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Thursday, April 30, 2009
Tsingtao Breweries Q1 Result on reduced tax rate
Tsingtao Breweries <0168.HK>, China's best known beer brand, rose 7.6 percent after reporting 54 percent growth in its first quarter earnings, far exceeding expectations, on a reduced tax rate. The effective tax rate for the quarter came down to 27 percent from 47 percent in the same period of 2008.
China Mobile buying 12 pct stake in Taiwan's Far Eastone
China Mobile <0941.HK> will be in focus after it said it was
buying 12 percent of Taiwan's Far EasTone <4904.TW> for $529
million, in one of the biggest investments by a Chinese company
in Taiwan as ties warm between the former rivals.
China Mobile, the world's largest mobile carrier by users,
will pay about T$17.8 billion or T$40.00 per share for the stake
in one of Taiwan's top three telecoms carriers, it said in a
statement on Wednesday. The price would mark a 14 percent premium
to Far EasTone's closing price of T$35.20.
The benchmark Hang Seng Index <.HSI> finished 2.8 percent
firmer at 14,956.95 on Wednesday, clawing back some some lost
ground after a two-day slump.
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TABLE-Tsingtao Brewery Q1 net profit rises 53.8 pct 30 Apr 2009 09:45
April 30 (Reuters) - Three months ended March 31, 2009
(in million yuan unless stated)
Shr (yuan) 0.1524 vs 0.0991
Net 199.42 vs 129.64
Company name Tsingtao Brewery Co. Ltd.
NOTE - Tsingtao Brewery <0168.HK> <600600.SS> produces and
sells beer.
All financial information set out in the first quarterly
report was unaudited and prepared in accordance with PRC
Accounting Standards.
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Yangzijiang Q1 Result
-- YANGZIJIANG SHIPBUILDING HOLDINGS <YAZG.SI>
- Chinese shipbuilder Yangzijiang Shipbuilding Holding
announced its first quarter profit rose 30 percent to 483.3
million yuan ($70.81 million). [ID:nSN4T50982]
Credit Suisse upgraded Yangzijiang Shipbuilding to
"outperform" from "neutral" and raised its target price to S$0.60
from S$0.40, citing the restructuring of the shipping industry in
China.
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SGX fuel oil futures plan attractive to sellers 29 Apr 2009 20:30
By Yaw Yan Chong
SINGAPORE, April 29 (Reuters) - Singapore Exchange's proposed fuel oil futures could see warmer reception from sellers, who see it is another way to offload cargoes, than buyers averse to paying security deposits and to its loading limits, traders said on Wednesday.
SGX <SGXL.SI>, which is developing a fuel oil contract similar to that operated by SIMEX in the early 1990s, held a session on Tuesday with majors Shell, BP and Singapore Petroleum Co, as well as traders Vitol, Glencore, Chemoil, Hin Leong, PetroChina, shipper Maersk and bunker supplier Equatorial Marine.
From a sellers' perspective, the contract for the 380-centistoke fuel oil grade offers another outlet with lower counterparty risk, as they are trading with the exchange.
"At the beginning, it would have no pricing impact and cargoes are traded on the exchange either to cover actual demand-supply, or for traders to punt on the market," a Singapore-based Western trader said.
Natural sellers are trading houses and oil majors, who sell fuel oil as ex-wharf marine fuels to barge operators and shipowners.
"The natural sellers either produce the oil or import it. They only buy in Singapore if they are short or have pricing interests," another trader said.
But some traders said the futures contract would not be a benchmark at the outset and that limits its attraction.
"For pricing interests, the Platts window is still very entrenched," the trader added.
"Until the SGX contract becomes a benchmark, it will be hard to do any swaps settlement off the contract. They will have to drum up liquidity before that can happen."
To succeed, the contract needs liquidity as it progresses, said another trader. "This is at least the seventh regional attempt at a futures contract for fuel oil."
BUYERS AVERSE
The SGX contract is based on 100 tonnes per lot and will be traded on a free-on-board (FOB) basis, which means the cargoes can be loaded from any shore-based terminal in the city-state.
SGX has proposed two daily trading sessions -- 9:00 am-7:00 pm and 8:00 pm-10:55 pm, with the 7:00 pm closing price as the day's settlement. The monthly settlement is the average settlement price for the last five days of the month.
In an exchange environment, participants have to put up security deposits for their trades and top up when margin calls are made, if the market moves against them.
At the end of the contract month, the exchange will match buyers and sellers by volume, before loadings are fixed. For unmatched volumes, the parties would settle their trades against the monthly closing price for the contract.
As such, bunker suppliers and shipowners -- the buyers -- who typically receive 30-day credit, would have to invest upfront capital. They also face the risk of not receiving the goods.
"There's less incentive for a bunker supplier to participate. Also, there's no guarantee of receiving the cargoes, so it's a punt and most of us can't afford it," a bunker supplier said.
Most bunker suppliers in Singapore, the world's largest bunkering port by volume, are mid-sized firms with tight cashflows.
The New York Mercantile Exchange (NYMEX) started a similar futures contract in Singapore about three years ago, but it suffered from poor liquidity and has not seen a single trade.
"The contract is presently inactive. But I still think it's a good contract and we will be looking to revive it sometime in the future," said George Ng, the CME Group's Asia Head of Energy and Metals Products.
SGX also operates a clearing house, AsiaClear, for the Asian oil swaps market for several products including fuel oil. Its volumes are lower than that of NYMEX's Clearport and the International Clearing Exchange's ICE Clear.
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UOB says no need for rights issue, cautious on lending 29 Apr 2009 17:37
* Chairman says comfortable with Tier-1
* Dividend cut aimed at preserving capital
* Financial crisis may drag on for 1-2 years
* No plans to retire, says Wee, 79
(Adds chairman comment, share price)
SINGAPORE, April 29 (Reuters) - United Overseas Bank <UOBH.SI>, Singapore's second-biggest lender, is comfortable with its capital level and has no plans for a rights issue, its chairman said on Wednesday.
The comments are likely to put to rest market speculation that UOB, which has the lowest Tier-1 capital adequacy ratio of the city-state's three local banks, may have to raise more capital.
"We are comfortable," Chairman Wee Cho Yaw told a shareholders meeting. "I don't think we need any rights issue for the time being."
UOB had a Tier-1 ratio of 10.9 percent at end-2008 compared to DBS Group's <DBSM.SI> 12.2 percent and Oversea-Chinese Banking Corp's <OCBC.SI> 14.9 percent.
Wee, whose family controls Southeast Asia's second-biggest bank, said he was still concerned about the outlook for the global economy, especially the United States.
"I am still pessimistic," he said, adding the financial crisis may last another 1-2 years.
He said UOB was careful and selective on lending and recently cut its dividend to preserve capital.
UOB's loans grew at 7.7 percent in the fourth quarter, slowing from 18 percent growth in the third quarter. The bank reports first-quarter results on May 6.
Wee said UOB does not have toxic assets on its books, but could see a rise in bad loans because of weak economies, with Singapore facing its worst recession. He said the level of non-performing loans would, however, remain manageable. UOB had an NPL ratio of 2 percent.
Wee, 79, whose father founded the bank, said he has no plans to retire. His son Wee Ee Cheong is chief executive,
"In my lifetime, I don't want to see this bank in trouble," Wee said. "I can't retire. Once I retire, I'll die."
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Wednesday, April 29, 2009
Q+A How serious is swine flu? How bad could it get?
WASHINGTON, April 28 (Reuters) - The world has moved closer to the threat of a pandemic of a new kind of flu, with 149 people suspected to have died from it in Mexico and new cases being detected around the globe.
Just how bad is this new flu strain, how far will it go and how long will the outbreak last?
Here are some questions and answers about the outbreak:
HOW MANY PEOPLE HAVE DIED? HOW MANY ARE INFECTED?
All deaths so far have been in Mexico, where 20 of the 149 reported fatalities have been confirmed to be from the H1N1 swine flu virus. There are 1,600 suspected cases in Mexico and 64 confirmed cases in the United States, and a few cases in Canada, New Zealand, Britain, Spain and Israel.
WHY ARE THERE ONLY DEATHS IN MEXICO?
No one is sure. It is important to remember that health officials are now taking a snapshot of the past -- they are not reporting on new infections at this point, just tracking down old infections and they are only finding them where they are looking. The Mexican authorities looked in hospitals, where serious cases will, of course, be found. U.S. health officials found their cases during routine screening of people with flu-like symptoms, most in walk-in clinics, so they have naturally found milder cases.
