Top Stories: Business and Finance
The following are the day's top business stories:
1. Ireland Credit Rating Cut Two Levels to A by S&P as Bank Bailout Adds Debt 2. Asian Stocks Fall, Won Drops on North Korean Attack, Ireland's Rating Cut 3. SAP Ordered to Pay Oracle $1.3 Billion for Illegally Downloading Software 4. `Dim Sum' Debt Rallies on Pent-Up Demand to Buy Yuan Assets: China Credit 5. South Korea Kospi Falls Most in Two Weeks After North Korea Shells Island 6. SAC Said to Get Document Request as U.S. Widens Probe Into Insider Trading 7. Whitefield Capital Lowers Fee in Bid for Assets as Hedge Fund Advances 33% 8. Philippine Growth Probably Held Near Three-Year High on Consumer Spending 9. Contango on Mideast Oil Disappears on China Diesel Squeeze: Energy Markets 10.Palm Oil Growers May Be Winners From UN Forest Protection Accord in Mexico 11.`Microsoft' of Machine Tools Runs World's Factories from Base of Mt. Fuji 12.Triguboff Becomes Billionaire Rewriting Australia's Dreams of Cottage Life
1. Ireland Credit Rating Cut Two Levels to A by S&P as Bank Bailout Adds Debt
Ireland´s debt rating was lowered two steps by Standard & Poor´s, with a negative outlook, as the nation´s bailout of its banking system is set to escalate the government´s borrowing needs. "The Irish government looks set to borrow over and above our previous projections to fund further bank capital injections into Ireland´s troubled banking system," S&P said in a statement. Putting the rating on "CreditWatch with negative implications" reflects the risk of a further downgrade if talks with a European Union-led rescue fail to stanch capital flight, it said. The downgrade risks worsening an investor exodus from Irish bonds that has sparked contagion through the euro region, with Spanish bonds tumbling yesterday, pushing the 10-year yield premium over German bunds to a euro-era record. Ireland is hammering out an aid package with the EU and the International Monetary Fund to rescue its banking system. Standard & Poor´s lowered Ireland´s long-term sovereign rating to A from AA- and the short-term grade was cut to A-1 from A-1+, the statement said.
2. Asian Stocks Fall, Won Drops on North Korean Attack, Ireland's Rating Cut
Asian stocks fell, sending the regional index to the lowest level this month and the won slumped while the dollar touched a two-month high against the euro after North Korea attacked a South Korean island and Standard & Poor´s Ratings Services cut Ireland´s credit rating. The MSCI Asia Pacific Index declined 1.2 percent to 129.87 as of 9:09 a.m. in Tokyo, set for its lowest close since Oct. 29. Standard & Poor´s 500 Index futures rose 0.2 percent after the gauge yesterday sank 1.4 percent. South Korea´s won dropped the most in five months against the dollar, while the greenback traded at $1.3375 per euro from $1.3367 in New York after earlier reaching $1.3360, the strongest level since Sept. 24. Stock markets extended a selloff after North Korea fired artillery shells yesterday at an island near the border with South Korea. Ireland´s long-term sovereign debt rating was cut to `A´ from `AA-´ while its short-term rating was reduced to `A- 1´ from `A-1+´ at S&P, which cited concerns about additional borrowing by the government as it seeks external aid from the European Union and International Monetary Fund. "You can´t have the most liquid market in Asia ex-Japan getting hammered without some spill-over to other Asia-Pacific markets," Sean Callow, senior currency strategist at Westpac Banking Corp. in Sydney, said in reference to South Korea. "To have negative risk events both in Europe and in Asia at the same time is all a bit much."
3. SAP Ordered to Pay Oracle $1.3 Billion for Illegally Downloading Software
SAP AG, the world´s largest maker of business application software, must pay $1.3 billion to Oracle Corp. for copyright infringement by a now-defunct software maintenance unit, a federal jury in California decided. Today´s verdict is the largest jury award of 2010, according to Bloomberg data. It is the largest ever for copyright infringement and the 23rd-largest of all time for any jury award, according to Bloomberg data. The jury awarded the damages after an 11-day trial in Oakland, California. Oracle, the second-biggest maker of business software, sued Walldorf, Germany-based SAP in 2007 claiming its U.S.-based unit made hundreds of thousands of illegal downloads and several thousand copies of Oracle´s software to avoid paying licensing fees and steal customers. "We are, of course, disappointed by this verdict and will pursue all available options, including post-trial motions and appeal if necessary," Bill Wohl, an SAP spokesman, said outside the courtroom. "This will unfortunately be a prolonged process and we continue to hope that the matter can be resolved appropriately without more years of litigation."
