Archive for the 'money' Category

04
Mar

Greece prepares tax rises, debt continues to mount

ATHENS (AFP) – Greece, fighting to avert bankruptcy, was to reveal a third wave of tax rises and welfare cuts on Wednesday to win support from the European Union and a reprieve from debt markets.

Prime Minister George Papandreou, who warned lawmakers on Tuesday that the country faced a "wartime situation", was expected to announce the new draconian measures after briefing President Carolos Papoulias.

The latest round of crisis action is believed to include a two-percent increase in sales tax, a pension freeze, heavier benefit cuts for civil servants and steeper tobacco and fuel duties.

The European Commission, the EU's executive arm, insists that Greeks must sort out their fiscal mess — which includes a public debt of nearly 300 billion euros (407 billion dollars) — before expecting any outside help.

Greece must avoid "a nightmare of bankruptcy in which the state would not be able to pay salaries or pensions," Papandreou told lawmakers in Athens. He said: "We find ourselves today in a wartime situation."

That would create a huge headache for its European partners which are alarmed that Greece's problems could cause lasting damage to the credibility and discipline which underpin the eurozone. Related article:EU unveils 2020 vision

Greece needs more than 20 billion euros (27 billion dollars) by May to redeem old debt falling due. It also needs to borrow heavily to finance a public deficit which is close to 13 percent of gross domestic product (GDP).

Overall, the government is desperate to improve its downgraded credit rating and thereby reduce the crippling interest rate, currently slightly above 6.0 percent, which it has to pay to borrow from international investment funds.

And time is short. Papandreou has said that financing needs are assured until the middle of March.

A total of 54 billion euros will have to be raised this year to cover the public deficit which has swollen way beyond the three-percent EU limit make quick cash. Moody's rating agency has estimated that about 15 percent of tax revenues will be absorbed by debt charges this year.

A team of analysts from the Standard and Poor's rating agency is currently in Athens for talks with Greek ministers.

Meanwhile, the sentiment on financial markets about the course of events in Greece is highly uncertain, although there is a suspicion that if the latest round of measures satisfies EU authorities, some sort of support for Greece may emerge in the next week or so.

A Greek official told Dow Jones Newswires that Athens would issue a 10-year bond to raise between three and five billion euros "within days of the announcement of the austerity package."

And economist Neil MacKinnon at VTB Capital told AFP that a rescue "has to be agreed, whether it is some sort of loan package contingent on evidence of Greek budget cuts or debt purchases by EU governments and/or state owned entities or some sort of debt guarantees."

The Greek prime minister flies to Berlin on Friday for talks with German Chancellor Angela Merkel, widely regarded as holding the key to any eurozone bailout.

Papandreou has undertaken to use the crisis to restructure the economy, and cure Greece of decades of fiscal mismanagement and deeply entrenched corruption, but statistics released on Tuesday show that he faces a titanic reform task as bribery is on the rise.

The local branch of Transparency International said that bribes last year rose by 50 million euros from 2008 to 790 million euros (1.1 billion dollars), paid to all parts of the economy, from hospitals to tax officials.

Greece prepares tax rises, debt continues to mount

14
Feb

Insider Trading Charge in China

HONG KONG — The former chairman of one of China’s largest electronics companies has been charged with insider trading, offering bribes and running illegal operations, the state-run China News Service said.

Huang Guangyu’s case was sent to the Beijing Municipal Second Intermediate People’s Court for trial, and the people accused of being his accomplices have also been indicted, China News Service said Saturday without identifying those people.

The charges against Mr. Huang had long been expected. He has been in detention since November 2008, and Chinese officials subsequently took the uncommon step of publicly confirming that he was under investigation by the Ministry of Public Security.

He resigned as chairman of the electronics company, Gome, two months after his detention.

He has been held incommunicado, as is common in China during investigations, and could not be reached Sunday for comment.

Sunday marks the first day of the Lunar New Year holiday, with government and corporate offices closed across China and tens of millions of people going to their hometowns to celebrate.

The long-running scandal over Mr no fax payday loans. Huang’s alleged activities has already tarnished the careers of a series of Chinese officials. Zhu Ying, the former deputy director of the Shanghai Municipal Public Security Bureau, was expelled from the municipal discipline inspection committee of the Communist Party last December. The committee issued a statement at the time saying, without providing details, that he had been stripped of his membership in connection with the investigation of Mr. Huang.

The investigation of Mr. Huang has also resulted in further reviews at the Ministry of Public Security of how the ministry’s economic crimes section had handled the affair, according to the state-run news agency Xinhua, which is larger than China News Service.

