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Asian Stocks Fluctuate After Australia Confidence Report; Shippers Decline

by on March 9, 2010

By Shani Raja and Satoshi Kawano March 10 (Bloomberg) — Asian stocks fluctuated as Australian consumer confidence rose, while shipping lines declined after a measure of cargo transport rates fell for the first time in almost two weeks. Virgin Blue Holdings Ltd. , Australia’s second-biggest airline, climbed 4 percent. David Jones Ltd. , the nation’s No. 2 department store chain, advanced 1.2 percent. STX Pan Ocean Co., South Korea’s largest bulk-shipping line, dropped 1.9 percent in Seoul, and Kawasaki Kisen Kaisha Ltd., Japan’s third-largest line, fell 1.7 percent in Tokyo. “We don’t have a strong catalyst, so I’m expecting stocks to drift without a clear direction today,” said Hiroichi Nishi , an equities manager at Nikko Cordial Securities Inc. in Tokyo. The MSCI Asia Pacific Index was little changed at 122.79 as of 9:30 a.m. in Tokyo, with about as many stocks advancing as declining. The index has risen 74 percent since March 9 last year, when it sank to its lowest level since the September 2008 bankruptcy filing of Lehman Brothers Holdings Inc. Australia’s S&P/ASX 200 Index and Japan’s Nikkei 225 Stock Average were also little changed. To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net ; Satoshi Kawano in Tokyo skawano1@bloomberg.net .

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Macau Casino Billionaire Stanley Ho Discharged From Hospital, RTHK Reports

by on March 6, 2010

By Kelvin Wong March 6 (Bloomberg) — Macau casino billionaire Stanley Ho has been discharged from hospital today, Radio Television Hong Kong reported on its Web site. The billionaire, accompanied by his family, was seen waving to reporters at the front door of Hong Kong Sanatorium and Hospital, according to the RTHK report. Ho has regained weight lost before he was hospitalized and he has been walking, RTHK cited his daughter, Pansy Ho , as saying today. “He’s in very good condition and his health has fully recovered,” Pansy Ho said in comments broadcast on Hong Kong’s Cable TV News. Ho, 88, had been hospitalized in Hong Kong since August. His last public appearance was in December, when Macau Chief Executive Fernando Chui took the oath of office. Ho controls SJM Holdings Ltd., the casino operator with the biggest market share in Macau, in turn the world’s largest gambling hub. Ho, who also owns ferry operator and property developer Shun Tak Holdings Ltd., has never named a successor. The gaming magnate’s companies have made no public statement on his condition. Janet Wong , a spokeswoman for Shun Tak, couldn’t be reached immediately for comment today. Ho has undergone two “pretty big” surgeries, Lawrence Ho , his eldest surviving son, said in a Bloomberg Television interview broadcast Dec. 9, without elaborating. To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

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Virgin Blue Names Former Qantas Executive Borghetti CEO, Replacing Godfrey

March 1, 2010

By Robert Fenner March 2 (Bloomberg) — Virgin Blue Holdings Ltd. , Australia’s second-largest airline, hired John Borghetti as its next chief executive officer, a year after he quit larger rival Qantas Airways Ltd. Borghetti, 54, will replace Brett Godfrey in the role from May 8, Brisbane-based Virgin Blue said in a statement today. He quit as executive general manager of Sydney-based Qantas last year after the airline promoted Alan Joyce to the CEO position. The appointment comes after Virgin Blue last month announced a return to profitability and plans to order as many as 50 Boeing Co. 737 planes to underpin an expansion of Australian capacity. Godfrey has been Virgin Blue’s only CEO after helping found the carrier in 2000 with two planes and A$10 million ($9 million) from Richard Branson . “I am thrilled today to welcome John Borghetti to the Virgin family,” Branson, the airline’s biggest shareholder, said in an e-mailed statement. “John has been in the aviation business for even longer then I have, has a deep understanding of the industry, strong sense of brand and many powerful ideas of his own.” Virgin Blue shares rose 0.8 percent to 63.5 Australian cents at 10:10 a.m. in Sydney. The stock has gained 7.6 percent this year after more than doubling in 2009. To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

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Qantas Airways to Reconfigure Planes After First-Half Profit Declines 72%

February 17, 2010

By Robert Fenner Feb. 18 (Bloomberg) — Qantas Airways Ltd., Australia’s biggest airline, will reconfigure 29 planes and drop first-class services on some routes after reporting a 72 percent drop in first-half earnings because of a slump in premium travel demand. Net income declined to A$58 million ($52 million), or 2.6 cents a share, in the six months ended Dec. 31 from A$210 million, or 10.7 cents, a year earlier, the Sydney-based company said in a statement today. That compared with the A$82 million median profit estimate in a Bloomberg News survey of five analysts. The cabin changes come six months after the airline reported a record loss and as Qantas considers price hikes to take advantage of recovering travel demand. Singapore Airlines Ltd. also reported its first net income in three quarters after reducing capacity and traffic revived amid a pick up in the global economy. “The global downturn significantly affected international premium traffic in particular and therefore revenues, although domestic leisure demand remained strong,” Chief Executive Officer Alan Joyce said in the statement. The company cut A$202 million of costs in the half as Qantas targets expense reductions worth A$1.5 billion over three years to compensate for the slump in premium travel. Qantas Shares Qantas shares rose 2.8 percent to A$2.97 in Sydney trading yesterday. The earnings were reported before the stock market opened for trading. First-half pretax profit was A$90 million, compared with the company’s Dec. 21 forecast for earnings between A$50 million and A$150 million. Sales fell 14 percent to A$6.9 billion. Annual “underlying” pretax earnings will be between A$300 million and A$400 million, the company said. The airline’s namesake carrier, its biggest unit, posted first-half earnings before interest and tax of A$60 million, a decrease of 39 percent. Jetstar, Qantas’s discount carrier, almost tripled earnings to A$121 million from A$43 million a year earlier as customers switched to cheaper flights. Qantas has more than 65 percent of Australia’s domestic air-travel market, compared with about 30 percent for second- ranked Virgin Blue Holdings Ltd. The carrier expects to curb costs and fuel use by flying more direct routes, using more fuel efficient aircraft and cutting the time airplanes take to taxi from the gate to the runway. Qantas will spend A$400 million on reconfiguring Airbus SAS A380s and Boeing Co. 747-400 planes in addition to new inflight entertainment systems. Earnings at Qantas’s frequent flyer program more than doubled to A$157 million from A$73 million a year earlier. Freight earnings dropped 65 percent to A$17 million. To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

