June 1 (Bloomberg) -- The following companies may have unusual price changes in Malaysia trading. Stock symbols are in parentheses, and share prices are from the most recent close.
Malaysia’s FTSE Bursa Malaysia KLCI Index rose 1.3 percent to 1,285.01.
AirAsia Bhd. (AIRA MK): Southeast Asia’s largest budget carrier reported a 10 percent increase in first-quarter profit after flying more passengers and added routes. Net income totaled 224.1 million ringgit ($69 million) in the three months ended March, compared with 203.2 million ringgit the year before, it said in a statement. AirAsia gained 4.3 percent to 1.22 ringgit.
Affin Holdings Bhd. (AHB MK): The banking group part-owned by Hong Kong’s Bank of East Asia Ltd. said it submitted an application to Malaysia’s central bank to commence takeover talks with EON Capital Bhd. (EON MK) and its major shareholders.
Affin added 0.7 percent to 2.90 ringgit. EON gained 2 percent to
7.01 ringgit.
Alliance Financial Group Bhd. (AFG MK): The banking group said fourth-quarter net income surged to 77.3 million ringgit from 897,000 ringgit a year earlier, after net interest income rose and provisions for bad debts declined. Alliance gained 1.1 percent to 2.78 ringgit.
Maxis Bhd. (MAXIS MK): Malaysia’s biggest mobile-phone operator posted a profit of 552 million ringgit in the first quarter compared with a loss of 42 million ringgit a year earlier after adding more customers to its wireless broadband services. Maxis slid 0.4 percent to 5.22 ringgit.
RHB Capital Bhd. (RHBC MK): Malaysia’s fourth-largest banking group said first-quarter net income rose 53 percent from a year earlier to 349.7 million ringgit, after net interest income increased and bad debt provisions dropped. RHB Capital added 0.2 percent to 5.75 ringgit.
Sealink International Bhd. (SELI MK): The Malaysian builder and operator of offshore marine vessels said it agreed to hire advisors to conduct a feasibility study on its plan to list a shipbuilding division. The company is considering “several locations” for the listing, it said in a statement. Sealink added 2.3 percent to 66 sen.
Ta Ann Holdings Bhd. (TAH MK): The Malaysian timber producer said it plans to give shareholders one new share for every five held as part of a bonus issue. Ta Ann advanced 2.2 percent to 5.08 ringgit.
Monday, May 31, 2010
Malaysia Stocks
May 31 (Bloomberg) -- Malaysia’s FTSE Bursa Malaysia KLCI Index rose 15.85, or 1.3 percent, to close at 1,285.01, its highest close since May 21. The gauge slid 4.6 percent this month, its biggest monthly decline since a 15 percent slump in October.
Axiata Group Bhd. (AXIATA MK), a mobile-phone operator, rose 2.2 percent to 3.77 ringgit, its highest close since May 18.
The company said first-quarter profit surged more than 14-fold from a year earlier to 921.5 million ringgit ($280 million), bolstered by income from its overseas units and the sale of shares in an Indonesian subsidiary.
Genting Bhd. (GENT MK), Asia’s second-biggest publicly traded casino operator, added 1 percent to 6.80 ringgit, its highest level since May 18. The company said first-quarter profit rose 9 percent to 232.4 million ringgit, helped by revenue from its new gambling resort in Singapore. The company’s casino and hotel unit Genting Malaysia Bhd. (GENM MK) gained 4.9 percent to 2.78 ringgit.
Sime Darby Bhd. (SIME MK), the world’s biggest listed palm oil producer, dropped 1 percent to 7.75 ringgit, the worst performer on the stock index today. The company posted its first quarterly loss in more than a decade after cost overruns prompted the company to remove its chief executive officer. The third-quarter net loss was 308.6 million ringgit, compared with a profit of 150.6 million ringgit a year earlier, the company said in a statement.
Telekom Malaysia Bhd. (T MK), a fixed-line phone and internet operator, advanced 2.8 percent to 3.35 ringgit, its largest gain since March 23, after saying first-quarter net income jumped to 242.9 million ringgit from 27.7 million ringgit a year ago.
Zelan Bhd. (ZELN MK), a builder, tumbled 9.5 percent to
47.5 sen, its lowest close since March 19, 2009, after its fourth-quarter loss widened to 184.3 million ringgit from 57.5 million ringgit a year earlier on cost overruns in some of its overseas projects.
Axiata Group Bhd. (AXIATA MK), a mobile-phone operator, rose 2.2 percent to 3.77 ringgit, its highest close since May 18.
The company said first-quarter profit surged more than 14-fold from a year earlier to 921.5 million ringgit ($280 million), bolstered by income from its overseas units and the sale of shares in an Indonesian subsidiary.
Genting Bhd. (GENT MK), Asia’s second-biggest publicly traded casino operator, added 1 percent to 6.80 ringgit, its highest level since May 18. The company said first-quarter profit rose 9 percent to 232.4 million ringgit, helped by revenue from its new gambling resort in Singapore. The company’s casino and hotel unit Genting Malaysia Bhd. (GENM MK) gained 4.9 percent to 2.78 ringgit.
Sime Darby Bhd. (SIME MK), the world’s biggest listed palm oil producer, dropped 1 percent to 7.75 ringgit, the worst performer on the stock index today. The company posted its first quarterly loss in more than a decade after cost overruns prompted the company to remove its chief executive officer. The third-quarter net loss was 308.6 million ringgit, compared with a profit of 150.6 million ringgit a year earlier, the company said in a statement.
Telekom Malaysia Bhd. (T MK), a fixed-line phone and internet operator, advanced 2.8 percent to 3.35 ringgit, its largest gain since March 23, after saying first-quarter net income jumped to 242.9 million ringgit from 27.7 million ringgit a year ago.
Zelan Bhd. (ZELN MK), a builder, tumbled 9.5 percent to
47.5 sen, its lowest close since March 19, 2009, after its fourth-quarter loss widened to 184.3 million ringgit from 57.5 million ringgit a year earlier on cost overruns in some of its overseas projects.
Sunday, May 30, 2010
Malaysia Equity Preview - May 31,2010
May 31 (Bloomberg) -- The following companies may have unusual price changes in Malaysia trading. Stock symbols are in parentheses, and share prices are from the most recent close.
Malaysia’s FTSE Bursa Malaysia KLCI Index rose 1.6 percent to
1,269.16 on May 27. The market was closed on May 28 for a public holiday.
Axiata Group Bhd. (AXIATA MK): The mobile-phone operator said first-quarter profit surged more than 14-fold from a year earlier to 921.5 million ringgit ($280 million), bolstered by income from its overseas units and the sale of shares in an Indonesian subsidiary. Axiata climbed 0.5 percent to 3.69 ringgit.