Before his arrest, Mr. Huang had been one of the wealthiest people in China, with Forbes magazine estimating his wealth then at $2.7 billion and the Hurun Report, which also keeps track of the wealth of Chinese business leaders, estimating that he was worth $6.3 billion.

Insider Trading Charge in China

09
Feb

Feds Bullard: May see asset sales late 2010

WASHINGTON (Reuters) – The Federal Reserve could sell some assets later this year in an effort to whittle down its bloated balance sheet to avoid inflation, a senior Federal Reserve official said on Monday.

The Fed's purchases last year of longer-term Treasuries and other debt, undertaken to help revive the economy, were financed by adding cash to the financial system. But leaving large amounts of cash sloshing around as the economy strengthens risks fueling inflation.

"Maybe you get in the second half of 2010 or something like that, if things are going pretty well, maybe then you'd sell a little bit at that point and you'd try to see how the market reacts," St. Louis Federal Reserve Bank President James Bullard told Reuters in an interview.

The U.S. central bank should try to get its balance sheet, which has ballooned by more than $1 trillion, down to a normal size before the next recession strikes to ensure it has the ammunition it needs to counter a downturn, Bullard said.

After the Fed slashed interest rates to near zero in late 2008, it launched a buying spree that also included mortgage-backed securities and debt issued by housing finance agencies to provide further support for the economy.

SALES BEFORE RATE HIKES

Bullard, who is a voting member on the Fed's policy-setting panel this year, said his preference would be to begin selling some assets before raising interest rates, although he said not all Fed policymakers were likely to see it his way.

He said the idea would be not only to get the balance sheet back to a pre-crisis size, but to return it to holdings of mostly U.S. Treasury securities.

The St. Louis Fed chief has long been an advocate of more actively managing the Fed's assets — either by selling them or by leaving open the option of buying more if the economy stumbles anew. The consensus view at the Fed favors shuttering the purchase programs as planned and relying on rate hikes initially to tighten financial conditions.

However, with an economic recovery seemingly on track, Bullard made clear officials had begun to debate how best to normalize the Fed's balance sheet. Fed Chairman Ben Bernanke could shed more light on the central bank's plans in congressional testimony on Wednesday.

Bullard said markets would be disrupted if they came to believe the Fed was planning large-scale sales of mortgage-backed securities. However, he said the idea of gradual sales as a strategy is under discussion.

"Selling has more sympathy than you might think free credit report online. It's more a question of timing and speed," Bullard said.

"You'd kind of want the situation to be back to normal in some kind of time frame before the next storm comes for the economy so that at that point you'd have a fresh set of tools and you can react at that point," he said. "There will be a lot more discussion going forward about how exactly to do this."

INFLATION EXPECTATIONS SEEN RISING

The Fed's unprecedented policy actions helped lift the U.S. economy out of its deepest downturn since the 1930s. After contracting for four straight quarters, the economy grew at a 2.2 percent annual rate in the third quarter of last year and a 5.7 percent pace in the final three months of the year.

Bullard said the economy should grow at an annual rate above 3 percent in the first half of this year, adding that unemployment may have peaked. The U.S. jobless rate dropped to 9.7 percent in January from 10 percent in December.

The Fed is scheduled to wrap up its purchases of $1.43 trillion in mortgage-related securities by the end of next month. The program was undertaken to lower mortgage rates and prop up the struggling housing market.

Bullard said he does not expect a substantial jump in mortgage rates when the program ends, as some fear.

"I think it will be seamless," he said.

Further emphasizing his concerns about preventing inflation, Bullard said inflation expectation are at or above the Fed's implicit target range. Central bankers lay great stress on holding inflation expectations in check because they believe doing so is key to keeping inflation at bay.

"If the data keep coming in as expected and the economy keeps improving, then those will continue to ratchet up unless the central bank sends some signals that, 'No, we intend to keep inflation close to target,'" he said.

Bullard said that if the rise in inflation expectations began to look troubling, the Fed could discard its pledge to hold interest rates exceptionally low for an extended period, even if unemployment remained high.

"We know that the expectations are very important to how these things evolve, and so if those started to get out of hand, we really have to come back in and send a signal to the market," he said. "It would trump everything."

Fed’s Bullard: May see asset sales late 2010

08
Feb

CIT names ex-Merrill CEO Thain as chairman, CEO

NEW YORK – CIT Group has chosen former Merrill Lynch CEO John Thain to lead the company as chairman and CEO as the commercial lender continues to restructure its business following a brief stay in bankruptcy protection last year.

CIT Group Inc., one of the nation’s largest lenders to small and mid-sized businesses, says Thain will take the helm immediately. He replaces acting interim CEO Peter J. Tobin, who will remain on CIT’s board.