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Acer’s Google Android Phone Sales Beat Expectations, President Lanci Says

February 6, 2010

By Tim Culpan and Bruce Einhorn Feb. 6 (Bloomberg) — Acer Inc. , the world’s No. 2 computer vendor, said stronger-than-expected sales of its Google Inc. Android phone, named Liquid, have led to shortages of the device. “Liquid is doing much better than our expectation,” Gianfranco Lanci , president of the Taipei-based company, said in an interview yesterday. “This is why we’re a little bit short of supply.” The Liquid touch-screen handset, unveiled in October, competes against models from HTC Corp., Samsung Electronics Co. and Motorola Inc. in the market for phones using the free Android platform. Acer expects its smartphone sales, including those using Microsoft Corp. ’s Windows system, to total between 2 million and 3 million units this year, Lanci said. Acer expects to ship at least 250,000 Liquid handsets by the end of this quarter, compared with initial expectations for 150,000 to 200,000, Lanci said. Smartphones will account for 10 percent of Acer’s revenue in about three years, one year later than initial company predictions because of last year’s global economic slump, the executive said. “It’s a very competitive market and depends a lot on feedback from customers,” said Angela Hsiang , who rates the company “outperform” at KGI Securities Co. in Taipei. “If you launch a product and it’s successful, that’s very positive in helping marketing for the future.” Acer shares lost 2.3 percent to NT$84.80 as of 11:40 a.m. in Taipei today, taking its decline this year to 11.8 percent compared with a 12.4 percent slide in the benchmark Taiex index. Liquid is manufactured by Taipei-based Compal Communications Inc. while Foxconn International Holdings Ltd. will make a second Android handset for Acer this quarter, Jim Wong , president of Acer’s IT Products division, said Jan. 22. Technical problems and slow consumer acceptance of Android led to Taoyuan, Taiwan-based HTC posting a 5 percent drop in revenue last year, its first annual sales decline . HTC, maker of Google’s Nexus One handset, shipped 11.7 million smartphones in 2009, it said in a Jan. 26 statement . To contact the reporters on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net ; Bruce Einhorn in Hong Kong at beinhorn1@bloomberg.net ;

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Funds of Hedge Funds Trail Market, Close as Madoff Ponzi Scam Still Stings

January 20, 2010

By Tom Cahill Jan. 20 (Bloomberg) — Funds of hedge funds trailed the recovery in the broader market last year and still bear the scars of investments in Bernard Madoff ’s $65 billion Ponzi scheme, according to data from Hedge Fund Research Inc. The firm’s fund of funds index rose 11.6 percent last year, compared with a 20 percent jump in HFR’s Fund-Weighted Composite Index. That’s the biggest gap since the company began keeping records in 1990, HFR President Ken Heinz , told reporters today in London. Funds of funds outperformed the hedge fund index as recently as 2007, he said. Investors yanked a net $118 billion from funds of hedge funds last year, leaving them with $571 billion, 28 percent less than their 2007 peak and about a third of the overall $1.6 trillion invested in hedge funds, HFR data shows. Madoff’s fraud, the biggest Ponzi scheme in history, caught dozens of funds of funds, prompting questions about whether they had properly researched their investments. “Funds of funds were under threat from losses before Madoff,” Heinz said. “The experience of Madoff represents an inflection point for their business model.” Investors use funds of funds to spread their money across a variety of holdings, relying on fund managers to investigate the individual funds. A net 225 funds of funds went out of business in 2009, the most in a single year since 1990, according to HFR data released today. Gottex Fund Management Holdings Ltd. , a Lausanne, Switzerland-based $8.5 billion fund of funds firm, said today it is taking over management of $150 million of fund of funds that had been overseen by Constellar Capital LLC. “The old business model is likely to continue to be challenged,” Heinz said. “This consolidation will continue to play out.” To contact the reporter on this story: Tom Cahill in London at tcahill@bloomberg.net

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China Pushes One-Year Bill Yield to 14-Month High to Limit Growth in Loans

