(Bloomberg) -- Microsoft Corp. co-founder Bill Gates, recruited by his friend Warren Buffett to join the board at Berkshire Hathaway Inc., said he’s committed to the firm for the rest of his life.
Gates and fellow Berkshire board member Don Keough, the former president of Coca-Cola Co., said in separate interviews with Bloomberg Television that their role with Omaha, Nebraska- based Berkshire is to protect the company’s culture and values after Buffett, 78, steps down. Buffett has pledged the majority of his Berkshire shares to Gates’s charitable foundation.
“I’ve got a commitment to stay involved with Berkshire as a lifelong thing,” Gates, 53, said in an interview scheduled to be broadcast today. “We always have to think about what might happen and make sure Berkshire is not just great now, but forever.”
Buffett, Berkshire’s chairman and chief executive officer, has said the board’s most important job will be to replace him when he’s unable to perform his duties. He will host about 35,000 people on May 2 at Omaha’s Qwest Center arena for the annual shareholder meeting -- an occasion where he typically fields questions about the succession plan.
“It’s the most important issue there is,” Buffett said in an interview with Bloomberg Television at Berkshire’s headquarters last month. “There’s nothing more important. Nobody knows on any given day where I’ll be the next day.”
‘Intense and Real’
Buffett built Berkshire over four decades from a failing manufacturer of men’s suit linings into a $140 billion company by investing in out-of-favor stocks and buying dozens of businesses ranging from insurance and underwear to ice cream and utilities. Buffett says his ideal time horizon to hold a stock is “forever,” and he purchases operating companies for Berkshire with the promise to their owners never to sell them.
“When you’re sitting on the board, you’re talking about sustainability of Berkshire Hathaway long-term, the issue of management down the road,” said Keough, 82. “The culture he’s built into Berkshire is intense and real and, I think, permanent.” Berkshire is the largest shareholder in Coca-Cola, and Buffett served on the soft-drink maker’s board with Keough.
Buffett said in letters to shareholders and at past annual meetings that the chairman post will go to his son, Howard Buffett, to keep the culture intact, and said the remainder of his work will be split between at least two people: a CEO and person or group that handles investing.
‘Total Confidence’
“All candidates currently work for or are available to Berkshire and are people in whom I have total confidence,” he said in the company’s most recent annual report. Buffett said in an interview March 5 that the CEO candidates hadn’t changed in a year. He declined to name them.
“You could water-board me,” and he still wouldn’t tell, Buffett joked.
Berkshire stockholders and Buffett-watchers have long speculated about who will fill the CEO position. Barron’s has reported that David Sokol, the head of Berkshire’s MidAmerican Energy Holdings Co., was the most likely successor. Sokol said in an interview with Bloomberg Television he hasn’t discussed succession with Buffett.
“Never a word,” Sokol said. “Unfortunately my name comes up because people try to come up with names.”
Tony Nicely, the head of Berkshire’s Geico Corp. car insurance business, and Ajit Jain, who runs a unit that sells reinsurance, are also on media lists of potential successors. Buffett biographer Alice Schroeder, now a Bloomberg News columnist, has suggested Buffett adviser Byron Trott, formerly at Goldman Sachs Group Inc., is an ideal candidate.
Read more here
Tuesday, April 28, 2009
Monday, April 27, 2009
Baidu quarterly profit up 24%, forecast tops estimates
(MarketWatch) -- Baidu Inc.'s first-quarter net income grew 24% on higher-than-expected revenue, as traffic to the site improved since it launched a new marketing campaign.
Baidu's American Depositary Shares rose 4% to $233.07 in after-hours trading as the company's second-quarter revenue forecast topped analysts' estimates.
The company, which holds a commanding share of the Internet-search market in China, had warned earlier this year that its online marketing customers might scale back on spending. The company was also hit by negative publicity late last year when it was criticized by state media for carrying ads from unlicensed medical companies.
The company spent an additional CNY40 million ($5.85 million) on marketing in the first quarter, including a high-profile television ad campaign over the Chinese New Year holiday in January.
