It will be announced in Beijing on Friday that Bank of America has agreed to purchase a 9 percent stake in China Construction Bank for approximately $2.5 billion.
BofA is also expected to invest $500 million more in CCB’s upcoming initial public offering.
In return for its purchase, the largest foreign investment in the Chinese banking sector to date, BofA is expected to receive one seat on CCB’s board.
CCB has been looking for a foreign investor for some time, but the search has been complicated by the reluctance of foreign companies to invest in Chinese banks over concerns about bad debts, corruption, and management issues.
Also at issue has been the large size of investments required, with very little return in terms of having a say in management.
Several international banks are thought to have been approached by CCB about buying into the bank before its IPO.
Bank of America has been looking for further growth opportunities overseas after it bought a 25 percent stake in Mexican bank Grupo Financiero Santander Serfin in 2003. BofA currently generates only 6 percent of its revenues outside the US.
The London equities markets were up on Thursday as the mining and oil sectors did well but tobacco stocks did not.
The FTSE 100 was up 0.5 percent to 5,045.0 while the FTSE 250 gained 0.8 percent to 7,317.9 on a volume of 2.6 billion shares.
The mining sector continued strong activity on overnight purchases by Australian funds and on higher copper prices based on Chinese data. BHP Billiton was up 4.2 percent to 716p, Rio Tinto gained 3.9 percent to £17.24, Antofagasta rose 3.6 percent to £12.25, and Angloamerican gained 2.6 percent to £13.45.
Oil exploration groups did well as First Calgary Petroleums gained 1.3 percent to 392 ½p despite the end of joint venture talks with Repsol and BowLeven advanced 37 percent to 452p after receiving positive news concerning a drilling project off the coast of Cameroon.
The tobacco sector was lower on a warning from Credit Suisse First Boston that current valuations do not adequately reflect the risks of changes in regulations, changes in taxation, litigation and competition from less expensive brands.
British American Tobacco lost 2.2 percent to £10.74, Imperial Tobacco fell 1.6 percent to £15.07, while Gallaher declined 1.1 percent to 849p.
In London on Tuesday, the FTSE 100 closed down fractionally at 5046.8 while the FTSE 250 lost 0.2 percent to 7289.8. Volume was low at 2.6 billion shares traded.
The leading gainer on the FTSE 100 was altnet telecommunications operator Cable & Wireless, which gained 1.6 percent to 142p. The biggest rise in the banking sector was Lloyd’s TSB, which gained 1.2 percent to 468 ½p as hopes for cross-border mergers highlighted after the announcement of the UniCredito/HVB merger.
Pharmaceuticals group AstraZeneca fell 1.2 percent to £22.79 on continuing concerns over Crestor, its cholesterol drug.
Part of the drop on the FTSE 250 had to do with concerns about the housing market which sent most stocks in the sector down. Savills, the property consultant, was down 3.9 percent to 362 ½p. Housebuilder Taylor Woodrow fell 3.9 percent to 326 ½p and Westbury declined 1 percent to 459 ½p.
The exception was Redrow, which gained 2.7 percent to 405p.
Meanwhile, in Europe the FTSE Eurofirst 500 was up 0.2 percent to 1,136.94. Oil stocks were key to the advance as Statoil was up 2 percent to NKr125.50, Eni rose 0.5 percent to €21.97, Royal Dutch advanced 1.1 percent to €50.40, and Repsol was up 1.1 percent to €20.51.
A survey published Thursday by the Japan External Trade Organisation (Jetro) has found that only 54.8 percent of Japanese companies surveyed in May are planning to expand their operations in China.
Last December, 86 percent of companies said they would do so.
The drop-off in planned expansion is part of the fall-out of anti-Japan sentiment and demonstrations targeting Japanese business in China in April over issues such as Tokyo’s efforts to win a permanent seat on the United Nations Security Council and the publication of history textbooks in Japan that ere seen by China as not admitting Japan’s wartime aggression.
The two nations have also been involved in disagreements over energy rights and territorial claims and China has protested the plans of Japan’s prime minister to visit a war shrine seen as excessively nationalistic.
