AUSTRALIA
As part of a new round of asset sales, Rio Tinto is seeking buyers for its 76% stake in Coal & Allied Industries, which runs three mining operations in New South Wales, and could have likely bidders in the forms of China Shenhua Energy, Mitsubishi of Japan and Xstrata of Switzerland. But potential bidders want the UK-Australian resources giant to include its Queensland coal operations into the sale, which is currently worth an estimated US$3.72 billion. Rio Tinto is looking to make asset sales as demand from manufacturers for raw materials declines amid the global credit crunch.
CHINA
China Eastern Airlines admitted to making a Rmb6.2 billion (US$906.9 million) hedging loss in 2008, the biggest amount of any mainland China airline so far. The country’s third-largest airline said that the loss was due to making the wrong bets on fuel costs, leading to its losses soaring 239% by the end of the year. As a result it said it would make a major outright loss for the year. Its cash loss on jet-fuel hedging contracts hit US$14.15 million in December, compared to US$420,000 in November. Other airlines, including Cathay Pacific Airways, Air China and China Southern Airlines, have also announced sizeable hedging losses, after oil prices more than halved in the second half of 2008.
Huawei Technologies, China’s largest maker of telecoms equipment, reportedly won a US$250 million contract to set up a 3G network in Costa Rica. The operation is expected to be up and running by the end of the year.
HONG KONG
Inner Mongolia-based Real Gold is intending to raise at least US$160 million from a Hong Kong listing in February. The company hired Citi and Macquarie as its joint bookrunners for the deal, and a roadshow is expected to begin after the Chinese New Year ends in late January. Real Gold wants to use the proceeds it raises to invest in production.
Electronic broker Instinet is expanding its dark pool trading system from Japan to include Hong Kong stocks. Its CBX Asia system is designed to offer anonymity to buyers and sellers of stocks, who can lessen the market impact of trading large blocks of shares. Instinet said that bid and offer prices on CBX in Japan were roughly 18 basis points narrower than the average 28 basis point spread on the Tokyo Stock Exchange. Dark pool trading systems are gaining traction across the world as US and European regulators force investors to seek out the most cost-efficient trading methods.
INDIA
The Indian government appointed a new board of directors at disgraced Indian outsourcing company Sanyam Computer Services, including former HDFC Bank head Deepak Parekh. The company is the centre of the worst fraud scandal in recent Indian history after company founder and former chairman B. Ramalinga Raju admitted to having misled shareholders and regulators over its revenues for years. He resigned and has been imprisoned. Minutes since released reportedly revealed that Satyam’s previous board had approved the acquisitions of Maytas Properties and Maytas Infra, two companies run by the sons of the founder. The attempted purchases led to an investor revolt and helped precipitate the events that led to Raju’s confession.
JAPAN
Mitsubishi UFJ Financial Group (MUFG) plans to write down the value of its securities portfolio by US$3.2 billion for the three months ending in December. Like its peers, Japan’s largest bank has invested a large portion of its capital base into stocks, leading to capital erosion as markets have dropped across the world. MUFG said it would need to do more work to discover whether the write-down would exceed 3% or more of net assets, the trigger for disclosure to the Tokyo Stock Exchange.
KOREA
InBev reinitiated plans to sell Oriental Brewery after gaining interest from other companies for the asset. InBev, which is now the world’s largest brewer following its US$52 billion merger with Anheuser-Busch, considers Oriental to be non-core to its business and last tried selling it in the latter half of 2008. It halted the plans after the financial crisis emerged, but has gained new interest from bidders following the merger with Anheuser-Busch. Deutsche Bank and J.P.Morgan are acting as its sale advisers.
Posco chief executive Lee Ku-taek unexpectedly stepped down just ahead of the steel company’s latest quarterly earnings announcement, leaving the firm to look for a new head to take it forward. The world’s fourth-largest steelmaker said that net profit rose 1.1% to W721 billion (US$532.5 million) over the previous year, as a result of higher prices for steel products. Shareholders will convene at a meeting on February 27 to vote on a new chief executive.
SINGAPORE
The Singapore Exchange’s (SGX) second fiscal quarter profits dropped 52% to S$74.7 million (US$50 million) from S$156.4 million a year earlier, as trading volumes dropped. Exchange CEO Hsieh Fu Hua warned that with the world’s economic slowdown continuing and Singapore in the midst of a recession, new listings were also likely to drop in the coming months.
THAILAND
The Bank of Thailand (BoT) became the latest central bank to cut interest rates when it slashed its main rate by 75 basis points to 2% on January 14. The cut was greater than anticipated by observers, and is intended to help stimulate domestic spending and bank lending and prevent the country’s economy from softening further, following the world’s credit crunch, domestic political volatility and drops in tourist numbers. Some economists believe that the BoT could drop rates further to 1% by the middle of the year.
Sources: Financial Times; Asia Wall Street Journal; South China Morning Post; Reuters