Nov. 24 (Bloomberg) -- The following are the day's top business stories:
1. China's Central Bank to Strengthen Liquidity Management, Tighten Lending 2. Japanese Stocks Rise on U.S. Jobs Report, Commodities; Honda, Sony Advance 3. Mortgages Poised to Draw Record Foreign Demand to Denmark: Credit Markets 4. Japan Export Growth Slows More Than Forecast as Economy Loses Trade Boost 5. Record Hong Kong IPOs Falter as Bluestar, China Datang Suspend Stock Sales 6. Pike River Coal May Be `Worthless' After Fatal New Zealand Mine Explosion 7. India Arrests 8 Including LIC Housing CEO, Bank Officials on Bribery Probe 8. ECB May Delay Exit Again as Ireland Rescue Fails to Stem Contagion Spread 9. Expert Networker Don Chu Is Arrested on Conspiracy Charges in Insider Case 10.Power Premium Shrinking as France Converges With Germany: Energy Markets 11.Gartmore's Rise and Fall Hinged on Star Manager Guy Who Beat Gross, Herro 12.Copper Thieves Tear Up America as Surge in Commodities Spurs Crime Spree
1. China's Central Bank to Strengthen Liquidity Management, Tighten Lending
China´s central bank said it will strengthen liquidity management and "normalize" monetary conditions after having twice this month ordered banks to hold more in reserves to curb inflation that´s at a two-year high. The nation will use quantitative and price tools to manage liquidity, Hu Xiaolian, a deputy governor of the People´s Bank of China, said in a statement posted to the central bank´s website yesterday. China will also control the pace of bank lending for the remainder of this year as it will be difficult to stay within the government´s 7.5 trillion yuan ($1.13 billion) target for new loans in 2010, she said. Premier Wen Jiabao´s government has raised interest rates, increased the reserve requirement for banks and pledged to use price controls if needed as part of efforts to rein in inflation that reached 4.4 percent last month. Analysts at nine banks surveyed by Bloomberg News last week predicted the PBOC will boost borrowing costs a second time by year-end. "Beijing´s top concern is excess liquidity flooding the economy and fueling asset price inflation, so the policy stance is moving from accommodative to prudent, actually, more tightening," Jinny Yan, an economist at Standard Chartered Plc in Shanghai, said before yesterday´s central bank statement.
2. Japanese Stocks Rise on U.S. Jobs Report, Commodities; Honda, Sony Advance
Japanese stocks rose after U.S. reports showed employment and consumer sentiment improved, boosting confidence in a global economic recovery and driving commodity prices higher. Honda Motor Co., Japan´s second-biggest carmaker, rallied 1 percent. Sony Corp., an electronics maker that gets 70 percent of its sales abroad, jumped 1.7 percent after Mizuho Securities Co. recommended the stock. Mitsubishi Corp., Japan´s biggest commodities trader, gained 1.5 percent after oil and metal prices increased. "The global economy is certainly improving, so we don´t have to be pessimistic about the economic outlook," said Hideaki Higashi, a strategist in Tokyo at SMBC Friend Securities Co. "The market should become more active." The Nikkei 225 Stock Average rose 0.6 percent to 10,086.77 as of 9:05 a.m. in Tokyo. The broader Topix index gained 0.5 percent to 871.29 with almost four stocks advancing for each that fell.
3. Mortgages Poised to Draw Record Foreign Demand to Denmark: Credit Markets
Denmark´s $97 billion mortgage-bond auction is poised to attract record demand from international investors as Europe´s sovereign debt crisis boosts appetite for the top-rated securities. Nykredit Bank A/S, the country´s biggest issuer of the debt, Realkredit Danmark and more of the nation´s banks will offer bonds tied to home loans with maturities of one to five years in auctions starting today. Foreign funds will buy as much as 20 percent of the debt, an all-time high and up from 15 percent last year, according to Danske Bank A/S. Denmark´s $490 billion mortgage-bond market, the third- largest after the U.S. and Germany, proved resilient during the global financial crisis, with prices rising 6.57 percent in 2008, 7.1 percent in 2009 and 5.4 percent this year, according to the Danske Bank Mortgage Bond-Market Index. The securities provide an alternative to European government bonds roiled by a spreading debt crisis that led to bailouts for Greece and Ireland. "There might be an incentive for foreign investors to have a higher focus on the Danish market compared to last year because of the turmoil in the European bond market," said John Madsen, the chief economist at Nykredit in Copenhagen. "The Nordic market, and the Danish market especially, is in a more stable situation."
4. Japan Export Growth Slows More Than Forecast as Economy Loses Trade Boost
Japan´s export growth slowed more than forecast in October, weakening the boost from trade that has led the nation´s recovery from its deepest postwar recession. Overseas shipments increased 7.8 percent from a year earlier, the Finance Ministry said in Tokyo today. The median estimate of 21 economists surveyed by Bloomberg News was for a 10.7 percent gain. The report adds to concern that Japan is losing its main growth engine after trade last quarter failed to contribute to the expansion for the first time since the global financial crisis. The yen´s advance against the dollar this year has imperiled the earnings of exporters and manufacturers from Nissan Motor Co. to Panasonic Corp. "Going forward, we see a risk of further declines in exports," Takehiro Sato, chief Japan economist at Morgan Stanley MUFG Securities Co. in Tokyo, said before the report was released. He added that Japan´s economy may shrink in the final three months of 2010, the first contraction in five quarters.
