Business

Editor: Zoe Zhang
29 Oct 2008 08:44:34 GMT

(CQNEWS) The 10th International Machinery Exhibition, organized by the Chongqing Economic Commission and Lijia Exhibition Co., Ltd., will be held on May 22-25 next year in Nanping International Convention and Exhibition Center.

More than 600 enterprises will participate in this exhibition, including nearly 100 giants from Japan, Shenyang, Dalian. At that time, there will be not only purchase concessions at the scene, but also favorable activities such as extended technical services and warranty together with free tax.

From: english.cqnews.net

Editor: evewen
31 Oct 2008 06:08:47 GMT

NEW YORK/DETROIT, Oct 30 - A deal to merge General Motors Corp and Chrysler LLC has hit an impasse after the Bush administration ruled out funding for it, three people with direct knowledge of the talks said on Thursday.

This puts any merger of the struggling automakers on hold until after the U.S. presidential election, the sources said.

The development adds a new element of uncertainty for the embattled U.S. auto industry as Detroit’s political allies warn the sector faces a deepening financial crisis that threatens tens of thousands of jobs.

It also opens the door for Cerberus Capital Management, which owns Chrysler, to restart talks with the Nissan-Renault alliance, one of the sources said. The private equity firm had seen the alliance as a backstop to its talks about an outright acquisition of Chrysler by GM, one of the sources said.

This week, Carlos Ghosn however said he sees any deals among automakers involving a cash element as unlikely unless cash comes from outside, such as from the government.

The sources declined to be named as they were not authorized to discuss the private talks.

GM and Cerberus declined comment. Chrysler said it was pushing ahead with its own restructuring plans.

A merged GM-Chrysler would be the largest automaker by global sales, but analysts have cautioned it would struggle to turn around the overlapping Detroit-based operations of two firms that have seen mounting losses tied to a global downturn in sales.

Chrysler, which has seen its sales fall 25 percent this year, said it was moving ahead with a cost-cutting plan as it pushes ahead with plans for new vehicles, including a plug-in hybrid.

“We are taking the tough but necessary decisions to stabilize the business in the short-term and making the viable long-term business decisions to restructure the company for the future,” Chrysler spokeswoman Lori McTavish said.

GM and Cerberus have been in talks since September.

GM had approached the U.S. Treasury in recent days about support for the merger through some $10 billion in new funding that would have included taking an ownership stake in the merged company, people familiar with the talks have said.

TREASURY STAYS AWAY

But a Bush administration official said on Thursday the Treasury Department was not negotiating on direct aid for the merger.

Instead, the official told Reuters, the administration was working to speed the distribution of $25 billion in low-cost loans for automakers to retool factories that was authorized by Congress last month.

With an offer of immediate government aid off the table, talks about combining GM and Chrysler are on hold until after the Nov. 4 election when the parties hope to sit down with representatives of the new administration, the sources said.

A decision by the Bush administration to provide the government’s first funding for the auto sector since the $1.5 billion bailout of Chrysler in 1980 had been widely seen as the merger’s best chance for success.

Private investors consulted in the course of the talks have not expressed interest in providing funding for the controversial deal in the absence of government backing, people with knowledge of the talks have said.

In the absence of a deal, Cerberus pushed ahead with a restructuring for GMAC LLC, the money-losing auto finance and mortgage provider in which it owns a 51-percent stake.

The Detroit-based lender said it was in talks with federal regulators about becoming a bank holding company, which would make it easier for it to participate in a $250-billion bank recapitalization plan.

Editor: evewen
31 Oct 2008 06:08:34 GMT

LOS ANGELES/DETROIT, Oct 31 - Tesla Motors Inc expects to close a financing round of over $20 million from existing investors as soon as next week to bolster a cash balance now at $9 million, said Elon Musk, founder and chief executive of the electric car start-up.

Musk, who became a billionaire by founding PayPal, said he would personally ensure that the San Jose, California company would have enough cash to deliver all of its orders for the $109,000 Tesla Roadster, the first battery powered sports car.

“I’ve gone on record as saying that I am personally standing behind delivering the cars and the deposits for the company,” Musk told Reuters late on Thursday.

“I have the means and wherewithal to do so. So people should have absolutely zero concern about their deposit.”