Baidu reported first-quarter net income of CNY181.1 million ($26.5 million), or CNY5.22 (76 cents) per ADS, compared with CNY146.6 million, or CNY4.22 per ADS, a year earlier. Excluding stock-based compensation, earnings rose to 86 cents per ADS from 68 cents. Analysts polled by Thomson Reuters expected 76 cents.
Revenue climbed 41% to CNY810.7 million, or $118.6 million, above the company's February forecast of $114 million-$117 million.
The company said it expects revenue in the second quarter to be between $157 million and $161 million, topping analyst forecasts of $146.5 million, according to Thomson Reuters.
Active online-marketing customers increased 15% to more than 185,000, as revenue per customer grew 22%.
Read more here
Baidu's American Depositary Shares rose 4% to $233.07 in after-hours trading as the company's second-quarter revenue forecast topped analysts' estimates.
The company, which holds a commanding share of the Internet-search market in China, had warned earlier this year that its online marketing customers might scale back on spending. The company was also hit by negative publicity late last year when it was criticized by state media for carrying ads from unlicensed medical companies.
The company spent an additional CNY40 million ($5.85 million) on marketing in the first quarter, including a high-profile television ad campaign over the Chinese New Year holiday in January.
Baidu reported first-quarter net income of CNY181.1 million ($26.5 million), or CNY5.22 (76 cents) per ADS, compared with CNY146.6 million, or CNY4.22 per ADS, a year earlier. Excluding stock-based compensation, earnings rose to 86 cents per ADS from 68 cents. Analysts polled by Thomson Reuters expected 76 cents.
Revenue climbed 41% to CNY810.7 million, or $118.6 million, above the company's February forecast of $114 million-$117 million.
The company said it expects revenue in the second quarter to be between $157 million and $161 million, topping analyst forecasts of $146.5 million, according to Thomson Reuters.
Active online-marketing customers increased 15% to more than 185,000, as revenue per customer grew 22%.
Read more here
Thursday, April 23, 2009
Pressure builds on BofA's Ken Lewis
(Fortune) -- Questions about whether Bank of America breached its duties to shareholders come at an inconvenient time for embattled CEO Ken Lewis.
According to documents released Thursday by a top state prosecutor, the BofA (BAC, Fortune 500) chief met repeatedly late last year with federal regulators and the bank's board to discuss the deteriorating condition of Merrill Lynch, the struggling brokerage BofA had agreed to acquire in September.
At one point, according to an account released by New York Attorney General Andrew Cuomo, Lewis told then-Treasury Secretary Henry Paulson that BofA was considering backing out of the Merrill deal -- only to relent when Paulson said regulators, fearing a financial sector collapse, might respond by removing Lewis and his directors.
The Cuomo report certainly won't go down as a shining moment for a government that has twisted itself in knots claiming it wasn't pulling the strings at financial firms it invested in.
But worse, to some observers, is BofA's failure to disclose any of this information to its shareholders -- regardless of Lewis's claim he was being leaned on by Paulson.
The report could increase the pressure on Lewis as he and some members of the BofA board face re-election next week at the company's annual shareholder meeting.
"It's hard for me to believe the Treasury and the Federal Reserve would tell Ken Lewis to violate securities laws," said Jonathan Finger, a longtime BofA investor who has been critical of Lewis' penchant for empire building at shareholder expense. "Regardless of the pressure he may have felt, Ken Lewis still had a duty to protect shareholders and disclose relevant information."
Cuomo wrote in a letter to congressional leaders and other top federal officials Thursday that facts unearthed in his investigation raise questions about "corporate governance and disclosure practices at Bank of America."
BofA dismisses questions about its handling of the deal.
"We believe we acted legally and appropriately in the Merrill Lynch transaction," spokesman Scott Silvestri said.
Read more here
According to documents released Thursday by a top state prosecutor, the BofA (BAC, Fortune 500) chief met repeatedly late last year with federal regulators and the bank's board to discuss the deteriorating condition of Merrill Lynch, the struggling brokerage BofA had agreed to acquire in September.
At one point, according to an account released by New York Attorney General Andrew Cuomo, Lewis told then-Treasury Secretary Henry Paulson that BofA was considering backing out of the Merrill deal -- only to relent when Paulson said regulators, fearing a financial sector collapse, might respond by removing Lewis and his directors.
