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Rochester Gas and Electric Corp said it began a public offering of 300000 shares of 8.25 pct preferred stock Series R at 100 dlrs per share. Proceeds will be used to redeem its 10.84 pct preferred shares. Reuter | ROCHESTER GAS AND ELECTRIC <RGS> BEGINS OFFER |
U.S. bank reserve monetary and discount window borrowings data released by the Federal Reserve today clearly indicate that policy is on hold and may not be changed for weeks or even months economists said. The Fed is keeping policy at dead center and it is not about to change policy unless something fairly dramatic occurs on the economy said John Williams of Bankers Trust Co. These numbers contain no hint that a policy shift is in prospect nor do economic or financial developments argue for policy change said William Griggs of Griggs and Santow Inc. Fed data released today were all in line with economists expectations and similar to the numbers of recent weeks. The Fed said net discount window borrowings in the two weeks ended Wednesday averaged 191 mln dlrs up from 381 mln dlrs in the February 25 statement period but little changed from 160 mln dlrs in the period before that. It said that banks net free reserves in the latest two weeks averaged 660 mln dlrs versus 675 mln dlrs previously. Finally the Fed said that the M-1 money supply fell 800 mln dlrs in February with the broader M-2 measure down 1.6 billion dlrs and M-3 up an even three billion dlrs. Analysts said that M-1 last month grew at a negative 1.3 pct annual rate compared with minus 0.7 pct for M-2 and actual positive growth of 1.0 pct annualized for M-3. February levels of M-2 and M-3 left the aggregates 18.2 and 20.8 billion dlrs under their respective upper growth limits set by the Fed for 1987. The annual growth target for both is 5-1/2 to 8-1/2 pct. There is no M-1 target. In the near term there is absolutely no reason for the Fed to ease policy even apart from the slowdown in money growth said Stephen Slifer economist at Lehman Government Securities Inc. Economists generally expect a modest pickup in monetary growth in March after Februarys anemic growth rates. However they stress that money growth will not be strong enough to prevent the Fed from dropping interest rates further if the economy shows evidence of weakness. Commenting on Februarys decline in the key M-2 aggregate Slifer said the main cause was a 3.2 billion dlr drop in money market deposits at banks. This number has risen three to four billion dlrs a month for a long while he said so Februarys weakness is not likely to persist. Slifer expects modest M-2 and M-3 growth rates of 3-1/2 to four pct during March. Griggs said that M-2 and M-3 in coming months should return to the five to seven pct annualized growth region and so continue to present no problem for the Fed. Economists said the Fed appears to be very comfortable with its current policy stance and it is likely to wait for perhaps several more months of economic data before deciding whether or not to ease its grip on reserves. Given the economys fragility in many sectors the analysts agreed that there is almost no chance that the Fed will choose to raise rather than lower interest rates when it next changes policy. Discount window borrowings in the past week were about as low as the Fed can get them although Fed funds held above six pct said Williams of Bankers Trust. Funds averaged 6.12 pct in the week to Wednesday up from 6.06 pct in the prior week. The Fed added reserves indirectly via one billion dlrs of customer repurchase agreements last Friday 2.5 billion dlrs on Monday and two billion dlrs on Wednesday. On Tuesday it added reserves directly through two-day System repurchases. Williams and Griggs agreed the Fed will let the funds rate be largely market-driven. They said it is focusing instead on a borrowings target of around 300 mln dlrs. Reuter | FED DATA INDICATE NO POLICY CHANGE LIKELY |
Colombia intends to improve the marketing of its coffee with the accent on more flexibility on setting export registration prices finance minister Cesar Gaviria said. Speaking to reporters after announcing a lower export registration price or reintegro of 1.10 dlr per lb ex-dock New York Gaviria said export mechanisms would be more agile. In the first stage we decided not only to lower the reintegro but also to adopt a flexible policy of reintegro that will allow private exporters to participate more actively in Colombias coffee export policy he said. Traders said this means the export registration price will change more often in a truer reflection of market trends. Gaviria said the measures merely responded to new market factors since a return to a system of International Coffee Organisation (ICO) export quotas may not occur in the short term. ICO talks last month in London failed to break a deadlock over re-introduction of export quotas suspended in February 1986. Gaviria stressed that Colombia will not necessarily suffer from depressed prices because it can compensate lower prices with increased volume. Colombia will continue to export its traditional amount of coffee between 9.6 and 10 mln bags (of 60 kilos) and will do so without an agreement among producers he said. He ruled out a much higher volume of exports or up to 13.5 mln bags as mentioned in market circles because the idea is precisely not to disrupt the market. Colombia exported a record 11.5 mln bags in the 1985/86 coffee year which ended last September 30. Echoing Gavirias words Jorge Cardenas manager of the national coffee growers federation said Colombia sought to adapt its coffee marketing policy to circumstances. There is great expectation in the world for the policies that Brazil and Colombia will adopt. Ours is beginning to emerge and no agreement among producers is foreseeable in the immediate future he told journalists. Trade sources in Rio today said Brazils future export policy was unlikely to be revealed before the end of next week. Cardenas said a new ICO meeting could only take place when problems that hindered an agreement at the recent London talks have been resolved. Asked to comment on a Reuter report from Jakarta saying Indonesia hoped Colombia could use its contacts with Brazil to suggest a compromise on the quota issue Cardenas said the Brazilian stand was quite clear. He said Brazils current quota reflects the reality of the market allows for an orderly supply and satisfies demand but added more clarity was needed to assess the criteria that determined it. Cardenas said lows registered immediately after the failure of the London talks were triggered by a widespread fear among dealers of an imminent price war and the belief that producers would go out and sell their coffee as quickly as possible which did not happen. Reuter | COLOMBIA'S COFFEE MARKETING TO BE MORE FLEXIBLE |
The World Bank said it approved a 140 mln dlr loan for India to help lessen that countrys dependence on imported oil and spur development of its own petroleum resources. The bank said the loan will be used to boost production by injecting gas in the partially depleted Assam oil fields and to assist exploration in other areas including drilling 10 exploratory wells. The bank said the recipient of the 20-year loan will be Oil India Ltd (OIL) which is the smaller of two public Indian petroleum exploration and production companies. Reuter | INDIA GETS 140 MLN DLR WORLD BANK LOAN |
WEintraub Entertainment Group Inc said it agreed to acquire Cannon Groups Screen Entertainment film library. The library was purchased in May 1986 as part of Cannons acquisition of Screen Entertainment Ltd from Bond Corp Holdings Ltd. The library has over 2000 theatrical motion pictures. Terms call for the price to be established through an appraisal process beginning immediately and not to exceed 175 mln dlrs or be below 125 mln dlrs. Reuter | CANNON <CAN> SELLS LIBRARY TO WEINTRAUB |
Gerber Scientific Inc said its GST Acquisition Corp purchased 444646 shares of its 84 pct owned Gerber Systems Technology pursuant to a January 15 tender offer. Following the purchase Gerber made a capital contribution to GST of all the shares it owned resulting in 95.6 pct ownership by GST. Reuter | GERBER <GRB> BUYS GERBER SYSTEMS <GSTI> SHARES |
United Medical Corp said it it has requested a meeting of holders of its Swiss Francs 30 mln 5-1/8 pct convertible subordinated notes due 1991. The meeting has been requested in order to amend the negative pledge and financial covenants which have proved to be too restrictive in light of the companys activities it said. United also said it plans to acquire some of these notes to reduce its exposure to foreign exchange fluctuations. Reuter | UNITED MEDICAL <UM> TO AMEND COVENANTS |
Institutional investors are finding it difficult to find the best price for transactions in U.K. Government bonds (gilts) and have become more active in the market since the deregulation of the London Stock Exchange in October agency broker Capel-Cure Myers said in a survey. The survey covering a broad section of institutional investors also showed that investors were uneasy about the impartiality of market makers advice. Given their concerns over half those surveyed said they spend more time managing their portfolios. At the same time the investors believed the market was more liquid and efficient than before Big Bang. Capel-Cure a unit of Australia and New Zealand Banking Group Ltd conducted the survey during January among 70 institutions which are not clients of that firm. Banks and merchant banks accounted for 32 pct of the total building societies 30 pct life assurance companies 20 pct insurance companies 11 pct and pension funds seven pct. The survey found that with the virtual elimination of commissions the improved market liquidity has encouraged investors to deal more frequently in the market. Of those responding 70 pct were encouraged to deal more actively 25 pct which saw no change and five pct dealt less actively. A Capel-Cure official told reporters the elimination of commissions has made the market more competitive. He said Capel-Cure has deliberately set low commisstions because of this. Nearly half the respondents said they now have their own dealing team to cope with the new market although the definition of a dealing team was ambiguous the survey said. Rather than being a self-contained specialised group of dealers who spend all their time searching for prices the definition now appears to be the less formal idea of a multi-purpose fund manager it said. The survey supported the general view in the gilt market that a shake-out of the 27 market-makers is likely. It showed nearly 90 pct of the respondents believed that the total number of market makers in three years time would be less than 20 while 46 pct thought the number would be less than 15. Some 79 pct of respondents said they expect the number of agency brokers (for which there was no estimate) to fall over the next three years. Unlike broker/dealers agency brokers do not take positions in the market but the survey showed 68 pct of respondents did not consider this very important when deciding whether to use one. REUTER | INVESTORS MORE ACTIVE IN GILT MARKET, SURVEY SAYS |
Venezuela will lend Ecuador 50000 barrels per day of crude oil over the next few months to help it meet its export commitments Energy and Mines Minister Arturo Hernandez Grisanti said today. He said that under the terms of this loan agreed during a visit here this week by Ecuadors Deputy Energy Minister Fernando Santos Alvite Ecuador will begin repaying the loan in August. Hernandez Grisanti said the loan will go part way to offsetting the loss of Ecuadors 140000 in exports caused by earthquake damage to 25 miles of pipeline last week. Ecuador was forced to suspend exports after the pipeline connecting its jungle oil fields with the pacific port of Balao was put out of action. Venezuela has an output quota of 1.495 bpd while Ecuadors is 210000 bpd. Santos Alvite said Ecuador will ask OPEC to allow it to produce 100000 bpd above its quota when the pipeline is repaired to offset present production losses. Hernandez Grisanti said also a first 300000 barrels shipment of Venezuelan crude oil will leave for Ecuador this weekend to help meet domestic consumption needs. The oil part of a five mln additional crude oil loan by Venezuela will be processed at Guayaquil refineries. If we had not supplied oil to Ecuador the life of this country would have ground to a halt he said. Reuter | VENEZUELA TO LEND ECUADOR 50,000 BPD OF CRUDE |