Influenza experts say they fully expect to find deaths in other places, including the United States and elsewhere, as the search goes on. One problem is that people die of respiratory diseases regularly and the cause is often not determined.
WHY WOULD IT KILL SOME AND NOT OTHERS?
Seasonal influenza kills 250,000 to 500,000 people every year in a normal year and all sorts of factors determine who dies. Elderly people often die but sometimes perfectly healthy adults and children die. Sometimes flu makes people susceptible to bacterial infections, called secondary infections, and if the virus and the bacteria are circulating at the same time in the same place there can be clusters of deaths.
WHAT KIND OF FLU IS IT AND HOW IS IT SPREADING?
The virus is an influenza A virus, carrying the designation H1N1, but it contains DNA from avian, swine and human H1N1 viruses. It appears to have evolved the ability to pass easily from one person to another, unlike most swine H1N1 viruses which only very occasionally infect people and usually only infect one person and then stop there.
Flu viruses are all passed on by sneezing, coughing or when people pick up the virus on their hands. This one likely originated in pigs, but the Mexican government and the World Health Organization have ruled out any risk of infection from eating pork.
HOW SERIOUS IS IT?
The Geneva-based WHO has declared the flu a "public health emergency of international concern" and raised the threat level for a pandemic, a global epidemic of new disease. H1N1 swine flu poses the biggest risk of a large-scale pandemic since avian flu re-emerged in 2003, killing 257 out of 421 infected in 15 countries.
It is not clear yet whether this virus could actually become a pandemic.
HOW IS THIS FLU DIFFERENT FROM ORDINARY FLU?
The swine flu is characterized by common flu symptoms -- sudden fever, muscle aches, sore throat and dry cough -- but may cause more severe vomiting and diarrhea.
New flu strains can spread fast because no one has natural immunity and a vaccine can take months to develop. This strain is confusing because it is an H1N1 -- a type that has been around since the 1918 "Spanish Flu" pandemic that killed at least 40 million people globally.
Usually if a new flu strain is related to one that has been around for years, people have some immunity and they no longer can cause pandemics. But this new strain has taken on genetic elements from animal viruses, and this may be genetically unique enough to pose a pandemic threat.
HOW BAD COULD IT GET?
A 1968 a "Hong Kong" flu pandemic killed about one million people globally. The 1957-58 pandemic killed about 2 million. The 1918 pandemic killed between 40 million and 100 million, according to some estimates. However, the WHO says the world is now better prepared to withstand a flu pandemic. Vaccines and antiviral drugs are available that were not around during previous pandemics.
In 1918, there was a first wave of mild flu in April. It then seemed to disappear during the Northern Hemisphere's summer but came back severely in August. WHO and CDC officials say it is possible this virus could behave in the same way, or completely differently.
ARE THERE ENOUGH DRUGS AND VACCINES?
Most countries have been stockpiling supplies of two antiviral drugs -- Tamiflu, known generically as oseltamivir and made by Roche AG <ROG.VX> and Gilead Sciences Inc <GILD.O>; as well as Relenza, known generically as zanamivir and made by GlaxoSmithKline <GSK.L> and Australia's Biota Inc. <BTA.AX>.
A third company, BioCryst Inc. <BCRX.O> is working to license its experimental flu drug peramivir.
Older flu drugs called amantadine and rimantadine do not work very well any longer against any influenza strain except sometimes in combination with newer drugs.
There is no vaccine yet against this new strain and health officials say the seasonal flu vaccine is unlikely to provide any protection against it. The CDC and WHO are working with companies to start making a new vaccine if it is needed, but the process takes months.
WHAT CAN I DO?
Wash your hands. It is proven to be the best way to protect against infection with a range of germs, including flu. Experts generally agree that face masks, especially the surgical masks now seen on the street of Mexico City, offer very little protection. Flu viruses can float on little particles of spit or mucus, in general no further than three to six feet (1 to 2 metres), but they then settle on surfaces and can be transferred to the mouth, eyes or nose.
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Straits Asia says Thailand's PTT makes offer
SINGAPORE, April 29 (Reuters) - Singapore-listed coal miner Straits Asia <STRL.SI> said on Wednesday that Thailand's PTT International <PTT.BK>, will make a mandatory conditional cash offer for all Straits Asia shares.
The move comes after PTT completed the acquisition of 60 percent of Australia's Straits Resources' <SRL.AX> unit, Straits Bulk & Industrial Pty Ltd, which holds a stake in Straits Asia, as well as coal assets in Brunei and Madagascar, in a deal worth up to $335 million.
Straits Asia said J.P. Morgan will be conducting the mandatory cash offer on behalf of PTT International at a price of S$0.807 per share, valuing the company at around S$882 million.
Trading in Straits Asia's shares were halted on Tuesday pending the completion of the deal and last traded at S$1.09.
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Inefficient PetroChina
April 28, 2009
By ANDREW PEAPLE
Just as the first quarter of 2009 could be a nadir for the Chinese economy, so PetroChina will be hoping a 35% drop in first-quarter profit will prove a low point.
But there's less reason to be confident that China's biggest oil refiner is capable of the recovery some predict for the country as a whole.
For sure, fuel demand in China has shown small signs of recovery recently, though the International Energy Agency still expects it to contract this year. It's hardly surprising PetroChina is suffering along with other oil majors, as lower average oil prices bite: The U.K.'s BP saw first-quarter profit dive 59%.
Like BP, PetroChina is looking to cut costs, with oil prices well off of stratospheric heights hit last year. But lack of cost control during the good times could come to haunt PetroChina during a leaner period for the oil sector.
Citi Investment Research says PetroChina spent $35 producing one barrel equivalent of oil last year, up from $14 in 2005.
Those costs could remain high as PetroChina spends more to squeeze out production from its aging oil fields. That's also proving a drain on cash flow. Capital expenditure this year, which includes upkeep of existing oil fields, is predicted to be around the same as last year, about $34 billion, up 27% from 2007.
It's already putting a strain on PetroChina's balance sheet, with borrowing rising fast: $3.6 billion of medium term notes were issued in the first quarter -- boosting the value of outstanding debt by 19% since the end of December.
PetroChina won't have problems raising funds in a crunch, thanks to its government backing. That doesn't mean investors should offer it their own backing, though.
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Tuesday, April 28, 2009
ICBC Net Edges Up as Stake-Sale Worry Casts Cloud Over Solid Growth Potential
JASON LEOW
SHANGHAI -- Industrial & Commercial Bank of China Ltd., the world's largest lender by market value, reported a 6.2% rise in first-quarter net profit, as higher fee-based income and gains in foreign-exchange holdings helped offset a drop in net interest income.
The fall in net interest income, a key source of profit for China's banks, reflects the challenges the banks face as the domestic economy slows. China's central bank cut the benchmark one-year lending interest rate by 2.16 percentage points in the second half of last year, to help boost the cooling economy.
With recent signs of a recovery in China's economy, analysts expect banks' growth to improve in the coming quarters. "From the perspective of profit growth rate, the first quarter may have been the low point in this cycle for China's banks," said Wang Qian, an analyst at Industrial Securities Co., of Shanghai.
![[ICBC net profit chart]](http://s.wsj.net/public/resources/images/AM-AF787_ICBC_NS_20090427142417.gif)
"Concerns that foreign investors will likely sell part of their stakes in the bank have been hanging over ICBC. On Tuesday, Allianz SE and American Express Co. said they sold half of their stakes in ICBC in a private placement as the lockup period on them had expired. The lockup on the other half of their holdings expires on October 20.
Allianz now owns a 0.97% stake in ICBC and American Express 0.2%. Goldman Sachs Group Inc., another foreign investor, holds 4.93% in ICBC and has pledged a new lockup commitment covering 80% of those shares. It will be free to sell 20% of its stake after Tuesday."
For the first period, ICBC said its net rose to 35.15 billion yuan ($5.15 billion) from 33.11 billion yuan a year earlier. The latest profit was better than the average forecast of 33.70 billion yuan of four analysts surveyed by Dow Jones Newswires.
ICBC's net interest income fell 13% to 57.75 billion yuan, though loans rose 14%, or 636.4 billion yuan, from the end of last year, exceeding its full-year target of 530 billion yuan.
Income on foreign-exchange assets was a big driver of ICBC's rise in profit in the first quarter, said Lee Yuk-kei, an analyst at Core Pacific-Yamaichi International, in Hong Kong. ICBC reported 831 million yuan in net income on foreign-exchange assets in the first quarter, against a 3.36 billion yuan net loss a year earlier.
