a-second-time

India Unexpectedly Raises Interest Rates After Inflation Hit 16-Month High

by on March 19, 2010

By Cherian Thomas March 19 (Bloomberg) — India’s central bank unexpectedly raised interest rates for the first time since July 2008 after inflation accelerated to a 16-month high. The Reserve Bank of India increased the benchmark reverse repurchase rate to 3.5 percent from a record-low 3.25 percent and the repurchase rate to 5 percent from 4.75 percent, according to a statement in Mumbai. The surprise decision comes a month before the bank’s scheduled monetary policy meeting. India and China, the world’s fastest-growing major economies, are withdrawing stimulus steps as stronger consumer demand stokes inflation and asset bubbles. Governor Duvvuri Subbarao’s move came after Prime Minister Manmohan Singh ’s top economic advisers this week described the current inflation rate as “worrying” and “unacceptable.” “The growth trend has been persistently surprising on the upside,” Chetan Ahya , the Singapore-based regional economist at Morgan Stanley, said before the report. “We believe this quick pace of recovery has lifted capacity utilization rates closer to full – warranting quick action by the central bank.” Subbarao, who is scheduled to announce policy on April 20, moved today after India’s industrial production gained 6.7 percent in January following a 17.6 percent increase in December from a year earlier, the fastest pace since at least 1994, according to Bloomberg data. The benchmark wholesale-price inflation rate touched 9.89 percent in February, according to the commerce ministry. ‘Significantly Behind’ “The policy authorities have fallen significantly behind the curve and need to act much more aggressively than they have so far to clamp down on underlying inflation,” Robert Prior- Wandesforde , a Singapore-based economist at HSBC Holdings Plc. said before today’s announcement. “The Indian economy is further advanced in the economic cycle than most people believe.” India’s $1.2 trillion economy, the biggest after Japan and China, may expand 8.2 percent in the next fiscal year, compared with 7.2 percent in the year to March 31, the Finance Ministry said in February. Inflation has returned to Asia as growth accelerates amid the global economic recovery. Consumer prices in China rose to a 16-month high of 2.7 percent in February from a year earlier as industrial production grew 20.7 percent in the first two months of 2010, the most in more than five years. Factory output in Malaysia rose 12.7 percent in January. ‘Financial Imbalances’ Malaysia increased its overnight policy rate, saying it wants to avoid “financial imbalances.” China ordered banks to set aside more deposits as cash last month for a second time while India raised its cash reserve ratio to 5.75 percent from 5 percent in January. Consumer demand may strengthen further in Asia’s third- largest economy as Hewitt Associates Inc. expects salaries in India to grow at the fastest pace in Asia Pacific in 2010. Prospects of demand exceeding current capacity in India prompted Honda Motor Co., the world’s biggest motorcycle maker, to say this month that it will invest about 8.9 billion yen ($98 million) to build a second motorcycle plant in the country. To contact the reporter on this story: Cherian Thomas in Bangalore at Cthomas1@bloomberg.net

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Job Legislation Costing $18 Billion Moves Closer to Passage in U.S. Senate

by on March 15, 2010

By Brian Faler March 15 (Bloomberg) — An $18 billion jobs plan giving companies a tax break for hiring the unemployed moved closer to becoming law when the U.S. Senate voted to end debate on the measure. Today’s 61-30 vote clears the way for a final vote as soon as tomorrow. Approval would send the bill to President Barack Obama for his signature. The measure would offer companies a holiday from a 6.2 percent Social Security payroll tax for each worker they hire this year who has been unemployed for at least 60 days. Other provisions would expand subsidies for bonds issued by state and local governments, increase highway spending and give small businesses more power to write off the cost of investments. The Senate first approved the legislation last month. The House made a few changes amid complaints the bill violated strengthened budget rules aimed at lowering the federal deficit . The changes require the Senate to pass the proposal a second time. In another effort to boost the economy, the Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. The legislation is pending in the House. To contact the reporter on this story: Brian Faler  in Washington at bfaler@bloomberg.net .