Tesla has delivered less than 60 Roadsters despite having taken over 1,200 orders.

It has taken deposits of between $5,000 and $60,000 for those Roadster orders under a contract that specifies those funds can be used for Tesla’s working capital, Musk said.

But like established automakers, Tesla has been hit hard by the recent turmoil in financial markets as well as cost overruns and production delays for the Roadster.

When Tesla failed to secure a $100-million investment round earlier this month, Musk cut 24 percent of the company’s work force and delayed development work on a battery-powered electric sedan, known internally as the “Model S.”

He also took the CEO post from Tesla’s former chief executive, Ze’ev Drori.

“We didn’t raise the $100 million but we still need to raise some money to get to cash flow positive,” Musk said. “We actually probably only need on the order of $20 million to do that. We’re going to raise more than that, but we only need about $20 million.”

He added that the financing would come from existing investors in Tesla.

“My expectation is next week is likely,” Musk said when asked about the timing.

Musk was speaking after an apparently disgruntled Tesla employee posted a letter to a Silicon Valley blog that suggested Tesla was running out of funds after a financial briefing for employees this week.

“It’s a bit silly. If we had almost no money in the bank then one could say that we are about to run out of money. But I think it’s kind of silly to say that with $9 million in the bank,” Musk said.

In addition to the new financing round from investors, Tesla also expects to secure another $200 million in still-pending loans from the U.S. Department of Energy.

The San Jose, California-based company is counting on the taxpayer-backed loans to offset up to 80 percent of the development cost of the Model S. Tesla has said it expects that car to cost $60,000 and compete against the likes of the BMW 5-Series for luxury and performance.

Though Tesla is among the most high-profile makers of electric vehicles, it faces intense competition from established automakers like General Motors Corp <GM.N> and Nissan Motor Co Ltd <7201.T>, and upstarts like Chinese battery maker BYD Co Ltd <1211.HK>

Editor: evewen
30 Oct 2008 10:04:36 GMT

LONDON, Oct 30 - Exchange-style clearing offers a way forward for the multi-billion dollar over-the-counter market in oil derivatives that has seized up because of the credit crisis.

Volumes of over-the-counter (OTC) trade slumped in September after the crisis in the banking sector made participants nervous about counterparty credit risk.

"The physical oil market is still operating normally but the paper market is experiencing problems," said Ian Taylor, Chief Executive of independent oil trading firm Vitol.

"OTC trades have gone down dramatically during this economic crisis and as traders exit from commodities, volatility increases," he said at this week’s Oil & Money conference in London.

NYMEX Clearport has provided a solution for some participants, with a large number of OTC trades in oil being cleared on its system.

The OTC market is where derivatives are traded bilaterally between brokers, investment banks, oil companies, trading firms and other counterparties.

These instruments can be used for hedging price risk as well as for speculative trading strategies.

But when the credit crisis caused turmoil in the banking sector in September, volumes fell as participants became nervous about counterparty risk.

Huge moves in the oil price, which has more than halved in just three months, is also causing strain for OTC participants.

"Today nobody trusts anybody in terms of counterparty risk," said a senior executive at one trading firm.

Some have turned to NYMEX Clearport, set up in 2002, which offers exchanged-based clearing of OTC trades.

This can reduce counterparty risk because trading positions are backed up by margin payments paid into a central clearing house.

CLEARING DEMAND JUMPS

NYMEX Clearport’s volumes in OTC oil contracts jumped up 176 percent year-to-date at the end of October.

"The oil markets are in need of contracts that offer clearing for OTC deals that were previously done bilaterally," said Joe Raia, managing director, energy and metals products at CME Group, which owns NYMEX Clearport.

Raia said the credit crisis would reinforce the need for clearing in oil as the collapse of energy trading group Enron had done for power and gas markets.

"Now in the U.S. markets, approximately 95 percent of natural gas and electricity OTC products are cleared," he said.

Raia said Clearport had a $7 billion cushion for all exchange customers as a result of NYMEX’s merger with the CME, now the world’s biggest derivatives exchange.

Financial regulators are keen on exchange clearing for derivatives. They want to see over-the-counter products in credit derivatives move to an exchange format to gain greater transparency and closer oversight of these opaque and complex instruments.