First half ended December 31 Shr 55.01 cents vs 97.76 Int div 18 cents vs 16 Net 75.05 mln dlrs vs 55.68 mln Turnover 156.94 mln vs 177.87 mln Other revenue 72.50 mln vs 31.18 mln. One-for-five rights issue at 11.50 dlrs a share One-for-four bonus issue on capital enlarged by rights issue Shrs 99.36 mln vs 70.94 mln. NOTE - Shr applies to total net 54.66 mln dlrs vs 69.48 mln after extraordinaries loss. Pre-extraordinaries net shr 75.53 cents vs 78.32 Div pay April 30. Div and rights issue reg March 30. Bonus reg May 6. Net equity-accounts share of associates earnings. Pre-equity pre-tax earnings 59.52 mln dlrs vs 64.13 mln. Pre-equity net 52.07 mln dlrs vs 43.35 mln after tax 3.45 mln vs 16.34 mln minorities 4.00 mln vs 6.44 mln interest 33.89 mln vs 26.11 mln and depreciation 2.67 mln vs 2.72 mln but before net extraordinary loss 20.39 mln vs 13.79 mln. REUTER | THE ADELAIDE STEAMSHIP CO LTD <ADSA.S> FIRST HALF |
Debt talks between the Philippine government and its bank advisory committee were delicately poised after a brief meeting between the two sides today bankers and sources close to the Philippine delegation said. We had a businesslike meeting and made good progress a banker said. The banks are anxious to come to an agreement. But bankers were reluctant to predict whether the talks would end successfully. Caution was also evident in the Philippine camp. We feel the balls in the banks court one source said. The two sides will meet again on Friday. The talks in which the Philippines is seeking to reschedule about 9.4 billion dlrs of debt are now dominated by a discussion of the innovative proposal made by finance minister Jaime Ongpin to pay part of the countrys interest bill in Philippine Investment Notes PINs instead of cash. Manila wants to pay the London Interbank Offered Rate in cash and to issue PINs in respect of the margin above LIBOR. The banks rejected the original PINs proposal last Friday but Ongpin presented a revised proposal on Monday which sought to satisfy the banks objections by guaranteeing that the notes would yield 7/8 pct over LIBOR in cash. The banks have apparently yet to pass final judgment on the new proposal. Senior Reagan Administration officials expressed warm support for the PINs proposal this week which gave Ongpin hope that the banks would embrace the idea. But the banks are still being circumspect weighing possible accounting consequences as well as considering the precedents that they would set if they agreed to PINS. One of the main architects of the PINs proposal U.S. lawyer Lee Buchheit is adamant that the banks have nothing to worry about. To the extent that its a precedent its a precedent to be encouraged Buchheit a partner with Cleary Gottlieb Steen and Hamilton told a debt-equity swaps conference sponsored by Euromoney magazine. Under the proposal banks would sell the dollar-denominated PINs at a discount to multinational firms which would convert them into pesos at face value to fund government-approved equity investments in the Philippines. In effect international firms would be paying part of Manilas interest bill allowing the government to conserve much-needed hard currency. One of the beauties of the scheme according to Buchheit is that it widens the scope of third-world debt negotiations which have been confined to debtors and creditors for the past 4-1/2 years. Theres another pool of cash at the table now he said. David Mulford Assistant Secretary of the U.S. Treasury told the Euromoney conference that ideas such as PINs should be part of a menu of options available to banks instead of pure new-money packages. He said the difficulty of syndicating Mexicos 7.7 billion dlr loan package shows that new approaches must be encouraged. We must face the fact that greater flexibility in devising new money packages may in effect be essential to future bank syndications Mulford said. In an unusually frank comment about the Mexican deal he said that dissatisfaction with Mexicos economic program and criticism of communication and coordination within the bank syndicate had prompted a number of banks to refuse to participate in the loan. This refusal for a time appeared to jeopardize the prospects for successful agreement with the rest of the banks Mulford said. The Mexican package is now due to be signed on March 20 but bankers said the U.S. clearly feels the need to breathe new life into the financing process especially with crucial negotiations with Brazil about to start. The banks for their part insist that they are more than willing to discuss Mulfords menu and say it is the debtors that need to be more flexible. For example they say financing talks with Argentina are proving tough because Buenos Aires dislikes the debt-equity schemes and onlending provisions that the banks are promoting. But whether the banks are ready to endorse the PINs concept right away still hangs in the balance. Reuter | PHILIPPINE DEBT TALKS FINELY POISED, BANKERS SAY |
Air Midwest INc said its february load factor rose to 42.9 pct from 37.0 pct its revenue passenger miles rose to 13.4 mln from 9.1 mln and its available seat miles rose to 31.2 mln from 24.5 mln. For the year to date load factor tose to 39.9 pct from 36.6 pct revenue passenger miles rose to 25.5 mln from 20.6 mln and available seat miles rose to 63.8 mln from 56.4 mln. Reuter | AIR MIDWEST <AMWI> FEBRUARY LOAD FACTOR ROSE |
Qtly div 30 cts vs 30 cts prior Payable May one Record April 10 NOTE:Bryn Mawr was reorganized as a holding company on January 2 1987 resulting in each share of Bryn Mawr Trust Co being converted into three shares of the new holding companys stock. The 30 cts dividend represents a 15 pct increase over prior quarter. Reuter | BRYN MAWR BANK CORP <BMTC> UPS DIVIDEND |
Greenwood Resources Inc said its board approved a restrucuting and recapitalization plan uner which more than four mln dlrs of debt and interest will be restructured. As part of the plan its preferred stock will be converted into one class of common stock. Reuter | GREENWOOD <GRRL> BOARD APPROVES RESTRUCTURING |
Price Co said it agreed to buy at least 81 pct of the stock of <TSS-Seedmans INc> for about 50 mln dlrs. The terms envision a purchase of the entire company it said. The transaction is expected to close at the end of April. Reuter | PRICE <PCLB> TO BUY 80 PCT OF TSS-SEEDMAN |
Finance Minister Kiichi Miyazawa told a press conference he thinks exchange rates will remain stable due to the currency accord reached in Paris last month by six major industrialised nations but he did not say for how long. The dollar has hovered around 153 yen since the six agreed to cooperate to bring about currency stability. Asked to comment on remarks by some U.S. Officials calling for a further decline of the dollar Miyazawa said only the U.S. President and the U.S. Treasury Secretary can make official statements about exchange rates. REUTER | MIYAZAWA SAYS EXCHANGE RATES WILL STAY STABLE |
Two small shipping companies have reached a pay deal with striking seamen but union leaders said most of Brazils 40000 seamen were still on strike. A union spokesman in Rio de Janeiro said the seamen had accepted a 120 pct pay offer from the companies Globo and Flumar which have less than 200 employees each. The two-week strike comes as Brazil faces a debt crisis and is delaying exports badly needed to earn foreign exchange. Labour Minister Almir Pazzionotto said the government will not force a settlement of the strike which was ruled illegal last Friday. REUTER | TWO BRAZILIAN SHIPPING FIRMS SETTLE WITH STRIKERS |
A U.S. Judge dismissed a lawsuit by fired White House aide Oliver North seeking to halt a special prosecutors investigation into the Iran arms scandal. In a 21-page ruling Judge Barrington Parker threw out Norths suit challenging the constitutionality of the law empowering special prosecutor Lawrence Walsh to investigate secret White House arms sales to Iran and the diversion of profits to contra rebels in Nicaragua. The nation demands an expeditious and complete disclosure of our governments involvement in the Iran-contra affair Parker said in his ruling. REUTER | U.S. JUDGE DISMISSES SUIT CHALLENGING IRAN PROBE |
The Finance Ministry will institute a study to consider changing the corporate disclosure rules to provide more information for investors a ministry official said. The study will look at whether companies should include data on profits for separate divisions products and overseas regions in corporate earnings statements the official said. At present companies give such breakdowns for sales only. He said no time limit has been set for the study. REUTER | JAPAN MULLING CHANGES TO CORPORATE DISCLOSURE RULES |
 CHOCK FULL ONUTS CORP 2ND QTR JAN 31 LOSS NEW YORK March 12 Oper shr loss 38 cts vs profit 24 cts Oper net loss 2243000 vs profit 1192000 Revs 43.6 mln vs 41.0 mln Six mths Oper shr loss 35 cts vs profit 28 cts Oper net loss 2090000 vs profit 1399000 Revs 84.3 mln vs 72.9 mln Note: Year-ago oper excludes loss from discontinued operations of 1028000 dlrs for qtr and 1076000 dlrs for six mths. REUTER  | |
The Adelaide Steamship Co Ltd <ADSA.S> (Adsteam) said its one-for-five rights issue at 11.50 dlrs a share will raise 228.5 mln dlrs for general working capital and investment both in Australia and overseas. The group announced the issue with its first half earnings and said in a statement that the rights issue will be followed by a one-for-four bonus issue. Adsteams equity-accounted net earnings rose to 75.05 mln dlrs in the half ended December 31 from 55.68 mln a year earlier and interim dividend to 18 cents from 16. Adsteam shares eased to 14.20 dlrs from an opening 14.60 and yesterdays close of 14.50 on the issue announcement. The issue will be underwritten by <Morgan Grenfell Australia Ltd> and <McCaughan Dyson Ltd> apart from the shares to be taken up by Adsteams associate and largest shareholder department store retailer <David Jones Ltd>. New shares will not rank for the interim dividend but will rank equally thereafter. Adsteam said it expects to maintain an annual dividend rate of 36 cents on capital enlarged to about 149 mln shares by both issues from 99.36 mln. Adsteam said its diverse industrial interests generally performed well and its results as the ultimate holding company and beneficiary reflected this solid performance. David Jones owned 49.2 pct by Adsteam earned the largest associates net of 57.38 mln dlrs in the half against 40.29 mln a year earlier Adsteams figures show. Wholly-owned and joint venture companies also did well apart from timber building supplies and real estate which returned below-budget profits due to the housing downturn. Adsteam said it sees 1987/88 as a year of reconstruction and consolidation with the capital base boosted by the issue. REUTER | ADSTEAM RIGHTS ISSUE TO RAISE 228 MLN DLRS |
The <Hearst Corp> is buying the Houston Chronicle from Houston Endowment Inc for 400 mln dlrs. The announcement was made jointly by Frank Bennack Jr president and chief executive officer of Hearst and Richard Johnson president of the Chronicle. The Houston Endowment is selling the paper to comply with federal tax laws requiring charitable institutions to divest themselves of profit-making subsidiaries by 1989. The Chronicle has a daily circulation of over 425000 and is in competition with the Houston Post owned by the <Toronto Sun Publishing Corp> with a circulation of about 316000. The acquisition gives Hearst its biggest newspaper holding in Texas where the California-based publisher already owns papers in San Antonio Beaumont and Laredo. The chain also owns among others the flagship San Francisco Examiner the Los Angeles Herald Examiner and the Seattle Post-Intelligencer. REUTER | HEARST BUYS HOUSTON CHRONICLE FOR 400 MLN DLRS |
<Industrial Equity Ltd> (IEL) unit <Acmex Holdings Ltd> said it proposed to make a formal takeover offer for all the issued capital of <Cheetham Ltd> a producer of salt animal feed and seeds. Acmex said in a statement it would offer one share for every two Cheetham shares or 3.40 dlrs cash for each share. Acmex said it was presently entitled to 5.1 mln Cheetham shares or 16.85 pct of its 30.27 mln issued shares. The scrip offer values Cheetham at about 110 mln dlrs based on Acmexs current price of 7.20 dlrs and the cash offer at about 104 mln. Cheetham last traded at 3.10 dlrs. REUTER | IEL'S ACMEX UNIT TO BID FOR CHEETHAM |
The U.S. Has given further details of an action program announced yesterday aimed at helping sub-Saharan Africa overcome hunger and economic problems senior U.S. Offficials said. Under the new program a 500-mln dlr Development Fund for Africa will be set up to consolidate most of the aid money going to the continent to replace the large number of bilateral accounts currently in existence. Chester Crocker assistant secretary of state for Africa said he believed Congress will favour the program which stems from a U.N. Conference on Africas economic problems. The 500-mln dlr fund coupled with an additional 100 mln dlrs in food aid would surpass Congress 1986 vote of 483 mln dlrs for equivalent programs officials said. Washington is also increasing its funding to the International Development Agency (IDA) the World Banks soft loan affiliate and is seeking a greater share of a bigger fund for Africa they said. Officials said under the last IDA replenishment Africa got 37 pct of 8.7 billion dlrs but the Reagan administration wants this increased to 45-50 pct of 12.8 billion dlrs in new funds. REUTER | U.S. DETAILS ITS ACTION PROGRAM FOR AFRICA |