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Reliance Said to Have No Plans to Raise $14.5 Billion Offer for Lyondell

March 3, 2010

By Natalie Obiko Pearson March 4 (Bloomberg) — Reliance Industries Ltd. has no plans to increase its bid for bankrupt chemicals maker LyondellBasell Industries AF after creditors rejected a $14.5 billion offer, two people briefed on the matter said. Market conditions didn’t justify raising the offer further, the people said yesterday declining to be identified because they aren’t authorized to speak to the media. Chairman Mukesh Ambani , Asia’s richest man, may be prompted to spend Reliance’s $3.5 billion of cash elsewhere, analyst Victor Shum said. “Paying any more than Reliance have offered makes the deal unattractive,” Shum of energy consultants Purvin & Gertz Ltd. said by telephone from Singapore today. “Lyondell would have given Reliance assets outside India and access to its marketing network in the U.S., but Reliance already markets globally and the synergies between the two companies are not that great.” The Mumbai-based oil refiner and explorer’s shares have climbed 4.7 percent this week after its bid was rejected for a second time this year. Reliance is seeking asset abroad to reduce the risk of investing mostly in India, where it is battling a lawsuit over natural-gas supplies with a company owned Mukesh’s estranged brother, Anil Ambani . Alok Agarwal , chief financial officer at Reliance couldn’t be reached at his office after hours. Rising crude oil prices coupled with weak global demand for fuels and chemicals are prompting companies to sell assets. Bid History Rotterdam-based LyondellBasell had earlier rejected a revised Reliance bid that valued it at $13.5 billion, the Wall Street Journal reported Jan. 8. India’s largest company by market value had raised its offer for a controlling stake to $14.5 billion, two people with knowledge of the offer said on Feb. 22. The company initially offered an undisclosed amount on Nov. 21 and has yet to make public the value of its bid. Oklahoma-based Devon Energy Corp ., the biggest independent U.S. oil and gas producer, on Nov. 16 announced it was putting oil blocks from the Gulf of Mexico to the Caspian Sea up for sale to raise $7.5 billion to cut debt and fund onshore developments. Houston-based ConocoPhillips plans to sell $10 billion of assets in two years to cut debt that may include exploration and production holdings in North America and gas properties in the North Sea, Chief Executive Officer Jim Mulva said in October. ‘Global Footprint’ Reliance operates India’s biggest natural gas field, owns the world’s largest refining complex at Jamnagar in Gujarat state, and has cash holdings of 160 billion rupees ($3.5 billion). While it has interests in overseas oil blocks, including in Peru, Iraq and Australia, only one in Yemen is producing at 4,400 barrels a day, according to Reliance’s earnings statement for the three months ended Dec. 31. Reliance seeks a “far more widespread global footprint” in the near term, Ambani told shareholders Nov. 17. The company may buy oil fields in the Gulf of Mexico and Brazil to hedge the risk of investing mainly in India, P.M.S. Prasad, president of its oil and gas business, said Sept. 14. In December, Reliance hired Walter van de Vijver , a former exploration chief at Royal Dutch Shell Plc , to head its overseas business. “Reliance has a very strong position in India but it doesn’t internationally,” Nathan Schaffer, an analyst at PFC Energy, said by phone from Houston. “There will be plenty of opportunities to pick up some attractive assets.” To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net .

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Reliance Said to Have No Plans to Raise $14.5 Billion Offer for Lyondell

