Posts from Tuesday Jun 1 2010

Singapore SWF eyes Grosvenor House

Government of Singapore Investment Corp. is among a handful of cash-rich buyers seeking to buy London’s landmark Grosvenor House Hotel — which carries a £500m price tag — from its current owner RBS, the WSJ reported, citing people familiar with the matter.

China to offer subsidies to green carmakers

China will offer substantial purchase subsidies for green cars and financing for the construction of electric power charging infrastructure in five cities, the FT reported. The Ministry of Finance said it would offer as much as Rmb50,000 ($7,300) subsidies for the purchase of plug-in hybrid electric vehicles and Rmb60,000 for pure electric vehicles, in Shanghai, Changchun, Shenzhen, Hangzhou and Hefei.

Pace of Asian manufacturing growth slows

Manufacturing growth across a wide swathe of Asia continued to expand in May but its progress slowed, the WSJ reported, citing data released Tuesday. Indexes of manufacturing activity in China, Australia, Taiwan and South Korea all showed slower growth in May than in April, though they remained in expansionary territory, the newspaper said.

BP shares plunge

BP’s shares suffered their worst one-day fall for 18 years on Tuesday following the company’s failure to stop its leaking oil well in the Gulf of Mexico, cutting the oil giant’s market value to two-thirds of its level before the April accident, the FT said. On the same day, US attorney general Eric Holder said that the US government had launched civil and criminal investigations into the spill. FT Alphaville meanwhile considers whether BP amid its travails has become a takeover target.

Abu Dhabi to create regional semiconductor hub

Abu Dhabi on Tuesday announced plans to bring the global chipmaking industry to the Middle East, as the emirate seeks to diversify its economy into knowledge-based industries, the FT reported. Ibrahim Ajami, chief executive of state-owned Advanced Technology Investment Company, said his company would invest in building a “capital intensive, manufacturing-driven cluster” technology cluster.

Nomura triples pay for 10 executives

Executives at Nomura enjoyed a more than three-fold increase in average pay last year as Japan’s largest investment bank returned to profit from a record loss, the FT reported. The bank paid 10 executives including Kenichi Watanabe, the bank’s chief executive, a total of Y1.45bn ($16m) in salary, stock and cash bonuses in the year to March 2010, vs Y415m the previous year. All 10 of the executives are Japanese and none are former Lehman employees.

Honda 24% pay offer fails to appease workers

Production at a Honda components factory in China remained stalled on Tuesday, in spite of the company’s offer of a 24 per cent wage increase to striking workers. The Japanese carmaker said most of the 1,800-strong workforce at its transmission plant in Foshan, a factory town in southern Guangdong province, had accepted the wage increase, the FT reported. But some workers insisted their industrial action was continuing, while others said they would return to the plant but refuse to work once there.

Tora planning pan-Asian ‘dark pool’

Tora, a trading technology vendor in which Goldman recently took a stake, has unveiled plans to create a pan-Asian “dark pool” in an ambitious move to break into an industry dominated by investment banks and brokers, the FT said. Tora plans to roll out the pool – known as Crosspoint – across the region, starting with Hong Kong in the second quarter and Singapore and Australia later in the year.

Thiam under fire after AIG rebuffal

Prudential’s $35.5bn bid to buy AIG’s Asian insurance arm was on the verge of collapse on Tuesday night, the FT reported. Some investors called for AIA’s chief executive Tidjane Thiam to resign after he failed to renegotiate the deal. AIG’s board voted 10-2 against a proposal to cut to $30.375bn the price paid for AIA, preferring to resurrect plans for a partial sale of AIA in an Asian stock market listing. Staffers at AIA’s Hong Kong HQ greeted the news with “unbridled euphoria“.

What’s the right amount to pay bankers? Less.

Dan Ariely of “Predictably Irrational” fame is out with a new book, the first chapter of which deals with the oh-so-topical issue of banker pay. And according to Ariely’s research, better performance is linked to lower bonuses. FT Alphaville has more. Read more

‘The eurozone has failed,’ Czech president says

Václav Klaus, president of the Czech Republic since 2003, is not impressed with Europe’s single currency experiment. In fact, he thinks the eurozone is a failure. See FT Alphaville for why. Read more

BP – a takeover target? Part II.

BP’s stock continued to take a battering late in London trading on Tuesday, closing down 13.1 per cent. Cue a fresh round of analysis of whether BP is in danger of a break-up, as well as discussions of just how much damage the oil spill is doing to BP’s bottom line. FT Alphaville has the details. Read more

CDS report: volatility returns

Markit CDS chart for BP, Anadarko and Transocean

After the long weekend in the UK and the US, the markets resumed the volatility that has plagued them in recent times. Spreads opened wider and the credit and equity markets capitulated through the morning with risk aversion again on the rise. Several factors contributed to the cautious climate. Asian markets were on the back foot after the HSBC/Markit China Manufacturing PMI showed the headline index dropping to its lowest level in 11 months. The sector was still expanding but at a declining rate, suggesting that the economy is losing momentum. Read more

BofAML blames the media: ‘tape bombs’ hurt the rally

Ethan Harris, head of economics research for North America at Bank of America Merrill Lynch, used an interesting phrase in a note published on May 28:

‘Tape bombs’ (npl) – news stories that have the effect of encouraging risk aversion Read more

Fitch downgrades a slew of Spanish banks

Having cut Spain’s sovereign rating from AAA to AA+ on Friday, Fitch moved on Tuesday to adjust the ratings for a number Spanish financial institutions.