"Exchanges have proved they can process big transactional volumes and numbers," said Anthony Belchambers, chief executive of the UK-based Futures and Options Association.

"People will value the greater transparency of exchanges, so there will be a migration."

Oil traders say it will take some time for the OTC market to recover from the credit crisis shocks.

"You will see a move away from OTC opacity towards tranparency," said one senior executive at a U.S. firm. "Cleared products will be very attractive versus bilateral deals."

There is a cost to exchange clearing because of the margin payments required, but traders said these had come down now the oil price was lower than in September.

But for some transactions, OTC will remain the preferred option.

"There’s been a big increase in cleared OTC and that trend will continue," said Christopher Bellew at broker Bache Commodities Ltd. "But really complicated transactions will remain OTC."

Editor: Bruce Meng
30 Oct 2008 10:04:29 GMT

LONDON, Oct 30 - Exchange-style clearing offers a way forward for the multi-billion dollar over-the-counter market in oil derivatives that has seized up because of the credit crisis.

Volumes of over-the-counter (OTC) trade slumped in September after the crisis in the banking sector made participants nervous about counterparty credit risk.

“The physical oil market is still operating normally but the paper market is experiencing problems,” said Ian Taylor, Chief Executive of independent oil trading firm Vitol.

“OTC trades have gone down dramatically during this economic crisis and as traders exit from commodities, volatility increases,” he said at this week’s Oil & Money conference in London.

NYMEX Clearport has provided a solution for some participants, with a large number of OTC trades in oil being cleared on its system.

The OTC market is where derivatives are traded bilaterally between brokers, investment banks, oil companies, trading firms and other counterparties.

These instruments can be used for hedging price risk as well as for speculative trading strategies.

But when the credit crisis caused turmoil in the banking sector in September, volumes fell as participants became nervous about counterparty risk.

Huge moves in the oil price, which has more than halved in just three months, is also causing strain for OTC participants.

“Today nobody trusts anybody in terms of counterparty risk,” said a senior executive at one trading firm.

Some have turned to NYMEX Clearport, set up in 2002, which offers exchanged-based clearing of OTC trades.

This can reduce counterparty risk because trading positions are backed up by margin payments paid into a central clearing house.

CLEARING DEMAND JUMPS

NYMEX Clearport’s volumes in OTC oil contracts jumped up 176 percent year-to-date at the end of October.

“The oil markets are in need of contracts that offer clearing for OTC deals that were previously done bilaterally,” said Joe Raia, managing director, energy and metals products at CME Group, which owns NYMEX Clearport.

Raia said the credit crisis would reinforce the need for clearing in oil as the collapse of energy trading group Enron had done for power and gas markets.

“Now in the U.S. markets, approximately 95 percent of natural gas and electricity OTC products are cleared,” he said.

Raia said Clearport had a $7 billion cushion for all exchange customers as a result of NYMEX’s merger with the CME, now the world’s biggest derivatives exchange.

Financial regulators are keen on exchange clearing for derivatives. They want to see over-the-counter products in credit derivatives move to an exchange format to gain greater transparency and closer oversight of these opaque and complex instruments.

“Exchanges have proved they can process big transactional volumes and numbers,” said Anthony Belchambers, chief executive of the UK-based Futures and Options Association.

“People will value the greater transparency of exchanges, so there will be a migration.”

Oil traders say it will take some time for the OTC market to recover from the credit crisis shocks.

“You will see a move away from OTC opacity towards tranparency,” said one senior executive at a U.S. firm. “Cleared products will be very attractive versus bilateral deals.”

There is a cost to exchange clearing because of the margin payments required, but traders said these had come down now the oil price was lower than in September.

But for some transactions, OTC will remain the preferred option.

“There’s been a big increase in cleared OTC and that trend will continue,” said Christopher Bellew at broker Bache Commodities Ltd. “But really complicated transactions will remain OTC.”

Editor: Bruce Meng
30 Oct 2008 03:14:20 GMT

WELLINGTON, Oct 30 - Two ports in New Zealand’s South Island are looking at merging to provide some much needed consolidation, the companies said on Thursday.

