US stocks rose, with major indexes hitting fresh records on the back of multiple merger deals.]]> |||
New York - US stocks rose on Monday, with major indexes hitting fresh records on the back of multiple merger deals and hopes that China will take further accommodative monetary policy action.
Equities closed a fifth straight week of advances Friday, with the Dow and S&P 500 ending at closing records on the back of accommodative action from central banks in China and Europe.
Sources told Reuters that the Chinese leadership and central bank were ready to cut interest rates again and loosen lending restrictions.
Such policy changes in the world's second-biggest economy could spur more market gains.
“The carry-over effect from China, taken with the fact that the US is pretty healthy, and you have a market with a bias to trend higher, especially on the cyclical front,” said Mike Gibbs, who helps oversee more than $500 billion (R5.5 trillion) as co-head of the equity advisory group at Raymond James in Memphis, Tennessee.
Cyclical groups - tied to the pace of economic growth - led gains, with the S&P financial sector up 0.7 percent.
JPMorgan Chase & Co was up 1.3 percent to $61.21.
The weakest group was telecom, considered a defensive play that underperforms in periods of economic expansion.
The group fell 2.1 percent, with AT&T down 2.3 percent to $34.46 and Verizon off 2.5 percent at $48.99.
RenaissanceRe agreed to buy Platinum Underwriters for $1.9 billion.
BioMarin Pharmaceuticals said it would buy Dutch drug developer Prosensa for about $840 million including milestone payments.
Prosena soared 61 percent to $18.43 while Platinum was up 19 percent at $72.90.
Cimatron jumped 43 percent to $8.70 on heavy volume after 3D Systems agreed to buy the company for $97 million.
Shares of 3D rose 1.1 percent to $35.55.
At 9:50 am (16:50 SA time), the Dow Jones industrial average rose 17.86 points, or 0.1 percent, to 17 827.92, the S&P 500 gained 4.38 points, or 0.21 percent, to 2 067.88 and the Nasdaq Composite added 20.79 points, or 0.44 percent, to 4,733.76.
Advancing issues outnumbered decliners on the NYSE by 1 709 to 1 037, for a 1.65-to-1 ratio; on the Nasdaq, 1 656 issues rose and 683 fell for a 2.42-to-1 ratio.
The benchmark S&P 500 index posted 40 new 52-week highs and no new lows; the Nasdaq Composite recorded 51 new highs and 25 new lows. - Reuters]]>
Lower oil prices and Western sanctions will cost Russia around $130-140 billion (R1.5 trillion) a year.]]> |||
Moscow - Lower oil prices and Western financial sanctions imposed over the Ukraine crisis will cost Russia around $130-140 billion (R1.5 trillion) a year - equivalent to around 7 percent of its economy - Finance Minister Anton Siluanov said on Monday.
His comments are the latest acknowledgement by Russian policymakers that sanctions restricting borrowing abroad by major Russian companies are imposing heavy economic costs.
But in Siluanov's view, the fall in oil prices is the bigger worry.
“We're losing around $40 billion a year because of geopolitical sanctions, and about $90 billion to $100 billion from oil prices falling by 30 percent,” he told a news conference.
“The main issue that affects the budget and economy and financial system, this is the price of oil and the fall in monetary flows from the sale of energy resources.”
Official forecasts suggest Russia's gross domestic product is likely to be around $1.9-2.0 trillion this year, at average exchange rates.
Siluanov's estimate of the cost of lower oil prices is in line with analysts' rule of thumb that each $1 fall in the oil price lops around $3 billion off export earnings.
The oil price has slumped from nearly $115 per barrel in June to around $80 now.
Oil and gas account for around two-thirds of Russia's exports, making the balance of payments highly vulnerable to oil price falls.
Natalia Orlova, chief economist at Alfa Bank, said the $90-100 billion estimate did not take into account the effect of the weakness of the rouble, partly caused by the fall in the oil price, which would help to compensate the loss by boosting exports and curtailing imports.
The rouble has lost 25 percent of its value against the dollar since June, and Orlova said the net impact of lower oil prices on the economy would be around $40 billion.
But when it comes to the cost of sanctions, Siluanov's estimate of $40 billion may be conservative, based on the direct cost to companies unable to borrow abroad rather than the overall impact on investor behaviour.
Other analysts have arrived at gloomier estimates, taking into account the indirect cost of sanctions and overall East-West tensions linked to Ukraine.
In its latest monetary strategy, the central bank forecast that net capital outflow this year would be $128 billion, more than double the $61 billion seen in 2013, as a result of “the events in Ukraine and the introduction of sanctions”.