January 18, 2010

By Bloomberg News Jan. 19 (Bloomberg) — China’s central bank guided its benchmark one-year bill yield higher for the second time this year to curb record loan growth and prevent bubbles in the nation’s property and stock markets. The People’s Bank of China sold the bills at a yield of 1.9264 percent in open-market operations , the highest in 14 months, according to traders at Industrial & Commercial Bank of China Ltd. and BOC International Holdings Ltd. The yield rose eight basis points, or 0.08 percentage point, matching last week’s increase, said the traders, who asked not to be identified. The consecutive jumps in yields suggest central bank Governor Zhou Xiaochuan is gradually raising the cost of financing for lenders in the interbank market, even after three- month bill rates were left unchanged last week. The monetary authority on Jan. 12 also announced an increase to the amount of funds banks must set aside as reserves. “The PBOC will continue to drain cash from the market,” said Dong Dezhi , a bond analyst with Bank of China Trading Center in Shanghai. “The yield will continue to rise in the coming two weeks to around 2 percent.” Chinese lenders extended 379.8 billion yuan ($55.6 billion) of new loans last month, capping a record 9.59 trillion yuan credit expansion for the year. Property prices in 70 Chinese cities rose at the fastest pace in 18 months, a government report said. China’s exports grew 17.7 percent last month from a year earlier, the first increase in more than a year, adding to the supply of cash in the economy that the central bank needs to mop up to contain inflation. Government data this week may show consumer prices increased 1.4 percent in December from a year earlier, the quickest rate in more than a year, according to a Bloomberg News survey of economists. The monetary authority sold 24 billion yuan of the one-year securities at the auction today, the biggest offering in 13 weeks. — Belinda Cao . Editors: Sandy Hendry , James Regan To contact the Bloomberg news staff on this story: Belinda Cao in Beijing at lcao4@bloomberg.net

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China Gas LPG Sales May Rise Sixfold by 2012 as Network of Cities Expands

December 7, 2009

By John Duce Dec. 7 (Bloomberg) — China Gas Holdings Ltd. , the Hong Kong-listed supplier of the fuel to homes and businesses on the mainland, expects liquefied petroleum gas sales to surge sixfold as the company expands its distribution network to 300 cities. Sales of bottled LPG may rise to 3 million tons by March 2012 as the company extends sales beyond the 113 cities it currently sells the fuel in, Chief Financial Officer Eric Leung said in an interview. The shares reached a two-year high today. The government aims to increase the nation’s use of gas to reduce reliance on more polluting coal. China Gas, which sold about 500,000 metric tons of LPG in the last financial year, will mainly target areas not linked by pipelines, Leung, 60, said at an LPG storage base on Xiaomen island off Wenzhou city in Zhejiang province on Dec. 3. “The company’s target of increasing LPG sales is realistic as demand for LPG is huge, being a cheap form of fuel, and many villages and rural areas don’t have access to piped gas,” said Shi Yan , an energy analyst at UOB-Kay Hian in Shanghai. China Gas’s expansion comes after the company signed an LPG supply agreement with a unit of the nation’s biggest oil company PetroChina Co. The utility has an advantage over rivals because of the supply accord and China Gas’s LPG storage and distribution network, Shi said. Utilities including China Gas, Xinao Gas Holdings Ltd. and China Resources Gas Group Ltd. have more than doubled in Hong Kong trading this year, outpacing the 55 percent gain in the benchmark Hang Seng index, as they increase supplies to meet demand in the world’s fastest-growing major economy. China Gas rose 6.4 percent to HK$3.64 today, the highest since Dec. 6, 2007, compared with the 0.8 percent decline in the Hang Seng index. Rural Areas The fuel distributor will extend its network in the southern provinces of Guangdong, Guangxi, Fujian, and Jiangsu, Anhui and Zhejiang in the east, Leung said. “We have largely concentrated on our piped natural gas projects, but our supplies of LPG will allow us to move into new cities and also target suburban and rural areas which are not connected to gas pipelines,” Leung said. China Gas will invest as much as 200 million yuan over the next three years to build LPG bottling stations and retail outlets in the target cities and districts, according to Leung. The company estimates about a third of China’s population has access to piped gas. “It means there’s tremendous potential for the sale of bottled LPG in areas still not served by pipelines,” Leung said. China Gas aims to generate about 18 billion yuan ($2.6 billion) in revenue from LPG by 2012, said Investor Relations Manager Frank Li. LPG sales reached HK$2.2 billion ($284 million) last year, or about a third of total revenue . Nationwide Demand Chinese companies have invested $30 billion over the past five years building pipelines to transport gas from Sichuan, Xinjiang and Ordos in Inner Mongolia to urban centers in the east, Sanford Bernstein & Co. said in an Oct. 13 report. PetroChina estimates that the nation’s gas demand will rise to 215 billion cubic meters by 2015 from about 80 billion cubic meters last year, President Zhou Jiping said on Aug. 28. The government is likely to ease controls on gas prices in the first quarter and link them to the international market, Leung said. This could result in gas prices rising 10 percent annually for the next five years, he said. PetroPower (Shanghai) Holdings Ltd., China Gas’s LPG division, is considering listing shares in Shanghai or Shenzhen within three to five years, said Pang Yingxue , the unit’s president. PetroChina is in preliminary talks on buying a stake in China Gas’s LPG unit, Leung said. To contact the reporter on this story: John Duce in Hong Kong at Jduce1@bloomberg.net

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Chinatrust to Buy $660 Million Nan Shan Stake After Losing AIG’s Auction

