Euro raises hopes of long
The euro strengthened against the dollar for the third day in a row,
raising hopes in Europe that the anaemic regional currency has finally reversed its plunge
toward parity with the greenback.
The euro has bounced almost 4 per cent higher against the dollar since
the beginning of the week, following signs of better-than-expected growth in Germany and
hints that the European Central Bank might hike interest rates. It traded in London at
$1.0517 compared to a record low of $1.0108.
BoJ gives slightly better opinion about economy
The Bank of Japan (BoJ) put a slightly brighter gloss on its economic
assessment but cautioned a recovery was still not in sight and continued its battle
against a strengthening yen.
"The economy has stopped deteriorating and corporate sentiment has
improved somewhat," the BoJ said in its monthly report, making an apparent reference
to the central bank's "tankan" survey, released earlier this month, which showed
an improvement in business sentiment from three months ago.
But the BoJ said it still saw no clear recovery in private demand, and
Governor Masaru Hayami cautioned that the central bank will not change its ultra-easy
monetary policy until deflationary fears abated.
The improving corporate sentiment, however, has prompted investors,
especially foreigners, to pour money into Japanese shares and other assets, driving the
yen higher and threatening to thwart the very recovery the government hopes to nurture.
Hayami acknowledged that an increase in overseas investors' buying of
Japanese shares have led to the yen's rise.
PepsiCo: Soft drink maker PepsiCo Inc reported
better-than-expected second quarter results fuelled by its Frito-Lay operations. Worldwide
sales grew by five per cent to reach $4.523 billion. Earnings in the second quarter were
Microsoft: Microsoft Corp has announced a 62 per cent rise in
earnings in its fiscal fourth quarter. Microsoft posted net income of $2.2 billion, or 40
cents per diluted share, in the quarter ended June 30, compared with $1.36 billion, or 25
cents, a year earlier.
IBM: International Business Machines Corp has posted
stronger-than-expected second-quarter net income of $2.4 billion. IBM posted a profit of
$1.28 per share in second quarter, up from the $1.5 billion, or 75 cents per share earned
in the year-ago quarter.
Citigroup: The No. 1 U.S. financial services company Citigroup
Inc said its second-quarter profits before one-time items jumped 21 per cent to a record
Bank of America: Bank of America Corp, the No. 1 U.S. bank, said
operating profits rose a modest 2 per cent in the second quarter to $2.06 billion.
Operating earnings per share was $1.15, slightly above the analysts' consensus view of
$1.14, according to First Call Corp.
Lucent: Lucent Technologies Inc., posted a
stronger-than-expected 60 per cent jump in fiscal third-quarter profits. Lucent said
operating profits before acquisition-related charges, rose to $829 million or 26 cents per
share, from $518 million or 17 cents, a year earlier.
Reuters: News and information company Reuters Group Plc said
first-half pre-tax profit rose two per cent to £300 million ($474 million).
Gambro: Swedish medical technology group Gambro posted a
first-half profit after financial items of 1.58 billion crowns ($190 million) against 1.33
billion crowns a year ago.
ABB: Swiss-Swedish engineering and technology group ABB Ltd said
it expected higher 1999 revenues and operating income excluding capital gains, after
lifting first half net profit by a solid 32 per cent.
AOT: Dutch securities trader AOT NV said its net profit fell to
13.6 million euros in the first half of 1999 from 18.3 million in the year-ago period.
Toyota boosts output in June
Japan's top automaker Toyota Motor Corp boosted worldwide vehicle
output in June, but its rival Nissan Motor Co Ltd still suffered a production decline, the
two firms said.
Toyota said its worldwide production of cars, trucks and buses in the
month was up 3.1 per cent from a year earlier at 409,822 units.
Mattel and Bandai join forces to market toys
The makers of Barbie dolls and Power Ranger action figures said they
would join forces to market each other's products.
Japan's Bandai Co Ltd and Mattel Inc. the world's largest toymaker,
said they planned an alliance in marketing, sales and product development.
Bandai is Japan's biggest maker of toys and merchandise based on
animated characters, including Pocket Monster toys, and racked up losses in the last
business year to March after a rapid drop in sales of its once popular
"Tamagotchi" virtual pet toy.
Under the agreement announced, Bandai is to market and sell Mattel
products such as Barbie dolls and toy cars in Japan starting in October.
Mattel will concurrently begin marketing and sales of Bandai products,
including Power Ranger toys, in Latin America.
Dollar rallies as shares take beating
The dollar rallied sharply against the yen after the U.S. Federal
Reserve surprised the currency market by purchasing dollars for yen on behalf of the Bank
The intervention came a day after the dollar fell 2.75 per cent against
the yen to a low of 117.68, its weakest level since June 10. It boosted the dollar above
119 yen to a peak of 119.68, though it fell back to around 118.87 in late European trade.
"I don't think anyone expected anything to happen during the New
York trading day with Japan off on holiday," sald Matthew Lifson of PNC Bank in
"That is why you saw the jump as great as you did in the
dollar," he added.
The intervention had only a mild effect on the resurgent euro, which
dipped below $1.04 shortly after news of the intervention, but soon popped back above that
European shares, meanwhile languished in the shadow of risingbond
yields and a weaker Wall Street.
U.S. stocks were mired near their session lows as a weak technology
sector set the tone for the broad market.
The Dow Jones industrial average was down about 162.10 points at
11,025.58 with more than 50 points of the decline coming from the Dow's two technology
In London, the FTSE-100 index of leading shares ended down 91.7 points,
or 1.4 per cent, at 6,392 on volume of 998.5 million shares.
In France, the benchmark CAC 40 index plunged 1.5 per cent at 4,548.31
while Frankfurt's DAX index shed 133.45 points, or 2.37 per cent, at 5,491.29.
UK business favours euro
British business is firmly in favour of joining the European single
currency, a leading employers group said as it unveiled survey results that gave a firm
boost to the flagging pro-euro cause.
Three out of four members of the Confederation of British Industry
voiced hopes that Britain would join economic and monetary union (Emu) at some point in
the future, and only two per cent support an outright rejection of euro-zone membership,
the CBI survey found.
Hefty growth in trade
Singapore issued a hefty upward revision to its 1999 trade forecast
yesterday as it revealed solid export growth during the 12 months to June.
Trade this year would be four to six per cent higher than last year,
the Trade Development Board said, dropping its previous estimate that trade would be five
to seven per cent lower.
"The overall assessment is that while total trade growth is likely
to be positive for 1999, it is still too early to conclude that recovery would be complete
and sustainable," said Barry Desker chief executive officer of the Trade Development
The board said non-oil domestic exports in June had been S$8.49
billion, up 7.5 per cent on a year earlier, after surging 15.5 per cent during the year to
May and 8.5 per cent in the year to April.
Taiwan plans stock stabilisation fund
Taiwan announced plans for a T$500 billion ($15 billion) stabilisation
fund aimed at calming nerves shaken by the worst row with mainland China in three years.
Stock prices on the island jumped on news of the fund which includes
T$300 billion already announced. The benchmark Taiwan Index (Taiex) surged 5 per cent to
7,756.38 in early trade on heavy volume.
The finance ministry statement came a day after Taiwan launched a
massive defence of its markets against Chinese rage at Taiwan President Lee Teng-hui's
controversial shift last week to a "two state" China policy.
U.S. imposes 100 pc tariff on EU goods
The United States announced it would impose a 100 per cent tariff on a
wide range of European Droducts in retaliation for the EU ban on U.S. hormone-treated
Roquefort cheese, goose-liver pate, and truffles were among the
products targeted after the World Trade Organisation ruled that Washington may suspend
tariff concessions covering EU trade worth $116.8 million a year, the U.S. Trade
Representative's office said in a statement.
Duties also will be slapped on fresh and frozen meat from bovine
animals, pork, fruit juice, mustard and other products.
Imposition of the duties- which will double the goods'
priceswill be effective on goods entered or withdrawn from warehouse on or after
July 29, 1999, the USTR said.
U.S. Special Trade Negotiator for Agriculture Peter Scher said earlier
this month that the move's "main objective" would be to "maximise our
leverage over the EU."