March 3, 2010

By Natalie Obiko Pearson March 4 (Bloomberg) — Reliance Industries Ltd. has no plans to increase its bid for bankrupt chemicals maker LyondellBasell Industries AF after creditors rejected a $14.5 billion offer, two people briefed on the matter said. Market conditions didn’t justify raising the offer further, the people said yesterday declining to be identified because they aren’t authorized to speak to the media. Chairman Mukesh Ambani , Asia’s richest man, may be prompted to spend Reliance’s $3.5 billion of cash elsewhere, analyst Victor Shum said. “Paying any more than Reliance have offered makes the deal unattractive,” Shum of energy consultants Purvin & Gertz Ltd. said by telephone from Singapore today. “Lyondell would have given Reliance assets outside India and access to its marketing network in the U.S., but Reliance already markets globally and the synergies between the two companies are not that great.” The Mumbai-based oil refiner and explorer’s shares have climbed 4.7 percent this week after its bid was rejected for a second time this year. Reliance is seeking asset abroad to reduce the risk of investing mostly in India, where it is battling a lawsuit over natural-gas supplies with a company owned Mukesh’s estranged brother, Anil Ambani . Alok Agarwal , chief financial officer at Reliance couldn’t be reached at his office after hours. Rising crude oil prices coupled with weak global demand for fuels and chemicals are prompting companies to sell assets. Bid History Rotterdam-based LyondellBasell had earlier rejected a revised Reliance bid that valued it at $13.5 billion, the Wall Street Journal reported Jan. 8. India’s largest company by market value had raised its offer for a controlling stake to $14.5 billion, two people with knowledge of the offer said on Feb. 22. The company initially offered an undisclosed amount on Nov. 21 and has yet to make public the value of its bid. Oklahoma-based Devon Energy Corp ., the biggest independent U.S. oil and gas producer, on Nov. 16 announced it was putting oil blocks from the Gulf of Mexico to the Caspian Sea up for sale to raise $7.5 billion to cut debt and fund onshore developments. Houston-based ConocoPhillips plans to sell $10 billion of assets in two years to cut debt that may include exploration and production holdings in North America and gas properties in the North Sea, Chief Executive Officer Jim Mulva said in October. ‘Global Footprint’ Reliance operates India’s biggest natural gas field, owns the world’s largest refining complex at Jamnagar in Gujarat state, and has cash holdings of 160 billion rupees ($3.5 billion). While it has interests in overseas oil blocks, including in Peru, Iraq and Australia, only one in Yemen is producing at 4,400 barrels a day, according to Reliance’s earnings statement for the three months ended Dec. 31. Reliance seeks a “far more widespread global footprint” in the near term, Ambani told shareholders Nov. 17. The company may buy oil fields in the Gulf of Mexico and Brazil to hedge the risk of investing mainly in India, P.M.S. Prasad, president of its oil and gas business, said Sept. 14. In December, Reliance hired Walter van de Vijver , a former exploration chief at Royal Dutch Shell Plc , to head its overseas business. “Reliance has a very strong position in India but it doesn’t internationally,” Nathan Schaffer, an analyst at PFC Energy, said by phone from Houston. “There will be plenty of opportunities to pick up some attractive assets.” To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net .

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Kissel Indicted Again for Hong Kong Murder of Her Merrill Banker Husband

March 3, 2010

By Debra Mao and Marco Lui March 3 (Bloomberg) — Nancy Kissel , who claimed she killed her Merrill Lynch & Co. banker husband, Robert, in self-defense, was indicted yesterday a second time for murder, according to Hong Kong’s Department of Justice. “There is one single count of murder on the indictment,” Sherlin Fu, a department spokeswoman, said today in an e-mail. Kissel’s lawyer Simon Clarke said today a hearing has been scheduled for Nov. 1. He had yet to receive a copy of the indictment. Clarke said Feb. 12 that an indictment for the lesser charge of manslaughter would be “sensible and just” after Deputy Director of Public Prosecutions Kevin Zervos said an indictment on a count of murder would be refiled. Hong Kong’s Court of Final Appeal on Feb. 11 ruled that evidentiary errors may have prejudiced Kissel’s 2005 murder conviction. The new indictment was filed yesterday, according to the e-mail. The 45-year-old mother of three remains in prison pending a bail application. Kissel was accused of bludgeoning her husband to death in 2003 after giving him a drugged milkshake. She claimed to have killed the banker after he attacked her. The case is HKSAR v. Nancy Ann Kissel , case no. HCCC55/2010, Hong Kong Court of First Instance. To contact the reporters on this story: Debra Mao in Hong Kong at dmao5@bloomberg.net ; Marco Lui in Hong Kong at mlui7@bloomberg.net

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Sumitomo Mitsui Rises in Tokyo as Stronger Capital Trumps Dilution Concern