November 17, 2009

By Cathy Chan and Janet Ong Nov. 18 (Bloomberg) — Chinatrust Financial Holding Co. plans to pay $660 million for a 30 percent stake in Nan Shan Life Insurance Co. after losing its bid to buy the business from American International Group Inc. Chinatrust, Taiwan’s third-biggest financial company by market value, said in a statement that it will acquire the 30 percent investment from China Strategic Holdings Ltd. Primus Financial Holdings Ltd. joined China Strategic in an agreement last month to buy Nan Shan for $2.15 billion. The stake in Taiwan’s second-largest life insurer will help Chinatrust diversify its business to counter stagnant growth in the banking industry. With Nan Shan as part of its main business, Chinatrust may be more attractive for Chinese investors after the two countries signed agreements to ease restrictions on access to each other’s banks, brokerages and insurers, said Fitch Ratings analyst Joyce Huang. “It fits in with their strategy as they’ve got a pretty big ambition to embark into insurance,” Taipei-based Huang said. “Chinatrust has been striving to become a leading regional player and seeking opportunities to expand its franchise beyond a banking-centric group.” China Strategic will buy 1.17 billion Chinatrust shares, or a 9.95 percent stake, for about NT$20.8 billion ($648 million) as part of the deal. The share sale is part of a plan to sell 2.5 billion shares at NT$17.74 apiece through private placements, Chinatrust said. Lazard Asia (Hong Kong) Ltd. is advising Chinatrust on the transaction. Shares of Chinatrust rose 2.7 percent to NT$20.9 today at 11:10 a.m. in Taipei. China Strategic rose 10 percent to 66 Hong Kong cents on the Hong Kong bourse. 4 Million Policyholders “The transaction combines Chinatrust’s distribution network and Nan Shan’s customer base and more than 35,000 agents to boost our competitiveness,” the company said. The deal may be completed by the second quarter of 2010, it said. Nan Shan has about 4 million policyholders. The stake in Nan Shan will enable Taipei-based Chinatrust to boost fee income by increasing policy sales through its bank network. Nan Shan would gain a partner with 145 domestic outlets to help it close the gap with Cathay Financial Holding Co. , the island’s biggest life insurer. “The Nan Shan investment will allow Chinatrust to better utilize its bancassurance channel and boost its wealth management business,” said Chris Lee , an analyst at Taiwan Ratings, the local partner of Standard & Poor’s. Chinatrust is the island’s biggest bancassurance distributor. Increasing Stake The agreement last month by Primus and Hong Kong-based China Strategic to buy Nan Shan was the largest deal struck by AIG since its bailout last year. The New York-based insurer is selling assets to pay down loans included in a $182.3 billion U.S. government rescue. Chinatrust has the right to nominate the chief executive officer of Nan Shan after the transaction. The Taipei-based company also agreed to negotiate to increase its shareholding in Nan Shan within three years from the signing of the agreement, which expires on June 25, China Strategic said in a statement. China Strategic also may be allowed to lift its stake in Chinatrust in the period. Primus, set up in April by Citigroup Inc. ’s former Asia investment banking chief Robert Morse , is building a network of financial-services companies in the region. Chinatrust said in a stock exchange filing on Nov. 3 that it had hired layers to study the sale of Nan Shan to the Primus-led group and was weighing whether to sue AIG. To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net

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Asian Stocks Gain as Yen Weakens, Brokerages Recommend JFE, Commonwealth

October 13, 2009

By Patrick Rial and Adam Haigh Oct. 13 (Bloomberg) — Asian stocks rose, driving the MSCI Asia Pacific Index to a 13-month high, as a weaker yen lifted Japanese automakers and brokerage recommendations boosted steelmakers and banks. Toyota Motor Corp. , which gets 74 percent of its revenue outside Japan, rose 3.1 percent as the yen traded near the lowest level in more than two weeks against the euro. JFE Holdings Inc. , Japan’s No. 2 steelmaker, surged 6.1 percent after Goldman Sachs Group Inc. added the stock to its “conviction buy” list. Commonwealth Bank of Australia climbed 2.3 percent as Bank of America Corp.’s Merrill Lynch unit advised buying the stock. The MSCI Asia Pacific Index rose 0.7 percent to 119.34 at 1:48 p.m. in Tokyo, set to close at the highest level since Sept. 8, 2008. The measure has climbed 69 percent from a five-year low on March 9 as Japan exited recession and growth accelerated in countries from China to Indonesia. “Markets continue to rise at such a rate and you’re always looking for rotation into the next thing that hasn’t moved yet,” said Tim Schroeders , who helps manage $1.1 billion at Pengana Capital Ltd. in Melbourne. “You’re probably going to get a number of false starts as people try to pre-empt a recovery that probably isn’t there yet, or is at best muted.” Japan’s Nikkei 225 Stock Average rose 0.4 percent to 10,055.15. Australia’s S&P/ASX 200 Index gained 1 percent, while China’s Shanghai Composite Index added 0.8 percent. Higher Forecast Hong Kong’s Hang Seng Index advanced 1.8 percent as Shenguan Holdings Group Ltd. , which makes sausage skins, soared 53 percent in its trading debut. Geely Automobile Holdings Ltd. jumped 6.8 percent after saying it doubled September sales. Futures on the Standard & Poor’s 500 Index expiring in December were little changed at 1,071.80. The gauge advanced 0.4 percent to 1,076.19 yesterday, the highest since Oct. 3, 2008, as Black & Decker Corp. boosted its earnings forecast and Ford Motor Co. reported higher European sales. “It seems investors are still happy to bid the market higher heading into the bulk of the reporting period,” said Ben Potter , a research analyst at IG Markets in Melbourne. “They’re taking confidence from earnings upgrades, with the latest being Black & Decker.” Toyota, the world’s largest automaker, added 3.1 percent to 3,630 yen on speculation the weaker yen will boost the value of overseas sales repatriated back to Japan. Chinese Automakers Nissan Motor Co. , which got 34 percent of its revenue in North America last fiscal year, gained 2.2 percent to 688 yen. The yen traded at 132.70 per euro from 132.72 yesterday, when it touched 133.32, the weakest level since Sept. 25. China’s SAIC Motor Corp. and Chongqing Changan Automobile Co. rose after saying they probably posted higher profits for the third quarter. SAIC Motor , China’s largest carmaker, gained 1.3 percent to 20.88 yuan. Changan Automobile, a partner of Ford and Mazda Motor Corp., advanced 2.1 percent to 11.36 yuan. In Hong Kong, Geely Automobile Holdings Ltd. , the Chinese carmaker backed by Goldman Sachs, climbed 6.8 percent to HK$2.52 after sales last month doubled to 32,053 vehicles. JFE Holdings climbed 6.1 percent to 3,310. Nippon Steel Corp. , the world’s second-largest steelmaker, added 6.2 percent to 358 yen. Goldman raised Nippon Steel to “buy” from “neutral.” “We are turning maximum bullish on Asian steel and on Japan in particular,” a team of analysts led by Rajeev Das at Goldman Sachs wrote in a report. “We expect Asian steel demand to surprise on the upside in 2010 — mainly due to rising steel intensity of Asian economies.” Best Performers Raw-material and energy shares are the MSCI Asia Pacific Index’s best performers in the past three months on optimism a global economic recovery will boost commodities demand. Signs of growth contributed to an unexpected increase in Australian interest rates last week, while reports showed U.S. jobless claims fell and retail sales rose. Rio Tinto Group climbed 1.4 percent to A$62.15 as a measure of six metals traded on the London Metal Exchange, including copper and zinc, added 1.1 percent yesterday. Woodside Petroleum Ltd. , Australia’s second-largest oil producer, added 1 percent to A$51.83, as crude traded at $73 a barrel in New York in after-hours trading, after settling yesterday at a seven-week high of $73.27. “At this moment, it’s very easy for risk money to flow into the commodities and equity markets,” said Fumiyuki Nakanishi , a strategist at Tokyo-based SMBC Friend Securities Co. “Materials shares are likely to be snapped up.” Broker Upgrade The stock rally since March has driven the average price of shares on the MSCI Asia Pacific Index to 1.57 times book value, up from 1.03 times at the market’s low in March, according to data compiled by Bloomberg. Financial shares were led higher by Commonwealth Bank of Australia as Merrill Lynch raised its recommendation on the shares to “buy” from “neutral.” The stock is now the brokerage’s “preferred exposure” among Australia’s banks, analysts led by Matthew Davison wrote in a note to clients. Commonwealth Bank gained 2.3 percent to A$53.85. National Australia Bank Ltd. rose 1.6 percent to A$31.52. In Hong Kong, Shenguan jumped 53 percent to HK$4.75 on its first day of trading. The company sold 400 million shares at HK$3.10 each in its initial share sale, generating net proceeds of HK$1.15 billion ($148 million), according to a statement. Slot Machines Hong Kong-listed casino operators SJM Holdings Ltd. and Melco International Development Ltd. dropped after Macau said it’s reviewing the size of the casino industry and that the six license holders agree it “shouldn’t expand infinitely.” The region’s government may limit slot-machine locations and raise the age for customers and staff to 21, according to a statement. SJM, billionaire Stanley Ho’s casino holding company, lost 3.9 percent to HK$4.42. Melco International , controlled by Ho’s son Lawrence, fell 3.5 percent to HK$4.97. In Australia, Macquarie Media Group slumped 5.2 percent to A$2.21. Preliminary estimates of the company’s American Consolidated Media LLC unit earnings for the quarter ended Sept. 30 indicate the company may breach a loan covenant, Macquarie Media said in a statement. To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net ; Adam Haigh in Hong Kong at ahaigh1@bloomberg.net .