Genting Bhd. (GENT MK): Asia’s second-biggest publicly traded casino operator said first-quarter profit rose 9 percent to 232.4 million ringgit, helped by revenue from its new gambling resort in Singapore. Genting added 2.6 percent to 6.73 ringgit.
Sime Darby Bhd. (SIME MK): The world’s biggest listed palm oil producer posted its first quarterly loss in more than a decade after cost overruns prompted the company to remove its chief executive officer. The third-quarter net loss was 308.6 million ringgit, compared with a profit of 150.6 million ringgit a year earlier, the company said in a statement. Sime gained 3 percent to 7.83 ringgit.
YTL Corp. (YTL MK): Malaysia’s biggest builder said profit in the third quarter dropped 32 percent from a year earlier to
330.6 million ringgit because of increased taxes. YTL added 2.5 percent to 7.12 ringgit.
Malaysia’s FTSE Bursa Malaysia KLCI Index rose 1.6 percent to
1,269.16 on May 27. The market was closed on May 28 for a public holiday.
Axiata Group Bhd. (AXIATA MK): The mobile-phone operator said first-quarter profit surged more than 14-fold from a year earlier to 921.5 million ringgit ($280 million), bolstered by income from its overseas units and the sale of shares in an Indonesian subsidiary. Axiata climbed 0.5 percent to 3.69 ringgit.
Genting Bhd. (GENT MK): Asia’s second-biggest publicly traded casino operator said first-quarter profit rose 9 percent to 232.4 million ringgit, helped by revenue from its new gambling resort in Singapore. Genting added 2.6 percent to 6.73 ringgit.
Sime Darby Bhd. (SIME MK): The world’s biggest listed palm oil producer posted its first quarterly loss in more than a decade after cost overruns prompted the company to remove its chief executive officer. The third-quarter net loss was 308.6 million ringgit, compared with a profit of 150.6 million ringgit a year earlier, the company said in a statement. Sime gained 3 percent to 7.83 ringgit.
YTL Corp. (YTL MK): Malaysia’s biggest builder said profit in the third quarter dropped 32 percent from a year earlier to
330.6 million ringgit because of increased taxes. YTL added 2.5 percent to 7.12 ringgit.
Wednesday, May 26, 2010
Malaysia Equity Preview - May 27,2010
May 27 (Bloomberg) -- The following companies may have unusual price changes in Malaysia trading. Stock symbols are in parentheses, and share prices are from the most recent close.
Malaysia’s FTSE Bursa Malaysia KLCI Index fell for a ninth day, sliding 0.1 percent to 1,248.94, the longest losing streak since March 20, 2001.
Bintai Kinden Corp. (BKC MK): The Malaysian engineering group said it won a $32.4 million contract to provide mechanical and electrical works for the proposed Indochina Plaza project in Hanoi, Vietnam. Bintai was unchanged at 32 sen.
IJM Corp. (IJM MK): The construction, property and plantation group said fourth-quarter net income doubled to 111 million ringgit ($33.4 million) from 53.3 million ringgit a year earlier, helped by a foreign exchange translation gain of 57 million ringgit on its U.S. dollar denominated debt. IJM advanced 0.9 percent to 4.48 ringgit.
Kuala Lumpur Kepong Bhd. (KLK MK): The Malaysian palm oil producer said second-quarter net income almost doubled to 215.9 million ringgit ($65 million) from 112.7 million ringgit a year earlier on higher revenue. The stock added 0.1 percent to 15.58 ringgit.
Proton Holdings Bhd. (PROH MK): The Malaysian state- controlled carmaker said it had a profit of 22.8 million ringgit in the fiscal fourth quarter compared with a loss of 323 million ringgit a year earlier. Sales climbed to 2.26 billion ringgit from 1.4 billion ringgit, the company said in a statement.
Proton was unchanged at 4.44 ringgit.
SHL Consolidated Bhd. (SHLC MK): The Malaysian property developer said fourth-quarter net income more than doubled to
7.72 million ringgit from 2.9 million ringgit a year earlier, on higher sales. SHL fell 14 percent to 1.03 ringgit on May 25.
TRC Synergy Bhd. (TRC MK): The construction company said it secured a $9.36 million contract to build homes in Cambodia for Delta Garden Ltd. TRC added 1 percent to 1.03 ringgit.
Malaysia’s FTSE Bursa Malaysia KLCI Index fell for a ninth day, sliding 0.1 percent to 1,248.94, the longest losing streak since March 20, 2001.
Bintai Kinden Corp. (BKC MK): The Malaysian engineering group said it won a $32.4 million contract to provide mechanical and electrical works for the proposed Indochina Plaza project in Hanoi, Vietnam. Bintai was unchanged at 32 sen.
IJM Corp. (IJM MK): The construction, property and plantation group said fourth-quarter net income doubled to 111 million ringgit ($33.4 million) from 53.3 million ringgit a year earlier, helped by a foreign exchange translation gain of 57 million ringgit on its U.S. dollar denominated debt. IJM advanced 0.9 percent to 4.48 ringgit.
Kuala Lumpur Kepong Bhd. (KLK MK): The Malaysian palm oil producer said second-quarter net income almost doubled to 215.9 million ringgit ($65 million) from 112.7 million ringgit a year earlier on higher revenue. The stock added 0.1 percent to 15.58 ringgit.
Proton Holdings Bhd. (PROH MK): The Malaysian state- controlled carmaker said it had a profit of 22.8 million ringgit in the fiscal fourth quarter compared with a loss of 323 million ringgit a year earlier. Sales climbed to 2.26 billion ringgit from 1.4 billion ringgit, the company said in a statement.
Proton was unchanged at 4.44 ringgit.
SHL Consolidated Bhd. (SHLC MK): The Malaysian property developer said fourth-quarter net income more than doubled to
7.72 million ringgit from 2.9 million ringgit a year earlier, on higher sales. SHL fell 14 percent to 1.03 ringgit on May 25.
TRC Synergy Bhd. (TRC MK): The construction company said it secured a $9.36 million contract to build homes in Cambodia for Delta Garden Ltd. TRC added 1 percent to 1.03 ringgit.
Malaysia Stocks
May 26 (Bloomberg) -- Malaysia’s FTSE Bursa Malaysia KLCI Index fell for a ninth day, sliding 1.19, or 0.1 percent, to close at 1,248.94, the longest losing streak since March 20, 2001.
IGB Corp. (IGB MK) and KLCC Property Holdings Bhd. (KLCC MK) slid ahead of their removal from the MSCI Malaysia Index as of the close of today. Shares of IGB, a property developer, fell
6.1 percent to 1.54 ringgit, the most since Oct. 26. KLCC lost
3.9 percent to 2.75 ringgit, its lowest since Dec. 30, 2008.