Of the 414 companies included in the survey, 7.5 percent said they would cancel or postpone planned projects in China and a further 5.6 percent said they were planning to downsize Chinese production or to shift production to other countries.
Just 9.7 percent of surveyed companies said that their business had already been hurt by the tensions between the two countries, but many more said that there could be effects in the future.
Prices were down and yields up on US Treasury bonds on Wednesday ahead of Thursday’s appearance of Federal Reserve chairman Alan Greenspan before a congressional committee to talk about the country’s economic outlook.
Yields on 2-year bonds were up 2.5 basis points to 3.591 percent, and 10-year yields rose 1.5 basis points to 3.922 percent.
The yield on 5-year bonds stood at 3.71 percent ahead of a sale of $14 billion in new issues, and 30-year bonds were yielding 4.2 percent.
In the eurozone, yields were down yet again as the Dutch central bank cut its 2005 growth forecast from 1.7 percent to 0.4 percent on high oil prices and global economic slowdowns.
This increased speculation that the European Central Bank might cut interest rates before the end of the year.
Yields on the 10-year Bund fell to a record low of 3.12 percent.
Yields on gilts in the UK fell to the lowest level in 2 years as the 10-year gilt was down 2.7 basis points to a yield of 4.214 percent. The Bank of England was to hold a monetary policy meeting, but a change in interest rates was not expected.
Meanwhile, in Japan, 10-year government bonds were yielding 1.230 percent while 5-year issues were up 1 basis point to a yield of 0.425 percent, still close to a 22-month low.
Gazprom, the Russian natural gas monopoly, has announced that the Russian government will increase its holdings in the company from 38 percent to 51 percent.
Russia will acquire the shares on the open market and will pay cash for them.
This move makes it unlikely that a planned merger between Gazprom and Rosneft, the state run oil company, would proceed as planned.
However, if the merger does not proceed, it is considered likely that Gazprom will try to acquire another Russian oil company, possibly Sibneft.
It is also likely that the move by the Russian government will result in an end to the ban on foreign ownership of Gazprom shares.
The economic ministry said that it would borrow from international banks to raise the cash for the transaction, but there was some speculation that the money might be raised by selling part of oil producer Yuganskneftegaz, recently acquired by Rosneft, to China.
That acquisition tripled Rosneft’s oil production but served to complicate matters involved in the merger with Gazprom.
China’s National Oil Corporation is said to be in the market for new oil sources.
All this news had Gazprom shares up 2.8 percent to Rbs76 in late trading in Moscow.
Globo Comunicacoes Participators (Globopar), the leading media company in Brazil, is one step closer to finishing the construction of the largest corporate bond restructuring deal in that South American nation’s history.
On Monday the company entered into an auction process that will refinance $1.3 billion in debt.
Globopar found itself in debt after losses in its cable division in the 1990s and after it could not service its debt after Brazil’s currency was devalued in 2002.
The company has been in negotiations with Brazilian and international creditors for two years to restructure its debt.
In April, holders of Globopar’s bond issues agreed to exchange old debt for new securities or cash. The banks involved agreed to the deal last week.
The auction process will take about a month to complete and will give creditors the choice of access to $200 million in cash payouts or receiving debt worth more than the face value of the defaulted bonds they hold.
The Asian markets started the day sharply down Thursday, but with the exception of Tokyo, they generally managed to finish higher by the end of the trading day.
In Tokyo, the Nikkei 225 ended down by 0.9 percent at 10,984.39. It had been down to 10,770.58 earlier in the day, its lowest since mid-December. The Topix closed 0.7 percent lower at 1,123.32.
Concerns about inflation in the U.S. was a factor in the losses, as was a report from the Ministry of Finance that foreign investors had sold ¥126 billion of Japanese stocks in the week ending April 16, after a net buy the previous week.
Declines were prevalent across the board, including the precision machinery, construction, shipping, toy making, and electronics sectors.