Senior U.S. Economic officials disagree on the likelihood the government can meet its budget deficit reduction targets. Beryl Sprinkel chairman of the Council of Economic Advisers reiterated the Reagan Administrations opposition to a tax increase and its pledge to reduce the deficit by cutting spending and fostering economic growth. By contrast Rudolph Penner Director of the Congressional Budget Office said the budget process has broken down and the deficit will remain close to 200 billion dlrs for fiscal 1987. Sprinkel told a symposium sponsored by New York University that spending could be cut by avoiding decisions based on the desire to influence votes and by shifting the responsibility for local projects to state governments. He also suggested a line-item veto which allows the President to veto parts of bill without rejecting all of it to limit wasteful spending. Spending and taxing decisions should be linked more closely. Sprinkel said the Administration still looks for 2.7 pct growth in U.S. Real gross national product (GNP) in 1987 and 3.5 pct in 1988. Asked if the latest economic reports signal this rate of economic growth is attainable Sprinkel said It looks pretty good to me. Weve had two very strong employment reports. He also said federal reserve policy is appropriate adding It looks like theyre on track. While further reductions are needed in the trade deficit Sprinkel said the lower dollar is having an impact. The new 1987 tax laws will not hurt the economy and the tax reform act of 1986 significantly lowers tax rates and will greatly increase private production incentives he said. Our estimates at the Council of Economic Advisers suggest national net output of goods and services will permanently increase by approximately two pct because of the long-run consequences of tax reform Sprinkel said. In 1986 this would have amounted to an increase of approximately 600 dlrs in the income of the average American family. Sprinkel also argued the 1981 tax cuts were not responsible for the large increase in the budget deficit. In fiscal 1986 ending September federal spending amounted to 23.8 pct of GNP while federal receipts absorbed 18.5 pct of GNP leaving a deficit of 5.3 pct he said. Sprinkel said that compared with fiscal 1978 the 1986 federal expenditure share of GNP is 2.7 percentage points higher and the revenue share of GNP is virtually the same. Contrary to the conventional wisdom therefore the 1981 tax cut is not the root cause of the extraordinary budget deficits of the past few years Sprinkel said. This tax cut merely rolled back the inflation-induced tax increases that occurred between 1978 and 1981 he added. However the Congressional Budget Offices Rudolph Penner argued that the tax cut in 1981 was misguided. Since making the big mistake in 1981 of cutting taxes enormously without any plan to decrease spending by the Administration or Congress indeed with increases in defence spending now all the options (for reducing the budget deficit) are unpleasant he said. Penner said the tax cut resulted from the ideological turmoil in the U.S. Caused by the biggest sustained inflation in our nations history which helped foster widespread distrust of government. The American people turned on the government with tax revolt at the state level and new demands on the government at the national level Penner said. But their dislike of taxes exceeded their general dislike of spending programs. Now the correction of that 1981 mistake demands that the system change a lot. Penner sees little hope the Gramm-Rudman-Hollings budget deficit reduction targets will be met and said the deficit will remain at roughly 200 billion dlrs this year. He said a budget process that sets targets arbitrarily is not likely to succeed. I feel pretty safe in saying that any process that tries to dictate a numerical outcome from above is doomed to fail simply because theres no ... Way to enforce it Penner said. Penner questioned the methods by which the 1987 budget deficit was cut. He said 18 to 19 billion dlrs were eliminated by one-time measures such as a temporary increase in taxes related to tax reform and sales of government assets. Another four billion dlrs was cut by what I call creative timing changes like moving the military payday from the last day of fiscal 1987 to the first day of fiscal 1988. That saved more than two billion dlrs Penner said. REUTER | U.S. OFFICIALS DISAGREE ON REDUCING BUDGET DEFICIT |
Diversified industrial and investment group The Adelaide Steamship Co Ltd <ADSA.S> said it was looking to the British market for future investment in view of high share prices and interest rates in Australia. Because of lower interest rates and improved economic statistics we believe the U.K. At the present time offers better value and we hold strategic investments in that market it said in a statement. Adsteam did not name any British investments but it has disclosed a stake in Blue Circle Industries Plc <BCIL.L> last stated by Adsteam in London at 6.85 pct in late February. Adsteam said it was continuing to look for investment opportunities both in Australia and overseas but with the Australian stock market at record levels opportunities to acquire companies on reasonable investment criteria were limited. As earlier reported Adsteam will raise 228.5 mln dlrs for working capital and investment both in Australia and overseas through a one-for-five rights issue at 11.50 dlrs a share. We expect to enter 1988 in a highly liquid position and will be looking to take advantage of investment opportunities as they arise it said. Nevertheless Adsteam said it continues to be a large investor in the Australian market through its equity-accounted associates and through other major investments. We have enjoyed a very substantial increase in the market value of our investments over the course of this financial year but we are concerned at the economic fundamentals which persist in Australia particularly the high interest rates which currently apply it said. Adsteam also said it had hedged part of its Australian stock market portfolio in the futures market and had hedged all foreign currency borrowings. Realised losses from futures hedging have been brought to account as extraordinary items but unrealised gains from investments significantly exceed realised and unrealised losses on hedging Adsteam said. In its earlier reported first half ended December 31 Adsteam posted an extraordinary loss of 20.39 mln dlrs against a 13.79 mln profit a year earlier. Equity-accounted net profit before extraordinaries rose to 75.05 mln dlrs from 55.68 mln a year earlier. REUTER | ADSTEAM LOOKING TO BRITISH MARKET FOR INVESTMENT |
Kidnapped Japanese businessman Noboyuki Wakaoji is alive and well and may soon be released Cardinal Jaime Sin the archbishop of Manila said. Wakaoji head of the Philippines branch of Mitsui and Co Ltd is being visited on a daily basis by a senior priest Sin told reporters at a briefing. He refused to reveal Wakaojis whereabouts. The businessman was kidnapped last November and his captors have demanded a five mln dlr ransom from Mitsui. REUTER | KIDNAPPED JAPANESE BUSINESSMAN ALIVE - CARDINAL |
Australian Prime Minister Bob Hawke called on businessmen to hold their salaries and profit margins as part of his campaign for economic restraint. In a speech to the National Press Club Hawke said business must not puncture the spirit of community restraint evident in low wage increases and suppressed consumer demand. Hawke said the Federal Government would coordinate with State administrations to monitor prices and profit margins. At a time when a concerted national effort to restrain costs is required profit margins should not be increased he said. Direct price control did not appeal to the government but it would act to ensure market forces operated fairly and businesses were reminded of their obligations to Australia Hawke said. The government would demonstrate its commitment with spending cuts in its May 14 economic statement he said. It would also limit increases in government excises normally indexed to inflation to about six pct Hawke said. REUTER | AUSTRALIAN BUSINESS URGED TO RESTRAIN PROFITS |
Australias terms of trade fell by a further 3.5 pct in the fourth quarter of 1986 after declining 0.8 pct in the third quarter and 2.7 pct a year earlier the Statistics Bureau said. It said the seasonally adjusted current account deficit of 3.22 billion dlrs in the quarter would have dropped to 912 mln if not for the terms of trade decline. The fourth quarter decline followed a 1.1 pct fall in export prices and a 2.4 pct rise in import prices it said. The Bureau noted Australias terms of trade had fallen by 19.9 pct since the fourth quarter of 1983. REUTER | AUSTRALIAN TERMS OF TRADE WORSEN IN LAST QUARTER |
China has to decide if it will increase sugar imports this year to cover falling domestic output and rising demand in view of market predictions that international sugar prices will remain firm this year traders and the official press said. He Kang Minister of Agriculture Animal Husbandry and Fisheries said this week that China has adjusted the purchasing price for sugar cane and beet to check a drop in production last year but he gave no price details. One Japanese trader said domestic demand is rising rapidly because of improving living standards and rising demand for sweet drinks cakes and biscuits and other sugary foods. It will not be easy to cut domestic demand even in a state-controlled economy. China may have to import he said. Customs figures show imports fell to 1.182 mln tonnes in 1986 from 1.909 mln in 1985 and fell to 25165 tonnes in January 1987 from 54000 in January 1986. The official Economic Information newspaper last month said production in the 1986/87 crushing season (September-April) will be 1.18 mln tonnes short of demand. The paper put 1986/87 output at 4.82 mln down from 5.24 mln in 1985/86 and domestic demand at about six mln tonnes. In the last two years acreage under sugar cane and beet has fallen sugar mills are underutilised output has dropped and cannot meet demand that is rising every day it said. The country will have to continue imports of sugar and draw down stocks to meet market demand it added. It quoted the Ministry of Light Industry as blaming the drop in output on unreasonable state purchasing prices for cane and beet as against other crops which has resulted in farmers refusing to grow them. The paper said in 1985 a farmer could earn up to three times more per hectare from pineapple and watermelon and up to seven times more from bananas than from sugarcane. He could sell grain on the free market at 560 yuan a tonne against only 70 yuan a tonne for sugarcane. Sugar mills are suffering because refined sugar prices have not changed for 20 years despite rising costs it said. In Fujian the cost of producing one tonne rose to 702 yuan in 1985 from 520.1 in 1980 cutting the mills profit to 117 yuan a tonne from 217.9 it added. The paper said unreasonable pricing resulted in 144 of the 442 sugar mills working in the 1985/86 crushing season losing money. China has 521 sugar mills. A foreign agricultural expert forecast a drop in cane acreage in 1986/87 (September-August) of up to 10 pct in Guangdong which produced 45 pct of Chinas sugar in calendar 1985 and a smaller drop in Fujian which produced 11 pct of Chinas sugar in calendar 1985. He said both provinces are more developed than other sugar-producing areas and more sensitive to demand from cities. But cane acreage in Guangxi and Yunnan which accounted for 28 pct of the 1985 crop has risen by 10 to 30 pct in 1986/87 because cane-growing is more economic there he said. He put sugar stocks at 2.333 mln tonnes in September 1986. A Hong Kong trader estimated stocks at more than three mln at end-January. Now they are falling but (they) have not reached the critical level compelling China to import quickly he said. China has options not easily available in western countries. It controls stocks strictly and can release less into the consumer market if stocks fall too quickly he said. The Hong Kong trader said calendar 1987 imports will be slightly less than those of 1986 because of firm world prices and serious foreign exchange constraints which he said are likely to continue until at least end-1988. He said nearly all cane and beet is sold to the state-owned mills with a small amount sold raw to consumers. Most of the mills are old and inefficient with many of them using Soviet equipment imported in the 1950s he said. He said demand in rural areas will in future rise an annual four pct with demand in the cities rising an annual two pct. REUTER | CHINA FACES DILEMMA OVER SUGAR IMPORTS |