Last week, influential former finance minister Alexei Kudrin said the impact of “formal and informal” sanctions on the rouble - and by implication the wider economy - was comparable to the impact of lower oil prices, and that foreign investor confidence would take seven to 10 years to recover. - Reuters]]>
China's corruption watchdog has launched a series of inspections into state-owned enterprises and government bodies.]]> |||
Beijing - China's corruption watchdog has launched a series of inspections into state-owned enterprises and government bodies including China Petrochemical (Sinopec Group), Asia's largest oil refiner, state media said on Monday.
The inspectors, part of China's Central Commission for Discipline Inspection (CCDI), will focus on senior figures within Sinopec who may be promoted to leadership roles.
The official Xinhua news agency said the inspection would be complete within one month.
Sinopec Group is the parent company of China Petroleum & Chemical.
The inspection will also take in government institutions and other state companies, including China Southern Airlines and China Unicom (Hong Kong).
A spokesman for China Unicom declined to comment.
Sinopec and China Southern were not immediately reachable for comment.
President Xi Jinping has launched a sweeping crackdown on corruption since taking power, warning that the problem is a threat to the Communist Party's very survival and vowing to go after powerful “tigers” as well as lowly “flies”.
The crackdown has so far netted Zhou Yongkang, former security chief and previously an oil industry man, and Jiang Jiemin, former head of top energy group China National Petroleum, the parent of PetroChina.
Earlier this month, China's top prosecutor said a senior official of China National Offshore Oil Company (CNOOC) was under investigation suspected of having received bribes, the first executive from the offshore oil and gas firm embroiled by Beijing's war on graft. - Reuters]]>
Fraudulent qualifications are a problem on the African continent, the SA Qualifications Authority (SAQA) said.]]> |||
Johannesburg - Fraudulent qualifications are a problem on the African continent, the SA Qualifications Authority (SAQA) said on Monday.
“Everyone battles fraudulent qualifications, African countries are also faced with the growing problem of qualifications fraud,” SAQA chief executive Joe Samuels said.
SAQA is holding a two-day seminar in Pretoria on qualifications fraud on the continent.
The seminar is titled “Building Trust: Promoting Genuine Qualifications in Africa Through Effective Verification”.
The seminar started on Monday and ends on Tuesday.
Many countries, including the Democratic Republic of Congo, Ghana, Malawi, Zimbabwe, Kenya, Malawi, and Cameroon were represented at the seminar.
Samuels said that through the seminar, participants hoped to set up a network in Africa for the verification of qualifications so that fraudulent practices could be countered.
“The verification process on SAQA side can take between 10 and 20 days. The processes can become longer when we have to wait for information from the country where the qualification was obtained,” Samuels said.
He had encouraged his counterparts on the continent to set up their verification processes on-line.
“In some instances, we would send a verification query in 2007, and only receive the response in 2011... that is how long it would take in some of the countries.”
SAQA is tasked with evaluating foreign educational qualifications to determine their South African equivalence.
People with foreign qualifications who wish to attend South African education institutions or enter the labour market apply to SAQA to have their qualifications evaluated.
“I advise every company or institution to verify educational qualifications and their authenticity before hiring a candidate,” Samuels said. - Sapa]]>
The number of liquidations has decreased by 12 percent year-on-year, Statistics SA announced.]]> |||
Cape Town - The number of liquidations has decreased by 12 percent year-on-year, Statistics SA announced on Monday.
“The number of liquidations decreased by 11.9 percent in the three months ended October 2014 compared with the three months ended October 2013,” Stats SA's latest preliminary report said.
“There was a year-on-year decrease of 12.0 percent (23 fewer liquidations) in October 2014.
The wholesale, retail trade, catering and accommodation sector saw the largest year-on-year decrease.
Eleven fewer liquidations happened in this sector.
“The estimated number of insolvencies increased by 7.4 percent year-on-year in September 2014, following six consecutive negative year-on-year growth rates,” said Stats SA.
“There was a decrease of 5.1 percent in the first nine months of 2014 compared with the first nine months of 2013.” - Sapa]]>
Sasol is considering hedges to protect against lower oil prices.]]> |||
Johannesburg - Sasol is considering hedges to protect against lower oil prices even as the decline to the weakest in four years poses no threat to debt of the world’s biggest producer of motor fuel from coal.
“The presently lower oil price does not pose a risk for investors in Sasol’s bond,” acting chief financial officer Paul Victor said in an e-mail response to questions today.
“We have not hedged during the last few years as shareholders want exposure to oil-price movements, our gearing is negligible and we have substantial surplus cash.”
The company is “currently considering an oil hedge for downside risk protection,” he said.
A global glut of oil has contributed to a 22 percent decline in the price since the start of September.
Borrowing costs for Johannesburg-based Sasol, whose revenue is linked to the dollar price of crude, have increased, with yields on its dollar debt due November 2022 rising 26 basis points to 4.39 percent.