The Cuomo report certainly won't go down as a shining moment for a government that has twisted itself in knots claiming it wasn't pulling the strings at financial firms it invested in.
But worse, to some observers, is BofA's failure to disclose any of this information to its shareholders -- regardless of Lewis's claim he was being leaned on by Paulson.
The report could increase the pressure on Lewis as he and some members of the BofA board face re-election next week at the company's annual shareholder meeting.
"It's hard for me to believe the Treasury and the Federal Reserve would tell Ken Lewis to violate securities laws," said Jonathan Finger, a longtime BofA investor who has been critical of Lewis' penchant for empire building at shareholder expense. "Regardless of the pressure he may have felt, Ken Lewis still had a duty to protect shareholders and disclose relevant information."
Cuomo wrote in a letter to congressional leaders and other top federal officials Thursday that facts unearthed in his investigation raise questions about "corporate governance and disclosure practices at Bank of America."
BofA dismisses questions about its handling of the deal.
"We believe we acted legally and appropriately in the Merrill Lynch transaction," spokesman Scott Silvestri said.
Read more here
Wednesday, April 22, 2009
Eskom may miss tariff deadline
South Africa's utility Eskom, which has delayed an application for a tariff increase, is in danger of missing a July 1 deadline for any tariff hike to be implemented, the power regulator said.
Mbulelo Ncetezo, the executive director at the power regulator Nersa, said it takes three to four months to process an application, and state-owned Eskom was running out of time.
Should Eskom miss the deadline, the utility may have to wait until next year for any tariff increase to be enforced, or it may have to accept an increase of 34% that has been proposed by the Treasury.
Ncetezo said Nersa had yet to consider treasury's proposal.
"The national treasury sent a note to municipalities in the country saying that they should implement a 34% rise as of July if there is nothing coming from Eskom by then," he told Reuters late on Tuesday at a power conference in Johannesburg.
"We have told Eskom what the implications would be if they submit their application late," Ncetezo said.
He said the increase proposed by Treasury was "not far off from what Nersa had indicated last year if you add inflation".
Read more here
Mbulelo Ncetezo, the executive director at the power regulator Nersa, said it takes three to four months to process an application, and state-owned Eskom was running out of time.
Should Eskom miss the deadline, the utility may have to wait until next year for any tariff increase to be enforced, or it may have to accept an increase of 34% that has been proposed by the Treasury.
Ncetezo said Nersa had yet to consider treasury's proposal.
"The national treasury sent a note to municipalities in the country saying that they should implement a 34% rise as of July if there is nothing coming from Eskom by then," he told Reuters late on Tuesday at a power conference in Johannesburg.
"We have told Eskom what the implications would be if they submit their application late," Ncetezo said.
He said the increase proposed by Treasury was "not far off from what Nersa had indicated last year if you add inflation".
Read more here
Monday, April 20, 2009
Yen Weakens, Snaps 3-Day Gain, as Trade Deficit May Damp Demand
(Bloomberg) -- The yen fell for the first time in four days against the euro and the dollar before a government report tomorrow that may show Japan posted a trade deficit last month, damping the currency’s appeal as a refuge.
Japan’s currency dropped from a five-week high against the euro as technical indicators showed its recent gains were excessive. The euro traded near the lowest in a month against the dollar on speculation the European Central Bank will cut interest rates and signal it may pump money into the economy to spur growth. South Korea’s won dropped the most in almost two weeks as widening U.S. credit losses curbed demand for emerging- market assets.
“The Japanese economy is in a terrible way and people are very pessimistic,” said Sean Callow, Sydney-based senior currency strategist at Westpac Banking Corp., Australia’s biggest bank by market value. “If we get much further deterioration in the trade position, it should be a yen negative.”
The yen dropped to 127.16 per euro as of 12:42 p.m. in Tokyo from 126.48 in New York yesterday. It has still gained 3.2 percent against the euro in the past week and earlier reached 126.09, the strongest level since March 16. Japan’s currency declined to 98.26 per dollar from 97.89, and weakened to 68.94 against Australia’s dollar from 68.20.