In addition, ICBC's fee-based income rose 9.7% in the first quarter to 13.55 billion yuan because of a 30% surge in China's stock market in the period.
Analysts say that how ICBC and the nation's other banks perform for the full year will depend in part on whether Beijing intends to keep up the lending momentum. Beijing has encouraged big banks like ICBC to lend funds to jump-start the economy.
New yuan loans surged to 4.58 trillion yuan in the first quarter, equivalent to more than 90% of the central government's minimum target for the full year.Though analysts expect lending growth to slow over the rest of the year, they said China's banks will likely extend seven trillion yuan of new loans this year, up 22% from the end of last year.
—Rose YuWrite to Jason Leow at jason.leow@wsj.com
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ICBC Net Edges Up as Stake-Sale Worry Casts Cloud Over Solid Growth Potential
JASON LEOW
SHANGHAI -- Industrial & Commercial Bank of China Ltd., the world's largest lender by market value, reported a 6.2% rise in first-quarter net profit, as higher fee-based income and gains in foreign-exchange holdings helped offset a drop in net interest income.
The fall in net interest income, a key source of profit for China's banks, reflects the challenges the banks face as the domestic economy slows. China's central bank cut the benchmark one-year lending interest rate by 2.16 percentage points in the second half of last year, to help boost the cooling economy.
With recent signs of a recovery in China's economy, analysts expect banks' growth to improve in the coming quarters. "From the perspective of profit growth rate, the first quarter may have been the low point in this cycle for China's banks," said Wang Qian, an analyst at Industrial Securities Co., of Shanghai.
"Concerns that foreign investors will likely sell part of their stakes in the bank have been hanging over ICBC. On Tuesday, Allianz SE and American Express Co. said they sold half of their stakes in ICBC in a private placement as the lockup period on them had expired. The lockup on the other half of their holdings expires on October 20.
Allianz now owns a 0.97% stake in ICBC and American Express 0.2%. Goldman Sachs Group Inc., another foreign investor, holds 4.93% in ICBC and has pledged a new lockup commitment covering 80% of those shares. It will be free to sell 20% of its stake after Tuesday."
For the first period, ICBC said its net rose to 35.15 billion yuan ($5.15 billion) from 33.11 billion yuan a year earlier. The latest profit was better than the average forecast of 33.70 billion yuan of four analysts surveyed by Dow Jones Newswires.
ICBC's net interest income fell 13% to 57.75 billion yuan, though loans rose 14%, or 636.4 billion yuan, from the end of last year, exceeding its full-year target of 530 billion yuan.
Income on foreign-exchange assets was a big driver of ICBC's rise in profit in the first quarter, said Lee Yuk-kei, an analyst at Core Pacific-Yamaichi International, in Hong Kong. ICBC reported 831 million yuan in net income on foreign-exchange assets in the first quarter, against a 3.36 billion yuan net loss a year earlier.
In addition, ICBC's fee-based income rose 9.7% in the first quarter to 13.55 billion yuan because of a 30% surge in China's stock market in the period.
Analysts say that how ICBC and the nation's other banks perform for the full year will depend in part on whether Beijing intends to keep up the lending momentum. Beijing has encouraged big banks like ICBC to lend funds to jump-start the economy.
New yuan loans surged to 4.58 trillion yuan in the first quarter, equivalent to more than 90% of the central government's minimum target for the full year.Though analysts expect lending growth to slow over the rest of the year, they said China's banks will likely extend seven trillion yuan of new loans this year, up 22% from the end of last year.
—Rose YuWrite to Jason Leow at jason.leow@wsj.com
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ICBC Net Edges Up as Stake-Sale Worry Casts Cloud Over Solid Growth Potential
JASON LEOW
SHANGHAI -- Industrial & Commercial Bank of China Ltd., the world's largest lender by market value, reported a 6.2% rise in first-quarter net profit, as higher fee-based income and gains in foreign-exchange holdings helped offset a drop in net interest income.
The fall in net interest income, a key source of profit for China's banks, reflects the challenges the banks face as the domestic economy slows. China's central bank cut the benchmark one-year lending interest rate by 2.16 percentage points in the second half of last year, to help boost the cooling economy.
With recent signs of a recovery in China's economy, analysts expect banks' growth to improve in the coming quarters. "From the perspective of profit growth rate, the first quarter may have been the low point in this cycle for China's banks," said Wang Qian, an analyst at Industrial Securities Co., of Shanghai.
"Concerns that foreign investors will likely sell part of their stakes in the bank have been hanging over ICBC. On Tuesday, Allianz SE and American Express Co. said they sold half of their stakes in ICBC in a private placement as the lockup period on them had expired. The lockup on the other half of their holdings expires on October 20.
Allianz now owns a 0.97% stake in ICBC and American Express 0.2%. Goldman Sachs Group Inc., another foreign investor, holds 4.93% in ICBC and has pledged a new lockup commitment covering 80% of those shares. It will be free to sell 20% of its stake after Tuesday."
For the first period, ICBC said its net rose to 35.15 billion yuan ($5.15 billion) from 33.11 billion yuan a year earlier. The latest profit was better than the average forecast of 33.70 billion yuan of four analysts surveyed by Dow Jones Newswires.
ICBC's net interest income fell 13% to 57.75 billion yuan, though loans rose 14%, or 636.4 billion yuan, from the end of last year, exceeding its full-year target of 530 billion yuan.
Income on foreign-exchange assets was a big driver of ICBC's rise in profit in the first quarter, said Lee Yuk-kei, an analyst at Core Pacific-Yamaichi International, in Hong Kong. ICBC reported 831 million yuan in net income on foreign-exchange assets in the first quarter, against a 3.36 billion yuan net loss a year earlier.
In addition, ICBC's fee-based income rose 9.7% in the first quarter to 13.55 billion yuan because of a 30% surge in China's stock market in the period.
Analysts say that how ICBC and the nation's other banks perform for the full year will depend in part on whether Beijing intends to keep up the lending momentum. Beijing has encouraged big banks like ICBC to lend funds to jump-start the economy.
New yuan loans surged to 4.58 trillion yuan in the first quarter, equivalent to more than 90% of the central government's minimum target for the full year.Though analysts expect lending growth to slow over the rest of the year, they said China's banks will likely extend seven trillion yuan of new loans this year, up 22% from the end of last year.
—Rose YuWrite to Jason Leow at jason.leow@wsj.com
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ICBC Net Edges Up as Stake-Sale Worry Casts Cloud Over Solid Growth Potential
JASON LEOW
SHANGHAI -- Industrial & Commercial Bank of China Ltd., the world's largest lender by market value, reported a 6.2% rise in first-quarter net profit, as higher fee-based income and gains in foreign-exchange holdings helped offset a drop in net interest income.
The fall in net interest income, a key source of profit for China's banks, reflects the challenges the banks face as the domestic economy slows. China's central bank cut the benchmark one-year lending interest rate by 2.16 percentage points in the second half of last year, to help boost the cooling economy.
With recent signs of a recovery in China's economy, analysts expect banks' growth to improve in the coming quarters. "From the perspective of profit growth rate, the first quarter may have been the low point in this cycle for China's banks," said Wang Qian, an analyst at Industrial Securities Co., of Shanghai.
"Concerns that foreign investors will likely sell part of their stakes in the bank have been hanging over ICBC. On Tuesday, Allianz SE and American Express Co. said they sold half of their stakes in ICBC in a private placement as the lockup period on them had expired. The lockup on the other half of their holdings expires on October 20.
Allianz now owns a 0.97% stake in ICBC and American Express 0.2%. Goldman Sachs Group Inc., another foreign investor, holds 4.93% in ICBC and has pledged a new lockup commitment covering 80% of those shares. It will be free to sell 20% of its stake after Tuesday."
For the first period, ICBC said its net rose to 35.15 billion yuan ($5.15 billion) from 33.11 billion yuan a year earlier. The latest profit was better than the average forecast of 33.70 billion yuan of four analysts surveyed by Dow Jones Newswires.
ICBC's net interest income fell 13% to 57.75 billion yuan, though loans rose 14%, or 636.4 billion yuan, from the end of last year, exceeding its full-year target of 530 billion yuan.
Income on foreign-exchange assets was a big driver of ICBC's rise in profit in the first quarter, said Lee Yuk-kei, an analyst at Core Pacific-Yamaichi International, in Hong Kong. ICBC reported 831 million yuan in net income on foreign-exchange assets in the first quarter, against a 3.36 billion yuan net loss a year earlier.