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China Metallurgical Shares Decline in Hong Kong on First Day of Trading

September 23, 2009

By Kyunghee Park Sept. 24 (Bloomberg) — Metallurgical Corporation of China Ltd ., the construction company that helped build Beijing’s “Bird’s Nest” Olympic stadium, dropped 14 percent on its first day of trading in Hong Kong. China Metallurgical, which also builds plants for China’s largest steelmakers, fell 87 cents to HK$5.48 at 10:03 a.m. local time from the HK$6.35 offer price. It raised HK$18.2 billion ($2.3 billion) in the city’s biggest initial public offering this year. The company’s Shanghai -traded shares have fallen 12 percent since their Sept 21 debut. The shares tailed the median 13 percent first-day advance of the 23 other IPOs in Hong Kong this year, after the company sold stock at 16.9 times forecast earnings, according to data compiled by Bloomberg. Companies listing in Hong Kong have raised HK$58.4 billion in 2009. “Some investors are concerned about oversupply in China’s steel industry as the company has business in that sector,” said Carmen Wong , an analyst at Phillip Securities Group in Hong Kong. “Market sentiment for this stock isn’t positive.” Investors in Hong Kong applied for 205 times the stock available to them for China Metallurgical compared with an oversubscription rate of almost 600 times for Sinopharm Group Co., China’s biggest drug distributor, which rose 16 percent on its debut yesterday. The pricing of the Shanghai traded shares was “unattractive” compared with steel and metal companies, Helen Lau , a Hong Kong-based analyst at OSK Securities Hong Kong Ltd., said this week. The state-owned contractor that builds mines and factories sold the Shanghai stock at 41.9 times last year’s earnings compared with 32 for China’s benchmark index. The last company to fall on the first day of trading in Hong Kong was Sundart International Holdings Ltd., which fell 6.7 percent on Aug. 21. To contact the reporters on this story: Kyunghee Park in Hong Kong at kpark3@bloomberg.net

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Berkshire, Munich Re Benefit as Reinsurer Surplus Rebounds on Investments