The greenback traded at $1.2939 per euro from $1.2921 yesterday, when it reached $1.2889, the highest level since March 16. The won fell 1.3 percent, the most since April 8, to 1,352.70 per dollar.
Trade Deficit
Japan’s currency weakened against all 16 of the most-traded currencies before the finance ministry releases its trade report in Tokyo tomorrow. The nation had a trade deficit of 27 billion yen ($275 million) in March, the fifth shortfall in six months, according to a Bloomberg News survey of economists.
The yen fell from a five-week high versus the euro as the European currency’s 14-day stochastic oscillator against Japan’s dropped to 8 today, below the 20 level that signals the euro may have fallen too quickly and is poised to strengthen.
“There’s a sense the yen has been overbought,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest bank. “Market participants are probably unwinding long yen positions.” A long position is a bet an asset will gain.
Stocks Slump
Declines in the yen were tempered as Asian stocks extended a global slump in equities, spurring demand for the relative safety of the Japanese currency. The MSCI Asia-Pacific Index of regional shares slipped 2.8 percent.
The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, was little changed at 86.642. U.S. stocks tumbled yesterday after Bank of America Corp. put aside $6.4 billion to cover a growing pool of uncollectible loans. JPMorgan Chase & Co. said banks will likely realize about $400 billion more in losses on soured assets.
“Stocks are falling and uncertainty over the credit markets is returning,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second- biggest bank. “The yen may be bought.”
President Barack Obama said on April 19 that he will demand “accountability” from any U.S. banks that require additional taxpayer money following “stress tests” being conducted by regulators. The tests are being used to determine whether the companies have enough capital to cover losses over the next two years should the recession worsen.
Read more here
Japan’s currency dropped from a five-week high against the euro as technical indicators showed its recent gains were excessive. The euro traded near the lowest in a month against the dollar on speculation the European Central Bank will cut interest rates and signal it may pump money into the economy to spur growth. South Korea’s won dropped the most in almost two weeks as widening U.S. credit losses curbed demand for emerging- market assets.
“The Japanese economy is in a terrible way and people are very pessimistic,” said Sean Callow, Sydney-based senior currency strategist at Westpac Banking Corp., Australia’s biggest bank by market value. “If we get much further deterioration in the trade position, it should be a yen negative.”
The yen dropped to 127.16 per euro as of 12:42 p.m. in Tokyo from 126.48 in New York yesterday. It has still gained 3.2 percent against the euro in the past week and earlier reached 126.09, the strongest level since March 16. Japan’s currency declined to 98.26 per dollar from 97.89, and weakened to 68.94 against Australia’s dollar from 68.20.
The greenback traded at $1.2939 per euro from $1.2921 yesterday, when it reached $1.2889, the highest level since March 16. The won fell 1.3 percent, the most since April 8, to 1,352.70 per dollar.
Trade Deficit
Japan’s currency weakened against all 16 of the most-traded currencies before the finance ministry releases its trade report in Tokyo tomorrow. The nation had a trade deficit of 27 billion yen ($275 million) in March, the fifth shortfall in six months, according to a Bloomberg News survey of economists.
The yen fell from a five-week high versus the euro as the European currency’s 14-day stochastic oscillator against Japan’s dropped to 8 today, below the 20 level that signals the euro may have fallen too quickly and is poised to strengthen.
“There’s a sense the yen has been overbought,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest bank. “Market participants are probably unwinding long yen positions.” A long position is a bet an asset will gain.
Stocks Slump
Declines in the yen were tempered as Asian stocks extended a global slump in equities, spurring demand for the relative safety of the Japanese currency. The MSCI Asia-Pacific Index of regional shares slipped 2.8 percent.
The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, was little changed at 86.642. U.S. stocks tumbled yesterday after Bank of America Corp. put aside $6.4 billion to cover a growing pool of uncollectible loans. JPMorgan Chase & Co. said banks will likely realize about $400 billion more in losses on soured assets.
“Stocks are falling and uncertainty over the credit markets is returning,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second- biggest bank. “The yen may be bought.”