In addition, ICBC's fee-based income rose 9.7% in the first quarter to 13.55 billion yuan because of a 30% surge in China's stock market in the period.
Analysts say that how ICBC and the nation's other banks perform for the full year will depend in part on whether Beijing intends to keep up the lending momentum. Beijing has encouraged big banks like ICBC to lend funds to jump-start the economy.
New yuan loans surged to 4.58 trillion yuan in the first quarter, equivalent to more than 90% of the central government's minimum target for the full year.Though analysts expect lending growth to slow over the rest of the year, they said China's banks will likely extend seven trillion yuan of new loans this year, up 22% from the end of last year.
—Rose YuWrite to Jason Leow at jason.leow@wsj.com
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American Express, Allianz sell ICBC H-shares at discount
HONG KONG, April 28 (Reuters) - Allianz <ALVG.DE> and American Express <AXP.N> sold shares in Industrial and Commercial Bank of China <1398.HK><601398.SS> at 4 percent discount to the Monday closing price of the Chinese lender.
Allianz and American Express had sold the ICBC H-shares at HK$3.86 per share, compared with the closing price of HK$4.02 on Monday, a source with direct knowledge of the deal said on Tuesday.
Allianz sold 3.22 billion ICBC H-shares and American Express sold 638.06 million shares to a select group of investors through private sales, ICBC said in statements.
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American Express sells half its ICBC shares
April 27 (Reuters) - American Express Co <AXP.N>: * American Express and ICBC announce the completion of ICBC shares transfer
through a private sale * Says it has sold its 638,061,116 shares of Industrial And Commercial
Bank of China [icbaf.ul] to a select group of investors through a private
sale * Says it continues to hold 638,061,117 h shares in ICBC
((New York Equities Desk; tel: +1 646 223 6000))
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Petrochina Q1 net profit down 36 pct
April 28 (Reuters) - Three months ended March 31, 2009
(in million yuan unless stated)
Shr (yuan) 0.10 vs 0.16
Net 18,774 vs 29,426
Operating income 181,582 vs 259,425
Company name PetroChina Co. Ltd.
NOTE - PetroChina <0857.HK><PTR.N><601857.SS> is China's
largest oil producer.
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Ping An slides 5.5 pct after disappointing Q1 earnings
HONG KONG, April 28 (Reuters) - Ping An Insurance <2318.HK> dropped 5.53 percent after reporting a 71 percent decline in first-quarter earnings, disappointing investors who expected to see a recovery this year.
By 0232 GMT, the stock was at HK$46.95.
"While we believe Ping An's profit should improve in the second quarter of 2009, the market will start to question the quality of premium growth and underlying profitability," said analysts with Merrill Lynch in a report.
"Confidence needs to be rebuilt; and therefore, sentiment should remain poor until further clarity is given at first-half results," they said while downgrading the stock to an underperform rating.
Merrill Lynch also cut its target price on the stock to HK$45 from HK$54.
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UBS raises DBS price target to $11.30
SINGAPORE, April 27 (Reuters) - Swiss bank UBS on Monday reiterated its "buy" recommendation on Singapore's DBS <DBSM.SI> and increased the target price to S$11.30 from S$10.30.
"In a recession, (lending) margins tend to shrink. However, we believe this time they will remain resilient as DBS is able to exert its pricing power to widen the spread," UBS said in a report.
The Swiss bank also it believed the Singapore economy has bottomed in the first quarter and noted that bank shares tended to rally once the trough was reached.
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ICBC
Industrial and Commercial Bank of China <1398.HK><601398.SS>
on Tuesday said Allianz <ALVG.DE> and American Express <AXP.N>
had sold shares in the Chinese lender.
The stock fell 5.9 percent on Monday in anticipation of
strategic investor exits when the lock-up on a portion of its
shares expires on Tuesday.
"Some of the overhang from the share sale may be removed but
the stock may not find any respite today after the bank
disappointed with its Q1 earnings, particularly the new interest
income was lower than expected," said Conita Hung, head of equity
markets with Delta Asia Securities.
ICBC <1398.HK>, the world's biggest bank by market value,
posted a 6.2 percent increase in first-quarter profit on Monday
due to loan growth and higher fees, but investors were
disappointed with the 12.9 percent drop in its net interest
income.
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Allianz, American Express unload ICBC H-shares
HONG KONG, April 28 (Reuters) - Industrial and Commercial Bank of China <1398.HK><601398.SS>, the world's biggest bank by market value, said on Tuesday Allianz <ALVG.DE> and American Express <AXP.N> had sold shares in the Chinese lender.
Allianz sold 3.22 billion ICBC H-shares and American Express sold 638.06 million through private sales, ICBC said in statements.
Allianz holds 3.87 percent of ICBC's H-shares after its share sale and American Express continues to hold 638.06 million, the bank added.
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Monday, April 27, 2009
Capitaland
-- CAPITALAND LTD <CATL.SI>
- CapitaLand, Southeast Asia's largest developer, said on
Friday it had acquired a 30 percent stake in Guangzhou Slamet
Property Co, a company incorporated in China, for a cash
consideration of 64.3 million yuan (approximately S$14.2
million). [ID:nSN4O50971]
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UBS reiterate "buy" recommendation on DBS
-- DBS GROUP HOLDINGS LTD <DBSM.SI>
- UBS reiterated its "buy" recommendation on Singapore's DBS
and increased the target price to S$11.30 from S$10.30, citing
reasons such as the banking group's ability to gain market share
with increased funds gained from a recent S$4 billion ($2.69
billion) rights issue. [ID:nSGC001105]
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Friday, April 24, 2009
China Life Insurance 1Q Result
April 24 (Reuters) - Three months ended March 31, 2009
(in million yuan unless stated)
Shr (yuan) 0.19 vs 0.12
Net 5,387 vs 3,474
Operating income 116,325 vs 111,073
Company name China Life Insurance Co. Ltd.
NOTE - China Life <2628.HK> <601628.SS>, is a life insurance
company in China.
The figures are prepared under China Accounting Standards for
Business Enterprises.
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China Life Insurance 1Q Result
* China Life Insurance Co Ltd <2628.HK><601628.SS>, the
world's biggest life insurer by market value, posted a 55 percent
gain in first-quarter net profit as a rebound in the domestic
stock market boosted investment returns. [ID:nHKG294849]
January-March profit rose to 5.39 billion yuan ($789.6
million) from 3.47 billion yuan, the Beijing-based insurer said
in a statement late on Thursday.
Last year, China Life and smaller rival China Ping An
Insurance (Group) Co <2318.HK><601318.SS> suffered from a
collapse in investment returns as the stock market tumbled 65
percent.
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GFMS Platinum and Palladium Survey 2009
LONDON, April 23 (Reuters) - Metals consultancy GFMS released its Platinum and Palladium Survey 2009 in London on Thursday, providing an outlook for the two metals for 2009 and historical statistics from last year.
Below is a breakdown of the company's findings on supply and demand for platinum in 2008.
PLATINUM
* In 2008, total platinum demand eased 2 percent to 7.794 million ounces, while supply from mines and scrap -- both jewellery and autocatalyst -- was little changed at 8.059 million, giving a gross market surplus of 265,000 ounces.
* The largest element of demand, buying by the automotive industry, fell 8 percent to 3.814 million ounces last year from 4.139 million. Car sales have slipped sharply as a consequence of the global economic slowdown.
* Jewellery demand stood at 1.646 million ounces in 2008, down from 1.872 million a year before, accounting for some 21 percent of global demand, it said. Jewellery buying, especially in China, picked up late in the year as prices fell.
* An area of growth was retail investment, particularly in Japan, which climbed to 452,000 ounces in 2008 from disinvestment of 7,000 ounces the year before.
* On the supply side, mine output declined for the second year running to 6.151 million ounces from 6.583 million, and is now down 12.4 percent from its 2006 level.
* Of the two largest platinum mining countries, South African mine production was down 8 percent to 4.671 million ounces, while Russian output fell 9 percent to 835,000 ounces.
* North American output ticked up, however, to 342,000 ounces from 328,000.
* A significant addition to supply came from a surge in jewellery scrap, which jumped 68 percent to 910,000 ounces from 543,000. Autocatalyst scrap also rose to 998,000 ounces from 921,000.
PALLADIUM
* Palladium supply dropped 5.2 percent in 2008 to 7.759 million ounces, led by falls in output from South Africa, where mine supply was down 11.7 percent, and Russia, where it fell 11.1 percent.
* Demand meanwhile slid a smaller 1.6 percent. Autocatalyst demand fell 6.4 percent, which a 5.6 percent rise in electronics usage and a 1.4 percent uptick in jewellery buying did little to offset.