January 20, 2010

By Finbarr Flynn Jan. 21 (Bloomberg) — Sumitomo Mitsui Financial Group Inc. , Japan’s second-largest bank by market value, rose in Tokyo trading as investors bet stronger capital from its sale of common stock will outweigh the negative impact of share dilution. Sumitomo Mitsui shares rose 1 percent to 2,918 yen at 10:03 a.m. in Tokyo, extending their gain to 10 percent this month after a 30 percent slump in 2009. The Tokyo-based lender will sell as many as 360 million shares at a 3 percent discount to yesterday’s closing price. “We were worried about dilution but now we know it, and we can move on,” said Kristine Li , a Singapore-based credit analyst at Royal Bank of Scotland Plc. “The big concern for Japanese banks has been their weak capital base.” The bank will raise as much as 968 billion yen ($10.6 billion), based on the sale price of 2,804 yen per share announced yesterday, taking share sales by Japan’s three-largest banks to 3.8 trillion yen since December 2008. Sumitomo Mitsui’s core Tier 1 capital ratio, an indicator of a bank’s ability to absorb losses, should rise to about 6.5 percent, after deducting hybrid securities and tax assets from capital, said Ismael Pili , a Tokyo-based analyst at Macquarie Group Ltd. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank by market value, has a core Tier 1 capital ratio is 7.3 percent and third-ranked Mizuho Financial Group Inc. ’s ratio is 3.5 percent, Pili said. Sumitomo Mitsui , which raised 861 billion yen in an equity offering in June and July, is tapping investors a second time in less than a year after the Zurich-based Basel Committee on Banking Supervision said last month banks must increase the amount of equity they hold to cope with losses better. Banks should increase the quality of the capital they hold by the end of 2012, the committee said in a report. The group won’t make final decisions until the end of 2010, as to how much and what kind of capital banks should hold, the report said. To contact the reporter on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net

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Japan’s Recovery Persists as Exports Expand to Asia, Economic Index Shows

January 7, 2010

By Aki Ito and Toru Fujioka Jan. 8 (Bloomberg) — Japan’s broadest indicator of economic health rose for an eighth month as growing demand from abroad boosted manufacturing. The coincident index , a composite of 11 indicators including factory production and retail sales, climbed to 95.9 in November from a revised 94.3 a month earlier, the Cabinet Office said today in Tokyo. The median estimate of 13 economists surveyed by Bloomberg was for an advance to 95.8. The report adds to evidence that Japan’s recovery persists as companies from Toyota Motor Corp. to Komatsu Ltd. benefit from more than $2 trillion in global stimulus spending. Analysts say accelerating growth in Asia will prompt manufacturers to continue increasing output, which climbed the most in six months in November. “From steel to metal parts, increasing exports to Asia is lifting activity at the country’s factories,” Kyohei Morita , chief economist at Barclays Capital in Tokyo, said before the report. “Production won’t keep rising at this pace forever. But exports will continue to recover, and that means Japan will be able to avert a double-dip recession.” The leading index , an indication of economic health in three to six months, rose to 91.2, a ninth monthly gain. Japanese shipments to Asia rose in November for the first time in 14 months. Industrial production climbed 2.6 percent, the most since May, and factories increased their workers’ overtime hours for an eighth month. Demand From China Toyota, the country’s largest carmaker, said this week its China sales rose 21 percent to 790,000 units in 2009. The automaker narrowed its full-year net loss forecast for a second time in November after government incentives boosted car demand in China and the U.S. Komatsu and Hitachi Construction Machinery Co., Asia’s two largest excavator makers, said this week that December sales in China more than doubled. Takahide Kiuchi , chief economist at Nomura Securities Co. in Tokyo, says exporters face a better outlook than sectors dependent on consumers at home, forming a “two-faced” recovery this year. Benefits from an export revival have been slow to spread to households because corporate profits are still too low for employers to afford higher personnel costs, according to Barclays’ Morita. That means workers won’t see paycheck increases anytime soon. Wages have dropped for 18 straight months, leaving less money for consumers to spend. Japan’s largest businesses slashed winter bonuses by 15 percent to 755,628 yen ($8,100), the steepest drop since the survey began in 1959, the Japan Business Federation said last month. Firms typically pay the bonus in December. To contact the reporters on this story: Aki Ito in Tokyo at aito16@bloomberg.net ; Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

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Bank of Israel Raises Benchmark Rate for Third Time as Growth Accelerates