5. Record Hong Kong IPOs Falter as Bluestar, China Datang Suspend Stock Sales
Hong Kong´s record year of initial public offerings is faltering as tumbling stock prices prompted Bluestar Adisseo Nutrition Group and China Datang Corp. to delay or withdraw a maximum $2.6 billion of share sales. Bluestar Adisseo, the animal-nutrition producer backed by Blackstone Group LP, said it withdrew its IPO because of "continued and excessive" market volatility. Market conditions are affecting the valuation of Datang´s renewable energy unit, said two people with knowledge of the plan who declined to be identified because the information is confidential. The benchmark Hang Seng Index has slumped 7.8 percent from its Nov. 8 high as China stepped up measures to contain inflation and Ireland accepted a European Union-led bailout. The slump may curtail 2010´s record $43.9 billion of initial sales by 74 companies including Agricultural Bank of China Ltd. and AIA Group Ltd. "Since the market started to correct, investors started to think twice about IPOs," said Alex Au, managing director of Richland Capital Management Ltd. in Hong Kong, which oversees $300 million of assets. "China tightening has been a big concern in the market, and Europe debt is certainly also a big macro event. It´s making people lower their risk appetite."
6. Pike River Coal May Be `Worthless' After Fatal New Zealand Mine Explosion
Pike River Coal Co. faces an indefinite production shutdown at its New Zealand mine after two gas explosions that police say killed 29 workers. "It´s their only operating asset, and it´s shut, and it´s going to be shut for the foreseeable future," said Cameron Peacock, a market analyst at IG Markets Ltd. in Melbourne. "You can´t see it opening anytime probably within the next six to 12 months. The near-term future is going to be pretty bleak." New Zealand Oil & Gas Ltd., Pike River´s largest shareholder, this week had its biggest share drop on record after resuming trade following last week´s first explosion. Prime Minister John Key said yesterday he expects cabinet next week to approve a commission of inquiry into the blast. Pike River, which expected to get NZ$4 billion ($3.1 billion) in export sales from the mine, slumped 14 percent to 61 Australian cents in Sydney on Nov. 19 before trading was halted. The company fell 4.4 percent to 88 New Zealand cents at the Wellington close on the same day. The stock was suspended on both exchanges Nov. 22.
7. India Arrests 8 Including LIC Housing CEO, Bank Officials on Bribery Probe
India´s federal investigating agency arrested LIC Housing Finance Ltd. Chief Executive Officer Ramachandran R. Nair and seven bank and brokerage officials following a probe into bribes and improper loan disbursals. Rajesh Sharma, chairman of Mumbai-based securities firm Money Matters Financial Services Ltd., was taken into custody, P. Kandaswamy, the Central Bureau of Investigation´s inspector general for Mumbai Zone 2, said yesterday. Executives at the Life Insurance Corp. of India, Bank of India, Central Bank of India and Punjab National Bank were also arrested. LIC Housing and Money Matters plummeted yesterday on concern the arrests may discourage investors already worried about allegations that the government improperly awarded phone licenses, a clampdown on local microfinance companies and the contagion from Europe´s debt crisis. Shares of banks and real estate companies dragged the nation´s benchmark index lower. "It does not seem to be limited to one company or one sector: there are going to be issues on corporate governance," said Paras Adenwala, chief executive officer at Capital Portfolio Advisors in Mumbai, which advises non-resident Indians on investments in the country. "This will have some impact on the sentiment for foreign investors."
8. ECB May Delay Exit Again as Ireland Rescue Fails to Stem Contagion Spread
The European Central Bank may have to delay its exit from emergency measures again as Ireland´s bailout fails to stem the region´s sovereign debt crisis. Investors are dumping Spanish and Portuguese bonds on concern they will have to follow Ireland and Greece in asking for European Union bailouts, making it more difficult for the ECB to proceed with its withdrawal of liquidity support for banks. Some economists now doubt the ECB will be able to signal a move back to limited auctions of three-month loans, which they regard as the next likely step in the bank´s exit, when policy makers meet next week in Frankfurt. "We can no longer be very categorical on this point given the engulfing crisis in the periphery and the desire of the ECB to avoid exacerbating it," said Julian Callow, chief European economist at Barclays Capital in London. "We should prepare for the distinct possibility that the ECB realizes the timing would be bad and so avoids taking actions that could inflame an already inflammatory situation." Surging bond yields in Greece, Ireland, Portugal and Spain suggest investors are losing confidence in the ability of European leaders to contain the debt crisis, even after they agreed to rescue Ireland. At the same time, Germany´s economy expanded at the fastest pace since reunification in the second quarter and a report yesterday showed business confidence jumped to a record this month. That´s prompting ECB policy makers including Axel Weber, Juergen Stark and Yves Mersch to say they´re anxious to proceed with the withdrawal of stimulus.
