Headlines (Scroll down for complete stories):
1. Expert: India and China Overseas Deals 'To Explode'
2. Wages, Benefits Rise at 2-Year Pace
3. Consumer Confidence Edges Down in Oct.
4. Oil Dips Below $58 on OPEC Doubts, Nigeria
1. Expert: India and China Overseas Deals 'To Explode'
An expert on global mergers and acquisitions says that recent overseas
acquisitions made by Chinese and Indian companies are just the "tip of a very
large iceberg," reports the Financial Times.
Story Continues Below
Mervyn Davies, chief executive officer of global bank Standard Chartered, tells
FT he expects China and India to be major players on the world's business stage
in the next decade or two."
Over the next 10 to 20 years, a big phenomenon in the world will be Chinese and
Indian companies, once they have scale in their own markets, expanding
overseas," said Mr Davies.
Davies says he expects a huge explosion in cross-boarder trading as well as
international mergers and acquisitions.
MoneyNews readers will recall that China's state-owned China National Offshore
Oil Corporation (CNOOC) last year attempted to acquire U.S. company Unocal
Corp., eventually withdrawing its bid amidst political pressure from Washington.
India's Tata Steel recently bought Anglo-Dutch steelmaker Corus. Including the
Tata deal, Reuters reports that Indian companies have announced overseas
acquisitions worth $19.5 billion so far this year, up from $4.5 billion in 2005,
data from research firm Dealogic shows.
"One by one, slowly the sizes are increasing and confidence in making these
kinds of acquisitions has increased across all sectors of the Indian corporate
world," said Harish H.V., a corporate finance partner at Grant Thornton in
India, to Reuters.
Davies is in Beijing for a Standard Chartered board meeting at the same time
that China is hosting African leaders in the nation's capital.
"The very fact that you have a large number of African leaders in Beijing this
week is a signal of how the world's trading patterns are changing," points out
Davies.
Banks such as Davies' Standard Chartered are creating new services to facilitate
acquisitions in Africa. Last week, Barclays Capital's South Africa-based arm,
Absa Capital, announced that it is advising the Export-Import Bank of China on
investment opportunities in Africa.
"We can open the door for investors looking to participate in Africa's future by
utilizing our knowledge of local investment and regulatory requirements as well
as our deep relationships with companies there, says Absa CEO John Vitalo. "We
expect the inflow of direct investment from China and elsewhere to increase."
Editor's Note:
2. Wages, Benefits Rise at 2-Year Pace
Wages and benefits paid to American workers rose in the July-September period at
the fastest pace in more than two years.
The Labor Department reported that its Employment Cost Index was up 1 percent in
the third quarter, compared to a 0.9 percent rise in the April-June period. It
was the biggest quarterly increase since a similar 1 percent rise in the second
quarter of 2004.
The increase, which was above the 0.9 percent rise that economists had been
expecting, was led by a big jump in the cost of employee benefits such as health
insurance and pensions.
For the third quarter, benefit costs rose by 1.1 percent, up from a 0.8 percent
gain in the second quarter. Wages and salaries were up 0.9 percent, matching the
increase in the second quarter.
Officials at the Federal Reserve are watching closely to see whether wage
pressures are beginning to accelerate, a development that would give workers'
more money in their paychecks but could fuel unwanted inflation.
The Fed is hoping that its two-year campaign to slow the economy by raising
interest rates will do the trick to send underlying inflation rates lower
without slowing growth so much that the economy topples into a recession.
The government reported last week that the overall economy grew at a lackluster
annual rate of just 1.6 percent in the July-September period, the slowest pace
in three years, reflecting a sharp fall in the once-booming housing industry.
Analysts believe the recent sharp decline in the cost of gasoline and other
energy products will give consumers more money to spend on other items and
provide a boost to the economy in the final three months of this year.
The Fed, after raising interest rates for 17 consecutive times, has left rates
unchanged since August with financial markets hoping that inflation pressures
will slow enough to keep the central bank on the sidelines for an extended
period.
There are indications that the Fed's battle against inflation is having an
impact. The government reported Monday that the Fed's preferred measure of
inflation, which excludes energy and food, rose by 2.4 percent over the 12
months ending in September, down slightly from a 2.5 percent rise for the 12
months ending in August.
Even with the slight decline, inflation is still above the Fed's comfort zone of
1 percent to 2 percent, which is why analysts believe the Fed will not respond
to the slowing economy with rate cuts until inflation declines to a more
acceptable level.
For the 12 months ending in September, overall compensation costs were up 3.3
percent, compared to a 3 percent rise for the 12 months ending in September
2005.
