India's Tata Motors profits slump on weak China sales

India's largest car maker Tata Motors reported a near 50 per cent dive in quarterly profits on Friday due to a slump in sales of its luxury British unit in China. 

PHOTO: BLOOMBERG

AUG 7, 20159:21 PM

[MUMBAI] India's largest car maker Tata Motors reported a near 50 per cent dive in quarterly profits on Friday due to a slump in sales of its luxury British unit in China.

Consolidated net profit for the three months to June fell to 27.69 billion rupees (US$432.66 million) from 53.98 billion rupees a year ago, a drop of 48.70 per cent, the Mumbai-based company said.

That was well below the expectations of analysts surveyed by Bloomberg who had predicted that the firm, part of Tata's sprawling tea-to-steel conglomerate, would report profits of 31.4 billion rupees.

It marked the company's second consecutive large fall in quarterly profits following a 56 per cent slump announced in May.

See who is talking about TATA MOTORS

Last 30 days:

• 2106
• 75
• 644

HOT COMPANIES

United Utils Grp +204% messages

• RSA Insurance +93%
• Glencore +91%
• Rio Tinto +74%
• Travis Perkins +74%
• Mondi +59%
• Inmarsat +56%
• Randgold +56%
• Old Mutual +55%
• Intertek +29%

• RSA Insurance +93%
• Glencore +91%
• Rio Tinto +74%
• Travis Perkins +74%
• Mondi +59%
• Inmarsat +56%
• Randgold +56%
• Old Mutual +55%
• Intertek +29%

The latest fall was "primarily driven by weak China sales (of Jaguar Land Rover JLR)," Tata Motors president and chief financial officer C Ramakrishnan told reporters.

JLR shifted only half the number of luxury cars that it sold in the same period last year, Ramakrishnan said.

A sales increase in India helped stem the slide in profits, the company said in a statement.

Consolidated revenue slid 5.57 per cent to 610.20 billion rupees (US$9.53 billion) from 646.83 billion rupees, while revenue from JLR fell to 5 billion pounds (US$7.76 billion) from 5.35 billion pounds.

In India, the firm earned 8.05 billion rupees in the quarter to June, lower than last year due to a rise in costs to 1.17 billion rupees (US$174.59 million) from 945 million rupees a year ago.

Tata Motors is hugely reliant on revenues from JLR, which it bought for US$2.3 billion from Ford in 2008 at the height of the global financial crisis.

AFP

    

China said to consider merging China Shipping Group, COSCO Group  

China is considering a merger of China Shipping Group and Cosco Group, its two major shipping companies, amid a broader push to streamline state-owned enterprises, according to people familiar with the matter.

PHOTO: COSCO

AUG 7, 20157:39 PM

[SHANGHAI] China is considering a merger of China Shipping Group and Cosco Group, its two major shipping companies, amid a broader push to streamline state-owned enterprises, according to people familiar with the matter.

The government may combine the two companies or merge some of their operations, according to the people, who asked not to be identified because the deliberations aren't public.

China Shipping Group is the parent company of China Shipping Development, while COSCO counts Cosco Shipping among its listed entities. Both listed companies said in stock exchange filings their parent groups are "planning major issues" and suspended trading from Monday.

China's State-owned Assets Supervision & Administration Commission didn't immediately respond to a faxed request for comment. A China Shipping Group spokesman declined to comment when reached by phone today, while two calls to a Cosco Group spokesman rang unanswered.

Earlier on Friday, Ship.sh, a Shanghai-based news website about the shipping industry, reported Cosco and China Shipping planned to set up a reform committee to discuss restructuring the two companies and would work out a plan in the next three months.

BLOOMBERG

      

Apple Inc supplier Hon Hai confirms death at China plant after watchdog reports suicide

Taiwan's Hon Hai Precision Industry Co Ltd, a key supplier to Apple Inc, confirmed the death of an employee at its Zhengzhou plant in China which a labour group said was suicide. 

PHOTO: BLOOMBERG NEWS

AUG 7, 201510:39 AM

[TAIPEI] Taiwan's Hon Hai Precision Industry Co Ltd, a key supplier to Apple Inc, confirmed the death of an employee at its Zhengzhou plant in China which a labour group said was suicide.

