Date : 06th October 2008
News-National
UBS AG, the European bank hardest hit by the credit crisis, will stop over-the-counter trading in natural gas, crude oil, power, agricultural products and industrial metals as it cuts jobs to reduce costs.
The Zurich-based bank will retain its precious metals trading operations, started about a century ago, its commodities index unit and exchange-traded commodity derivatives business, spokesman Dominik von Arx said today by phone from London. He declined to say how many jobs would be cut. “You've got a liquidity crisis — businesses need to survive and people need to raise cash and cut costs,” Mark Mathias, chief executive officer of Quantum Asset Management Ltd in London, said today by phone. “Commodities remain a good business going forward.”
The bank said yesterday it made a “small profit” in the three months through September, its first profitable quarter in more than a year after it cut holdings in mortgage securities. (Business Standard)
http://www.business-standard.com/india/storypage.php?autono=336489
Kochi: The pepper futures market last week witnessed high volatility and prices continued to decline after mid-week even as the fundamentals were remaining strong.
Tight supply position in all the origins coupled with indications of potential demand in the last quarter of the current year, appears to have pushed up the prices in other origins. Indian parity at the weekend dropped to remain competitive.
Availability of black pepper in the country is also said to be tight.
The exchanges are understood to be holding only around 5,000 tonnes. Major growers are not interested to liquidate their ‘iron stocks’ at the current price. (Business Line)
http://www.thehindubusinessline.com/2008/10/06/stories/2008100650410700.htm
Mumbai: The downtrend in turmeric futures in NCDEX is expected to continue in the short term on weak sentiment in the spot market besides a slowdown in demand from overseas market.
Markets took a cue from dismal output predictions due to scanty rainfall in the initial crop season. However, prices started falling mid-July after monsoon revived the growing areas.
Sowing activity started picking up in fully swing mid-July. Area under turmeric cultivation in the kharif season is expected to be about 1.69 lakh hectares against 1.64 lakh hectares registered in the same period last year, according to trade estimates. (Business Line)
http://www.thehindubusinessline.com/2008/10/06/stories/2008100650400700.htm
Cotton procurement is likely to hit a record this year with state-owned Cotton Corporation of India (CCI) eyeing a bumper purchase of 5-10 million bales due to a sharp hike in the minimum support price (MSP).
“We expect a minimum 5 million bales (one bale=170 kg) of procurement in the 2008-09 season, and could even go up to 10 million bales. The cotton purchase last season stood at 2.75 million bales,” CCI Chairman and Managing Director Subhash Grover said.
Cotton output is expected to rise to at least 32 million bales in 2008-09 from 31.5 million bales last year, he said. (Business Standard)
http://www.business-standard.com/india/storypage.php?autono=336451
Gold futures, declined on Friday ending the week with a loss of more than six per cent, after the US House of Representatives approved the $700-billion plan to bail out the financial sector. Precious metals declined this week as investors sold holdings to cover losses in other markets. Pressure to raise cash is forcing funds and long-term players to exit long positions. Gold has still not lost its safe haven position and the bailout plan accomplishes little to turn the eco nomy around and is intended to arrest the fall and boost the sentiment in the short-term. (Business Line)
http://www.thehindubusinessline.com/2008/10/06/stories/2008100650420700.htm
News-International
Crude oil fell for a fourth day in New York on signs slowing global economic growth will reduce demand.
World markets are oversupplied and the Organization of Petroleum Exporting Countries may review output levels for the first quarter of 2009, Iranian Oil Minister Gholamhossein Nozari said Oct. 4. Saudi Aramco, the world's largest state-owned oil company, yesterday cut its official selling prices for light crude exports to the U.S., the world's largest consumer. (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601012&sid=a47Qrr_CbgYQ&refer=commodities
Gold fell for a fifth day as the dollar rallied to the highest in more than 13 months against six major currencies including the euro, reducing demand for bullion as an alternative asset.