The Agriculture Ministry said it set Japans beef import quota for the six months from April 1 at 93000 tonnes up from 83000 in the second half of 1986/87 and 85000 a year earlier. Under an agreement with the U.S. And Australia Japan has been increasing imports by 9000 tonnes a year from March 31 1985 to reach a projected 177000 tonnes in the year to March 31 1988. REUTER | JAPAN SETS 1987/88 FIRST HALF BEEF IMPORT QUOTA |
Japan denied breaking a pact with the U.S. On semiconductor trade but said prices set out in the pact were too high and acknowledged difficulties in implementing the accord. We are faithfully abiding by the ... Agreement but of course there are some problems a spokesman for the International Trade and Industry Ministry told Reuters. He said the high semiconductor prices recommended by the agreement were leaving Japanese manufacturers piling up stocks of unsellable products. We are aiming to reduce production in Japan but of course this takes time he said. The spokesman said some Japanese companies were selling chips in Europe and Asia below stipulated prices but added: It is only a matter of time before we solve this problem. The eight month old pact aims to stop Japan selling large quantities of chips at knock-down prices to the United States and other countries and to increase U.S. Semiconductor sales in Japan. The U.S. Senate Finance Committee this week called on President Reagan in a non-binding resolution to retaliate against Japan for violating the agreement. REUTER | JAPAN DENIES BREAKING SEMICONDUCTOR TRADE PACT |
International Trade and Industry Minister Hajime Tamura told a parliamentary session Japans small- and medium-sized enterprises are seriously suffering from the yens rise and can only stand levels around 170 yen. He also said he still believes a dollar exchange rate level plus or minus 10 yen from 170 yen would be within levels agreed upon last month in Paris by six major industrial nations. Finance ministers of Britain Canada France Japan the U.S. And West Germany agreed on February 22 to cooperate in stabilizing exchange rates around the current levels. The dollar had closed here at 153.77 yen on February 20. REUTER | JAPAN MINISTER SAYS ABOUT 170 YEN APPROPRIATE |
West German wholesale prices fell 0.4 pct in February from January to stand 6.9 pct lower than in February 1986 the Federal Statistics Office said. In January wholesale prices rose 0.8 pct from December to stand 8.6 pct below their level in January 1986. Wholesale price declines were led by starch products down 13 pct light heating oil 11 pct lower heavy heating oil 10 pct lower and green coffee down 6.9 pct. Among higher wholesale prices were those for fresh vegetables up 17 pct fresh fruit up 12 pct and eggs up 8.9 pct the statistics office said in a statement. REUTER | GERMAN WHOLESALE PRICES FALL 0.4 PCT IN FEBRUARY |
SWISS FEB TRADE DEFICIT 629.7 MLN FRANCS (JAN DEFICIT 209.4 MLN) - OFFICIAL |
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Australian beef output is forecast to decline to 1.34 mln tonnes carcass weight in 1987 and 1.36 mln in 1988 from 1.44 mln in 1986 the Australian Meat and Live-Stock Corp (AMLC) said. Exports of beef/veal are also predicted to decline to 480000 tonnes shipped weight in 1987 from 515000 in 1986 and then rally to 490000 in 1988 the AMLC said in a summary of its bi-annual meat and livestock forecasts. It sees cattle numbers remaining at around the 1986 level of 23.2 mln beasts in both years because herd rebuilding is expected to be slower than previously forecast. Beef producers are becoming more confident that higher returns in the market both domestically and overseas will continue the AMLC said. The slow herd build-up and the forecast lower production is expected to bring about a slight drop in both export and domestic consumption this year it said. The forecast does not assume a turnaround in production levels until late next year. It said the outlook for beef exports as a proportion of output remains much the same as last year when it was around 55 pct of total production. In 1985 it was 52 pct. The increase in exports of beef as a percentage of production has mainly been attributed to the decline in the Australian dollar the AMLC said. It also forecast that Australias four major markets the U.S. Japan Canada and Taiwan will continue to dominate the chilled and frozen beef export markets. They take collectively around 94 pct of total Australian exports. REUTER | AUSTRALIAN BEEF OUTPUT SEEN DECLINING IN 1987 |
Chinas grain exports in January totaled 386157 tonnes down 22.1 pct from January 1986 customs figures show. They gave no detailed breakdown. The official China Economic News quoted the figures as showing tea exports rose 9.7 pct to 8474 tonnes during the month. Imports of wool rose 117.6 pct to 10248 tonnes over the same period the figures show. REUTER | CHINA'S JANUARY GRAIN EXPORTS FALL |
Switzerland had a trade deficit of 629.7 mln Swiss francs in February compared with a revised 209.4 mln deficit in January and 723.2 mln shortfall in February 1986 the Federal Customs Office said. February imports were 6.00 billion francs against exports of 5.37 billion. Imports rose in real terms by 5.1 pct against February 1986 while exports rose by a real 4.6 pct the office said. But a further improvement in the terms of trade left the deficit smaller than last year. Last Februarys figure had also been hit by the import of two passenger aircraft. REUTER | SWISS FEBRUARY TRADE DEFICIT 629.7 MLN FRANCS |
The Reserve Bank of Australia said it would offer 500 mln dlrs of 13-week treasury notes and 200 mln dlrs of 26-week notes for tender next week The Bank said it would take up 300 mln dlrs of the 13-week notes at the average yield. It is not taking up any 26-week notes. REUTER | AUSTRALIAN TREASURY NOTE TENDER 700 MLN DLRS |
Japanese shipbuilders have applied to the states Fair Trade Commission to form a cartel to restrict tonnage built to about half of total capacity for the year starting April 1 officials of the Shipbuilders Association of Japan said. Under the plan 33 yards capable of building ships of more than 10000 gross tons will curtail operations to three mln compensated gross registered tonnes (CGRT) a year against capacity of about six mln CGRT. The Transport Ministry estimates new orders at 3.3 mln CGRT in the year to March 1988 and 3.1 mln the following year. The industry has curtailed production due to oversupply nearly every year since 1977/78 under cartel or Transport Ministry guidelines. The latest guidelines call for a ceiling of four mln CGRT in the year to March 31. The cartels self-imposed and self-regulated are not legally binding but industry finds it in its own interest to stick to them. The slowdown in orders has been caused by the strong yen and a protracted worldwide shipbuilding slump. REUTER | JAPAN SHIPBUILDERS SEEK CARTEL TO RESTRICT OUTPUT |
Swiss wholesale prices fell by 0.3 pct in February giving a drop of 4.3 pct from February 1986 the Federal Office of Industry Trade and Labour said. Prices had been unchanged in January giving an annual drop of 4.6 pct. They fell by 2.6 pct in the year to February 1986. The wholesale price index base 1963 stood at 168.5 in February from 176.1 last year. The office said the fall was largely due to lower prices for energy raw materials and semi-finished goods. Consumer goods prices rose slightly. REUTER | SWISS WHOLESALE PRICES FALL 0.3 PCT IN FEBRUARY |
Bangladesh will seek additional money from the World Bank to finance industrial development which is facing a capital shortage and a lack of expertise Finance Ministry officials said. They said the government had revised downward its Annual Development Programme budget for this fiscal year by seven pct to 44.4 billion Taka. A team will visit Washington next month for talks with World Bank executives and to ask for 200 mln dlrs from the banks Industrial Programme Credit scheme they said. The new money would be in addition to nearly two billion dlrs aid which the World Bank other leading agencies and donor countries are expected to offer Bangladesh for the year from July at their Paris meeting next month. They offered 1.85 billion dlrs to the country in 1986/87. The Annual Development Programme budget has been cut mainly because of poor tax collection and a fall in public and private sector industrial investment the Finance Ministry officials said. They said they expect a two pct growth in the industrial sector this year against a target of five pct and a growth of 1.5 pct in 1985. They gave no further details. REUTER | BANGLADESH TO SEEK WORLD BANK HELP FOR INDUSTRY |
Expanding global links between futures markets mean that the Singapore International Monetary Exchange (SIMEX) must add Chicago and London to its list of rivals banking sources said. When SIMEX and the Sydney Futures Exchange (SFE) introduced U.S. Treasury bond futures last autumn the sources expected to see fierce rivalry between the two exchanges ending with only one winner in Asia. But surprisingly the challenges now appear to be coming from the other side of the world they said. The Chicago Board of Trade (CBOT) will introduce night trading in its U.S. Treasury bond contract on April 30 which could clash with SIMEX morning activity banking sources said. The CBOT had planned to introduce night trading on April 2 but postponed the move to allow participants time to prepare. The London International Financial Futures Exchange (LIFFE) could cut further into the SIMEX contract with a U.S. Treasury bond contract that can be offset on the CBOT they said. Such a LIFFE contract is expected later this year. LIFFE liquidity could be higher than at the SIMEX where average daily volume in Treasury bonds dropped to 165 in February from 1286 last October when the bonds were first introduced. The contracts were set up to attract hedging from the rapidly growing underlying cash market in U.S. Treasury bonds in Toyko but interest has waned as that market has grown more stable traders said. Restrictions on investments by Japanese residents have also inhibited the growth of the futures contracts in both Singapore and Sydney the banking sources said. Nevertheless all 450 seats on SIMEX are now taken with the last trading at 55000 dlrs against the initial price of 50000 dlrs. The current bid is 55500 dlrs but offers at 65000 show that confidence in SIMEX remains said Michael Killian general manager of Chase Manhattan Futures Corp. Killian a SIMEX board member said the CBOT night session might raise arbitrage opportunities and SIMEX would benefit from a local stock exchange index contract planned for the end of 1987. SIMEX also became more competitive after this months budget eliminated withholding tax on interest earned on futures margin deposits. Banking sources said the tax change would boost SIMEX trading by non-bank institutions and individuals and would benefit foreign firms and institutions. While the Treasury bond contract has been somewhat disappointing other SIMEX contracts continue to expand Fong Yew Meng SIMEX assistant general manager told Reuters. Volume in the SIMEXs Nikkei stock index based on the Tokyo stock market has risen to a daily average of more than 1000 contracts this month from 320 contracts last October helped by uncertainty during the recent bull run in Tokyo stocks Fong said. Open interest in the Nikkei contract introduced last year reached a record 2697 on February 26. Killian said the Nikkei contract has considerable potential for expansion as overseas investors have been avoiding the contract because they currently see no need to hedge the rising cash market in Tokyo. SIMEX is also enjoying record trading in other contracts. In February total volume on the exchange reached a record 122819 contracts surpassing the previous monthly record of 116767 set in September. Eurodollar volume reached a record 78546 contracts last month against 70306 in September. SIMEX is likely to try to maintain its growth by moving into options soon but competition continues regionally as well as globally banking sources said. The Sydney exchange plans to introduce by June a share index futures contract based on a composite of stocks on which equity options are traded which could generate more liquidity than the ordinary index banking sources said. Local interest in the Sydney Treasury bond contract may also flare if the Sydney exchange establishes a three-way link with Chicago and London traders in Sydney said. LIFFE is discussing such a link with the CBOT they said. REUTER | SINGAPORE MONETARY EXCHANGE FACES NON-ASIAN RIVALS |
Group shr 53 yen vs 22 Net profit 3.58 billion vs profit 1.47 billion Pretax profit 4.94 billion vs loss 248 mln Operating profit 5.36 billion vs profit 789 mln Sales 127.34 billion vs 130.22 billion Nine months ended January 15 Group shr 134 yen vs 119 Net 9.10 billion vs 8.03 billion Pretax 19.78 billion vs 14.77 billion Operating 17.35 billion vs 16.00 billion Sales 430.06 billion vs 446.26 billion REUTER | KUBOTA LTD <KUB.T> THIRD QUARTER TO JANUARY 15 |
