Top Stories: Business and Finance
The following are the day's top business stories:
1. General Motors Raises at Least $20.1 Billion in IPO of Bailed-Out Carmaker 2. Goldman Sachs Promotes 110 to Partner as Wall Street Rebounds From Crisis 3. Yuan Premium in Hong Kong Shrinks 77% as PBOC Provides Funds: China Credit 4. Stocks, Euro Gain as Irish Aid Discussed in Europe; S&P 500 Pares Advance 5. Singapore Forecasts Economy to Grow 4% to 6% in 2011, Extending Expansion 6. Irish Talks Turn to Government Bailout as EU Officials Join IMF in Dublin 7. Axis Bank, Enam Securities to Merge Investment Banking Operations in India 8. Citigroup Tells Congress It Will Refile Thousands of Foreclosure Documents 9. World's Cheapest Stocks Getting Cheaper as Russian Profits Climb to Record 10.Rapping Hamsters Help Kia Alleviate Quality Concerns as Sales in U.S. Soar 11.India Revives 45-Year-Old Trade Zone System China Adopted to Boost Exports 12.Tibet Lures St. Regis as China's Big Cities Crowded by Luxury Hotel Chains
1. General Motors Raises at Least $20.1 Billion in IPO of Bailed-Out Carmaker
General Motors Co. raised more than $20 billion selling common and preferred stock in an initial public offering that reduced the U.S. government to a minority shareholder. GM´s owners, including the U.S. Treasury, sold at least $15.8 billion of common shares at $33 each, making it the second-largest U.S. IPO on record after San Francisco-based Visa Inc.´s $19.7 billion sale in March 2008, a statement and data compiled by Bloomberg showed. An overallotment option and a sale of preferred shares may boost the total raised to $23.1 billion, more than the $22.1 billion sold by Agricultural Bank of China Ltd. in the largest IPO of common stock in history. The offering came 16 months after GM emerged from bankruptcy and brings Chief Executive Officer Dan Akerson closer to his goal of returning the $49.5 billion the automaker received in a taxpayer bailout last year. The Treasury, which is taking a loss on its portion of the sale, will break even only if the shares climb more than 60 percent, Bloomberg data shows. "It´s pretty hard to be anything but positive," said Uri Landesman, who helps oversee about $500 million as president of New York-based hedge fund Platinum Partners LLP. The IPO "shows you that there are people who are very enthusiastic. People think that this is a viable company," he said.
2. Goldman Sachs Promotes 110 to Partner as Wall Street Rebounds From Crisis
Goldman Sachs Group Inc. selected 110 people to become partners, up from 94 in the last round two years ago, as Wall Street rebounds from the financial crisis. Among the employees named this year were David Kostin, chief U.S. equity strategist, Andre Laport Ribeiro, the Sao Paolo-based head of Latin America equities, and Colin Coleman, who runs the firm´s South Africa business, according to an internal memo (see full list below) obtained by Bloomberg News. The appointments take effect Jan. 1. David Wells, a spokesman for Goldman Sachs in New York, declined to comment. The elections are a vestige of the firm´s days as the last major investment bank partnership, before the company ended 130 years of private ownership with its 1999 initial public offering. Partners, who get a $600,000 salary, share in a special compensation pool and typically receive most of their yearend bonuses in restricted stock. "There are no partners in a corporation, this is an honorary designation that enables people in it to participate in a bonus pool," said Roy Smith, a finance professor at New York University´s Stern School of Business who was a partner at Goldman Sachs before it went public. "This is a promotion for most of them in terms of how much they get paid."
3. Yuan Premium in Hong Kong Shrinks 77% as PBOC Provides Funds: China Credit
The premium paid for yuan in Hong Kong shrank 77 percent in the past month as monetary authorities made more of the currency available to ease a shortage. Yuan traded in Hong Kong closed yesterday at 6.6025 per dollar, 0.6 percent stronger than the rate in Shanghai, data compiled by Bloomberg show. The premium reached 2.6 percent on Oct. 19, the most since offshore trading began in July, and has been as little as 0.3 percent in the past week. The Hong Kong Monetary Authority said Oct. 28 it drew down 10 billion yuan ($1.5 billion) via a swap with the People´s Bank of China. "The initial offshore yuan premium over the onshore was due to insufficient yuan liquidity," said Pin Ru Tan, a Singapore-based strategist at Royal Bank of Scotland Plc. "This shortage was essentially resolved by the HKMA tapping the yuan swap line." Premier Wen Jiabao is allowing yuan to become more readily available beyond China´s borders to reduce reliance on U.S. dollars in trade and finance, as money-printing by the Federal Reserve erodes the attraction of the greenback. The value of yuan transacted daily in Hong Kong was about $500 million to $700 million in October, up from $200 million to $400 million in September and no more than $100 million in August, according to Gerrard Katz, head of foreign-exchange trading at Standard Chartered Plc in Hong Kong.