The Dollar Index rose to 81.19 today, the highest since Aug. 23, 2007. The euro also fell to a 13-month low against the dollar after a summit in Paris on Oct. 4 where leaders of Europe's four biggest economies stopped short of a plan mirroring the $700 billion rescue in the U.S. to counter the worst financial crisis since World War II. (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601012&sid=aJMFLywAwZpo&refer=commodities
SINGAPORE: Gold inched down on Monday as oil dropped on demand fears, while platinum steadied after tumbling to its weakest in nearly three years on economic weakness and dismal car sales.
Gold was trading at $828.00 an ounce, down $6.80 an ounce from New York's notional close on Friday, when it hit a two-week low at $818.70 after the US House of Representatives voted to pass a $700 billion to bailout the US financial system. Platinum was trading at $950.00 an ounce, unchanged from New York's notional close. It tumbled to $836.50 on Friday, its lowest level since November 2005. Oil prices slumped 2 per cent on Monday, falling for a fourth day as traders feared efforts to contain the spreading credit crisis would fail to stave off a deeper decline in oil demand.
New York gold futures fell $1.6 an ounce to $831.6 an ounce on the COMEX division of the New York Mercantile Exchange. (Reuters)
Platinum fell, capping the biggest weekly drop in 22 years, and palladium plunged on concern auto sales in emerging markets will falter, further reducing demand for the metals used in car parts.
Automakers account for more than 60 percent of global platinum use, according to London-based metals trader Johnson Matthey Plc. Platinum fell 58 percent from a March record as auto sales plunged in the U.S., the world's biggest market, and weakened in Europe, stoking concern that emerging markets, including China, may also decline. (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601012&sid=aMkyqaIWZ.gs&refer=commodities
Asia-Pacific markets slid on Monday as investors focused on growing concerns about the global economic outlook and ignored the passing of the US-government sponsored bailout plan.
The decline in non-farm payrolls announced late last week was the largest since March 2003. The Nikkei 225 dropped to a 4-year low, dropping 3.6 per cent to 10,544.33, while the broader Topix was trading 4.1 per cent lower at 1,005.53. The yen strengthened against the dollar, which added to the woes of Japanese exporting stocks such as Canon and the automakers.(Financial Times)
http://www.ft.com/cms/s/0/23e5a682-9351-11dd-98b5-0000779fd18c.html
Asian stocks fell for a third day, led by financial companies, after the global credit crisis deepened in Europe and the U.S. lost the most jobs in five years.
National Australia Bank Ltd., the nation's largest lender, dropped 3.8 percent after Hypo Real Estate Holding became the latest casualty of the financial turmoil that generated a $700 billion U.S. bank rescue plan. Newcrest Mining Ltd., Australia's biggest gold producer, and Inpex Holdings Inc., Japan's largest oil explorer, retreated at least 2 percent after prices of the two commodities sank. (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJwQOFfKGL4E&refer=home
TOKYO: Japan's Nikkei stock index slipped 2.6 per cent to a four-year low on Monday as exporters such as Canon Inc were battered by a weaker dollar
and growing worry about the global economy despite passing of a US bailout bill.
Automakers such as Toyota Motor Co slid along with Kyocera Corp and other high tech shares as investors dumped stocks just after the opening. The losses came even after the US House of Representatives passed a $700 billion financial rescue plan as market attention shifted from worry about whether or not the proposal would pass to concern about how it will be carried out.(Reuters) http://timesofindia.indiatimes.com/Business/Exporters_banks_settle_derivatives_losses/articleshow/3563765.cms
SHANGHAI: China's securities regulator said on Sunday that it would soon allow investors to buy stocks on margin and to conduct short-selling of stocks. The reforms will initially be conducted on a trial basis, and are designed to strengthen and stabilise the equities market, the China Securities Regulatory Commission said in a statement. (Agencies)
LONDON: Investors may heave a sigh of relief this week that the U.S. Congress has finally approved a $700 billion crisis bailout package but there is
still plenty for markets to fear. The focus on the financial crisis has to some extent become a distraction from the deterioration in the world economy that it now risks exacerbating.
