volume trading vehicles, but slipped even after saying their were in compliance with New York Stock Exchange princing rules.
September — historically the worst month for stocks — had started off in traditional fashion with losses on the first two trading days, but the averages gained in the final two sessions before the long weekend and are poised to do so again today.
The first of three Treasury note went well, with $38 billion in 3-year notes going at a lower yield than expected and fetching strong demand.
Oil,Gold & Currencies:
Crude-oil prices jumped 4.5 per cent to settle at $US71.10 a barrel after Ali Naimi, Saudi Arabia's Oil Minister, said ahead of an OPEC meeting later this week that the oil market is in "very good shape" and that oil-producing and consuming nations are happy with crude prices between $US68 and $US73 a barrel. OPEC is expected to leave output levels unchanged.
Metals prices also jumped. Comex gold for September delivery gained $US3 a troy ounce (rising 0.30 per cent) to $US997.90, after trading above $US1006 on an intraday basis. Copper and silver prices also rose.
Gold futures topped the key threshold of $1,000 per ounce for the first time since February.
Oil and other commodities, which are traded globally in US dollar terms, were also helped by a sell-off in the US currency. The greenback declined against all six components of the US Dollar Index - the euro, Japanese yen, Swedish krona, Swiss franc, British pound and Canadian dollar - for the first time since July 31. The Dollar Index declined 0.9 per cent.
The euro rose toward a nine-month high against the dollar before a government report forecast to show French industrial production increased for a third month in July, boosting demand for higher-yielding assets.
Europe's single currency advanced against 13 of its 16 major counterparts on expectations Federal Reserve officials will today signal they plan to refrain from raising interest rates. The yen dropped to the lowest level in almost two weeks against the euro before a report this week forecast to show Japanese consumer confidence rose for an eighth month, paring demand for the currency as a refuge.
"Risk appetite is coming back on the table, supporting the euro," said Susumu Kato, chief economist in Tokyo at Calyon Securities, the investment banking unit of Credit Agricole SA. "The euro is also benefiting from uncertainty about the U.S. economy. The euro-zone is likely to see a hike in interest rates before the U.S. does."
The euro traded at $1.4497 at 11:13 a.m. in Tokyo from $1.4478 in New York yesterday, when it reached $1.4535, the highest level since Dec. 18. The dollar was at 92.37 yen from 92.32 yen. The yen fell to 133.90 per euro from 133.67, after earlier reaching 134.17, the lowest level since Aug. 28.
The greenback traded at 86.03 cents per Australian dollar from 86.16 yesterday, when it touched 86.58, the lowest since Aug. 29, 2008.
'Inflation Debate'
The euro advanced as economists surveyed by Bloomberg News said the Paris-based statistics office Insee may report factory output in France gained 0.4 percent in July after rising 0.3 percent in June. The data is due tomorrow.
"Global growth indicators remain supportive for risk takers," analysts led by Hans-Guenter Redeker, London-based global head of currency strategy at BNP Paribas SA, wrote in a research note yesterday. "The dollar will remain under selling pressure."
The dollar weakened before speeches by Chicago Fed President Charles Evans and Fisher today. Evans will speak on "The Great Inflation Debate" in New York and Fisher will speak on "Today's Economy: New Challenges for Business" in Dallas.
"They are going to talk about policies remaining accommodating in the near term," said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Sydney. "There are signs that things are improving, but we are not out of the woods yet. They are still going to be cautious."
Weaker Yen
Dallas Fed President Richard Fisher said last week the U.S. may see "a prolonged period of sluggish economic performance." Atlanta Fed President Dennis Lockhart will speak in Jacksonville, Florida, and Fed Vice Chairman Donald Kohn will speak in Washington tomorrow.
The Dollar Index has fallen 1.8 percent this week as signs the global economy is starting to recover sapped demand for the greenback as a refuge from the recession.
U.K. industrial production rose for a second month in July, climbing 0.5 percent, the Office for National Statistics said in London yesterday. German exports increased for a third month in July, advancing 2.3 percent, as global trade picked up, the Federal Statistics Office said in Wiesbaden yesterday.
The Dollar Index, which the ICE uses to track the dollar against the currencies of six major U.S. trading partners, was at 77.231 today from 77.333 yesterday, when it fell to 77.047, the lowest level since Sept. 29, 2008.
UBS AG, the world's second-largest currency trader, lowered its forecasts for the dollar, citing improving risk appetite and gains in stocks.
UBS Forecasts
The dollar will weaken to $1.45 per euro in a month, compared with a previous forecast of $1.40, and it will fall to $1.63 per pound, versus an earlier prediction of $1.57, Mansoor Mohi-uddin, chief currency strategist at UBS in Zurich, wrote in a research note today.
The yen fell against 15 of its 16 major counterparts as economists surveyed by Bloomberg News forecast consumer confidence in Japan climbed to 40.2 in August from 39.7 in July, signaling the worst postwar recession is easing. The Cabinet Office is set to release the data on Sept. 11 in Tokyo.
"The global economic outlook is improving as the financial crisis abates, damping demand for the yen as a refuge," said Satoru Ogasawara, a foreign-exchange analyst and economist in Tokyo at Credit Suisse Group AG. "The yen is being sold due to Japan's low interest rates."
Aussie Slips
Benchmark interest rates are 0.1 percent in Japan and as low as zero in the U.S., compared with 3 percent in Australia. That makes the South Pacific nation's assets attractive to investors seeking higher returns. The yen fell to 79.74 per
Australia's dollar slipped from a one-year high against the U.S. currency after government reports showed retail sales unexpectedly fell and home loans declined by more than economists had estimated.
Sales dropped 1 percent from June, when they declined a revised 0.8 percent, the Bureau of Statistics said in Sydney today. The median forecast of 20 economists surveyed by Bloomberg News was for a 0.5 percent gain. Australian home-loan approvals fell in July, ending a record nine months of consecutive gains, a separate report showed.
Bonds:
The bond market fell. The yield on the 10-year Treasury bond advanced to 3.469 percent from 3.442 percent Friday and that on the 30-year bond rose to 4.311 percent from 4.273 percent.
Bond yield and prices move in opposite directions.
In the Treasury market, an auction of three-year notes came in at a yield of 1.487 per cent, compared with the 1.493 per cent on the when-issued paper just before the auction. The bid-to-cover ratio, a main gauge of demand, was 3.02, compared with 2.89 for the previous auction in August and the average of 2.58 from the past 10 auctions. Treasury prices declined.
What to expect:
The economic calendar was light in the holiday-shortened week. The Federal Reserve Beige Book survey on the US economy is due Wednesday and data on the US trade balance Thursday.
Investors will eye Google and Apple as they display their wares and await the possible return of Apple's master showman CEO Steve Jobs at a media event.
Asia:
Most Asian stocks rose as gains among commodity producers on higher oil and metals prices offset downgrades of Japanese banks by JPMorgan Chase & Co.
Rio Tinto Group, the world's third-largest mining company rose 1.8 percent in Sydney, while Inpex Corp., Japan's largest oil explorer, climbed 3 percent. Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., Japan's two largest listed banks by value, retreated at least 1.4 percent after JPMorgan downgraded both to "neutral."
About four stocks advanced for every three that fell on the MSCI Asia Pacific Index, which was little changed at 115.97 as of 10:12 a.m. in Tokyo. The gauge closed at the highest in almost a year yesterday, having gained 64 percent in the past six months amid speculation stimulus measures worldwide will revive global growth.
"The critical question is what are the earnings underpinning the valuations," said Macquarie Group Ltd.'s Tanya Branwhite, who was voted Australia's top strategist in a fund manager survey by BRW magazine. "Valuations can only be assessed reliably if the earnings underpinning the valuations turn out to be correct."
Japan's Nikkei 225 Stock Average slipped 0.1 percent to 10,383.52. Australia's S&P/ASX 200 Index gained 0.5 percent and New Zealand's NZX 50 Index added 0.2 percent. South Korea's Kospi index dropped 0.2 percent.
Futures on the U.S. Standard & Poor's 500 Index lost 0.1 percent. The gauge rose 0.9 percent yesterday after metal prices jumped as the dollar weakened and Goldman Sachs Group Inc. boosted its forecasts because of "increasing evidence of a stronger-than-anticipated recovery in global industrial activity."
Gold, Crude Oil
Rio climbed 1.8 percent to A$58.80, while Inpex climbed 3 percent to 763,000 yen. BHP Billiton, the world's largest mining company and Australia's largest oil producer, added 0.9 percent to A$37.90.
Gold jumped to as high as $1,009.70 in New York yesterday, a price not seen since March 2008. A gauge of six metals in London climbed 2.4 percent to the highest level since Aug. 13. Crude oil leapt 4.5 percent, the most in three weeks.
"Higher prices for commodities will spur investors to snap up resource-linked shares," said Hiroichi Nishi, an equities manager at Tokyo-based Nikko Cordial Securities Inc.
The dollar depreciated versus the yen to as much as 92.04 last night from 92.81 at yesterday's 3 p.m. close of stock trading in Tokyo. A weaker dollar reduces the value of overseas sales at Japanese companies when converted into their home currency.
Bank Downgrades
Mitsubishi UFJ fell 1.8 percent to 533 yen. Sumitomo Mitsui lost 1.4 percent to 3,660 yen. Bank of Yokohama Ltd., Japan's largest regional bank, slumped 2.9 percent to 478 yen.
Katsuhito Sasajima, an analyst at JPMorgan in Tokyo, cut Mitsubishi and Sumitomo Mitsui to "neutral" from "overweight," while Yokohama was slashed to "underweight" from "neutral."