4. Stocks, Euro Gain as Irish Aid Discussed in Europe; S&P 500 Pares Advance
Stocks in Europe rebounded from the biggest drop in four months, the euro rose and Irish bonds gained as government officials negotiated aid for the nation. Oil fell a fourth straight day, the longest streak since September, and U.S. stocks erased most of their advance. The Stoxx Europe 600 Index added 0.5 percent and the euro climbed 0.3 percent to $1.3529. Irish bond yields fell 10 basis points to 8.15 percent. Crude slumped 2.3 percent to $80.44. The Standard & Poor´s 500 Index advanced less than 0.1 percent as NetApp Inc. joined Cisco Systems Inc. in spurring concern that technology spending will slow. After the close, S&P 500 futures rose 0.2 percent as of 7 p.m. in New York while stock indexes fluctuated in early trading in Japan and Australia. The European Union and International Monetary Fund will start scanning the books of Ireland´s banks tomorrow in a prelude to a possible aid package to stem Europe´s widening fiscal crisis. U.S. government reports showed today that the increase in consumer prices and housing starts trailed economist forecasts, bolstering the Federal Reserve´s case that it needs to buy Treasuries to spur growth. "It´s a bit of a relief bounce," said Quincy Krosby, chief market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees $690 billion. "Investors are realizing that there will be a solution for the Irish situation that won´t end up in global contagion."
5. Singapore Forecasts Economy to Grow 4% to 6% in 2011, Extending Expansion
Singapore said its economy will next year extend an expansion that has already prompted the central bank to allow the currency to rise to a record to damp inflationary pressures. The economy will grow 4 percent to 6 percent in 2011 after expanding about 15 percent this year, the trade ministry said in a statement today. Gross domestic product shrank at an annualized rate of 18.7 percent in the third quarter from the previous three months, less than the 19.8 percent pace initially estimated last month, it said. That compares with the median 17 percent decline in a Bloomberg News survey of 12 economists. Singapore´s economy is in the running to be the world´s fastest-growing this year after a record first-half expansion. Inflation is accelerating even after the central bank said in October it will allow faster currency gains, breaking from Thailand and Malaysia where policy makers have refrained from tightening policy this quarter as global growth slows. "We believe that the challenge in the next 12 months will be fighting inflation," Alvin Liew, a Singapore-based economist at Standard Chartered Plc, said before the report. "The faster pace of Singapore dollar appreciation could start being detrimental to exports at some point. A more expensive Singapore dollar may also make Singapore a less attractive tourist destination."
6. Irish Talks Turn to Government Bailout as EU Officials Join IMF in Dublin
European Union and International Monetary Fund officials jet into Dublin today as the Irish government edges closer to accepting a bailout for its national finances and the banking system. The government will hold talks with the EU, IMF and the European Central Bank across the capital "over a number of days," a Finance Ministry spokesman said yesterday. Discussions will be held at the Irish central bank, the country´s bond agency and the Finance Ministry. No press briefings are planned today. While EU Commissioner Olli Rehn indicated yesterday the discussions will center on the financial system, the central bank said Ireland will also consider steps "to improve market confidence" in the "government finances." Prime Minister Brian Cowen says the government is fully funded until mid-2011. "We are in the end game," said James Nixon, co-chief European economist at Societe Generale SA in London. "A bailout is desperately needed, not just for the sovereign but for the banking sector."
7. Axis Bank, Enam Securities to Merge Investment Banking Operations in India
Axis Bank Ltd., India´s top-ranked manager of debt sales, aims to bolster its equity underwriting operations by merging the unit with Enam Securities Pvt. in a transaction valued at about 20.7 billion rupees ($455 million). Axis Bank will swap 5.7 shares for each one of closely held Enam, the Mumbai-based companies said in a joint statement yesterday. Enam shareholders will get a 3.3 percent stake in Axis following the transaction, and Enam´s Manish Chokhani, 44, will be chief executive officer of the entity to be created by the combination, according to the release. Axis´s first financial-services acquisition will combine capital at India´s fourth-largest bank with the clients and distribution network managed by Enam, said Deven Choksey, CEO of K.R. Choksey Shares & Securities Pvt. Shikha Sharma, 51, named CEO of Axis in April 2009, is seeking to expand its investment bank after share sales in India climbed to a record this year. "The deal is a shot in the arm for Axis, which was looking to expand: when you are becoming a global player, you need to have a bank at the front-end and distribution for the back- end," said Choksey, whose Mumbai-based firm manages $125 million in assets. "It´s a win-win deal for both, as even Enam needs funds from a bank base."
8. Citigroup Tells Congress It Will Refile Thousands of Foreclosure Documents
Citigroup Inc., the third-largest U.S. bank by assets, expects to refile affidavits in foreclosure proceedings that began before the bank overhauled its operations for seizing homes last year. The lender is reviewing 10,000 affidavits that were executed before the reorganization was completed in February, Harold Lewis, a managing director with the CitiMortgage lending unit said in written testimony for a congressional hearing tomorrow. About 4,000 affidavits may not have been signed before a notary and may be resubmitted, he said. Citigroup has defended its procedures and continued to seize homes after borrowers accused the country´s biggest banks of seeking foreclosures without fully reviewing loan documents. The New York-based bank´s overhaul improved training and limited the volume of paperwork processed by staff, Lewis said. Flaws uncovered don´t warrant a sweeping delay, he said. "The changes and safeguards implemented this year give Citi confidence that there are no systemic issues in its existing foreclosure processes," he said in comments to be delivered at a House Financial Services Committee hearing on foreclosures. "Citi has not suspended its foreclosure process and believes there is no reason to do so."
