Dec. 6 (Bloomberg) -- The following are the day's top business stories:
1. Obama Agrees on Two-Year Extension of Bush-Era Tax Cuts in Compromise Plan 2. Japanese Stocks Fall on Concern Yen Will Resume Strengthening; Honda Drops 3. China Outstrips Fed in Liquidity Surge Threatening Inflation Spike in 2011 4. Citigroup Shares to Be Sold by Treasury as U.S. Sheds Its Remaining Stake 5. Discounted Debt Sold in Hong Kong May Rally on Yuan Outlook: China Credit 6. UBS Taking Biggest Share of Australia M&A Since 2004 With ASX, AMP Deals 7. Recent Chinese IPOs in U.S. Slump Even as Offerings Climb to Annual Record 8. China's Bright Food May Buy Vitamin Retailer GNC For $3 Billion, WSJ Says 9. Bank of America Loses $5.9 Billion Wealth Adviser to Todd Thomson Venture 10.Hong Kong Home Prices Poised to Fall, Property Stocks Signal: Chart of Day 11.India Signs $9.3 Billion Deal for Areva to Build Two Nuclear Power Plants 12.`Guns & Hoses,' Tissue Makers Shake Hands as Businesses Hit the Road Again
1. Obama Agrees on Two-Year Extension of Bush-Era Tax Cuts in Compromise Plan
President Barack Obama said he´ll agree to a two-year extension of all Bush-era tax cuts in exchange for extending federal unemployment insurance. The plan also would cut the payroll tax by 2 percentage points. Obama said he would accept a lower rate for the estate tax than Democrats wanted in order to break a stalemate over extending the Bush tax cuts before Congress adjourns. The current tax rates, enacted in 2001 and 2003, are set to expire Dec. 31. Without the compromise, middle-income families would become "collateral damage for political warfare here in Washington," Obama said in televised remarks. He said he still believes the nation can´t afford to permanently extend the top tax rates. "This compromise is an essential step on the road to recovery," Obama said. He criticized Republicans for insisting on permanent tax cuts for the wealthiest Americans "regardless of the cost of impact on the deficit."
2. Japanese Stocks Fall on Concern Yen Will Resume Strengthening; Honda Drops
Japanese stocks declined, sending the Nikkei 225 Stock Average lower for a second day, on concern the yen will resume strengthening and hurt exporters´ earnings. Honda Motor Co., a carmaker that gets about 80 percent of its sales abroad, sank 1.6 percent. Canon Inc., the world´s largest camera maker, lost 0.9 percent. Mitsubishi Corp., Japan´s biggest commodities trader, rose 0.6 percent after the oil and metal prices advanced. "Concerns about the strong yen may weaken exporters," said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. "Commodity markets are firm, which may boost resource-related companies." The Nikkei 225 Stock Average fell 0.5 percent to 10,112.52 as of 9:22 a.m. in Tokyo. The broader Topix lost 0.6 percent to 876.47, with more than two shares dropping for every one that gained.
3. China Outstrips Fed in Liquidity Surge Threatening Inflation Spike in 2011
China´s reluctance to allow a stronger exchange rate has hamstrung its efforts to rein in inflation and endangered a campaign to shift the economy toward domestic demand. The central bank continues to add liquidity, with money supply rising 19 percent in November from a year ago, according to the median estimate of 29 analysts in a Bloomberg News survey before a government release this month. That needs to be curbed to 15 percent to 16 percent to rein in inflation, said Fred Hu, the former Goldman Sachs Group Inc. chief China economist who has founded financial advisory firm Primavera Capital Group. China has held off executing a series of interest-rate increases in part because that would put pressure on a currency officials have kept down to shelter exports. The strategy will leave inflation accelerating past 4 percent for 2011, a three- year high, according to a separate survey. The cost: diminished consumer spending and narrower margins for domestic industries. "China is behind the curve" on reining in the monetary measures adopted during the global financial crisis, said Hu, 47, who is based in Beijing and gives talks to Communist Party members on the economy. "Policy makers have been complacent and failed to anticipate the inflationary consequences of the massive stimulus program."