DRB-Hicom Bhd. (DRB MK), a builder and auto assembler, gained 1.6 percent to 98.5 sen, its largest increase since May 10. The company said it had a profit of 259.4 million ringgit
($77 million) in the fourth quarter ended March 31 compared with a loss of 60.7 million ringgit a year earlier.
Lion Corp. (LION MK), a steel producer and builder, advanced 5.7 percent to 28 sen, the most since April 9. The company said it swung to a profit of 18.5 million ringgit in the third quarter ended March 31 from a loss of 479.9 million ringgit a year earlier after sales advanced.
MMC Corp. (MMC MK), a ports, power and construction group, added 2.2 percent to 2.28 ringgit, its biggest gain since May 13.
The company said first-quarter net income rose 9.9 percent from a year earlier to 34.4 million ringgit, helped by higher contributions from transport and logistics, as well as energy and utilities.
MISC Bhd. (MISC MK), the world’s biggest owner of liquefied natural gas tankers, slid 3.4 percent to 8.13 ringgit, its steepest drop since Feb. 24. An oil tanker owned by MISC’s AET Tanker Holdings Sdn. that spilled 2,500 metric tons of crude into the Singapore Strait yesterday following a collision with a bulk carrier, is being unloaded as efforts to clean up a slick resumed. “The incident caused significant damage to the vessel’s hull,” AET said in a statement.
IGB Corp. (IGB MK) and KLCC Property Holdings Bhd. (KLCC MK) slid ahead of their removal from the MSCI Malaysia Index as of the close of today. Shares of IGB, a property developer, fell
6.1 percent to 1.54 ringgit, the most since Oct. 26. KLCC lost
3.9 percent to 2.75 ringgit, its lowest since Dec. 30, 2008.
DRB-Hicom Bhd. (DRB MK), a builder and auto assembler, gained 1.6 percent to 98.5 sen, its largest increase since May 10. The company said it had a profit of 259.4 million ringgit
($77 million) in the fourth quarter ended March 31 compared with a loss of 60.7 million ringgit a year earlier.
Lion Corp. (LION MK), a steel producer and builder, advanced 5.7 percent to 28 sen, the most since April 9. The company said it swung to a profit of 18.5 million ringgit in the third quarter ended March 31 from a loss of 479.9 million ringgit a year earlier after sales advanced.
MMC Corp. (MMC MK), a ports, power and construction group, added 2.2 percent to 2.28 ringgit, its biggest gain since May 13.
The company said first-quarter net income rose 9.9 percent from a year earlier to 34.4 million ringgit, helped by higher contributions from transport and logistics, as well as energy and utilities.
MISC Bhd. (MISC MK), the world’s biggest owner of liquefied natural gas tankers, slid 3.4 percent to 8.13 ringgit, its steepest drop since Feb. 24. An oil tanker owned by MISC’s AET Tanker Holdings Sdn. that spilled 2,500 metric tons of crude into the Singapore Strait yesterday following a collision with a bulk carrier, is being unloaded as efforts to clean up a slick resumed. “The incident caused significant damage to the vessel’s hull,” AET said in a statement.
Market Commentary
May 26 (Bloomberg) -- Hong Kong stocks rose, with the benchmark index rebounding from a 10-month low, on optimism mainland insurers will be allowed to invest in more of the city’s shares, and as shipping companies gained on higher transport fees.
Ping An Insurance (Group) Co., China’s second-largest insurer, jumped 5 percent. Pacific Basin Shipping Ltd., Hong Kong’s largest commodity-vessel operator, advanced 2.3 percent.
Gome Electrical Appliances Holdings Ltd., China’s second-biggest electronics retailer by market value, soared 14 percent after winning a distribution contract with LG Electronics Inc. worth as much as 9.3 billion yuan ($1.4 billion).
“Equity markets may have found a bottom in the short term,” Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees
$11 billion, said in a Bloomberg Television interview. “Now one has to look at some growth opportunities, which have been beaten down. That’s value to us.”
The Hang Seng Index advanced 1.1 percent to 19,196.45. The measure closed yesterday at the lowest level since July 17, dragging its 14-day relative strength index to 30, a threshold that signals to some traders that shares are poised to rise.
The Hang Seng China Enterprises Index of so-called H-shares of Chinese companies rose 2.7 percent to 11,016.05.
Ping An Insurance (Group) Co., China’s second-largest insurer, jumped 5 percent. Pacific Basin Shipping Ltd., Hong Kong’s largest commodity-vessel operator, advanced 2.3 percent.
Gome Electrical Appliances Holdings Ltd., China’s second-biggest electronics retailer by market value, soared 14 percent after winning a distribution contract with LG Electronics Inc. worth as much as 9.3 billion yuan ($1.4 billion).
“Equity markets may have found a bottom in the short term,” Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees
$11 billion, said in a Bloomberg Television interview. “Now one has to look at some growth opportunities, which have been beaten down. That’s value to us.”
The Hang Seng Index advanced 1.1 percent to 19,196.45. The measure closed yesterday at the lowest level since July 17, dragging its 14-day relative strength index to 30, a threshold that signals to some traders that shares are poised to rise.
The Hang Seng China Enterprises Index of so-called H-shares of Chinese companies rose 2.7 percent to 11,016.05.
A Billionaire Goes All-In on Gold
Gold is setting records again, boosting the holdings of central banks, Armageddon worrywarts, and ordinary people who own gold bars, coins and jewelry.
But few individuals stand to benefit as much as low-profile billionaire Thomas Kaplan. A New York-born commodities magnate who earned a doctorate in British colonial history at Oxford, Mr. Kaplan oversees an empire devoted largely to gold.
Many fund managers and high-rollers have allocated small percentages of their portfolios to gold as a hedge against inflation. But Mr. Kaplan is the bull of bullion. He has gone further than perhaps any other major investor, betting the majority of his wealth on gold and other precious metals. And it reflects his deeply held conviction that global economic instability could bring rising demand for gold.
Through his firm, Tigris Financial Group, and affiliates, Mr. Kaplan has loaded up on bullion and bought up properties in 17 countries on five continents, where geologists are exploring for more. Tigris subsidiaries have taken stakes in mining companies, including tiny firms that have yet to produce an ounce.
Though he won't disclose how much physical gold he owns, Mr. Kaplan, who is 47 years old, controls up to 30% of the shares in some so-called junior miners. Together, his holdings amount to a nearly $2 billion bet on gold, more than the Brazilian central bank's bullion is currently worth.
"I've reached a point where I feel the only asset I have confidence in is gold," Mr. Kaplan said in an interview at Tigris's midtown Manhattan headquarters.
Mr. Kaplan's views are shaped by a concern, shared by many investors, that heavy government spending hasn't contained the woes facing the financial system. Gold hit an exchange record of $1,242.70 a troy ounce at the Comex division of the New York Mercantile Exchange on May 12, days after euro-zone leaders announced a nearly $1 trillion bailout for ailing member states.