Lyttelton Port Company Ltd <LPC.NZ>, which serves the South Island’s largest city of Christchurch, and Port Otago Ltd will begin talks on the structure of a new port, and said the benefits will include increased productivity, operational efficiencies and the co-ordination of future developments.

"The need for port rationalisation within New Zealand has long been recognised. This investigation takes up that challenge," the companies said in a joint statement.

Ports in New Zealand are targeting consolidation as ship visits from major lines such as Maersk <MAERSKb.CO>, Hapag-Lloyd <HPLG.H>, CMA CGM and Hamburg Sud decline due to rationalisation and because of larger container ships that require only one New Zealand stop.

Shares in Lyttleton Port Company were untraded on Thursday, after closing on Wednesday at NZ$2.22.

A local council owns 75.5 percent of the shares in the company, while Port Otago holds 15 percent. Port Otago Ltd is wholly owned by a local council. New Zealand’s two largest ports, Port of Tauranga <POT.NZ> and Ports of Auckland, broke off talks on a potential NZ$1.6 billion ($936 million) merger last year. Port of Tauranga has said it believes a merger remains a logical move. ($1=NZ$1.71)

Editor: Bruce Meng
30 Oct 2008 02:06:23 GMT

BRUSSELS, Oct 29 - The European Commission on Wednesday backed a call by Europe’s carmakers for 40 billion euros ($50.98 billion) in soft loans to help develop cars which meet toughening European Union CO2 emissions targets. “Loan subsidies could be provided via the European Investment Bank,” EU Industry Commissioner Guenter Verheugen said after meeting auto industry chief executives including Daimler and PSA Peugeot Citroen.

Verheugen said it was up to the bloc’s member states to decide on the scale of any help to the car industry, however, as the European Commission did not have power over the EIB.

The EU is under pressure to help the car industry, a huge employer, after the United States agreed to provide soft loans to help its automakers.

“We are talking about a credit volume of 40 billion euros available for research and development in the area of energy efficiency, and lower fuel consumption of new vehicles,” Verheugen told a news conference.

The European Automobile Manufacturers Association (ACEA) says the economic crisis and sliding consumer confidence has made it increasingly difficult to achieve EU targets to curb carbon dioxide emissions from cars by 18 percent by 2012.

Tightening environmental legislation comes as vehicle sales in Europe are falling. The European commercial vehicle market fell for the fifth straight month in September, with an 8.8 percent fall in new vehicle registrations.

The European car industry will suffer a further drop in sales in the fourth quarter of this year, Christian Streiff, the head of European Automobile Manufacturers Association (ACEA), told the same news conference.

“In the third quarter, there was a drop of about 10 percent … in the fourth quarter it will be even more,” said Streiff, who is also chief executive of French carmaker Peugeot Citroen.

“It is quite clear now that the banks are not following us and neither are the clients … there is a lack of a market,” he said.

EU Commission President Jose Manuel Barroso said that any aid to the car sector should comply with EU state aid rules but that the bloc could help to make sure that European carmakers remained competitive.

“We are open to the possibility of providing support for the development of low emission cars, high tech cars that could help the European motor industry maintain its global competitiveness,” he told another news conference.

EU leaders said at a summit this month that Europe must be ready to follow the United States in supporting national car industries.

But a source at the European Commission had said that the bloc’s executive rejected the carmakers’ demand for a loan to help meet its proposal to cut CO2 from new cars to 130 grams per km, which has divided the 27 EU states.

The Bush administration has agreed to provide $25 billion in low-cost loans to help U.S. carmakers, authorised in a 2007 energy law that requires the industry to improve the fuel efficiency of vehicles by 40 percent by 2020.

EU car-making nations led by Germany, which specialises in powerful, heavy luxury vehicles such as Mercedes and BMW, which emit the most greenhouse gases, have pressed for a softening of the terms of the EU proposal.

Editor: Bruce Meng
30 Oct 2008 02:05:38 GMT

WASHINGTON, Oct 29 - The value of worldwide U.S. arms deals soared nearly 50 percent last year to $24.8 billion from $16.7 billion in 2006, according to a newly released report for the U.S. Congress.

