09 - 15, 2000
Global investment surges
As billion-dollar mergers and acquisitions mushroom across
the globe, cross-border direct investment by multinational companies could
surpass $1 trillion this year, after surging 27.5 per cent to $865 billion in
1999, the United Nations Conference on Trade and Development said Tuesday.
UNCTAD also said in its World Investment Report 2000 report
that direct investment prospects in Asia are bright, following a 9 per cent jump
in cross-border direct investment to $106 billion in 1999.
Cross-border investment in Latin America jumped 21 per cent
to $90 billion, as privatization paved the way for an influx of funds.
Direct cross-border investment flows into developed countries
surged 32 per cent to $636 billion last year, while investors pumped $208
billion into projects in developing countries, a 16 per cent increase from a
Britain was the largest outward investor, shelling out $199
billion in 1999.
One of the main drivers of such investments is mergers and
acquisitions. Some 24,000 merger and acquisition deals were sealed last year
with a completed value of $2.3 trillion, the report said.
Of those deals, 109 "mega-deals" with a value of
more than $1 billion, accounted for more than 60 per cent of the total value of
While investment in Asia grew on the whole last year, funds
to China dropped by nearly 8 per cent to $40 billion.
Investment in Japan, meanwhile, quadrupled to $13 billion as
Japanese companies invested less overseas.
"This mirrors strategic changes in Japanese companies,
which are increasingly viewing M&As as a means to revitalize and
restructure," the report said.
US House clears H-IB visa bill
The bill designed to increase the number of US visas for
educated and technically qualified foreigners that was approved by the Senate on
Monday also cleared the House of Representatives on Tuesday night.
Early approval by President Clinton was said on Wednesday to
be virtually certain.
The bill, earlier mired in wrangling between the Democrats
and Republicans, advanced first in the Senate, on a vote of 96 to 1. On Tuesday
night, only hours after it had passed the Senate, the measure was cleared as
well by the House, with Republicans setting aside their differences on the
The legislation was passed by the House on a voice vote and
was opposed by only one senator, Ernest F. Hollings, a South Carolina Democrat
who is known as a job protectionist.
The bill raises, the number of H-1B visas to 195,000 from the
existing 115,000 for the next three years. Each visa will cost $500. Foreigners
employed by US universities and research organizations are exempt from the
195,000 ceiling. Visas fees are expected to bring in $450m in the next three
Under the bill, the Immigration and Naturalization Service
would be able to issue the 195,000 H-1B visas a year for each of the next three
years to foreign-born workers with college degrees and special skills. Each visa
will be good for six years, although it must be renewed after the first three
Foreign investors barred from China dotcom auction
China's first auction of dotcoms yielded only one successful
sale as foreign investors were barred from participating, organizers revealed on
The auction, held in Beijing this week, was aimed at helping
cash-strapped start-up companies raise finance.
But 20 foreign companies that registered to attend as buyers
were barred in a sign that China's Ministry of Industry remains reluctant to
allow foreign ownership of the potentially lucrative Internet market.
The 20 companies included firms from the United States,
Britain, Hong Kong, Taiwan, South Korea and Germany, organizers said.
They were among a total of 52 registered buyers. Two hundred
sellers registered but after weeding out companies deemed to lack potential,
organizers allowed only 35 web sites and six domain names to go up for sale on
the auction floor.
The only successful sale made was that of a nine-month-old
legal services company — www.elawchina.com. Twenty per cent of the company was
purchased by a Shenzhen Internet service provider, Shenzhen Technology and Trade
Inc., for US$1.8 million.
US, EU agree on handling tax disputes
The United States and the European Union have agreed on
procedures for handling a dispute over a US tax break scheme for exporters in a
bid to reduce tensions in the explosive row, the EU said on Saturday.
The World Trade Organisation (WTO) ruled earlier this year
that the US Foreign Sales Corporation (FSC) scheme, which provides billions of
dollars in tax breaks for exporters, was an illegal export subsidy and gave
Washington until October 1 to reform it.
But the EU says US legislation reforming the scheme, now
before Congress, still breaks world trade rules, raising the possibility
Brussels could seek compensation or impose billions of dollars of sanctions on
The EU-US agreement, reached after several days of talks in
Brussels, does not tackle the underlying dispute.