Sasol uses proprietary Fischer-Tropsch technology to make gasoline, diesel and jet fuel from the coal it mines in South Africa and from gas extracted below the ocean floor near Qatar.
Sasol expects the Impumelelo and Shondoni coal mines, part of a 14 billion-rand mine-replacement program in the country, to become operational next year.
It has arranged a term loan with FirstRand’s Rand Merchant Bank at market-related terms, Victor said. - Bloomberg News]]>
China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions.]]> |||
Beijing - China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.
Friday's surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilise the world's second-largest economy.
Economic growth has slowed to 7.3 percent in the third quarter and policymakers feared it was on the verge of dipping below 7 percent - a rate not seen since the global financial crisis.
Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak.
“Top leaders have changed their views,” said a senior economist at a government think-tank involved in internal policy discussions.
The economist, who declined to be named, said the People's Bank of China had shifted its focus toward broad-based stimulus and were open to more rate cuts as well as a cut to the banking industry's reserve requirement ratio (RRR), which effectively restricts the amount of capital available to fund loans.
China cut the RRR for some banks this year but has not announced a banking-wide reduction in the ratio since May 2012.
“Further interest rate cuts should be in the pipeline as we have entered into a rate-cut cycle and RRR cuts are also likely,” the think-tank's economist said.
Friday's move, which cut one-year benchmark lending rates by 40 basis points to 5.6 percent, also arose from concerns that local governments are struggling to manage high debt burdens amidst reforms to their funding arrangements, the sources said.
The cut helped send Asian shares broadly higher on Monday.
The CSI300 Index of the largest companies listed in Shanghai and Shenzhen opened up 1.2 percent at its highest level since June 2013, while the Shanghai Composite Index opened up 0.8 percent.
Top Chinese leaders had been resisting a rate cut, fearing it could fuel debt and property bubbles and dent their reformist credentials, but were eventually swayed by signs of deteriorating growth as the property sector cooled.
Until then, they had persisted with targeted policy steps, such as cuts in reserve ratios for selected banks and liquidity injections into the banking system.
But these failed to bring down borrowing costs for the corporate sector.
“Increasing liquidity by the central bank has failed to lower borrowing costs for the real economy,” said a former central bank researcher who now works for the government.
“Employment still holds up, but corporate profits have been squeezed as producer price deflation bites, and it's unreasonable for banks to have hefty profits.”
CALLS FOR BOLDER ACTION
Many Chinese economists had been calling for bolder policy actions, as recent data showed the economy losing more steam in the fourth quarter and consumer price inflation falling.
Full-year growth is on track to undershoot the government's 7.5 percent target and mark the weakest expansion in 24 years.
“GDP growth is near 7 percent which is at a dangerous level given it could still go even lower due to structural reforms,” said Li Xunlei, chief economist at Haitong Securities.
“The rate cut helped boost confidence in next year's growth outlook,” said Li, who was among economists who discussed policy issues with Premier Li Keqiang at a recent cabinet session.
Government think-tanks, which make policy proposals, have urged Beijing to cut its economic growth target next year, probably to around 7 percent, from around 7.5 percent this year.
The leadership is due to map out economic and reform plans for 2015 at a work conference next month, including economic targets which will be unveiled in parliament next March.
WORRIES OVER EMPLOYMENT
China's leaders also worried that a sharp economic slowdown could hurt employment and undermine public support for reforms.
“Employment still holds up now, but it will definitely be affected if growth slows further,” said Yin Zhongli, senior economist at the Chinese Academy of Social Sciences, a top government think-tank.
The central bank does not have the final word on adjusting interest rates or the value of the yuan.
The basic course of monetary and currency policy is set by the State Council, China's cabinet, or by the Communist Party's ruling Politburo
Beijing wants to push some painful reforms next year, including fiscal reforms to deal with a mountain of local government debt, and the risk of pushing local governments into defaults could be offset by lower interest rates.
Some policy insiders said the rate cut was also influenced by talks at this month's summit of the G20 group of nations, which pledged to boost flagging global growth.
China, which will host the G20 summit in 2016, is keen to maintain its influence as a major driver of global growth.
“China is keen to play a bigger role within G20 and it needs to maintain relatively fast economic growth,” said Zhao Xijun, an influential economist at Renmin University. - Reuters]]>
US stock index futures rose, indicating the market's recent strength would continue during a week that's expected to see light action ahead of the Thanksgiving holiday on Thursday.]]> |||
New York - US stock index futures rose on Monday, indicating the market's recent strength would continue during a week that's expected to see light action ahead of the Thanksgiving holiday on Thursday.
* Equities closed a fifth straight week of advances Friday, with the Dow and S&P 500 ending at closing records on the back of accommodative action from central banks in China and Europe.
* Policy in China, the world's No. 2 economy, could spur more market gains.