* Similarly to platinum, retail investment also rose sharply, to 84,000 ounces from 20,000.
* Palladium was also weighed down by Russian stock sales, which rose to 39.8 tonnes in 2008. "Much of these sales were mopped up by the 640,000 ounce gross deficit and a large slice of the remainder was absorbed by ETF investors," GFMS said.
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Rigbuilder Keppel Q1 net up 9 pct, outlook uncertain
* Profit up despite weaker results from property, oil units
* Outlook remains uncertain with trend of no major rig orders
SINGAPORE, April 23 (Reuters) - Singapore's Keppel Corp
<KPLM.SI>, the world's largest offshore oil rig builder, posted a
9 percent rise in first quarter net profit on Thursday, and
reiterated its outlook remains uncertain.
The company said its S$9.5 billion orderbook for offshore and
marine business extends to 2012, but a trend of no major rig
orders since the third quarter of 2008 had continued through the
past quarter, due mainly to the tight credit situation.
"The outlook for the rest of 2009 remains uncertain... While
we hope to see more signs of bottoming out in the economy, it
would be hasty to believe that a firm recovery will come
quickly," the firm said in a statement.
The conglomerate earned S$285 million ($189.6 million) in the
first three months of 2009, up from S$262 million in the year ago
period.
Earlier this year Keppel said that 2009 would be a
challenging year for the firm, which has a market value of $6.3
billion.
Keppel Corp and rival Sembcorp Marine <SCMN.SI> benefited
from the jump in oil exploration in recent years as crude prices
<CLc1> soared to record highs, but oil prices slid from a peak of
near-$150 a barrel in 2008 to less than $50 by the end of the
first quarter, leading to order cancellations for rigs.
The rise in its net profit came despite its 53-percent owned
property firm Keppel Land <KLAN.SI> booking a 38.8 percent drop
in first quarter net profit on Wednesday, and its 45-percent
owned oil firm Singapore Petroleum <SPCS.SI> posting a 43.5
percent slide in first quarter net earlier this week.
The firm said the property sector remains weak across the
region, but it sees opportunities for its infrastructure arm
thrown up by huge government stimulus packages.
Shares in Keppel Corp jumped 15.7 percent in the first
quarter, versus a 3.5 percent drop in the broader Straits Times
Index <.FTSTI>.
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Untitled
SINGAPORE, April 23 (Reuters) - Singapore's Keppel Corp <KPLM.SI>, the world's largest offshore oil rig builder, posted a 9 percent rise in first quarter net profit on Thursday, and reiterated that the company outlook remains uncertain.
The conglomerate earned S$285 million ($189.6 million) in the first three months of 2009, up from S$262 million in the year ago period.
Earlier this year Keppel said that 2009 would be a challenging year for the firm, which has a market value of $6.3 billion.
Keppel Corp and rival Sembcorp Marine <SCMN.SI> benefited from the jump in oil exploration in recent years as crude prices <CLc1> soared to record highs, but oil prices slid from near-$150 a barrel in 2008 to less than $50 by the end of the first quarter.
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Keppel Land to raise $474 mln via rights issue
* Says raising funds to pursue opportunities
* Says has S$627.3 million cash, low debt-to-equity of 0.52
* Traders say rights to hurt KepLand shares, not overall mkt
(Adds details of issue)
SINGAPORE, April 24 (Reuters) - Keppel Land <KLAN.SI>, Singapore's third-largest developer, said on Friday it planned to raise S$712.3 million ($474 million) via a rights offer to take advantage of opportunities in the weakened property market.
"The company believes that the current macroeconomic environment will present attractive opportunities in the real estate sector across Asia," Keppel Land said in a filing to the Singapore stock exchange.
The developer added that it was already in a "strong financial position to weather the current economic slowdown", with cash balances of S$627.3 million and a net debt-to-equity ratio of 0.52 as of March 31.
Traders said Keppel Land's fund-raising may hurt the firm's shares but was unlikely to affect the overall Singapore market given the likely boost from gains in U.S. stocks overnight and South Korea's better-than-expected first-quarter GDP numbers.
Keppel Land plans to offer nine rights shares for every 10 existing shares at S$1.09 a share, a 42 percent discount to its last traded price of S$1.88.
Oil-rig builder Keppel Corp <KPLM.SI>, Keppel Land's majority shareholder with 53 percent, will subscribe to its full entitlement of rights shares as well as underwrite 90 percent of the remaining offer, which is being managed by Merrill Lynch, according to the filing. ($1=1.503 Singapore Dollar)
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Capitaland profit falls 83 pct, says swift turnaruond
* Does not expect quick turnaround in global property market
* Warns of "downside risk to capital values"
(Adds details)
SINGAPORE, April 24 (Reuters) - CapitaLand <CATL.SI>, Southeast Asia's largest developer, said on Friday first quarter net profit fell 83 percent and warned that it may book losses on investment properties under development in the next quarter.
"We do not expect a quick and sharp turnaround in global property markets," CapitaLand CEO Liew Mun Leong said in a statement.
The firm, whose largest shareholder is state investor Temasek [TEM.UL], said that due to revisions in Singapore accounting law, it will have to revalue investment properties under development at the half year with "downside risk to capital values".
The company added, however, that it was in a strong position to weather the global recession and take advantage of investment opportunities that may arise as it had S$5.5 billion in cash and low net debt-to-equity ratio of 0.32.
CapitaLand earned S$42.9 million in the three months ended March, down from S$247.5 million a year earlier, due to weaker home sales in its main markets of Singapore, China and Australia as well as lower earnings from serviced residences.
Shares of CapitaLand fell 9.5 percent in the first quarter compared with a 3.5 percent drop in the benchmark Straits Times Index <.FTSTI>.
Analysts expect CapitaLand to post a 62 percent fall in net profit to about S$475 million this year due to slower home sales and a drop in the value of its investment properties, according to the median forecast of 21 analysts polled by Thomson Reuters.
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Coke, Huiyuan in formal talks after deal blocked
* Coca-Cola holding informal talks with Huiyuan -source
* Talks could include taking minority stakes in assets-WSJ
(Adds further details, background)
By Joseph Chaney and Fion Li
HONG KONG, April 23 (Reuters) - Coca-Cola <KO.N> is holding informal talks with China Huiyuan Juice <1886.HK> to weigh partnership options after China blocked its takeover of the company last month, a source familiar with the situation said.
In March, China rejected Coca-Cola's planned $2.4 billion acquisition of top juice maker Huiyuan, saying the deal would have been bad for competition. The acquisition would have been the largest-ever buyout of a Chinese company by a foreign rival.
"After the deal collapsed there have been discussions in Beijing," the source said, adding that the talks with senior Huiyuan management are at an informal stage.
The source declined to be named due to the sensitive nature of the situation.
Coca-Cola is in negotiations with Huiyuan that could include taking a minority stake in the Chinese juice maker's assets, a Wall Street Journal report citing unidentified sources said on Thursday.
China's Ministry of Commerce rejected the takeover deal under an anti-monopoly law enacted last year, saying in a statement that Coca-Cola's changes to the deal were insufficient to allay its concerns.
At the time of the decision, Gary Bradshaw, a portfolio manager at Dallas-based Hodges Capital Management, called the rejection "a minor setback" for Coca-Cola rather than "a major slap in the face".
"They'll probably regroup and try to go at it from a different angle," Bradshaw said.
A Huiyuan spokeswoman in Beijing declined to comment.
"It is our policy not to comment on speculation," Kenth Kaerhoeg, a Coca-Cola spokesman in Hong Kong said.
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Thursday, April 23, 2009
Analysis- Investors sense rhodium gains as auto demamd pick up
* Investors catch a ride on rising rhodium <RHOD-LON>
* Chinese drive auto industry demand
* Dealers see price rising to $2,000-2,500/oz
By Veronica Brown and Jan Harvey
LONDON, April 22 (Reuters) - Investors are sniffing out new gains for auto-catalyst material rhodium, sensing the metal could gather momentum as end-users build stocks in what might be a signal of moderation in the economic crisis.
Platinum Group Metals, used heavily in the manufacture of auto catalysts, sank with global economic growth. As a result rhodium fell more than 90 percent from a record high above $10,000 per ounce last year to its 2009 low around $1,000.
Prices hovered at the lows as the broader economic crisis tore through the auto sector, but analysts say a brighter demand outlook in China and initiatives -- including German and newly-approved UK scrapping schemes to encourage new car purchases -- is enticing end-users to replenish stocks.