9. Expert Networker Don Chu Is Arrested on Conspiracy Charges in Insider Case
Don Ching Trang Chu was arrested today on charges he arranged for insiders at publicly traded companies to improperly provide information to hedge fund clients of the consulting firm where he worked. U.S. prosecutors in New York claim in a complaint unsealed today that Chu, 56, established a relationship with Richard Choo-Beng Lee, a former partner at San Jose, California-based Spherix Capital LLC. Lee was employed as an analyst by SAC Capital Advisors LLC, the hedge fund firm run by Steven Cohen, from 1999 to 2004. Lee´s hedge fund paid Chu´s California-based firm, which prosecutors didn´t identify, for tips, according to the government. Inside information was passed concerning Atheros Communications Inc., Broadcom Corp. and Sierra Wireless Inc., according to the government´s complaint. Chu was employed by an unnamed "expert-networking" firm and served as a liaison to consultants and sources of information in the United States and elsewhere, the U.S. says. Chu´s firm is Primary Global Research LLC, based in Mountain View, California, according to a person familiar with the investigation.
10.Power Premium Shrinking as France Converges With Germany: Energy Markets
The extra cost to buy French electricity compared with Germany´s is shrinking as the European Union moves toward a single power market for the continent. French electricity for delivery next year traded at as little as 1.30 euros ($1.73) a megawatt-hour more than the equivalent German contract yesterday, the smallest difference since February, according to data compiled by Bloomberg based on broker prices. That compares with this year´s high of almost 4 euros on May 17 and an average of 2.50 euros during 2010. It ended yesterday at 1.70 euros. The falling premium shows how the system of so-called market coupling, which routes electricity to where prices are highest, is making Europe´s power market more competitive as the EU moves toward a unified system by 2015. Day-ahead power for France and Germany, the region´s biggest consumers, converged on Nov. 9, the day the nations were coupled for the first time. "Germany will move closer to France as now there will only be one physical market," said Dieter Hluchy, a trader at Stadtwerke Hannover AG, an energy supplier based in Hannover, Germany. "It´s now a European market."
11.Gartmore's Rise and Fall Hinged on Star Manager Guy Who Beat Gross, Herro
Gartmore Group Ltd., the U.K. fund manager founded by the Cayzer shipping dynasty, has been sold five times over the past 20 years. Its sixth sale, being run by Goldman Sachs Group Inc., will take place without its biggest asset and liability -- star fund manager Roger Guy. Guy, 44, has outperformed Bill Gross and David Herro, two of Morningstar Inc.´s three fund managers of the decade, since 2000 as he ran Gartmore´s best-performing funds with partner Guillaume Rambourg, 39. His success made the firm too dependent on their star managers and his exit has left it struggling to stem client withdrawals and find a buyer a year after going public, former employees and analysts say. "They weren´t as good as Warren Buffett, but they were close," said Joe Seet, senior partner at Sigma Partnership, a London hedge-fund advisory firm, and an investor in Gartmore´s European Absolute Return fund run by Guy and Rambourg. "Investors follow the manager. Talent is hard to come by and very difficult to replace." Gartmore has promised to update investors by March on a search for a buyer or merger partner after clients pulled 14 percent of their assets following Rambourg´s suspension last March and Guy´s announced departure this month. Although Guy´s rise from investment analyst to the firm´s highest revenue producer over 17 years increased profits for its revolving door of owners, his success caused a concentration of power within the firm that was exposed on his departure, analysts and ex- employees say.
12.Copper Thieves Tear Up America as Surge in Commodities Spurs Crime Spree
For almost a year, Mid City Recycling operated out of a warehouse next to a liquor store on South Industrial Boulevard in the south side of Dallas. The startup seemed to have popped up out of nowhere. Out front there was a sidewalk sign with a Mexican flag letting everyone know that the proprietors spoke Spanish. Beside it, a small truck draped with a banner read, "$We Pay Big Bucks$." There was no need to say for what, Bloomberg Businessweek reports in its Nov. 29 issue. For five weeks during the summer of 2009, undercover agents with the Dallas Police Metal Theft Unit watched Mid City. One at a time, they pulled into the rutted parking lot in unmarked sedans or SUVs. With tiny spy cameras attached to their shirts, they lugged in buckets of insulated electrical wiring and suspiciously stripped transmission lines, threading past dunes of scrap metal piled high enough to block out the ceiling lights far overhead. The metal was weighed on a small scale and the transaction finished at a glassed-in cashier´s window. Afterward the footage was reviewed by Lieutenant Richard Dwyer, then the unit commander. "This is a great picture of the roof," he said when one of the men returned with useless footage from a poorly angled camera. They kept filming. Dwyer wanted proof that Mid City was functioning as a black market. If they could find that proof, they would be slightly closer to bringing a crime spree under control.
For the complete stories summarized here, and for more of the day's top news, see TOP <Go>.