The National Australia Banks Hong Kong branch is planning a 75 mln Australian dlr floating rate certificate of deposit (CD) issue banking sources said. The three-year issue which matures April 9 1990 is in two tranches. Tranche A of 50 mln dlrs carries interest at 30 basis points below one-month bank bill rate payable monthly and tranche B of 25 mln dlrs carries interest at 25 basis points below three-month bank bill rate payable quarterly. Fee for co-managers is 1/8 pct. Lead manager is BT Asia Ltd and syndication is expected to close on March 16. REUTER | NATIONAL AUSTRALIA BANK PLANS 75 MLN DLR CD ISSUE |
Bond Corp Holdings Ltd <BONA.S> said its previously announced float of <Bond Media Ltd> will be on the basis of three shares at 1.55 dlrs each for every four Bond Corp shares. For each five Bond Corp shares Bond Media shareholders will receive one free option exercisable up to March 1991 also at 1.55 dlrs Bond said in a statement. Bond Media will be owned about 50 pct by Bond Corp. Bond Corp is injecting Kerry Packers electronic media interests which it purchased for one billion dlrs into Bond Media. It is also injecting Bonds own media holdings. REUTER | BOND CORP DETAILS BOND MEDIA ISSUE |
Fiji gold miner <Emperor Mines Ltd> said it will float a gold investment company in the Isle of Man to be known as <Odin Mining and Investment Co Ltd>. Sixty pct of Odins 51 mln issued shares will be offered to Emperor shareholders on a one-for-one non-renounceable basis at 1.20 Australian dlrs each it said in a statement. Each share will carry a free option exercisable at the same price up to March 1992. Odin in turn will be allotted a 10 pct stake in Emperor at 6.06 dlrs a share against the market level of about 7.70 dlrs. Odin shares will be listed in Australia and New Zealand. Emperor said Odins chief activity would be strategic investment in emerging gold companies and projects. Emperors 22 pct stake in Australias <Nullarbor Holdings Ltd> and 10 pct stake in Canadas <Osborne and Chappel Goldfields Ltd> will be transferred to Odin at substantial discounts to their market prices it said. The offer will not be available to shareholders registered in the U.S. And Britain in view of compliance costs it said. But David Kingston of advisers <Rothschild Australia Ltd> told Reuters those few shareholders were being urged to switch their registrations to an Australian nominee. Kingston said about 65 to 70 pct of Emperors shareholders are domiciled outside Australia but the vast majority are registered through Australian nominees and are thus entitled to participate. Stockbroker <Ord Minnett Ltd> will underwrite the issue Emperor said. Odin shares are expected to be listed in May it added. Emperor changed its domicile to the Isle of Man from Australia last October because of changes in Australian tax laws that would affect its tax position even though it has no activities in Australia. REUTER | EMPEROR MINES TO FLOAT GOLD INVESTMENT COMPANY |
The cabinet has approved a bill making it easier for the government to issue commemorative coins a Finance Ministry official said. The bill which must still be approved by parliament would take effect in April 1988. It would allow the government to issue 1000 5000 and 10000 yen coins without special legislation although higher-valued coins would still need a special law the official said. At present it can only issue coins of 500 yen or less. REUTER | JAPAN CABINET APPROVES BILL ON GOLD COIN ISSUES |
Group 1986 net profit 541 mln Swiss francs vs. 529 mln Dividend 105 francs per 250 francs nominal share vs. 100 21 francs per 50 franc nominal participation certificate vs 20 Group Turnover 8.36 billion francs vs. 8.45 billion Cash Flow 956 mln francs vs. 941 mln Parent company net profit 153.8 mln francs vs. 135.3 mln REUTER | SANDOZ AG <SANZ.Z> YEAR 1986 |
India is to partially cover the cost of its Malaysian palm oil imports through a countertrade deal involving the construction of two bridges valued at 20 mln dlrs an Indian trade source told Reuters. He said Malaysia agreed to the oil-for-bridges deal in October after India said it could no longer buy some 700000 tonnes of palm oil a year because of its trade deficit. Malaysia has also agreed to barter palm oil for 30 mln dlrs of hydroelectric equipment and is interested in countertrading for Indian iron ore wheat and other goods and services he said. REUTER | INDIA IN COUNTERTRADE DEAL FOR MALAYSIAN PALM OIL |
The Finance Ministry has clarified regulations governing fund management satisfying overseas critics who charged the rules were too tightly-drawn ministry officials and Western diplomats said. They said double licensing has been dropped so a foreign fund management firm need apply only for a licence for its Japanese subsidiary and not for the parent company as well. A foreign investment management company will be permitted to employ only one fund manager in Japan with another on standby in the home country. Domestic companies must have two. In deciding whether a Japanese subsidiary of a foreign firm is eligible to manage funds in Japan the ministry will take account of the amount of funds the parent company has under management a ministry official said. This should make it very easy for foreign firms to meet the criteria for a licence he said without elaborating. He said the ministry expects to grant the first investment management licences by the end of June. Some 135 firms including some 15 foreign companies will probably be licensed under the new law passed late last year. REUTER | JAPAN CLARIFIES FUND MANAGEMENT REGULATIONS |
ALUSUISSE GROUP 1986 NET LOSS 688 MLN SWISS FRANCS (LOSS 756 MLN) |
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The short-term effect of foreign exchange rate movements in correcting international trade imbalances appears to be waning and long-term efforts are required to cut Japans chronic dependence on external demand the Bank of Japan said in a monthly report. Japans trade surplus in nominal terms is likely to remain high in the near future the central bank said. Fundamental adjustments will be needed as long as Japan hopes to benefit from a better international allocation of resources and maintain the free trade system it added. REUTER | BANK OF JAPAN CALLS FOR LONG-TERM EFFORTS ON TRADE |
The U.S. Company Du Pont De Nemours <DD> has abandoned plans to build a chemical factory near the west coast port of Lukang after environmental protests. A company spokesman told a news conference yesterday that Du Pont would conduct an environmental impact study and then look for another site for the 160 mln U.S. Dlr titanium dioxide plant the largest foreign investment project in Taiwan. The decision came after almost a year of protests by residents who feared pollution from the plant might ruin the tourist industry and nearby fish farms. REUTER | TAIWAN ENIVIRONMENTAL PROTESTS BLOCK DU PONT PLANT |
London - Floating rate note prices open sharply lower, dealers say |
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Net Loss 688 mln Swiss francs vs. Loss 756 mln Gross sales 5.93 billion vs. 8.51 billion Operating income 198 mln francs vs 256 mln Net extraordinary charges 592 mln vs 472 mln Note - Company plans 50 pct capital reduction banks to convert 300 mln francs of credit facilities to subordinated loans. No immediate plans for capital increase. Company full name Schweizerische Aluminium AG. REUTER | ALUSUISSE <ALUZ.Z> YEAR 1986 |
Opec deliberately under 15.8 mln barrel ceiling to defend price - Subroto |
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<County Ltd> which is acting in concert with Tesco Plc <TSCO.L> in its 151.4 mln stg for supermarket chain operator <Hillards Plc> has purchased 300000 Hillards ordinary shares at 316p per share a statement said. These purchases together with those made by County on 10 March represent about 4.8 pct of Hillards issued ordinary share capital it said. Tescos offer made on March 10 values each Hillards ordinary share at 305.5p a 37.6 pct premium over the previous days closing price. A cash alternative of 290.55p will be made available. REUTER | COUNTY INCREASES TESCO STAKE IN HILLARDS |
South African year-on-year producer price inflation fell to 14.9 pct in January against 16.4 pct in December Central Statistics Office figures show. The all items index (base 1980) rose a monthly 0.8 pct in January to 233.9 after also rising 0.8 pct in December to 232.1. A year ago the index stood at 203.6 and year-on-year producer price inflation at 22.2 pct. REUTER | S. AFRICAN PRODUCER PRICE INFLATION FALLS SHARPLY |
Sandvik AB <SVIK.ST> and Belgian group <Diamant Boart SA> have completed preliminary negotiations on forming a joint venture which will combine their oil and gas drilling tools activities Diamant Boart said in a statement. The two companies announced in January that they had signed a letter of intent to form a venture in which each would have equal stakes and which would have annual turnover of about 75 mln dlrs. In todays statement Diamant Board said The results of the negotiations support strong synergy between the two units involved. Diamant Boart is a wholly owned subsidiary of Sibeka SA in which Societe Generale de Belgique <BELB.BR> has a 52 pct stake. REUTER | SANDVIK, DIAMANT BOART IN ACCORD ON JOINT VENTURE |
Indonesian Energy Minister Subroto said he sees the oil market continuing bullish with underlying demand expected to rise later in the year. He told a press conference in Jakarta at the end of a two-day meeting of South-East Asian Energy Ministers that he saw prices stabilizing around 18 dlrs a barrel. The sentiment in the market is bullish and I think it will continue that way as demand will go up in the third or fourth quarters Subroto said. Asked about the prospect for oil prices he said: I think they will stabilise around 18 dlrs although there is a little turbulence ... Of course the spot price will fluctuate but the official price will remain at 18 dlrs he added. REUTER | SUBROTO SEES OIL MARKET CONTINUING BULLISH |
Schweizerische Aluminium AG <ALUZ.Z> Alusuisse plans to reduce share and participation certificate capital by 50 pct to cover losses in 1986 and those carried forward from the previous year chief executive Hans Jucker said. Jucker told a news conference that the greatest drain on its financial resources had been stopped but after extraordinary charges the net loss of 688 mln francs in 1986 was only slightly under the 756 mln loss of the previous year. The losses in 1986 and those carried over from 1985 made it necessary to reduce capital by 50 pct he said. However Jucker said the company improved liquidity through a recovery in cash flow and conversion of 300 mln Swiss francs of credit into a subordinated loan. REUTER | ALUSUISSE PLANS 50 PCT CAPITAL CUT |
Indonesian Energy Minister Subroto said OPEC is deliberately under its production ceiling of 15.8 mln barrels to defend its 18 dlr a barrel price target. He told reporters at an energy conference in Jakarta that OPEC had decided to maintain its price level of 18 dlrs. We are deliberately defending the price so OPEC production is less than 15.8 (mln) at the moment he stated. Asked if OPEC would increase production if prices went above 18 dlrs a barrel he said this would be decided at the next OPEC meeting in June. We will discuss the market situation then he added. He said a meeting of the OPEC Differentials Committee had been postponed because there is no need for the meeting. He did not elaborate. The committee had originally been due to meet in Vienna this week. REUTER | OPEC DEFENDING 18 DLR PRICE, SUBROTO SAYS |