The demand outlook has taken rhodium <RHOD-LON> up almost 40 percent since early last week to $1,625 an ounce. Last week marked the metal's biggest one-week percentage gain since August 2008.
"The PGMs at the moment are very cheap, platinum, palladium and rhodium. There is definitely buying interest out there, especially from the industrials," said Rory McVeigh, senior PGMs trader at Commerzbank.
Analysts and industry insiders say further gains towards $2,000 an ounce and even $2,500 are now a distinct possibility, even though that still leaves prices a substantial distance away from the record high above $10,000 an ounce they hit in June 2008.
"Rhodium is a nasty little metal. It's a dealer market, it's ripe for squeezes and manipulation," an industry source said.
RESILIENT DEMAND
About four-fifths of rhodium is consumed by the auto industry. Global car demand has been boosted by a spate of schemes in which governments offer incentives to car owners to scrap old vehicles in favour of new models.
A 40 percent rise in German car sales in March was attributed to the country's "cash-for-clunkers" scheme and analysts also cite steady demand for replacement catalytic converters. Britain approved a similar plan on Wednesday. [ID:nDARLING]
The impact of such schemes will also be seen as first-quarter sales are published. [nL0232959]
China, a major consumer, has been particularly active traders say, adding that the Chinese government and companies have been taking advantage of cheap prices.
"Not only is autocatalyst the biggest application -- it single-handedly appears to consume more than global mine production with the gap filled largely by recycling from scrapped autocatalysts," said Peter Ryan, senior consultant at metals consultancy GFMS.
"This is indicative of the tension in this market, I would suggest," he added.
Typically in a small and unregulated market like rhodium sellers will hold back from agreeing deals after a spate of accelerated buying, confident they will get higher prices.
However, signs of recovery in the car market are far from definitive, and a dearth of demand is likely to prevent further significant rises in the rhodium price, some dealers said.
Rhodium consumption by the car industry, net of recycling, fell nearly 9 percent to 645,000 ounces in 2008 from 707,000 ounces the year before, according to figures produced by metals consultancy Johnson Matthey.
"We shouldn't forget that there is still a lot of rhodium sitting somewhere which was not used in the last weeks and months," said Andreas Daniel, head trader at German-based Heraeus Metals.
"Those with long positions will take advantage of higher prices and sell into the rally at some stage. Funds probably did not have their best year last year so if they have an opportunity to make a bit of money, I'm sure they will take it."
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Rhodium supply and demand factors
LONDON, April 22 (Reuters) - Autocatalyst material rhodium <RHOD-LON> has risen 30 percent in the last week as dealers take advantage of low prices to buy the metal amid hopes the downturn in the automotive industry may be bottoming out.
Below are projections for rhodium supply and demand for the full year 2008, as produced by metals consultancy Johnson Matthey.
* Rhodium is a hard, silvery-white metal mined mainly in South Africa as a by-product of platinum production.
* Four out of five ounces of the metal are used by the car industry in catalytic converters.
* The automotive sector accounted for 645,000 ounces of rhodium demand last year, net of 184,000 ounces of recycled supply.
* The chemical sector bought a further 72,000 ounces of rhodium, while offtake from the glass industry was 57,000 ounces.
* South Africa, the world's largest rhodium miner, produced 620,000 ounces in 2008, equivalent to some 82 percent of global supply.
* Other major suppliers include Russia, which produced 90,000 ounces last year, and North America, with output of 20,000 ounces.
* Last year the rhodium market was in deficit by 62,000 ounces, against a deficit of 34,000 ounces in 2007.
* Rhodium prices tumbled more than 90 percent from their all-time high above $10,000 an ounce reached in June last year as the global economic downturn hurt the car market.
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Tuesday, April 21, 2009
Autoshow - China BYD in talks to supply US, Europe firms
SINGAPORE, April 20 (Reuters) - Moody's Investors Service on Monday cut its ratings outlook on Singapore's three banking groups to "negative" from "stable", saying the global recession would hurt earnings and asset quality.
DBS Group <DBSM.SI>, United Overseas Bank <UOBH.SI> and Oversea-Chinese Banking Corp <OCBC.SI> are currently rated "Aa1" for both long-term debt and deposits, equivalent to the AA-plus rating assigned by rivals Standard & Poor's and Fitch Ratings.
"The negative outlooks of DBS, OCBC and UOB reflect the fact that the deepening global economic downturn could have a protracted impact on their asset quality and earnings," Moody's Vice President and Senior Analyst Christine Kuo said in a statement.
But Moody's also said the three Singapore lenders had strong franchises and healthy credit profiles, and benefited from a "very high level of support" from the Singapore government.
"Consequently, even in a severe downside scenario, we would expect the banks' financial strength ratings to remain above average and their debt and deposit ratings to be solidly positioned within the Aa-rating band," Kuo said.
Singapore last week reported its economy contracted a record 11.5 percent from a year earlier in the first quarter and said gross domestic product could shrink as much as 9 percent for the whole of 2009.
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Moody's cuts rating outlook on singapore banks
SINGAPORE, April 20 (Reuters) - Moody's Investors Service on Monday cut its ratings outlook on Singapore's three banking groups to "negative" from "stable", saying the global recession would hurt earnings and asset quality.
DBS Group <DBSM.SI>, United Overseas Bank <UOBH.SI> and Oversea-Chinese Banking Corp <OCBC.SI> are currently rated "Aa1" for both long-term debt and deposits, equivalent to the AA-plus rating assigned by rivals Standard & Poor's and Fitch Ratings.
"The negative outlooks of DBS, OCBC and UOB reflect the fact that the deepening global economic downturn could have a protracted impact on their asset quality and earnings," Moody's Vice President and Senior Analyst Christine Kuo said in a statement.
But Moody's also said the three Singapore lenders had strong franchises and healthy credit profiles, and benefited from a "very high level of support" from the Singapore government.
"Consequently, even in a severe downside scenario, we would expect the banks' financial strength ratings to remain above average and their debt and deposit ratings to be solidly positioned within the Aa-rating band," Kuo said.
Singapore last week reported its economy contracted a record 11.5 percent from a year earlier in the first quarter and said gross domestic product could shrink as much as 9 percent for the whole of 2009.
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Bank Of Communications 3328.HK
-- HSBC <0005.HK> is looking to increase its stake in Bank of Communications (BoCom)<3328.HK> by 0.75 percent to a total of 19.9 percent, BoCom Chairman Hu Huaibang said.
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Monday, April 20, 2009
Flashbacks of the 1970s for Stock-Market Vet
John Spooner remembers that during the depths of the 1970s bear market, a joke made the rounds.
Q: "What do you call a stockbroker?"
A: "Waiter!"
That joke, says the Smith Barney veteran, is making the rounds again. The only difference, he notes, is that today brokers are known as financial advisers.
The credit crisis and the depth of the stock-market decline, even after recent gains, have had many investors looking to the Great Depression for parallels. But for some, today's environment brings back memories of their early years on Wall Street during the 1970s when stock investors bailed out of the market and, for the most part, didn't come back for a decade.
"The summer of 1974 was so bad that we used to go out to the bars at lunch and not go back to the office," says Jeffrey Saut, who got his start on a trading desk in 1971 and today is chief market strategist at Raymond James Financial. "It felt like stocks were never going to go up."
Photographs provided by the subjects
THAT '70S BEAR: Market veterans recall a lost decade for stocks and see similarities. From left: John Spooner, Lloyd Glazer, Charles Johnson
Today, many market pros, including Mr. Saut, are thinking the worst of the stock-market declines are likely over. But few harbor hopes of a sustained bull market and many think stocks could go mostly sideways for at least the rest of the year.
Meanwhile, the math required for investors to recoup their losses is daunting: It will take a 74% rise in the Dow to reach its peak hit in October 2007. More dispiriting for many is that the Dow is down 22% from where it was a decade ago.
Much like the current market, investors entered the 1970s still heady from the go-go years of the mid-1960s, even after a bear market that lasted from the end of 1968 through 1970.
The Dow rallied to hit an all-time high of 1051.70 in January 1973 but from there it was all downhill as the oil crisis and Watergate sent stocks into a 45% tailspin. Despite periodic rallies in the years to come, the Dow wouldn't recover to hit a new high until November 1982.
In the 1970s, Franklin Templeton Investments was a small mutual-fund firm, and Charles Johnson was president as well as a portfolio manager. No new money was going into mutual funds, says Mr. Johnson, who is now the firm's chairman. "That meant in order to buy something you had to sell something else," he says.