December 28, 2009

By Alisa Odenheimer Dec. 28 (Bloomberg) — The Bank of Israel raised the benchmark interest rate for a third time since the global economy began to recover as growth accelerated and inflation exceeded the government’s target range. Governor Stanley Fischer increased the lending rate by a quarter of a percentage point to 1.25 percent, the Jerusalem- based central bank said today. Seven of 16 economists surveyed by Bloomberg had predicted the increase, while nine expected no change. “The decision to increase the interest rate for January was taken in light of the inflation environment in Israel which is in the upper part of the price stability range, against the background of growth that is becoming more firmly based,” the bank said in an e-mailed statement. Fischer in August became the first central banker to boost the key rate since the beginning of the global economic recovery and raised it for a second time last month. Inflation accelerated to 3.8 percent in November, its fastest pace in almost a year, breaching the government’s 1 percent to 3 percent target range for the first time in three months. The benchmark Mimshal Shiklit note due February 2017 fell 0.19 shekel to 108.3 at the close in Tel Aviv before the decision. The yield on the 5.5 percent security rose three basis points to 4.87 percent. The shekel strengthened to 3.7825 to the dollar as of 5:50 p.m. local time. The currency was at 3.7857 just before the decision. Economic Expansion Gross domestic product expanded an annualized 2.2 percent in the third quarter, the fastest pace in more than a year. The economy may grow faster than the Bank of Israel’s 2.5 percent forecast next year, Finance Minister Yuval Steinitz said Dec. 24. Growth is likely to return to its 2003-2008 level of about 5 percent by the end of next year, he said. The economy returned to growth in the second quarter this year, after contracting in the previous two quarters as the global financial crisis dried up Israel’s main export markets. The Bank of Israel is sending “a message of resolve by raising its rate for January, heading off unnecessary increases later on,” Rafael Gozlan , chief economist at Leader Capital Markets in Tel Aviv, said in an e-mailed report prior to the announcement. The TA-25 stock index has increased almost 75 percent this year, led by Delek Group Ltd., which rose more than six-fold. To contact the reporter on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net .

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Hynix Semiconductor Lenders Plan to Accept Bids for Their Stake by January

December 19, 2009

By Kevin Cho and Saeromi Shin Dec. 20 (Bloomberg) — Hynix Semiconductor Inc. creditors will accept letters of intent from potential bidders for their controlling stake in the world’s second-largest maker of computer-memory chips by Jan. 29. The sale arrangers will send out notices to domestic companies tomorrow, Korea Exchange Bank, the South Korean chipmaker’s main lender, said in a statement today. Creditors of Hynix plan to sell all or part of their 28 percent stake, valued at about 3.6 trillion won ($3.1 billion) based on Hynix’s closing price on Dec. 18, Korea Exchange Bank said. Creditors are trying to sell Hynix for a second time after Hyosung Corp. dropped its bid in November because of speculation that it received political favors to pursue the takeover. Korea Exchange Bank said last month creditors will resume their search for a domestic buyer as they try to recoup the $4.6 billion spent bailing out the chipmaker. “The industry outlook has turned more positive, and there may be more interest than before,” said Kim Young Joon, head of equities at NH-CA Asset Management Co. in Seoul, which manages the equivalent to $8.5 billion in assets. “Even if only part of the stake is sold, I think decision-making process will get better than under the current ownership, comprised of financial companies.” Right Timing Hynix may be able to repay about 1 trillion won in debt in 2010 and is still seen capable of investing about 2.3 trillion won, which should help the company widen the gap with its rivals, Korea Exchange Bank said. The Korean chipmaker said in October its spending budget for next year will be more than 1.5 trillion won, compared with about 1 trillion won in 2009. “Now is the right time for Hynix’s acquisition and we hope many companies will participate in the sale,” Korea Exchange Bank said in the statement. Sale arrangers Credit Suisse Group AG, Korea Development Bank and Woori Investment & Securities Co. said Nov. 16 it was the “right timing” to try to revive the sale because of the recovery in the industry. Hynix reported its first quarterly profit in two years in the third quarter on higher prices after an industrywide production cut helped ease a glut. The price of the benchmark dynamic random access memory chip, which temporarily holds data and helps computer processors run multiple programs simultaneously, has more than tripled this year after falling 62 percent in 2008, according to Dramexchange Technology Inc. , operator of Asia’s biggest spot market for semiconductors. Korea Exchange Bank owns 6.4 percent of Hynix , while Woori Bank has 6.3 percent and Korea Development Bank holds 4.8 percent. Six other financial companies own the remainder. Hynix shares have more than tripled this year, compared with a 46 percent gain in the benchmark Kospi stock index. To contact the reporters on this story: Kevin Cho in Seoul at kcho2@bloomberg.net Saeromi Shin in Seoul at sshin15@bloomberg.net

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Human Genome Says Novel Lupus Treatment Reduces Pain, Hair Loss in Trial

July 20, 2009

By David Olmos and Lisa Rapaport July 20 (Bloomberg) — Human Genome Sciences Inc. and GlaxoSmithKline Plc said their experimental lupus drug reduced patients’ symptoms in a yearlong study, raising hope of the first new therapy in more than 50 years for the autoimmune disease.

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