In Seoul, the weighted index finished up 0.2 percent at 939.14 after a period of losses earlier. Taipei was up as well, by 0.5 percent, to finish the day at 5,721.99. In Hong Kong, the Hang Seng index was 0.7 percent higher to close at 13,597.31, as retailers were generally higher on
the day.
In the European markets on Thursday afternoon, the FTSE Eurofirst 300 rose 0.3 percent to 1,067.76. Xetra Dax was up 0.6 percent to 4,203.29 in Frankfurt, and in Paris the CAC-40 was up 0.5 percent, to 3,967.91.
Nokia was up 5.8 percent on a positive first quarter earnings report, well above expectations.
Other telecommunications companies were up even before the release of Nokia’s report. Ericsson was up 3.5 percent, Alcatel overcame early losses to rise 1 percent, France Telecom was up 2.3 percent, and Telefonica rose 1.5 percent.
Nokia’s news also benefited chipmakers: STMicroelectronics rose 2.9 percent and ASML advanced 1.5 percent.
In the automotive sector, Volkswagen was up 1.8 percent on a better than expected quarterly report, Fiat advanced 4.3 percent, Renault was 2.5 percent higher, and Peugeot was up 1.8 percent.
Pernod Ricard was 7.4 percent higher after it projected that its acquisition of Allied Domecq would provide substantial cost savings. Allied Domecq was up 3.8 percent.
The London markets were mixed at the end of the morning Thursday. The FTSE 100 was up 0.1 percent to 4,826.7 but the FTSE 350 fell 0.1 percent to 6,971.8.
The biggest gain on the FTSE 100 was achieved by Allied Domecq, up 3.6 percent to 666p after its board recommended in favor of a takeover by a consortium that includes Pernod Ricard of France and Fortune Brands of the United States.
This news sent rival drinks maker SABMiller up 1.2 percent, and shares in Scottish and Newcastle were up 0.2 percent. However, Diageo fell 0.3 percent.
The decline in the FTSE 250 was led by Spirent, which fell 24.9 percent on a profit warning that group operating profit will be far below expectations. Citigroup downgraded Spirent’s stock to “hold” on the news that the telecommunications
testing company will likely report an operating loss of about £10m for the first half.
On the other hand, Colt Telecom moved up 4.6 percent on its report of higher quarter-to-quarter earnings and dismissal of takeover rumors. Computacenter fell another 1.3 percent.
The Asian markets were mixed on Wednesday: oil prices had a negative impact, as did concerns about strong economic growth in China, while a positive quarterly earnings report from Intel didn’t have much impact at all.
In Tokyo, the Nikkei 225 average rose 0.2 percent to 11,088.58 and the Topix index rose 0.4 percent to 1,131.53.
In the technology sector Sony fell 1 percent, but Cannon was up 0.7 percent, Matsushita gained 1.2 percent, Advantest ended the day up 0.1 percent after being up 2.2 percent earlier in the day, and Tokyo electron posted a 1 percent gain after reporting a 16 percent rise in quarterly orders.
Japan Airlines continued to rebound with a 0.3 percent rise, while All Nippon Airways closed unchanged.
In Shanghai, the composite index closed down 1.3 percent at 1,184.19. In Taipei the good news from Intel had no effect on the technology sector and the weighted index ended the day 1 percent lower at 5,693.01.
In Seoul, the composite index rose 0.5 percent to 937.36. Bangkok’s SET index rose 0.9 percent to 684.19 when Thailand’s central bank left interest rates the same. In Manila, bargain hunting pushed the composite index up 1.1 percent to 1,854.97.
Trading was mixed in London on Wednesday. At mid-day the FTSE 100 had fallen 0.2 percent to 4845.1, but the more broad-based FTSE 250 was up 0.2 percent to 7,012.5.
Mining stocks posted gains, with Antofagasta rose 1.6 percent when UBS raised its rating to “buy” from “neutral.” Xstrata was up 2.2 percent, and BHP Billiton advanced by 1 percent.
In other sectors, the electrical retailer Dixon’s was up 0.5 percent after Deutsche Bank raised its rating from “hold” to “buy” on the strength of its recently signed option to buy Russian retailer Eldorado.