But that wasn't nearly the end of the frustration. "You bought value stocks or something you thought was a fallen angel and they would just continue to go down," the 76-year-old Mr. Johnson says. "It was dismal."
![[the way we were]](http://s.wsj.net/public/resources/images/MI-AW239_70s_NS_20090417224902.gif)
Much like today, investors were dispirited, questioning whether it was really worth the risk to own stocks. "There was almost no interest in being in the stock market," says Smith Barney's Mr. Spooner, who started in the business around 1962. It felt like just about any stocks bought in 1972-73 "turned to dust" he says.
"It was brutal when you made calls," to clients, says Lloyd Glazer, managing partner at Mayflower Advisors. Mr. Glazer got his start in 1968 in the Boston office of a New York based brokerage Walston & Co. and by the mid-1970s was a stockbroker for Bache & Co. before moving to Bear Stearns Cos. "If somebody would even take your call you'd be delighted."
He sees similarities today in how sentiment changed coming out of the 1960s bull market. "It went from complacency to fear to panic," he says. "By 1973 they were saying 'just get me the hell out of the market.' "
Investors changed their behavior. When they did put money into stocks, they were much quicker to pull it back out, trying to time the market's swings. "That was a period when a lot of advisers and individuals started to actively trade mutual funds," Franklin's Mr. Johnson says.
The combination of the poor business climate and demoralizing markets meant significant job losses or attrition. Many brokerage firms were forced to merge or close down.
Mr. Glazer, now 69 years old, recalls that his brokerage training class 1968 started with upward of 80 people and by 1974, fewer than 10 were still working on Wall Street. "To my knowledge, in 1980 I was only one of two still in the market."
Mr. Spooner, now 71, recalls the offices being "extremely quiet and you were just trying to scrape together a living in the business," he says. "You had to reinvent yourself."
Mr. Spooner supplemented his income as a broker by writing four books over the decade -- he had a top seller before things got ugly, publishing "Confessions of a Stock Broker" in 1971 under the pseudonym "Brutus."
Raymond James's Mr. Saut agrees that surviving meant either reinventing or differentiating yourself. He recalls a broker he worked with who had built his practice around putting clients in initial public offerings during the 1960s. When the new-issuance market collapsed, that broker couldn't adapt and eventually quit the business.
Mr. Saut made it by focusing on a strategy of putting clients in dividend-producing stocks and selling call options against them to provide additional income for the clients.
But he took it a step further. Rather than having the income from the call options go straight to the brokerage account, Mr. Saut had the money sent directly to his clients by check. "I wanted them to see the money in their own hands," he says.
Amid the ashes, the survivors of the decade say that eventually time rewarded those who persevered. Says Mr. Johnson: "If you had invested in 1975 and held until 1985, you had some very fine returns."
Write to Tom Lauricella at tom.lauricella@wsj.com
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Friday, April 17, 2009
Factbox - Age profiles, distribution of Malaysia's oil palms
KUALA LUMPUR, April 17 (Reuters) - Following are the age
profiles of oil palm trees and percentage of total land they
cover as well as distribution in Malaysia, the second-largest
producer of palm oil in the world.
Total palm oil hectarage in the Southeast Asian nation stood
at 4.5 million hectares at end-2008, rising 4.5 percent from
2007, estimates from the Malaysian Palm Oil Board (MPOB) showed.
MPOB data showed major palm oil producing Sabah and Sarawak
states in Borneo island account for 46.5 percent of the total
hectarage in 2008 while mainland Malaysia made up the rest.
The age-profile data is taken from a rough survey on palm oil
traders, government officials and plantation company executives
in Malaysia.
Age of oil palms Percentage of total land under
oil palms (4.5 million hecares)
1-3 years 10.5 pct
4-8 years 27.0 pct
9-13 years 25.0 pct
14-18 years 16.0 pct
19-25 years 17.0 pct
25 years and above 5.0 pct
================================================================
Year Mainland % Sabah % Sarawak % Total
Malaysia share share share
(all in hectares)
================================================================
2008 2,410,000 53.6 1,345,000 29.9 745,000 16.6 4,500,000
2007 2,362,057 54.9 1,278,244 29.7 664,612 15.4 4,304,913
2006 2,334,247 56.0 1,239,497 29.8 591,471 14.2 4,165,215
2005 2,298,608 56.7 1,209,368 29.9 543,398 13.4 4,051,374
2004 2,201,606 56.8 1,165,412 30.1 508,309 13.1 3,875,327
2000 2,045,500 60.6 1,000,777 29.6 330,387 9.8 3,376,664
1995 1,903,171 74.9 518,133 20.4 118,783 4.7 2,540,087
1990 1,698,498 83.7 276,171 13.6 54,795 2.7 2,029,464
(Sources: Malaysian Palm Oil Board, traders, plantation
officials)
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Mengniu Year End 2008 Result
April 16 (Reuters) - Year ended December 31, 2008
(in million yuan unless stated)
Shr (yuan) 0.639 loss vs 0.664 gain
Final Div (yuan) nil vs 0.1315
Net 948.6 loss vs 935.79 profit
Turnover 23,864.98 vs 21,318.06
Company name China Mengniu Dairy Co. Ltd.
NOTE - China Mengniu Dairy <2319.HK> is a leading maker of
dairy products.
The calculation of share loss is based on the weighted
average of 1,485.4 million shares in issue during the year
versus 1,408.91 million shares in issue during the last year.
Total dividend for the year is nil vs 0.1315 yuan.
(Reporting by Jimmy Tsim; Editing by Ken Wills)
((jimmy.tsim@thomsonreuters.com; +852 2843 6570; Reuters
Messaging: jimmy.tsim.reuters.com@reuters.net))
Keywords: MENGNIU DAIRY RESULTS/TABLE
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singapore's NOL says expects $240 mln loss in Q1
April 17, 2009
* Second straight quarterly loss expected
* Warns 2009 loss to be worse than analysts expectations
* Analysts expect recovery in container business H2
(Adds analyst quote, background)
SINGAPORE, April 17 (Reuters) - Singapore's NOL <NEPS.SI>, the world's seventh biggest container shipping firm, expects to report a net loss of around $240 million in the first quarter, its second straight quarterly loss, as it battles an economic slowdown.
The company said the worsening of business conditions and a traditionally slower period for container shipping will result in the estimated loss, which is more than the $149 million loss it had suffered in the fourth-quarter.
Neptune Orient Lines (NOL) said in a statement late on Thursday that it expects its full year loss to be significantly worse than financial analysts' current estimates.
The first quarter's figure is comparable to the loss analysts had forecast for NOL for the whole of 2009. They expected a net loss of $255 million for this year, according to a mean forecast by 12 analysts polled by Thomson Reuters.
Analysts expect NOL's losses will narrow from mid-2009 as global trade picks up and volumes start to recover from the first quarter's dismal numbers.
"We have suggested that the consensus estimates were subject to a downside risk, and do not think the market should be terribly surprised by the profit warning," Goldman Sachs analysts Tom Kim and Chun-pong Wu said in a note to clients on Friday.
The company's key container business has been hit hard by a global slowdown in trade. NOL carried 21 percent fewer containers in the four weeks to March 6 versus a year ago.
Ron Widdows, chief executive of NOL, told the Financial Times earlier this month that container shipping faces a long recession because container lines have failed to cancel enough of the excess ships ordered during the sector's boom.
NOL suffered a net loss of $149 million in the fourth quarter, from a net profit of $196 million a year ago. It had earlier warned it expects to report a loss in 2009.
In November the firm laid off about 1,000 staff and shifted its headquarters to Phoenix, Arizona from Oakland, California to cut costs. [ID:nSIN50422].
The move followed the decision of APL, its container shipping unit, to cut capacity to Asia-Europe trade by about 25 percent and in transpacific trade by 20 percent, measures that could save $200 million in 2009.
The company said in its statement on Thursday that it the expected losses will come despite "increased cost savings and mitigation efforts undertaken by NOL." (Reporting by Saeed Azhar; Editing by Dhara Ranasinghe)
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Mengniu Financial Result
-- China Mengniu Diary <2319.HK> dipped into the red for the first time since it was listed in 2004. It reported a net loss of 949 million yuan ($138.9 million) for 2008. The company was hurt by a tainted milk scandal but it said sales had returned to 80 percent of the pre-scandal level.