The United States accounted for 41.5 percent of all such agreements in 2007, followed by Russia, with $10.4 billion, or 17.3 percent, the Congressional Research Service said in the annual report dated Oct. 23.

Britain was third, with arms deals valued at $9.8 billion, up from $4.1 billion in 2006, said the report, titled “Conventional Arms Transfers to Developing Nations, 2000-2007.” The report is based on unclassified data from unspecified U.S. government sources.

Last year’s 48.5 percent jump in U.S. arms deals “may be a high water mark for the foreseeable future because of the economic difficulties now confronting major purchasers,” the report’s author, Richard Grimmett, said in a telephone interview.

The U.S. total reflected, among other things, the advantage of having well-established defense support arrangements based on the range of U.S. weapons already in use with militaries worldwide, the report said.

Deals inked in 2007 include not only sales of major weapons systems, but the upgrading of those sold previously along with pacts for a wide range of spare parts, ammunition, ordnance, training and support services.

Saudi Arabia was the largest buyer among developing countries in 2007, concluding $10.6 billion in arms deals, led by an order for 72 Eurofighter Typhoon fighter aircraft valued at more than $9 billion, the report said.

India was the second biggest buyer among developing countries with $5 billion in agreements, with Pakistan third, with $4.2 billion, it said.

The report said Russia’s biggest-ticket arms deals continued to be with India and China while it was pushing to expand prospects in North Africa, the Middle East and Southeast Asia.

“Most recently, Russia has increased sales efforts in Latin America, despite having essentially abandoned major arms sales efforts there after the end of the Cold War,” it said.

Venezuela has become a significant new arms client gained by Russia in this region, the report said.

“For less affluent developing nations Russia’s less expensive armaments are particularly attractive,” the survey said.

Editor: Bruce Meng
30 Oct 2008 02:04:27 GMT

BRUSSELS, Oct 29 - The European Commission is ready to support the car industry and help it achieve EU targets to curb CO2 emissions despite the economic crisis, EU Commission President Jose Manuel Barroso said on Wednesday.

“We are open to the possibility of providing support for the development of low emission cars, high tech cars that could help the European motor industry maintain its global competitiveness,” Barroso told a news conference.

He added that any aid to the car sector should comply with EU state aid rules.

Editor: Bruce Meng
29 Oct 2008 09:57:10 GMT

TOKYO, Oct 29 - Softbank Corp, Japan’s No. 3 wireless carrier, reported a 7 percent rise in quarterly profit on Wednesday, boosted by its Internet and fixed-line phone operations, and forecast 5 percent growth this business year.

Earnings were also supported by lower costs, although profit from its main wireless business shrank after a cut in calling fees reduced its income per subscriber.

Softbank, which launched Apple Inc’s iPhone in July, said its quarterly operating profit totalled 94.9 billion yen ($957 million), against 89.0 billion yen a year earlier, helped by strong results at Yahoo Japan Corp, in which Softbank owns 41 percent.

The company, which usually does not release earnings forecasts, projected an operating profit of 340 billion yen for the year ending in March, up 4.8 percent from a year earlier.

The forecast was below an average forecast of 355 billion yen in a poll of 13 analysts by Reuters Estimates.

Softbank also said it sees a 420 billion yen operating profit in the next business year to March 2010.

While the financial crisis and economic worries batter global markets, telecom shares have generally fared well, appearing recession-proof and free from the effects of the stronger yen that has hurt exporters.

But shares in Softbank have been an exception. They have tumbled nearly 60 percent since April 1, underperforming a 34 percent drop in the Nikkei average, as investors worry that the global financial crisis will hurt debt-laden Softbank’s finances.

Most of Softbank’s shareholders are individual investors.

Softbank has interest-bearing debts of 2.5 trillion yen, mostly from its purchase of Vodafone’s Japan unit in 2006.

Second-ranked KDDI Corp last week announced a 27 percent rise in quarterly profit and stuck to its full-year forecast, a rare bright spot when many Japanese firms are cutting their outlooks in the face of a firmer yen and slowing economies.

Industry leader NTT DoCoMo plans to announce its half-year results on Friday.

Before the announcement, Softbank shares closed up 15.4 percent, or by the daily limit of 100 yen, at 750 yen. The Nikkei average was up 7.7 percent.