President Barack Obama said on April 19 that he will demand “accountability” from any U.S. banks that require additional taxpayer money following “stress tests” being conducted by regulators. The tests are being used to determine whether the companies have enough capital to cover losses over the next two years should the recession worsen.
Read more here
Thursday, April 16, 2009
Google profit beats estimates
(CNNMoney.com) -- Shares of Google Inc. rose in after-hours trading Thursday after the Internet search company said its first-quarter profit climbed 8.9% and topped Wall Street's forecast, amid a tough advertising environment.
Net income for the three months ended March 31 totaled $1.42 billion, or $4.49 per share, compared with $1.31 billion, or $4.12 per share, a year ago.
Results included charges of 67 cents per share for special items. Without the charges, earnings were $5.16 per share for the Mountain View, Calif.-based company.
A consensus estimate of analysts polled by Thomson Financial, who typically exclude one-time items from their estimates, predicted $4.93 per share.
Sales rose almost 6% to $5.51 billion from $5.19 billion last year. Excluding commissions paid to advertising partners, sales totaled $4.07 billion, which missed analysts' forecast of $4.08 billion.
In the previous earnings period, Google posted its first-ever drop in quarterly profit.
Google (GOOG, Fortune 500) stock was trading almost 1% higher to $392.24 in after-hours action Thursday after rising as high as 5.7% following the earnings release.
"It's not an expensive stock, and stocks are rallying even on bad news," said Jeff Rath, analyst at Canaccord Adams. "There's a building belief that the worst is behind us."
January and February were difficult months for Web search, but the trends started to improve in March and may be stabilizing, Rath said.
'Feeling the impact'
"Despite the tough economic climate, we had a good quarter," chief executive Eric Schmidt said in a conference call. "But no company is recession-proof, and Google is definitely feeling the impact."
Consumers are still searching on Google, but they're buying less, Schmidt said. "The shift to online gives us an advantage, so we're well-placed for the recovery when it occurs," he said.
Read more here
Net income for the three months ended March 31 totaled $1.42 billion, or $4.49 per share, compared with $1.31 billion, or $4.12 per share, a year ago.
Results included charges of 67 cents per share for special items. Without the charges, earnings were $5.16 per share for the Mountain View, Calif.-based company.
A consensus estimate of analysts polled by Thomson Financial, who typically exclude one-time items from their estimates, predicted $4.93 per share.
Sales rose almost 6% to $5.51 billion from $5.19 billion last year. Excluding commissions paid to advertising partners, sales totaled $4.07 billion, which missed analysts' forecast of $4.08 billion.
In the previous earnings period, Google posted its first-ever drop in quarterly profit.
Google (GOOG, Fortune 500) stock was trading almost 1% higher to $392.24 in after-hours action Thursday after rising as high as 5.7% following the earnings release.
"It's not an expensive stock, and stocks are rallying even on bad news," said Jeff Rath, analyst at Canaccord Adams. "There's a building belief that the worst is behind us."
January and February were difficult months for Web search, but the trends started to improve in March and may be stabilizing, Rath said.
'Feeling the impact'
"Despite the tough economic climate, we had a good quarter," chief executive Eric Schmidt said in a conference call. "But no company is recession-proof, and Google is definitely feeling the impact."
Consumers are still searching on Google, but they're buying less, Schmidt said. "The shift to online gives us an advantage, so we're well-placed for the recovery when it occurs," he said.
Read more here
China Economy to Rebound as Stimulus Spurs Investment
(Bloomberg) -- China’s economy, the world’s third largest, may rebound this quarter as Premier Wen Jiabao’s 4 trillion yuan ($585 billion) stimulus package cushions the effects of the global recession.
Urban fixed-asset investment surged by almost a third in March and industrial-output growth accelerated, reports accompanying China’s gross domestic product figures showed yesterday. First-quarter GDP grew 6.1 percent, the slowest pace in almost a decade, as exports slumped.
“The economy has gained significant momentum since February,” said Sun Mingchun, an economist at Nomura Holdings Inc. in Hong Kong, who predicts the economy will expand 8 percent this year. “We still expect a V-shaped recovery.”
