Canada’s Bank of Nova Scotia said Friday it’s buying a stake in the Bank of Guangzhou for Canadian dollars 719 million ($727 million), its second stake in a Chinese bank.
Scotiabank said it was chosen as the successful bidder for the 20 percent stake, the maximum share that foreign banks are allowed to own under Chinese regulations.
The Chinese bank is the country’s 29th largest and has 84 branches and offices. It’s based in bustling Guangzhou, capital of affluent Guangdong province, which neighbors Hong Kong. The bank is not publicly traded and is mostly government owned.
The purchase still needs regulatory approval and is expected to be completed in December.
The Toronto-based bank, Canada’s third largest, is one of a number of foreign banks that have sought footholds in China’s expanding banking and financial-services sector.
“Asia is a region of strategic importance for Scotiabank and enhancing our investment in China supports our long-term growth strategy,” President Rick Waugh said in a news release.
Scotiabank also owns 14.8 percent of Xi’an City Commercial bank and is waiting for approval to raise its stake to 18.1 percent. It has been in China since 1982 and also operates in nine other countries in the Asia-Pacific area.
Asian markets opened lower Tuesday after fears of a worsening global economy sparked a session of free-falling losses in Europe.
Oil prices fell to below $84 a barrel in Asia as investor fears of a recession in developed countries sent equities and commodities lower. The dollar was higher against the euro but lower against the yen.
Japan’s Nikkei 225 index dropped 1.2 percent to 8,676.12. Hong Kong’s Hang Seng index was 1 percent down at 19,420.47. Australia’s S&P ASX 200 lost 1.1 percent to 4,095.50. South Korea’s Kospi index was 0.6 percent down at 1,774.73.
The slump in Asia comes a day after European shares booked sharp losses. Britain’s FTSE 100 closed the day down 3.6 percent to 5,102.58. Germany’s DAX tumbled a massive 5.3 percent to 5,246.18, and France’s CAC-40 plummeted 4.7 percent to 2,999.54.
A wave of negative sentiment was unleashed Friday by a government report that said the U.S. economy failed to add any new jobs in August. That caused European and Asian stock markets to sink sharply Monday.
The August jobs figure was far below economists’ already tepid expectations for 93,000 new U.S. jobs and renewed concerns that the U.S. recovery is not only slowing but actually unwinding.
U.S. hiring figures for June and July were also revised lower, adding to the gloom. The unemployment crisis has prompted President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring.
The health of the U.S. economy is crucial for the wider world because consumer spending there accounts for a fifth of global economic activity. The U.S. imports huge amounts from Japan and China and is closely linked at all levels with the European market.
Traders are hoping for signs that the Federal Reserve might take action at its September meeting to support the economy _ perhaps a third round of bond purchases, dubbed quantitative easing III or QE3.
Wall Street, which was closed Monday due to the Labor Day holiday, was bracing for losses Tuesday.
Benchmark oil for October delivery was down $2.47 to $83.98 in electronic trading on the New York Mercantile Exchange. Crude last settled at $86.45 on Friday because U.S. markets were closed Monday for the holiday.
In London, Brent crude for October delivery was steady at $110.08 on the ICE Futures exchange.
In currencies, the euro weakened to $1.4074 Tuesday from $1.4187 in New York late Friday as worries mounted about Greece’s ability to meet requirements set by international lenders to stave off a massive default on the country’s debts.
The dollar weakened to 76.82 yen from 76.87 yen. Last month, the dollar fell under 76 yen, which was a new post-World War II high for the Japanese currency.
Nearly two decades ago, Missouri created a quasi-public workers’ compensation firm to bail out small businesses facing a crisis in the skyrocketing cost of coverage.
Since then, Missouri Employers Mutual has parlayed its nonprofit status, state backing and federal tax exemption into a dominant market position. It now makes the lion share of its money from bigger clients and investments.
Meanwhile, the problem the company was established to solve has dissipated, some competitors and government officials say. And that raises the question of whether the company
JACKSON HOLE, WYO.
Dish Network Corp.’s second-quarter net income climbed 30 percent, but its net subscribers declined partly because of rival’s discounts.
To remain competitive, the No. 3 pay TV company said Tuesday that it will be freezing prices through January 2013.
Dish reported net income of $334.8 million, or 75 cents per share, for the period ended June 30. That’s up from $257 million, or 57 cents per share, a year earlier.
Analysts expected earnings of 79 cents per share.