Reuters fell 0.6 percent on a first-quarter report that revenues had dropped 6 percent compared to the same period last year.
Computer services company Computacenter lost 8.5 percent after warning that its profits stand to be “substantially lower” than those of last year.
Supermarket chain Wm Morrison, on the other hand, was up 1.8 percent on speculation that it could be vulnerable to takeover after recent losses.
Gains in the technology sector and good earnings reports from Intel and Yahoo in the U.S. did not help the European markets, which were lower at mid-afternoon on Wednesday.
The FTSE Eurofirst 300 was down 0.4 percent to 1,066.39. Frankfurt’s Xetra Dax fell 0.5 percent to 4,182.90. The CAC-40 in Paris was down 0.3 percent to 3,975.07.
In the technology sector, ASML rose 2.3 percent, Infineon was up 0.7 percent, while STMicrolectronics advanced by 0.3 percent.
Alcatel, a French telecommunications group, went up by 1.8 percent amid speculation that they were looking to strengthen their ties to Thales, the defense electronics group. Alcatel already owns 9 percent of Thales.
Things were not as positive in the pharmaceuticals sector: Roche fell 0.6 percent, Sanofi-Aventis was down 0.4 percent, and Novartes, the Swiss drug company, lost 0.1 percent, partly on a report of problems with an epilepsy drug but mostly due to the effects of profit-taking after several days of gains.
A rebound in US technology stocks helped the Tokyo markets Tuesday to take back some of the ground it has lost recently.
Still, gains were small in comparison to the losses posted since the beginning of last week, as worries continue over economic growth in the U.S. as well as over continuing tensions between Japan and China.
The Nikkei 225 was up 1.2 percent to 11,066. This compares to losses of 7.1 percent since last Monday. The Topix index was up by 1.55 percent, to 1,127.
The news from Texas Instruments on Monday of a 12 percent rise in quarterly profits sent Japanese technology stocks higher, and information and communication stocks rose by an average of 0.9 percent.
Stocks in other sectors were also generally higher, including airline stocks, which had earlier taken serious hits when many Japanese citizens cancelled business and holiday flights to China over fears for their safety in the face of anti-Japanese sentiment there.
Japan Airlines rose ¥7 to ¥338. Air transport shares generally rose by an average of 2 percent.
The European markets seemed to be making back some of their recent losses in mid-afternoon trading on Tuesday.
By mid-afternoon, the FTSE Eurofirst 300 was up 0.9 percent to 1,072.7. In Frankfurt, the Xetra Dax was at 4,218.70, up by 0.4 percent. In Paris, the CAC-40 was up 0.5 percent to 3,971.05.
These gains were spurred by better news from Wall Street and a positive first-quarter earnings report from Roche, a Swiss pharmaceuticals company.
On the strength of good performances from cancer and flu drugs, Roche’s first-quarter sales were up 17 percent, much better than had been expected.
More good earnings news came from Akzo Nobel, the Dutch chemicals and drug group, which reported that their first-quarter earnings had met expectations.
Positive earnings news from Texas Instruments helped the technology sector, as Infinion was up 1 percent by mid-day, STMicroelectronics rose 1.3 percent, and ASML advanced by 1.1 percent.
The Tokyo markets suffered their worst one-day losses in nearly a year as investors worried about the worsening relations between Japan and China.
A wide range of sectors were down, taking the Nikkei 225 down 3.8 percent to 10,938.44, a four-month low. The Topix index was off 3.6 percent, closing at 1,109.49.
Travel businesses especially felt the effect of the tensions with China as many Japanese cancelled planned vacations in China over fears of dangers in traveling there. Kinki Nippon Tourist dropped 7.3 percent and Eurasia Travel was down 11.4 percent.
Steel companies also felt repercussions from the China trouble due to their heavy involvement there. Japan Steelworks was down 9.1 percent and Nisshin Steel was off 4.8 percent.
Technology stocks were off as well, mostly on the bad news from IBM and Samsung last week and on worries about pressures to drop prices for consumer electronics.