He has experience with how supply and demand can drive the price of raw materials. His doctoral thesis studied Britain's involvement after World War II in Malaya, home to prized rubber and tin. That taught him how far people and governments will go to secure natural resources.
Wanting to apply his insights, he went to Israel to advise hedge funds. His nose for finding valuable resources was developed at firms he started that explored for silver and natural gas, which helped him make his fortune.
On Demand and Supply
Gold miners are struggling to make major discoveries and it takes years to bring new finds into production. If people want to stock up on gold in a hurry, it will be hard to ramp up production enough to satisfy them, Mr. Kaplan believes.
"You've got a perfect storm with no apparent solution," he said. "If the world does well, gold will be fine. If the world doesn't do well, gold will also do fine … but a lot of other things could collapse."
Mr. Kaplan is known in the mining industry for his all-in approach. "When he likes something, he dives in with both feet," Egizio Bianchini, a banker at BMO Capital Markets in Toronto, said of Mr. Kaplan, whom he has worked with in the past.
In his charitable endeavors, Mr. Kaplan works similarly. In 2006, he co-founded Panthera Corp., whose "single-minded pursuit" is preserving the world's endangered wild cats, he wrote in an open letter on the group's site in which he cited inspirational quotes by Winston Churchill, Edward R. Murrow and Marcus Aurelius.
Mr. Kaplan is also president of the board of directors at New York's 92nd Street Y, a prominent cultural organization that is a magnet for New York's elite. And he is a benefactor of Eternal Jewish Family, a group dedicated to uniform rules governing conversions to Judaism whose leader resigned last year amid an alleged sex scandal.
In some cases, Mr. Kaplan has invested in gold miners that have also attracted the attention of fellow billionaires, such as George Soros and John Paulson.
Mr. Kaplan put money into one firm, Gabriel Resources Ltd., in late 2007 after Mr. Paulson, who made billions of dollars betting against housing markets, mentioned how low the stock had fallen while they attended "The Nutcracker" at the New York City Ballet.
"I'm there," Mr. Kaplan recalls was his response.
In early March, Mr. Paulson's firm, Paulson & Co., and Quantum Partners, Ltd., an investment fund run by Soros Fund Management, invested $100 million and $75 million, respectively, in NovaGold Resources Inc., a Canadian miner, paying $5.50 a share. Their move came a year after Mr. Kaplan, who has $69 million invested in the company, acquired 30% of the firm for $1.30 a share.
Gold prices are up 7.4% this year, after rising 24% last year, which was the ninth straight up year for bullion. Mr. Kaplan thinks that greater gains are coming. "I wouldn't even say we're in a bull market yet," he said.
But Mr. Kaplan has concentrated risk in a volatile sector, and he knows the potential pitfalls better than most.
In 2008, for instance, a company that Mr. Kaplan founded, Apex Silver Mines Ltd., went bankrupt, felled by the terms of a loan made after Mr. Kaplan left the company in 2004. The company emerged from bankruptcy last year, and now operates as Golden Minerals Co.
In January 2009, Mr. Kaplan received a so-called Wells notice from the Securities and Exchange Commission related to what the company said were "impermissible payments" of $125,000 to government officials by executives at a South American subsidiary.
The SEC delivers Wells notices to inform recipients that it may bring an enforcement action, providing an opportunity for the recipient to persuade the agency not to pursue charges. No charges have been filed against Mr. Kaplan. An SEC spokesman declined to comment.
Concentrated Risk
Mr. Kaplan's current investments also carry risk. Gabriel Resources owns Europe's biggest undeveloped gold deposit, in Romania, but has been waiting for government approval for years. He has $100 million at stake in the company.
Mr. Kaplan acknowledges the dangers involved in investing in small mining companies. "It's not the kind of thing I would suggest for widows and orphans," he said.
And, he added, he isn't in a rush to cash in on his gold investments. "If I am right about the big picture," he said, "I will be rewarded for my patience."
But few individuals stand to benefit as much as low-profile billionaire Thomas Kaplan. A New York-born commodities magnate who earned a doctorate in British colonial history at Oxford, Mr. Kaplan oversees an empire devoted largely to gold.
Many fund managers and high-rollers have allocated small percentages of their portfolios to gold as a hedge against inflation. But Mr. Kaplan is the bull of bullion. He has gone further than perhaps any other major investor, betting the majority of his wealth on gold and other precious metals. And it reflects his deeply held conviction that global economic instability could bring rising demand for gold.
Through his firm, Tigris Financial Group, and affiliates, Mr. Kaplan has loaded up on bullion and bought up properties in 17 countries on five continents, where geologists are exploring for more. Tigris subsidiaries have taken stakes in mining companies, including tiny firms that have yet to produce an ounce.
Though he won't disclose how much physical gold he owns, Mr. Kaplan, who is 47 years old, controls up to 30% of the shares in some so-called junior miners. Together, his holdings amount to a nearly $2 billion bet on gold, more than the Brazilian central bank's bullion is currently worth.
"I've reached a point where I feel the only asset I have confidence in is gold," Mr. Kaplan said in an interview at Tigris's midtown Manhattan headquarters.
Mr. Kaplan's views are shaped by a concern, shared by many investors, that heavy government spending hasn't contained the woes facing the financial system. Gold hit an exchange record of $1,242.70 a troy ounce at the Comex division of the New York Mercantile Exchange on May 12, days after euro-zone leaders announced a nearly $1 trillion bailout for ailing member states.
He has experience with how supply and demand can drive the price of raw materials. His doctoral thesis studied Britain's involvement after World War II in Malaya, home to prized rubber and tin. That taught him how far people and governments will go to secure natural resources.
Wanting to apply his insights, he went to Israel to advise hedge funds. His nose for finding valuable resources was developed at firms he started that explored for silver and natural gas, which helped him make his fortune.
On Demand and Supply
Gold miners are struggling to make major discoveries and it takes years to bring new finds into production. If people want to stock up on gold in a hurry, it will be hard to ramp up production enough to satisfy them, Mr. Kaplan believes.
"You've got a perfect storm with no apparent solution," he said. "If the world does well, gold will be fine. If the world doesn't do well, gold will also do fine … but a lot of other things could collapse."
Mr. Kaplan is known in the mining industry for his all-in approach. "When he likes something, he dives in with both feet," Egizio Bianchini, a banker at BMO Capital Markets in Toronto, said of Mr. Kaplan, whom he has worked with in the past.
In his charitable endeavors, Mr. Kaplan works similarly. In 2006, he co-founded Panthera Corp., whose "single-minded pursuit" is preserving the world's endangered wild cats, he wrote in an open letter on the group's site in which he cited inspirational quotes by Winston Churchill, Edward R. Murrow and Marcus Aurelius.
