Archive | Archive – world business

Snapshot on world business, week to 30 March 2003

30 March 2003

AMP Ltd will transfer its British banking portfolio to the Newcastle Building Society as it tries to restructure back to health. AMP’s UK ban has a £360 million mortgage portfolio, £60 million deposit portfolio & £12 million of loans on policy. The transfer should be completed within 3 months, subject to regulatory approval & contractual obligations. AMP aims to release $A500 million in capital by the end of 2003.

28 March 2003

The World Trade Organisation has followed last year’s declaration against US tax breaks for exporters through foreign sales companies, in which the WTO trade panel awarded Europe the right to impose $US4 billion of trade sanctions, by finding in an interim decision today that steel tariffs President Bush imposed last year were also illegal. Meanwhile US airlines have their hands out again, and Republican senators are supporting a $US3 billion aid package to tide them over the Iraq war period.

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Snapshot on world business, week to 29 April 2001

Latest: US Q1 gdp up 2%, Germany weak link in stronger Europe, Japanese output falls, national interest defeats Shell bid for Woodside, Village Roadshow sells rest of European assets, Jardine Matheson battle resumes.

29 April 2001

The US gross domestic product rose 2% in the first quarter, double economists’ expectations, after a 1% December quarter rise and 2.2% rise in the September 2000 quarter. Exports fell 2.2%, after falling 6.4% in the December quarter and mostly low-double-digit returns in the previous four quarters. Imports fell 10.4% after falling 1.2% in the December quarter. That was a turnaround from mostly high-double-digit import growth in the previous six quarters. In sum, there’s some US consumer resilience, but yes: they are putting up the shutters.

Most European countries remain on a stronger growth path, with an average 2.5% gain expected this year, 3% in France, but a forecast reduction in Germany from 2.75% to 2%. The German average through the 90s was only 1.5% growth/year, held back by continuing disintegration of East Germany.

Japan’s industrial output fell 2.1% in March, 3.7% in the first quarter, inventories rose 1.1% in February, 0.7% in March. The Japanese CPI fell 0.4% in the March year.

26 April 2001

Jardine Matheson Holdings Ltd’s controlling Keswick family has rejected restructuring proposals from the largest minority shareholder, Brandes Investment Partners of San Diego, in an addendum to the notice of 17 May’s annual meeting. Chairman Henry Keswick said his view remained that the Brandes resolutions wouldn’t create either medium or long-term shareholder wealth. He said Jardine Matheson achieved 17% compound average annual growth in $US shareholder returns over the past three years and 18% over the past 10 years. The seven Jardine Matheson core businesses include property (and including Colliers Jardine), hotels and supermarkets (Dairy Farm International/Woolworths NZ).

23 April 2001

The Australian Government has turned down Shell’s $A10 billion bid for Woodside Petroleum. Treasurer Peter Costello said it would be against the national interest for Shell to control the operator and its joint venture partner in the North West Shelf gas project. He weighed up the national interest of maximising value from this project against possible corporate strategies which would pit this project unfavourably against competing projects elsewhere in the world — the kind of reasoning which has been rejected by New Zealand governments in their support of foreign big business since 1984.

Melbourne-based Village Roadshow has sold its remaining European cinema interests for $A94 million, using $A49 million to reduce debt. It profited from its Athens sale and achieved book value in Switzerland and Hungary. The entertainment company has already sold out of Germany, Hong Kong and the Village Entertainment Property Trust.

Jardine Matheson’s value could rise 80% if the controlling Keswick family gave in to rebel shareholder demands, according to a report from Salomon Smith Barney last Friday. The main rebel, San Diego-based Brandes Investment Partners, has 10.5% of Jardine Matheson and 2.3% of Jardine Strategic Capital, and will present resolutions again at the 17 May annual meeting in Bermuda to unravel the structure which keeps the Keswicks in control.

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Snapshot on world business, week to 3 February 2002

29 January 2002

US undersea cable operator Global Crossing has filed for chapter XI bankruptcy protection, declaring $US22.4 billion of liabilities but only $US12.4 billion of assets. Two Asian operators, Hutchison Whampoa of Hong Kong and Singapore Government-controlled Singapore Technologies Telemedia, have stepped into the breach, planning to take 37.5% each of Global Crossing for $US375 million each. Their takeover is conditional on US court confirmation of a reorganisation plan by August. Global Crossing lost $US3.4 billion in the September quarter and is due to report its December result on 26 February.