First up, Spain’s sixth-largest bank, Banco SabadellRead more

Meddling Mandy lives on

The UK Takeover Panel finally published its proposed changes to the Takeover Code on Tuesday — and perhaps suitably for the post-Kraft era, they’re rather stringent.

Lord Mandelson, the former Business Secretary who inspired them, would be proud. Read more

Taleb explains his tweets

Nassim Nicholas Taleb, of Black Swan fame, doesn’t just tweet on Twitter. He now tweets the explanations for his Twitter tweets on Twitter. No, really. See FT Alphaville for more. Read more

Markets Live transcript 1 Jun 2010

Live markets commentary from FT.com 

Front-running money market fear

Many parallels have been drawn between current money market stress and that experienced post the collapse of Lehman Brothers in 2008. But there’s a key difference, as highlighted by the fixed income analysts at Deutsche Bank. In 2008, money market strains manifested themselves in a cash shift — spot dollar Libor-OIS spreads moved first. FT Alphaville has their analysis.  Read more

Commods plays: Clever or daft?

Given the debate — and doubts — assailing the commodities sector, it could be a very good — or very bad –  move by Calstrs (the Californian State Teachers Retirement System), the second-biggest US pension fund, to be launching its first big push into commodities investing.

As the FT reports on Tuesday, Calstrs is set to vote later this week on a “long-term strategic allocation to commodities”, adding bulk goods such as oil, sugar and copper to its $138.5bn portfolio of equities, bonds, real estate and private equity. Read more

Two million sales in two months for Apple’s iPad

A strong international debut for Apple ’s iPad had lifted sales of the tablet computer to 2m since its US launch two months ago, the company said, a rate exceeding the most recent public figures for its flagship Mac laptop and desktop computers, the FT reports. The Taiwanese company Asustek’s Eee Pad, unveiled on Tuesday, is the latest challenger to Apple’s tablet throne, the WSJ adds.

Markets focus on manufacturing health

The health of the global economy’s manufacturing base is foremost in investors’ minds as London and New York return to the international trading fold after public holidays on Monday, according to the FT’s rolling global market overview. The FTSE All-World index is down 0.8 per cent, while the euro is down 0.8 per cent against the dollar. Declining factory output in Asia has raised investor fears that global demand is falling. the FT adds.

Commodities cast cloud over investors

The Journal of Commerce commodity index fell by 57 per cent in May, its worst performance since the collapse of Lehman Brothers, Bloomberg reports, while China appears to be dipping into its commodities reserves, according to the WSJ — increasing the bear signals hanging over the market. The California State Teachers’ Retirement System, the United States’ second-biggest public pension fund, is nevertheless poised to make its first investmenet in commodities as an inflation hedge, the FT reports.

China property risk is worse than in US

The problems in China’s housing market are more severe than those in the US before the financial crisis because they combine a potential bubble with the risk of social discontent, an adviser to the Chinese central bank has told the FT. Li Daokui, a member of the bank’s monetary policy committee, called for a longer-term plan to bring house prices under control.

BP stock plunges on spill fix failure

Shares in BP fell on Tuesday as traders got their first chance to react to news that its latest attempt to cut the rate of oil leaking from its well in the Gulf of Mexico had failed, the FT says. The company’s top kill strategy to close the leak failed at the weekend, forcing it to start a long process of installing a cap on the well. Tuesday’s fall was the most in 18 years, Bloomberg added, while the WSJ reveals details of BP’s last-minute tweaks to the well’s design days before its explosion.

AIG and Pru fail to agree Asian deal

American International Group on Tuesday rejected a revised $30.4bn cash and shares offer from Prudential for its Asian life insurance assets, dealing a major blow to the UK group’s attempt to clinch the take over of the unit, the FT reports. Prudential’s board said that it was considering its options, while the company’s London shares leapt on speculation that the deal will be abandoned. The talks’ collapse show that the Treasury, AIG’s main shareholder, won’t accept a lower price for AIA, the WSJ adds.

Le SMP, le bailout Français

Did Europe’s central bank favour French banks in its grand bond-buying programme for troubled sovereign debt? That’s the allegation made in the German press, FT Alphaville observes – which has been hotly denied. At the very least, however, banks’ exposure to Greece and other debt-laden governments remains unclear. Read more

BP a takeover target?

The news on the Gulf of Mexico’s seemingly unstoppable oil leak just gets worse — as is BP’s stock, FT Alphavlle notes. In fact, the energy giant is beginning to look cheap, and therefore vulnerable. What could stop Exxon or Shell from pouncing? Read more

The Spanish waterfall

You may have missed a curious downgrade of CDOs backed by the Spanish government, amid Fitch’s sovereign ratings cut on Friday, FT Alphaville says. What is going on? It’s the waterfall effect a sovereign crisis can have on asset classes — and if Spain loses its last AAA rating (from Moody’s), collateral will have to be posted on these CDOs.  Read more

Top-killed

How much did the weekend’s Deepwater top-kill failure hurt BP? This much:

 Read more