Thain served as chairman and CEO of Merrill Lynch until its sale to Bank of America was completed in January 2009 bad credit payday advance. He resigned under pressure from the combined company after reports he rushed out billions in bonuses to Merrill employees in his final days as CEO, while the brokerage was suffering huge losses and just before Bank of America took it over.

CIT names ex-Merrill CEO Thain as chairman, CEO

06
Feb

Earnings Preview: Lorillard Inc.

RICHMOND, Va. – Lorillard Inc., the nation’s third-biggest cigarette company, reports its fourth-quarter results before the stock market opens Monday.

WHAT TO WATCH FOR: Any sign the maker of Newport cigarettes is losing market share loss among menthols or gaining in the discount segment — and any sign that cigarette volumes are rebounding from sharp drops in volume experienced industrywide in 2009 due to a federal tax hike.

Analysts believe the Greensboro, N.C., company continues to have the industry’s best outlook for profit margin, price per pack and volume.

Despite the Food and Drug Administration’s pending study on the public health impact of menthol, the segment continues to grow as the rest of the cigarette market shrinks. A scientific committee being organized by the FDA must study and issue a report on the public health impact of menthol cigarettes.

The top two U.S. cigarette companies — No. 1 Philip Morris USA, owned by Richmond, Va business cards.’s Altria Group Inc., and No. 2 Reynolds American Inc., based in Winston-Salem, N.C. — are ramping up efforts to grab some of the menthol market away from Lorillard.

Lorillard is working to grow its Maverick discount brand as the weak economy and high unemployment have caused some consumers to switch to lower-priced brands.

WHY IT MATTERS: As demand for cigarettes continues to fall, any rebound in volumes could signal consumers are adjusting to April’s 62-cents-per-pack federal tax hike, which most cigarette makers accompanied with price hikes.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters on average expect Lorillard to earn $1.51 per share on revenue of $1.23 billion.

LAST YEAR’S QUARTER: Lorillard reported profit of $1.53 per share on revenue of $1.09 billion.

Earnings Preview: Lorillard Inc.

03
Feb

Obama pushes energy plan that GOP may support

WASHINGTON – Looking for a political and policy victory, President Barack Obama on Thursday pushed energy proposals designed to attract allies and opponents alike, calling for increased ethanol production and new technology to limit pollution from the use of coal.

Facing a Senate with a newly energized Republican minority, Obama has begun tailoring his energy policy to GOP-supported ideas, starting in his State of the Union address last week with calls for offshore oil drilling opposed by environmentalists and a bigger role for nuclear power.

The first-term president — politically weakened by the loss of the late Sen. Edward M. Kennedy’s seat to Massachusetts Republican Scott Brown — also has begun promoting his energy policy as a job-creating boost to the economy.

“Now, there’s no reason that we shouldn’t be able to work together in a bipartisan way to get this done,” Obama said during a bipartisan meeting with governors in the White House’s State Dining Room. “It’s good for our national security and reducing our dependence on foreign oil. It’s good for our economy, because it will produce jobs.”

He spoke as the White House released presidential task force recommendations calling on both Washington and the private sector to spend more money on biofuels like ethanol. The group said the nation likely will fall short of goals Congress has set for creating more environmentally friendly energy.

At the same time, the Environmental Protection Agency issued a new rule requiring U.S. companies to produce at least 13 billion gallons of renewable fuels this year — up from about 11.1 billion in 2009. The congressional goal is 36 billions gallons of renewable fuel by 2022.

EPA Administrator Lisa Jackson said the new rules would reduce oil dependence by million of barrels a year and “help bring new economic opportunity to millions of Americans, particularly in rural America us fast cash.”

In his meeting with the governors, Obama also announced a new task force to study ways to increase the use of coal in meeting the nation’s energy needs without increasing the pollution that contributes to global warming.

“It’s been said that the United States is the Saudi Arabia of coal, and that’s because … it’s one of our most abundant energy resources,” Obama said. “If we can develop the technology to capture the carbon pollution released by coal, it can create jobs and provide energy well into the future.”

Washington Gov. Christine Gregoire said the president told coal-state governors he understood their resistance to change when coal suppliers in their states are making money. She said Obama urged them to be partners in developing clean coal alternatives, a proposal that was embraced by many Republicans in the room.

“There was consensus around, let’s see if we can develop a clean coal strategy of the future,” she said.

The White House meeting comes a day after Obama signaled a willingness to separate a controversial cap-and-trade proposal aimed at limiting carbon pollution from more attractive green energy jobs and energy efficiency proposals. The House approved the anti-pollution measure last year as part of a comprehensive energy bill, but it is unlikely to win Republican support on Capitol Hill.