Tokyo Electron and Taiyo Yuden each saw shares fall 4.4 percent, Toshiba was down 3.7 percent, and NEC was down 4.3 percent.
Asian markets were lower Monday on worries about global growth and the dismal first-quarter earnings reports coming out of some of the world’s largest corporations.
In Taipei, a sell-off in the technology sector sent the market there down to close to a six-month low as the weighted index fell 2.9 percent to 5,715.16.
Taiwan Semiconductor Manufacturing was down 2 percent. Display screen manufacturer AU Optroncis was down 4.5 percent, and Powerchip was down 3.4 percent.
Mitak International, which makes personal computers and smart phones, bucked the trend, rising 2.3 percent after a strong first quarter earnings report.
The composite index in Seoul fell for the sixth straight session, down 2.4 percent to 925.00, under the continuing influence of Samsung Electronics’ poor first-quarter earnings report.
Seoul’s losses were driven by losses in the technology sector. Samsung was down 3.2 percent after a 2 percent fall Friday. Additionally, Hynix Semiconductor was down 3.4 percent, and LG Electronics dropped 2.1 percent.
In other sectors, consumer-related stocks posted some gains in Seoul.
In Hong Kong, the Hang Seng index was off 2.1 percent on selling in all sectors.
The European markets started the week even lower than the ended last week. This is seen to be an effect of worries about earnings and economic slowdown.
These worries and the losses attributed to them come after last week’s losses on Wall Street, the worst in two years.
One of the major reasons for concern continues to be last week’s news of poor earnings announced by IBM and Samsung last week.
At mid-afternoon Monday, the FTSE Eurofirst 300 had fallen 1.8 percent to 1,063.66. Only four stocks listed on the Eurofirst had managed gains by that time of day.
The Xetra Dax in Frankfurt was off 2.5 percent to 4,204.47, and in Paris the CAC-40 was down by 1.9 percent to 3,954.83.
Phillips, the Dutch electronics company, only added to the bad news Monday as they reported that their first-quarter net profits had fallen short of expectation. Phillips was down 3.8 percent by mid-afternoon.
Other stocks in the technology sector also fell, including the German chipmaker Infineon, which was down 2.7 percent, STMicroelectronics, which fell 1 percent, and ASML, which declined by 1.7 percent.
Samsung Electronics, Asia’s most valuable technology company, has reported that its first-quarter profits were over 50 percent lower compared with the same period last year.
Net profits were down 52 percent and sales revenue was down 4.2 percent.
Operating profits in Samsung’s liquid crystal display division were 97 percent lower and in its semiconductor business they fell by 22 percent as compared to last year.
The factors cited as leading to the loss were said to include oversupply, an unfavorable exchange rate, and weak pricing power.
The company was also hurt by its bail-out of its credit-card affiliate, Samsung Card, of which it owns 47 percent.
The South Korean company, which is the world’s biggest flat screen manufacturer as well as the second-largest chipmaker and the third-largest mobile phone producer also reported that it expected that second-quarters earnings news will not be much better.
Samsung said, however, that it was still optimistic about its long-term outlook.
The Japanese markets continued to fall on Friday as IBM and Samsung Electronics issued disappointing reports on earnings, and worries about rates of growth in the US and China continued to take their toll.
This led to the Nikkei 225 being down 1.7 percent at close, to 11,371, and the Topic index fell 1.5 percent to 1,151.
Analysts did not have hopeful news for a recovery in the Tokyo markets any time soon, either, with at least one prediction that the Nikkei could fall another 12 percent by the end of the year.
The news was bad again for Kanebo as it continued its slide after admitting to years of accounting fraud, losing another 18.3 percent Friday, bringing its losses since Wednesday to a total of 47.2 percent.
An announcements from IBM that its quarterly earnings were far below estimates, coupled with South Korea’s Samsung Electronics’ report that its first quarter earnings were off by 52 percent sent technology stocks lower.
Tokyo Electron was down 3 percent to ¥5,880 and Toshiba fell 3 percent as well, to ¥436. Victor Co. of Japan fell 3.65 percent to ¥845, for its second straight day of losses.