9. World's Cheapest Stocks Getting Cheaper as Russian Profits Climb to Record
Russian stocks, the cheapest worldwide, are getting cheaper after the nation´s companies posted record profits that topped analysts´ estimates by the widest margin in emerging markets. Micex Index companies reported combined earnings of 178 rubles a share ($5.70) during the past year, the most since at least 2003 and 29 percent above the average of about 400 analyst estimates compiled by Bloomberg. The Micex is valued at 6.8 times profit forecasts for the next 12 months, the lowest level among 59 world stock indexes tracked by Bloomberg and about half the global average of 12 times. While the Micex advanced 13 percent in the past year, its valuation tumbled 31 percent because Russian shares failed to keep pace with a surge in earnings estimates spurred by oil´s rally above $80 a barrel. Equity mutual funds in the world´s largest energy exporter attracted less money in the past six months than funds in the other so-called BRICs -- Brazil, India and China -- as investors favored more expensive shares in faster-growing economies, EPFR Global data show. "Russia really stands out as being cheap and attractive," said Maarten-Jan Bakkum, an emerging-market equity strategist in The Hague at ING Investment Management, which oversees about $100 billion in developing nations. "Investors will increasingly be looking for emerging economies that can still improve," he said. "For Russia, there should be some room for improvement."
10.Rapping Hamsters Help Kia Alleviate Quality Concerns as Sales in U.S. Soar
Rapping hamsters and unemployment near a 26-year high are helping Kia Motors Corp. log record sales in the U.S. even as its cars plummet in quality surveys. Kia´s U.S. sales gained 15 percent this year through October, outpacing General Motors Co., Toyota Motor Corp. and Honda Motor Co. That rate would push Kia, whose lineup sells for about $8,000 less than the industry average, to its highest annual U.S. sales ever. South Korea´s second-largest carmaker is defying a drop in quality rankings by J.D. Power & Associates as 9.6 percent unemployment spurs demand for inexpensive cars. Commercials featuring rodents driving the boxy Soul and characters from the children´s show Yo Gabba Gabba! have also raised the company´s profile in the U.S. "People are looking for value in this market, and they´re looking at brands they might not have considered in the past," said Rebecca Lindland, an analyst with IHS Automotive, based in Boston. "The advertisements are so good and are helping to create a buzz for the models."
11.India Revives 45-Year-Old Trade Zone System China Adopted to Boost Exports
It takes more than an hour to drive the 25 miles of clogged highway linking New Delhi to Noida Special Economic Zone. Inside the gate, a smooth four-lane road leads to electronics, engineering and textile plants that are at the heart of India´s plan to imitate China´s export success. "It´s the kind of place where one can think of doing business," said Vishnu Pal Singh, 51, whose Noida-based Optic Electronic India Pvt. sells night-vision devices for rifles and tanks to Germany and Poland. "The zone offers top class infrastructure and tax benefits." India is counting on entrepreneurs such as Singh to revive a system it pioneered 45 years ago: using enclaves that provide lower taxes, faster permits and even their own power source to boost exports. While India switched focus in the 1970s to industry tax breaks, China adopted the zone idea a decade later. The system turned the former fishing village of Shenzhen into an export hub of 8.5 million people in 30 years and made China, with overseas sales of $1.2 trillion last year, the world´s largest exporter.
12.Tibet Lures St. Regis as China's Big Cities Crowded by Luxury Hotel Chains
Expansion in China, the world´s fastest-growing economy, is causing an urban lodging glut that´s spurring luxury chains including Starwood Hotels & Resorts Worldwide Inc.´s St. Regis to head to areas as remote as Tibet. The 162-room St. Regis Lhasa Resort, which opened this week as the first international luxury hotel in Tibet´s capital, is about 12,000 feet (3,680 meters) above sea level and boasts a five-star spa. Shangri-La Asia Ltd. will open a 350-room hotel in Lhasa in 2012, and InterContinental Hotels Group Plc plans to add a high-end, 2,000-room hotel in the city within three years. The surge of hotel development in China has led to an oversupply, particularly in cities, and it may take five years for demand to catch up, said Jonas Ogren, a Singapore-based director for STR Global, an industry research company. That´s made Tibet and other regions far from Beijing and Shanghai increasingly attractive to expanding hoteliers. "While Tibet isn´t necessarily the first location that comes to mind for a hotel, these companies usually already have properties in primary and secondary cities," Ogren said. "So more are looking to smaller markets or resort-type places."
-0- Nov/18/2010 00:35 GMT