Mr. Kaplan is also president of the board of directors at New York's 92nd Street Y, a prominent cultural organization that is a magnet for New York's elite. And he is a benefactor of Eternal Jewish Family, a group dedicated to uniform rules governing conversions to Judaism whose leader resigned last year amid an alleged sex scandal.
In some cases, Mr. Kaplan has invested in gold miners that have also attracted the attention of fellow billionaires, such as George Soros and John Paulson.
Mr. Kaplan put money into one firm, Gabriel Resources Ltd., in late 2007 after Mr. Paulson, who made billions of dollars betting against housing markets, mentioned how low the stock had fallen while they attended "The Nutcracker" at the New York City Ballet.
"I'm there," Mr. Kaplan recalls was his response.
In early March, Mr. Paulson's firm, Paulson & Co., and Quantum Partners, Ltd., an investment fund run by Soros Fund Management, invested $100 million and $75 million, respectively, in NovaGold Resources Inc., a Canadian miner, paying $5.50 a share. Their move came a year after Mr. Kaplan, who has $69 million invested in the company, acquired 30% of the firm for $1.30 a share.
Gold prices are up 7.4% this year, after rising 24% last year, which was the ninth straight up year for bullion. Mr. Kaplan thinks that greater gains are coming. "I wouldn't even say we're in a bull market yet," he said.
But Mr. Kaplan has concentrated risk in a volatile sector, and he knows the potential pitfalls better than most.
In 2008, for instance, a company that Mr. Kaplan founded, Apex Silver Mines Ltd., went bankrupt, felled by the terms of a loan made after Mr. Kaplan left the company in 2004. The company emerged from bankruptcy last year, and now operates as Golden Minerals Co.
In January 2009, Mr. Kaplan received a so-called Wells notice from the Securities and Exchange Commission related to what the company said were "impermissible payments" of $125,000 to government officials by executives at a South American subsidiary.
The SEC delivers Wells notices to inform recipients that it may bring an enforcement action, providing an opportunity for the recipient to persuade the agency not to pursue charges. No charges have been filed against Mr. Kaplan. An SEC spokesman declined to comment.
Concentrated Risk
Mr. Kaplan's current investments also carry risk. Gabriel Resources owns Europe's biggest undeveloped gold deposit, in Romania, but has been waiting for government approval for years. He has $100 million at stake in the company.
Mr. Kaplan acknowledges the dangers involved in investing in small mining companies. "It's not the kind of thing I would suggest for widows and orphans," he said.
And, he added, he isn't in a rush to cash in on his gold investments. "If I am right about the big picture," he said, "I will be rewarded for my patience."
Tuesday, May 25, 2010
Ghosn: Europe's Crisis Is Overblown
DETROIT—The economic crisis in Europe prompted by Greece that has roiled stock markets internationally will be short-lived and is being "outplayed," said Carlos Ghosn, chief executive officer of both Nissan Motor Co. of Japan and Renault SA of France.
Mr. Ghosn said Tuesday at a Detroit Economic Club luncheon he doubts that Greece will leave the European Union and said the situation on the continent will settle down soon.
"I personally don't think it's going to be Armageddon," Mr. Ghosn said. "There are a lot of extremes in the thinking today. But it will come back into a much more balanced thinking."
Leaving the European Union would have major consequences both for Greece and the union and it would be very difficult for the country to re-enter, he said.
Mr. Ghosn said it natural that governments have intervened to rescue auto companies. In the U.S., the government became shareholders in both General Motors Co. and Chrysler Group LLC last year. In Europe, car companies including Renault received loans while auto makers in Japan received access to low-cost credit through the government.
"No government in the world is going to allow hundreds of thousands of jobs" to disappear, Mr. Ghosn said. "I don't think it changes the industry. We can consider it fair or unfair, but it's going to happen."
On another topic, Mr. Ghosn said Renault has no plans to resume selling its vehicles in the U.S.
Mr. Ghosn said Tuesday at a Detroit Economic Club luncheon he doubts that Greece will leave the European Union and said the situation on the continent will settle down soon.
"I personally don't think it's going to be Armageddon," Mr. Ghosn said. "There are a lot of extremes in the thinking today. But it will come back into a much more balanced thinking."
Leaving the European Union would have major consequences both for Greece and the union and it would be very difficult for the country to re-enter, he said.
Mr. Ghosn said it natural that governments have intervened to rescue auto companies. In the U.S., the government became shareholders in both General Motors Co. and Chrysler Group LLC last year. In Europe, car companies including Renault received loans while auto makers in Japan received access to low-cost credit through the government.
"No government in the world is going to allow hundreds of thousands of jobs" to disappear, Mr. Ghosn said. "I don't think it changes the industry. We can consider it fair or unfair, but it's going to happen."
On another topic, Mr. Ghosn said Renault has no plans to resume selling its vehicles in the U.S.
Alcom, Kencana, KNM, Malaysian Pacific: Malaysia Equity Preview - May 26, 2010
May 26 (Bloomberg) -- The following companies may have unusual price changes in Malaysia trading. Stock symbols are in parentheses, and share prices are from the most recent close.
Malaysia’s FTSE Bursa Malaysia KLCI Index fell for an eighth day, sliding 1.9 percent to 1,250.13, the longest losing streak since July 8, 2008.
Aluminium Company of Malaysia Bhd. (ALC MK): The aluminum producer said it had a profit of 1.42 million ringgit in the fourth quarter ended March 31 compared with a loss of 8.5 million ringgit a year earlier after sales gained. Alcom, as the company is known, dropped 5.2 percent to 92 sen.
DRB-Hicom Bhd. (DRB MK): The builder and auto assembler said it had a profit of 259.4 million ringgit ($77 million) in the fourth quarter ended March 31 compared with a loss of 60.7 million ringgit a year earlier. DRB-Hicom fell 2.5 percent to 97 sen.
Kencana Petroleum Bhd. (KEPB MK): The oil and gas services provider was awarded a $15.5 million contract by Mumbai-based Larsen & Toubro Ltd. to construct a so-called jacket for an off- shore platform. Kencana fell 4.5 percent to 1.27 ringgit.
KNM Group Bhd. (KNMG MK): The oil and gas services provider said first-quarter net income fell 59 percent from a year earlier to 40.3 million ringgit after sales declined. KNM lost 4 percent to 48 sen.
Lion Corp. (LION MK): The steel producer and builder said it swung to a profit of 18.5 million ringgit in the third quarter ended March 31 from a loss of 479.9 million ringgit a year earlier after sales advanced. Lion fell 7 percent to 26.5 sen.
