Oil drops as speculators
World oil markets took a nosedive as speculators decided the rally,
which doubled prices since March, had gone far enough.
London benchmark Brent blend futures dipped 83 cents to $19.80 a barrel
at close after overnight U.S. data indicated slower than expected demand growth for
gasoline in the world's biggest oil consuming nation.
Weekly government data showed U.S. gasoline inventories rose in the
week to August 20 when dealers were expecting a large decline.
"Gasoline supplies appear plentiful," said Prudential Bache
broker Nauman Barakat.
Traders said the investment hedge funds which have led this year's
price rise, in the wake of Opec supply cuts, sold heavily.
Paribas chief quits after BNP takeover
The president of French investment bank Paribas, Andre Levy-Lang,
announced his resignation after his bank was taken over by BNP in France's biggest
His resignation comes just two days before French regulators are to
give a final ruling on the outcome of the bidding war, in which BNP scuppered a friendly
merger between Paribas and Societe Generale (SG) by launching a hostile bid for both
GM vetting Daewoo's car business
A fact-finding team from General Motors Corp has begun assessing the
car business of South Korea's debt-laden Daewoo Group in the first step toward forging an
alliance, a GM spokesman said.
"Some 20 offficials from GM's worldwide operations will see
various aspects of Daewoo's vehicle business in the next two or three days," said Lee
Kisup spokesman for GM's Seoul office.
Malaysian recession ends but other concerns arise
Malaysia said its deepest recession in decades is all but ended, but
the news is overshadowed by controversial bank mergers and the expected September 1 exodus
of foreign funds.
"Growth recovery is on track; our concerns now are more on the
policy-making," said Neil Saker, head of economic research at SG Securities.
"Specifically, the rapid pace of bank mergers could be impediment
to the real economy," he said.
The central bank said Malaysia's gross domestic product grew a robust
4.1 per cent in the second quarter, confirming an end to the most severe recession since
independence in 1957.
The sharp rebound prompted the central bank to say its longstanding
forecast of one per cent GDP growth in 1999 was not optimistic enough.
SAirGroup: Swiss aviation conglomerate SAirGroup warned it could
not match its strong 1998 earnings after a 31.5 per cent fall in first-half profit. The
company said in reporting net profit fell 31.5 per cent in the first half to 87 million
Swiss francs ($57.24 million).
MNB: Finnish-Swedish banking group MeritaNordbanken reported a
flat January-June operating profit excluding gains on disposals. Comparable operating
profit for the group was 655 million euros ($683.2 million), flat on last year's adjusted
653 million euros.
Matsushita: Matsushita Electric Industrial, whose products are
sold worldwide under the Panasonic and National brands, chalked up consolidated operating
profit of 14.35 billion yen ($128.13 million) for the April-June quarter, down 57 per cent
from the same period last year.
The Toronto-Dominion Bank has made
financial history in Canada becoming the first financial institution to earn more than $1
billion in a quarter. In announcing the $1.47 billion profit for the three months ending
July 31, TD Bank said it had beaten a previous quarterly profit record of $533 million set
by Bank of Nova Scotia in 1997. It also bettered its own annual profit record of $1.12
billion set in 1997.
Foster: Foster's reported a net profit of A$364.8 million
($233.5 million) for the year ended June 30, before a one-off gain of A$4 million, well
ahead of analysts' forecasts, which averaged about A$327 million.
NetCom: Norwegian telecoms firm NetCom ASA said that pre-tax
profits more than tripled in the first half. NetCom, said pre-tax profits leapt to 135
million crowns ($17.42 million) from 43 million in the same period of 1998.
ABN Amro: ABN Amro, the Netherlands' largest bank, unveiled a 30
per cent increase in 1999 first-half net profit. First-half net, at 1.44 billion euros
($1.52 billion), pipped analysts' expectations of 1.16 to 1.4 billion euros. Earnings per
share rose by 28 per cent to 0.97 euros.
Fed jacks up key rates to curb inflation
The U.S. Federal Reserve's policymaking body raised the federal funds
rate by one quarter point to 5.25 per cent, in a move the Open Market Committee said
should diminish the risk of inflation.
The Fed also raised the discount rate by a quarter point to 4.75 per
cent, in the first increase in the rate since February 1991.