A Foreign Ministry official dismissed arguments made by senior U.S. Government officials seeking to block the sale of a U.S. Microchip maker to a Japanese firm. They appear to be linking completely unrelated issues Shuichi Takemoto of the Foreign Ministrys North American Division told Reuters. U.S. Commerce Secretary Malcolm Baldrige has asked the White House to consider blocking the sale of <Fairchild Semiconductor Corp> to Japans Fujitsu Ltd <ITSU.T> U.S. Officials said yesterday. Baldrige expressed concern that the sale would leave the U.S. Military dependent on a foreign company for vital high technology equipment. Pentagon officials said Defence Secretary Caspar Weinberger also opposes to the sale. U.S. Officials have also said the sale would give Fujitsu a powerful role in the U.S. Market for supercomputers while Japans supercomputer market remains closed to U.S. Sales. Takemoto said national security should not be an issue since the planned purchase of Fairchild from its current owner Schlumberger Ltd <SLB> does not include Fairchilds main defence-related division. In addition Takemoto said tension over the supercomputer trade should not affect the sale as Fairchild does not make supercomputers. Analysts noted that Fairchild does make sophisticated microchips used in supercomputers. Fujitsu makes similar chips and supplies them to U.S. Supercomputer makers they said. Takemoto also dismissed U.S. Fears that the proposed takeover would violate U.S. Antitrust law saying the purchase would not result in Fujitsu monopolising the U.S. Semiconductor market. Two separate issues appear to have come together to boost pressure to block the purchase industry analysts said. The move is in part an attempt to force Japan to open its domestic market to more U.S. Supercomputer sales they said. U.S. Officials have repeatedly charged that the Japanese public sector is closed to U.S. Supercomputer sales despite U.S. Firms technological lead in the field. The United States believes Japan will only react when bullied and this is a bullying ploy Salomon Brothers Asia analyst Carole Ryavec said. However the analysts said more is at stake than supercomputer sales as the U.S. Fears it is losing its vital semiconductor industry to Japanese competitors. The real issue is xenophobia in (the U.S.) Silicon Valley said Tom Murtha of brokerage James Capel and Co. U.S.-Japanese tension over the semiconductor trade has failed to subside despite recent efforts by Japans Ministry of International Trade and Industry (MITI) to get Japanese firms to abide by a bilateral pact aimed at halting predatory pricing and opening Japans market. A MITI official said that while Japan is faithfully abiding by the agreement problems remain in halting the sale of microchips in Europe and Southeast Asia at prices below those set by the pact. It is only a matter of time before we solve this problem he told Reuters. Despite the furore Fujitsu will proceed with talks on the acquisition in line with the basic agreement reached with Schlumberger last year a Fujitsu spokeswoman told Reuters. REUTER | JAPAN REJECTS U.S. OBJECTIONS TO FAIRCHILD SALE |
The Bank of England said it invited an early round of bill offers to help ease tight conditions in the money market. The bank estimated todays liquidity shortage at about 1.10 billion stg. Bills maturing in official hands and the treasury bill take-up would drain 1.21 billion stg from the system while a rise in the note circulation and below target bankers balances would take out 265 mln and 180 mln respectively the bank said. Against this exchequer transactions would add a net 535 mln stg. REUTER | BANK OF ENGLAND OFFERS EARLY HELP TO MONEY MARKET |
Oesterreichishce Kontrollbank AG is issuing a 100 mln Canadian dlr eurobond due March 20 1997 at nine pct and priced at 101-7/8 pct Morgan Guaranty Ltd said as joint book-runner with LTCB International. The bond is available in denominations of 1000 and 10000 dlrs and will be listed in Luxembourg. Fees comprised 1-1/4 pct selling concession with 3/4 pct for management and underwriting combined. REUTER | OKB ISSUES 100 MLN CANADIAN DLR BOND |
President Reagans legal adviser said the President could not recall when he approved a 1985 arms sale to Iran the New York Times reported. We were trying to stimulate his (Reagans) recollection and he had no recollection although he remembered being surprised about something Peter Wallison who is resigning was quoted as saying in an interview. That led us to expect that he would not be able to recall (the date) when he appeared before the Tower board Wallison said referring to the question of whether Reagan gave prior approval to an Israeli shipment of U.S. Arms to Iran. Wallison said John Poindexter then head of the National Security Council (NSC) kept him from probing the scandal for weeks after it was first made public last November the Times reported. Wallison told the newspaper that Poindexter who resigned from his NSC post last November 25 refused to give him information about the deal despite pleas by former White House Chief of Staff Donald Regan. Regan told me on several occasions that he had been unable to move Poindexter to include me in any of the discussions or to provide me with ... The facts he said. REUTER | REAGAN DID NOT RECALL APPROVING ARMS DEAL, COUNSEL |
CBS Inc <CBS.N> is issuing 400 mln dlrs of convertible debt due April 7 2002 with a coupon of five pct and priced at par said Morgan Stanley Ltd as lead manager. The securities are convertible into shares of CBS at a price of 200 dlrs per share which represents a premium of 26.2 pct over the companys closing stock price yesterday of 158.50 dlrs on the New York Stock Exchange. The issue is callable in the first three years only if the stock prices rises abouve 130 pct of the conversion level. There is a 1-1/2 pct selling concession and a one pct combined management and underwriting fee. REUTER | CBS ISSUES 400 MLN DLRS IN CONVERTIBLE DEBT |
Japans Prime Minister Yasuhiro Nakasone has refused to drop a proposed sales tax as debate on a draft budget for 1987 resumed after a nine-day opposition boycott. I have no plan to withdraw the sales tax as I think it is the best policy (for Japan) Nakasone told the budget committee of the lower house of parliament. Kyodo News Agency said a small group of members of Nakasones ruling Liberal Democratic Party filed a complaint with their local headquarters calling for his expulsion from the party on the grounds he broke a campaign pledge by introducing the sales tax. Nakasone admitted the tax was a major factor in an upper house by-election defeat for his party on Sunday. The election was the first national-level poll since Nakasone presented his plan for overhauling Japans tax system which has remained unaltered for the past 36 years. The sales tax and the planned abolition of the tax-free saving system are designed to offset proposed income and corporate tax cuts. REUTER | NAKASONE REFUSES TO DROP SALES TAX |
A total of 1.886 mln hectares was sown to wheat in Britain excluding Northern Ireland up to December 1 1986 for the 1987 crop a Ministry of Agriculture census shows. It compares with 1.925 mln planted in the same period 1985. The barley area was unchanged at 952000 ha but oilseed rape increased to 393000 from 333000 ha. REUTER | BRITISH WHEAT AREA DOWN, MINISTRY CENSUS SHOWS |
Senior Belgian cabinet ministers reached an agreement on budgetary economies which will allow the net budgetary financing requirement to remain within previously set limits the government said in a statement. The statement issued as ministers ended a marathon meeting in the early hours of this morning did not give further details. However Budget Minister Guy Verhofstadt said before the meeting he was seeking economies of at least 21.2 billion francs in order to keep the financing requirement at 418 billion francs this year or eight pct of Gross National Product. The government set this figure as its target for the financing requirement last year when it announced a program of cuts designed to reduce spending by 195 billion francs in 1987. However Verhofstadt had claimed that subsequent developments had meant that unless further cuts were found the financing requirement would be considerably higher. Last year Belgium had a financing requirement of 561 billion francs or 11.0 pct of GNP. A government spokeswoman said the accord would be considered by the full cabinet later today and Prime Minister Wilfried Martens would announce it to Parliament on Monday. She said no details would be made public before then. REUTER | BELGIAN GOVERNMENT REACHES BUDGETARY ACCORD |
State-owned Indian Railway Finance Corporations first ever bond issue has been oversubscribed by 3.5 to 6.0 billion rupees brokers said. The 2.5 billion rupee issue consisted of 10-year maturity bonds of 1000 rupees each earning 10 pct tax free interest. They were listed for subscription on major stock exchanges from March 2 to March 7. The Corporation has sought Finance Ministry permission to retain the entire oversubscribed amount brokers said. The collection of such a large amount within just one working week is a record for the Indian capital market one broker said. REUTER | INDIA'S FIRST EVER RAIL BOND ISSUE OVERSUBSCRIBED |
A mix of electoral boldness and fiscal caution is expected from Chancellor of the Exchequer Nigel Lawson next week when he unveils his budget for fiscal 1987/88. Exceptionally robust tax revenues have given Lawson very favourable budget options with which to please voters industry and financial markets alike. The budget will Lawsons fourth and probably the last from the Conservative government before the next general election political analysts say. Analysts said the major budget question is how Lawson will balance expected tax cuts with lower public borrowing and allow for fresh falls in U.K. Interest rates. They said a boost given to the economy by consumer spending has helped reduce the Public Sector Borrowing Requirement (PSBR) for financial 1986/87 from an originally targetted 7.1 billion stg despite big rises in government spending. Economists say Lawson may have up to five billion stg to split between income tax cuts and other electoral sweeteners higher spending and a drop in borrowing while still meeting his earlier 1987/88 PSBR target of 7.0 billion stg. The decision facing Lawson is how best to use that so-called fiscal adjustement to maximise the governments all-round popularity ahead of the next general election. Economist Ian Harwood of Warburg Securities said Lawsons budget must strike a balance between tax cuts aimed at home consumption and lower public borrowing for attracting support from overseas investors. Peter Fellner of James Capel and Co said a budget which concentrates on tax cuts for the consumer will be a budget for an early election. Prime Minister Margaret Thatcher must call a poll before June 1988. But anticipation of a summer or autumn 1987 ballot has risen as the opposition Labour Party has slipped in voter surveys. Forecasts that the economy may deteriorate later this year add to arguments for an early poll analysts say. The Conservatives have pledged to cut the basic rate of taxation in the U.K. From the current 29 pct level to 25 pct. While confirming that aim Prime Minister Margaret Thatcher last month seemed to dash speculation that that would happen in the near future. She said in a television interview that it would happen Eventually. But I think it will be eventually. Most market analysts now expect a two-pence reduction in the basic rate of taxation and a lowering in of the top rate of income tax from 60 pct. A one billion stg cut in the 1987/88 PSBR - to six billion stg - is considered the minimum needed for reassuring financial markets they add. The Treasurys inflow of tax receipts has far surpassed that previously envisaged economists say. Lawson as recently as December 17 said that I very much doubt whether there will be much scope for reductions in taxation in next years budget. The Conservative government is eager to get the basic rate of tax down to 25 pct as soon as possible since every pound off the tax base would make the opposition Labour Partys spending plans look more painful to the electorate analysts say. The direct revenue effect of a one penny change in the basic rate of income tax would be about 1.1 billion stg in 1987/88 and 1.45 billion stg in 1988/89 Treasury figures show. Lawsons budget speech to Parliament on Tuesday starts at 1530 GMT and is sure to echo the governments distinct tone of optimism analysts say. The tax measures which Lawson is expected to announce will be based firmly on a positive assessment of past economic achievements and confidence for the future they add. But even if he does cut his planned PSBR for 1987/88 by between one and 1.5 billion stg as most economists predict Lawson is still likely to find himself announcing a higher PSBR than the outturn for this financial year.^M That could leave him with a presentation problem economists say. A lower PSBR would raise financial confidence by reassuring markets that the borrowing burden imposed by the government would stay low even if certain key aspects of the budgets arithmetic seem over-optimistic economists say Lawson is slated to reaffirm the governments goals as set out in its Medium Term Financial Strategy (MTFS) of reducing inflation and raising economic growth. Regarding monetary targets some analysts expect him to drop the wayward broad money aggregate sterling M-3 while retaining the tamer M0 narrow measure. Few foresee any other monetary aggregate being chosen by Lawson for formal targeting. Analysts were surprised this week when the government sanctioned a half percentage point cut in interest rates in an attempt to cool down sterling and the gilts market. Analysts had expected the authorities to wait until after the budget. Further declines in bank base lending rates are anticipated after the budget. Many analysts foresee them falling by as much as a full percentage point from the current 10.5 pct level. The main electoral attraction of reducing interest rates is to cut mortgage borrowing costs and thus reduce inflation analysts say. Each one percentage point cut in the mortgage rate reduces retail prices by 0.4 pct government figures show. REUTER | TAX REVENUES BOOST U.K. BUDGET OPTIONS |