4. Citigroup Shares to Be Sold by Treasury as U.S. Sheds Its Remaining Stake
The U.S. Treasury Department plans to sell the rest of its stake in Citigroup Inc., using a public offering to dispose of stock acquired during the taxpayer bailout of the financial system. The Treasury will sell about 2.4 billion common shares, the department said in a statement today in Washington. If the offering is completed, the Treasury would continue to hold warrants that entitle the holder to buy the bank´s shares in the future, the department said. "Citi is pleased that the U.S. Department of the Treasury has finalized plans to exit from its remaining holdings of Citigroup common stock," Jon Diat, a spokesman for the New York-based bank, said in an e-mailed statement. "We are very appreciative of the support provided by the UST during the financial crisis." Citigroup got $45 billion in bailout money in late 2008 as the bank´s stock sank below $5, a decline that had prompted investors and depositors to start pulling their money. Last year, the Treasury converted $25 billion of the bailout money into Citigroup shares, and the bank repaid the remaining $20 billion.
5. Discounted Debt Sold in Hong Kong May Rally on Yuan Outlook: China Credit
China, in an effort to lure Hong Kong savers to its debt, starts selling 3 billion yuan ($450 million) of two-year bonds today at a higher yield than it offered on longer-maturity notes sold to institutions last week. The December 2012 securities are being offered to individual investors with a 1.6 percent coupon, 60 basis points more than fund managers got on the three-year notes. The yield is likely to drop at least 30 basis points, or 0.30 percentage point, this month as prospects for yuan gains fuel demand, according to analysts at Credit Agricole CIB, Royal Bank of Scotland Plc and Standard Chartered Plc. "There will be an overwhelming response from the Hong Kong public given deposits are rising and the yuan should appreciate," said Dariusz Kowalczyk, a senior economist at Credit Agricole in Hong Kong. "There´s a good chance we´ll see queues outside banks. This bond is a rare gem in the market." China is seeking to broaden the range of investment options for its currency in Hong Kong, where yuan deposits jumped 67.8 billion yuan in October to a record 217 billion yuan. The coupon offered on the December 2012 debt compares with the 3.08 percent yield for similar-maturity government bonds on the mainland, reflecting limited access to the market for offshore investors.
6. UBS Taking Biggest Share of Australia M&A Since 2004 With ASX, AMP Deals
UBS AG is taking the biggest share of Australian mergers advisory since 2004 after working on four of this year´s five largest transactions involving local companies, as deal making rebounds from a slump. UBS, Switzerland´s biggest bank, has been involved in deals accounting for 42 percent of the $124 billion of mergers involving Australian companies this year, according to data compiled by Bloomberg. The company overtook New York-based Goldman Sachs Group Inc.´s local affiliate and Macquarie Group Ltd. to gain the top spot in Australian M&A advisory. UBS´s bankers in Australia outperformed their colleagues in North America, where the firm ranks eighth in M&A, Bloomberg data show. While Bank of America Corp., based in Charlotte, North Carolina, and New York-based Citigroup Inc. added staff to local investment-banking units this year, UBS kept the size of its team steady at about 160, the largest among foreign banks. "They haven´t needed to hire because they´ve lost very few people," said Jon Michel, founder of Sydney-based financial recruitment company Jon Michel Executive Search. "It´s been a steady ship this year."
7. Recent Chinese IPOs in U.S. Slump Even as Offerings Climb to Annual Record
At a time when China´s government is trying to keep the economy from overheating, a record number of its companies are selling stock in U.S. initial public offerings. Youku.com Inc., the online video provider whose name means "excellent and cool," E-Commerce China Dangdang Inc., the country´s largest online book retailer, and three other mainland companies plan to raise a total of $703 million this week, according to filings with the Securities and Exchange Commission. The sales would bring the number of Chinese IPOs in New York to 39 this year, surpassing the 37 in 2007, data compiled by Bloomberg show. While four of the ten best performing U.S. IPOs of 2010 have come from China, shares of the last four mainland companies that completed sales fell after the government raised interest rates and bank reserve requirements and said it may impose price controls. Youku.com and China Dangdang are offering stock at as much as five times the median valuation of their U.S.-traded rivals, data compiled by IPOdesktop.com and Bloomberg show. "The market wants emerging market stocks," said Timothy Cunningham, a money manager at Santa Fe, New Mexico-based Thornburg Investment Management, which oversees about $70 billion. "If they had come a month ago, these would have been incredibly hot, up a huge amount. They´re going to get a little more investor scrutiny."