The analyst cited concerns of "crowding out" in debt markets by the newly elected government, the possibility that credit charges will disappoint the market and the outlook for stricter capital requirements leading to new shares being issued.
Nikkei 225 10,358.48 -34.75 ( - 0.33%).(08.12 AM IST)
Japan's Nikkei stock average edged 0.2 percent lower on Wednesday, with exporters such as Canon (7751.T) hurt by the yen's recent firmness, while energy-linked shares rose following a surge in oil prices.
Honda Motor Co. (7267) shares traded slightly lower Wednesday morning, as the yen's appreciation to the lower-92 level against the dollar pushed down exporters across the board.
Shares in CSK Holdings Corp. (9737) traded lower Wednesday, following the announcement the previous evening by the information services firm that it will raise up to 52 billion yen by issuing preferred stock.
HSI 20906.31 -163.5 -0.78%.(08.14 AM IST).
Hong Kong shares declined in early trading Wednesday, taking a breather after a four-session rally, though the fall was limited as Shanghai stocks took gains to a seventh straight session. The Hang Seng Index fell 0.4% to 20,987.40 in early action. The Hang Seng China Enterprises Index slipped 0.2% to 12,250.82, supported by the Shanghai Composite Index, which inched 0.1% higher to 2,932.50. Shares of China Resources Enterprise Ltd. lost 1.9%, and Hong Kong-listed shares of China Unicom Ltd. dropped 4.1%, reversing some of their strong recent gains, while heavyweight HSBC Holdings Plc shed 1.1%.
SSE Composite 2926.37 -0.14.(08.17 AM IST).
Chinese stocks open 0.47% higher on Wed
Chinese stocks opened higher on Wednesday morning, tracking gains from the previous closing.
The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 2,944.17 points, up 0.47% or 13.69 points from the previous closing.
The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.64% or 76.76 points higher at 12,000 points.
Legend to invest RMB 10 bln in clean energy sector in 5 years.
Investor sells 9 mln shares of Kai Yuan Holdings.
Century City's net profit down 41.37% in H1.
BYD Chairman calls for green car purchase subsidies.
Huadian Power wins CSRC approval for placement plan.
Champion REIT H1 DPU hits HK$0.1314.
Cheung Kong to sell luxury units in Celestial Heights Phase II.
Geely Auto confirms parent's Volvo bid.
China's Legend to invest 10 bln yuan over five years
China's Legend Holdings plans to invest 10 billion yuan (about 1.4 billion U.S. dollars) over the next five year in industries such as clean energy and environmental protection, as part of its effort to transform itself into a corporate investment-holding company, China Daily reported Wednesday.
Legend Holdings, parent of the Chinese computer maker Lenovo Group, said it plans to build its core assets in five sectors - clean energy and environmental protection, new materials, hi-tech, financial services and consumer goods, the newspaper said.
The company also intends to become a well-respected international corporate investment-holding company, the newspaper said, citing Liu Chuanzhi, chairman of Legend Holdings.
The investment plan comes close on the heels of private investment firm China Oceanwide's decision to buy a 29 percent stake in Legend Holdings for 2.76 billion yuan.
This was first time that the Chinese State-owned technology firm was selling stake to a private investment group in the past two decades.
Legend was set up in 1984 by 11 scientific researchers with an investment of 200,000 yuan.
The company now has three key businesses, including IT, investment and property development. It runs five subsidiaries, including Lenovo Group, Digital China, Legend Capital, Rongke Property and Hony Capital. The company's total business volume last year was 115.2 billion yuan.
Legend also announced on Monday that it would join a group of investors in a new 115 million U.S. dollar angel investment fund launched by Kai-Fu Lee, Google's former China head.
Chinese milk producer Mengniu H1 profit up 14%
Chinese milk producer Mengniu Dairy Co. saw its profit go up 14 percent in the first half of the year despite a fall in sales revenue, China Daily reported Wednesday.
Wing Hang a Target as China Banks Look to Hong Kong
Wing Hang Bank Ltd., which surprised some analysts by cutting its dividend by 79 percent last month, may be the next family-run lender in Hong Kong to be bought by a Chinese competitor.
Industrial & Commercial Bank of China Ltd., the world's largest by market value, is the Chinese lender showing the most interest in acquiring Wing Hang, according to two bankers who are scouting for buyers and spoke on condition of anonymity. Neither bank has hired advisers for a possible deal.
A takeover of Wing Hang would cut the number of publicly traded family-run banks in Hong Kong to three from six a decade ago, as mainland-based lenders muscle in on the territory. Wing Hang's dividend cut may be a sign the bank, controlled by the family of Chairman Patrick Fung, is trying to boost its value in a potential takeover, said analysts at CLSA Asia-Pacific Markets and Nomura Holdings Inc.
"Wing Hang is a well-managed, well-capitalized mid-sized bank and that in itself makes it an obvious target," said Lee Yuk-kei, a Hong Kong-based analyst at Core-Pacific Yamaichi International Ltd. "The competitive environment in the local banking sector is getting increasingly tough for family-run banks like Wing Hang."
Wing Hang rose 3.1 percent to HK$77.20 at 10:05 a.m. in Hong Kong trading, taking gains this year to 62 percent and the bank's market value to HK$21.3 billion ($2.7 billion). ICBC spokesman Xie Taifeng declined to comment, as did Cherry Yung, a spokeswoman at Wing Hang.
The 'Real Story'
No formal talks have been held between Wing Hang and Beijing-based ICBC, which last year lost out to China Merchants Bank Ltd. in a takeover battle for family-controlled Hong Kong lender Wing Lung Bank Ltd., the bankers said.
The bank's board said Aug. 13 it will pay an interim dividend of 20 Hong Kong cents per share. The proposed payout represents 11.5 percent of earnings, down from 13.3 percent in the year-earlier period.
Reducing the dividend was unnecessary because Wing Hang already had a capital adequacy ratio of 17.7 percent, CLSA analysts Kevin Chan and Kitty Chan said in a note to clients the day after. The regulatory minimum ratio in the city is 8 percent.
"The dividend cut may imply M&A is the real story here," the analysts wrote. Retaining a higher portion of profit may raise Wing Hang's book value and push up the sale price in a takeover, they said.
Wing Lung Bank reduced its dividend three months before the announcement of its HK$4.7 billion takeover by China Merchants Bank in May 2008.
Macau Profit
ICBC has $241 billion of cash and equivalents, almost 100 times Wing Hang's market value. The Chinese bank, run by Chairman Jiang Jianqing and majority owned by the government, in 2000 paid HK$1.8 billion for control of Union Bank of Hong Kong and renamed it ICBC (Asia) Ltd. Four years later, it completed the purchase of Fortis Bank's unit in the city for HK$2.53 billion.
"The deal would make sense," said Dominic Chan, a banking analyst at BNP Paribas SA. "ICBC (Asia) primarily focuses on syndicated loans while Wing Hang has a good retail branch network. Also, as ICBC is making a push in Macau it will find Wing Hang's strength there very useful."
Macau, the former Portuguese enclave where gambling is legal, accounted for 20 percent of Wing Hang's first-half pretax profit, up from 17 percent a year earlier.
One obstacle to a deal may be restrictions on how much China's banking regulator would allow ICBC to pay, said Chan.
Pricey Takeover
Last year, when ICBC was competing for Wing Lung Bank, the China Banking Regulatory Commission barred the lender from paying more than 3 times book value, people familiar with the matter said at the time. Merchants Bank eventually paid 3.1 times book value, making it the most expensive bank acquisition in Hong Kong in seven years by that measure.
Merchants Bank, based in Shenzhen, said in April that it had written down the value of the investment by 579 million yuan ($85 million).
"Chinese regulators won't want to see another bank overpaying so soon after what happened with China Merchants," said Chan.
A takeover would likely value Wing Hang at between 2.5 and 3.3 times book value, Nomura analysts Grace Wu and Queenie Poon said in an Aug. 13 note to clients. The bank trades at 1.9 times book value, according to Bloomberg data.
ICBC's Ambitions
Hong Kong, a former British colony returned to Chinese rule in 1997, is attractive for mainland banks as the yuan starts being used for international trade settlements, according to CLSA. The city serves as a hub for goods traveling to and from China, the world's third-largest economy.
China Construction Bank Corp., the nation's second-largest, in December 2006 bought Bank of America Corp.'s Hong Kong and Macau unit for HK$9.7 billion, at the time the largest acquisition by a Chinese bank outside the country.
ICBC has ambitions beyond Hong Kong, said Li Ming, a portfolio manager at Dacheng Fund Management Co., which oversees about 100 billion yuan. The bank, with a market value of $243 billion, made acquisitions in Indonesia, South Africa, Canada and Macau in the past three years.
"ICBC is probably among the few banks around the world that still have the means and the incentive to make acquisitions overseas," Li said. "Expanding in Hong Kong is just the beginning, as that market is competitive yet small enough to serve as a testing ground."
WB report: World economies set new record in business regulation reform
A record 131 economies around the world reformed business regulation in 2008/2009, according to a report released by the World Bank and its private sector-leaning arm the International Finance Cooperation (IFC) on Tuesday.
The report, "Doing Business 2010: Reforming through Difficult Times", recorded 287 reforms between June 2008 and May 2009, up 20 percent from the previous year.
Reformers around the world focused on making it easier to start and operate businesses, strengthening property rights and improving commercial dispute resolution and bankruptcy procedures.
"Business regulation can affect how well small and midsize firms cope with the crisis and seize opportunities when recovery begins," said Penelope Brook, Acting Vice President for Financial and Private Sector Development for the World Bank Group.
"The quality of business regulation helps determine how easy it is to reorganize troubled firms to help them survive difficult times, to rebuild when demand rebounds, and to get new businesses started," he said.