Energy has been a major part of the president’s domestic agenda since he took office, but it has taken on new urgency in the wake of Brown’s victory in Massachusetts as both the president and his Democratic allies on Congress look ahead to the fall elections.

___

Associated Press Writer Julie Pace contributed to this report.

Obama pushes energy plan that GOP may support

Hot News: Bernanke voices economic concerns as hes sworn in

02
Feb

Geithner says economy improved from year ago

WASHINGTON – Treasury Secretary Tim Geithner (GYT’-nur) says the nation’s economy is stronger than it was a year ago, yet the government must continue to act to stimulate job growth.

Geithner told the Senate Finance Committee Tuesday that the Obama administration is trying to balance the desire to add jobs with the need to rein in ballooning budget deficits.

President Barack Obama has proposed giving companies a $5,000 tax credit for each new worker they hire in 2010 no credit check payday loan. Businesses that increase wages or hours for their current workers in 2010 would be reimbursed for the extra Social Security payroll taxes they would pay.

Geithner says economy improved from year ago

Hot News: Oil rises above $75 on China, U.S. economy prospects

25
Jan

Geithner warns of Bernanke fallout

Treasury Secretary Timothy Geithner warned that the financial markets would view a Senate rejection of Ben Bernanke's renomination as "very troubling" but said he's sure the embattled Federal Reserve chairman will prevail.

"We're very confident that the chairman will be reconfirmed by the Senate, and we think it's very important he be reconfirmed by the Senate," Geithner said Friday in an interview at the Treasury for POLITICO's new video series, "Inside Obama's Washington," debuting Monday.

"He's done a remarkable job of helping steer this economy out of the great recession. And I think he'll play a very important role in helping in the success of our efforts to try to make sure we are bringing this economy back to durable growth."

Asked about possible market reaction to a defeat, Geithner said: "I think the markets would view that as a very troubling thing to the economy as a whole. But, as I said, I don't think they should be uncertain. I think they should be confident because we are very confident he will be reconfirmed."

Bernanke is having such a rough time, Geithner suggested, because the country is "in a moment where people are incredibly angry and frustrated by the damage this crisis caused."

"You see that across the country," Geithner said. "That's perfectly understandable, and everybody involved in this effort is bearing a lot of the brunt of that frustration and anger."

The Bernanke nomination is the latest headache for the nation's 75th Treasury secretary, who has kept his dry sense of humor while juggling some of the Obama administration's highest-stakes crises — winding down financial bailouts and trying to get banks lending again, instilling confidence despite data that are mixed at best and serving as a public face (and sometimes punching bag) for an economic team often accused of being too close to Wall Street.

He sees his biggest challenge as getting the right incentives in place to help spur private-sector job creation through tax, export and research-and-development policies. And he continues to shepherd the financial reregulation that was a centerpiece of President Barack Obama's first-year agenda. The House has passed a version, and the Senate will continue working on it this winter.

Geithner is most grateful that his strategy to bring private capital in to stabilize the markets has worked effectively. Banks have raised about $200 billion in nongovernment equity and debt, effectively taking the government out. Last year, most everyone assumed the U.S. would have to pony up a lot more taxpayer money. In fact, the government has gotten most of the bank money back and is on track to make a profit on that part of the bailout. Treasury’s view is that without that stability in the system, no progress on the broader economy would have been possible.

Geithner, 48, came up as a staff guy, working in three administrations for five Treasury secretaries. And he was president and CEO of the Federal Reserve Bank of New York during the financial meltdown of 2008. So this is the second time that he's been one of a handful of officials charged with staving off a depression.

Despite the sudden pressure from Bernanke's renomination, Geithner chatted calmly in the Treasury's Diplomatic Reception Room. He joked that he'd like to do a segment explaining the economy on ESPN's "SportsCenter" (he can't tell the anchors apart) and was looking forward to a birthday dinner with his wife, Carole, at Rasika, a hip Indian restaurant in Penn Quarter.

The question hanging over the pleasantries: Is there any way that Bernanke could lose?

"I don't believe so," Geithner replied. "We are very confident that this will happen, and he will have the support he needs to continue in this important role."

On Saturday, Obama made what a White House aide called "a few check-in calls to senators and members of leadership to make sure Bernanke was on track, and he was assured he was."

The White House was rushing to shore up Bernanke as the stock market was dropping, after Obama's announcement that he wanted further restrictions on the activities of the biggest banks. Geithner rejected the banks' contention that the proposed rules could mean thinner markets and less money available for lending.

"That's the argument you're always going to hear when you try to change things," he said no fax pay day loan. "But I do not believe that there is a credible risk of that in the reforms we are pursuing."