Many market players are hoping that an expected interest rate cut from the Bank of England on Thursday will herald a round of similar -- perhaps coordinated moves from the likes of the European Central Bank and the U.S. Federal Reserve. There will also be a keen focus on what leaders of the Group of Seven nations have to say about the crisis when they meet in Washington next weekend.(Reuters)
The global turmoil has left everyone clueless. And unlike stock markets crash seen in the past, this downside has touched everyone’s life. Right from
a global investment banker at Lehman who is directly impacted, to a housewife whose daily expenses have shot up due to high inflation and growing commodity prices.
The first question which comes to mind is whether my investments are safe? Certain investments carry risk as an inherent nature. Investments in stocks, real estate, equity mutual funds carry the risk of credit, where principal can also be eroded but if they perform, returns can compensate the risk of erosion of capital. (TOI)
BRUSSELS - Belgium and Luxembourg were desperately searching for a buyer for troubled financial group Fortis before markets opened on Monday as concerns grew over the future of rival Dexia.In a second weekend of crisis talks, Belgian Prime Minister Yves Leterme told broadcasters on Sunday he hoped to keep the Belgian and Luxembourg operations of the group together after the Dutch nationalised most of Fortis's Dutch units on Friday. (Reuters)
http://in.reuters.com/article/businessNews/idINIndia-35807220081005
TOKYO: The euro fell to a 13-month low against the dollar on Monday as investors shifted their focus to banking problems in Europe after leaders of E
urope's four biggest economies decided against a coordinated bank bailout.
German and French officials denied on Sunday that they were set to endorse a common fund to bail out European banks. The comments came after a meeting in Paris on Saturday of leaders of France, Germany, Italy and Britain who issued a joint statement that made no mention of a fund. While there was no uniform regional effort as in the United States to help the struggling banking sector, each country took steps to contain the spreading credit crisis. (Reuters)
New York: Financial services major JPMorgan, which rescued two troubled banks within a span of seven months, has now been accused of putting the final nail on Lehman Brothers, says a media report.
“JP Morgan has been accused by its Wall Street rivals of dealing the final hammer blow that forced Lehman Brothers into collapse in a sensational claim that threatens to spark a colossal legal battle,” the Sunday Times reported.
The giant American bank is alleged to have frozen $17 billion of cash and securities belonging to Lehman on the Friday night before its failure, the daily added. Lehman Brothers filed for bankruptcy two days later on Monday, triggering a series of collapse of financial institutions in US and Europe. The allegations were raised in a filing at the bankruptcy court in New York, lodged late last week, the newspaper said. (Deccan Chronicle)
http://www.deccan.com/Business/Business.asp#JP Morgan blamed for Lehman’s bankruptcy
London: European leaders have asked India to join a major economic summit to prepare a response to the global financial meltdown sparked by the US credit crisis. At a hastily convened meeting in Paris, French President Nicolas Sarkozy called for a summit in November where emerging powers India, China and Brazil should join the Group of Eight industrialised nations — Britain, Canada, France, Italy, Japan, Germany, Russia and the United States.
He said the heads of the European Union’s four biggest economies — Germany, France, the UK and Italy — were united on the need to call all leading economic nations together to create “a new financial world just as Bretton Woods did 60 years ago”. Mr Sarkozy, who called Saturday night’s meeting in his role as European Union President, said it was time for governments to clamp down on speculators and restore a moral element to the heart of a regime that had failed. (Deccan Chronicle)
http://www.deccan.com/Business/Business.asp#India to join EU crisis talk
Citigroup has won the first round in a bitter match with Wells Fargo over the takeover of Wachovia after a New York court gave it more time for exclusive negotiations with the sixth-largest US bank.
Citi is also suing Wachovia for up to $60bn in damages, accusing it of breaking an exclusivity agreement when it clinched a rival deal with Wells, according to people close to its case.