Singapore’s gross domestic product fell 2.2% last year, headed by an 11.5% fall in manufacturing. The country’s economic development board said electronics output fell 21.4%, but biomedical science output rose 10%.

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Snapshot on world business, week to 12 May 2002

12 May 2002

National Australia Bank Ltd increased net profit 11% to $A2.256 billion in the March half on strong regional results. New Zealand rose 31%, Asia 33%, Australia 22% & Europe 18%. Bank ratios included the cost to income ratio for banking operations down 140 basis points to 48%, return on assets significantly higher at 1.2%, capital position strengthened to a tier 1 ratio 7.9%.

8 May 2002

The Enron scam gets worse: Californian state officials are seeking to recover billions of dollars after documents suggest collapsed energy trader Enron created an appearance that the state’s power grid was congested, then arranged for the state to pay Enron to relieve the supposed congestion.

Dutch pension fund ABP Investments US Inc has appointed Lend Lease Hyperion Capital Advisors to manage a new below-investment-grade commercial mortgage-backed securities (cmbs) account. ABP is one of the biggest pension funds in the world. Lend Lease Hyperion is a joint venture between Lend Lease Real Estate Investments and Hyperion Capital Management. It focuses exclusively on managing cmbs investments.

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Snapshot on world business, week to 19 August 2001

Latest: Taiwan’s gdp falls 2.35%, bad day at Gateway, Swire Pacific slips, shonky Chinese entities pursued.

19 August 2001

Taiwan’s gross domestic product fell 2.35% year-on-year in the second quarter and is now forecast to fall 2.45% in the third quarter, but to grow 2.38% in the final quarter. The June result was the lowest quarterly figure in 25 years. The Government is now forecasting a decline for the whole year of 0.37%, which would be Taiwan’s first full-year decline since 1945.

13 August 2001

Gateway, the US PC maker which built the factory in 1993 that symbolised Ireland’s resurgence, is looking at closure for that factory and for much of its business in Ireland and Britain. Gateway’s last quarterly result was a $US128 million loss.

Swire Pacific’s profit for the June half fell 7% to $2.4 billion. The British-owned group has large property interests in Hong Kong, which contributed most to the slight revenue rise to $HK2.38 billion. It also has a controlling interest in the Cathay Pacific airline.

Two lawsuits brought by the Bank of China’s Hong Kong office against the provincial governments of Shanxi and Xinjiang may help propel China towards an internationally acceptable legal system. Many of China’s governments set up companies in the 80s to source foreign capital. Hong Kong Hengshan, set up by Shanxi, was bankrupted last year after using 40 million yuan ($NZ11.4 million) on real estate investment in Guangzhou, not on foreign trade.

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Snapshot on world business, week to 26 January 2003

24 January 2003

The Daily Reckoning newsletter — whose authors are convinced a US recovery is not imminent, and keep presenting views of prominent individuals in support of their attitude — provided this insight today: Pension funds lost $US half a trillion in the September 2002 year. Investors have switched from the sharemarket to saving, increasing their saving rate 50% in 2002, from 2.3% of disposable income in January to 3.5% in November. Every percentage point represents about $US70 billion. “A rise in the savings rate to 6% would take about $US200 billion out of the consumer economy, probably pushing the US into recession.”

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Snapshot on world business, week to 31 December 2000

Latest:US economic shifts, mutual funds slowdown, P&O sells half ABC, Opec balancing act, motorway troughs don’t rate.

29 December 2000

Revised data shows the New York-based Conference Board’s composite index of leading economic indicators rose 0.1% in September then fell 0.3% in October and 0.2% in November. The index is watched a key signal of where the overall US economy is headed over the next six month. It peaked in January, fell eight months this year and is now 0.4% lower than a year ago, after gaining 1.5-2% in each of the three previous years. The index of coincident indicators, a measure of current activity, fell 0.1% in October and rose the same in November. The index of lagging indicators rose 0.3% in October and fell the same in November.

US mutual funds reported a 54% fall in new money in November, the biggest fall in two years reflecting the decline of share prices.

