. .


Feb 21 - 27, 2000

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

Markets lost ground

The Brazilian and Mexican markets lost ground after the U.S. Federal Reserve Chairman suggested U.S interest rates may not be high enough. Both north of the U.S. border, the Toronto Stock Exchange broke through the 9,500 mark, once again setting records.

Brazilian stocks ended in negative territory after a day of see-saw trading. Sao Paulo's benchmark Bovespa index finished 0.7 percent lower at 17,979 points, just below the psychologically important 18,000 point barrier, which the index crossed several times during the day.

Mexican stocks ended lower. The IPC index of leading shares finished down 62.53 points, or 0.82 percent, at 7538.19, after two days of consecutive marginal gains.

Elsewhere in the region, in Argentina the MerVal index rose .69 to 630.21, while in Venezuela the IBC index dropped 268.76, or 4.27 percent, to 6,019.98.

The Peruvian IGRA index fell 1.60 to 1,820.37, and in Chile, the IGPA index fell 39.19, or 0.71 percent, to 5445.22.

The Toronto Stock Exchange's benchmark 300 Composite Index closed up 34.93 points, or 0.37 percent, at 9,463.54 on record volume of 324.9 million shares worth C$4.49 billion.

Nasdaq soars to record

The Nasdaq composite index staged a strong rally, closing above the 4,500 mark for the first time as gains among biotechnology issues and its key tech components fuelled the index to a record.

But testimony from Federal Reserve Chairman Alan Greenspan that strongly hinted of further interest rate hikes weighed on the Dow Jones industrial average.

The Nasdaq composite index rallied 121.22 points, or 2.7 percent, to 4,548.87, surpassing its previous record close of 4,485.63 on Feb. 10. Volume on the Nasdaq also set a record at 2 billion shares.

The Dow Jones industrial average fell 46.84 to 10,514.57, while the broader S&P 500 edged up 0.58 to 1,388.25. Small-cap stocks performed well, with the Russell 2000 Index of Small Stocks posting a record close for the second consecutive session at 558.42.

Breadth was negative on the New York Stock Exchange, with declines outnumbering advances 1,570 to 1,440 on trading volume of 1 billion shares.

Mergers & Acquisitions

Lennar—U.S. Home: Lennar Corp. agreed to buy U.S. Home Corp. for $476 million in cash and stock to create the largest U.S. homebuilder, with combined annual revenues of $4.9 billion.

Cisco—Growth Networks: Cisco Systems Inc. said it signed a deal to acquire privately held Growth Networks Inc., which develops technology used in equipment that routes large amounts of Internet and voice data at high speeds, for about $355 million in stock.

Corning—NetOptix: Fibre optics company Corning Inc unveiled three deals aimed at bolstering its presence in the fibre optical networking market, including a $2 billion agreement to buy NetOptix Corp.

Occidental—Altura: U.S.-based Occidental Petroleum is to pay over $3.5 billion for Altura Energy after winning an auction for the Texas and New Mexico oil and gas venture, a U.S. industry source said.

Rate fears dampen Asia

Asia's major stock markets all fell Friday in the wake of hawkish comments on global interest rates from U.S. Federal Reserve chairman Alan Greenspan, though a slide in the yen cushioned Tokyo's blue-chip index, which closed little changed from the previous session.

The latest in a series of records closes on the tech-heavy Nasdaq Composite in the U.S. and the yen's drift to a five-month low against the dollar supported export-sensitive stocks. The benchmark Nikkei 225 fell just 2 points at a close of 19,789.03, after gains earlier in the session were countered by declines in utility shares. The index advanced 0.4 percent in the week.

The Hang Seng in Hong Kong was hit harder by Greenspan's remarks, dropping 1.75 percent to 16,685.66 trade as blue chips suffered selling pressure. The Straits Times index in Singapore suffered a similar fate and was off 1.5 percent at 2,196.44 near the end of its session.

Asian markets had received mixed signals from Wall Street in the wake of Greenspan's congressional testimony, which hinted strongly at further interest-rate hikes to cool the economy. The Nasdaq soared 2.4 percent to close at a record 4,548.87, but the Dow Jones industrial average shed 47 points to end at 10,514.57, while the broader S&P 500 moved fractionally ahead to end at 1,388.25.