However, Justice Charles Ramos of the Supreme Court of the state of New York did not rule on that claim when he granted Citi an emergency extension of the exclusivity agreement on Saturday night. (Financial Times)
http://www.ft.com/cms/s/0/3133301e-9308-11dd-98b5-0000779fd18c.html
The Federal Reserve and US Treasury were on Sunday night under increasing pressure to follow passage of the $700bn financial rescue plan with further measures to shock the ailing credit markets back to life.
Among the options available to policymakers are additional liquidity operations and an emergency rate cut – possibly in co-ordination with other central banks. A combination of the two is also possible. (Financial Times)
BERLIN: The German government said on Sunday it would guarantee private bank deposits as part of its response to the banking crisis, embracing an Iri
sh approach that has angered some European countries. "The state guarantees private deposits in Germany," Finance Ministry spokesman Torsten Albig said.
A second ministry spokesman said the guarantee was unlimited. "We say to savers that their deposits are safe," Chancellor Angela Merkel said at a news conference in Berlin. (Reuters) http://timesofindia.indiatimes.com/Business/Intl_Business/Germany_guarantees_all_private_bank_accounts_/articleshow/3563669.cms
NEW YORK: Indian companies listed on the American bourses lost close to $10 billion during the past week, with IT bellwether Infosys witnessing the maximum erosion of about two billion dollars.
The 16 Indian firms listed on NYSE and Nasdaq saw their collective market capitalisation dip to $78.9 billion, from $88.7 billion at the beginning of the week.(ET)
NEW YORK: The world's financial markets face an uncertain and possibly volatile week as investors await details about how the Treasury will implement the government's financial rescue package — and watch for any further fallout from the credit crisis around the globe.
The markets have switched their focus to the world economy now that the $700 billion bailout plan has become law. And there's reason for their concerns — governments across Europe are rushing to prop up failing banks. On Sunday, Germany said it would follow suit with Ireland and Greece in guaranteeing all private bank accounts. (Agencies)
CHICAGO: Access to credit is the lifeblood of maritime trade and the credit crunch has largely cut off that supply, threatening to weed out weaker shippers and shipyards, as well as hamper global trade."The credit crisis has made banks nervous and the last thing on their minds is making fresh loans," said Omar Nokta, an analyst at investment bank Dahlman Rose. "Some ship owners and shipyards in particular are feeling the pain."
The outlook is worst for the bulk shipping industry, which hauls raw materials such as iron ore, grain and cement. More than 90 percent of the world's traded goods by volume is carried by sea. (Reuters) http://in.reuters.com/article/businessNews/idINIndia-35807720081005
KUWAIT CITY: Stock markets in the energy-rich Gulf states dropped sharply on Sunday over uncertainty resulting from the global financial turmoil and
its impact on the region.
Five of the six stock markets in the Gulf reopened on Sunday after a week-long holiday for the Muslim Eid al-Fitr.
Dubai Financial Market shed 6.86 percent to close on 3,844.27 points, its lowest finish in about 18 months. So far, it has dropped 35.2 percent this year. (Agencies)
News-General
The Reserve Bank of India (RBI) and finance ministry have cleared the participation of foreign institutional investors (FIIs) in Indian depository receipts (IDRs).
IDRs are Indian counterparts of global depository receipts that enable foreign companies to raise money from the Indian markets.
The proposal has been forwarded to the ministry of corporate affairs for clearance before the decision is notified. Sources added that the ministry of corporate affairs would also consider whether to allow Non-Resident Indians (NRIs) to subscribe to IDRs since neither RBI nor the finance ministry has any objection to the proposal, in principle. (Business Standard)
http://www.business-standard.com/india/storypage.php?autono=336480
Government has reduced the licence fee for the telecom service providers which have completed over 95 per cent network roll-out in a service area, except metros, a move is aimed at encouraging operators to increase tele-density.