A pickup in China will contribute “strongly” to growth in the rest of Asia by increasing demand for commodities and products from around the region, according to the World Bank. Wen has cautioned that while the economy is in better-than- expected shape, China is yet to establish a solid foundation for a recovery.
“China has bounced and I think it’s very important,” Barclays Plc President Robert Diamond said in an interview yesterday in New York. “The impact that that can have, if we’re right and we see this continuation in stronger Asian countries, is pretty phenomenal.”
UBS AG yesterday raised its estimate for economic growth this year to as much as 7.5 percent from 6.5 percent previously and Royal Bank of Scotland increased its estimate to 7 percent from 5 percent. Merrill Lynch expects second-quarter growth of 7.2 percent, climbing to 8 percent for 2009.
Newman’s Optimism
“China got its stimulus plan started months ahead of the U.S. and it’s really working,” said Frank Newman, chairman of Shenzhen Development Bank, who served as a deputy secretary at the U.S. Treasury from 1994 to 1995. “We see a lot of it in action because we are financing it.”
Economists have been increasing their forecasts since February. The median estimate of 15 surveyed by Bloomberg News before the release of yesterday’s data was for 7.7 percent growth this year, up from 7.2 percent in February.
Nissan Motor Co. said its sales of passenger cars in China rose 36 percent in March from a year earlier as stimulus measures boosted confidence and attracted more buyers into showrooms. Anhui Conch Cement Co., China’s biggest maker of the building material, said this month that sales volume jumped 15 percent in the first quarter from a year earlier.
Wen’s Target
The government has targeted 8 percent economic growth for the year, a level deemed necessary to create enough jobs for its growing population.
The closure of thousands of factories has cost the jobs of millions of migrant workers, raising the risk of social unrest as China approaches the anniversary of the anti-government protests and crackdown in Tiananmen Square in June 1989.
While stimulus measures have started to produce results, China faces faltering export demand, industrial overcapacity, unemployment and weak private investment sentiment, Wen said yesterday. A rebound in industrial-output growth lacks momentum, the premier said.
“Growth may have bottomed out in the first quarter but with private sector and overseas demand still weak, China will not emerge from this downturn as rapidly as it went in,” said Mark Williams, an economist with Capital Economics Ltd. in London.
Read more here
Urban fixed-asset investment surged by almost a third in March and industrial-output growth accelerated, reports accompanying China’s gross domestic product figures showed yesterday. First-quarter GDP grew 6.1 percent, the slowest pace in almost a decade, as exports slumped.
“The economy has gained significant momentum since February,” said Sun Mingchun, an economist at Nomura Holdings Inc. in Hong Kong, who predicts the economy will expand 8 percent this year. “We still expect a V-shaped recovery.”
A pickup in China will contribute “strongly” to growth in the rest of Asia by increasing demand for commodities and products from around the region, according to the World Bank. Wen has cautioned that while the economy is in better-than- expected shape, China is yet to establish a solid foundation for a recovery.
“China has bounced and I think it’s very important,” Barclays Plc President Robert Diamond said in an interview yesterday in New York. “The impact that that can have, if we’re right and we see this continuation in stronger Asian countries, is pretty phenomenal.”
UBS AG yesterday raised its estimate for economic growth this year to as much as 7.5 percent from 6.5 percent previously and Royal Bank of Scotland increased its estimate to 7 percent from 5 percent. Merrill Lynch expects second-quarter growth of 7.2 percent, climbing to 8 percent for 2009.
Newman’s Optimism
“China got its stimulus plan started months ahead of the U.S. and it’s really working,” said Frank Newman, chairman of Shenzhen Development Bank, who served as a deputy secretary at the U.S. Treasury from 1994 to 1995. “We see a lot of it in action because we are financing it.”
Economists have been increasing their forecasts since February. The median estimate of 15 surveyed by Bloomberg News before the release of yesterday’s data was for 7.7 percent growth this year, up from 7.2 percent in February.
Nissan Motor Co. said its sales of passenger cars in China rose 36 percent in March from a year earlier as stimulus measures boosted confidence and attracted more buyers into showrooms. Anhui Conch Cement Co., China’s biggest maker of the building material, said this month that sales volume jumped 15 percent in the first quarter from a year earlier.
