MAIN BUSINESS HEADLINES
House price fall fastest in 18 years
The Nationwide Building Society reported yesterday that house prices were falling at their fastest rate since the end of 1990. In its report it said that the average house price had fallen 10.5 per cent over the last twelve months to £164,654, and 1.9 per cent in August alone. After beginning to drop last October it means that the housing market has now been falling steadily for almost a year. The society said that housing activity was “very subdued” and that housebuilders have been reporting “significant reductions in site visits”.
Credit Agricole profit slumps
France’s third largest bank by market capitalisation said second quarter profit dropped 94 per cent, a steeper drop than expected. The bank had already announced a 5.5 billion euro writedown related to subprime mortgages and was forced to write down a further 693 million euros in the quarter on debt backed by US bond insurers. Calyon, its investment banking arm, posted a loss for the third quarter in a row in the wake of restructuring of the division.
Aer Lingus crashes into red
Aer Lingus warned today of the need for cost-cutting and possible job losses, reported The Guardian. The Irish airline fell into the red in the first half of the year, posting an operating loss of £17.93 million, down from a small profit a year earlier. It warned that it could make a bigger loss in 2009 unless it cut costs, in the face of weakening global demand and higher oil prices. With its cost per passenger double that of rival Ryanair, there is room “to take significant costs out of the business”.
Pakistan stock exchange takes emergency action
The Pakistan authorities today adopted emergency measures to try to halt the slide in its stock market. It imposed a trading limit to prevent shares falling below yesterday’s closing level, which will remain in place for about 7 to 10 days. The benchmark index has fallen 42 per cent over the past 19 weeks, on concern over the political crisis which led to the ousting of President Musharraf last week. Last month investors stoned the stock exchange after a previous set of limits failed to stop the slide.
Renewed fears over UK recession
The UK is bound for a worse recession than currently expected, new research suggests. Analysts at Capital Economics have said that the economy will shrink by 0.25 per cent next year as a result of the weak housing market and a sharp increase in unemployment. The forecast is the most bearish of any City organization and suggests that the UK will experience a slump similar in scale to that of the early 1990s. Capital’s chief European economist expects four successive quarters of contraction, starting with the third quarter of 2008.
Personnel shakeup at Fannie Mae
The US government-financed mortgage company announced a management restructuring plan, as it struggles in the face of the current credit crisis, reported the Financial Times. Its chief financial officer has left the company, as has its chief risk officer, while its chief business officer has retired. Fannie Mae has “come under growing pressure” in recent months after losses related to subprime mortgages, and the US treasury has been given emergency powers to grant credit lines to the company and rival Freddie Mac.
...in brief..................
Oil gains and Siemens goes to Gulf
Oil prices rose on trader concern that tropical storm Gustav might affect oil and gas production in the Gulf of Mexico by the weekend. The storm has been downgraded from a hurricane but is predicted to regain that status. Workers are already being evacuated from the area…………
Toyota, the world’s second biggest automaker, cut its 2009 sales forecast by 6.7 per cent, citing lower demand for trucks in the US as petrol prices near $4 a gallon. The company now expects to sell 9.7 million vehicles globally next year, versus its earlier target of 10.4 million…………
Diageo, the world’s biggest drinks group, announced an 11 per cent rise in annual profits, matching estimates. It reduced its forecasts however, due to the slowing economy and rising input costs. Europe is the area of greatest concern while the US is seen as “robust”…………
Lloyd’s of London underwriter Brit Insurance is to decide on the re-location of its headquarters in the coming months. It is currently considering a move away from the UK for tax reasons, the latest in a line of companies unhappy with the government’s taxation changes…………
Moss Bros has reshuffled its board and the founding Gee family has all but sold out of the retailer. Rowland Gee has retired as a non-executive director and with his brothers now holds a combined stake of just 0.5 per cent. The clothing company was the subject of an aborted bid by Icelandic group Baugur…………
Siemens, Europe’s biggest engineering group, has been holding talks with sovereign wealth funds from the Gulf and other regions, to try to expand its investor base, reported the Financial Times. It would be a contentious move in Germany, but pressure has increased since General Electric announced such a deal…………
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