Sources told Reuters the country's leadership and central bank were ready to cut interest rates again and loosen lending restrictions on concern falling prices could trigger a surge in debt defaults, business failures and job losses.
* The S&P 500 has appreciated 13.3 percent since an intraday low hit on October 15, and the gains since then have been broad, with all but 23 S&P 500 components higher.
The speed of the rally has worried some market participants, and volatility may pick up this week with traders out for the holiday. Markets will close for Thanksgiving on Thursday and close early Friday.
* In company news, RenaissanceRe agreed to buy Platinum Underwriters for $1.9 billion (R21 billion).
BioMarin Pharmaceuticals said it would buy Dutch drug developer Prosensa for about $840 million including milestone payments.
Prosena jumped 53 percent to $17.50 in premarket trading.
* Trina Solar Ltd reported third-quarter earnings that grew 16 percent on strong demand in Japan and China. Shares were flat at $10.93 before the bell.
* Intel rose 0.9 percent to $35.91 in premarket trading.
In its November 24 edition, Barron's wrote that the stock could rise more than 30 percent over the next two years.
Futures snapshot at 6:47 a.m. EST (13:47 SA time):
* S&P 500 e-minis were up 3.75 points, or 0.18 percent, with 89 703 contracts changing hands.
* Nasdaq 100 e-minis were up 10.25 points, or 0.24 percent, in volume of 12 978 contracts.
* Dow e-minis were up 25 points, or 0.14 percent, with 11 782 contracts changing hands. - Reuters]]>
Operations at the SA Post Office (Sapo) are improving as the number of employees returning to work increases.]]> |||
Johannesburg - Operations at the SA Post Office (Sapo) are improving as the number of employees returning to work increases, the entity said on Monday.
“The number of Sapo employees that have heeded the call to return to work... has increased sharply,” said Simo Lushaba, head of the intervention team appointed by Telecommunications and Postal Services Minister Siyabonga Cwele and Finance Minister Nhlanhla Nene.
“We are fast moving towards full capacity shortly. This demonstrates that our projections of returning the Sapo operations to full capacity in the near future are in sight.”
He said 52 percent of employees had returned to work since the wage agreement with unions had been signed last week.
On Friday, Lushaba announced that a wage agreement had been reached with two of three recognised unions at Sapo.
The two unions - the SA Postal and Allied Workers' Union (Sapawu) and the Democratic Postal and Communications Union (Depacu) - agreed to a 6.5 percent wage increase for the bargaining unit, which would be effective on December 1.
Sapawu and Depacu represented 61 percent of employees at bargaining level.
Part of the agreement involved converting part-time and casual employees to full-time employees from December 1, with full benefits becoming effective on April 1, 2015.
The full conversion would be completed within 24 months.
Lushaba said the Communication Workers Union (CWU), which represents 39 percent of the employees, had stuck to its demand of a 7.5 percent increase. - Sapa]]>
BHP Billiton won’t sell any more assets set aside for a $15 billion (R165 billion) spinoff.]]> |||
Johannesburg - BHP Billiton won’t sell any more assets set aside for a $15 billion (R165 billion) spinoff after today’s disposal of an aluminum casthouse in South Africa.
“We’re not talking to other people about adding or subtracting to the portfolio, we’re very focused on getting the demerger done,” BHP chief financial officer Graham Kerr, who will head the spinoff planned for the first half, said in an interview.
“To get the regulatory approvals and paperwork done in the timeframe you’re talking about you can’t afford to keep chop-and-changing what’s in and what’s out.”
Hulamin, South Africa’s biggest maker of aluminum products, said today it and a group of companies will buy the casthouse at BHP’s Bayside smelter in the northeastern port of Richards Bay for an undisclosed figure.
The transaction was “an exception,” Kerr said in Johannesburg.
BHP, the world’s largest mining company, said in August it plans to spin off 12 assets across countries from Australia to South Africa.
The new company may be worth about $15 billion when listed and become mining’s biggest spinoff in at least a decade, according to CLSA Asia-Pacific Markets.
While the South Africa’s Hillside smelter was set aside for inclusion in the spinoff, the Bayside smelter was earmarked to close.
The new entity would prioritise existing assets before embarking on new deals, Kerr said.
The company “will look at some of the internal brownfield options we have in terms of existing operations that we can grow,” he said.
“Then over time you would like to think of things that you can add.”
BHP will provide full details by March before a vote on the plans, and a name for the company probably by the year-end, Kerr said.
Ricus Grimbeek, head of BHP’s Worsley operations, was named president and chief operating officer for the spinoff’s Australian assets and will be based in Perth.
Mike Fraser gets the same position in Africa, based in Johannesburg, BHP said in a separate statement.
Fraser is BHP’s human resources president. - Bloomberg News]]>