Singapore, a consistent reformer, is the top-ranked economy on the ease of doing business for the fourth year in a row, with New Zealand as runner-up.
But most of the action occurred in developing economies. Two-thirds of the reforms recorded in the report were in low-and-lower-middle-income economies.
For the first time a Sub-Saharan African economy, Rwanda, is the world's top reformer of business regulation, making it easier to start businesses, register property, protect investors, trade across borders and access credit.
Reformers were particularly active in Eastern Europe, Central Asia, the Middle East and North Africa, according to the report.
This year, there were four new reformers among the top 10: Liberia, the United Arab Emirates, Tajikistan and Moldova.
Others include Rwanda, Egypt, Belarus, Macedonia, Kyrgyzstan and Colombia. Colombia and Egypt have been top global reformers in four of the past seven years.
Doing Business analyzes regulations that apply to an economy's businesses during their life cycles, including start-up and operations, trading across borders, paying taxes, and closing a business, according to a statement released by the World Bank.
Meanwhile, the report does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, skill level, or the strength of financial systems.
First Solar nabs China contract to build world's largest field
First Solar Inc. said Tuesday it has signed an agreement with China to build a sprawling, 2-gigawatt solar power field, possibly becoming the world's largest such facility.
September's Greenback Woes: What's the Dollar's Future?
If the kids are back at school, it must be time to sell the U.S. dollar. Or at least that's what history suggests for the greenback.
Over the last 20 years, September has been the second weakest month of the year for the dollar against the euro, according to data from Royal Bank of Scotland's [RBS 18.44 -0.04 (-0.22%) ] global banking and markets division, while December has been historically the weakest.
The U.S. dollar sank to its lowest this year against the euro on Tuesday as a rosy global economic outlook fueled buying in stocks, encouraging investors to take riskier bets on assets in other currencies.
Renewed concerns about the status of the dollar was also sparked by a report from the U.N. trade and development agency (UNCTAD) on Monday which called for the creation of a new world reserve system using several currencies, not just the U.S. dollar.
It didn't help that the seasonal September currency flow coincided with the euro breaking out of its range of the past few weeks, triggering automated trading orders and options plays, providing momentum for the move.
The InterContinental Exchange's dollar index, on which futures contracts are traded, fell 1.0 percent to its lowest level in about a year.
"Certainly, the game has changed with the move in the euro above the previous high for 2009," said Nick Bennenbroek, head of FX strategy at Wells Fargo [WFC 26.98 0.07 (+0.26%) ] in New York. "We can see further dollar weakness from where we are, especially when we take into account the seasonal factor."
The euro was up 1.2 percent against the dollar to around $1.4535 in late trading in New York, erasing a rack of $1.4500 option barriers. Traders are citing more barriers in the $1.4550 area. In the options market, one-month risk reversals, which reflect the market's sentiment on a currency, are showing a bias for euro calls, a bullish indicator. On Tuesday, the premium for euro calls jumped to 0.25 from 0.05 late Monday.
September Woes
Dollar weakness in September could be explained by corresponding moves in other asset markets, said Alan Ruskin, chief international strategist at RBS.
There is a "consistent pattern of unusually bullish U.S. government bond markets" in September including a sharp two-year and 10-year spread compression against the dollar relative to the euro zone benchmark bonds. Lower U.S. yields, relative to those offered by other major currencies, is a disincentive to hold the U.S. dollar. Wells Fargo's Bennenbroek said when traders return in September from their summer holidays, they tend to follow existing trends in the market.
While there was a spike in the U.S. dollar in the fourth quarter last year, as investors sought safety in U.S. assets after investment bank Lehman Brothers collapsed, the overall trend for the dollar in the past decade has been downwards.
"Part of what's happening is that traders are looking to trade the underlying trend. That's when dollar weakness has gained some momentum," Bennenbroek said.
The seasonals are also reflected in negative U.S. data surprises that tend to trigger dollar selling, RBS's Ruskin said. For instance the U.S. Institute for Supply Management survey of purchasing managers' intentions', a leading indicator or activity in the manufacturing and services sectors, tends to show the largest downside surprise in the August data released at the start of September.
September has also produced some of the more consistent downbeat numbers in U.S. non-farm payrolls data over the last 10 years, although the data comes out in October. Meanwhile, the August jobs report that is released in September usually shows a lower-than-expected number, although not as weak as that in June, September, and November.
Range Break Out
While global economic recovery is encouraging risk appetite and seasonal factors are playing their part, Tuesday's move gained some momentum as the breakout in the dollar from recent trading ranges triggered automated trading orders and options plays.
Analysts said euro/dollar's climb above $1.45 was a "significant event," after traders tried to push the euro above $1.4450 in early August but failed.
"This week essentially ends the summer holidays in most trading centers and as such, the increased participation and liquidity would theoretically increase the chances that the latest rise in euro/dollar can be extended," said HSBC in a research note.
HSBC [HBC 54.27 0.08 (+0.15%) ] said the next upside target is $1.4720, a breach of which should propel the euro to its highest in nearly a year.
Still some analysts cautioned against relying too much on correlations, including seasonal and technical factors to sell the dollar.
For one, the dollar's negative correlation with equities and positive data could not hold for long because if this is taken to an extreme, it poses growth risks to U.S. trading partners saddled with strong currencies at a time in which their own export sectors are still frail.
In addition, RBS' Ruskin believes much of the positive economic news that has pressured the dollar has already been priced in by the market. "A risk premium is already built into holding dollars. Buying euro/dollar on seasonals make little sense at the best of times."
Warren Buffett Joins Call to Target "Short-Termism" In Financial Markets
Warren Buffett is one of twenty-seven business, government, and academic leaders endorsing what's described as a "bold call to end the focus on value-destroying short-termism" in financial markets.
Buffett is one of the signers of a statement to be released tomorrow (Wednesday) by Walter Isaacson's Aspen Institute.
The statement argues that a "healthy society requires healthy and responsible companies" working to achieve long-term goals.
Instead, "boards, managers, shareholders with varying agendas, and regulators ... have allowed short-term considerations to overwhelm the desirable long-term growth and sustainable profit objectives of the corporation."
The Aspen statement calls for boards, managers, and "most particularly, shareholders" ... institutional investors .. to shift their focus to long-term goals and not push for "high-leverage and high-risk corporate strategies designed to produce high short-term returns."
As companies try to satisfy influential institutional investors focusing on short-term metrics like quarterly earnings, they "can harm the interests of shareholders seeking long-term growth and sustainable earnings."
The statement recommends:
"Market incentives to encourage patient capital," such as lower capital gains tax rates for longer holding periods.
Closer alignment of the interests of financial intermediaries, like mutual funds, and their investors.
"Greater transparency in investor disclosures" to make it harder for activists and other investors to "use their influence to achieve short-term gains at the expense of long-term value creation."
The bottom line, says Aspen, is that "the trend toward greater shareholder power .. should be accompanied by greater investor and intermediary responsibility" to "empower and encourage business managers and boards of directors to focus on sustainable value creation rather than evanescent short-term objectives."
Not everyone will agree, of course. Activists like billionaire Carl Icahn believe incompetent or entrenched managements often cite the pursuit of "long-term goals" as a crutch to avoid making difficult changes that would help the company, shareholders, and everyone else.
A few years ago, he told Business Week, "My critics say I am short-term-oriented .. My point is that a lot of times assets can be better utilized and enhance society when you put them in better hands than the current management."
Current Berkshire stock prices:
Current Berkshire stock prices:
Class A: [BRK.A 97560.00 --- UNCH (0) ]
Class B: [BRK.B 3200.00 -12.00 (-0.37%) ]
China Raises the Money-Printing Alarm
A hugely important story from Ambrose Evans-Pritchard of the London Telegraph that China is alarmed by U.S. money-printing has helped drive the dollar price of gold over $1,000, at least temporarily, and drive down the exchange rate of the greenback. Other commodities like oil and copper have also rallied today.
At a conference in Lake Como, Italy, a leading Chinese economic spokesman—Cheng Siwei—criticized Ben Bernanke's loose monetary policy. "If they keep printing money to buy bonds it will lead to inflation," said Cheng, "and after a year or two the dollar will fall hard." Cheng went on to say that China was diversifying its roughly $700 billion of U.S. foreign-exchange reserves into gold. "Gold is definitely an alternative, but when we buy, the price goes up," he said. "We have to do it carefully so as not to stimulate the market."
Ambrose-Pritchard interprets this as the "Beijing Put" on gold—meaning the Chinese will buy gold on the dips, which is going to prevent the yellow metal from falling hard. It also puts upward price pressure on gold for the long term. Beijing has in fact doubled its gold reserves to 1,054 tons.
As a corollary to this, the Chinese are clearly losing confidence in the U.S. dollar.
And while nobody is much paying attention to a new UN report that the global financial system needs a new reserve currency to replace the dollar, the fact is that Chinese spokesmen (and Russian and Brazilian spokesmen) have said the same thing from time to time.
Incidentally, the G20 meeting of finance ministers and central bankers in London this weekend failed to articulate a fiscal and monetary exit strategy from all their massive spending, borrowing, and money-creating to fight off the financial meltdown and the world recession. The G20 reluctance to exit from hyper-stimulus is also bullish for gold—and, for that matter, bearish for paper currencies in general.
Cheng, by the way, hinted that China is experiencing a speculative boom in stocks and property. But if the Chinese raise interest rates ahead of the Fed they will risk being flooded with hot money that will make the boom even worse. "We have to wait for them," said Cheng. "If they raise, we raise."
Many Wall Street traders are dissing the gold-rally story. But I think they're missing the bigger picture of excess money-creation in the U.S. and elsewhere. As I recall, Confucius once said: Where there's smoke, there's fire.