August 31, 2009

By Jamie McGee Aug. 31 (Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. and Munich Re are among reinsurers that benefited in the second quarter as the industry’s surplus in the U.S. expanded for the first time in seven periods on investment gains. The combined surplus of 19 reinsurers climbed 11 percent in the three months ended June 30 to $66 billion, the Reinsurance Association of America said today in a report. The surplus, a measure of assets minus liabilities, hadn’t increased since the third quarter of 2007. The figure was $72.8 billion on June 30, 2008, before the collapse of Lehman Brothers Holdings Inc. forced down the value of the industry’s investments. “You are starting to see a rebound in the financial markets, and therefore you are starting to see a little bit of an uptick in the valuations of the assets,” said Michael Paisan , an analyst at Stifel Nicolaus & Co. Reinsurers provide coverage to primary carriers, protecting them from large claims including catastrophes. Munich Re, the world’s largest reinsurer, posted a 14 percent profit gain in the second quarter as investments and sales climbed. Buffett told investors this month that he is more willing to take the risk of covering disasters after Omaha, Nebraska-based Berkshire’s investment portfolio gained. “Barring a catastrophe in the third quarter,” the surplus gains are likely to continue, said Dean Evans , an analyst with KBW Inc. “The current outlook is still pretty good for profitability.” Hurricane Season Catastrophes last year, including Hurricanes Gustav and Ike, cost $25.2 billion, the most since the record storm season of 2005, an industry group said in January. Forecasters have scaled back predictions for the severity of this year’s storm season because of warming in the eastern Pacific Ocean. The Atlantic didn’t produce a named storm in 2009 until Ana on Aug. 15, the latest in more than two decades for the first storm of a calendar year to reach that intensity. The season runs from June 1 to Nov. 30. Policy sales for the group of 19 reinsurers climbed to $12.8 billion in the first half of the year, up from $12.7 billion the same period in 2008, the Washington-based RAA said. Property reinsurances rates have advanced as capital has diminished and insurers seek protection from natural disasters. Reinsurance prices for U.S. catastrophe zones increased as much as 15 percent in July 1 renewals, Willis Group Holdings Ltd. reported last month. Reinsurers have been unable to boost prices for casualty coverage, Paisan said. Property Coverage “Particularly on the property-catastrophe reinsurance, you are seeing a pretty sizeable uptick in pricing,” Paisan said. “In the current market where the equity markets are volatile, and debt markets are essentially closed or prohibitively costly, the only additional alternative form of capital is the reinsurance market.” Munich Re’s surplus in the U.S. advanced about 6.2 percent in the three months ended June 30 to $3.6 billion. The surplus at Berkshire’s National Indemnity Co. gained 18 percent to $28.4 billion. “Due to the restoration of net worth that occurred during the second quarter, management’s willingness to write large catastrophe risks has increased, but to date rates have not warranted such writing,” Berkshire said in an Aug. 7 regulatory filing. Capital needs have led reinsurers to pursue acquisitions this year, Paisan said. Validus Holdings Ltd. announced plans to buy IPC Holdings Ltd. , and PartnerRe Ltd. agreed in July to acquire Paris Re Holdings Ltd. “The real driver for merger and acquisition activity within the reinsurance area would be more based on trying to build a larger capital base,” Paisan said. “It’s been increasingly more important to have a larger capital base within the reinsurance industry.” To contact the reporters on this story: Jamie McGee in New York at Jmcgee8@bloomberg.net

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Asian Stocks Gain as Harvey Norman, Dell Earnings Beat Analyst Estimates