8. Bank of America Loses $5.9 Billion Wealth Adviser to Todd Thomson Venture
Todd S. Thomson, Citigroup Inc.´s former head of wealth management, lured a top Bank of America Corp. financial adviser with $5.9 billion in client assets to join a new business that caters to independent advisory firms. Michael C. Brown, 52, said he left Bank of America´s U.S. Trust unit last week to join New York-based Dynasty Financial Partners, founded by Thomson and Shirl Penney, another ex- Citigroup manager. Brown´s clients had a typical net worth of $50 million, according to Barron´s, which ranked him 28th on its 2009 list of the top 100 U.S. financial advisers. He managed about $5.9 billion when he departed Bank of America, according to a person briefed on his move. His departure may revive concern about the ability of brokerages such as Bank of America´s Merrill Lynch to keep top producers as the companies grapple with mergers, stagnant stock prices and bad publicity tied to probes of mortgages and securities underwriting. More than 7,300 advisers have left the four largest full-service brokerages from the beginning of 2009 through June, according to research firm Aite Group LLC. Brown´s defection is "another indication of what I would define as the dysfunction of Bank of America and other major firms," said Tim White, a partner at Dallas-based executive recruitment firm Kaye/Bassman International Corp.
9. Hong Kong Home Prices Poised to Fall, Property Stocks Signal: Chart of Day
A decline in Hong Kong´s property stocks may presage the end of a 56 percent surge in the city´s home prices since the start of 2009, according to Portwood Capital. The CHART OF THE DAY compares weekly performances of the Hang Seng Property Index and Centaline Property Agency Ltd.´s Centa-City Leading Index since January 1994. The gauge tracking shares of Hong Kong´s largest developers dropped 9.9 percent through last week from Nov. 8, when it reached the highest level since January 2008. House prices rose 0.4 percent in the week to Nov. 28, a 13-year high, according to data compiled by Centaline. "Stocks have typically preceded property prices by three to 12 months either on the upside or the downside," said Peter Churchouse, chairman of Hong Kong-based Portwood, a property- investment firm. "There is good reason to expect Hong Kong residential property prices to at least stop rising and perhaps even come off a few percentage points given the government´s very significant recent intervention." Hong Kong on Nov. 19 intensified a battle the past year to curb bubble risk in the housing market with additional taxes and higher down-payments, triggering a 2.6 percent slump in the Hang Seng Property Index, the biggest drop in three months. Financial Secretary John Tsang said Nov. 29 that the government may introduce more measures.
10.India Signs $9.3 Billion Deal for Areva to Build Two Nuclear Power Plants
France and India signed a preliminary contract for nuclear reactors and services worth about 7 billion euros ($9.3 billion), Areva SA Chief Executive Officer Anne Lauvergeon told reporters in New Delhi today. Areva and state-owned Nuclear Power Corp. of India Ltd. signed agreements for the construction of two reactors, the first of a series of six at Jaitapur in western India, the French nuclear company said in a statement today. The deals include fuel supply for 25 years, the Paris-based company said. The agreements set conditions for Areva to supply "nuclear islands," which include reactor vessels and steam generators, as well as related services, and allow both sides "to accelerate several partnerships between Areva and the Indian nuclear industry," the French company said. Areva, the world´s biggest supplier of nuclear equipment and services, will supply EPR reactors, it said. The French government, which controls 91 percent of Areva, is seeking to sell shares to investors such as the Kuwait sovereign fund. Areva, which wants to increase sales in countries such as India and China, needs to invest in new plants and uranium mines as competition from Russian and Korean companies intensifies.
11.`Guns & Hoses,' Tissue Makers Shake Hands as Businesses Hit the Road Again
From poker-table salesmen rubbing shoulders with piano makers at the "Cruise Shipping Miami" event to buyers of toilet paper gathering at "Tissue World" in Nice, France, more businesses are hitting the road again. "We´re expecting a strong cruise shipping show come March, better than the last few years," Simon Foster, chief executive officer of UBM Live, the events unit of London-based United Business Media Plc, said in an interview. The show drew 10,800 people in March this year, 7 percent more than in 2009. Reed Elsevier Plc, United Business Media and Informa Plc, all of which recorded double-digit revenue drops last year, are starting to see a rebound in attendance and exhibitors. The hundreds of global tradeshows, events and conferences carry an economic value of about $300 billion a year, and showed growth in the three months ended September after nine quarters of declines, according the International Association of Exhibitions and Events in Dallas, Texas. Events including "Guns and Hoses" in San Francisco for the police and fire departments; the "New You Expo" in Texas; "Guangzhou Beauty Expo"; the "Cranky & Nasty Live Crocodile Show" in Queensland, Australia; and the "International Conference for Paints and Varnishes" in Moscow may be a barometer of the global economy. As companies ease travel restrictions and revive face-to-face deal-making, event organizers expect to return to pre-recession growth levels.
For the complete stories summarized here, and for more of the day's top news, see TOP <Go>.