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OCTOBER 20, 2009

Crude oil retreats after reaching one-year high above $79
LONDON (Bloomberg) — Crude oil fell after rising equity markets pushed prices to a one-year high. Oil lost ground after topping $79 a barrel ...


Caspian, Black Sea oil to run in Turkey pipeline: Eni
MILAN (Reuters) — Oil from the Caspian and the Black Sea will supply the Samsum-Ceyhan pipeline linking Turkey’s Black Sea coast and its ...


Japan economy improves in all nine regions, BOJ says
TOKYO (Bloomberg) — The Bank of Japan said the economy is improving in all of the country’s nine areas as the nation emerges from its worst ...


h t t p : / / w w w. t e h r a n t i m e s . c o m / e c o n o m y

yuan. The China Securities Journal reported property sales in Shenzhen reached 475 units on Oct. 11, a record for this year. Asustek, the maker of the Eee PC low-cost notebook computer, climbed 4.9 percent to NT$58 after the Commercial Times reported it will post thirdquarter net income of more than NT$4 billion ($124 million), citing analysts’ estimates. The company reported a loss in the previous quarter. Japan Airlines soared 12 percent to 113 yen and posted the biggest advance on the MSCI World Index. The carrier may receive public funds to bolster capital, the Yomiuri newspaper reported. Reform concern Gains in Japan were limited after Japan’s Financial Services Minister Shizuka Kamei said he told Japan Post President Yoshifumi Nishikawa that the government had decided to scrap plans for the company’s initial public offering. The privatization of Japan Post was a cornerstone of former Prime Minister Junichiro Koizumi’s reform program. “International investors aren’t going to like indications that the reform movement in Japan if faltering,” said Naoteru Teraoka, who helps oversee about $16 billion at Chuo Mitsui Asset Management Co. Casio tumbled 9 percent to 692 yen, the steepest drop since March 19. The maker of G-Shock watches cited declining sales of mobile phones and digital cameras for its full-year loss forecast. The MSCI Asia Pacific Index rose to the highest level in more than a year last week as reports showed China’s export decline slowed and Australian consumer confidence rose. The seven-month rally has driven the average price of stocks in the gauge to 1.59 times book value, compared with a one-year average of 1.31 times. (Source:Bloomberg)

Confectionary, soft drink, textile expos
Tehran Times Economic Desk TEHRAN — The 8th Biscuit, Confectionary & Chocolate Machineries & Raw Materials International Exhibition opened in Tehran on Monday. Islamic Republic of Iran Broadcasting (IRIB) reported that in the fair 200 domestic and 65 foreign firms from 17 countries including Turkey, Holland, Germany, Italy, Singapore, Bangladesh, the UK, Spain, Malaysia, Japan, Sweden, France, Russia, Switzerland, China, South Korea and Denmark are taking part. Also the 15th International Exhibition for Textile Machineries, Embroidery Machines, Raw Materials, Home Textiles and Textile Products, as well as the 1st Specialized Exhibition of Soft Drinks, Machineries and Related Industries opened on Monday. The confectionary show is in salon 44, the textile fair is in salon 7 and the soft drink expo is in salon 38 of Tehran International Permanent Fairground. The shows run from 9 a.m. to 4 p.m. and will be going on for four days.

Asian stocks rise on crude-oil prices, China growth speculation
Asian stocks advanced, led by energy and technology companies, as oil prices rose to a one-year high amid speculation data this week will show China’s economic growth gathered pace in the third quarter. Cnooc Ltd., China’s largest offshore oil producer, added 4.2 percent in Hong Kong. Gemdale Corp., China’s fourthlargest developer by value, jumped 8.3 percent after a media report said apartment sales in the city of Shenzhen climbed. Taiwan’s Asustek Computer Inc. rose 4.9 percent after the Commercial Times said the company will report a third-quarter profit, compared with a loss the previous three months. The MSCI Asia Pacific Index added 0.5 percent to 120.25 as of 7:23 p.m. in Tokyo. The gauge has surged 70 percent from a five-year low on March 9 amid signs the global economy is rebounding from the worst slowdown since World War II. “The pace of the economic recovery will continue,” said Gabriel Gondard, Shanghai-based deputy chief investment officer at Fortune SGAM Fund Management Co., which oversees about $7.2 billion. “Investors will look to the upcoming data for clues.” China’s Shanghai Composite Index rose 2.1 percent, while Hong Kong’s Hang Seng Index added 1.2 percent. The Topix Index gained 0.5 percent in Tokyo, led by Japan Airlines Corp. on speculation the company will receive public funds. Among stocks that fell, Casio Computer Co., which makes cameras and

Zar Makaron named Iranian top exporter
TEHRAN — Zar Makaron Industrial Group was introduced as the sole Iranian exemplary exporter of macaroni products for the second consecutive year. On the sidelines of the National Export Day ceremony in Tehran on Monday, Morteza Soltani the chairman of the board of directors of the company said Zar Makaron fully observes international standards, customers’ rights, and quality control of products. It exports products to some 80 countries. During the 70 years of macaroni production industry in Iran, no Iranian company has managed to attain such a great achievement, he noted.