Miyazawa says current dollar/yen rate not necessarily satisfactory |
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Japan agreed in talks with the U.S. To amend its laws to allow more companies to engage in international value-added network telecommunications services a Post and Telecommunications Ministry official said. Such services make communications between otherwise incompatible computers possible over telecommunications lines. The official said firms registering as Special Type Two Telecommunications Firms which are those leasing lines from common carriers will be permitted to re-lease the lines to users and provide international services. Steps will also be taken to assure fairness in negotiations between common carriers and firms seeking to lease lines the official said. Since December 10 companies have registered as Special Type Two firms including two which have American Telephone and Telegraph Co <T> or McDonnell Douglas Corp <MD> as major shareholders the official said. Currently only <Kokusai Denshin Denwa Co Ltd> and <Nippon Telegraph and Telephone Corp> are allowed to operate international telecommunications services. REUTER | JAPAN TO WIDEN PARTICIPATION IN TELECOM SERVICES |
Swedens Nordbanken banking group said it would postpone indefinitely its planned auction on Monday of 4.2 mln B free shares deposited as loan collateral by Fermentas <FRMS ST> founder and former chief executive Reefat el-Sayed. A statement cited Fermentas financial position as the main reason for delay. The companys 1986 deficit had earlier been estimated at 136 mln crowns but that was revised at an extraordinary shareholders meeting last Monday to half a billion crowns. The company said at the meeting a planned new share issue would not be launched but that another estimated to raise 580 mln crowns was scheduled for April. Nordbanken said the auction was the natural result of a debtors inability to repay an overdue loan. Although it expected to buy the shares back itself it did not exclude accepting a suitable bid for them. Nordbanken loaned 200 mln crowns to Reefat el-Sayed privately and is Fermentas largest creditor with loans of l55 mln crowns. It was one of the four Swedish banks which last month agreed to advance Fermenta 110 mln crowns to solve its immediate liquidity problems. REUTER | NORDBANKEN POSTPONES PLANNED AUCTION OF FERMENTA SHARES |
Kampuchea harvested more than two mln tonnes of rice paddy in 1986 up on the crops of the previous two years the official SPK news agency said yesterday. Diplomats said estimates put the 1985 harvest at less than one mln tonnes slightly up on 800000 in 1984. SPK said Kampuchea planned to expand planting from 1.5 mln to 1.93 mln hectares and boost rice paddy output to 2.5 mln tonnes this calendar year. Two mln tonnes of paddy would produce some 1.3 mln tonnes of milled rice above the 1.25 mln tonnes Kampuchea says is the minimum its 7.5 mln people need. REUTER | KAMPUCHEA SAYS RICE CROP IN 1986 INCREASED |
Chinas 1987 cotton output must rise above the 1986 level of 3.54 mln tonnes or supply will fall short of increasing demand the China Daily said. Demand in 1986 rose 10.9 pct over 1985. Output in 1986 fell from 4.15 mln tonnes in 1985 and a record 6.2 mln in 1984 official figures show. The China Daily attributed the decline to several factors including less favorable weather conditions and new state measures to restrict cotton production after the 1984 build-up of stocks. According to Customs figures cotton exports rose to 558089 tonnes in calendar 1986 from 347026 in 1985. To increase output quickly the state will raise by 10 pct the price it pays for cotton produced above and beyond quota levels the newspaper said. Its official purchasing agencies will buy cotton produced in excess of that originally contracted for it added. The China Daily said all cotton growing areas in south China should be maintained and growing in the north should be concentrated in Hebei Shandong Henan and Xinjiang. It called for comprehensive planning to coordinate production of cotton with that of grain edible oil and other crops but gave no more details. REUTER | CHINA TRYING TO INCREASE COTTON OUTPUT, PAPER SAYS |
Finance Minister Kiichi Miyazawa told a parliamentary session the current dollar/yen exchange rate is not necessarily satisfactory for the Japanese economy. Miyazawa said the Paris currency accord among six major industrial nations last month does not necessarily mean the yen should stay stable around current levels in the future. The Paris agreement was aimed at stopping a further rapid fluctuation of exchange rates he said. The accord stipulated that current rates reflect fundamentals of the six nations - Britain Canada France Japan the U.S. And West Germany. REUTER | MIYAZAWA SAYS PRESENT YEN NOT NECESSARILY IDEAL |
The Indian State Trading Corporation (STC) bought three cargoes of rbd palm olein at its vegetable oil import tender yesterday traders said. Late yesterday the market was reporting it had bought one to two cargoes. The business comprised two 6000 tonne cargoes for March 15/April 15 shipments at 355 dlrs per tonne cif and 6000 tonnes for May at 358 dlrs. The first two cargoes were on a cash basis and the May position was transacted on a 30 pct counter-trade basis traders said. REUTER | INDIA TOOK THREE CARGOES OF RBD OLEIN AT TENDER |
The Bank of England said it provided the market with 478 mln stg of early assistance to help ease a liquidity shortage it estimated at 1.10 billion stg. It made outright purchases of seven mln stg of band one bank bills at 10-3/8 pct and 30 mln stg of band two bank bills at 10-5/16 pct. In addition it bought 294 mln stg of paper for resale to the market on March 30 and 147 mln stg for resale on April 8 in both cases at an interest rate of 10-7/16 pct. REUTER | U.K. MONEY MARKET GIVEN 478 MLN STG EARLY HELP |
Metal Box Plc <MBXL.L> is issuing 60 mln stg of convertible eurobonds due April 28 2002 with an indicated coupon of 5-3/4 pct to six pct and priced at par Swiss Bank Corp International Ltd said as lead manager. The conversion premium will be five to 10 pct and the price will be fixed on or before March 18. The bonds will be callable at 106 after five months and until April 28 1988 and thereafter at prices declining by one pct per annum until 1993 but only if the share price is 130 pct of the conversion price. The bonds will be listed in London and will be issued in denominations of 1000 stg. Fees for the issue total 2-1/2 pct comprising 1-1/2 pct for selling and 1/2 pct each for management and underwriting. There is a 1/4 pct praecipuum. Pay date is April 28. REUTER | METAL BOX ISSUES 60 MLN STG CONVERTIBLE BONDS |
The proposed note issuance facility for Elders IXL Ltd has been reduced to 100 mln Australian dlrs from the original 200 mln dlrs lead manager Westpac Finance Asia Ltd said. Terms of the facility have also been amended. It will still be half underwritten and half uncommitted but the underwriting margin has been raised to 10 basis points over the Australian dollar bank bill rate. The margin was originally set at 6.25 basis points over bank bill rate for up to 50 mln dlrs and at 2.5 basis points for the remaining 50 mln dlrs. There is a 10 basis point utilisation fee if the underwriters are required to pick up more than 67 pct of the paper issued and a five basis point fee if they are to pick up 34-67 pct of the paper. No utilisation fee will be charged if they are to pick up less than 33 pct. Underwriting fee is 1/8 pct. Under the facility notes in denominations of 500000 dlrs will be issued with maturities ranging from one to six months. Syndication deadline has been extended to March 20 from today to allow banks more time to consider the facility. REUTER | ELDERS HALVES NOTE FACILITY AMOUNT, AMENDS TERMS |
Japanese securities houses have asked the Finance Ministry again to consider introducing auctions of 10-year government bonds securities sources said. Finance Ministry officials declined comment but said the Ministry has been aware of growing calls from securities houses for 10-year bond auctions. Japanese securities houses also may allow foreign brokers to underwrite more 10-year bonds from April. Four U.S. Banks are expected to receive Finance Ministry approval in late April to operate securities subsidiaries in Japan as long as they hold no more than 50 pct of the capital bankers said. These firms are likely to join the syndicate which will increase the number of participants in the 10-year government bond primary market securities managers said. Each of the 17 current foreign securities houses in the syndicate underwrites 0.07 pct of each issue they said. In order to expand participation by foreigners the syndicate must either expand the securities industrys 26 pct share or introduce auctions to the primary market they said. Local brokers have requested the head of the syndicate now Fuji Bank Ltd to increase their share to 30.7 pct but banks oppose any cut in their 74 pct share bankers said. REUTER | JAPAN BROKERS SEEK 10 YEAR GOVERNMENT BOND AUCTION |
Japanese personal savings grew 10.3 pct in 1986 from 1985 helped by a sharp increase in stock investments by individuals the Bank of Japan said. Outstanding savings on December 31 1986 totalled 545303 billion yen. Funds in investment trusts alone totalled 21918 billion yen up 37.4 pct from a year earlier. The outstanding balance also included deposits at banks and post offices up 7.4 pct to 337867 billion yen savings in the form of insurance up 18.6 pct to 111431 billion corporate bond investments up 7.8 pct to 46867 billion and investments in trust banks up 4.1 pct to 27220 billion. REUTER | JAPAN PERSONAL SAVINGS SOAR IN 1986 |
Trading in shares of Schweizerische Aluminium AG Alusuisse <ALUZ.Z> was suspended on the Zurich stock exchange after todays announcement by the company that it would cut its share capital by 50 pct the bourse said. The bourse said trading would resume again on Monday. Alusuisse bearer shares closed at 490 francs yesterday registered shares at 170 francs and the participation certificates at 45.50. REUTER | ALUSUISSE SHARES SUSPENDED ON CAPITAL CUT NEWS |
New Zealand is launching a 100 mln stg eurobond due April 9 1995 priced at 100-1/4 with a 9-5/8 pct coupon lead manager Warburg Securities said. Fees are 3/8 pct each for management and underwriting and 1-1/4 pct for selling. Payment date is April 9 and listing will be in London. The bonds will be sold in denominations of 1000 and 10000 dlrs. REUTER | NEW ZEALAND LAUNCHES 100 MLN STG EUROBOND |
Brazils state oil company Petrobras has cancelled a 40 mln dlr crude oil purchase from Saudi Arabia after the Saudis refused to accept credit guarantees from the Bank of Brazil and did not disclose reasons a Petrobras official said. Export director Carlos Santana told reporters the Saudis were the first suppliers of oil to impose such conditions after Brazils decision to halt interest payment of its commercial debts last month. The shipment of 2.2 mln barrels represents two days of consumption. He said the Saudis reported they would no longer accept letters of credit from the Bank of Brazil or even from Saudi banks and that Brazil would have to obtain credit guarantees from leading international banks. In February Brazil had contracted to buy 125000 bpd from the Saudis until June. Saudi Arabia is Brazils second biggest oil supplier with an average 115000 bpd. Iraq is the main supplier with 235000 bpd. China comes third with 58000 bpd. If the Saudis wish to stop our trade relationship...I am sure that if they do we will be getting dozens of offers from elsewhere Santana added. Santana said if the Saudis change their minds and decide to respect the terms of the contract then Petrobras will lift the order to cancel the shipment. The Saudis had put similar conditions on a previous shipment he added. We telexed them saying that if they insisted we would rather cancel the contract and buy the product elsewhere Santana said. After Petrobras threatened to cancel the contract the Saudis changed their minds and decided to accept the Bank of Brazils credit guarantees he said. REUTER | PETROBRAS CANCELS OIL PURCHASE FROM SAUDI ARABIA |
A Mannesmann AG <MMWG.F> spokesman said the company has lodged an application with the Federal Cartel Office for approval of a possible majority stake in car parts company <Fichtel und Sachs AG>. He described the application as a precautionary move and said no agreement on buying a majority stake had yet been reached. Until now Mannesmann has said only that it wanted to buy a 37.5 pct stake in Fichtel from the heirs of Ernst Wilhelm Sachs the grandson of the firms founder. The spokesman declined to say from whom it may buy the other shares to create a majority stake in the firm. Fichtels other principal shareholders are Commerzbank AG <CBKG.F> with 35.01 pct and Salzgitter AG <ISLG.F> with 24.98 pct. Spokesmen declined to comment directly on the possibility of selling Fichtel shares to Mannesmann. Mannesmann said in January it hoped to take a 37.5 pct stake in Fichtels holding company Sachs AG in the first quarter. Last week a spokesman said Mannesmann had a letter of intent on the 37.5 pct stake but completion was being delayed by legal questions surrounding the inheritance. REUTER | MANNESMANN CONSIDERING MAJORITY STAKE IN FICHTEL |