Malaysian Pacific Industries Bhd. (MPI MK): The country’s biggest listed semiconductor company reported a third-quarter profit of 27.1 million ringgit, compared to a 53.8 million loss in the same period a year ago as sales climbed. The stock dropped 3.2 percent to 6 ringgit.
MMC Corp. (MMC MK): The Malaysian ports, power and construction group said first-quarter net income rose 9.9 percent from a year earlier to 34.4 million ringgit, helped by higher contributions from transport and logistics, as well as energy and utilities. MMC fell 1.3 percent to 2.23 ringgit.
Petronas Dagangan Bhd. (PETD MK): The retail arm of Malaysia’s state oil company Petroliam Nasional Bhd. said fourth-quarter net income fell 6.5 percent from a year earlier to 161.1 million ringgit because of higher operating expenses.
Petronas Dagangan slid 0.2 percent to 8.95 ringgit.
Malaysia’s FTSE Bursa Malaysia KLCI Index fell for an eighth day, sliding 1.9 percent to 1,250.13, the longest losing streak since July 8, 2008.
Aluminium Company of Malaysia Bhd. (ALC MK): The aluminum producer said it had a profit of 1.42 million ringgit in the fourth quarter ended March 31 compared with a loss of 8.5 million ringgit a year earlier after sales gained. Alcom, as the company is known, dropped 5.2 percent to 92 sen.
DRB-Hicom Bhd. (DRB MK): The builder and auto assembler said it had a profit of 259.4 million ringgit ($77 million) in the fourth quarter ended March 31 compared with a loss of 60.7 million ringgit a year earlier. DRB-Hicom fell 2.5 percent to 97 sen.
Kencana Petroleum Bhd. (KEPB MK): The oil and gas services provider was awarded a $15.5 million contract by Mumbai-based Larsen & Toubro Ltd. to construct a so-called jacket for an off- shore platform. Kencana fell 4.5 percent to 1.27 ringgit.
KNM Group Bhd. (KNMG MK): The oil and gas services provider said first-quarter net income fell 59 percent from a year earlier to 40.3 million ringgit after sales declined. KNM lost 4 percent to 48 sen.
Lion Corp. (LION MK): The steel producer and builder said it swung to a profit of 18.5 million ringgit in the third quarter ended March 31 from a loss of 479.9 million ringgit a year earlier after sales advanced. Lion fell 7 percent to 26.5 sen.
Malaysian Pacific Industries Bhd. (MPI MK): The country’s biggest listed semiconductor company reported a third-quarter profit of 27.1 million ringgit, compared to a 53.8 million loss in the same period a year ago as sales climbed. The stock dropped 3.2 percent to 6 ringgit.
MMC Corp. (MMC MK): The Malaysian ports, power and construction group said first-quarter net income rose 9.9 percent from a year earlier to 34.4 million ringgit, helped by higher contributions from transport and logistics, as well as energy and utilities. MMC fell 1.3 percent to 2.23 ringgit.
Petronas Dagangan Bhd. (PETD MK): The retail arm of Malaysia’s state oil company Petroliam Nasional Bhd. said fourth-quarter net income fell 6.5 percent from a year earlier to 161.1 million ringgit because of higher operating expenses.
Petronas Dagangan slid 0.2 percent to 8.95 ringgit.
Malaysia’s Anti Corruption Unit Starts Sime Probe, Times Reports
By Soraya Permatasari
May 26 (Bloomberg) -- The Malaysian Anti-Corruption Commission has started a probe into the losses of Sime Darby Bhd., the New Straits Times reported, citing Investigations Director Mustafar Ali.
The agency will start with an investigation focusing on the internal inquiry being carried out by Sime, Mustafar was quoted as saying by the newspaper. The Malaysian plantation and energy company removed Ahmad Zubir Murshid as chief executive officer on May 13 after holding him responsible for losses and cost overruns, the report said.
May 26 (Bloomberg) -- The Malaysian Anti-Corruption Commission has started a probe into the losses of Sime Darby Bhd., the New Straits Times reported, citing Investigations Director Mustafar Ali.
The agency will start with an investigation focusing on the internal inquiry being carried out by Sime, Mustafar was quoted as saying by the newspaper. The Malaysian plantation and energy company removed Ahmad Zubir Murshid as chief executive officer on May 13 after holding him responsible for losses and cost overruns, the report said.
U.S. Stock-Index Futures Drop on Korean Tension, Europe Concern
By Jonathan Burgos and Adam Haigh
May 25 (Bloomberg) -- U.S. stock-index futures sank after a report that North Korean leader Kim Jong Il last week ordered his military to prepare for combat and amid mounting concern Europe’s debt crisis will endanger the global recovery.
Morgan Stanley retreated 3.7 percent in German trading, leading a decline among bank shares. Microsoft Corp. lost 2.6 percent after the world’s largest software maker’s Chief Executive Officer Steve Ballmer said he is less optimistic about China as a market.
Standard & Poor’s 500 Index futures expiring next month dropped 2.6 percent to 1,043.6 as of 10:33 a.m. in London. The U.S. equities benchmark has slumped 12 percent from a 19-month high on April 23 amid concern mounting budget deficits in some European countries and China’s steps to curb asset bubbles will derail global growth. Dow Jones Industrial Average futures lost
2.2 percent to 9,827 today and Nasdaq-100 Index futures retreated 2.2 percent to 1,772.
“The troubles that we have are big enough to keep this downtrend going for quite some time,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels. “Everybody realizes this is going to put severe stress on economic growth. Tension between South and North Korea is another additional negative that is spooking markets some more.”
North Korea
Asian and European shares retreated as the North Korea Intellectuals Solidarity group reported on its website that the North’s military was placed on alert last week. The U.S.
yesterday announced plans to conduct joint anti-submarine exercises with South Korea after the March 26 sinking of one of the South’s warships cost 46 lives.
Concerns over the health of European finances deepened after four Spanish savings banks submitted a proposal to the nation’s central bank to merge their businesses. The Bank of Spain is stepping up efforts to buttress or combine the weakest of Spain’s “cajas,” or mutually owned banks.
The International Monetary Fund said in a report yesterday that Spain’s banking industry “remains under pressure” as consolidation has been too slow.
The worsening European debt crisis “may limit the pace of the global recovery,” Adam Posen, a member of the Bank of England’s Monetary Policy Committee said in a speech yesterday.
Home Prices, Confidence
The S&P/Case-Shiller index of property values in 20 cities, due at 9 a.m. New York time, rose 2.5 percent in March from a year earlier, the best performance since 2006, according to the median forecast of economists surveyed by Bloomberg News. The Conference Board’s consumer sentiment index for May, due at 10 a.m., may climb to 58.5, the highest level since September 2008.
Morgan Stanley declined 3.7 percent to $24.79 in German trading. Goldman Sachs Group Inc. slid 2.8 percent to $132.87.