Greenspan's remarks and a downbeat assessment of Japanese growth prospects from Economic Planning Agency chief Taichi Sakaiya pulled the yen back to a five-month low against the dollar of 110.97.

In Tokyo, auto makers provided an early lift for the Nikkei.

In Hong Kong, financial and property shares declined on Greenspan's remarks, paring recent gains.

The All Ordinaries in Sydney closed down 0.8 percent at 3,120.10 and Taiwan's Weighted index fell 1.04 percent from its 10-year record, closing at 10,096.38. The Kospi in Seoul continued its volatile run, ending down 2.05 percent at 79.14.

Gates says Windows 2000 serves Web

As Microsoft unveiled Windows 2000 to the waiting computer world, Chairman Bill Gates stressed that the new operating system would meet the needs of the most powerful new tool in business — the Internet.

Gates told the Moneyline News Hour that a priority for his company was ensuring that Windows 2000, "is the best platform for the Internet."

"Having great software that lets your people see digital information, lets them collaborate, lets you build a great Web site, that's going to be very, very important for all companies going forward," Gates told Moneyline co-anchor Stuart Varney. "And Windows 2000 is the key platform where that starts."

Bass brews beer deal

Bass said it is considering putting its brewing unit on the block, and may raise as much as 1.8 billion pounds ($2.9 billion) if it offloads Britain's second-biggest beer business to focus more on leisure and hotels.

UBS revamps wealth arm

Swiss bank UBS on Friday announced a shake-up that triggered a rally in its lagging stock price, amid optimism the changes will succeed in revitalizing its sluggish private banking business.

European markets open flat

Europe's major equity markets moved gently ahead in trade, shrugging off the hawkish comments from U.S. Federal Reserve Chairman Alan Greenspan that hinted at higher interest rates.

Ford Europe plans revamp

Ford Motor Co. said Friday it would unveil a revamp of its troubled European operations, and is expected to cut about 2,000 jobs and announce changes to its supplier and distribution strategies.

Japan faces ratings cut Moody's,

Japan's fragile recovery got a vote of no-confidence after a leading international rating agency warned that the world's second-largest economy could sink into a morass of debt.

Moody's Investors Service said it is studying whether to lower its debt rating for Japan's government, a move that could send Japan's borrowing costs higher and damage its international prestige.

Some analysts echoed Moody's warning that the fast-growing mountain of public debt will require a damaging cutback in government spending before structural reforms can nurture private sector growth.

But others said the warning might have been overdone, because Japan's economy appears to have emerged already from the darkest days of its worst recession in half a century.

Moody's said a build-up of debt was likely over several years and could approach a jaw-dropping 150 percent of gross domestic product — levels notseen in the industrialized world since the 1920s or 1930s.

"It will be extremely difficult in the medium term for the present government or future governments to deal with this very large burden," Vincent Truglia, managing director of Moody's sovereign risk unit, told Reuters Television. "The government faces very, very difficult choices in the medium term."

Moody's rattled markets and authorities in November 1998 when it downgraded Japan's sovereign debt rating from a top-notch Triple-A to Aa1, its second-highest rating.

Other agencies have also expressed concern about the swelling debt. In January, Standard and Poor's said that while Japan's debt was manageable at current levels, getting it under control was one key to keeping the triple-A credit rating it gives Japan.


Mannesmann: Mannesmann AG, currently being taken over by Britain's Vodafone AirTouch Plc, said its 1999 net profit fell some 21 per cent as goodwill costs from its own acquisition programme kicked in. The German telecoms and engineering group said net profit fell to around 500 million euros from 630 million euros.

Philips: Philips Electronics NV shattered market forecasts with more than tripled 1999 earnings. Headline profits (came in at 1,804 million euros ($1.77 billion), a massive leap from 1998's 541 million euros and well above consensus analyst forecasts of 1.64 billion.

SmithKline: SmithKline pre-tax profits for 1999 rose 13 per cent to 1.941 billion pounds ($3.10 billion). Sales rose 10 per cent 7.75 billion pounds, buoyed by a 21 per cent jump in sales of its Seroxat/Paxil anti-depressant— now approved for social anxiety disorder in 50 countries—and a 16 per cent increase for antibiotic Augmentin.

