Business News Up Date.
Markets move ahead again
Stocks in the US gained again yesterday, with the benchmark Standard & Poor’s Index adding another 3.2 per cent as US housing starts confounded expectations with a rise. In Asia there was a fourth day of gains in the region, which saw the MSCI Asia Pacific Index rise 0.8 per cent. In Hong Kong lender HSBC gained five per cent after it said it was well-capitalised. All markets in the region advanced except Australia’s. In London the FTSE 100 Index was over one per cent higher in early trade. Yesterday it lost 0.2 per cent.
UK to be only nation still in recession in 2010 says IMF
Britain is set to experience its “worst year since the Great Depression” according to a new briefing by the IMF, said the Independent. The fund “shocked” analysts with its predictions, which revealed that the UK economy will shrink 3.8 per cent this year and another 0.2 per cent in 2010. That would make it the only large economy expected still to be in decline next year. The downgrade will translate into “grim economic realities”, including unemployment -expected to break the two million barrier today - hitting three million next year.
RBS sees improvement in business
RBS has been the beneficiary of increased activity in its corporate banking arm since the start of the year, reported the Financial Times. The news is a “rare glimpse of optimism” for the bank, which has received taxpayer funds, and comes on the heels of positive recent comments from Barclays and Citigroup. Its chairman, Sir Philip Hampton, reported “buoyant” activity in wholesale banking, but there were concerns that any improvement in revenues could be “undermined” by more deterioration in its balance sheet.
Glimmer of hope for US housing
Economists have “hailed” the news that new home construction in the US jumped 22.2 per cent in February, reported the Daily Telegraph. The figures are thought to be the first convincing glimmer of hope that the US housing market may have “finally turned the corner”. The news was viewed as positive, since economists have linked the housing decline to the problems in the stock market, and believe that when housing starts to recover it will mark the “beginning of the end” of the financial crisis. With toxic assets linked to US housing any recovery cold “put a floor” on global asset prices.
Repossessions up 68% in 2008
A total of 46,750 homes were repossessed in 2008 according to Financial Services Authority figures, reported the Guardian. The level marks a 68 per cent increase over 2007. The number of mortgage holders in arrears also increased “sharply” in the second half of 2007 and by the end of 2008 there were 377,000 mortgage accounts in arrears, an increase of 31 per cent over the year before. The figures also provide evidence of the strict criteria now applied to sub-prime mortgages, with the group making up only one per cent of new lending.
US to recover AIG bonuses
US Treasury secretary Timothy Geithner told Congress that he will “recoup” the bonuses paid to executives at American International Group after widespread outrage at the payouts, reported Bloomberg.com. “Under fire” Geithner said the money will be recovered from the company by deducting it from the next £30bn in aid being provided to the failed insurer. AIG paid $165m in bonuses after receiving taxpayer bail-outs totalling $173bn and also budgeted $57m in “retention” pay for employees who will now be let go.
...in brief..................
Shell reveals pension hole and Debenhams expects great results
Royal Dutch Shell, Europe’s largest oil company, will have to pay “up to $6bn” to fill the hole in its pension fund, reported the Financial Times. Shell revealed in its annual US filing that it has an $8.3bn pension fund deficit, equal to about five per cent of its market capitalisation…………
The head of a private Chinese airline has “disappeared” after the collapse of takeover talks with the country’s flag-carrier Air China, reported the Financial Times. The case is raising fears of “renationalisation” in the country as state groups flex their financial muscle over private rivals…………
The Royal Bank of Scotland used an “elaborate ruse” to pay Sir Fred Goodwin’s pension, reported the Independent. It allowed him to take an “upfront” lump sum of £2.7m from his £16.6m pot and also agreed to pay the tax on it. Sir Fred has now agreed to repay the money on condition the tax is not sought…………
The world’s biggest mobile phone maker, Nokia, is set to “axe” another 1,700 jobs in the next couple of months, said the Daily Telegraph. The company is having to cope with a “collapse” in demand for new mobile phones and aims to cut annual costs at its handset division by €700m by 2010…………
The head of Britain’s biggest nightclub operator, Luminar, has predicted that half the country’s estimated 2,700 nightclubs could “fail” in the next 18 months, reported the Times. Stephen Thomas said there would be a lot of closures but many would re-open under “pre-pack” administration…………
Debenhams expects a “great set of results” next month, despite announcing a 3.6 per cent drop in half-year sales, reported the Guardian. Chief executive Michael Sharp said the debt-laden retailer is taking market share from its rivals, “winning customers” from Marks & Spencer and Next…………
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