Obama's Promises Could Use a Good-Faith Deposit: Caroline Baum
With his job approval ratings slipping and his signature domestic undertaking in trouble, President Barack Obama will attempt to retake the initiative on health-care reform with a televised address to a joint session of Congress this evening.
Obama's aides have put the word out that the speech will be "prescriptive." In other words, the president will provide mundane details on how he plans to implement his grand vision of providing universal health care and cutting costs.
Don't expect a green-eyeshade speech. The Great Chamber from which Obama will address lawmakers and, more importantly, the American people, isn't a place for a snazzy power-point presentation on budget math.
Rather, the hallowed hall, steeped as it is in the symbols of democracy, is a place where presidents come to appear presidential and appeal to the public. It's a venue that lends itself to big ideas, national themes and soaring oratory.
So what should the president try to achieve this evening when he attempts to enlist support for his health-care overhaul?
He could start by explaining the seeming inconsistency in his plan to save money by spending money.
"If I went to my board of directors with a similar proposal for 'cost reduction,' they would laugh me out of the conference room -- and then my job!" writes reader Michael Dunlop, vice president of operations/IT at Parts Associates Inc. in Cleveland.
Spend and Save
The Congressional Budget Office estimated the cost of various health-care plans approved by House of Representatives committees at $1 trillion over 10 years. Obama says he will pay for the bulk of the increase in spending by rooting out $500 billion in Medicare waste.
A good-faith deposit would resonate with the public after all the talk: 28 speeches on the subject of health care, or 121 if you include speeches and remarks where Obama mentioned health-care goals, according to political Web site Politico.
What's preventing Obama from appointing, say, a waste- management czar, now that a position in "green jobs" has opened up, and setting him loose? Ridding Medicare of waste and fraud isn't dependent on reforming the entire system.
It would be a lot easier to start with cost containment, as outlined by David Walker, former comptroller of the Government Accountability Office and longtime deficit hawk, in a Sept. 4 Wall Street Journal interview. If the U.S. creates "new obligations" before it gets its fiscal house in order, "we'll have a Thelma and Louise moment where we go over the cliff," Walker says.
Down Payment on Talk
If the president wants to show he's serious about containing the costs of expanded benefits, not just expanding both, he should identify and address Medicare waste while the country explores the most effective way to provide health care to the uninsured.
On that score, the country seems to be moving away from the belief that government would do a better job of containing costs than private industry. (No doubt the government's handling of cash-for-clunkers, with its crashing computer systems and delays in processing rebates, served as prosecution exhibit No. 1.) A special CBS news poll on health care taken Aug. 27-31 showed only 36 percent favor government over insurers -- even after routine vilification of the industry by the Democrats.
Obama has his work cut out for him if he wants to convince the public that government can create efficiencies in health care. One of capitalism's underlying premises is that incentives -- specifically the profit motive -- encourage companies to compete with one another to produce the goods and services consumers want at prices they're willing to pay. If not, the business is history.
Not so with government.
Craving Clarity
The CBS poll also found that 67 percent of Americans are confused about health-care reform and 60 percent think the president has failed to explain his plan clearly.
The poll numbers comport with reality on the ground. Lawmakers went home for the August recess to find constituents anxious about change and wary of signing away their current medical benefits and signing on to ObamaCare.
The president is going to have to convince those with health insurance why they will be better off under his plan.
That includes reconciling his promises to individuals with business economics. Obama has reiterated that individuals can keep their current plan. Yet employers may find it's cheaper to pay a government-imposed penalty than provide coverage.
Substance Abuse
Obama is a gifted orator, but his empty rhetoric is finally catching up with him.
During the campaign, voters projected their fantasies onto the young, attractive and unknown candidate: a community organizer, academic (with no published scholarship to his name) and less-than-one-term senator. Lack of experience was a virtue in a world where Congress offers lifetime employment, not to mention great benefits.
When it comes to governing, form over content will only get you so far.
US consumer debt in record fall
US consumers slashed their borrowing by a record amount in July as rising job losses and uncertainty about an economic recovery hit home.
Consumer credit fell by $21.6bn (£13.1bn) compared with June, figures from the Federal Reserve showed, massively more than analysts expected.
June's figure was also revised downwards, to $15.5bn from $10.3bn.
Economists say that US households are focusing on cutting back debt levels during the recession.
Last week, official figures showed that US employers cut 216,000 jobs in August, pushing the unemployment rate up to 9.7%, a 26-year high.
But there have been signs that the US economy is recovering.
Last week, figures showed that US manufacturing grew in August for the first time in 19 months and that home sales hit a two-year high in July.
INVESTMENT VIEW
EssDee Aluminium-The Shine Is Returning
A major bull operator from Bombay has been accumulating the stock, as also Hindalco. Aluminium it seems will be the last commodity to join the stimulus induced and China dedicated buying that has put a new spring into most base metals. Now U S and global major Alcoa has raised demand forecast for Aluminium-a metal widely used in automobiles, aircraft manufacture and even white goods. Alcoa Inc. has let out a release saying, it had boosted its annual forecast for global aluminum consumption, driven by higher demand from China.
The largest U.S. aluminum producer now expects worldwide demand for the lightweight metal to shrink by 5.5 percent rather than 7 percent as forecast in July, when Alcoa ( AA - news - people ) reported its third straight quarterly loss. The improved outlook was prompted mainly by economic stimulus spending in China, which has bolstered expected growth in aluminum consumption to 4 percent from zero, said Kevin Lowery, an Alcoa spokesman.
"Shovel-ready stimulus initiatives (in China) is one of the big drivers," he said. China is the world's biggest producer and consumer of aluminum.
Alcoa and other aluminum makers have struggled since last year with sharply lower orders for the metal used in products ranging from beer cans to jumbo jets. Alcoa's latest quarterly loss reflected slumping orders from key customers in the aerospace, automotive, commercial transportation and construction industries.
The weak demand has driven up stockpiles and depressed prices of the metal, and many aluminum makers have responded by curbing production.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
--
Arvind Parekh
+ 91 98432 32381
Buy WH BRADY & CO (BSE Cash) Buy with a Stop Loss of 75 level with a Target of 80 level.
Above 83 level, uptrend may continue. If SL got triggered then expect unwinding up to 72 level by non-stop.
Buy FARMAX RETAIL (I) (BSE Cash) Buy with a Stop Loss of 114 level with a Target of 121 level.
Above 126 level, uptrend may continue. If SL got triggered then expect unwinding up to 109 level by non-stop.
NIFTY FUTURES (F & O):
Above 4825 level, rally may continue up to 4833-4835 zone and thereafter expect a jump up to 4855-4857 zone by non-stop.
Support at 4790 & 4798 levels. Below these levels, expect profit booking up to 4781-4783 zone and thereafter slide may continue up to 4758-4760 zone by non-stop.
Below 4751-4753 zone, expect panic up to 4728-4730 zone by non-stop.
On Positive Side, cross above 4862-4864 zone can take it up to 4885-4887 zone. Supply expected at around this zone and have caution.
Short-Term Investors:
Bearish Trend. 3 closes below 4623.80 level, it can tumble up to 4092.20 level by non-stop.
SL triggered. 3 closes above 4623.80 level, expect short covering up to 4889.60 level by non-stop.
BSE SENSEX:
Higher opening expected. Uptrend should continue.
Short-Term Investors:
Short-Term trend is Bearish and target at around 14235 level on down side.
Maintain a Stop Loss at 15973 level for your short positions too.
SL triggered. 3 closed above 15973 level, expect short covering up to 16842 level by non-stop.
SPOT LEVELS
 | 4805.25 | ( 0.47 %) | 22.35 |  |
| 1 | 2 | 3 | ||
| Resistance | 4837.42 | 4869.58 | 4896.97 | |
| Support | 4777.87 | 4750.48 | 4718.32 | |
 | 16123.67 | ( 0.67 %) | 107.35 | | |
| 1 | 2 | 3 | |||
| Resistance | 16227.03 | 16330.40 | 16428.63 | ||
| Support | 16025.43 | 15927.20 | 15823.83 | ||
FUNDS DATA
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 08-Sep-2009 | 3907.76 | 2916.01 | 991.75 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 08-Sep-2009 | 1605.64 | 1399.39 | 206.25 |
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,497.34. Up by 56.07 points.
The Broader S&P 500 closed at 1,025.39. Up by 8.99 points.
The Nasdaq Composite Index closed at 2,037.77. Up by 18.99 points.
The partially convertible rupee INR=IN ended at 48.47/48 per dollar on yesterday, stronger than Monday's close of 48.66/67.
Interesting findings on web:
The Dow started the week Monday with a 56-point gain.
US stocks rose Tuesday, underpinned by optimism that economic recovery is underway and a surge in commodities prices stoked by a weakening dollar.
Corporate takeover news and rising commodities prices lifted investors' confidence in the global economy Tuesday, sending the Dow Jones index ending for three trading days in a row.
Investors were spirited by a takeover bid from Kraft Foods Ink for Cadbury PLC and a decision by Deutsche Telekom and France Telecom to merge their British mobile phone units.
Investors' confidence in the world economy was also bolstered as prices of such commodities as gold and crude oil surged, said market analysts.
Stocks closed higher as oil prices surged more than $3 a barrel and gold made a run at $1,000 an ounce before backing off.
The day's trading was driven by stronger commodity prices generated off a weaker dollar, and the relationship's flux helped keep gains in check.
Weakness in the U.S. dollar helped send gold over $1,000 an ounce before a pullback, while. Crude roared over the $71 mark.
The dollar hit its lowest level in nearly a year against a basket of currencies, a move that may have been sparked over concerns that the greenback's status as the world's reserve currency was in danger.
The Dow Jones Industrial Average finished the trading day at 9,497.34, up 56.07 points (0.59 percent).
The S&P 500 closed at 1,025.39, up 8.99 points (0.88 percent). Its strongest category was energy, which rose 2.8 per cent as money spilled back into commodities.
The NASDAQ Composite finished at 2,037.77, up 18.99 points (0.94 percent).
"Investors believe that the global stimulus-induced economic recovery will last and are bidding up riskier assets such as equities," said Chris Lafakis of Moody's Economy.com.
The optimistic outlook and a faltering dollar propelled dollar-priced commodities higher, particular oil, which jumped three dollars to 71 dollars a barrel in New York and gold, trading at an 18-month high above 1,000 dollars an ounce.
Wall Street struggled to hold opening gains as trading resumed after Monday's Labor Day holiday, the unofficial end of the summer holiday season.
Briefing.com analysts said that although energy and materials stocks "performed well" throughout the session, the broader market was hit by a few fits of choppy trading.
"The more dramatic moves to the downside came as stocks approached last week's highs. However, buyers did show some resolve by bidding stocks back toward session highs ahead of the closing bell," they said in a note to clients.
The surge in crude oil futures lifted energy and materials stocks.
Oil giant ExxonMobil shares jumped 2.12 percent to 70.65 dollars, Chevron gained 2.20 percent to 70.48 dollars and aluminum giant Alcoa leapt 3.45 percent to 12.60 dollars.
Alcoa gained 3.5 per cent and Chevron and Exxon Mobil climbed more than 2 per cent. General Electric rose 4.5 per cent after JPMorgan Chase analysts upgraded their shares.
With the broad market up around 50 percent from lows in early March, some analysts argue that stocks have risen too much and too quickly.
The head of the UN Conference on Trade and Development, Supachai Panitchpakdi, cautioned that governmental stimulus spending was creating "bubbles" in the equities markets.
The market was focused on a major takeover battle in the candy sector.
Kraft Foods, a blue-chip Dow component, dropped 5.87 percent to 26.45 dollars after its unsolicited takeover bid was rejected by Britain's Cadbury.
Kraft Foods sank 5.9 per cent after its cash-and-stock takeover bid for Cadbury was rejected. But many traders welcomed the news, which came amid a spate of other large merger developments in recent weeks, as a sign of an improving market landscape.
Cadbury's US shares shot up 38.49 percent to 51.88 dollars.
Hershey, reportedly interested in making a bid for Cadbury, rose 1.29 percent to 39.13 dollars.
Conglomerate General Electric, sometimes considered a bellwether of the US economy, surged 4.54 percent to 14.50 dollars after an analyst upgrade.
Insurer AIG, nationalized in a government rescue a year ago and whose share price has increased fivefold in recent months, plunged 10.49 percent to 35.85 dollars after a Credit Suisse downgrade.
Gold miners were getting a boost from the metal's run, with Couer D'Alene [CDE 18.97 1.80 (+10.48%) ] setting the pace.
GE led gainers on the Dow industrials while Kraft was the index's worst performer.
Among the market's biggest movers:
Advanced Micro Devices [AMD 5.19 0.66 (+14.57%)] shares jumped after Barclays upgraded the chip giant to outperform.
MGM [MGM 9.41 0.65 (+7.42%)] shares gained along with the rest of the luxury hotel industry on a generally higher outlook for hotel real estate investment trusts.
Government-sponsored entities Fannie Mae [FNM 1.63 -0.14 (-7.91%)] and Freddie Mac [FRE 1.86 -0.11 (-5.58%)] continued to be high-volume trading vehicles, but slipped even after saying their were in compliance with New York Stock Exchange princing rules.
September — historically the worst month for stocks — had started off in traditional fashion with losses on the first two trading days, but the averages gained in the final two sessions before the long weekend and are poised to do so again today.
The first of three Treasury note went well, with $38 billion in 3-year notes going at a lower yield than expected and fetching strong demand.
Oil,Gold & Currencies:
Crude-oil prices jumped 4.5 per cent to settle at $US71.10 a barrel after Ali Naimi, Saudi Arabia's Oil Minister, said ahead of an OPEC meeting later this week that the oil market is in "very good shape" and that oil-producing and consuming nations are happy with crude prices between $US68 and $US73 a barrel. OPEC is expected to leave output levels unchanged.
Metals prices also jumped. Comex gold for September delivery gained $US3 a troy ounce (rising 0.30 per cent) to $US997.90, after trading above $US1006 on an intraday basis. Copper and silver prices also rose.
Gold futures topped the key threshold of $1,000 per ounce for the first time since February.
Oil and other commodities, which are traded globally in US dollar terms, were also helped by a sell-off in the US currency. The greenback declined against all six components of the US Dollar Index - the euro, Japanese yen, Swedish krona, Swiss franc, British pound and Canadian dollar - for the first time since July 31. The Dollar Index declined 0.9 per cent.
The euro rose toward a nine-month high against the dollar before a government report forecast to show French industrial production increased for a third month in July, boosting demand for higher-yielding assets.
Europe's single currency advanced against 13 of its 16 major counterparts on expectations Federal Reserve officials will today signal they plan to refrain from raising interest rates. The yen dropped to the lowest level in almost two weeks against the euro before a report this week forecast to show Japanese consumer confidence rose for an eighth month, paring demand for the currency as a refuge.
"Risk appetite is coming back on the table, supporting the euro," said Susumu Kato, chief economist in Tokyo at Calyon Securities, the investment banking unit of Credit Agricole SA. "The euro is also benefiting from uncertainty about the U.S. economy. The euro-zone is likely to see a hike in interest rates before the U.S. does."
The euro traded at $1.4497 at 11:13 a.m. in Tokyo from $1.4478 in New York yesterday, when it reached $1.4535, the highest level since Dec. 18. The dollar was at 92.37 yen from 92.32 yen. The yen fell to 133.90 per euro from 133.67, after earlier reaching 134.17, the lowest level since Aug. 28.
The greenback traded at 86.03 cents per Australian dollar from 86.16 yesterday, when it touched 86.58, the lowest since Aug. 29, 2008.
'Inflation Debate'
The euro advanced as economists surveyed by Bloomberg News said the Paris-based statistics office Insee may report factory output in France gained 0.4 percent in July after rising 0.3 percent in June. The data is due tomorrow.
"Global growth indicators remain supportive for risk takers," analysts led by Hans-Guenter Redeker, London-based global head of currency strategy at BNP Paribas SA, wrote in a research note yesterday. "The dollar will remain under selling pressure."
The dollar weakened before speeches by Chicago Fed President Charles Evans and Fisher today. Evans will speak on "The Great Inflation Debate" in New York and Fisher will speak on "Today's Economy: New Challenges for Business" in Dallas.
"They are going to talk about policies remaining accommodating in the near term," said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Sydney. "There are signs that things are improving, but we are not out of the woods yet. They are still going to be cautious."
Weaker Yen
Dallas Fed President Richard Fisher said last week the U.S. may see "a prolonged period of sluggish economic performance." Atlanta Fed President Dennis Lockhart will speak in Jacksonville, Florida, and Fed Vice Chairman Donald Kohn will speak in Washington tomorrow.
The Dollar Index has fallen 1.8 percent this week as signs the global economy is starting to recover sapped demand for the greenback as a refuge from the recession.
U.K. industrial production rose for a second month in July, climbing 0.5 percent, the Office for National Statistics said in London yesterday. German exports increased for a third month in July, advancing 2.3 percent, as global trade picked up, the Federal Statistics Office said in Wiesbaden yesterday.
The Dollar Index, which the ICE uses to track the dollar against the currencies of six major U.S. trading partners, was at 77.231 today from 77.333 yesterday, when it fell to 77.047, the lowest level since Sept. 29, 2008.
UBS AG, the world's second-largest currency trader, lowered its forecasts for the dollar, citing improving risk appetite and gains in stocks.
UBS Forecasts
The dollar will weaken to $1.45 per euro in a month, compared with a previous forecast of $1.40, and it will fall to $1.63 per pound, versus an earlier prediction of $1.57, Mansoor Mohi-uddin, chief currency strategist at UBS in Zurich, wrote in a research note today.
The yen fell against 15 of its 16 major counterparts as economists surveyed by Bloomberg News forecast consumer confidence in Japan climbed to 40.2 in August from 39.7 in July, signaling the worst postwar recession is easing. The Cabinet Office is set to release the data on Sept. 11 in Tokyo.
"The global economic outlook is improving as the financial crisis abates, damping demand for the yen as a refuge," said Satoru Ogasawara, a foreign-exchange analyst and economist in Tokyo at Credit Suisse Group AG. "The yen is being sold due to Japan's low interest rates."
Aussie Slips
Benchmark interest rates are 0.1 percent in Japan and as low as zero in the U.S., compared with 3 percent in Australia. That makes the South Pacific nation's assets attractive to investors seeking higher returns. The yen fell to 79.74 per
Australia's dollar slipped from a one-year high against the U.S. currency after government reports showed retail sales unexpectedly fell and home loans declined by more than economists had estimated.
Sales dropped 1 percent from June, when they declined a revised 0.8 percent, the Bureau of Statistics said in Sydney today. The median forecast of 20 economists surveyed by Bloomberg News was for a 0.5 percent gain. Australian home-loan approvals fell in July, ending a record nine months of consecutive gains, a separate report showed.
Bonds:
The bond market fell. The yield on the 10-year Treasury bond advanced to 3.469 percent from 3.442 percent Friday and that on the 30-year bond rose to 4.311 percent from 4.273 percent.
Bond yield and prices move in opposite directions.
In the Treasury market, an auction of three-year notes came in at a yield of 1.487 per cent, compared with the 1.493 per cent on the when-issued paper just before the auction. The bid-to-cover ratio, a main gauge of demand, was 3.02, compared with 2.89 for the previous auction in August and the average of 2.58 from the past 10 auctions. Treasury prices declined.
What to expect:
The economic calendar was light in the holiday-shortened week. The Federal Reserve Beige Book survey on the US economy is due Wednesday and data on the US trade balance Thursday.
Investors will eye Google and Apple as they display their wares and await the possible return of Apple's master showman CEO Steve Jobs at a media event.
Asia:
Most Asian stocks rose as gains among commodity producers on higher oil and metals prices offset downgrades of Japanese banks by JPMorgan Chase & Co.
Rio Tinto Group, the world's third-largest mining company rose 1.8 percent in Sydney, while Inpex Corp., Japan's largest oil explorer, climbed 3 percent. Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., Japan's two largest listed banks by value, retreated at least 1.4 percent after JPMorgan downgraded both to "neutral."
About four stocks advanced for every three that fell on the MSCI Asia Pacific Index, which was little changed at 115.97 as of 10:12 a.m. in Tokyo. The gauge closed at the highest in almost a year yesterday, having gained 64 percent in the past six months amid speculation stimulus measures worldwide will revive global growth.
"The critical question is what are the earnings underpinning the valuations," said Macquarie Group Ltd.'s Tanya Branwhite, who was voted Australia's top strategist in a fund manager survey by BRW magazine. "Valuations can only be assessed reliably if the earnings underpinning the valuations turn out to be correct."
Japan's Nikkei 225 Stock Average slipped 0.1 percent to 10,383.52. Australia's S&P/ASX 200 Index gained 0.5 percent and New Zealand's NZX 50 Index added 0.2 percent. South Korea's Kospi index dropped 0.2 percent.
Futures on the U.S. Standard & Poor's 500 Index lost 0.1 percent. The gauge rose 0.9 percent yesterday after metal prices jumped as the dollar weakened and Goldman Sachs Group Inc. boosted its forecasts because of "increasing evidence of a stronger-than-anticipated recovery in global industrial activity."
Gold, Crude Oil
Rio climbed 1.8 percent to A$58.80, while Inpex climbed 3 percent to 763,000 yen. BHP Billiton, the world's largest mining company and Australia's largest oil producer, added 0.9 percent to A$37.90.
Gold jumped to as high as $1,009.70 in New York yesterday, a price not seen since March 2008. A gauge of six metals in London climbed 2.4 percent to the highest level since Aug. 13. Crude oil leapt 4.5 percent, the most in three weeks.
"Higher prices for commodities will spur investors to snap up resource-linked shares," said Hiroichi Nishi, an equities manager at Tokyo-based Nikko Cordial Securities Inc.
The dollar depreciated versus the yen to as much as 92.04 last night from 92.81 at yesterday's 3 p.m. close of stock trading in Tokyo. A weaker dollar reduces the value of overseas sales at Japanese companies when converted into their home currency.
Bank Downgrades
Mitsubishi UFJ fell 1.8 percent to 533 yen. Sumitomo Mitsui lost 1.4 percent to 3,660 yen. Bank of Yokohama Ltd., Japan's largest regional bank, slumped 2.9 percent to 478 yen.
Katsuhito Sasajima, an analyst at JPMorgan in Tokyo, cut Mitsubishi and Sumitomo Mitsui to "neutral" from "overweight," while Yokohama was slashed to "underweight" from "neutral."
The analyst cited concerns of "crowding out" in debt markets by the newly elected government, the possibility that credit charges will disappoint the market and the outlook for stricter capital requirements leading to new shares being issued.
Nikkei 225 10,358.48 -34.75 ( - 0.33%).(08.12 AM IST)
Japan's Nikkei stock average edged 0.2 percent lower on Wednesday, with exporters such as Canon (7751.T) hurt by the yen's recent firmness, while energy-linked shares rose following a surge in oil prices.
Honda Motor Co. (7267) shares traded slightly lower Wednesday morning, as the yen's appreciation to the lower-92 level against the dollar pushed down exporters across the board.
Shares in CSK Holdings Corp. (9737) traded lower Wednesday, following the announcement the previous evening by the information services firm that it will raise up to 52 billion yen by issuing preferred stock.
HSI 20906.31 -163.5 -0.78%.(08.14 AM IST).
Hong Kong shares declined in early trading Wednesday, taking a breather after a four-session rally, though the fall was limited as Shanghai stocks took gains to a seventh straight session. The Hang Seng Index fell 0.4% to 20,987.40 in early action. The Hang Seng China Enterprises Index slipped 0.2% to 12,250.82, supported by the Shanghai Composite Index, which inched 0.1% higher to 2,932.50. Shares of China Resources Enterprise Ltd. lost 1.9%, and Hong Kong-listed shares of China Unicom Ltd. dropped 4.1%, reversing some of their strong recent gains, while heavyweight HSBC Holdings Plc shed 1.1%.
SSE Composite 2926.37 -0.14.(08.17 AM IST).
Chinese stocks open 0.47% higher on Wed
Chinese stocks opened higher on Wednesday morning, tracking gains from the previous closing.
The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 2,944.17 points, up 0.47% or 13.69 points from the previous closing.
The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.64% or 76.76 points higher at 12,000 points.
Legend to invest RMB 10 bln in clean energy sector in 5 years.
Investor sells 9 mln shares of Kai Yuan Holdings.
Century City's net profit down 41.37% in H1.
BYD Chairman calls for green car purchase subsidies.
Huadian Power wins CSRC approval for placement plan.
Champion REIT H1 DPU hits HK$0.1314.
Cheung Kong to sell luxury units in Celestial Heights Phase II.
Geely Auto confirms parent's Volvo bid.
China's Legend to invest 10 bln yuan over five years
China's Legend Holdings plans to invest 10 billion yuan (about 1.4 billion U.S. dollars) over the next five year in industries such as clean energy and environmental protection, as part of its effort to transform itself into a corporate investment-holding company, China Daily reported Wednesday.
Legend Holdings, parent of the Chinese computer maker Lenovo Group, said it plans to build its core assets in five sectors - clean energy and environmental protection, new materials, hi-tech, financial services and consumer goods, the newspaper said.
The company also intends to become a well-respected international corporate investment-holding company, the newspaper said, citing Liu Chuanzhi, chairman of Legend Holdings.
The investment plan comes close on the heels of private investment firm China Oceanwide's decision to buy a 29 percent stake in Legend Holdings for 2.76 billion yuan.
This was first time that the Chinese State-owned technology firm was selling stake to a private investment group in the past two decades.
Legend was set up in 1984 by 11 scientific researchers with an investment of 200,000 yuan.
The company now has three key businesses, including IT, investment and property development. It runs five subsidiaries, including Lenovo Group, Digital China, Legend Capital, Rongke Property and Hony Capital. The company's total business volume last year was 115.2 billion yuan.
Legend also announced on Monday that it would join a group of investors in a new 115 million U.S. dollar angel investment fund launched by Kai-Fu Lee, Google's former China head.
Chinese milk producer Mengniu H1 profit up 14%
Chinese milk producer Mengniu Dairy Co. saw its profit go up 14 percent in the first half of the year despite a fall in sales revenue, China Daily reported Wednesday.
Wing Hang a Target as China Banks Look to Hong Kong
Wing Hang Bank Ltd., which surprised some analysts by cutting its dividend by 79 percent last month, may be the next family-run lender in Hong Kong to be bought by a Chinese competitor.
Industrial & Commercial Bank of China Ltd., the world's largest by market value, is the Chinese lender showing the most interest in acquiring Wing Hang, according to two bankers who are scouting for buyers and spoke on condition of anonymity. Neither bank has hired advisers for a possible deal.
A takeover of Wing Hang would cut the number of publicly traded family-run banks in Hong Kong to three from six a decade ago, as mainland-based lenders muscle in on the territory. Wing Hang's dividend cut may be a sign the bank, controlled by the family of Chairman Patrick Fung, is trying to boost its value in a potential takeover, said analysts at CLSA Asia-Pacific Markets and Nomura Holdings Inc.
"Wing Hang is a well-managed, well-capitalized mid-sized bank and that in itself makes it an obvious target," said Lee Yuk-kei, a Hong Kong-based analyst at Core-Pacific Yamaichi International Ltd. "The competitive environment in the local banking sector is getting increasingly tough for family-run banks like Wing Hang."
Wing Hang rose 3.1 percent to HK$77.20 at 10:05 a.m. in Hong Kong trading, taking gains this year to 62 percent and the bank's market value to HK$21.3 billion ($2.7 billion). ICBC spokesman Xie Taifeng declined to comment, as did Cherry Yung, a spokeswoman at Wing Hang.
The 'Real Story'
No formal talks have been held between Wing Hang and Beijing-based ICBC, which last year lost out to China Merchants Bank Ltd. in a takeover battle for family-controlled Hong Kong lender Wing Lung Bank Ltd., the bankers said.
The bank's board said Aug. 13 it will pay an interim dividend of 20 Hong Kong cents per share. The proposed payout represents 11.5 percent of earnings, down from 13.3 percent in the year-earlier period.
Reducing the dividend was unnecessary because Wing Hang already had a capital adequacy ratio of 17.7 percent, CLSA analysts Kevin Chan and Kitty Chan said in a note to clients the day after. The regulatory minimum ratio in the city is 8 percent.
"The dividend cut may imply M&A is the real story here," the analysts wrote. Retaining a higher portion of profit may raise Wing Hang's book value and push up the sale price in a takeover, they said.
Wing Lung Bank reduced its dividend three months before the announcement of its HK$4.7 billion takeover by China Merchants Bank in May 2008.
Macau Profit
ICBC has $241 billion of cash and equivalents, almost 100 times Wing Hang's market value. The Chinese bank, run by Chairman Jiang Jianqing and majority owned by the government, in 2000 paid HK$1.8 billion for control of Union Bank of Hong Kong and renamed it ICBC (Asia) Ltd. Four years later, it completed the purchase of Fortis Bank's unit in the city for HK$2.53 billion.
"The deal would make sense," said Dominic Chan, a banking analyst at BNP Paribas SA. "ICBC (Asia) primarily focuses on syndicated loans while Wing Hang has a good retail branch network. Also, as ICBC is making a push in Macau it will find Wing Hang's strength there very useful."
Macau, the former Portuguese enclave where gambling is legal, accounted for 20 percent of Wing Hang's first-half pretax profit, up from 17 percent a year earlier.
One obstacle to a deal may be restrictions on how much China's banking regulator would allow ICBC to pay, said Chan.
Pricey Takeover
Last year, when ICBC was competing for Wing Lung Bank, the China Banking Regulatory Commission barred the lender from paying more than 3 times book value, people familiar with the matter said at the time. Merchants Bank eventually paid 3.1 times book value, making it the most expensive bank acquisition in Hong Kong in seven years by that measure.
Merchants Bank, based in Shenzhen, said in April that it had written down the value of the investment by 579 million yuan ($85 million).
"Chinese regulators won't want to see another bank overpaying so soon after what happened with China Merchants," said Chan.
A takeover would likely value Wing Hang at between 2.5 and 3.3 times book value, Nomura analysts Grace Wu and Queenie Poon said in an Aug. 13 note to clients. The bank trades at 1.9 times book value, according to Bloomberg data.
ICBC's Ambitions
Hong Kong, a former British colony returned to Chinese rule in 1997, is attractive for mainland banks as the yuan starts being used for international trade settlements, according to CLSA. The city serves as a hub for goods traveling to and from China, the world's third-largest economy.
China Construction Bank Corp., the nation's second-largest, in December 2006 bought Bank of America Corp.'s Hong Kong and Macau unit for HK$9.7 billion, at the time the largest acquisition by a Chinese bank outside the country.
ICBC has ambitions beyond Hong Kong, said Li Ming, a portfolio manager at Dacheng Fund Management Co., which oversees about 100 billion yuan. The bank, with a market value of $243 billion, made acquisitions in Indonesia, South Africa, Canada and Macau in the past three years.
"ICBC is probably among the few banks around the world that still have the means and the incentive to make acquisitions overseas," Li said. "Expanding in Hong Kong is just the beginning, as that market is competitive yet small enough to serve as a testing ground."
WB report: World economies set new record in business regulation reform
A record 131 economies around the world reformed business regulation in 2008/2009, according to a report released by the World Bank and its private sector-leaning arm the International Finance Cooperation (IFC) on Tuesday.
The report, "Doing Business 2010: Reforming through Difficult Times", recorded 287 reforms between June 2008 and May 2009, up 20 percent from the previous year.
Reformers around the world focused on making it easier to start and operate businesses, strengthening property rights and improving commercial dispute resolution and bankruptcy procedures.
"Business regulation can affect how well small and midsize firms cope with the crisis and seize opportunities when recovery begins," said Penelope Brook, Acting Vice President for Financial and Private Sector Development for the World Bank Group.
"The quality of business regulation helps determine how easy it is to reorganize troubled firms to help them survive difficult times, to rebuild when demand rebounds, and to get new businesses started," he said.
Singapore, a consistent reformer, is the top-ranked economy on the ease of doing business for the fourth year in a row, with New Zealand as runner-up.
But most of the action occurred in developing economies. Two-thirds of the reforms recorded in the report were in low-and-lower-middle-income economies.
For the first time a Sub-Saharan African economy, Rwanda, is the world's top reformer of business regulation, making it easier to start businesses, register property, protect investors, trade across borders and access credit.
Reformers were particularly active in Eastern Europe, Central Asia, the Middle East and North Africa, according to the report.
This year, there were four new reformers among the top 10: Liberia, the United Arab Emirates, Tajikistan and Moldova.
Others include Rwanda, Egypt, Belarus, Macedonia, Kyrgyzstan and Colombia. Colombia and Egypt have been top global reformers in four of the past seven years.
Doing Business analyzes regulations that apply to an economy's businesses during their life cycles, including start-up and operations, trading across borders, paying taxes, and closing a business, according to a statement released by the World Bank.
Meanwhile, the report does not measure all aspects of the business environment that matter to firms and investors. For example, it does not measure security, macroeconomic stability, corruption, skill level, or the strength of financial systems.
First Solar nabs China contract to build world's largest field
First Solar Inc. said Tuesday it has signed an agreement with China to build a sprawling, 2-gigawatt solar power field, possibly becoming the world's largest such facility.
September's Greenback Woes: What's the Dollar's Future?
If the kids are back at school, it must be time to sell the U.S. dollar. Or at least that's what history suggests for the greenback.
Over the last 20 years, September has been the second weakest month of the year for the dollar against the euro, according to data from Royal Bank of Scotland's [RBS 18.44 -0.04 (-0.22%) ] global banking and markets division, while December has been historically the weakest.
The U.S. dollar sank to its lowest this year against the euro on Tuesday as a rosy global economic outlook fueled buying in stocks, encouraging investors to take riskier bets on assets in other currencies.
Renewed concerns about the status of the dollar was also sparked by a report from the U.N. trade and development agency (UNCTAD) on Monday which called for the creation of a new world reserve system using several currencies, not just the U.S. dollar.
It didn't help that the seasonal September currency flow coincided with the euro breaking out of its range of the past few weeks, triggering automated trading orders and options plays, providing momentum for the move.
The InterContinental Exchange's dollar index, on which futures contracts are traded, fell 1.0 percent to its lowest level in about a year.
"Certainly, the game has changed with the move in the euro above the previous high for 2009," said Nick Bennenbroek, head of FX strategy at Wells Fargo [WFC 26.98 0.07 (+0.26%) ] in New York. "We can see further dollar weakness from where we are, especially when we take into account the seasonal factor."
The euro was up 1.2 percent against the dollar to around $1.4535 in late trading in New York, erasing a rack of $1.4500 option barriers. Traders are citing more barriers in the $1.4550 area. In the options market, one-month risk reversals, which reflect the market's sentiment on a currency, are showing a bias for euro calls, a bullish indicator. On Tuesday, the premium for euro calls jumped to 0.25 from 0.05 late Monday.
September Woes
Dollar weakness in September could be explained by corresponding moves in other asset markets, said Alan Ruskin, chief international strategist at RBS.
There is a "consistent pattern of unusually bullish U.S. government bond markets" in September including a sharp two-year and 10-year spread compression against the dollar relative to the euro zone benchmark bonds. Lower U.S. yields, relative to those offered by other major currencies, is a disincentive to hold the U.S. dollar. Wells Fargo's Bennenbroek said when traders return in September from their summer holidays, they tend to follow existing trends in the market.
While there was a spike in the U.S. dollar in the fourth quarter last year, as investors sought safety in U.S. assets after investment bank Lehman Brothers collapsed, the overall trend for the dollar in the past decade has been downwards.
"Part of what's happening is that traders are looking to trade the underlying trend. That's when dollar weakness has gained some momentum," Bennenbroek said.
The seasonals are also reflected in negative U.S. data surprises that tend to trigger dollar selling, RBS's Ruskin said. For instance the U.S. Institute for Supply Management survey of purchasing managers' intentions', a leading indicator or activity in the manufacturing and services sectors, tends to show the largest downside surprise in the August data released at the start of September.
September has also produced some of the more consistent downbeat numbers in U.S. non-farm payrolls data over the last 10 years, although the data comes out in October. Meanwhile, the August jobs report that is released in September usually shows a lower-than-expected number, although not as weak as that in June, September, and November.
Range Break Out
While global economic recovery is encouraging risk appetite and seasonal factors are playing their part, Tuesday's move gained some momentum as the breakout in the dollar from recent trading ranges triggered automated trading orders and options plays.
Analysts said euro/dollar's climb above $1.45 was a "significant event," after traders tried to push the euro above $1.4450 in early August but failed.
"This week essentially ends the summer holidays in most trading centers and as such, the increased participation and liquidity would theoretically increase the chances that the latest rise in euro/dollar can be extended," said HSBC in a research note.
HSBC [HBC 54.27 0.08 (+0.15%) ] said the next upside target is $1.4720, a breach of which should propel the euro to its highest in nearly a year.
Still some analysts cautioned against relying too much on correlations, including seasonal and technical factors to sell the dollar.
For one, the dollar's negative correlation with equities and positive data could not hold for long because if this is taken to an extreme, it poses growth risks to U.S. trading partners saddled with strong currencies at a time in which their own export sectors are still frail.
In addition, RBS' Ruskin believes much of the positive economic news that has pressured the dollar has already been priced in by the market. "A risk premium is already built into holding dollars. Buying euro/dollar on seasonals make little sense at the best of times."
Warren Buffett Joins Call to Target "Short-Termism" In Financial Markets
Warren Buffett is one of twenty-seven business, government, and academic leaders endorsing what's described as a "bold call to end the focus on value-destroying short-termism" in financial markets.
Buffett is one of the signers of a statement to be released tomorrow (Wednesday) by Walter Isaacson's Aspen Institute.
The statement argues that a "healthy society requires healthy and responsible companies" working to achieve long-term goals.