Mergers & Acquisitions
Global cellphone giant Vodafone
Airtouch Plc swooped on U.S.-based CommNet Cellular Inc, agreeing to pay nearly $1.4
billion to give it access to vast new regions in nine western United States.
BP Amoco is poised to forge a new link
with its historic partner by injecting its lubricants operations into Burmah Castrol and
taking a large minority stake in the company.
France TelecomDeutsche Telekom:
France Telecom will soon
sell its two-per cent stake in Germany's Deutsche Telekom, German newspapers reported.
"The cooperation is dead," France Telecom Chief Financial Officer Jean-Louis
Vinciguerra was quoted as saying.
QwestU.S. West: Qwest Communications International Inc is
close to an agreement to buy the local phone company U.S. West Inc for $40.5 billion, a
person familiar with the negotiations said.
Malaysia tightens insurance capital rules
Malaysia tightened its capital requirement rules for the country's
insurance companies and offered incentives for smaller firms to merge.
The country is also widening the doors to foreign insurers, asking them
to start life reinsurance operations in Malaysia, either as a branch or in joint ventures
with local partners.
The new capital requirement rules will be implemented in two stages,
Bank Negara, the central bank, said in a statement.
Under the first of two phases, the minimum paid-up capital for all
direct insurance companies will be raised to 40 million ringgit ($10.5 million) by
December, 31 1999, from 35 million, Malaysia's central bank said.
Insurance companies must keep a margin of solvency for each category of
insurance business in which they engage. The bank said that margin would be increased to
40 million ringgit from 30 million by January 1, 2000.
Dhaka devalues currency
Bangladesh devalued its currency by two per cent, to 49.35/49.65 taka
per dollar from 48.35/48.65.
Thai gold sales may rise in '99
Gold sales in recession-hit Thailand are expected to pick up this year
after they plunged by up to 80 per cent last year from their pre-crisis levels in 1996, a
senior industry source said.
Jitti Tangsithipakdee, president of Thai Gold Traders Association said
in an interview that he saw a 10-15 per cent improvement in sales volume this year from
around the eightto 10 billion baht posted last year.
Iran unshackles free zone insurance firms
Iran lifted restrictions on domestic and foreign investment in
insurance in the country's free trade zones, a senior official said.
The State Expediency Council, Iran's highest legislative body, approved
the new law allowing foreign and local entities to invest in Iranian insurance companies
established in the zones, the council's secretary Mohsen Rezal told state radio.
Two weeks ago, the council passed a law allowing foreign investment in
banks in the zones, which include the Gulf islands of Qeshm and Kish and the southeastern
port of Chahbahar.
Market value of Microsoft tops $500b
Microsoft Corp became the first company to top $500 billion in market
value, more than the economy of The Netherlands, as shares of the world's biggest software
maker hit a record 98.
Chairman Bill Gates' holdings in Microsoft neared $100 billion as the
stock climbed 33/8 to 973/4 in midday trading of 27.2 million, making it the most active
Earlier, shares touched 98, up 41 per cent for the year. The company's
market value reached $500 billion at 97-31/32.
Microsoft's shares have risen almost 500-fold since it went public in
1986, fuelled by the explosive growth of personal computers and the fervour of cofounder
Gates, the world's richest man.
The software powerhouse, founded in 1975, consistently posts earnings
growth and profit margins in excess of 30 per cent. It reports fiscal fourthquarter
results on Monday and is expected to beat analysts' estimates.
'They continue to drive the personal-computer revolution,' said Robert
Finch, a portfolio manager with Aeltus Investment Management Inc. which owns more than 7.9
"They plan to go beyond the PC platform to drive the benefits of
microcomputing to a whole host of products and devices that people are only just starting
to talk about."
Microsoft shares surged on prospects that it will issue a tracking
stock to more fully value its Internet assets, such as its MSN network of web sites.
The Redmond, Washington-based company's $500 billion value is 32 per
cent higher than the gross domestic product of The Netherlands, estimated at $378 billion.
Gates' holdings in Microsoft will reach $100 billion when the stock
Gates cofounded Microsoft with school friend Paul Allen in 1975. Gates
owns 991.7 million shares of Microsoft, or 19.4 per cent of the firm, after selling 9.9
million shares since January 29.