mobile phones, slumped 9 percent after forecasting a loss. Fast Retailing Co., Japan’s largest casual-clothing chain, sank 3.7 percent on a downgrade at JPMorgan Chase & Co. Korea Exchange Bank declined 5 percent amid valuation concerns. U.S. economy Australia’s S&P/ASX 200 Index dropped 0.9 percent as a research firm said the nation’s economic recovery will be slower than expected. Australia & New Zealand Banking Group Ltd. lost 3.4 percent. Futures on the Standard & Poor’s 500 Index rose 0.6 percent. The gauge sank 0.8 percent on Oct. 16 as Gen-

eral Electric Co.’s third-quarter revenue trailed analyst estimates. Bank of America Corp. led financial shares lower after posting a $1 billion loss. “The General Electric result disappointed the market,” said Tim Schroeders, who helps manage $1.2 billion at Pengana Capital Ltd. in Melbourne. “Investors watch it closely as a bellwether for the U.S. economy.” Monday is the 22nd anniversary of “Black Monday,” when an increase in U.S. interest rates and concerns about slowing economic growth helped spark a sell-off that dragged the S&P 500 20 percent lower and the Dow Jones Industrial Average down by 23 percent in a single day.

China growth Cnooc advanced 4.2 percent to HK$12.42 after crude-oil futures in New York increased as much as 0.7 percent to $79.05 a barrel in after-hours trading, the highest intraday level since Oct. 15, 2008. PetroChina Co., China’s largest producer, gained 3 percent to HK$10.28. China is the world’s second-largest consumer of oil. Data due Oct. 22 will probably show the country’s economy expanded 9 percent in the third quarter, the fastest pace since September 2008, according to economists’ estimates. Gemdale surged 8.3 percent to 16.19 yuan, while market leader China Vanke Co. jumped 6.8 percent to 12.34

Japan Air said to resume talks with Delta, American
Japan Airlines Corp., seeking its fourth state bailout since 2001, resumed talks with Delta Air Lines Inc. and AMR Corp.’s American Airlines over a possible capital alliance, three people familiar with the matter said. Executives from the two U.S. carriers visited Tokyo in the last two weeks and may return this month, said the people, who declined to be identified because the talks aren’t public. The carrier will also release a revised restructuring plan, drawn up with a state-appointed panel, by month’s end, said a person familiar with the situation. JAL, Asia’s biggest airline by sales, surged the most in a year in Tokyo trading on optimism it would secure investment and government support, enabling it to avoid collapse. The airline tumbled 30 percent in about three weeks after Japan’s new government rejected the company’s own turnaround proposal. “There’s no time left for JAL,” said Mitsushige Akino, who manages the equivalent of about $660 million at Tokyo-based Ichiyoshi Investment Management Co. “If the company waits another month, its shares may drop to 50 yen and then it will lose negotiating power.” The Tokyo-based carrier jumped 12 percent at the close of trading to 113 yen. It tumbled 26 percent last week, the biggest one-week drop on record. American, Delta JAL halted talks with American and Delta in September as the government task force began work, the three people said. A capital alliance with JAL may boost the U.S. carriers’ access to China, Asia’s biggest air traffic market. Satoru Tanaka, a JAL spokesman, declined to comment on whether talks had resumed. A call to Delta’s media relations office outside of U.S. office hours went unanswered. Charley Wilson, a spokesman for Fort Worth, Texas-based American, didn’t immediately reply to an e-mail seeking comment. The five-year turnaround plan aims to raise operating profit to 50 billion yen ($550 million), said the person, who declined to be identified because the information isn’t public. President Haruka Nishimatsu has been asked to step down to help the carrier win financial aid from lenders, the person familiar with the turnaround plan said. The state-appointed restructuring panel is seeking a 200 billion yen bridge loan from banks for JAL, the Mainichi newspaper said today, without saying where it got the information. Pensions payout The carrier may also pay “tens of billions” of yen to settle pension obligations under the proposal, previously due to be published next month, said the person. The panel is seeking debt-for-equity swaps, forgiveness of loans and new financing from banks, the person said. The funding isn’t dependent on the carrier finding a strategic investor, the person added. American Air, a member of the same alliance as JAL, was considering leading other Oneworld carriers in an investment in JAL, people familiar with the plan said last month. Air France- KLM, a Skyteam carrier alongside Delta, has also held talks on possibly investing in JAL. The Japanese carrier, which has predicted an operating loss of 59 billion yen this fiscal year, was downgraded two levels by Standard & Poor’s on Oct. 16 on concern it may issue new shares to pare debts. Moody’s Investors Service also cut the carrier’s main flying unit the same day and said the state-appointed panel may propose “drastic measures” to restore JAL to profit as a global recession damps demand for air travel. The government snubbed the airline’s own turnaround plan as it didn’t include enough cost-cutting or fundraising, Transport Minister Seiji Maehara said last month. JAL had total liabilities of 1.5 trillion yen as of June 30, according to an Aug. 7 statement. Nishimatsu has said the carrier will cut 6,800 jobs and have the biggest-ever reduction in its network. Nishimatsu, 61, has already slashed almost 5,500 jobs, or 10 percent of the workforce, in the three years to March 2009. (Source: Bloomberg)