Revenue rose 13 percent to $3.59 billion from $3.17 billion, beating Wall Street’s estimate of $3.38 billion
Net subscribers fell by about 135,000 to approximately 14.1 million subscribers.
Dish Network recently purchased Blockbuster Inc.’s assets out of bankruptcy.
A late sell-off wiped out the stock market’s gains Thursday as the stalemate over raising the country’s debt limit continued.
The market had been up for much of the day after an unexpected decrease in new applications for unemployment benefits. Stocks sank in the last half-hour of trading after Senate Majority Leader Harry Reid said that a bill to end the stalemate, proposed in the House of Representatives, would fail if it reached the Senate.
“That gave a catalyst for selling,” said Quincy Krosby, market strategist at Prudential Financial.
The Dow has fallen five straight days because of worries that the U.S. might default on its debt if Congress doesn’t raise the country’s borrowing limit. It’s down more than 484 points, or 3.8 percent. Just five days remain until the Treasury Department says the government won’t have enough money to cover all of its bills.
Even if the U.S. doesn’t default, investors worry that the country might lose its triple-A credit rating. That could raise interest rates and possibly slow the U.S. economy, which is still recovering from the worst recession in decades.
“We’re running out of time,” said Phil Dow, director of equity strategy at RBC Wealth Management in Minneapolis. “It’s getting scary.”
The chief executives of several of the country’s largest banks sent a letter to The White House and to Congress urging a quick resolution to the debt limit debate. Bank of America Corp.’s Brian Moynihan, JPMorgan Chase & Co.’s Jamie Dimon, and Goldman Sachs Group Inc.’s Lloyd Blankfein and others warned on Thursday that the consequences on not acting would be grave for the economy, the job market, and for America’s global economic leadership.
The Dow Jones industrial average fell 62.44 points, or 0.5 percent, to close at 12,240.11. The index had been up as many as 82 points earlier in the day.
The Standard & Poor’s 500 fell 4.22, or 0.3 percent, to close at 1,300.67. The S&P 500 has four straight days. The Nasdaq composite index was up 1.46, or 0.1 percent, to 2,766.25.
The price of gold, which tends to rise when investors are fearful of economic disruptions, fell $1.70 to $1,613.40 an ounce. Gold is up $100 an ounce in the last two weeks and nearly $200 an ounce since the beginning of the year, when it traded at $1,422 an ounce. When gold prices are high, experts say it’s a good indicator that people are reluctant to invest in other markets.
The dollar rose against other currencies. Treasury prices were also up slightly.
Markets declined less on Thursday than they did earlier in the week. That’s partly because the government reported that first-time applications for unemployment benefits fell to 398,000 last week, the fewest in four months. Economists had expected 415,000 first-time applications for unemployment benefits. And any figure below 400,000 is typically associated with job growth.
Technology stocks rose after LSI Corp., which makes storage and networking chips, forecast revenues that were higher than investors were expecting. Its stock gained 14.1 percent, the most in the S&P 500.
Bristol-Myers Squibb Co. rose 1.5 percent after the drugmaker reported earnings that were better than analysts anticipated. The company also raised its earnings forecast for 2011.
Exxon Mobil Corp. fell 2.2 percent after its earnings came in below analysts’ estimates.
Akamai Technologies Inc. fell 19.1 percent, the most in the S&P 500 index, after the online streaming company’s earnings were lower than analysts had expected. Sprint Nextel Corp. fell 15.9 percent. The nation’s No. 3 wireless carrier said its loss widened in the second quarter, partly because of a tax expense and investment losses.
The Dow is down 3.5 percent for the week and is headed for its worst week since last July. The S&P 500 is down 3.3 percent for the week, while the Nasdaq is down 3.2 percent. Still, the Dow is up 5.7 percent for the year, the S&P is up 3.4 percent for the year and the Nasdaq is up 4.3 percent for the year.
Nearly two stocks fell for every one that rose on the New York Stock Exchange. Volume was relatively heavy at 4.4 billion shares.
The Canadian Solar Industry Association is trying to raise $2 million from its members to mount a media campaign in Ontario, promoting the benefits of solar.
A message to members says the campaign is needed because
Prime Minister George Papandreou is meeting opposition party leaders in an effort to seek consensus on extra austerity measures being taken to deal with Greece’s crippling debt crisis.
Papandreou met Tuesday morning with conservative party leader Antonis Samaras, and was to meet with another four party leaders later in the day. The head of the Communist party, which is influential with trade unions, has refused to meet.