The increase in the Fed funds rate is the second in the past seven
weeks, as the central bank moves to prevent a buildup of inflationary pressures.
Some analysts said an increase in the largely symbolic discount rate
would be a signal that the Fed is prepared to raise short-term interest rates again
perhaps as soon as the next meeting of the Open Market Committee on October 5, in order to
keep the economy from overheating.
The dollar snapped higher against the Japanese yen and European single
currency after the Federal Reserve announced it had raised the key federal funds rate by a
quarter of a point.
Buoyed by an initial positive reaction by the U.S. stock market, the
U.S. currency jumped around half a yen to 111.40 yen shortly after the announcement, while
the euro slipped nearly half a cent to $1.0475, traders said
The Fed's rate increases were expected to be followed quickly by
announcements from commercial banks that they were boosting their prime lending rate by a
similar quarter point from the current 8 per cent to 8.25 per cent.
The prime rate is a key benchmark for millions of loans, from home
equity and credit card balances to short-term loans for small businesses.
Although the economy has slowed in recent months, it is still expected
to grow almost four per cent this year, a brisk pace that has pushed unemployment down to
its lowest level in three decades.
LSE set to launch Nasdaq rival
The London Stock Exchange (LSE) will next month reveal plans for a
separate market for technology stocks modelled on the hugely successful U.S. Nasdaq Stock
Market, industry sources said.
Techmarkas the new market is likely to be knownwill have
its own index initially consisting of at least 100 quoted companies, and will be aimed at
promoting London-listed technology stocks among international investors.
Growing interest in British high-tech stocks was recently underlined
after shares in Freeserve, the country's largest Internet company soared nearly 40 per
cent on its market debut in July with some 95 million shares changing hands.
London is the world's third largest market behind the New York Stock
Exchange and the Nasdaq. But the 200-year-old institution has been slow to embrace New
York's lead on technology stocks.
The Nasdaq is now 28 years old with a market capitalisation of $3
trillion and Germany has followed suit with its highly successful Neuer
Japan to sell $1 1.5b NTT stake
NTT, Japan's telecommunications giant, put in train the sale of an
$11.5 billion tranche of its shares as the finance ministry started meeting investment
banks chasing underwriting roles in the transaction.
Japan is selling 952,000 NTT sharesthe fifth tranche of stock to
be sold since privatization began more than a decade ago.
Officials have received written submissions from 13 banks chasing the
underwriting mandate, one of the most lucrative in the equity underwriting business.
Investment banks taking the lead roles in underwriting equity issues typically earn up to
2.5 per cent of the value of the transaction. Fees have fallen sharply in recent years but
big transactions like NTT are the most sought-after and remain the most valuable.
The sale of the shares, the biggest from Japan this year, is expected
to take place in November depending on market conditions, although officials may want to
take advantage of the Tokyo stock market's current strength to sell the shares sooner.
Much of the market's advance is being driven by foreign investors and the Nikkei average
is hovering above 18,000
Japan banks back at top with a bang
Three of Japan's biggest banks announced a broad alliance, giving birth
to the world's first trillion-dollar financial group and heralding Japan's long-awaited
entry into the era of global mega-bank mergers.
"Even as dynamic realignments take place across the globe and
across borders, Japanese banks had been left out in the cold while we tried to resolve our
bad loan problems," Industrial Bank of Japan President Masao Nishimura said.
"The three of us agreed that we wanted to be the front-runner in
revitalising Japan's financial system," Nishimura said.
The threeDai-lchi Kangyo Bank, Fuji Bank and IBJsaid they
will form a joint holding company by the autumn of next year and integrate their business
operations by the spring of 2002.
The combined group will have assets totalling $1.3 trillion, surpassing
the current world banking leader Deutsche Bank and nearly twice as large as
Deutsche acquired Bankers Trust Corp last year in the largest takeover
of a U.S. bank by a foreign firm, while in France Banque Nationale de Paris is currently
battling to absorb rivals Paribas and Societe Generale.