Microsoft lost 2.6 percent to $25.57. The software maker is less optimistic about China as a market than India or Indonesia because of the country’s lack of progress in stamping out software piracy, Chief Executive Officer Steve Ballmer said.
Neurocrine Biosciences Inc. surged 41 percent to $3.84. The drug company said a clinical study on its experimental drug elagolix showed positive results in treating patients with endometriosis.
May 25 (Bloomberg) -- U.S. stock-index futures sank after a report that North Korean leader Kim Jong Il last week ordered his military to prepare for combat and amid mounting concern Europe’s debt crisis will endanger the global recovery.
Morgan Stanley retreated 3.7 percent in German trading, leading a decline among bank shares. Microsoft Corp. lost 2.6 percent after the world’s largest software maker’s Chief Executive Officer Steve Ballmer said he is less optimistic about China as a market.
Standard & Poor’s 500 Index futures expiring next month dropped 2.6 percent to 1,043.6 as of 10:33 a.m. in London. The U.S. equities benchmark has slumped 12 percent from a 19-month high on April 23 amid concern mounting budget deficits in some European countries and China’s steps to curb asset bubbles will derail global growth. Dow Jones Industrial Average futures lost
2.2 percent to 9,827 today and Nasdaq-100 Index futures retreated 2.2 percent to 1,772.
“The troubles that we have are big enough to keep this downtrend going for quite some time,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels. “Everybody realizes this is going to put severe stress on economic growth. Tension between South and North Korea is another additional negative that is spooking markets some more.”
North Korea
Asian and European shares retreated as the North Korea Intellectuals Solidarity group reported on its website that the North’s military was placed on alert last week. The U.S.
yesterday announced plans to conduct joint anti-submarine exercises with South Korea after the March 26 sinking of one of the South’s warships cost 46 lives.
Concerns over the health of European finances deepened after four Spanish savings banks submitted a proposal to the nation’s central bank to merge their businesses. The Bank of Spain is stepping up efforts to buttress or combine the weakest of Spain’s “cajas,” or mutually owned banks.
The International Monetary Fund said in a report yesterday that Spain’s banking industry “remains under pressure” as consolidation has been too slow.
The worsening European debt crisis “may limit the pace of the global recovery,” Adam Posen, a member of the Bank of England’s Monetary Policy Committee said in a speech yesterday.
Home Prices, Confidence
The S&P/Case-Shiller index of property values in 20 cities, due at 9 a.m. New York time, rose 2.5 percent in March from a year earlier, the best performance since 2006, according to the median forecast of economists surveyed by Bloomberg News. The Conference Board’s consumer sentiment index for May, due at 10 a.m., may climb to 58.5, the highest level since September 2008.
Morgan Stanley declined 3.7 percent to $24.79 in German trading. Goldman Sachs Group Inc. slid 2.8 percent to $132.87.
Microsoft lost 2.6 percent to $25.57. The software maker is less optimistic about China as a market than India or Indonesia because of the country’s lack of progress in stamping out software piracy, Chief Executive Officer Steve Ballmer said.
Neurocrine Biosciences Inc. surged 41 percent to $3.84. The drug company said a clinical study on its experimental drug elagolix showed positive results in treating patients with endometriosis.
Euro Falls for Concern Europe Debt Crisis Spreading
By Yoshiaki Nohara and Ron Harui
May 25 (Bloomberg) -- The euro weakened for a second day against the yen and dollar as signs the European debt crisis is spreading revived concern the region’s recovery will slow.
The single currency dropped to within one yen of its weakest in more than eight years after the International Monetary Fund urged Spain to do more to overhaul its ailing banks, adding to speculation Europe’s financial institutions face more losses. The yen strengthened as a decline in Asian stocks boosted demand for Japan’s currency as a refuge. The won slumped as tensions escalated between the two Koreas over the sinking of a warship from the South’s navy in March.
“I’m concerned about what policy makers can do to contain the debt crisis should it spread from Greece to bigger nations like Spain and Italy,” said Tetsuya Inoue, chief researcher for financial markets at Nomura Research Institute, a unit of Japan’s largest brokerage. “Economic growth can’t help but lose momentum. The euro will stay under downward pressure.”
The euro fell 1.3 percent to 110.29 yen as of 6:45 a.m. in London from yesterday in New York. The common currency dropped to $1.2283 from $1.2372. The dollar was at 89.81 yen from 90.29 yen, and climbed to $1.4339 per pound from $1.4425.
The 16-nation euro touched a four-year low of $1.2144 on May 19, and the weakest since 2001 at 109.51 per yen on May 20.
Spain’s banking industry “remains under pressure,” as consolidation has been “too slow,” the Washington-based IMF said in a report yesterday after a regular review of Spain.
“We fully support” the new austerity measures, it said, referring to Spain’s plans to rein in its budget deficit with the deepest spending cuts in three decades.
Spain’s Banks
Four Spanish savings banks plan to combine to form the nation’s fifth-largest financial group with more than 135 billion euros ($166 billion) in assets, as regulators push ailing lenders to merge with stronger partners.
“Looking ahead, we suspect contagion risks from the European sovereign debt crisis will remain front-brain for markets,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “With negative momentum firmly ingrained, we wouldn’t be surprised to see the euro re-test recent lows around $1.22 in coming sessions.”
The Bank of Spain said on May 22 it appointed a provisional administrator to run CajaSur, a savings bank crippled by property-loan defaults. The seizure is the first under a state- financed rescue plan that Standard & Poor’s estimates may cost as much as 35 billion euros, increasing the burden on Spain’s finances as the government tries to reduce its budget deficit.
‘Widespread Disruption’
Stresses in Spain’s banking system are intensifying concern that the Greek debt crisis may spread, Mohamed A. El-Erian, whose company runs the world’s biggest mutual fund, said in an interview with PBS.
“The minute you introduce strains in the banking system, there’s always a fear that governments will be behind the curve and that you can get contagion,” El-Erian, co-chief investment officer at Pacific Investment Management Co., said on PBS’s Nightly Business Report. “You can get widespread disruption.”
Europe’s currency has lost 6.9 percent this year, based on Bloomberg Correlation-Weighted Indexes. The dollar has risen 10 percent, and the yen has advanced 15 percent.
Japan’s currency rose versus all 16 major counterparts as the MSCI Asia Pacific Index shares dropped 2.8 percent.
“Increasing concerns about a slowdown in economic growth weigh on stocks,” said Yoshiaki Ota, head of the foreign- exchange trading group at Sumitomo Mitsui Banking Corp. in Tokyo. “When stocks fall, investors rush to sell cross currencies against the yen as a knee-jerk reaction.”
Commodities Prices
The yen typically strengthens in times of financial turmoil as Japan’s trade surplus makes the currency attractive as it means the nation does not have to rely on overseas lenders.