If the percentage coverage of total number of development blocks in a service area is covered by the licencee is over 95 per cent, the applicable universal service obligation levy will be three per cent instead of five per cent, which means the licence fee is automatically reduced for category A, B and C circles to eight per cent, six per cent and four per cent respectively, DoT said while amending the UASL licence.
However, the benefit is not applicable to coverage of metros. A DoT official said, the move is aimed at encouraging operators to go beyond metros and fulfil the licence conditions for network roll-out to increase tele-density. (Business Standard)
http://www.business-standard.com/india/storypage.php?tp=on&autono=47545
Indo-US civilian nuclear deal may be signed on 13 October in Washington, after missing the 4 October schedule, when US Secretary of State Condoleezza Rice visited New Delhi on her farewell tour.
Although, there will be a new venue and schedule, the two signatories will remain same: External Affairs Minister Pranab Mukherjee will travel to Washington and sign the agreement there with Rice.
According to top sources, the government didn't see any problem in the delay. Rather it suited the UPA government as it wants to see the final shape of legislation after President George W Bush signs it into the law. (Business Standard)
http://www.business-standard.com/india/storypage.php?tp=on&autono=47542
State-owned BSNL is understood to have opposed merging loss making ITI with itself amidst stiff opposition from the employees unions, a move that may not go well within the government as the proposal was mooted by none other than Congress President Sonia Gandhi.
According to highly placed sources, BSNL has informed the Communication and IT Minister A Raja that merger of ITI would severely dent the financial position of the telecom service provider.
The accumulated losses of equipment manufacturer ITI stand at about Rs 2,500 crore and its merger with BSNL may put an additional burden of Rs 1,000 crore, sources said, adding the Board was not in favour of this.
With ITI having one of its manufacturing units in Rae Bareily in Uttar Pradesh, the constituency of Congress President, Gandhi had mooted the idea of merging ITI and BSNL. (Business Standard)
http://www.business-standard.com/india/storypage.php?tp=on&autono=47546
Indian companies listed on the American bourses lost close to 10 billion dollars during the past week, with IT bellwether Infosys witnessing the maximum erosion of about two billion dollars.
The 16 Indian firms listed on NYSE and Nasdaq saw their collective market capitalisation dip to 78.9 billion dollars, from 88.7 billion dollars at the beginning of the week.
The loss registered by the Indian American depository rates is mainly because of the meltdown at the US bourse and has been mostly in line with the broader market trends, analysts believe. (Financial Express)
http://www.financialexpress.com/news/investors-lose-10-bn-in-uslisted-indian-cos/369655/
NRI steel tycoon Lakshmi Mittal has lost 16.6 billion pounds in the global credit crunch owing to plummeting stock markets in the last four months, media reports said i9n London on Sunday.
The 58-year-old Mittal heads a list of ten super-rich losers who together have seen their share portfolios shrink by about 23 billion pounds from their peaks, The Sunday Times claimed.
Another NRI entrepreneur Anil Agarwal, who built up his metals empire, has seen his stock plummet by 2.7 billion pounds. (Financial Express)
http://www.financialexpress.com/news/mittal-loses-16.6-bn-pounds-in-meltdown/369641/
New Delhi: With financial institutions falling prey one after another to the global credit crisis, the bailout packages announced by various governments across the globe are inching towards the $2 trillion mark — an amount nearly double the size of Indian economy. With the US Congress giving nod to $700-billion aid for troubled financial institutions in the country, the US government alone has announced a total package worth about $990 billion.
Besides, a handful of European countries have already announced packages worth a similar amount in efforts to save their troubled financial entities. There are expectations for more such instances of helping hands coming from the governments in Europe as the crisis is said to be fast spreading in the region after a full-blown blast in the US. (Deccan Chronicle)
http://www.deccan.com/Business/Business.asp#Global bailout nears $2 tr
MUMBAI: Indian companies, which are sitting on issued certified emission reductions (CERs) or carbon credits, are likely to unlock the value of their
green certificates to release funds in the prevailing liquidity crunch.