Investors applauded alliance announcement, lifting all three banks'
shares by their daily allowable limits on the Tokyo Stock Exchange. IBJ's shares closed
100 yen higher at 1,084 yen, while DKB was up 100 at 1,009 and Fuji Bank was up 90 at
Setsuko Akiba, analyst at Deutsche Bank Group, said the shares could
rise to around 1,300 to 1,500 yen, with the new banking group expected to grab a healthy
14 per cent share of bank lending to fisted Japanese firms.
Japan's financial regulators who have pushed hard for consolidation in
the nation's battered banking industry, were quick to welcome the banks' move and urged
others to follow suit.
Basf inches closer to $2.8b China deal
Basf is a step closer to building a five billion mark ($2.79 billion)
petrochemical complex in China which would constitute Germany's largest-ever investment in
the country, a company executive said.
"We have nearly finalised the feasibility study," the
executive said. "Both sides are getting into the final stages."
Basf signed a letter of intent in 1996 with a subsidiary of Chinese
state giant Sinopec to build an integrated petrochemical plant in the southern city of
Money laundering may deal blow to Russia
The Russian mafia's apparent billion dollar money-laundering scheme at
the prestigious Bank of New York could further damage Western investors' confidence in the
Russian market, security analysts said.
There are suspicions in Europe and the United States that some Russian
government officials have mob ties, which makes it easy for criminals to break the law
with impunity, the analysts said.
Thai stocks soar
Thai stocks surged more than five per cent in their heaviest trade in
six weeks, aided by the return of foreign institutional funds and enthusiastic retail
buyers, brokers said.
The composite SET index closed up 22.51 points or 5.39 per cent at
440.51 on a heavy 14.35 billion baht turnover.
Gainers outnumbered losers by 223 to 44 with 32 issues finishing
Mergers & Acquisitions
French conglomerate Suez Lyonnaise des
Eaux said it had made a friendly, $1.0 billion takeover bid for the second-largest water
distributor in the United States, United Water Resources (UWR).
Carolina PowerFlorida Progress:
Carolina Power & Light
Co, the second-largest utility in North Carolina, has agreed to buy Florida Progress Corp
for about $5.3 billion in cash and stock, creating the ninth largest U.S. energy utility.
Centura Banks Inc will buy Triangle
Bancorp Inc. a smaller in-state rival, for stock valued at $608.4 million in a move to
expand market share in growing areas of North Carolina, Centura said.
Alcoa Inc. the world's largest aluminum
producer, said it reached an agreement to buy Reynolds Metals Co, the No. 3 player, in a
$4.4 billion all-stock deal that ends Alcoa's short-lived hostile bid for its smaller
Siemens, Fujitsu in joint venture
Germany's Siemens AG and Japan's Fujitsu Ltd tied the knot on a new
joint venture which aims to become the largest personal computers firm in Europe by 2001.
Fujitsu Siemens Computers said it wants annual unit sales growth of 40
per cent and revenue growth of 25 per cent positioning it to compete with world number one
Compaq Computer Corp in the European market.
The 50/50 joint venture, to be based in the Netherlands and combining
Fujitsu's European computer business with Siemens' computer systems division, expects
European sales of more than six million units in 2001 and 7.5 billion euros in revenues.
Seoul in bid to stabilise marts
South Korea secured pledges from financial firms to cooperate in
stabilising edgy financial markets; still apprehensive about how the restructuring of the
debt-laden Daewoo Group is progressing.
The Financial Supervisory Commission said institutions promised to
refrain from taking their investments out of bond funds exposed to Daewoo debt and to
stabilise interest rates.
Brokers and analysts said the financial regulator's announcement had
little impact on jittery financial markets, although the stock market showed a dramatic
turnaround after a surprise ratings report by Moody's Investors Service.
Moody's said it was reviewing for possible upgrade Korea's Baa3
long-term foreign currency ceiling for bonds and notes, the Ba2 country ceiling for
foreign currency bank deposits and the non-prime short-term foreign currency ceiling.
Samsung agrees final debt payment scheme
South Korea's Samsung Group bowed to creditors of its loss-making
affiliate Samsung Motors Inc, and agreed to a final debt repayment schedule which
virtually guarantees creditors their money back.
Korea's third largest conglomerate Samsung agreed on a final debt
payment scheme under which it would pay the full 2.45 trillion won ($2.04 billion) owed to
creditors not affiliated to Samsung by end2000, an executive at leading creditor Hanvit