2009 September 21 » News Live,News Today,News Online,News Business,Market News Today

Markets in Asia fell overnight

Sep 212009

Markets in Asia fell overnight and all the major European indexes declined in midday trading there. Commodities like oil and gold also retreated, while the dollar inched higher. Bond prices dipped.

Stock futures pared their losses slightly after computer maker Dell Inc. announced plans to buy information technology company Perot Systems Corp. for about $3.9 billion. Dell is offering $30 per share in cash — a 68 percent premium over Perot’s closing stock price on Friday.

Stocks and commodities have been on a relentless ascent since early March as investors make bets that the world economy is healing amid improving activity in the housing and manufacturing industries, and better consumer sentiment. Analysts say breaks in the rally are perfectly healthy.

The benchmark Standard & Poor’s 500 index tacked on a 2.5 percent gain last week, bringing its total rise since March to 58 percent, after Federal Reserve Chairman Ben Bernanke declared the US recession was “likely over.” Investors are now waiting to see what the rest of the Fed has to say this week during its two-day rate-setting meeting, which begins Tuesday.

Meanwhile, a private sector group’s forecast of economic activity on Monday should provide further evidence that the recession is ending. The Conference Board’s index of leading economic indicators is expected to have risen 0.7 percent in August. The index, which is meant to project economic activity in the next three to six months, climbed 0.6 percent in July.

Ahead of the market’s open, Dow Jones industrial average futures fell 38, or 0.4 percent, to 9,695. Standard & Poor’s 500 index futures lost 5.20, or 0.5 percent, to 1,055.80, while Nasdaq 100 index futures fell 8, or 0.5 percent, to 1,713.25.

Overseas, Hong Kong’s Hang Seng index lost 0.7 percent. A number of other Asian markets, including Japan’s, were closed for holidays. In afternoon trading, Britain’s FTSE 100 was down 0.6 percent, Germany’s DAX index dropped 1.2 percent, and France’s CAC-40 fell 0.7 percent.

Shares of Perot Systems shot up 66 percent, or $11.79, to $29.70 in pre-market trading after Dell offered to buy the company for $30 a share in cash in an effort to expand its IT service offerings. Dell shares slid 79 cents, or 4.7 percent, to $15.90.

With major market indicators up more than 50 percent over the past six months, including the Dow Jones industrial average, which is less than 200 points shy of the 10,000 mark, the conventional wisdom on Wall Street is that the market is ripe for a pullback.

Though it is difficult to know what could trigger a sell-off, if one comes at all, the comments from the Fed this week on its interest rate policy could unsettle investors.

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US bank collapse

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Sep 212009

Two more US banks went belly up last week, pushing total failures to a whopping 94 entities so far this year in the country, even as the economy is showing signs of recovery.

As many as 94 bank collapse have been witnessed in just nine months, translating into an average of at least ten banks are going belly up every month so far this year.

Besides, a staggering 109 banks have folded up in the US since the collapse of the once-famed Wall Street firm Lehman Brothers last September.

Two banking entities—Irwin Union Bank, FSB, Louisville, and Irwin Union Bank and Trust Company in Columbus,

As per FDIC, Irwin Union Bank and Trust Company had total assets of USD 2.7 billion and deposits of about USD 2.1 billion as of August 31, 2009.

Meanwhile, as on August 31 Irwin Union Bank, FSB in Louisville had assets to the tune of USD 493 million and deposits of about USD 441 million.

Of the 109 failures after the demise of the Lehman Brothers, 15 took place last year. So far in September 2009, 10 banks have gone belly up.

Banking failures, especially of small and medium ones, are rising on account of higher unemployment which has resulted in more defaults.

Presenting a gloomy scenario, the FDIC has said the count of problem banks, which are at the risk of collapsing, have jumped to 416 in the second quarter of 2009.

In August, a stunning 15 banks failed, while in July, a staggering 24 entities failed, which was the maximum for any month in 2009. Seven banks went out of business on July 2 and July 24.

Among the collapsed entities this year are the First Bank of Kansas, InBank, Vantus Bank, Platinum Community Bank and the First State Bank, First Coweta Bank, eBank and Community First Bank.
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Dell to buy Perot system

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Sep 212009

Dell Inc said Monday it has agreed to buy the information technology services company Perot Systems Corp. for about USD 3.9 billion as it looks to expand beyond the personal computer business.

Texas-based Dell said it will offer USD 30 per share in cash for Perot, which is based in Plano, Texas. That represents a 68 percent premium over Perot’s closing share price Friday, and Perot shares shot up 66 percent in premarket trading Monday.

Dell said Perot, founded by former presidential candidate Ross Perot, will expand the company’s IT services offerings for businesses and widen the pool of potential customers for its computers.

It expects to close the deal in the November-January quarter and start boosting its earnings beginning in fiscal 2012.

Analysts have been expecting an acquisition from Dell, which hired IBM Corp.’s former mergers and acquisitions chief earlier this year and has raised almost USD 1 billion in debt since March.

The company’s revenue comes mainly from the hard-hit PC business, while competitors like Hewlett-Packard Co. have a wider set of products. As a result Dell’s second-quarter profit slumped 23 percent.

The company said Perot will become Dell’s service unit, led by Perot CEO Peter Altabef. Ross Perot Jr., the head of Perot’s board, will be considered for a director slot at Dell.

Dell shares fell 79 cents, or 4.7 percent, to USD 15.90 in premarket trading Monday, while Perot’s stock shot up USD 11.79, or 66 percent, to USD 29.70.
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Gold prices will continue to remain bullish

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Sep 212009

Gold prices will continue to remain bullish and are expected to hover around Rs 16,000 this week as the US dollar is showing a weakening trend amid a better demand for the metal in the domestic market, analysts said.

“We expect gold to continue with the firm trend to trade at Rs 15,500-16,000 per 10 gram level as the US greenback is weak,” brokerage firm SMC Global’s Rajesh Jain said.

Gold and dollar generally trend in opposite directions. The US dollar, which is considered a safe haven, softens due to weakening economic condition. As dollar declines, many investors and central banks continue to hold gold as their safe haven to protect themselves from unforeseen global economic shocks, boosting the demand for the yellow metal.

Jain said that last week gold had taken a consolidation due to the past hectic rally and also on reports that the International Monetary Fund is considering to sell one-eighth of its total gold, worth about 13 billion dollars at current price, to provide soft loans to poor countries.

The physical demand in the domestic market will keep gold prices firm and in the international market it would be over USD 1,010 an ounce due to declining dollar, he said.

Gold for October contract on Multi Commodity Exchange was trading at Rs 15,820 per 10 grams, while in the global markets it was at $1,006 dollars an ounce (28.34 grams) last week.

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Take up quarterly cost audit:SEBI

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Sep 212009

Quarterly cost audit by internal auditors in the listed companies should be explored in consultation with the market regulator SEBI to improve corporate governance, an expert group appointed by Corporate Affairs Ministry has suggested.

“The possibility of introducing quarterly limited review of cost details, in case of listed companies, may be examined in consultation with SEBI,” the 13-member group set up to review the cost accounting rules and standards has said.

The group– representing Corporate Affairs Ministry, ICWAI, ICAI, ICSI, CII, FICCI, Assocham, PHDCCI, Sebi, academicians and management consultants among others– is of the view that although cost books could be maintained annually, internal audit should be done on a quarterly basis.

“As at present, periodicity of cost audit should remain on annual basis…a limited review of key parameters that appear in the cost audit report should be considered by the Audit Committee on a quarterly basis for listed companies,” it said.

At present, companies engaged in manufacturing 44 products, like paper, need to get their cost books audited.
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Air India makeover plan

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Sep 212009

Air India seeking a Rs 5,000-crore bailout package from the government, finance minister Pranab Mukherjee reviewed the turnaround plan of the national carrier, including the steps it was taking to cut costs and improve savings.

Mukherjee was briefed on the issue by civil aviation secretary M Madhavan Nambiar and Air India CMD Arvind Jadhav at a meeting in his North Block office,

The finance minister is understood to have made it clear that any government assistance to the national carrier would come only after it took concrete measures to reduce flab and costs. He reiterated the position that the airline should take more initiatives to cut costs and enhance savings.

In this context, it was also pointed out that on an average a pilot of Jet Airways earned about Rs two lakh a month, whereas their Air India counterparts got between Rs 3-4 lakh which included the productivity-linked incentives, informed sources said.

The meeting came as the civil aviation ministry started work on preparing a note for the Union cabinet on a package for Air India, including infusion of additional equity and a soft loan to overcome its present crisis.

The Air India Board is expected to meet on Wednesday following which Jadhav is likely to address employees on the urgent need to tighten their belts.
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Capital of banks rose 13.98% in 2008-09

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Sep 212009

Banks kept aside more capital against various risks during 2008-09 with their capital adequacy ratio increasing to 13.98 percent from 13.01 percent a year ago, as they became selective owing to the global financial crisis.

Private banks had higher capital adequacy ratio at 15.23 per cent during 2008-09 against nationalised banks’ 13.24 percent.

Analysts said as banks slowed down their lending and became too selective in advancing loans to risk areas, capital adequacy ratio, which is the amount of capital that banks keep aside against various kinds of risks, showed a rising tendency.

As per the RBI data on Profile of Banks 2008-09, the capital adequacy of ICICI Bank stood at 15.53 per cent compared to 13.97 percent in the previous year.

Similarly, capital adequacy of HDFC Bank stood at 15.69 per cent in 2008-09 against 13.60 per cent in the previous year.

Among the state-run lenders, State Bank of India capital adequacy ratio stood at 14.25 percent in 2008-09 against 13.54 per cent in 2007-08, while capital adequacy of Punjab National Bank was 14.03 percent at the end of last fiscal against 13.46 per cent in the previous year.

Capital adequacy ratio of Canara bank also rose to 14.1 per cent in 2008-09 against 13.25 percent in 2007-08, while for Bank of Baroda, it stood at 14.05 per cent compared to 12.94 percent in the previous year.

Overall, the capital adequacy ratio of nationalised banks rose to 13.24 percent in 2008-09 against 12.13 percent in the previous year while SBI and its associates banks increased to 13.96 percent against 13.21 percent in the previous year.

The capital adequacy ratio of foreign banks also rose to 14.30 percent in 2008-09 against 13.08 percent in the previous year.

Among the foreign banks, Citibank’s capital adequacy ratio increased to 13.23 percent in 2008-09 compared to 12 per cent in the previous year while for Standard Chartered Bank, it rose to 11.55 percent in the last fiscal compared to 10.59 percent in the previous year.

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Three killed as strong quake

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Sep 212009

At least three people were killed when a strong 6.3-magnitude earthquake struck Bhutan’s Munggar region along the India-Bhutan border on
Monday.

Three persons have been killed and monasteries and other buildings damaged in the Munggar region by the earthquake which hit Bhutan around 3pm .

The epicentre was located just inside Bhutan’s border with India, 180 kilometres east of the capital, News beuro,

Seven more swine flu deaths

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Sep 212009

Swine flu on Monday claimed seven more lives in the country taking the toll to 247 even as 228 fresh cases of the viral disease were
reported.

Out of the seven deaths, three each were reported from Maharashtra and Gujarat and one from Andhra Pradesh.

Of the 228 cases reported during the day, five are imported, rest are indigenous.

With the fresh cases, the number of people infected by the virus has reached 8,153.

The health ministry said samples from 34,376 persons have been tested for H1N1 in government laboratories and a few private laboratories across the country and 8,153 of them have been found positive.

Four deaths have been reported from Karnataka, but laboratory confirmation of the H1N1 virus is awaited for them.

The deaths include an infant who died at a private hospital in Gulbarga on September 17 and two women who passed away at a government hospital in the city last week.

Twelve more persons were tested positive for the H1N1 virus, including 11 from Bangalore and one from Bijapur, as per the latest report.

The total number of confirmed swine flu cases in Karnataka has gone up .
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Asian stocks lower as investors

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Sep 212009

Asian stocks were modestly lower Monday as investors look to this week’s Federal Reserve meeting for more clues about the strength of
the U.S. recovery.

A number of markets across the region including Japan were closed for holidays. Oil prices fell, while the dollar rose against the yen and the euro.

World markets posted more gains last week as U.S. Federal Reserve Chairman Ben Bernanke said recession in the world’s largest economy was “likely over.”

This week, investors will watch closely what the Fed has to say about the economy and the scale of the recovery after a two-day meeting that wraps up Wednesday. The Fed is widely expected to leave rock-bottom interest rates unchanged, though investors will be looking for clues in the central bank’s statement about when hikes might start.

Christopher Wood, equity strategist for CLSA brokerage, says the easy money in the West made possible by the Fed and other central banks has helped propel Asian markets this year.

“The dollar is the new carry trade,” Wood said in Hong Kong, referring to the practice of borrowing Japanese yen at a low cost to purchase risky and higher-yielding assets. “People are borrowing the dollar to buy equities and debt, primarily in emerging markets.”

In Hong Kong, the Hang Seng was down 34.59 points, or 0.2 percent, at 21,588.86 in back-and-forth trade, while South Korea’s Kospi lost 0.3 percent to 1,695.50.

China’s Shanghai benchmark was up 0.2 percent at 2,967.01 and Australia’s benchmark shed 0.3 percent.

Japanese financial markets are closed Monday through Wednesday for public holidays. The markets will reopen Thursday. Financial markets in India, Indonesia, Malaysia, Philippines and Singapore were also closed Monday for holidays.

Friday in New York, the Dow rose 36.28, or 0.4 percent, to 9,820.20, its highest close since Oct. 6, when it finished at 9,956. The index is up 11.9 percent for the year.

The broader Standard & Poor’s 500 index rose 2.81, or 0.3 percent, to 1,068.30, while the Nasdaq composite index advanced 6.11, or 0.3 percent, to 2,132.86.

Futures pointed to losses Monday on Wall Street. Dow futures were down 17, or 0.2 percent, at 9,716.

Benchmark crude for October delivery slipped 72 cents to $71.32 a barrel in Asian trade.
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