Stocks drop on growth worries
Shares fell in the US and Asia as worries continued over world growth and commodity producers saw their shares sold off. The closely-watched S&P 500 Index fell 2.13 per cent in New York on Friday and Asian markets followed the trend on Monday, with the MSCI Asia Pacific excluding Japan Index retreating 2.6 per cent (the Tokyo market was closed for a holiday). Investors in the US were shocked by worse-than-expected jobs data, which revealed an unemployment rate of 7.2 per cent. In London the FTSE 100 Index opened slightly higher.
Brown to unveil jobless boost
The prime minister is to unveil a £500m, two-year plan on Monday, aimed at stopping the recession “creating an army of long-term unemployed”, reported the Financial Times. The initiative would see employers paid up to £2,500 to recruit and train staff, as part of an “intensive support” package to help those unemployed for more than six months. The plans would be funded by £400m of treasury reserves linked to the government’s stimulus package and provide 75,000 training places. The conservatives called the proposal “more spin than substance”.
Lloyd’s warns over exposure
The director of finance, risk management and operations at Lloyd’s of London has warned insurance syndicates that they “may have to raise more capital”, reported the Daily Telegraph. The 75 groups have been contacted with a warning that the strength of the dollar against sterling “could have an impact on their business plans”. The rate of exchange at the organisation is set at $1.99 to the pound, although the current rate is closer to $1.52, leading Luke Savage to warn of “currency mismatch against exposures”.
BBC chief backs channel merger
The BBC director-general has called on the government to help Channel 4 and Five “survive the economic slowdown” through a proposed merger, reported the Financial Times. Mark Thompson indicated that he favoured the solution as a debate on the future of public service broadcasting “reaches its climax”. His thoughts will be “closely studied” by politicians and regulators and are thought to echo those of Lord Carter, the new communications minister. It is thought that there is “no enthusiasm” for a merger at C4 and that ITV would also oppose it.
HBOS staff reassured on jobs
HBOS staff have been told they face “little immediate change” when the bank is taken over by Lloyds TSB next week, reported the Guardian. The assurance came as the two banks prepared for merger, with the taxpayer taking a nearly 44 per cent stake in the combined entity. There was “widespread speculation” of heavy job losses, but no details have yet been given. 140,000 staff will be employed by the new group, which will have 3,000 branches throughout Britain. The asset management and insurance arms – Clerical Medical and Scottish Widows – will not be integrated straight away.
Hedge fund rents collapse
Rents for offices in Mayfair and St James’s “plunged almost 30 per cent” last year, as they were “hammered” by the problems of their hedge fund tenants, reported the Independent. Commercial property agent NB Real Estate has released research showing that rents in west London offices “tumbled” from £120 per square foot at the end of 2007 to £85 at the end of 2008. The Hedge Fund “Implode-O-Meter”, which tracks problems and failures at hedge funds, shows that 108 funds at 66 companies have collapsed since the end of 2006.
...in brief..................
Citigroup set to sell brokerage and Friends Provident slashes rates
Citigroup is set to book a gain of up to $10bn after selling its brokerage arm to Morgan Stanley, reported Bloomberg.com. The gain of $5bn to $6bn after-tax would help cushion the bank’s capital-base after it was forced to accept $45bn of funds from the US government last year…………
Shares in Satyam Computer Services traded “sharply higher” on Monday after it emerged that the Indian government has appointed one of the country’s top bankers to the board, reported the Financial Times. The shares rose 54 per cent on the move to install Deepak Parekh, chairman of HDFC Bank…………
New Star Asset Management, the fund manager that recently controlled a tenth of the retail investment market, is to be sold for a “knock-down price” by the end of the month, said the Independent. The company nearly collapsed last year, and is now being courted by a number of potential bidders…………
H&T Group, Britain’s biggest pawnbroker, has “cheered” the City by forecasting better profits than expected, said the Guardian. The company’s 105 UK outlets enjoyed a “surge in business” in the latter part of last year, as households began to suffer as a result of the economic downturn…………
Reforms to controversial “pre-pack” administrations are expected to be considered by MPs, reported the Daily Telegraph. An investigation is being launched into the current system, whereby failed businesses are lined up for new owners before administration, thus escaping debts and creditors…………
Friends Provident, the UK’s sixth-largest insurer, is “slashing rates” on 2009 bonuses on many of its 1.2m with-profits policies, said the Times. Other insurers are expected to follow suit after a “disastrous” year for investment. Friends is cutting the final bonus on 25-year endowments from 17.5 to 0.5 per cent…………
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