Hon Hai, the world's largest contract manufacturer of electronic products, is one of the largest private employers in China and has worked to improve labour conditions following a series of suicides in 2010-2011, mostly at its Shenzhen manufacturing operation.

The statement from Hon Hai, which goes by the trade name of Foxconn, came after watchdog China Labor Watch reported that a Foxconn worker committed suicide by jumping off a building at the Zhengzhou plant which makes Apple Inc's iPhone products.

In a statement, Hon Hai said that a 28-year-old male employee was found dead outside a building at its campus in Zhengzhou in the early morning of Aug 4.

REUTERS

China funds buck stock rout to lead global performance rankings

AUG 7, 201511:53 PM

[LONDON] Mutual funds that invest in Chinese stocks currently dominate fund tracker Lipper's list of the world's strongest performers even though shares on the country's stock markets have plunged almost 30 per cent since June.

Their chartbuster performance has defied turbulent conditions in China, which led to a large number of companies suspending trading in their stocks and a crackdown by the Chinese government on short sellers who can profit from falling stock prices.

The mutual funds' resilience may make them more attractive to retail investors burnt by the sharp drop in Chinese shares. Mutual funds aim to reduce risks for investors by spreading bets across stocks and sectors.

Trading on China's stock markets is dominated by so-called mom and pop investors who conduct an estimated 80 per cent of the trades. They invest directly rather than through a fund which exposes them to wild swings in the market.

Eighty-two of the world's top-100 best performing equity mutual funds in the first seven months of the year focus on picking stocks in China, data from Thomson Reuters fund industry tracker Lipper showed.

Even though the Chinese markets have fallen, dozens of individual stocks are among some of the world's strongest performers because of a rally earlier in the year.

"If you look at the Shanghai and Shenzhen stock exchanges, there has been a huge variation in the performance of stocks this year," Laith Khalaf, senior analyst at London-based investment firm Hargreaves Lansdown, said.

The two exchanges, the Shanghai Stock Exchange and the Shenzhen Stock Exchange, with a combined market value of more than US$8 trillion, are home to more than 400 stocks that have at least doubled their value this year, data compiled by Thomson Reuters showed.

"There has been scope for active managers to differentiate themselves from the index. The scale of the outperformance is nonetheless surprisingly large," Mr Khalaf said.

Undeterred by the volatile market, some foreign investors are already swimming against the tide and buying more shares.

Overall, more than 800 mutual funds focused on China managing nearly $200 billion in assets, returned 20.5 per cent on average during the period, the data showed, more than twice the gain in the CSI300 index of blue chip stocks, whose constituents include large cap companies from the Shanghai and Shenzhen stock markets.

The China winners are led by US$720 million Fullgoal Low Carbon Environment Fund, which gained 129 per cent up to the end of July through its bets on companies such as Shanghai Bairun Flavor and Fragrance Co Ltd and Shenzhen Tempus Global Business Service Holding Ltd.

Other strong performers include AXA SPDB Strategy New Industry Mix, which gained 91.4 per cent and China Universal Private Owned Enterprise Fund that returned 82.5 per cent.

"Even after the stock market correction, valuations for many small and mid cap stocks still remain at a relatively high level," Egdar Walk, chief economist at Metzler Asset Management said in an email.

"The stock market will consolidate and the preferred style will switch from small cap, high growth theme stocks to mid-large cap companies with reasonable valuations," Mr Walk said.

Metzler's China fund gained more than 50 per cent in the first seven months of the year, Lipper data showed.

REUTERS

    

Basic materials M&A hits seven-year high buoyed by chemicals deals

AUG 7, 201510:00 PM

[LONDON] Worldwide dealmaking in the basic materials sector rose in July to a seven-year high, lifted by US fertiliser maker CF Industries' US$8 billion bid for some of Dutch firm OCI NV's North American and European, Thomson Reuters data shows.

So far this year, mergers and acquisitions (M&A) worth US$615.4 billion have been announced in Europe, the data shows, with the value of deals in basic materials climbing 90 per cent to US$96.5 billion from the same period last year.

