Posts from Wednesday May 19 2010

Brussels fines chipmakers

EU competition authorities have fined 10 producers of memory chips – including Samsung, Infineon, Hynix and Toshiba – a total of €331m, in their first settlement deal over cartel offences, the FT reported. The biggest single penalty of €145.7m will be paid by Samsung, followed by Infineon (€56.7m) and Hynix (€51.4m).

HSBC accused over PEMGroup

HSBC was accused by a US court-appointed receiver of aiding an international fraud perpetrated by the late California financier Danny Pang, the WSJ reported. The receiver is seeking to reclaim $1.9m from the bank, plus other unspecified damages, the report said. An HSBC spokeswoman told the newspaper the company doesn’t comment on pending litigation.

Pru’s AIA forecasts under scrutiny

Analysts and investors are closely assessing Prudential’s forecasts for what it can do with AIA,the Asian arm of US insurer AIG, if the UK life assurer completes its $35.5bn takeover, the FT reported. Reactions so far suggest that even after gaining a welter of financial information about the deal, analysts are sticking with their initial mixed views.

Jakarta appoints finance minister

Indonesia’s president on Wednesday app­oin­ted Agus Martowardojo, head of Bank Mandiri, the country’s largest bank, as his finance minister to rep­lace Sri Mulyani Indrawati, who resigned following a clash with lawmakers, the FT reported. Susilo Bambang Yudhoyono also appointed Anny Ratnawati, the financie ministry’s director-general of budgeting, as deputy finance minister.

P&G goes online to compete for sales

Procter & Gamble has started to sell brands direct to US consumers online for the first time, in a sign of how digital commerce is shaking up relations between retailers and their suppliers, the FT said. The launch of P&G’s “eStore” is part of the company’s drive to increase total online sales, and will compete directly with e-commerce sites run by its retailer customers, including Walmart, Target, CVS and Walgreens.

US banks face push to raise capital levels

Many large banks will see a fall in their tier one capital ratios, the key measure of an institution’s strength, as part of a change to the US financial regulation bill, the FT reported. Credit Suisse analysts predicted the change meant a decline of 150 basis points, from 10.5 per cent to 9 per cent, of tier one capital at the largest US institutions.

Euro’s fall ‘won’t deter China’

The euro’s plunge on Europe’s sovereign-debt crisis won’t deter China from diversifying its massive foreign-exchange reserves, an adviser to China’s central bank told the WSJ on Tuesday. Separately, the WSJ said the euro’s weakness threatened the nascent earnings recovery among Japan’s export-dependent electronics and auto makers.

Android overtakes Windows in smartphones

Sales of smartphones using Google’s Android OS have overtaken Microsoft’s Windows mobile phones for the first time, figures published by tech research group Gartner on Wednesday showed. Sales of Android phones, which include Google’s Nexus One and Motorola’s Droid, accounted for just under 10 per cent of all smartphones sold globally in Q1 2010, vs  just 1.6 per cent in 2009, the FT said.

Bharti criticises ‘inflated’ India 3G prices

The UK’s Vodafone and Indian rivals Bharti Airtel and Reliance Communications paid between $1.8bn and $2.6bn each for third generation mobile phone spectrum in India, in an auction that will raise concerns about the financial sustainability of the sector, the FT said. The soaring cost of the auction, which fetched prices well beyond analysts’ estimates, raised Rs677.2bn ($14.5bn) in total for the government.

Bangkok burns, but Thai investors hold tight

Thailand’s army brought an abrupt end to more than nine weeks of anti-government demonstrations in central Bangkok on Wednesday but watched as protests spread to other parts of the capital and into the provinces, the FT reported. But the turmoil has had a remarkably limited effect on financial markets. Investors have judged that the disturbances represent only a modest threat to Thailand’s economic stability, the FT said.

Senate stalls on financial regulation

A bid by Senate Democratic leaders to end weeks of debate on legislation to overhaul regulation of US financial markets unexpectedly failed on Wednesday, the WSJ reported. Earlier, in an unusual public intervention, JPMorgan Chase CEO Jamie Dimon had warned Congress against destabilising markets by forcing derivatives dealing out of large banks, the FT reported.

Europeans scramble to restore unity

Europe’s leaders scrambled to restore unity in the face of the sovereign debt crisis after Germany dismayed allies with a unilateral ban on naked short selling, the FT reported. The ban, introduced with no warning to other European nations, and which the FT said appeared to have been driven by political considerations rather than regulatory zeal, knocked global stock markets and sent the euro tumbling to fresh four-year lows against the dollar.

US won’t push China on currency

The US will continue nudging China at top-level talks in Beijing next week to let its currency appreciate but won’t push hard on the issue, according to Reuters, which cited senior Treasury officials. The report noted that one factor complicating efforts to push China toward resuming the renminbi’s appreciation is the recent steady decline in the euro’s value.