Glaxo: Glaxo reported a 3.8 per cent rise in pre-tax profits to 2.772 billion pounds, excluding manufacturing restructuring costs. Adjusted earnings per share rose five per cent to 53.9p while the dividend for the year was increased three per cent to 37.0p.

ING: Dutch financial services group ING unveiled preliminary 1999 figures, pencilling in an 84 per cent rise in net profit to 4.92 billion euros ($4.87 billion) as banking operations made a dramatic recovery.

Apple unveils souped up Notebook

Apple Computer announced the launch of a souped up i-Book Notebook computer with double the memory and hard-drive size of the previous model.

Apple Inc Chief Executive Steve Jobs told a trade show in Tokyo that the new i-Book laptop would be launched in Japan at a price of 198,000 yen ($1,822), the same as the previous i-Book. It will be $1,599 in the United States.

Apple officials said the computer was being marketed in the United States and would be available worldwide.

It also unveiled a new PowerBook portable computer with processors up to 500 MHz.

Japan banks threaten to sue Tokyo

Shockwaves from renegade Tokyo Governor Shintaro Ishihara's plan to impose a local tax on big banks spread, as banks threatened to sue the metropolis and; Japan's biggest ruling party said it might recommend a similary but broader levy when the economy improves.

The latest twists in the weeklong saga pit a popular but economically dubious plan to single out banks, against efforts to implement a broader corporate tax that would be a boon to tattered local finances but anathema to many firms.

Banks pledged to fight what they say is an unfair levy.

Katsuyuki Sugita, chairman of the Japanese Bankers Association, said in an interview published he could not rule out a lawsuit against Tokyo if the new tax is imposed.

Indonesia economy expands marginally

Indonesia's battered economy grew just 0.23 per cent in 1999, the country's state statistics bureau said, releasing a batch of data that showed real recovery had yet to take root.

Fourth-quarter gross domestic product was 5.76 per cent higher than in the same 1998 period when Indonesia's economic crisis was at its worst but only 0.91 per cent up on the third 1999 quarter.

But statistics bureau head Sugito Suwito said growth was expected to be 4 per cent in 2000, and possibly higher if recent improvements in the economy continued. "GDP growth could be higher than four per cent if the situation continues to improve."

GDP growth in 1999 was broadly in line with forecasts. A poll of 10 research houses in December found an average forecast of a 0.2 per cent fall in GDP in 1999, with growth of 3.7 per cent expected in 2000.

Indonesia's budget for April to end-December 2000 assumes GDP growth of 3.8 per cent.

But economists said it was too early to say that real economic recovery was underway.

UK broker unveils novel trade system

Speechtrade, Britain's first voice-activated automated stock quoting service, was launched.

The service is a joint venture between Stocktrade, the telephone and online share-dealing unit of Ulna brokerage Brewin Dolphin Securities Ltd. and privately-held U.S. technology firm Speech Works International Inc.

The service will enable customers to dial in, mention the name of a company whose shares are listed in Britain, and then listen to a computer-simulated, female voice give them both a "buy" and "sell" price. Speechtrade will initially be open only to Stocktrade customers, not to the general public.

Malaysia okays sweeping bank mergers

Malaysia's central bank announced it had approved the merger of all 54 banks and finance houses into 10 banking groups to strengthen the sector against international competition.

Bank Negara Malaysia named the 10 "anchor" banks as Malayan Banking, BumiputraCommerce Bank, RHB Bank, Public Bank, Arab Malaysian Bank, Hong Leong Bank, Perwira Affin Bank, MultiPurpose Bank, Southern Bank and EON Bank.

The mergers must be completed by year-end.

Each group will have a minimum of two billion ringgit ($526 million) in shareholders' funds and an asset base of at least 25 billion ringgit, the central bank said in a statement.

Softbank and World Bank set up fund

A $520 million investment fund set up by Japanese Internet innovator Softbank Corp and the World Bank to help developing countries narrow the digital divide breaks new ground, their leaders said.

The joint venture, aimed at narrowing the "digital divide" between countries with access to information technology and those without, will be established in California's Silicon Valley, World Bank chief James D. Wolfensohn told a news conference.