4. `Dim Sum' Debt Rallies on Pent-Up Demand to Buy Yuan Assets: China Credit
Chinese bonds sold in Hong Kong rallied more than debt from the biggest developing nations in the past three months as international investors snapped up the securities to benefit from expected appreciation of the yuan. The yield on the government´s 3.3 percent offshore bond maturing in October 2014 fell 22 basis points to 2.91 percent, while that for similar-maturity debt onshore climbed 44 basis points, according to data compiled by Bloomberg. Rates on Russian, Indian and Brazilian securities rose in the period. The yield on notes due in July 2012 issued by Hopewell Highway Infrastructure Ltd., which is controlled by Hong Kong billionaire Gordon Wu, dropped 65 basis points to 2.18 percent. "There´s pent-up demand," said Per Nordstrom, the head of euro medium term notes in Asia at London-based Standard Chartered Plc. "Investors are generally `buy and hold´ as supply is limited. The dim sum bond market is a frontier market and it is growing." Expectations for the fastest currency gains among the so- called BRIC nations of Brazil, Russia, India and China are adding to the allure of yuan assets, even as Chinese regulators tighten limits on fund inflows. New issuance will help drive up the average daily turnover of so-called dim sum bonds as much as six-fold to 300 million yuan ($45 million) by the end of 2011, from 50 million this month, according to Standard Chartered Plc.
5. South Korea Kospi Falls Most in Two Weeks After North Korea Shells Island
South Korean stocks fell, dragging the benchmark Kospi Index down by the most in two weeks, after North Korea fired artillery shells into its southern neighbor. The Kospi sank 1.6 percent, the biggest drop since Nov. 11, to 1,898.79 as of 9:09 a.m. in Seoul. Samsung Electronics Co. and Kia Motors Corp. led declines, dropping more than 1 percent. The Bank of New York Mellon Korea Index slumped 4.2 percent in U.S. trading yesterday. "There will be a sell-down as risk premiums have risen overall," said Geoffrey Ng, who manages $1 billion including South Korean equities as chief executive officer at HLG Asset Management Sdn. in Kuala Lumpur. "I´m pretty sure it will rattle North Asian markets, especially markets which are closer to the Korean peninsula." South Korea scrambled fighter jets and returned fire after North Korea yesterday lobbed shells at an island near their border, killing two soldiers and setting houses ablaze in the worst attack in at least eight months. Local television channel YTN showed smoke billowing from Yeonpyeong island off South Korea´s northwest coast.
6. SAC Said to Get Document Request as U.S. Widens Probe Into Insider Trading
Steven A. Cohen´s SAC Capital Advisors LP got a government subpoena for documents as the U.S. widens a probe of Wall Street insider trading that has implicated former traders at the firm. The subpoena came from U.S. officials, said a person familiar with the matter who declined to be identified because the matter is private. No allegation of wrongdoing has been made against SAC, which manages $12 billion. Jonathan Gasthalter, a firm spokesman, declined to comment. "It could be that they´re just looking at individuals who used to work there," said Andrew Hruska, a former federal prosecutor at King & Spalding LLP. "You can´t rule out the possibility that they´re trying to build a case against SAC." Federal Bureau of Investigation agents, probing possible illegal trading by hedge funds, yesterday searched the offices of Level Global Investors LP and Diamondback Capital Management LLC. Both firms were founded by former employees of Stamford, Connecticut-based SAC. A third hedge fund, Boston-based Loch Capital Management, was also searched by agents yesterday, according to a person familiar with that matter.
7. Whitefield Capital Lowers Fee in Bid for Assets as Hedge Fund Advances 33%
Whitefield Capital Management Pte, whose Asian equities fund gained 33 percent this year, said it won´t charge investors any fee on investment gains until it doubles the size of its assets. The Singapore-based firm will start charging a performance fee again with a new share class once it increases the size of its Whitefield Asian Opportunities Fund to between $50 million and $100 million, from about $30 million currently, said Managing Director Benjamin Ng. Including separate accounts for institutions, Whitefield Capital manages about $100 million, he said in an interview. Hedge fund managers have trimmed fees as they seek to recover assets lost since the financial crisis. Balyasny Asset Management LP, a Chicago-based investment firm overseeing $2 billion, is offering reduced fees on its biggest hedge fund, while Ken Griffin´s Citadel LLC may cut fees for its biggest funds, people with knowledge of their plans said in September. "I would not base my fund selection process on the levels of fees charged," said Stephane Pizzo, founder of Lotus Peak Capital, a Singapore-based hedge-fund investing firm. "Talent is rare and outstanding managers are able to charge usual fees in my experience."