Globally, the materials sector recorded US$217.1 billion worth of deals, a 45 per cent increase compared with a year ago.

Chemicals, which together with metals and mining dominated basic materials M&A this year, totalled US$103.8 billion worth of global deals, an all-time record so far.

The largest deal of the week was announced in the healthcare sector.

Dublin-based drugmaker Shire offered US$30 billion to buy Baxalta, a company spun-off by Baxter International. But the bid, which aimed to forge the leading global specialist in rare diseases, was rebuffed on Tuesday.

Worldwide M&A is up 41 per cent year-to-date versus the same period last year, with deals worth US$2,716 trillion having been struck so far.

REUTERS

    

ANZ Bank shares drop most since 2008 after capital raising plan   

Australia & New Zealand Banking Group Ltd. shares slid the most in almost seven years on a A$2.5 billion (S$2.5 billion) share sale to raise capital and profit that missed analysts' estimates. 

PHOTO: BLOOMBERG

AUG 7, 20159:03 AM

[SYDNEY] Australia & New Zealand Banking Group Ltd. shares slid the most in almost seven years on a A$2.5 billion (S$2.5 billion) share sale to raise capital and profit that missed analysts' estimates.

The stock fell as much as 8.5 per cent to A$29.80 in Sydney, the sharpest drop since November 2008. The shares were 6.2 per cent lower at 10:32 am local time, compared with a 1.4 per cent decline for the benchmark S&P/ASX 200 Index.

The Melbourne-based lender said Friday it sold 80.8 million shares at A$30.95 each, a 5 per cent discount to the closing price on Wednesday, to meet new capital rules. The bank reported Wednesday cash profit that missed expectations as bad-debt charges climbed, prompting some analysts cut their earnings forecasts.

The stock was halted from trading Thursday for the share sale to institutional investors. ANZ is also raising another A$500 million by selling stock to existing shareholders.

BLOOMBERG

      

China market turmoil could delay Hong Kong futures plan: sources  

Plans by the Hong Kong stock exchange to begin trading China's most popular index future could be delayed due to growing opposition from Chinese officials unnerved by a recent sell-off in mainland share markets, sources said. 

PHOTO: REUTERS

AUG 7, 20158:21 PM

[HONG KONG] Plans by the Hong Kong stock exchange to begin trading China's most popular index future could be delayed due to growing opposition from Chinese officials unnerved by a recent sell-off in mainland share markets, sources said.

The Hong Kong Exchanges & Clearing (HKEx) has been in talks with Chinese authorities and brokers over launching the CSI300 futures contract in Hong Kong, a move that would further open up the mainland equity market to foreign investors.

HKEx had hoped to be able to announce the contract launch this summer, but ran into difficulties because of growing opposition from within the China Financial Futures Exchange (CFFEX), whose CSI300 contract is only available to onshore traders, sources familiar with the matter said.

Some CFFEX executives worry that allowing the CSI300 contract to trade in Hong Kong would pose a commercial threat to CFFEX, and their concerns have only grown since the sell-off in Chinese markets, which have fallen by about a third since mid-June.

The CSI300 is one of the most traded contracts globally.

"They don't have a done deal. There are voices within the CFFEX that don't think it's a great idea because ordinarily a contract trading on two exchanges in the same time zone wouldn't work, usually one contract dies," said a source briefed on the talks.

The China Securities Regulatory Commission (CSRC) has partly blamed the sell-off on "malicious" short-selling and has been scrutinising foreign trading accounts, checking that their use of index futures has been for hedging rather than speculating.

The authorities have also made it more difficult to borrow for trading futures, limited trading in some contracts and has sent the police to investigate individuals and institutions accused of illegal trading behaviour.

"Now with this (crackdown) it's providing all the more firepower for those that don't want it to happen, as it will also be harder for the CSRC to control shorting if the contract trades in Hong Kong," the source added.

HKEx wants to announce the launch of CSI300 futures along with the expansion of a Hong Kong gateway for foreigners investing directly in China-listed shares. The two initiatives would complement each other because foreigners could use the HKEx futures contract to hedge their Chinese stock holdings.