European techs slump
Europe's main markets were mixed at the start of trading
Friday as tech shares fell in step with their U.S. counterparts, although the
U.K.'s benchmark index edged higher.
London's FTSE 100 inched up 0.1 per cent to 6,389.6, led by
network equipment maker Marconi (MNI). In Paris, the CAC 40 blue chip index was
nearly 0.1 per cent lower at 6,330.03, with data network operator Equant (PEQU)
slipping 1.8 per cent. Frankfurt's electronically traded Xetra Dax slipped 0.3
per cent to 6,874.45, led by a 1.3 per cent drop in Europe's largest software
maker SAP. The SMI in Zurich was up 0.1 per cent and Amsterdam's AEX was little
changed. The pan-European FTSE Eurotop 300, a broader index of the region's
largest stocks, was down 0.2 per cent, with its technology sub-index shedding
0.8 per cent.
In the currency market, the euro rose against the dollar to
87.13 U.S. cents from 86.92 ents in New York late on Thursday.
In the U.S. Thursday, the Dow Jones industrial average fell
0.5 per cent, or 59.56 points, to 10,724.92, while the Nasdaq composite index
shed 1.5 per cent, or 51.44 points, to 3,471.66.
Asian down as techs slide
Tumbling tech shares took their toll on Tokyo and Singapore's
markets Friday, as most Asian markets headed lower, although Taipei's main index
bounded higher as the Taiwanese government pumped money into the market.
In Tokyo, the Nikkei 225 average fell 0.7 per cent to end at
15,994.24, burdened by declines for market heavyweights Fujitsu and NEC.
Singapore's Straits Times Index tumbled 1.9 per cent to
1,957.77 by the end of the morning session. Hong Kong's Hang Seng index was
closed for a public holiday.
In Taipei, the Taiwan Weighted index rose 5.4 per cent to
close at 6,353.67 as the government continued to tap its 500 billion Taiwan
dollar ($16 billion) state stabilization fund. Market sentiment also improved
after a cabinet reshuffle.
Australian shares closed lower as the weak Australian dollar
weighed on the market. The S&P/ASX 200 index fell 0.5 per cent to 3,293.5.
ECB airs surprise rate hike
The European Central Bank unexpectedly raised its leading
interest rate by one-quarter point Thursday, against a backdrop of gathering
inflation pressures aggravated by a weak euro and high oil prices. The ECB,
which sets monetary policy for the 11-nation euro zone, lifted its minimum bid
rate to 4.75 per cent, its sixth rate rise this year. Higher rates make it more
expensive for consumers and companies to borrow money, which tends to curb
spending and ease inflationary pressures.
BoE holds rates steady
The Bank of England held its leading interest rate steady
Thursday, as expected, judging that inflation pressures remained cool enough as
U.K. economic growth continued to slow amid a recent weakening in the pound's
value against other currencies.
The announcement, the first of two interest-rate decisions in
Europe Thursday, left the BoE's official lending rate at 6 per cent for the
eighth straight month. The European Central Bank was poised to announce its
decision on rates for the 11-nation euro zone about 1/2 hour later.
Fed leaves rates steady
The Federal Reserve decided Tuesday to leave interest rates
unchanged, but indicated that inflation is still a risk, stoking fears that
future rate increases may be in store.
Analysts had widely expected that the Fed would take no
action on interest rates, amid growing signs the U.S. economy is beginning to
slow. The Fed's decision marks the central bank's third consecutive policy
meeting with no rate hike, following a series of six rate increases since June
1999 that lifted the key federal funds rate by 1.75 per centage points to 6.5
SmithKline in Block race
SmithKline Beecham PLC is a leading contender to buy
Sensodyne toothpaste maker Block Drug Co. for about $1.2 billion, seeking to add
the U.S. company's oral hygiene products to its Aquafresh, Macleans and other
toothpaste brands, the Wall Street Journal reported Friday.
U.S. Treasurys rise
U.S. Treasurys rose Thursday as easing crude oil prices
soothed inflation concerns, but gains were tempered ahead of a key jobs report
traders expect will confirm that economic growth is moderating.
U.S. crude oil prices extended declines from 10-year high
above $37 a barrel two weeks ago to just above $30 a barrel, easing a potential
inflation threat that pushed up long-term bond yields some 0.25 per centage
points in September.