P&O has sold half of Associated Bulk Carriers to the Ofer family’s Eurotower Holdings, part of the Monaco Shipping and Air Co, for a net £68 million ($NZ230 million) cash after failing to secure a float in Norway early this year. The group’s cruise business was floated in October as P&O Princess Cruises and the group is negotiating to sell its stake in P&O Nedlloyd to its Dutch partner, Royal Nedlloyd, leaving it with ports, ferries and logistics, and it wants to sell most of that.

26 December 2000

Opec may cut oil production to keep its export price above $US22/bbl.

Britain’s Office of Fair Trading has found motorway service stations don’t offer value for money, opening them to competition from nearby supermarkets, some of which also sell petrol. The motorways have strict advertising rules and are dominated by Granada, Road Chef and Welcome Break, but supermarket chain Asda recently used a brown tourism road sign to promote a Manchester store, on the basis that it has enough visitors to be considered a tourist site.

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Snapshot on world business, week to 22 July 2001

Items on World Business this week:

Slight rise in Harvey Norman sales

Latest: Slight rise in Harvey Norman sales.

17 July 2001

Harvey Norman Holdings Ltd increased like-for-like sales by 2.7% in the 30 June year , excluding wholesale sales tax. Actual sales from its franchised Harvey Norman stores, commercial divisions and other outlets in Australia and New Zealand (excluding Singapore) rose 10.4% to $A2.5 billion.

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Snapshot on world business, week to 31 August 2003

28 August 2003

National Australia Bank had 5.4% of AMP Ltd at $A6/share today and was going for 10.1%, but the bank’s managing director & chief executive, Frank Cicutto, said NAB “has no interest in acquiring AMP while AMP owns its UK business.”

26 August 2003

“Just when we’re getting hit by the recession, we’re getting clobbered by currency manipulation. That’s unfair.” That’s the quote that ended a New York Times article today, about blaming US job losses on China’s pegged currency. The article was unbalanced, as most US reports on this subject have been, although it did mention in passing that the Chinese had had to tough out a rise in currency value because of the peg, when other nations devalued after the 1997 Asian financial crisis. Lots of currencies used to be pegged. The Chinese haven’t been manipulating, but Americans are looking for ways to change the rules. You can guarantee that will happen, somehow, and that it will be unfair: The US is deeply in debt, doesn’t want to pay its way out – because that would mean bankruptcy for countless ordinary citizens – and will make others pay.

ASB Bank chief economist Anhony Byettwrites in the bank’s winter market update: “The long awaited bounce in the US sharemarkets arrived in the June quarter. Prices generally increased in response to even lower interest rates and the prospect of an imminent US economic pickup. The possibility of improved US data raises the prospect of a continued equity market rally over the September quarter. However risks still abound. US share prices are still generally considered over-valued. Company insiders are reported as net sellers (suggesting those closest to company activity are less optimistic). The economic pickup has still to gain momentum. And even then there will remain a question mark over the sustainability of any higher US growth rate.”

“Sustainability” is the crucial word. New Zealand economists generally have noted sharemarket bounces, but played down or ignored the absurdly high US p:e ratios (35 times earnings, according to the Daily Reckoning) and the dilution of the US currency by a phenomenal rate of note-printing.

The New York Times quoted Jack Adamo, president of the weekly internet newsletter Insiders Plus, today saying: “The market is overvalued from every standpoint.” And Thomson Financial, which tracks insider trading, said executives had been selling their stock over the past 3 months at volumes seen only once in the past decade. In the year after this last happened, in July-September 2000, the broad S&P 500 index fell 28%.

What’s the significance to property investment in New Zealand? If, as I believe, the US positives are mostly superficial and that country’s dire economic straits have to be worked out to slow the cascade of debt, countries around the world will be affected by currency shifts (at the moment making the NZ dollar look rosy) & investment changes (less US business, less US corporate interest in foreign property but perhaps interest from lesser US investors, perhaps a resurgence of Asian business strength as it learns to rely less on the US).

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Snapshot on world business, week to 6 April 2003

6 April 2003

Perspective: Private Equity Online reports, from a conversation with an unnamed leading US venture capitalist: 6000 budding IT companies received venture investment in the late 1990s tech boom, of which 200 would prove profitable and another 200 could be turned round to become profitable. Taking minority stakes meant many venture capital firms couldn’t bring the pressure for restructure and the conflict of disparate interests meant most headed for destruction instead of construction.

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