Wages and salaries are up 3.2 percent over the past year, a significant rise
from the 2.3 percent gain for the 12 months ending in September 2005. Benefit
costs, however, were up 3.3 percent for the year, down from a 5 percent rise for
the year ending in September 2005.
© 2006 Associated Press.
Editor's Note:
3. Consumer Confidence Edges Down in Oct.
Consumers' confidence in the economy weakened a bit in October, as job worries
offset the benefits from falling gasoline prices, a New York-based private
research group said Tuesday.
The Conference Board said that its consumer confidence index edged down to
105.4, from a revised 105.9 in September. Analysts had expected a reading of
107.8.
"October's dip in confidence was prompted by consumers' mixed assessment of
present-day business conditions and a less favorable view of the job market,"
said Lynn Franco, director of The Conference Board Consumer Research Center, in
a statement. "Consumers' short-term expectations posted a slight improvement,
but the outlook for the labor market remains mixed."
Franco said October's readings hint at moderate economic growth for the rest of
the year and into the first few months of 2007.
The private research group's Present Situation Index, which measures how
shoppers feel now about economic conditions, fell to 124.7 from 128.3. The
Expectations Index, which measures consumers' outlook over the next six months,
rose to 92.6 from 91.0.
The report could prove to be a letdown for retailers before the holiday shopping
season. Consumers have been resilient even when energy prices were rising
earlier in the year. Falling gasoline prices have helped offset the overall
slowing of the economy, too.
But consumers' willingness to spend depends largely on job security. While the
job market has been steady, recent monthly reports from the Labor Department
have showed slower growth. Employers added just 51,000 jobs in September, the
fewest in almost a year, while the unemployment rate dropped down to 4.6
percent, offering a mixed assessment of the nation's job environment. On Friday,
analysts expect the government to report a gain of 125,000 jobs and an
unemployment rate of 4.6 percent.
A report on Monday from the Commerce Department showed that although personal
incomes rose in September, consumers are saving rather than going on buying
binges.
© 2006 Associated Press.
Editor's Note:
4. Oil Dips Below $58 on OPEC Doubts, Nigeria
Oil dipped below $58 on Tuesday, deepening sharp losses from the previous
session, on easing tensions in Nigeria, ample U.S. fuel stocks and lingering
doubts over OPEC output cuts.
U.S. light crude fell 46 cents to $57.90 a barrel by 1235 GMT, after tumbling
$2.39 or nearly 4 percent on Monday. Brent crude traded 36 cents lower to $58.32
a barrel.
Traders waited to see if OPEC producers will adhere to an agreement to cut 1.2
million barrels per day from Wednesday.
"The dominant speculative sentiment remains overwhelmingly bearish," Barclays
Capital said. "Those on the short side who are expecting global economic
weakness ... and weak OPEC cohesion are unlikely to change those core views in a
hurry."
Saudi Arabia, the world's largest oil exporter, and the United Arab Emirates
have told customers of supply cuts, but other OPEC members such as Kuwait and
Libya have yet to do so.
Nigeria, which was the first to instigate the voluntary cuts, was expected to
raise oil exports in December.
Protest Deal
Easing tensions in Nigeria also added to bearish sentiment.
Western oil companies were free to resume production of 62,000 bpd at four oil
pumping stations after striking a deal with protesters late on Monday.
Villagers invaded the stations last Wednesday demanding contracts from the
operators, Royal Dutch Shell and Chevron.
But as one problem subsided, another dispute was brewing.
Nigerian unions threatened to shut all oilfields operated by Italian oil company
Agip, which produces 200,000 bpd in the country, unless it paid staff a security
bonus. Attacks have cut Nigerian output by 500,000 bpd since February.
Analysts also attributed oil's decline to slowing U.S. economic growth and
swelling fuel stocks. "The U.S. macro picture is the big elephant in the room,
and left to grow could single-handedly sink many of the commodity bull markets
that are still in place," Man Financial said.
Oil's 26 percent slide since mid-July's peak of $78.40 has prompted funds to
shift their money into other commodities in search of better returns. Gold
prices hit a seven-week high and zinc in London touched a record on Monday.
U.S. crude supplies were expected to have risen 2.6 million barrels last week,
analysts said in a preliminary Reuters poll ahead of Wednesday's inventory data.
Domestic distillate stocks, which include heating oil, were seen falling 1.3
million barrels, while gasoline fell 1 million barrels.
© 2006 Reuters.
Editor's Note:
Editor's Notes:
