International Business News

Weakened by the crisis, the French capital again to make headlines in the business press but professionals are questioning the sustainability of a recovery that dare not speak its name.

The uncertainties in the sector are also the prospect of entry into force of new rules that regulators want to impose the financial sector, whether the standards of solvency of banks and insurance and new tax regimes on capital gains and bonuses of investment funds.

The Forum's capital organized by Reuters of 8 to 10 September in Paris will provide an update on the new standards and expectations of the profession after the excesses of the years 2004-2007 and the bursting of the credit bubble.

According to data compiled by Thomson Reuters over the period from January 1 to September 7, the activity of private equity in France, measured by value is more than six times lower than it was in 2006, a report close to that observed globally.

The nascent recovery is still tangible: the activity is about 60% higher than it was in 2009.

"There is still a little early to give a real trend for the end of the year, although there is still a 'stock' of deals that can be done," said Vincent Ponsonnaille, a lawyer specializing in capital at Linklaters.

"Especially on small and mid-cap activity there," says his side OSSMANN Remy, vice president of the consulting firm LEK in France.

Selling Frozen Picard, the largest operation in France since the bankruptcy of U.S. investment bank Lehman Brothers, however, showed that the billion euros was more impenetrable.

VIRTUOUS CIRCLE

But uncertainty over the economic environment and financial markets remain a brake, particularly in terms of IPOs (IPO).

"If the IPO market reopens for sizes and valuations fairly consistent, it is a bit of a virtuous circle for a variety of companies that are still in the portfolios," said Catherine Vincent, Chief Executive within the activity of investment bank Goldman Sachs in Paris.

Analysts said the IPO provided the chain of casinos Lucien Barriere will be a test.

But conversely, the withdrawal of the sale of fast food chain Quick or the retirement homes Medi-Partners also show that investors remain cautious.

"There is a fairly long list of transactions that have no takers, either for reasons of size or profile, for reasons of funding or pending award," notes Céline Méchain, director in charge of relationship with the investment fund at Goldman Sachs.

The continued funding of operations, moreover, remains uncertain because if the banks agreed to finance numerous records at the end of the first semester, they must organize now, that is to say, find investors interested in debt.

This process has also been launched on Monday by the banks in charge of LBO mounted for the redemption of Picard Frozen by Lion Capital.

"We can not consider access to the debt as an asset for the moment," he told Reuters late August Monique Cohen, managing partner of private equity group Apax.

NEW WAVE

The banks also require different ways to structure transactions so as to regain control faster business purchased by the funds in case of restructuring.

Because the crisis has shown the procedure to safeguard French was rather favorable to shareholders and creditors trying to turn faster debt capital.

The news of the capital since the outbreak of the crisis has been marked by restructuring banks that were very expensive to fund and precipitated the departure of certain officers.

In France, corporate restructuring or OMS Monier were characterized by such deadweight losses for the PAI, Sagard and Cognetas.

"We had a first wave of restructuring.By 2011, there could be a second for companies whose underlying economic activity is not to go and who only see their problem of excessive leverage, "says Catherine Vincent.

"2012 will be the first year where we will face a wall of refinancing," explained her side Céline Méchain.

"We'll see how some funds are recovering from their previous failures, particularly in the fundraising going and coming but for now there are many more records in 2009 rollover," said Olivier Tordjman, a lawyer with Ayache Salama.

"And if subjects remain restructuring, there is less risk of 'dead'," he says.

Positioning high-end of Germany and its strong presence in emerging markets, causing a record growth, should protect Europe's largest economy from the impact of an economic slowdown in the U.S. or its neighbors in the euro area.

During the last two decades, German companies are well established in the markets of emerging Asia and Latin America, particularly in infrastructure which these economies need to grow.Germany and last year signed a cooperation agreement with Brazil to develop the infrastructure needed to organize the World Cup soccer in 2014 and the Olympics in 2016.

Controlling the production of capital equipment up-end the German strategy was used. Indeed, the demand for these products is very strong, and machinery and commercial vehicles alone representing nearly 50% of German exports.

"We are well represented in many markets that are now very important, but which were not specifically before.We are better represented than others, "says Volker Treier, chief economist of the Chamber of Commerce and Industry (DIHK).

This good exposure to growth markets is reflected by good orders to German companies, even as mature economies like the United States, struggling to recover.

Orders in the German manufacturing sector have increased by 3.2% on month in June, after a strong second quarter showing a growth of 2.2% over the first three months of the year, the strongest growth since the reunification in 1990.

Businesses benefit directly from this favorable environment.Of the 30 groups listed on the DAX index, 23 of them have published results above market expectations in the second quarter, and 12 have raised their forecasts.

EXPORT DEPENDENCE

But the economic profile of Germany, focusing on exports, has its downside.Last year, at the height of the recession, German exports have dropped sharply, causing an economic contraction of 4.7%, higher than the average contraction across the euro area – 4.1%.

"The sensitivity to exports has struck the German economy in 2008 and 2009, and now she supports a remarkable growth," explains Niels Thygesen, professor of economics at the University of Copenhagen.

During the recession, foreign groups often had no access to funds for the purchase of German equipment, explains Volket Treier. "Often, the financial structure does not follow.(…) Now, repeat orders. "

These include small and medium businesses, often family, the famous Mittelstand, which form the backbone of the German economy.

SUPPORT HOUSEHOLD AND CONSTRUCTION

Another key factor in recovery: households.German consumers, known for their sense of savings, have supported the growth in the second quarter after starting the year marked by sluggish consumption.

The construction sector also contributed to the improved economic situation of the country, bouncing over the period April to June after a particularly harsh winter, which had greatly affected the industry.

Economists expect growth in the German economy at least 3% in 2010, prompting the country's trade unions to demand a high wage growth, after agreeing to tighten its belt during the greater part of the decade elapsed.

Such a decision would certainly erode the competitiveness of Germany, but without affecting the economy significantly.

The powerful IG Metall union calls for a wage increase of 6% to 85,000 steelworkers, a claim well above the inflation rate of 1% of Germany.

The Paris Bourse rebounded on Monday tentatively early trade, after closing Friday at its lowest in about a month and while several indicators of activity in Europe in August are expected.

Around 9:15 am, the CAC 40 rose 0.27% to 3535.80 points.

STMicroelectronics is the head increases and takes 1.43%, followed by France Telecom gained 1.27%. Brussels will dismiss the complaint of the operator and its competitors SFR and Bouygues Telecom against the state in the allocation of the fourth 3G license to Free, The Tribune wrote Monday.

Carrefour lost 0.28%. S & P cut its rating to "sell-off.

Ahead of London and Frankfurt 0.18% 0.12%.As for the European indices, the EuroStoxx 50 wins and 0.16% Eurofirst 300 rose 0.3%.

The euro has halted its decline against the dollar after losing more than a penny Friday and is trading around 1.2711.

U.S. light crude oil remains below $ 74 after rising briefly crossed. The barrel is trading at around 73.85 dollars.

BP announced the sale for 1.9 billion dollars (1.44 billion euros) of its Colombian subsidiary to a consortium of the Canadian Talisman Energy and Ecopetrol, the Colombian national oil company.

This sale is the latest of British Petroleum, which has announced plans to lift a thirty billion through asset sales to offset the costs of the oil spill in the Gulf of Mexico.

BP has already sold last month to seven billion dollars of assets in the United States, Canada and Egypt, the American Apache.It also plans to divest its assets in Pakistan and Vietnam, which could bring him $ 1.7 billion, in the opinion of analysts.

The Kuwait's oil minister said Tuesday that the national carrier Kuwait Petroleum International might be interested in certain assets from BP.

The emirate's sovereign wealth fund owns shares in British company to the tune of 1.75% and on Monday denied media reports that BP had asked him to reach 3%.

BP announced last week a charge of $ 32.2 billion on its second quarter results, due to the spill, but analysts believe the final slate will be much higher.

The rate of the Livret A, the product of savings the most widespread in France, went on Sunday from 1.25% to 1.75% to reflect the acceleration of inflation.

There were some 60 million books A and blue books in France in late 2009, according to figures released Wednesday by the Bank of France.

Individuals then held 59.3 million of outstanding books for 175.5 billion euros and 0.6 million corporate booklets for an outstanding $ 7.9 billion.

The higher rate of pay A booklet was announced July 13 after the publication of figures showing inflation in June rose 1.5% in consumer prices over the year.