Wen’s Target
The government has targeted 8 percent economic growth for the year, a level deemed necessary to create enough jobs for its growing population.
The closure of thousands of factories has cost the jobs of millions of migrant workers, raising the risk of social unrest as China approaches the anniversary of the anti-government protests and crackdown in Tiananmen Square in June 1989.
While stimulus measures have started to produce results, China faces faltering export demand, industrial overcapacity, unemployment and weak private investment sentiment, Wen said yesterday. A rebound in industrial-output growth lacks momentum, the premier said.
“Growth may have bottomed out in the first quarter but with private sector and overseas demand still weak, China will not emerge from this downturn as rapidly as it went in,” said Mark Williams, an economist with Capital Economics Ltd. in London.
Read more here
Wednesday, April 15, 2009
Mobius Says Thai Economy at Risk; SET Falls Most in Two Weeks
(Bloomberg) -- Mark Mobius, whose Templeton Asset Management Ltd. has invested in Thailand for two decades, says the nation’s political turmoil poses a risk to Southeast Asia’s second-largest economy. Stocks fell the most in two weeks.
“In the near and medium term, Thailand will need to restore consumer confidence and revive investment,” Mobius, who helps oversee $20 billion in emerging-market assets at San Mateo, California-based Templeton, said in an e-mail response to questions. “Failure to do so due to these political conflicts could present a risk to Thailand’s growth.”
Thailand’s benchmark SET Index dropped 0.9 to 449.91 at 10:02 a.m. as it resumed trading today after a three-day holiday marred by street clashes and weekend demonstrations that forced the cancellation of the Association of Southeast Asian Nations summit in the resort town of Pattaya on April 10. The protests left two dead and 123 injured.
The drop wiped out the SET’s gain for the year, compared with the 14 percent increase in MSCI’s developing-nation index. The Thai index tumbled 48 percent last year, the steepest drop since 1997, when the devaluation of Thailand’s baht triggered an economic crisis in Asia. The measure trades for 8.2 times its companies’ projected earnings for 2009, the lowest valuation among Asian equity benchmark gauges tracked by Bloomberg.
Abhisit
The demonstrations have dealt a blow to Prime Minister Abhisit Vejjajiva, 44, who called off the summit after so-called Red Shirt protesters stormed the meeting venue.
The group supports exiled former Premier Thaksin Shinawatra and says Abhisit came to power illegitimately in December. Opponents of Thaksin, in exile to avoid a two-year jail sentence for corruption, seized airports in the country last year. Abhisit said today Thaksin is in Dubai.
The past week of protests forced Abhisit to declare emergency rule April 12 after he failed to curb demonstrations, which have since subsided.
“The current political situation means that less foreigners will invest in the country and that portfolio managers may actually be sellers of equity,” investor Marc Faber, who publishes the Gloom, Boom and Doom report, said in an April 13 interview. “The two parties will not agree on anything for a long time to come and that has a negative impact on business and in particular tourism.”
The country relies on visitors for about 12 percent of its economy, according to the tourism authority.
Read more at Bloomberg
“In the near and medium term, Thailand will need to restore consumer confidence and revive investment,” Mobius, who helps oversee $20 billion in emerging-market assets at San Mateo, California-based Templeton, said in an e-mail response to questions. “Failure to do so due to these political conflicts could present a risk to Thailand’s growth.”
Thailand’s benchmark SET Index dropped 0.9 to 449.91 at 10:02 a.m. as it resumed trading today after a three-day holiday marred by street clashes and weekend demonstrations that forced the cancellation of the Association of Southeast Asian Nations summit in the resort town of Pattaya on April 10. The protests left two dead and 123 injured.
The drop wiped out the SET’s gain for the year, compared with the 14 percent increase in MSCI’s developing-nation index. The Thai index tumbled 48 percent last year, the steepest drop since 1997, when the devaluation of Thailand’s baht triggered an economic crisis in Asia. The measure trades for 8.2 times its companies’ projected earnings for 2009, the lowest valuation among Asian equity benchmark gauges tracked by Bloomberg.
Abhisit
The demonstrations have dealt a blow to Prime Minister Abhisit Vejjajiva, 44, who called off the summit after so-called Red Shirt protesters stormed the meeting venue.
The group supports exiled former Premier Thaksin Shinawatra and says Abhisit came to power illegitimately in December. Opponents of Thaksin, in exile to avoid a two-year jail sentence for corruption, seized airports in the country last year. Abhisit said today Thaksin is in Dubai.
The past week of protests forced Abhisit to declare emergency rule April 12 after he failed to curb demonstrations, which have since subsided.
“The current political situation means that less foreigners will invest in the country and that portfolio managers may actually be sellers of equity,” investor Marc Faber, who publishes the Gloom, Boom and Doom report, said in an April 13 interview. “The two parties will not agree on anything for a long time to come and that has a negative impact on business and in particular tourism.”
The country relies on visitors for about 12 percent of its economy, according to the tourism authority.
Read more at Bloomberg
Warren Buffett takes charge
(Fortune Magazine) -- Warren Buffett is famous for his rules of investing: When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact. You should invest in a business that even a fool can run, because someday a fool will. And perhaps most famously, Never invest in a business you cannot understand.
So when Buffett's friend and longtime partner in Berkshire Hathaway (BRKB), Charlie Munger, suggested early last year that they invest in BYD, an obscure Chinese battery, mobile phone, and electric car company, one might have predicted Buffett would cite rule No. 3 above. He is, after all, a man who shunned the booming U.S. tech industry during the 1990s.
But Buffett, who is 78, was intrigued by Munger's description of the entrepreneur behind BYD, a man named Wang Chuan-Fu, whom he had met through a mutual friend. "This guy," Munger tells Fortune, "is a combination of Thomas Edison and Jack Welch - something like Edison in solving technical problems, and something like Welch in getting done what he needs to do. I have never seen anything like it."
Read more at Fortune
So when Buffett's friend and longtime partner in Berkshire Hathaway (BRKB), Charlie Munger, suggested early last year that they invest in BYD, an obscure Chinese battery, mobile phone, and electric car company, one might have predicted Buffett would cite rule No. 3 above. He is, after all, a man who shunned the booming U.S. tech industry during the 1990s.
But Buffett, who is 78, was intrigued by Munger's description of the entrepreneur behind BYD, a man named Wang Chuan-Fu, whom he had met through a mutual friend. "This guy," Munger tells Fortune, "is a combination of Thomas Edison and Jack Welch - something like Edison in solving technical problems, and something like Welch in getting done what he needs to do. I have never seen anything like it."
Read more at Fortune
Tuesday, April 14, 2009
Asian Stocks Decline on U.S. Retail Sales, Yen; Nomura Slumps
(Bloomberg) -- Asian stocks dropped for the first time in five days after U.S. retail sales unexpectedly declined and a stronger yen dimmed the earnings outlook for Japan’s electronics and auto companies.
Li & Fung Ltd., the biggest supplier of toys and clothing to Wal-Mart Stores Inc., tumbled 9.8 percent in Hong Kong. Canon Inc., which generates more than half of its sales from U.S. and Europe, declined 3.2 percent in Tokyo as the yen rose to a two- week high against the dollar. Nomura Holdings Inc., Japan’s largest brokerage, slumped 7.3 percent, leading declines by finance shares, the region’s best performers in the past month.
“This is a reality check,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which manages $28 billion. “The collapse the global economy was experiencing has come to an end, but investors moved too quickly in predicting a recovery.”
Read more at Bloomberg
Li & Fung Ltd., the biggest supplier of toys and clothing to Wal-Mart Stores Inc., tumbled 9.8 percent in Hong Kong. Canon Inc., which generates more than half of its sales from U.S. and Europe, declined 3.2 percent in Tokyo as the yen rose to a two- week high against the dollar. Nomura Holdings Inc., Japan’s largest brokerage, slumped 7.3 percent, leading declines by finance shares, the region’s best performers in the past month.
“This is a reality check,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, which manages $28 billion. “The collapse the global economy was experiencing has come to an end, but investors moved too quickly in predicting a recovery.”
Read more at Bloomberg
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