Australia’s dollar fell for a second day as iron-ore prices dropped before steelmakers in China and South Korea, the world’s
largest- and sixth-biggest producing nations, meet today in Beijing to discuss raw material prices. Australia is the world’s biggest exporter of iron ore.
“Overall sentiment is still pretty weak and people are cutting back on risk positions,” said Khoon Goh, a senior economist at ANZ National Bank Ltd. in Wellington. “Any news reports suggesting further downward pressure on commodity prices will definitely be taken as a negative for Aussie.”
Australia’s currency fell 1 percent to 81.81 U.S. cents, and lost 1.5 percent to 73.48 yen.
Korea Tensions
The won weakened amid concern conflict between on the Korean peninsula could escalate. O Kuk Ryol, vice chairman of North Korea’s National Defense Commission, said the nation is ready to counter any attacks from South Korea, according to North Korea Intellectuals Solidarity, a Seoul-based group run by defectors from the communist country. Yonhap News agency reported on the group’s posting earlier today.
“Tensions between the North and South heightened today, with widespread panic, coupled with weaker equity markets driving massive dollar buying interest,” said Bernard Yeung, head of foreign-exchange trading at National Australia Bank Ltd.
in Hong Kong.
South Korean President Lee Myung Bak said yesterday the country will push for United Nations censure against North Korea for the March 26 sinking of a naval ship, which killed 46 sailors. A multinational team concluded on May 20 that North Korea fired a torpedo to split apart the 1,200-ton Cheonan.
The won slumped 3.7 percent to 1,260.60 per dollar, according to data compiled by Bloomberg, after earlier reaching 1,277.85, the lowest since July 16.
May 25 (Bloomberg) -- The euro weakened for a second day against the yen and dollar as signs the European debt crisis is spreading revived concern the region’s recovery will slow.
The single currency dropped to within one yen of its weakest in more than eight years after the International Monetary Fund urged Spain to do more to overhaul its ailing banks, adding to speculation Europe’s financial institutions face more losses. The yen strengthened as a decline in Asian stocks boosted demand for Japan’s currency as a refuge. The won slumped as tensions escalated between the two Koreas over the sinking of a warship from the South’s navy in March.
“I’m concerned about what policy makers can do to contain the debt crisis should it spread from Greece to bigger nations like Spain and Italy,” said Tetsuya Inoue, chief researcher for financial markets at Nomura Research Institute, a unit of Japan’s largest brokerage. “Economic growth can’t help but lose momentum. The euro will stay under downward pressure.”
The euro fell 1.3 percent to 110.29 yen as of 6:45 a.m. in London from yesterday in New York. The common currency dropped to $1.2283 from $1.2372. The dollar was at 89.81 yen from 90.29 yen, and climbed to $1.4339 per pound from $1.4425.
The 16-nation euro touched a four-year low of $1.2144 on May 19, and the weakest since 2001 at 109.51 per yen on May 20.
Spain’s banking industry “remains under pressure,” as consolidation has been “too slow,” the Washington-based IMF said in a report yesterday after a regular review of Spain.
“We fully support” the new austerity measures, it said, referring to Spain’s plans to rein in its budget deficit with the deepest spending cuts in three decades.
Spain’s Banks
Four Spanish savings banks plan to combine to form the nation’s fifth-largest financial group with more than 135 billion euros ($166 billion) in assets, as regulators push ailing lenders to merge with stronger partners.
“Looking ahead, we suspect contagion risks from the European sovereign debt crisis will remain front-brain for markets,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “With negative momentum firmly ingrained, we wouldn’t be surprised to see the euro re-test recent lows around $1.22 in coming sessions.”
The Bank of Spain said on May 22 it appointed a provisional administrator to run CajaSur, a savings bank crippled by property-loan defaults. The seizure is the first under a state- financed rescue plan that Standard & Poor’s estimates may cost as much as 35 billion euros, increasing the burden on Spain’s finances as the government tries to reduce its budget deficit.
‘Widespread Disruption’
Stresses in Spain’s banking system are intensifying concern that the Greek debt crisis may spread, Mohamed A. El-Erian, whose company runs the world’s biggest mutual fund, said in an interview with PBS.
“The minute you introduce strains in the banking system, there’s always a fear that governments will be behind the curve and that you can get contagion,” El-Erian, co-chief investment officer at Pacific Investment Management Co., said on PBS’s Nightly Business Report. “You can get widespread disruption.”
Europe’s currency has lost 6.9 percent this year, based on Bloomberg Correlation-Weighted Indexes. The dollar has risen 10 percent, and the yen has advanced 15 percent.
Japan’s currency rose versus all 16 major counterparts as the MSCI Asia Pacific Index shares dropped 2.8 percent.
“Increasing concerns about a slowdown in economic growth weigh on stocks,” said Yoshiaki Ota, head of the foreign- exchange trading group at Sumitomo Mitsui Banking Corp. in Tokyo. “When stocks fall, investors rush to sell cross currencies against the yen as a knee-jerk reaction.”
Commodities Prices
The yen typically strengthens in times of financial turmoil as Japan’s trade surplus makes the currency attractive as it means the nation does not have to rely on overseas lenders.
Australia’s dollar fell for a second day as iron-ore prices dropped before steelmakers in China and South Korea, the world’s
largest- and sixth-biggest producing nations, meet today in Beijing to discuss raw material prices. Australia is the world’s biggest exporter of iron ore.
“Overall sentiment is still pretty weak and people are cutting back on risk positions,” said Khoon Goh, a senior economist at ANZ National Bank Ltd. in Wellington. “Any news reports suggesting further downward pressure on commodity prices will definitely be taken as a negative for Aussie.”
Australia’s currency fell 1 percent to 81.81 U.S. cents, and lost 1.5 percent to 73.48 yen.
Korea Tensions
The won weakened amid concern conflict between on the Korean peninsula could escalate. O Kuk Ryol, vice chairman of North Korea’s National Defense Commission, said the nation is ready to counter any attacks from South Korea, according to North Korea Intellectuals Solidarity, a Seoul-based group run by defectors from the communist country. Yonhap News agency reported on the group’s posting earlier today.
“Tensions between the North and South heightened today, with widespread panic, coupled with weaker equity markets driving massive dollar buying interest,” said Bernard Yeung, head of foreign-exchange trading at National Australia Bank Ltd.
in Hong Kong.
South Korean President Lee Myung Bak said yesterday the country will push for United Nations censure against North Korea for the March 26 sinking of a naval ship, which killed 46 sailors. A multinational team concluded on May 20 that North Korea fired a torpedo to split apart the 1,200-ton Cheonan.
The won slumped 3.7 percent to 1,260.60 per dollar, according to data compiled by Bloomberg, after earlier reaching 1,277.85, the lowest since July 16.
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