IEA warns of massive oil
supply deficit next year
Opec oil producers next year can look forward to accelerating world
petroleum demand growth and only marginal extra supply from non-Opec competitors, the
International Energy Agency said.
The Paris-based thinktank said its initial estimate for oil demand in
2000 showed growth of 1.8 million barrels per day (bpd) to 77 million bpd, double the
900,000 bpd increase this year.
Asian demand growth would account for an extra 610,000 bpd of oil
consumption with the increase concentrated in China and the other developing countries of
China is already proving a strong factor in the oil market recovery
attracting net imports of about 1.2 million bpd in the three months to end-May after
purchases were limited by import bans.
Oil price rises could be exacerbated by the slow return to growth of
supply from producers outside the Organisation of the Petroleum Exporting Countries.
Non-Opec countries next year were likely only to manage an extra 660,000 bpd of extra
supply to 45.25 million after a fall of 140,000 bpd this year.
Japan sweetens bid
Japan has offered to invest $4 billion in Saudi Arabia over the next
decade in a bid to renew a lucrative upstream oil contract in the kingdom, an industry
"The Japanese trade ministry has offered the Saudis $4 billion in
investments over 10 years," the source said. "That's equivalent to its total
investment over the last 30 years."
Mergers & Acquisitions
LucentINS: Telecommunications equipment maker Lucent
Technologies Inc said it would buy communications consulting and software firm
International Network Services for $3.7 billion in a move to strengthen its presence in
the data communications networking market.
BOCAir LiquideAir Products and Chemicals:
BOC Group Plc said that an agreed £7.2 billion ($11.6 billion) takeover of the group by
France's Air Liquide and U.S.based Air Products and Chemicals, remained on track.
MeyerGraham: Britain's Meyer International Plc unveiled an
agreed £269 million ($431.7 million) bid for fellow building materials company Graham
Group Plc, marking further consolidation of the UK building supplies industry.
ShellChevron CorpWestern Oil Sands Inc:
and newly created Western Oil Sands Inc joined Shell Canada Ltd.'s proposed C$3.8-billion
Alberta oil sands venture, ending a month-long search by Shell for new partners.
VolvoScania: Sweden's AB Volvo said it had agreed to buy
rival truck and busmaker Scania for 60.7 billion crowns ($7.5 billion) to create the
world's second largest maker of heavy trucks.
HoechstRhone: The European Commission gave the go ahead to
the merger of Germany's Hoechst AG and Rhone-Poulenc SA of France after the companies
agreed to sell some assets and grant licences to remove competition concerns.
Virgin Group Plc and British mobile phone
group One20ne confirmed that they were linking up for a £100 million ($161.5 million)
plus joint venture to sell Virgin branded cellphones.
The World Bank gave a vote of confidence to Lebanon's economic policy
by agreeing to open an office in Beirut to help channel aid and knowledge to the country.
U.S. rejects oil dumping case
The U.S. Commerce Department threw out a landmark oil dumping case that
accused Saudi Arabia, Venezuela, Mexico and Iraq of selling crude oil at unfair prices in
the United States.
In its ruling, the Commerce Department said overall opposition in the
U.S. oil industry exceeded support for the case by the small producers.
The ruling was a defeat for a group of independent oil producers known
as Save Domestic Oil, who filed the case earlier this summer saying that the underpriced
oil had driven many independent firms out of business.
Russian shares trim early gains
Russian shares ended little changed after a fresh rash of selling
pushed prices down, wiping out earlier gains which traders attributed to an easing in
Trader said the firing of Prime Minister Sergei Stepashin on Monday was
unlikely to bring major changes in economic policy. But they said the market was unable to
maintain prices at the higher level.
The key RTS1-Interfax share index finished up 0.7 per cent at 102.42 on
strong volume of $12.8 million. Earlier in the day the market had hit 106.15.
Microsoft, U.S. still at odds in findings of fact
The U.S. Justice Department argued that evidence presented in federal
court here proved that Microsoft has engaged in illegal, anticompetitive practices, a
finding vigorously challenged by the software giant.
The parties in separate filings to U.S. District Court Judge Thomas
Penfield Jackson put forward their "findings of fact," interpretations of
testimony and documentary evidence presented to the court since the trial of Microsoft on
anti-trust charges began October 19.
The parties will respond to the other's filing on September 10, with
closing arguments in the landmark case scheduled for September 25.
Stocks tumble on U.S. rate hike
European shares were pulled lower in thin trade, mirroring weakness on
Wall Street, the dollar remained weak and European government bonds gyrated as thoughts of
higher U.S. interest rates preoccupied investors.