10-year notes rose 7/32 to 99-4/32, as their yield, which
moves inversely to the price, dropped to 5.87 per cent. Inflation-wary 30-year
bonds rose 19/32 to 104-27/32, yielding 5.90 per cent.
Two-year notes were flat at 99-31/32, yielding 6.01 per cent,
while five-year notes rose 4/32 to 103-14/32, yielding 5.89 per cent.
Mortgage rates decline
Long-term mortgage rates slipped to their lowest level for
the year as markets reacted to the non-action by the Fed at its latest policy
meeting. The 30-year fixed-rate mortgage, the industry benchmark, averaged 7.83
per cent for the week ending Oct. 6. The average for a 15-year fixed-rate
mortgage (FRM) was 7.50 per cent. One-year adjustable-rate mortgages (ARMs) this
week averaged 7.21 per cent.
Boeing gets $1.2bn order
Continental Airlines Inc., the No. 5 U.S. airline, said
Thursday it ordered 15 Boeing Co. 757-300 single-aisle aircraft in a deal valued
at $1.2 billion at list prices.
New jobless claims rise
The number of Americans filing new claims for unemployment
benefits rose to 299,000 last week from a revised 289,000 the prior week, the
government reported Thursday.
The U.S. Energy Department announced agreements Wednesday
with 11 companies and brokers to take 30 million barrels of oil from the
government's emergency reserve with deliveries to be completed by the end of
The 11 bidders agreed to return a like amount of crude, plus
a 1.56 million barrel premium, late next year. No money was exchanged.
Factory orders rebound
Orders placed with U.S. manufacturers rebounded modestly in
August, powered by strong demand for aircraft and electronic components,
according to government figures released Wednesday.
The Commerce Department reported that factory orders rose 2
per cent in August to a seasonally adjusted $382.5 billion, reversing a
downwardly revised 8.1 per cent drop in July.
NYSE won't bid for LSE
New York Stock Exchange Chairman Richard Grasso said Thursday
the Big Board would not make a hostile bid for the embattled London Stock
Swedish stock exchange operator OM Gruppen on Tuesday
extended its unsolicited $1.2 billion bid to buy the London Stock Exchange,
insisting it has made "good progress" in wooing shareholders of the
company that runs Europe's largest stock market.
Japan confidence rises
A closely watched survey of business confidence in Japan
showed strong improvement Tuesday, signalling that the world's second-largest
economy is rebounding from its worst slump in decades.
The Bank of Japan's "tankan" survey of business
confidence improved to plus-10 in the July-September quarter from plus-three in
the April-June period.
It was the seventh-consecutive quarter of improvement and the
second-straight quarter that the index climbed into positive territory, meaning
more business executives expressed optimism about the future than were
Japan warns Apple
Japan's anti-monopoly watchdog, the Fair Trade Commission
(FTC), said on Tuesday it issued a warning to the Japanese unit of Apple
Computer Inc. over suspected fixing of retail prices.
The FTC said in a statement it thought Apple Japan pressured
retailers not to sell its iMac desktop and iBook notebook computers below retail
Ship lines hike rates
Pacific Ship lines carrying goods from Asia to the United
States are planning to raise freight rates by more than 20 per cent next year.
Vodafone's China stake
Vodafone Group PLC will become a strategic investor in China
Mobile (Hong Kong) Ltd. by buying $2.5 billion of shares in the Chinese
mobile-phone operator's planned sale of stock, the U.K. wireless company said
The deal is part of an alliance covering management and
technology sharing, giving Vodafone a way into a market that has been largely
off limits to overseas investors, while also helping to build China Mobile's
Danish banks tie the knot
Danske Bank, Denmark's leading financial company, announced
Monday a 26.1 billion crown ($3.1 billion) all-stock takeover of No. 3
RealDanmark, creating the Nordic region's largest bank by assets.
China enacts sweeping rules
China published sweeping new regulations on Internet
companies on Monday that limit international investment, require strict
surveillance against "subversive" content and threaten to close down
any unlicensed firms.
The rules, passed by China's cabinet two weeks ago and
published in the official Xinhua Daily Telegraph on Monday, are sure to send
shockwaves through the country's fledgling Internet industry, which is heavily
dependent on international capital.