August 27, 2009

By Jonathan Burgos and Shani Raja Aug. 28 (Bloomberg) — Asian stocks rose, sending the MSCI Asia Pacific Index to its second weekly advance in three, as increased commodity prices and Dell Inc.’s better-than-estimated profit added to signs that the global economy is recovering. Inpex Corp., Japan’s largest oil explorer, gained 1.9 percent. Acer Inc., the world’s third-largest computer maker, climbed 3.1 percent. Casio Computer Co. surged 6.9 percent in Tokyo after the Yomiuri newspaper reported the company is merging its mobile phone business with NEC Corp. and Hitachi Ltd. Japanese equities rose before an election that opinion polls suggest will end the ruling coalition’s 50-year hold on power. “Risk appetite has recovered from the depths that we had in March and people are looking at fundamentals,” said Prasad Patkar , who helps manage about $1.1 billion at Platypus Asset Management in Sydney. “Confidence is there for the right reasons. Economies are stabilizing and things are starting to normalize.” The MSCI Asia Pacific Index advanced 0.4 percent to 113.43 as of 1:52 p.m. in Tokyo, taking its gain this week to 2.5 percent. The gauge has climbed 61 percent from a more than five- year low on March 9 on speculation government stimulus packages and lower borrowing costs will revive the global economy. Japan’s Nikkei 225 Stock Average added 0.3 percent. The country holds parliamentary elections on Aug. 30, in which the opposition Democratic Party of Japan is expected to win by a landslide, newspaper polls show. The ruling Liberal Democratic Party has governed Japan for all but 10 months since 1955. Shanghai Composite Australia’s S&P/ASX 200 Index gained 0.4 percent, while South Korea’s Kospi Index added 0.4 percent. Harvey Norman Holdings Ltd., Australia’s biggest electronics retailer, surged 16 percent, while BOC Hong Kong Holdings Ltd., Hong Kong’s second-largest publicly traded bank by market value, climbed 6.1 percent on better-than-estimated earnings. China’s Shanghai Composite Index dropped 2.5 percent and Hong Kong’s Hang Seng Index fell 0.5 percent on concern Chinese measures to curb lending and overcapacity in some industries will slow economic growth. China Cosco Holdings Ltd., Asia’s biggest shipping company by market value, sank 3.8 percent in Shanghai after posting a first-half loss. Futures on the U.S. Standard & Poor’s 500 Index lost 0.1 percent. The gauge rose 0.3 percent yesterday as oil futures climbed for the first time in three days with a 1.5 percent gain. Separately, a Commerce Department report showed the U.S. economy contracted at a 1 percent annual rate from April to June, less than the 1.5 percent contraction estimated by economists. Global Recovery Signs the global recovery is gaining traction has fueled the MSCI Asia Pacific Index’s rally since March. Malaysia’s gross domestic product shrank less than estimated in the three months to June 30, data released on Aug. 26 show. The Philippine economy expanded in the second quarter at three times the pace expected by economists, the government reported yesterday. Inpex gained 1.8 percent to 748,000 yen in Tokyo. Woodside Petroleum Ltd., Australia’s second-largest oil producer, added 1.2 percent to A$49.39 in Sydney. “Investors are putting their money in risk assets such as oil and stocks,” said Kiichi Fujita , a strategist at Nomura Holdings Inc. in Tokyo. BHP Billiton Ltd., the world’s biggest mining company, added 0.5 percent to A$37.82. Copper for September delivery in New York increased 1.7 percent in after-hours trading. Dell Earnings Samsung Electronics Co., the world’s largest maker of computer-memory chips, rose 0.5 percent to 771,000 won in Seoul. Dell, the world’s No. 2 maker of personal computers, reported second-quarter sales and profit that beat estimates after the Texas-based company cut manufacturing costs and attracting buyers with low-priced notebooks. Dell suppliers in Taiwan gained. Quanta Computer Inc., the world’s largest laptop maker, climbed 2.7 percent to NT$69.1. Compal Electronics Inc., the world’s second-largest laptop maker, advanced 1.9 percent to NT$32.60. Acer climbed 3.1 percent to NT$73. HSBC Holdings Plc upgraded the stock to “neutral” from “underweight” and Goldman Sachs Group Inc. raised its share-price estimate by 19 percent to NT$74. In Sydney, Harvey Norman surged 16 percent to A$3.71, the most in more than 20 years. The company’s net income of A$214.4 million ($180 million) in the year ended June beat the A$199.3 million average of analyst estimates in a Bloomberg survey. Beating Estimates Some 34 percent of the 586 companies in the MSCI Asia Pacific Index that have reported net income since early July have beaten analyst estimates , while 19 percent have missed, according to data compiled by Bloomberg. BOC Hong Kong advanced 6.1 percent to HK$16.04. The bank said yesterday first-half profit fell 5.6 percent to HK$6.69 billion ($863 million). That topped the HK$4.49 billion average estimate of four analysts surveyed by Bloomberg. Casio Computer Co., the maker of digital cameras and mobile phones, surged 6.9 percent to 905 yen in Tokyo. Casio, NEC Corp. and Hitachi Ltd. are in talks to merge their mobile-phone businesses by April, the Yomiuri newspaper reported. The venture, of which NEC may own more than a half, would have more than 20 percent of Japan’s mobile-phone market, the newspaper said. NEC added 0.9 percent to 334 yen. Hitachi gained 1.6 percent to 327 yen. In Shanghai, China Cosco sank 3.8 percent to 13.82 yuan. The company said it may cancel container-vessel orders after reporting a first-half net loss. To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net .

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Woolworths Profit Rises 16% as Australian Government Handouts Boost Sales

August 26, 2009

By Robert Fenner Aug. 27 (Bloomberg) — Woolworths Ltd., Australia’s biggest retailer, increased second-half profit 16 percent as demand grew at the company’s supermarkets and Big W discount stores after government cash handouts aimed at skirting a recession. Net income rose to A$852.4 million ($705 million) in the six months ended June 28 from A$735.5 million a year earlier. Second-half figures were calculated by subtracting first-half earnings from the A$1.835 billion full-year profit the Sydney- based company reported today. Sales stoked by government payments to individuals and store refurbishments helped Woolworths extend three years of market-share gains from second-ranked Wesfarmers Ltd. Chief Executive Office Michael Luscombe this week announced plans to start a chain of home improvement stores, taking on his rival’s most profitable retail business. “This solid result was delivered in a difficult global economic climate and reflects increased acceptance of our retail offer,” Luscombe, 56, said in the statement. “Our investment has improved stores, created jobs, added services, delivered value.” Woolworths shares gained 7.6 percent this year, less than half the 20 percent rise in the benchmark S&P/ASX 200 index . The stock closed yesterday at A$28.70. Full-year profit rose 13 percent to A$1.835 billion, beating the A$1.8 billion average of 11 analyst estimates compiled by Bloomberg. 2010 Guidance Net income in 2010 will rise between 8 percent and 11 percent with sales increases in the “upper single digits,” the company said today. Revenue in the year ended June was A$47 billion. Second-half earnings before interest and tax from Australian supermarkets, the company’s biggest unit, rose 13 percent to A$1.038 billion. The Australian supermarkets unit widened its profit margin , which measures earnings as a proportion of revenue, to 5.98 percent from 5.52 percent a year earlier. Wesfarmers’ Coles’ chain has a margin of 3 percent. Earnings from Woolworths’ New Zealand supermarkets rose 3.5 percent to A$85.5 million. Profit from Big W discount department stores surged 81 percent to A$58 million. The hotels unit, Australia’s biggest owner of pubs, had a 1.6 percent drop in second-half earnings to A$92.9 million. The consumer electronics unit, which includes the Dick Smith brand stores, had an 1.8 percent fall in earnings to A$21.9 million. Australia’s Woolworths isn’t related to London-based Woolworths Group Plc , which collapsed last year, or Woolworths Holdings Ltd. based in Cape Town, South Africa. To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

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Merckle’s Phoenix Said to Weigh IPO, Sale Valuing Company at $8.5 Billion