The dollar slipped below 115 yen, while the euro rose above $1.07 after
strong economic data from Japan and Germany.
European government bonds fell sharply earlier after data showed
euro-zone unemployment unchanged at 10.3 per cent.
But they were lifted by short covering towards the close with the
benchmark 10-year Bund yield dipping below the psychologically important five percent
level breached last Friday.
"There are still not many buyers around but it looks like a short
covering rally," said a bund trader at a U.S. bank in London. "There is a bit of
relief on the stronger euro and the market got a lift from the Treasury future rising
U.S. stocks traded near the day's lows in early afternoon as markets
awaited results of a government bond auction that could guide the trading direction for
the remainder of the afternoon.
The Dow Jones industrial average was down 130.12 points, or 1.2, at
10,577.58. The Nasdaq composite index was down 72.21 points, or 2.87 per cent at 2,446.77.
The U.S. Treasury 30-year-bond was down 8/32 with the yield of 6.26 per
cent, up from Monday's close of 6.24 per cent, which was the highest closing yield since
November 5, 1997.
In Europe, rate-sensitive shares such as banks, retailers, technology,
telecoms and media bore the brunt of investor worries.
Among interest rate sensitive technology stocks, Finnish mobile phone
maker Nokia was off over four per cent.
Thais approve stimulus plan
The Thai cabinet approved a multi-billion dollar stimulus package the
prime minister said would provide long-term support for economic recovery but was not a
The package, which may be worth up to $3 billion, was passed unchanged
from a draft that included new funds to help businesses, loans for small- and medium-sized
enterprises, steps to help the property sector and tariff cuts and reductions on around
Singapore's jump in economic growth during the year to the second
quarter has raised expectations that even better things are to come.
Singapore's Ministry of Trade and Industry (MTI) said the economy grew
6.7 per cent during the year to the second quarter, with all major sectors except
construction posting positive growth.
Seasonally adjusted quarter-on-quarter figures show the recovery to be
even more impressive with 21.7 percent annualised growth in second quarter against 3.6 per
cent expansion in the first quarter.
Aid for Iran
Japan is close to resuming low interest loans to Iran after a six-year
freeze, a foreign ministry offficial said.
"We are continuing our talks toward the resumption of low-interest
loans to support the construction of a dam in Iran," he said.
Another Japanese bank buckles under insolvency
Japan's regional bank Namihaya Bank Ltd was declared insolvent after
the bank applied to be put under state control officials said.
The commission decided to appoint two administrators to take over the
bank and find a buyer for its healthy assets, the commission said in a statement.
Namihaya, based in the western city of Osaka, was ordered by
authorities in June to raise its weak capital base.
Namihaya said its group capital-to-asset ratio had fallen to minus 1.46
per cent at the end of March.
Oil prices breach $20 a barrel
Oil prices surged above $20 per barrel for the first time in almost 21
months, buoyed by Opec supply curbs and strength in refined products markets.
Brent for September delivery breached the psychological $20 mark for
the first time since November 14, 1997, last trading at the day's high of $20.07 to show a
27 cent gain.
The London Stock Exchange's plan to expand the use of its electronic
share dealing platform is evidence of the growing confidence among its users in the once
controversial trading system financial industry representatives said.
The expansion of the electronic orderbook, also known as Sets should
also strengthen the hand of the LSE, in the midst of-negotiations with Frankfurt and other
European bourses about the creation of a pan-European market.
Unilever: Anglo-Dutch food and con: uwer products group Unilever
plc/NV reported 1999 second quarter pre-tax profits to June 30 of £726 million ($1.17
billion), on sales that rose three per cent to £7.15 billion. This followed a tough first
quarter when profits and turnover fell.
United News: Britain's United News & Media Plc, which
derives most profits from global business services but is also a major force in British TV
and tabloids posted headline pre-tax profits of £149.5 million ($241.7 million), down
from 152.9 million a year ago.
Telewest: Telewest Communications Plc Britain's number two cable
company which is controlled by 29.9 per cent shareholder Microsoft unveiled
half-year pre-tax losses of £273.42 million ($444.2 million), up from £145.09 million
last time, amid a hefty investment programme in new services.
Royal & Sun: British composite insurer Royal & Sun
Alliance Insurance Group Plc reported a 22 per cent fall in first-half profits. Royal
& Sun's group operating profit fell to £315 million ($508.8 million) from £406
million in the first half of 1998.
BASF: BASF AG, Europe's largest chemicals group, said
second-quarter operating profit dropped more than 40 per cent as an Industry slump and
fines and legal costs weighed on earnings. Second-quarter operating profit totalled 421
million euros ($454.7 million) after 723 million last year.