Instead, "boards, managers, shareholders with varying agendas, and regulators ... have allowed short-term considerations to overwhelm the desirable long-term growth and sustainable profit objectives of the corporation."
The Aspen statement calls for boards, managers, and "most particularly, shareholders" ... institutional investors .. to shift their focus to long-term goals and not push for "high-leverage and high-risk corporate strategies designed to produce high short-term returns."
As companies try to satisfy influential institutional investors focusing on short-term metrics like quarterly earnings, they "can harm the interests of shareholders seeking long-term growth and sustainable earnings."
The statement recommends:
"Market incentives to encourage patient capital," such as lower capital gains tax rates for longer holding periods.
Closer alignment of the interests of financial intermediaries, like mutual funds, and their investors.
"Greater transparency in investor disclosures" to make it harder for activists and other investors to "use their influence to achieve short-term gains at the expense of long-term value creation."
The bottom line, says Aspen, is that "the trend toward greater shareholder power .. should be accompanied by greater investor and intermediary responsibility" to "empower and encourage business managers and boards of directors to focus on sustainable value creation rather than evanescent short-term objectives."
Not everyone will agree, of course. Activists like billionaire Carl Icahn believe incompetent or entrenched managements often cite the pursuit of "long-term goals" as a crutch to avoid making difficult changes that would help the company, shareholders, and everyone else.
A few years ago, he told Business Week, "My critics say I am short-term-oriented .. My point is that a lot of times assets can be better utilized and enhance society when you put them in better hands than the current management."
Current Berkshire stock prices:
Current Berkshire stock prices:
Class A: [BRK.A 97560.00 --- UNCH (0) ]
Class B: [BRK.B 3200.00 -12.00 (-0.37%) ]
China Raises the Money-Printing Alarm
A hugely important story from Ambrose Evans-Pritchard of the London Telegraph that China is alarmed by U.S. money-printing has helped drive the dollar price of gold over $1,000, at least temporarily, and drive down the exchange rate of the greenback. Other commodities like oil and copper have also rallied today.
At a conference in Lake Como, Italy, a leading Chinese economic spokesman—Cheng Siwei—criticized Ben Bernanke's loose monetary policy. "If they keep printing money to buy bonds it will lead to inflation," said Cheng, "and after a year or two the dollar will fall hard." Cheng went on to say that China was diversifying its roughly $700 billion of U.S. foreign-exchange reserves into gold. "Gold is definitely an alternative, but when we buy, the price goes up," he said. "We have to do it carefully so as not to stimulate the market."
Ambrose-Pritchard interprets this as the "Beijing Put" on gold—meaning the Chinese will buy gold on the dips, which is going to prevent the yellow metal from falling hard. It also puts upward price pressure on gold for the long term. Beijing has in fact doubled its gold reserves to 1,054 tons.
As a corollary to this, the Chinese are clearly losing confidence in the U.S. dollar.
And while nobody is much paying attention to a new UN report that the global financial system needs a new reserve currency to replace the dollar, the fact is that Chinese spokesmen (and Russian and Brazilian spokesmen) have said the same thing from time to time.
Incidentally, the G20 meeting of finance ministers and central bankers in London this weekend failed to articulate a fiscal and monetary exit strategy from all their massive spending, borrowing, and money-creating to fight off the financial meltdown and the world recession. The G20 reluctance to exit from hyper-stimulus is also bullish for gold—and, for that matter, bearish for paper currencies in general.
Cheng, by the way, hinted that China is experiencing a speculative boom in stocks and property. But if the Chinese raise interest rates ahead of the Fed they will risk being flooded with hot money that will make the boom even worse. "We have to wait for them," said Cheng. "If they raise, we raise."
Many Wall Street traders are dissing the gold-rally story. But I think they're missing the bigger picture of excess money-creation in the U.S. and elsewhere. As I recall, Confucius once said: Where there's smoke, there's fire.
Obama's Promises Could Use a Good-Faith Deposit: Caroline Baum
With his job approval ratings slipping and his signature domestic undertaking in trouble, President Barack Obama will attempt to retake the initiative on health-care reform with a televised address to a joint session of Congress this evening.
Obama's aides have put the word out that the speech will be "prescriptive." In other words, the president will provide mundane details on how he plans to implement his grand vision of providing universal health care and cutting costs.
Don't expect a green-eyeshade speech. The Great Chamber from which Obama will address lawmakers and, more importantly, the American people, isn't a place for a snazzy power-point presentation on budget math.
Rather, the hallowed hall, steeped as it is in the symbols of democracy, is a place where presidents come to appear presidential and appeal to the public. It's a venue that lends itself to big ideas, national themes and soaring oratory.
So what should the president try to achieve this evening when he attempts to enlist support for his health-care overhaul?
He could start by explaining the seeming inconsistency in his plan to save money by spending money.
"If I went to my board of directors with a similar proposal for 'cost reduction,' they would laugh me out of the conference room -- and then my job!" writes reader Michael Dunlop, vice president of operations/IT at Parts Associates Inc. in Cleveland.
Spend and Save
The Congressional Budget Office estimated the cost of various health-care plans approved by House of Representatives committees at $1 trillion over 10 years. Obama says he will pay for the bulk of the increase in spending by rooting out $500 billion in Medicare waste.
A good-faith deposit would resonate with the public after all the talk: 28 speeches on the subject of health care, or 121 if you include speeches and remarks where Obama mentioned health-care goals, according to political Web site Politico.
What's preventing Obama from appointing, say, a waste- management czar, now that a position in "green jobs" has opened up, and setting him loose? Ridding Medicare of waste and fraud isn't dependent on reforming the entire system.
It would be a lot easier to start with cost containment, as outlined by David Walker, former comptroller of the Government Accountability Office and longtime deficit hawk, in a Sept. 4 Wall Street Journal interview. If the U.S. creates "new obligations" before it gets its fiscal house in order, "we'll have a Thelma and Louise moment where we go over the cliff," Walker says.
Down Payment on Talk
If the president wants to show he's serious about containing the costs of expanded benefits, not just expanding both, he should identify and address Medicare waste while the country explores the most effective way to provide health care to the uninsured.
On that score, the country seems to be moving away from the belief that government would do a better job of containing costs than private industry. (No doubt the government's handling of cash-for-clunkers, with its crashing computer systems and delays in processing rebates, served as prosecution exhibit No. 1.) A special CBS news poll on health care taken Aug. 27-31 showed only 36 percent favor government over insurers -- even after routine vilification of the industry by the Democrats.
Obama has his work cut out for him if he wants to convince the public that government can create efficiencies in health care. One of capitalism's underlying premises is that incentives -- specifically the profit motive -- encourage companies to compete with one another to produce the goods and services consumers want at prices they're willing to pay. If not, the business is history.
Not so with government.
Craving Clarity
The CBS poll also found that 67 percent of Americans are confused about health-care reform and 60 percent think the president has failed to explain his plan clearly.
The poll numbers comport with reality on the ground. Lawmakers went home for the August recess to find constituents anxious about change and wary of signing away their current medical benefits and signing on to ObamaCare.
The president is going to have to convince those with health insurance why they will be better off under his plan.
That includes reconciling his promises to individuals with business economics. Obama has reiterated that individuals can keep their current plan. Yet employers may find it's cheaper to pay a government-imposed penalty than provide coverage.
Substance Abuse
Obama is a gifted orator, but his empty rhetoric is finally catching up with him.
During the campaign, voters projected their fantasies onto the young, attractive and unknown candidate: a community organizer, academic (with no published scholarship to his name) and less-than-one-term senator. Lack of experience was a virtue in a world where Congress offers lifetime employment, not to mention great benefits.
When it comes to governing, form over content will only get you so far.
US consumer debt in record fall
US consumers slashed their borrowing by a record amount in July as rising job losses and uncertainty about an economic recovery hit home.
Consumer credit fell by $21.6bn (£13.1bn) compared with June, figures from the Federal Reserve showed, massively more than analysts expected.
June's figure was also revised downwards, to $15.5bn from $10.3bn.
Economists say that US households are focusing on cutting back debt levels during the recession.
Last week, official figures showed that US employers cut 216,000 jobs in August, pushing the unemployment rate up to 9.7%, a 26-year high.
But there have been signs that the US economy is recovering.
Last week, figures showed that US manufacturing grew in August for the first time in 19 months and that home sales hit a two-year high in July.
INVESTMENT VIEW
EssDee Aluminium-The Shine Is Returning
A major bull operator from Bombay has been accumulating the stock, as also Hindalco. Aluminium it seems will be the last commodity to join the stimulus induced and China dedicated buying that has put a new spring into most base metals. Now U S and global major Alcoa has raised demand forecast for Aluminium-a metal widely used in automobiles, aircraft manufacture and even white goods. Alcoa Inc. has let out a release saying, it had boosted its annual forecast for global aluminum consumption, driven by higher demand from China.
The largest U.S. aluminum producer now expects worldwide demand for the lightweight metal to shrink by 5.5 percent rather than 7 percent as forecast in July, when Alcoa ( AA - news - people ) reported its third straight quarterly loss. The improved outlook was prompted mainly by economic stimulus spending in China, which has bolstered expected growth in aluminum consumption to 4 percent from zero, said Kevin Lowery, an Alcoa spokesman.
"Shovel-ready stimulus initiatives (in China) is one of the big drivers," he said. China is the world's biggest producer and consumer of aluminum.
Alcoa and other aluminum makers have struggled since last year with sharply lower orders for the metal used in products ranging from beer cans to jumbo jets. Alcoa's latest quarterly loss reflected slumping orders from key customers in the aerospace, automotive, commercial transportation and construction industries.
The weak demand has driven up stockpiles and depressed prices of the metal, and many aluminum makers have responded by curbing production.
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