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Thursday, April 16, 2009
Bank of China, Construction Bank tighten loan rules
* Two of China's largest banks tighten loan rules
* China's regulator to soon issue lending guidelines - paper
* Authorities worry funds may be flowing into stock market
(Recasts and adds details)
By Samuel Shen and Jacqueline Wong SHANGHAI, April 16 (Reuters) - Bank of China and China Construction Bank, two of the country's biggest lenders, are tightening loan rules and increasing scrutiny on the use of borrowings, as explosive growth in lending fuels risk concerns.
Bank of China <3988.HK><601988.SS> has issued guidelines to its branches to monitor borrowers and the flow of loan capital as part of efforts to limit risks while continuing to maintain rapid business growth, sources familiar with the situation said.
Construction Bank <0939.HK><601939.SS> has started to inspect consumer loans, to ensure they are used for their intended purposes and not for speculation on the stock market, two bank officials familiar with the situation said.
The China Banking Regulatory Commission will soon issue stricter lending guidelines to banks to ensure proper use of loans, the official China Securities Journal reported on Thursday.
New rules will call for stricter enforcement of direct payment of loans to the borrower and direct repayment from the borrower, the paper said, citing a source familiar with the situation.
Bank of China could not be immediately reached for comment while Construction Bank declined to comment.
New lending has soared in China, with banks extending a record 1.89 trillion yuan ($276.6 billion) in loans in March, up from already high levels of 1.07 trillion yuan in February and 1.62 trillion yuan, the previous monthly record, in January.
The government has urged banks to lend to support an economy that slowed to 6.1 percent during the first quarter from double-digit annual growth seen not long ago.
While the surge in lending has bolstered hopes for an early recovery in the world's third-largest economy, it has also triggered worries that much of the money may be finding its way into the stock market, and banks' asset quality might suffer in the long term.
"Banks face the contradictory tasks of supporting economic growth and controlling lending risks," said Qiu Zhicheng, analyst at Guosen Securities Co. "Explosive lending benefits banks in the short term, but bad loans may emerge eventually."
"Some companies have already seen operational or financial difficulties while relatively good firms also face increasing short- and long-term uncertainty," sources cited a Bank of China document as saying. "We must strengthen management of new loans, to ensure rapid and healthy development of our business."
Construction Bank has started tracing consumer loans extended since last October to ensure they do not flow into the stock market, or else the loans will be called back, according to an official with direct knowledge of the matter.
The Chinese stock market's benchmark Shanghai Composite Index <.SSEC> has surged nearly 40 percent this year and was the best-performing stock market among the world's large bourses in the first quarter.
Meanwhile, nearly 40 percent of new lending in January was in short-term bill financing, typically used by companies to meet immediate cash needs rather than for long-term investments, although that proportion had fallen to about 20 percent in March.
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Silver Base debut falls 10 pct in poor market
* Weak market drags down shares
* Hang Seng Index drops 3 percent
* Silver Base to benefit from Chinese consumption
(Updates with closing price, adds details)
By Tony Munroe and Parvathy Ullatil
HONG KONG, April 8 (Reuters) - Chinese liquor and cigarette distributor Silver Base Group <0886.HK>, which raised $133 million in a popular Hong Kong IPO, fell 10 percent on its trading debut, failing to beat a tough day in the market.
Robust demand for shares in Silver Base and another recent newcomer from China had fuelled talk among investors, bankers and listing hopefuls that the long-moribund IPO market was finally showing signs of life.,
But a 3 percent drop in Hong Kong's Hang Seng Index <.HSI>, part of a global halt to a run-up in stocks as a potentially rough U.S. earnings season looms, served as a reminder that risk appetite remains fragile and demand for unproven names is skittish.
"Given the atmosphere today, it's hard to trade up the stock," said Jackson Wong, investment manager at Tanrich Securities, who expects Silver Base to benefit from rising domestic consumption in China.
"This is a good brand and retail story, so near-term prospects are pretty good," he said.
Export-reliant China is looking to bolster domestic consumption, and makers and sellers of retail goods are expected to benefit from Beijing's 4 trillion yuan ($586 billion) stimulus package, aimed at keeping economic growth at 8 percent or more.
DOWNSIZED DEAL, DISCOUNTED PRICING
Silver Base, which distributes products made by Chinese liquor maker Wuliangye Yibin <000858.SZ> as well as Dimple Scotch Whisky, had hoped to launch an offering worth as much as $300 million last year, but put those plans on hold when markets collapsed.
On Wednesday, shares in Silver Base closed at HK$3.11 each, never reaching their IPO price of $3.45, which had been at the top of an indicated range.
The IPO price valued Silver Base at 10.45 times the company's pro forma per-share earnings forecast of at least HK$0.33 each for the year just ended in March.
By comparison, Tsingtao Brewery <0168.HK><600600.SS>, China's best-known beer maker, trades at 27.4 times forecast 2008 earnings in Hong Kong.
Silver Base priced its IPO last week shortly after Chinese online gaming firm Changyou.com <CYOU.O> sold its $120 million Nasdaq IPO at the top of an indicated range on strong oversubscription. Shares in Changyou.com trade 40 percent above their IPO price.
Both Silver Base and Changyou.com's IPOs have encouraged other Chinese firms to dust off their own IPO plans.
"Every CEO in our IPO pipeline has been calling, saying: 'I want to be next'," said a senior equity capital markets banker in Hong Kong who declined to be identified.
But IPOs can require long lead times to execute and not every issuer is ready, the banker said.
Markets, meanwhile, need a prolonged period of stability and companies need to be willing to price their deals attractively in order for new issuance to pick up, bankers and investors said.
For story on the global IPO outlook, click [ID:nN07530167].
Globally, IPO volumes are down 96 percent so far this year, according to Thomson Reuters data.
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singapore exchange's Net Shrinks
By P.R. VENKAT
SINGAPORE -- The Singapore Exchange Ltd. said its fiscal third-quarter net profit fell 45.5% as the economic downturn reduced trading volumes and led to fewer companies listing on the exchange.
SGX's net profit was 55.3 million Singapore dollars (US$36.9 million) in the three months ending March 31, down from S$101.5 million a year earlier. Revenue fell 31% to S$119.8 million, compared with S$173.3 million in the same period last year.
"The quarter has been challenging with all revenue categories affected. Nonetheless, there are opportunities that SGX can take advantage of in derivatives, commodities and OTC [over the counter] clearing," SGX Chief Executive Hsieh Fu Hua said.
The global economic slowdown and the credit crisis has forced many companies to either defer or drop fund-raising plans through initial public offerings, which has hurt listing revenue for exchanges like the SGX.
Thin trading volumes in the securities and the derivatives markets have reduced clearing fees.
During the third quarter, SGX clearing fees from the securities market fell 48.3% to S$33 million as trading value declined 52% over the year to S$55.8 million.
SGX said only two companies tapped the IPO market in the third quarter, raising S$12.8 million. Nine companies raised S$673.5 million in the same period last year.
"While IPO activity was weak, secondary fund raising through rights issue was active," SGX said. In the quarter, a total of S$6.46 billion was raised by rights issues, compared with S$380 million in the same quarter last year.
In the derivatives market, SGX futures-clearing revenue declined by 14% from the prior year to S$29.5 million in the third quarter.
Revenue from clearing structured warrants fell 63.7% to S$1.7 million.
For the first nine months of its fiscal year, SGX's net profit fell 39.4% from a year earlier to S$214.5 million. Revenue fell 28.8% to S$424.8 million.
Write to P.R. Venkat at venkat.pr@dowjones.com
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China's Huiyuan says still hopes to find partner
BEIJING, April 16 (Reuters) - China's top juice maker Huiyuan <1886.HK> still has high hopes of finding a strong partner after Beijing rejected Coca-Cola's acquisition attempt, its chairman was reported as saying on Thursday.
Chairman Zhu Xinli said that Coca-Cola's <KO.N> bid had greatly boosted Huiyuan's reputation and that it was now being courted by even more companies.
We still hope "to marry into a wealthy family," Zhu was quoted as saying by the China Securities Journal. The newspaper did not mention the names of any potential partners.
Zhu also said that he had no hard feelings towards Chinese regulators for blocking the deal, likening them to parents who know what is best for their child in finding a spouse.
China rejected Coca-Cola's $2.5 billion bid for Huiyuan under an anti-monopoly law enacted last year, stating that the combined concentration of the two companies would have hurt competition in the juice business.
Huiyuan's profits attributable to shareholders fell 86.1 percent last year to 88.9 million yuan ($13.01 million) from 640 million yuan in 2007, the China Securities Journal said.
($1=6.832 Yuan) (Reporting by Simon Rabinovitch; Editing by Ken Wills)
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