Seoul nationalises insolvent Korea Life
South Korea said it would nationalise the insolvent Korea Life
Insurance Co, brushing aside an 11th-hour bid by a US consortium to take over the
country's third largest insurer.
The Financial Supervisory Commission (FSC) declared Korea Life
insolvent and announced plans to inject between 1.35 and 2.7 trillion won ($1.1 to $2.25
billion) into it before auctioning it off.
All existing Korea Life shares will be scrapped and the company board
has been suspended, the FSC said.
Nervous Asian markets retreated on U.S. job fears
Nervous Asian stocks retreated on fears U.S. job data could point to a
rate hike, with a strong yen, China-Taiwan ties, and Daewoo's troubles overshadowing
Tokyo's benchmark Nikkei 225 average ended down 1.6 per cent at 17,084
as the market fell for a third consecutive session, while Hong Kong's Hang Seng index
dropped 0.7 per cent at 13,167 by the close.
Selling across the region was triggered by worries that if U.S.
employment data were strong, it would increase pressure on the U.S. Federal Reserve to
raise interest rates.
"People are more or less waiting for the economic data from the
U.S.," said William Li, stock market analyst with Celestial Asia Securities Holdings
in Hong Kong.
Tokyo's decline was compounded by fears the yen's strength could nip
economic recovery in the bud as hopes of intervention to buttress the dollar dimmed.
The dollar was quoted at 114.54/64 at 0930 GMT, against 114.40/50 in
late New York on Thursday, after sticking to a 40-pip range all day on pre-job data
The euro fared no better at $1.0744/49, against $1.0755/ 60 in late New
York, with investors disappointed by its failure to sustain a break of $1.0800 overnight.
The fall in Tokyo share prices and a decline in interest rates at the
short end of the yield curve pushed key September 10-year Japanese government bond futures
to a higher close.
Hong Kong stocks were depressed further by concerns about the stability
of the Chinese yuan and ties between China and Taiwan.
Taiwan stocks fell for the sixth straight session as a spat over
Taiwan's status showed no signs of abating.
BoE leaves key rate steady
The Bank of England left Britain's key short-term interest rate
unchanged at its 22-year low of 5 per cent, a move that had been widely expected by
The Bank's Monetary Policy Committee (MPC) has faced growing evidence
in recent weeks that Britain's broad-based economic recovery is gathering pace.
Economists were almost unanimous in predicting steady rates this time,
with a growing number now expecting the next move to be up, possibly by the end of the
GM may start building cars in Japan
U.S. auto giant General Motors Corp, the world's largest car maker,
said it may start building cars in Japan.
The move would make GM the first U.S. car maker to set up a production
plant in Japan since World War II.
General Motors is considering buying a plant or working with a partner,
it said. It already has two affiliates in Japan, Suzuki Motor Corp. and Isuzu Motors Ltd.
China eases norms for foreign banks
China's central bank expanded trials allowing foreign banks to carry
out local currency business in Shanghai and Shenzhen into neighbouring provinces, state
A People's Bank of China spokesman said the 19 banks doing yuan
business in Shanghai now have access to the markets in neighbouring eastern provinces of
Jiangsu and Zhejiang, according to the official Xinhua news agency.
Samsung to face creditors' wrath
Creditors moved to impose punitive sanctions on the giant South Korean
Samsung Group unless its owner contributes more towards the huge debts run up by his
ill-fated auto unit, bankers said.
The tough decision was aimed at galvanising Samsung Group chairman Lee
Kun-Hee into complying with government demands that he cough up more cash to cover
multi-billion dollar debts of failed Samsung Motors Inc.
Malaysia to frame rules
Malaysia's central bank said it would set up rules for valuation of
local banks as it pushed ahead with a plan to merge 58 financial institutions into six
Bank Negara governor Ali Abul Hassan Sulaiman, allaying doubts in the
financial markets over the plan, said the government was committed to the merger plan.
Ali told a capital markets seminar in a speech read out by an adviser
that shareholders of acquired banks in the scheme would have the option of being paid
either in cash or in shares of the merged entity.
Danmark enters Norway
Danish telecoms operator Tele Danmark, 42 per cent owned by U.S. firm
Ameritech, said it had bought into the Norwegian wireless market and injected capital in a
fastgrowing Polish mobile carrier to maintain its one-fifth stake. It said in a statement
it had acquired 19.6 per cent of Norwegian NetCom from Singapore Telecom, paying 288
Norwegian crowns ($37.5) per share, or a total of 2.68 billion crowns ($347.8 million).