The Hong Kong-Shenzhen Connect scheme, an extension of the existing connection between the Hong Kong and Shanghai exchanges, is scheduled to be launched by year-end.

China's regulators had pushed the plan for CSI300 futures to be traded in Hong Kong, despite opposition from within CFFEX, as part of the Connect scheme to gradually open up the mainland's equity markets, a second source said. It was unclear if the regulators now shared some of the CFFEX concerns.

HKEx declined to comment on the detail of discussions. "We have said from the beginning that the Connect concept can be extended to other asset classes and we have been expressing an interest in building an equity futures link with the mainland," the exchange said in a statement.

"However, no concrete timetable has been set." The CSRC, which oversees the Connect scheme, did not answer calls requesting comment. CFFEX did not respond to requests for comment. The Hong Kong Securities and Futures Commission declined to comment.

REUTERS

      

European stock funds worldwide attract US$3.3b in week: BofA

AUG 7, 201511:47 PM

[NEW YORK] Investors worldwide poured US$3.3 billion into funds that specialize in European shares in the week ended Aug 5 while pulling US$4.3 billion out of funds that specialize in US shares, data from a Bank of America Merrill Lynch Global Research report showed on Friday.

The inflows into European stock funds marked their 12th straight week of inflows, while the outflows from US-focused stock funds marked their third straight week of withdrawals, according to the report, which also cited data from fund-tracker EPFR Global.

Stock funds overall attracted US$700 million in new cash to mark their fifth straight week of inflows. Bond funds attracted US$2 billion in new cash after posting $400 million in outflows the prior week.

REUTERS

Stock exchanges must improve trading model: Norway wealth fund

AUG 7, 20158:50 PM

[OSLO] Global stock exchanges are failing to meet the needs of large institutional traders and are increasingly losing out to private equity when companies seek to raise cash, the world's largest sovereign wealth fund said in a report published on Friday.

The Norwegian Government Pension Fund Global, with assets of US$875 billion, owns about 1.3 per cent of listed shares globally and is also a large investor in bonds and real estate.

In a report on the role of stock exchanges, Norges Bank Investment Management (NBIM), which manages the fund, said while regulated markets are vital to investors, the focus should not only be on the speed of trade but also on how large trades are executed.

"If they are to re-assert their central role, they must adapt and innovate to enhance their attractiveness to institutional investors who have supplanted the many small retail investors that exchanges were originally designed to serve," NBIM wrote.

The fund, which is largely restricted from buying unlisted shares, also expressed concern about a drop-off in the number of initial public offerings in the US and Europe in recent years.

"Exchanges need to ensure that the liquidity risk premium that is available from listings is maintained, versus the increasing amounts of capital available through venture capital and private equity," NBIM said.

"We do not believe economies benefit when going public simply means cashing in, rather than raising capital. We encourage exchanges to develop new solutions in this area, be they in the form of new listing classes, or potentially even a return to local exchanges," it added.

NBIM said some progress had been made on the trading of large blocks of shares, including by the New York Stock Exchange and the London Stock Exchange, such as the introduction of mid-day "batch" auctions, but that more work was needed.

The fund invests about 60 per cent of its assets on the stock market, 35 per cent in bonds and five per cent in real estate, all of it in foreign markets, to pay for future pensions and other costs of Norway's extensive welfare state.

REUTERS

    

China securities regulator to crack down on illegal fundraising via Internet

AUG 7, 20155:22 PM

[SHANGHAI] China's securities regulator said on Friday that it would launch a nationwide crackdown on equity financing via the Internet, and will step up making rules on crowdfunding.

Crowdfunding, which allows start-up firms to raise small sums of capital publicly via the Internet, involves public interest and China's financial stability, so must be regulated by law and is currently banned in China, the China Securities Regulatory Commission (CSRC) said on its official microblog.

Institutions in China, though, are allowed to raise capital via the Internet from no more than 200 select investors, and CSRC, in its special investigation, will make sure rules are not violated, according to the regulator.

REUTERS