The talks come amid increasing pressure from the European Union, which has called for cross-party support in Greece for a midterm austerity program, arguing that political bickering could derail the struggling country’s fiscal efforts.
Greece is currently dependent on a euro110 billion ($154 billion) bailout from the EU and International Monetary Fund.
MEMC rises on takeover report of rival
Europe’s debt crisis returned to haunt markets Monday as investors fretted over a possible Greek default and the impact of huge gains for a nationalist party in Finland.
It was also a day that Portugal began discussions on a financial bailout and Spain had to pay a much higher interest rates to tap bond investors.
Although borrowing costs for countries like Greece, Ireland and Portugal have risen sharply higher in recent weeks, the euro managed to brush off debt crisis concerns, hitting a 15-month high last week above $1.45. The currency has been buoyed by predictions that the European Central Bank will follow April’s first interest rate hike in nearly three years with more policy tightening.
That benefits the euro if investors don’t expect others, such as the Federal Reserve, to do the same.
However, there was little hiding place for the currency Monday amid a stream of negative developments, which sent the euro down 1.1 percent to $1.4255, its lowest level since April 7.
Further debt jitters emerged with the news that Spain had to pay sharply higher interest rates to raise euro4.7 billion ($6.7 billion) in short-term debt, while the yield on Greece’s 10-year bonds spiked nearly a whole percentage point at one stage to 14.59 percent. That’s the first time it’s gone above 14 percent since the country took up the euro in 2001.
By late European trading, the yield had eased slightly to 14.56 percent, but the difference with benchmark German bunds was over 11 percent _ a staggering differential given that the two countries use the same currency.
The renewed focus on Greece’s debts has come after some suggestions that the country would be better off looking for a way to renegotiate its debts.
Costas Simitis, Greece’s Socialist premier from 1996-2004, has backed calls for the country to deal with its debt mountain, arguing that a protracted austerity program may not work. A negotiated restructuring would be better, allowing Greece to rebuild its economy over the next 15 to 20 years, he argued.
He’s not the only one arguing for a restructuring but the Greek government insists that is not on the agenda, as it would make it more difficult to tap bond markets in the future.
The governor of Greece’s central bank weighed in Monday, arguing that a restructuring is “unnecessary and undesirable.” However, central banker George Provopoulos admitted that cost-cutting reforms by Greece’s Socialist government were showing signs of “fatigue” and required a “powerful restart” to keep the program on track.
Whether Greece can actually withstand the pressure is another matter _ after all, it spent the early part of 2010 insisting it didn’t need a bailout. By May, it had to accept a euro110 billion ($159 billion) package of rescue loans from its partners in the European Union and the International Monetary Fund.
“Despite public protestations to the contrary, the background chatter has reached such an intensity in recent days that the real questions now seem to be rather more when a Greek ‘restructuring’ will finally be announced and quite what the details will be rather than if there will be one,” said Simon Derrick, a senior analyst at The Bank of New York Mellon.
Although a restructuring would reduce the debt pile and possibly bring a quicker end to the painful austerity measures, restructuring would not be easy and would entail huge costs to Greece’s future ability to borrow money as well as risking a massive blow to the country’s banks, which are big holders of Greek bonds.
Many German and French banks are also big holders of Greek debt.
A Greek default could also trigger fears that Ireland or Portugal may seek a similar way out from their debt stranglehold. There had been hopes that Europe had finally done enough to ringfence its three weakest members, but those nations’ immediate economic prospects look bleak as they try to meet their obligations for the international financial support.
Portugal began its quest for financial assistance Monday with the finance minister of the country’s caretaker government meeting delegations from the European Commission, the European Central Bank and the International Monetary Fund. A key topic is expected to center on the interest rate charged for Portugal’s expected euro80 billion ($116 billion) bailout.
Meanwhile, news that a euroskeptic party made big gains in Finland’s election Sunday has stoked fears that the EU’s “comprehensive plan” to deal with the debt crisis may not run as smoothly as hoped.
True Finns leader Timo Soini suggested Monday that Finland should opt out of future bailout packages, decisions that require unanimity in the 17-member eurozone.
A bailout rescue without Finland would severely undermine the eurozone’s pledge to do everything to defend the common currency and could create panic on financial markets.
“The EU currently requires unanimous approval for each use of the eurozone bailout fund, so it is now being forced to examine ways to push through the Portuguese package without Finnish support,” said Jane Foley, an analyst at Rabobank International. “There is no time to lose since Portugal is facing a hefty bond redemption in June.”
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