8. Philippine Growth Probably Held Near Three-Year High on Consumer Spending
Philippine economic growth probably held near a three-year high last quarter as remittances, slowing inflation and record-low interest rates boosted consumer spending and investment. Gross domestic product increased 7.3 percent in the three months through September from a year earlier, according to the median forecast of 16 economists surveyed by Bloomberg News ahead of a report at 10 a.m. tomorrow. The economy expanded 7.9 percent in the second quarter, the fastest pace in three years. The Philippines, which avoided a recession last year as more export-dependent neighbors including Thailand and Malaysia contracted, may also be less affected by faltering recoveries in the U.S. and Europe now threatening demand for the region´s goods. President Benigno Aquino, who took office in June, is seeking investments for more than 700 billion pesos ($16 billion) of infrastructure projects to boost the economy. "The Philippines does seem to be in a good position for 2011" relative to its peers, said Matt Hildebrandt, an economist at JPMorgan Chase & Co. in Singapore. "The economy is far less vulnerable to a global economic slowdown or reversal in risk-taking sentiment."
9. Contango on Mideast Oil Disappears on China Diesel Squeeze: Energy Markets
The 16-month old contango in Dubai oil, the benchmark grade of crude for Asia, has disappeared as a shortage of diesel in China puts a premium on the quickest deliveries of fuel. The December contract was 13 cents a barrel more expensive than January´s yesterday, reversing a discount that´s been in place since July 2009, according to data from PVM Oil Associates, a London-based broker. A shortage of diesel in China is pushing up the premium for the fastest deliveries of oil as the nation curbs power use under a plan by Premier Wen Jiabao to cut electricity consumption per unit of gross domestic product by 20 percent in the five years through 2010. Stockpiles in the country, the world´s biggest energy user, fell for a seventh month in October, according to data from China Oil, Gas & Petrochemicals, a publication of the state-owned Xinhua News Agency. "China´s got to be short" of crude oil, said Alex Yap, an analyst at FACTS Global Energy in Singapore. "If they want to do any restocking from November to December, they´ll have to be importing a lot for the next couple of months."
10.Palm Oil Growers May Be Winners From UN Forest Protection Accord in Mexico
When United Nations climate negotiators meet next week in Mexico and debate protecting tropical rainforests, Golden Agri-Resources Ltd. and rival oil- palm growers in Southeast Asia will be paying attention. Any UN-led accord that restricts clearing rainforest for planting more palm trees would limit the supply of the edible oil crushed from their fruit and be a boon to prices for growers, said Dorab Mistry, a director at oil trader Godrej International Ltd. More than 80 percent of the world´s palm oil comes from the rainforest nations of Malaysia and Indonesia. "It´s a no-brainer that such exercises are bullish for prices," said Mistry, who has traded edible oils for more than 30 years. Global supply of edible oils will fail to keep pace with demand for a third year, he said in an interview. Palm oil climbed to a two-year high this year as more consumers and companies used the substance in cooking, detergents, cosmetics and biodiesel. The boom has helped destroy rainforests as growers expanded plantations of the 20-meter (66-foot) trees.
11.`Microsoft' of Machine Tools Runs World's Factories from Base of Mt. Fuji
At the base of snowcapped Mount Fuji sits a bright yellow compound that is home to one of Japan´s most profitable -- and secretive -- companies. Fanuc Ltd.´s systems tell lathes, grinders and milling machines how to turn steel into an Apple Inc. iPhone case or aluminum into the rib of a Boeing Co. 747. More than half of the world´s computerized tools, including those used by suppliers to Toyota Motor Corp. and General Motors Co., use Fanuc controls. "They´re the Microsoft you´ve never heard of," said Scott Foster, an analyst at BNP Paribas in Tokyo. "If Mount Fuji erupted and took them out, the world would stop running." Fanuc´s operating margin rose to a record 44 percent last quarter, the company said, making it the third highest on the Topix 100, according to data compiled by Bloomberg. To further boost profits, President Yoshiharu Inaba is focusing on China and India, Asia´s two fastest-growing major economies.
12.Triguboff Becomes Billionaire Rewriting Australia's Dreams of Cottage Life
In 1963, Harry Triguboff decided to challenge the Great Australian Dream of owning a house on a quarter-acre block. "I looked around and I saw cottages everywhere," the 77- year-old billionaire said of his decision to start building. "I thought it was time they lived in apartments." Since then, his closely held Meriton Pty. has grown to be Australia´s biggest apartment developer, providing units for more than 150,000 people in the nation of 22 million. In Sydney, about three in every 100 people live in an apartment that Meriton built, to the consternation of some residents and local governments who complain their suburbs have become overcrowded because of his developments. "He delivers units affordably priced, close to the city center or near railway stations, and he does it on a bigger scale than anyone else," said Bob Carr, who opposed some of Triguboff´s plans during his 1995 to 2005 stint as premier of New South Wales state. "He´s giving people a choice."
-0- Nov/24/2010 00:35 GMT