Sandoz AG <SANZ.Z> would have reported a percentage rise in net profits close to double figures rather than the actual two pct had it not been for Novembers warehouse fire a senior company official said. The official who declined to be identified told Reuters Sandoz had made a substantial addition to reserves to cope with the consequences of the accident at Schweizerhalle which caused severe pollution of the Rhine. Sandoz today reported without comment a rise in net profits to 541 mln francs from the previous 529 mln and a five pct increase in dividend to 105 francs per 250 franc nominal share. This year began well with the performance in January and February at least equal to the same period last year the official said. The company is expected to give fuller details of its results at a news conference on April 22. Sandoz has insisted that it is adequately insured to cover any liability arising from the accident. The official said the addition to reserves was to cover the one pct of claims somehow not covered and any voluntary gestures it wanted to compensate for the effects of pollution from the fire. Sandoz has not given any figure for claims which have been flowing in from Switzerland and other countries bordering the Rhine since the accident. However the official said the final figure would be much less than that cited in earlier comments. He gave no further details. In line with fellow chemical giant Ciba-Geigy <CIGZ.Z> which reported last month Sandoz profit and turnover were also hit by the falling dollar the official said. Sales in local currency terms were up by 14 pct with market share increases in the United States and Japan. But this was more than offset by a 15 pct negative foreign exchange effect which produced the reported one pct drop in turnover to 8.36 billion francsthe Sandoz official said. Net profit at Ciba-Geigy dropped by 21 pct to 1.16 billion francs while sales fell by 12 pct to 15.95 billion francs. The third major Swiss chemical company F. Hoffmann-La Roche and Co <HOFZ.Z> has not yet reported its results. REUTER | SCHWEIZERHALLE FIRE HIT SANDOZ 1986 PROFITS |
Schweizerische Aluminimum AG <ALUZ.Z> (Alusuisse) may be able to break even this year after cleansing its balance sheet for 1986 chief executive Hans Jucker said. The threshold of profitability has returned to the foreseeable future he said. We expect already in 1987 approximately to break even. That presupposes however that our industrial environment does not worsen. He said Alusuisse would no longer face the burden of past losses. Alusuisse made a net loss of 688 mln Swiss francs in 1986 after a restated 756 mln loss in 1985. Gross sales were 5.93 billion francs after 8.51 billion and net turnover 5.65 billion after 8.00 billion. Alusuisse had originally reported a 692 mln francs loss for 1985. But Jucker and Finance Director Hermann Haerri told a news conference the new management installed a year ago had decided to restate the previous five years accounts to eliminate rights on Australian bauxite previously in the books as an asset. Together with other one-off charges Alusuisse took an gross extraordinary charge in 1986 of 698 mln francs up from 472 mln in 1985. It also had 106 mln extraordinary income in 1986 remaining after provisions from the sale of its Maremont Corp subsidiary in the United States. There were no extraordinary gains in 1985. Jucker said the losses plus those carried forward from 1985 had wiped out the companys remaining reserves and exceeded legally allowed levels forcing Alusuisse to adopt a 50 pct capital cut to be approved by shareholders on April 22. Jucker said he knew shareholders would find this radical elimination of the mortgages of the past painful but said the foundation had been laid for a successful new company strategy. Haerri said despite the losses the companys liquidity was strong. Bank debt had been cut by about one-third to 2.56 billion francs against the end-1985 level of 3.85 billion. Cash flow improved substantially to 323 mln francs from 111 mln and represented 5.7 pct of turnover against a mere 1.4 pct in 1985. In addition to reassure other creditors Alusuisse had arranged with three major Swiss banks -- Union Bank of Switzerland <SBGZ.Z> Swiss Bank Corp <SBVZ.Z> and Credit Suisse <CRSZ.Z> to convert 300 mln francs of credits into a subordinated loan. The main sources of losses in 1986 were book losses and not cash losses Haerri said. Existing credit lines were used only to a small extent and the parent company had been granted a new credit line of 200 mln francs from a consortium of Swiss banks that would cover most of the loans falling due in 1987. Haerri said the company had been criticized for maintaining bauxite rights as an asset and so had restated the accounts. That left the 1985 account with a 756 mln franc loss instead of 692 mln 1984 with a 68 mln profit instead of 169 mln 1983 with a 217 mln loss instead of 82 mln and 1982 with a 479 mln loss instead of 179 mln. The new accounts show 1985 with shareholders equity of 1.15 billion francs instead of 1.75 billion and similar alternations were made for previous years. After 1986 losses shareholders equity stood at only 895 mln francs. REUTER | ALUSUISSE SEES POSSIBLE BREAK-EVEN IN 1987 |
Dutch state-owned chemical group N.V. DSM is launching a 150 mln guilder dual currency bond with a 7-1/4 pct coupon due 1992 and priced at par lead manager Algemene Bank Nederland N.V. Said. Interest will be paid in guilders and each 1000-guilder bond will be redeemed in 313.00 sterling on April 15 1992. Subscription closes Friday March 20 payment date is April 15 listing will be on the Amsterdam stock exchange. Co-leads are Bank Mees en Hope AMRO Bank and Citicorp Investment Bank (Netherlands). The management group consists of RABO NMB CLN Oyens en van Eeghen and F van Lanschot Bankiers. REUTER | DUTCH CHEMICAL GROUP LAUNCHES DUAL CURRENCY BOND |
The French government and Walt Disney Co <DIS.N> expect to sign a contract for Europes first Disneyland amusement park before the end of next month a senior French official said today. The complex to be built 20 miles east of Paris will include a so-called Magic Kingdom theme park outdoor recreation shops and hotels. Initial investment by Walt Disney and a group of French and other investors has been put at around eight billion francs for the projects central theme park. A preliminary agreement was reached in December 1985. REUTER | FRANCE EXPECTS TO SIGN DISNEYLAND CONTRACT BY NEXT MONTH |
Current profits of Japans major firms in the October-December quarter rose four pct from a year earlier to 5654 billion yen against a 2.6 pct year-on-year rise in the preceding quarter the Finance Ministry said. The improved earnings resulted mainly from a 22.5 pct profit increase in non-manufacturing industries supported by an 88.7 pct rise for construction firms and a 138 pct gain in real estate according to a ministry survey. Total sales of the 15308 firms with capital of 10 mln yen or more which responded to the poll fell one pct to 217217 billion yen against a 1.2 pct fall the previous quarter. Current profits of manufacturing industries in the fourth quarter dropped 13.7 pct to 2394 billion yen against a 22.1 pct fall in the preceding quarter the ministry said. Plant and equipment investments of all firms polled fell 3.9 pct to 8004 billion yen compared with a 1.4 percent fall the previoius quarter. Ministry officials said the survey showed that the Japanese economy is in a delicate stage in which it is hard to tell if economic growth has stopped deteriorating or if the economy is heading for a recovery. REUTER | JAPAN CORPORATE PROFITS IN LAST 1986 QUARTER UP |
The U.S. Is to lend Sudan 57 mln dlrs to buy 309000 tonnes of wheat and 73000 tonnes of wheat flour according to an agreement signed here. Under the agreement Sudan will receive 50 mln dlrs for the commodities and the rest for sea transportation. The loan is repayable in 40 years including a 10-year grace period. Interest will be two pct for the grace period and three pct over the repayment period of 30 years. REUTER | U.S. LENDS SUDAN 57 MLN DLRS FOR WHEAT PURCHASES |
Schweizerische Aluminium AG <ALUZ.Z> (Alusuisse) plans further drastic cuts in its aluminium smelting capacity and more concentration of higher value-added products chief executive Hans Jucker said. Elaborating on plans disclosed in outline last September company officials said current smelting capacity of 390000 tonnes a year would be cut to between 250000 and 260000 tonnes by 1989 or 1990. They did not say where cuts might be made. Two years ago before selling its Ormet Corp subsidiary in the United States to local management and staff Alusuisse had an annual capacity of 800000 tonnes. REUTER | ALUSUISSE PLANS FURTHER ALUMINIUM CAPACITY CUTS |
CANADA FEBRUARY UNEMPLOYMENT FALLS TO 9.6 PCT FROM JANUARY 9.7 PCT, STATISTICS CANADA SAID |
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The Singapore government should reduce its stake in major state-owned or run companies like Singapore Airlines Ltd <AIRH.SI> to around 30 pct over the next decade and privatise statutory boards a government report said. The report of the Public Sector Divestment Committee also recommended flotation of as many government-linked companies (glcs) as possible and secondary distribution of state-owned shares to add breadth and depth to the Singapore stock market. The Singapore government owns or backs 608 companies under three holding companies with total assets in access of 10 billion dlrs the report said. The report said a study of 99 glcs showed that 41 of them should be privatised 52 should not be privatised and six should be studied further because they have foreign government participation serve a social mission or are defence-related. Of the 41 15 should seek listing on The Stock Exchange of Singapore Dealing and Automated Quotation System (SESDAQ) including shipyards printing firms and airport service firms. The government should privatise a further 17 including Intraco Ltd (a government trading firm) Chemical Industries (FE) Ltd and Acma Electrical Industries Ltd and reduce its stake in nine it added. These included Singapore Airlines SIA now 63 pct-owned by the governments Temasek Holdings The Development Bank of Singapore <DBSM.SI> Keppel Corp Ltd <KPLM.SI> Sembawang Shipyard Ltd <BAWH.SI> and Neptune Orient Lines Ltd. The ceiling on foreign ownership of SIA should be allowed to rise to 49 pct from the current 20 pct it said. The committee recommends that Temasek Holdings reduces its stake (in SIA) in tranches to around 30 pct. The size and timing of each tranche would depend on the absorptive capacity of the Singapore stock market it added. Trading in shares of SIA which has a paid-up capital of 619 mln dlrs closed here today at 10.60 dlrs. The report said the governments 48 pct stake in DBS one of Singapores four major local banks should be cut to 30 pct through public offerings or dilution by issuing new shares. Among firms which should not be privatised nine are to be wound up it said including storage and food trading firms. The report said seven statutory boards should be considered for privatisation so as to reduce competition with the private sector with a 20 pct ceiling on foreign ownership. The seven include the Telecommunications Authority of Singapore the Public Utilities Board the Port of Singapore Authority the Civil Aviation Authority of Singapore and the Singapore Broadcasting Corp. The latter is least able to be privatised because of the sensitivity of its activities it said. The others can be privatised only after various issues have been thoroughly debated and adequate safeguards formulated for post-privatisation control and regulation it added. The committee recommends that as many government-linked companies as possible should be privatised the report said. But it added that there should be a policy of robust privatisation where initiative is decentralised and order is maintained through adequate monitoring control and direction. The committees findings will be subject to final approval from the Ministry of Finance. REUTER | MAJOR DIVESTMENT PLANS OUTLINED FOR SINGAPORE |
Canadas February unemployment rate seasonally adjusted fell to 9.6 pct from 9.7 pct in January Statistics Canada said. The rate was 9.8 pct in February last year. Seasonally adjusted employment in February was 11777000 compared with 11747000 in January while unemployment slipped to 1252000 from 1255000. Reuter | CANADA FEBRUARY UNEMPLOYMENT 9.6 PCT |
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