Li & Fung to pay up to $402m for U.S. clothing business
Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., agreed to pay as much as $401.8 million for a U.S. clothing business with $700 million of annual sales. The Hong Kong-listed company will pay $101.8 million in cash and as much as $300 million over five years based on performance for the Wear Me Apparel LLC’s operations related to children’s clothing and accessories as well as men’s apparel, it said in a statement to the city’s stock exchange Monday. Li & Fung, which makes most of its sales in the U.S., is accelerating efforts to buy makers of clothing, cosmetics, home products, accessories and shoes as retailers step up reordering to meet growing demand. The outsourcing specialist, the second- best performer on Hong Kong’s benchmark Hang Seng Index this year, has a $1 billion acquisition fund. “It’s a children’s clothing business so they can probably generate better margins,” Renee Tai, a CIMB-GK Securities analyst who has an “neutral” rating on the stock, said in a phone interview today. “They can improve margins right away, like they did with Liz Claiborne,” whose sourcing business Li & Fung has acquired. The operations of New York-based Wear Me that Li & Fung is purchasing had sales of $700 million last year and profit after tax and extraordinary items of $11.9 million, the statement said. ‘Very little cash’ The earnings have been “impaired by debt,” President Bruce Rockowitz said in a phone interview today. “It’s actually a strong business, it’s just the servicing of the debt was so high.” Li & Fung isn’t assuming any of the debt and also gets about $80 million in inventory, cash and receivables, he added. “We’ll be using very little cash for this deal.” The Wear Me sourcing business has margins that are “in line with our onshore business, which is a highermargin business,” Rockowitz said. Li & Fung had a profit margin of 3 percent in the first half. Wear Me holds licenses for brands including Calvin Klein, Timberland, Disney, Marvel and Nickelodeon, according to Li & Fung’s statement. The outsourcing and trading company will be buying Wear Me’s “business of designing, sourcing, licensing, marketing and selling of children’s apparel and accessories” as well as of men’s apparel and some intellectual property rights and related assets, the statement said. Li & Fung, also a supplier to Inditex SA’s Zara, Marks & Spencer Group Plc and Kohl’s Corp., earlier this year announced the acquisition of Liz Claiborne Inc.’s sourcing business for $83 million. Liz Claiborne’s brands include Kate Spade and Juicy Couture and its sourcing business had volume of $1.3 billion in the 2007 fiscal year. (Source:Bloomberg)

Chinese private enterprise invests $200m in Australian mining company
HONG KONG(Xinhua) — Hanlong Mining Investment Pty Limited signed here Monday a subscription agreement with Australia’s Moly Mines Limited to become the controlling shareholder of the Australian company. Hanlong Mining Investment Pty Limited is an Australian subsidiary company wholly owned by a privately run Chinese corporation -- Sichuan Hanlong Group Ltd.. Following a 200 million U.S. dollars’ investment into Moly Mines’ stock, Hanlong will become the controlling shareholder with a 55.3 percent shareholding in the company. Hanlong will also provide 500 million U.S. dollars in the form of project finance for the development of the world class SpinifexRidge Molybdenum Copper mine, which is wholly owned by Moly Mines. The investment will require final approval from the Australian Foreign Investment Review Board and relevant Chinese authorities prior to completion.

Temasek hires three banks for its first bond sale since 2005
Temasek Holdings Pte, Singapore’s government-owned investment company, hired Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley to help issue its first bonds in four years. The sale of 10-year dollar notes will be benchmark in size, Temasek said in a filing Monday, using a term that typically means at least $500 million. The bonds may be priced to yield about 100 basis points more than similar-maturity Treasuries, said a person familiar with the matter, who asked not to be identified as they’re not authorized to discuss it. “Temasek is triple A rated and there aren’t many triple A bonds around in Asia so it’s rare,” said Tan Wah Yong, who helps manage $4.4 billion of Asian fixed-income assets at Aberdeen Asset Management Asia Ltd. in Singapore. A spread of about 100 basis points would be “fair” and Aberdeen may buy the notes, she said. Temasek, which reported a 66 percent drop in profit to S$6.2 billion ($4.45 billion) for the year to March 31 after selling stakes in Bank of America Corp. and Barclays Plc, has slowed investments after losing money on financial companies. It invested S$9 billion in the period, down from S$32 billion a year earlier, of which S$3 billion was in rights offerings by portfolio companies including London-based Standard Chartered Plc and Singapore’s DBS Group Holdings Ltd. Liquidity buffer Chief Executive Officer Ho Ching said on Sept. 17 that Temasek has been building up liquidity “methodically” over the last two years because of the risk of a slump, though it didn’t anticipate “the speed and ferocity of the worst global financial crisis since the Great Depression.” The company said in August that it plans to work with companies in which it has stakes, the first change to its charter in seven years, reflecting a transformation from a passive owner of stakes in government-controlled companies to an investor with more than two-thirds of its assets outside Singapore. (Source:Bloomberg)

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