What may prompt them to sell CERs is a concern that prices of CERs may mimic crude oil prices, leading to a downward price trend in the global market. CER prices have already declined from E22, over a month ago when crude oil prices had peaked at $147 per barrel, to around E19.
Recently, Mysore Cements sold over one lakh CERs issued to the company by the clean development mechanism (CDM) executive board of the United Nations Framework Convention on Climate Change (UNFCCC). (TOI)
http://timesofindia.indiatimes.com/Business/Indian_cos_may_encash_ccredits/articleshow/3563902.cms
VADODARA: Union petroleum minister Murli Deora on Sunday said his ministry is actively considering introduction of a dual pricing policy for diesel i
n the country.
"In our country, one can drive a Mercedes car with subsidised diesel available at Rs 16 per litre. We are working on a policy whereby we can increase the prices of diesel without affecting railways, defence sector, public transport and household usage," said Deora.
Nearly 19% of diesel consumption in India is in the agriculture sector, upon which depends the country's food security. In addition, it is used by the transport sector for industrial use. (TOI) http://timesofindia.indiatimes.com/Business/Govt_mulling_dual_diesel_pricing_Deora/articleshow/3563926.cms
COIMBATORE: Even as the US is grappling with ways and means to tackle the financial crisis unleashed chiefly by credit derivatives, some banks and co
mpanies back home have realised that it is better to fix the mess rather than fight.
Several companies that have suffered huge losses from exotic derivatives have started going in for settlements. Garment export firms in Tirupur and Coimbatore-based Precot Meridian are among those who have reached settlements, sources said. (TOI)
Key indices tested new lows last week due to the crisis in global credit markets and uncertainty over the fate of the bailout package. Despite the fa
ll in crude oil and assurances from the finance minister about the health of the Indian financial system, the Nifty ended with a 4% loss for the week.
Although, buying support emerged at the 3700-3800 levels, the 4000-mark acted as stiff resistance at the higher end. Participation was lower due to the shortened trading week. Indices were weighed down by a 10% decline each in heavyweights like Reliance Industries, DLF and ICICI Bank. (ET) http://economictimes.indiatimes.com/Markets/Analysis/Pessimism_suggests_worst_may_be_over/articleshow/3564256.cms
Call rates hovered in the range of 13.5-16%, with cash tightness intensifying on account of higher demand in a holiday shortened week. Rates jumped to 17.5%, as banks looked to cover reserve requirements in advance. The treasury bill sales accounted for some more outflows, with recent bond sales having deepened the liquidity gap following the advance tax outflows. State-run bank activity aimed at supporting the rupee-exchange rate occasionally has also contributed to the squeeze while flows have been negative. At the LAF last week, RBI pumped in an average of Rs 90,840 crore through repos in an attempt to shore up cash. No bids received for reverse repos. Call rates are likely to linger at elevated levels with any respite from government spending likely to be offset by bond and treasury bill auctions scheduled during the week. (ET)
MUMBAI: As many as four firms in the list of 10 most valued companies in the country have managed to add an aggregate of over Rs 5,000 crore to their
market cap this week, even as meltdown at the bourses had an impact on most of the heavyweights.
Although the country's top 10 firms lost a total of over Rs 15,000 crore in their market capitilisation last week, telecom major Bharti Airtel and state-run entities SBI, ONGC, BHEL added an aggregate of Rs 5,484 crore to their valuations. (ET)
MUMBAI: It took a long time for Indian policymakers to allow short selling after it was banned in 2001. The delay was owing to the resistance by the
Reserve Bank of India, primarily the previous Governor, YV Reddy, who felt that permitting overseas institutional investors to short-sell — that is, sell shares which they do not own at the time of trade, would cause a lot of volatility and lead to instability.
Instead, he proposed restricting the facility to just local retail and institutional investors, perhaps going by the logic that keeping this set of investors under check would be far more easy. Ultimately, Reddy’s views did not prevail as others felt that the market could not be fragmented but Reddy may have a good laugh now. (ET)