The dangers of politicising regulation [UPDATED]

Former Treasury secretary Hank Paulson, on more than one occasion, deplored what he called the stigmatisation of the Tarp.

As the FT reported in May, Paulson told a hearing held by the Financial Crisis Inquiry Commission that the Tarp should have helped some 2,000-3,000 banks: Read more

CDS report: German shorting ban triggers volatility

Markit CDS chart of the iTraxx SovX WE and the iTraxx Europe

After a dull week start to the week it was back to the volatility we have become familiar with. Again the sovereign world was the source, though the trigger in this case was somewhat unexpected. Bafin, the German regulator, announced a ban on naked CDS referencing eurozone countries, as well as naked short sales of eurozone sovereign debt and equities of certain German financial institutions. The unilateral action took the market by surprise this morning and saw some unusual spread movements. Read more

Fitch on Greece’s Sisyphean task

This week’s volatility might be Germany-induced, but the overarching fear is still at heart Greek.

And as if on cue after Greece received its first tranche of aid on Tuesday, Fitch has jumped in with a report on the future of the country’s financing. Read more

A ride on Big Thunder Euro Mountain

Here’s the roller coaster action in EURUSD on Wednesday:

 Read more

US CPI – the good and bad news

Wednesday’s US inflation data is something of curate’s egg.

Here, via Reuters, are the headlines: Read more

The ECB’s ICO-nic bond purchases

The latest Barclays Capital’s AAA Investor research looks at the ECB’s recent foray into the sovereign bond market.

The bank’s analysts conclude that compared to the ECB’s entry into the covered bond market, the move this time has been much more aggressive. Read more

Was naked shorting of German financials really an issue?

We know it’s hard to assess the scale of naked shorting in any particular security.

However, it does make sense to look to the scale of conventional ‘borrowed-stock’ shorting activity for an indication. Read more

Euro Bingo

A new diversion brought to you by BaFin, Merkel and BNY Mellon.*

Tuesday’s key currency levels according to the US bank: Read more

Japan’s banks in fund-raising frenzy

While Europe grapples with internal politics, regulatory rows and sovereign debt problems, Japanese banks are quietly continuing their fund-raising frenzy. According to figures compiled for FT Alphaville by data provider Dealogic, Japanese banks raised a whopping Y3,530bn, or just under $38bn worth, of funds via 12 equity issues in 2009. Read more

France fights back on BaFin ban

Germany’s midnight move to ban naked shorting hasn’t quite led to an outbreak of European unity, it’s safe to say — with France lining up to attack first.

As Reuters reports, French economy minister Christine Lagarde is none too happy: Read more

Markets Live transcript 19 May 2010

Live markets commentary from 

Thai protest leaders surrender

The leadership of Thailand’s anti-government protesters surrendered on Wednesday, after troops and armoured vehicles forced their way into the main protest site in central Bangkok, ending nine weeks of demonstrations that cost almost 70 lives, the FT reports. But the government’s problems seem to have metastasised to other parts of Bangkok, where furious protesters fleeing the main site continued to set fire to tyres, as well as to other parts of the country, where a number of government offices were attacked in the afternoon.

Witz des Tages

That’s joke du jour for non-Germanaphone readers. And here it is:

 Read more

Walmart struggles while Home Depot thrives

Walmart, which has stores aimed primarily at lower- income shoppers, reported its fourth consecutive quarter of falling US comparable sales on Tuesday with a 1.4 per cent drop during its first quarter. The results, the FT says, underline the uneven recovery in US consumer spending, suggesting that purchases by low-income Americans were still lagging the pick-up in expenditure by middle-class shoppers.

Germany’s plan to deal with budget transgressors

Forget the short-selling ban, Germany’s plan to tackle budget transgressors (as outlined in Wednesday’s Handelsblatt), is what we should be REALLY worried about, according to RBS.

Before we get to that, here are the highlights of the draft document as seen by the paper: Read more

‘Risk off’ as German ban adds to eurozone worries

Risk aversion dominated markets on Wednesday after regulatory uncertainty in the eurozone added to worries about the health of the region’s economy, the FT reported. The FTSE All-World equity index fell down 1.4 per cent, US equity futures were off 0.8 per cent with commodities also under pressure. The euro fell to a fresh four-year low overnight as traders were spooked by news that Germany was banning ‘naked’ short-selling – selling securities such as shares and bonds that are not owned or borrowed – of some banks’ stocks and bonds.

Prudential’s Asian cash challenge

As we await CEO Tidjane Thiam’s answers to our eight questions, Paul J Davies, the FT’s insurance correspondent, has been methodically working his way through Prudential’s mammoth rights issue prospectus. For his initial observations on capital and Pru’s claim that getting cash out of its Asian operations won’t be a problem, see FT Alphaville. Read more