One of the most surprising — and persistent — critics of the administration's economic team has been Arianna Huffington, founder of The Huffington Post, who has taken a boisterously populist tack that includes a Move Your Money campaign to get depositors to move their money from big banks to neighborhood banks.

Geithner didn't endorse her idea. But he did say that customers of financial institutions "should be very demanding in the kind of service they expect, the kind of products they get, the disclosure banks offer to basic fairness and dealings."

"I'm very supportive of customers of banks, other investors of banks, creditors of banks holding them to very high standards — that's something that's very appropriate," Geithner said. "I'm not concerned about her campaign, and I agree with the basic principle … that we've been through a period where I think people are right to expect more of their financial institutions."

Huffington had an off-the-record dinner with Geithner shortly after Thanksgiving and gave him some advice he clearly has not taken. Dodging a question about their conversation, the secretary said that his approach of "trying to fix [the system] quickly and cleanly" should have appeal for both ends of the political spectrum.

"If you're on the right, you should be relatively pleased with our strategy, because we were able to pull the government out of the financial system much more quickly than people thought," he said. "We have a much, much smaller footprint today than when I came into office. And if you're from the left, you should be able to look at the strategy and say, by solving this today at much lower cost, we have more resources available to do things that many people think are important for the government to do better."

Other key points by Geithner:

— On whether he remains confident a clear recovery will be under way by this spring: "Very confident. The economy is healing. It's growing. It's more broad-based. You see the classic signs of greater confidence among consumers and businesses now. They see stronger orders. So I think we've been successful in breaking the momentum of the worst recession in generations. But this crisis caused a lot of wreckage.There's still a lot of damage out there. Unemployment is still very, very high, and we have a lot of work to do to make sure that we're restoring confidence, getting people back to work, making businesses comfortable to make the kind of decisions that are necessary to grow the economy. … I think most business economists, most businesses, would say now that you'll probably start to see positive job growth sometime in the spring."

— On when people are going to start to feel better about the economy: "The turn really came in the second quarter of last year — really in the spring and early summer. That's when the economy started to bottom. That's when the financial markets started to show the classic signs of confidence and hope. And there's been a steady, gradual improvement since then. … I just want to emphasize that this crisis caused an enormous amount of damage not just to people's lives and to businesses but to their confidence in how this country is being run. And we need to restore that, rebuild that. That's going to take a lot of effort over time."

— On his philosophy for the job: "The most important thing — and the really only source of credibility and confidence — is to be honest with people about the challenges we face, to try to be open about how we think it's best to solve them and then to act."

— On his own job security: "I'm going to do this as long as the president wants me to help contribute to fixing this mess, and I'm very proud of what he's been able to accomplish in this first year under enormously difficult conditions."

Read More Stories from POLITICODems' Bush-bashing goes bustBeau Biden not running for SenateFive key health reform questionsW.H. hopes to blunt SCOTUS decisionSenate Dems struggle to unite

Geithner warns of Bernanke fallout

24
Jan

India carmaker Maruti profit triples

NEW DELHI (AFP) – India's biggest carmaker Maruti Suzuki said Saturday its quarterly net profit more than tripled as it announced plans to increase capacity to maintain its dominance of the domestic market.

Maruti, majority owned by Japan's Suzuki Motor Corp, said net profit during the fiscal third quarter soared to 6.88 billion rupees (149 million dollars) from 2.14 billion rupees a year earlier.

The performance, fuelled by cheap loans and a reviving domestic economy, beat analyst expectations that profit for the three months to December would be around 5.8 billion rupees.

"This has been a good quarter," said Maruti's chief financial officer Ajay Seth, as he announced the company would expand capacity to defend its market leadership position from global rivals and meet increasing domestic demand.

A host of vehicle makers from General Motors to Renault and Toyota have unveiled plans for car launches in India to grab a larger slice of the fast-growing market and counter sluggish demand in developed countries.

India is now Asia's third-largest car market, outstripped only by China and Japan, and is one of the few countries where automobile sales are rapidly increasing. Car sales jumped 19 percent last year to 1.43 million units.

Maruti, which sells about one in two cars in the country, said sales jumped 62.5 percent to 73.34 billion rupees.

Seth said Maruti planned to invest 17 billion rupees to make 250,000 more cars each year from April 2012, increasing total capacity from one million units.

The expansion would take place at Maruti's plant at Manesar near the Indian capital.

Seth said Maruti could further ramp up capacity "if there is a need later no fax cash advances."

The car manufacturer attributed the profit increase partly to government stimulus measures aimed at helping the industry ride out the global economic slump.

The measures have put more money into the hands of India's growing middle class.

"Favourable conditions in the domestic market supported by the government's stimulus package and ease of automobile finance helped achieve good sales," the company said in a statement.

Nearly four-fifths of cars in India are bought using loans.

The central bank has cut interest rates to record lows to cushion the impact of international financial slump.

Maruti's domestic sales in the quarter jumped by 38 percent to 218,910 units while exports soared by 167 percent to 39,116 vehicles, spurred by European government incentives to scrap ageing vehicles.

Seth said the company was "cautiously optimistic" about sales volumes in the fourth quarter but added rising commodity prices would put pressure on profit margins.

"We also have to keep in mind interest rates may rise (as the domestic economy recovers) and it is important that government incentive measures stay in place" to help keep the market buoyant, he told AFP.

Passenger car sales are forecast to reach two million this year and are expected to triple in the next decade, boosted by higher incomes in the country of 1.2 billion people, according to industry estimates.

India carmaker Maruti profit triples

20
Jan

Kraft to Acquire Cadbury in Deal Worth $19 Billion

After months of fiercely resisting any deal, Cadbury agreed on Tuesday to an improved takeover offer from Kraft Foods, worth about $19 billion.

For Kraft, the deal offers a chance to expand its footprint in emerging markets and in higher-growth sectors like gum and candy.

“It transforms the portfolio, accelerates long-term growth and delivers highly attractive returns,” Irene B. Rosenfeld, Kraft’s chairwoman and chief executive, said in a statement.

Cadbury for its part will benefit from the supply chain of a larger company, said Jon Cox, a food and beverage analyst at Kepler Capital Management in Zurich.

But the prospect of a takeover of Cadbury, the 186-year-old British company, especially by an American multinational like Kraft, sent shudders throughout Britain and prompted a wave of public protests.

The Mail on Sunday, one of the biggest-selling British newspapers, ran a “Keep Cadbury British” campaign.

“It’s sad to see another British company bought up by a multinational,” Mr. Cox said, “but that’s finance.”

Prime Minister Gordon Brown said Tuesday that his government was “determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained,” and that “at a time when people are worried about their jobs, that jobs in Cadbury can be secure.”

During a conference call Tuesday, Kraft executives reiterated that the company would keep a strong presence in Britain and would be a “net importer” of jobs in the country.

The move will also continue the consolidation that has dominated the food business over the last decade.

While mergers involving food companies dipped somewhat last year — preliminary data from the Food Institute, a trade organization, showed 58 acquisitions in 2009, versus 130 in 2008 — analysts expect deal-making to pick up again as companies seek greater scale and presence in developing countries.

“We’re in the middle of a little wave of deal activity,” Greg Pearlman, the head of the food and consumer group at BMO Capital Markets, said. “Will they all be as big and global and transforming as this? No good credit score. But I do think there’s some pent-up demand for strategic acquisitions.”

That may present challenges for companies like Hershey that lack an international presence to pursue global competitors. Hershey, based in Pennsylvania, had been readying a potential bid for Cadbury, according to people briefed on the matter. Yet with Cadbury’s board recommending the new Kraft bid, a counteroffer from Hershey seems unlikely.

The agreement between Kraft and Cadbury came together over the weekend, after weeks of sometimes blistering volleys.

Cadbury in particular fought fiercely. Its chairman, Roger Carr, derided Kraft as showing “contempt” for the well-known brand and dismissed its hostile bidder as a low-growth conglomerate.

On Tuesday, Mr. Carr softened his language, saying in a joint statement that the new offer “represents good value for Cadbury shareholders.”

“For Cadbury shareholders, it’s the best possible deal, given they were dealt a bum hand, because there were no counterbidders,” Mr. Cox said. “The clear winner is Kraft.”

Kraft’s original, unsolicited offer, made in September, was worth about $16.7 billion.

The new offer is about a 5 percent premium over Cadbury’s closing share price of 807.5 pence on Monday and a 14 percent improvement over Kraft’s first offer in September.

Under the terms, Kraft will pay 500 pence in cash and offer 0.1874 new Kraft shares for each share of Cadbury. That amounts to a payment of 840 pence ($13.80) for each Cadbury share. Additionally, Cadbury will pay out a special dividend of 10 pence a share.

Tuesday was the last day Kraft could raise its offer under British takeover rules. Cadbury shareholders have until 1 p.m. London time on Feb. 2 to decide whether to accept it. While the terms of the offer are final, Kraft reserved the right to raise its bid if a rival offer were made.

William Neuman contributed reporting.

Kraft to Acquire Cadbury in Deal Worth $19 Billion

18
Jan

China markets set for new phase in 2010

SHANGHAI (AFP) – Shanghai's stock market is set for major changes in 2010 that could help close the gap with London and New York as the Chinese city strives to become a global financial centre, analysts say.

China began the year with a strong signal that it is serious about its goal of turning Shanghai into a leading finance hub by 2020, approving a raft of measures that give investors more sophisticated investment options.

Previously, mainland investors were only able to bet on stocks going up, but the State Council, or Cabinet, has approved trials of short-selling and margin trading that would allow investors to profit from falling markets as well.

"The ultimate introduction of the new investment options is, without doubt, a revolutionary move for China's capital markets," said Zhang Jian, a Beijing-based analyst with BOC International, Bank of China's brokerage unit.

Margin trading allows investors to borrow money from financial institutions to buy shares they expect to rise.

If the share price goes up, they can easily pay back the borrowed money. If the price goes down, investors must still pay back the full amount borrowed.

Short-selling allows investors to sell borrowed shares when they expect the price to decline. If the price falls, they can buy the shares at the lower price and return them to the lender.

"It opens a new chapter for China's domestic equity market. With these new rules, the A-share market will no longer be a 'one-way street,' as shorting and hedging become possible," Deutsche Bank economist Jun Ma wrote in a note.

"It is also a major step towards the internationalisation of the Chinese market," he added.

The central government has also approved a stock index futures market that will also give investors opportunities to profit when the market falls and help them hedge risks.

Preparations for the index futures market began years ago, with mock trading already running for three years. Margin and short trading systems tests began in late 2008.

Now that Beijing has given the green light, the new trading options could begin within three months, analysts said guaranteed online payday loans.

"These steps will speed up the pace for Shanghai to become an international financial centre," said Peng Yunliang of Shanghai Securities.

The changes come on top of expectations that the Shanghai Stock Exchange will see its first foreign listing in 2010 — HSBC has said it hopes to be the first, with a listing that could come as early as March, according to reports.

The developments — combined with the launch on October 30 of China's Nasdaq-style ChiNext board, which aims to boost start-ups as well as small and medium-sized companies — mark huge strides for Chinese capital markets and show growing confidence.

Both shorting and margin trading magnify risks, but experts say the practices could help reduce volatility over the long run by increasing liquidity.

Shanghai's market has seen huge swings in recent years. The benchmark Shanghai composite index soared 80 percent last year, but that came after a 65.5 percent plunge in 2008. So far this year the index is down 1.6 percent.

But China's asset prices are expected to continue to take off in 2010, with the economy expected to expand at roughly 10 percent, and investors will want to keep profiting from growing earnings, Macquarie Bank said in a note.

What impact will index futures trading have on the market?

Goldman Sachs studied the mock trading in China, which has seen eligible brokerages and the general public practising in simulations that involve no money since 2007.

The simulations suggest a maturing market with a bias towards long positions, or bets prices will rise, the US investment bank said in a research note, adding volatility declined as the mock trading progressed.

"The developments bring China a step closer to being ready to start foreign listings and attract world-renowned foreign companies to list in a market that is getting more mature and international," Shanghai Securities' Peng said.

China markets set for new phase in 2010

17
Jan

Sponsor Takes the Next Step in Tennis

LAS VEGAS — Fernando Verdasco was straining against a leg-press machine as he raised 710 pounds, yet his strength and conditioning coach, Gil Reyes, was making the most noise. Reyes bellowed in two languages as Verdasco, a Spanish tennis star, raised the massive load 14 times before Reyes finally shouted at him to stop.

“He’s a beast,” Reyes said last month. “I stopped him because I didn’t want him to break down. If he totally maxed out today, there’s a good chance it would throw him off stride tomorrow or the next day.”

Reyes, an American who speaks in the tones and rhythms of an evangelist, was Andre Agassi’s trainer and protector for nearly 20 years. He is now a company man: one of three pillars of the unusual player-development program created and financed by Adidas.

The other pillars are Sven Groeneveld, a veteran Dutch coach who started the program in 2006, and Darren Cahill, an Australian coach who with Reyes helped Agassi keep scaling the heights into his mid-30s.

Groeneveld is based in Amsterdam, and Reyes and Cahill in Las Vegas, the program’s training base. Reyes still works out of his private gym decorated with Agassi’s eight Grand Slam singles trophies and 1996 Olympic gold medal. Agassi remains a frequent visitor and is also an occasional hitting partner and counselor for the players.

But the program’s scope is broader, with Groeneveld and Cahill traveling to tournaments worldwide to offer on-site assistance with Groeneveld’s assistant Mats Merkel.

The executive who devised and supervises the operation is Jim Latham, an American expatriate and former Duke tennis player who saw the program as a way to protect his company’s investment in increasingly young athletes who sometimes lacked structure and expert advice.

“It’s a compact, mobile tennis academy,” said Latham, the head of global sports marketing for tennis at Adidas.

It is also a delicate diplomatic mission in a cutthroat, territorial sport unaccustomed to coaches spreading the wealth of their knowledge democratically or to manufacturers striving to be more than suppliers of apparel and juicy contracts.

“It’s a given that we had to have elite-level coaches,” Latham said. “But the other given for me was that it had to be people who were great communicators, who could go into it with all these people and make them feel included, rather than ‘my way or the highway.’ ”

Manufacturers’ teams are the foundation of sports like Formula One auto racing. But the Adidas developmental team remains unique in tennis, and though it is not without detractors who question its part-time approach, it is playing an increasingly visible role in the sport and has been involved in some big hits as well as misses.

The hits include Ana Ivanovic’s victory at the 2008 French Open and rise to No. 1, and Verdasco’s surprise run to last year’s Australian Open semifinals and rise into the top 10. The team, Groeneveld in particular, also provided counsel and support to Caroline Wozniacki, a Danish teenager coached primarily by her father who broke into the top four last year after reaching the United States Open singles final.

The misses include players like Evgeny Korolev, Anna Chakvetadze, Marcos Baghdatis and Sania Mirza, whose rankings and singles careers have not prospered. Ivanovic also dropped out of the top 10 after a mediocre 2009 season but spent the off-season working primarily with Groeneveld.

National tennis federations have long been involved in developing talent and providing coaching at the professional level. Some private academies have done the same.

But no other company has yet plunged in, and what also makes Adidas’s program unusual is that it does not attempt to be full service, but rather a consultancy business card design.

Latham said Adidas had contracts with about 75 players, more than 40 of whom are in the singles draws at the Australian Open beginning Monday. Luminaries like Jo-Wilfried Tsonga and Justine Henin have not sought help, but Latham estimated that 30 to 35 players have had some contact like seeking a quick tip from Groeneveld or training in Las Vegas, which requires an invitation from Latham.

Working with multiple players reduces a coach’s vulnerability and dependency.

“These guys can give unsugarcoated advice,” Latham said of his team.

But the Adidas principals emphasized that their input should be supplemental and that they wanted top players to have full-time coaches.

“This is not about a threat, this is not about better than, or instead of, it’s a matter of one plus one maybe might equal three,” Latham said.

But Verdasco and Ivanovic thrived under the system when they were without full-time coaches. Patrick Mouratoglou, who owns a prominent academy in France, said that he tried to play a similar role to many players but that he felt it undermined their relationships with their personal coaches. He now focuses on one or two players.

“I don’t doubt the quality or competence of Sven or any member of the team,” he said. “I just think the system is flawed. I stopped doing it. At first, you feel good because everyone loves you, and you give a bit to everyone, and everybody wants you on their court giving input. It’s a drug. If you need affection, it’s amazing. If you want results, it doesn’t work.”

Cahill said that he was sensitive to personal coaches’ concerns but that the benefits of exchanging thoughts and challenging preconceptions outweighed the negatives.

He had other options. Early last year, he trained on a trial basis with Roger Federer in Dubai. But Cahill, who has two children and increasingly strong ties to Las Vegas, said he was not prepared to handle the travel commitment Federer required. Instead, Cahill joined Adidas last March while continuing to do television commentary for ESPN and to work with Agassi’s foundation in Las Vegas.

Latham said the team’s existence has helped Adidas recruit several players, including Daniela Hantuchova, a 26-year-old Slovak who trained with Cahill and Reyes in the off-season. But Latham and Baghdatis failed to reach an agreement, and Baghdatis is no longer under contract.

Verdasco, 26, who won a warm-up event Saturday in Australia, is definitely still with the program: exchanging embraces and fist bumps with Reyes during intense training sessions. He is seeking a second home in Las Vegas to be closer to Reyes and his weights.

Reyes prefers to work one on one, so visitors are limited to three at a time. From the outside, his gym looks like a suburban home. It is in a gated community on a road named after Agassi, who built a house next door for his parents as well as a practice court. The carpeted weight room is filled with machines Reyes designed and built himself for Agassi because nothing tennis specific enough existed.

“If this is the future, I don’t really know,” Verdasco said of the Adidas program. “But of course it really helped me a lot, because I really found Gil that I have this strong connection with. Maybe if Adidas took another guy, maybe I wouldn’t have that same connection, and maybe I wouldn’t like it as much.”

Sponsor Takes the Next Step in Tennis