August 18, 2009

By Aaron Kirchfeld and Ambereen Choudhury Aug. 19 (Bloomberg) — Phoenix Group , the German drug wholesaler started by the late billionaire Adolf Merckle , is considering an initial public offering as well as a sale, two people familiar with the plans said. Deutsche Bank AG , which is overseeing the sale, is weighing a dual-track process, where a bank simultaneously prepares a company for an IPO and lines up potential bidders, said the people, who declined to be identified because the talks are private. Phoenix, based in Mannheim, Germany, may be valued at about 5.5 billion euros to 6 billion euros ($8.5 billion), and an IPO would take place next year at the earliest, the people said. “It makes sense to test both options — a sale and IPO — to see which one fetches the most money,” said Ulrich Huwald , an analyst at M.M. Warburg in Hamburg. “There’ll probably be a number of interested strategic and private equity buyers.” The MSCI World Index’s 51 percent gain from its 15-year low in March is making share sales more attractive for companies after a two-year lull. Ludwig Merckle is selling drug, machinery and cement assets after his father Adolf, who committed suicide in January, amassed debt and lost money on wrong-way bets on the stock market last year. A final decision on a sale or IPO hasn’t been made so far, the people said. Vivien Kremer , a spokeswoman for the Merckles’ holding company, declined to comment, as did Deutsche Bank spokesman Armin Niedermeier . Mepha Group The Merckle family is also preparing to sell Mepha Group, a Swiss generic-drug maker, in an auction that could raise about 500 million Swiss francs ($464 million), people familiar with the situation said yesterday. Phoenix operates in 23 countries and supplies about 43,000 European pharmacies with medicines. The company had sales of 21.6 billion euros in the year ended Jan. 31, 2008, about 30 percent of which were in Germany, according to its latest annual report . The Merckle family also controls generic-drug maker Ratiopharm, which is also being sold. Alliance Boots Holdings Ltd., the U.K. drugstore chain controlled by Kohlberg Kravis Roberts & Co. , is considering a bid for Phoenix, four people familiar with the plan said in March. Nottingham, England-based Boots has made no final decision, the people said at the time. To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net ; Ambereen Choudhury in London at achoudhury@bloomberg.net

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China Resources Land May Join Hong Kong’s Hang Seng Index Following Review

August 10, 2009

By Hanny Wan Aug. 11 (Bloomberg) — China Resources Land Ltd. may join Hong Kong’s Hang Seng Index following a quarterly review of the stock gauge, Nomura Holdings Inc. said. Cosco Pacific Ltd. , a container-terminal operator, may be removed from the 42-member gauge when Hang Seng Indexes Co. announces its decision on Aug. 14, the brokerage said. Cosco Pacific’s 12-month average market capitalization is ranked 89th among Hong Kong-listed companies, according to Sandy Lee , a Hong Kong-based analyst at Nomura. China Resources is ranked 36th. “The market cap of Cosco Pacific has gone down so much,” Lee said in an interview yesterday. “If it does get removed, they have got to add another stock.” Hang Seng Indexes said in February 2007 it plans to expand the benchmark gauge to 50 members. Lee does not expect any net reduction in membership. The amendments, based on criteria such as market capitalization and trading volume, may prompt funds that buy shares based on the index to adjust their holdings. Changes will take effect on Sept. 7, Nomura’s Lee said in a report last week. Belle International Holdings Ltd. , a retailer of women’s shoes in China, was also picked by Nomura as a potential candidate to be included in the benchmark index. “Whether both China Resources Land and Belle will join, that’s hard to say,” Lee said. BYD Co. may be added to the Hang Seng China Enterprises Index, according to a report from Lee dated Aug. 3. The electric car-maker in which Warren Buffett’s Berkshire Hathaway Inc. agreed last year to take a minority stake surged 254 percent in 2009 through yesterday. Stock Gains China Resources Land , a state-owned developer, climbed 81 percent this year, compared with a 45 percent advance in the Hang Seng Index. Should it be included in the gauge, it will be the third China Resources (Holdings) Co. company to become a constituent, after China Resources Enterprise Ltd. and China Resources Power Holdings Co. Belle surged 118 percent this year. Cosco Pacific, Asia’s third-biggest container-terminal operator, gained 63 percent in that period. “On industry mix concerns, we believe that China Resources Land and Belle International have a greater chance of being considered for inclusion, since the consumer goods and properties and construction sectors are underweighted in the Hang Seng Index,” Nomura’s Lee wrote in her report. To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net

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Zimbabwe Share Trading Value Surges, Surpassing Kenya, RenCap’s Danha Says

July 28, 2009

By Janice Kew July 28 (Bloomberg) — Zimbabwe share trading has surged to $1.3 million a day, surpassing Kenya, as the east African nation’s economy recovers from a decade-long recession, says Renaissance Capital. Daily transactions have increased from $50,000 in March as foreign investors return, making the Zimbabwe Stock Exchange the third-biggest in sub-Saharan Africa by trading value, according to the Moscow-based brokerage with offices in Africa. Reserve Bank of Zimbabwe Governor Gideon Gono ordered the shutdown of the exchange in November, alleging some traders were engaged in fraud, as President Robert Mugabe blamed pressure from western countries for pushing the economy toward collapse.

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Incoming Macau Chief Executive Raises Hopes of Gaming Industry Recovery

July 25, 2009

By Nicholas Olczak and Shelley Smith July 26 (Bloomberg) — Former culture secretary Fernando Chui won an uncontested election today to become Macau’s next chief executive, raising expectations of a recovery for casinos hurt by restrictions on mainland Chinese visitors and the economic downturn. Chui will replace Edmund Ho , who has governed Macau since the gambling enclave west of Hong Kong was returned to China in December 1999 after 442 years of Portuguese colonial rule. Chui won by a vote of 282 of a total of 292 votes cast by the 300 members of Macau’s election committee, according to Will Wong, an information officer at the Macau Government Information Bureau.

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