The Bank of France is responsible for conducting, on January 15 and July 15 of each year, the calculation of rates of pay passbooks regulated according to formulas that take into account the rates on money market and the increase of consumer prices.

The distribution of the Livret A was extended on 1 January 2009 to all banking networks.

The distribution of the money invested in this product is very concentrated, 42% of assets being deposited on only 7% of books in late 2009, according to the report released Wednesday. Next, 30 million savings books were credited with less than 150 euros.

Schlumberger, a global oilfield services company, reported Friday in an increase in line with expectations, 33% of its quarterly earnings, strong growth of its land in North America offset the effects of the moratorium on drilling offshore in the Gulf of Mexico.

Net income from continuing operations of U.S. group stood at 818 million dollars (632 million euros) over the second quarter, or $ 0.68 per share, against 613 million ($ 0.51 per share) last year.

Turnover rose 7.4% to 5.94 billion dollars.

Analysts on average had forecast earnings per share of $ 0.68 and revenues of 5.915 billion.

In exchange for pre-market action Schlumberger, who finished at 61.30 Thursday, yielded more than 2%.

The moratorium on offshore drilling in the Gulf of Mexico was decided after the explosion and sinking of the platform Deepwater Horizon, operated by BP, which left 11 dead and is causing the worst oil spill from the history of the United States.

But Schlumberger is less affected than, for example, Halliburton, by stopping the activity in the Gulf of Mexico, this region represents only 5% of its turnover.

The Bank of Korea raised its key interest rate Friday for the first time since the beginning of the financial crisis and reinforced expectations of a further tightening of monetary policy by predicting strong growth and rising inflation .

The Bank of Korea increased by 25 basis points rate previously set at record low of 2.0%, falling into step with its regional counterparts in Australia, India, Taiwan and Malaysia.

Investors were expecting such an initiative for several weeks in light of the growing confidence shown by the authorities regarding the ability of the fourth largest economy in Asia to consolidate its recovery, despite lingering uncertainties in Europe and the United States.

Most analysts polled by Reuters had forecast, however, on a rate hike in August or September.

The won has increased its earnings to grow by over 1.0% on the session against the dollar.The stock market is, they, remained virtually unchanged.

"Governments in Asia seem relatively confident about the economic outlook despite concerns about the potential impact of euro weakness and the short-term downturn in growth by the rapid pace set earlier this year "said Brian Jackson, a specialist emerging markets at Royal Bank of Canada.

"We expect the Bank of Korea will further increase interest rates by 50 basis points by the end of the year, the risks are increasingly tilted to the upside," he adds.

For a chart on the interest rate and inflation trends: here

PROGRESSIVE CURE

The Governor of the Bank of Korea Kim Choong-soo told reporters that the economy had probably increased more than 7% over the same period last year in the second quarter and throughout the first half.

He also said that inflation should reach 3.0% next year, in the middle of the range the central bank's target of between 2.0 and 4.0%, which analysts said could conduct Bank of Korea to bring its rate of 3.0% by the end of this year.

He also reported a sharp rise in housing loans in June after a period of sluggish growth.

"There is no doubt that the basic rate of 2.0% was very low in view of various factors such as economic growth and inflation outlook," the governor said.

Kim Choong-soo was upbeat on global growth while highlighting the budgetary problems in Europe that it deems the main risk, adding that further turmoil in financial markets were possible.

The tightening of monetary policy the central bank should be gradual as the institution has ensured that its policy would remain accommodative.

"As the policy rate is still very low and the pace of tightening is very gradual, it is still support for the economy and the market impact will not be negative," said Lee Sung Kwon, an economist at Shinhan Investment Corporation.

This is the first increase in interest rates in South Korea since August 2008 and their first change since the beginning of last year.

Agricultural Bank of China (AGBANK), China's third largest bank, has priced its initial public offering dual Hong Kong and Shanghai, which should enable it to raise more than $ 22 billion (17.5 billion euros ) hypothesized high, bigger bet on the market ever.

The first trading day will be held July 15 in Shanghai and Hong Kong the next day. The official announcement of the award is scheduled for Wednesday.

AGBANK, founded by Mao Zedong in 1951, operates a large network of branches in the Chinese countryside and in larger cities.

Three years ago, AGBANK was technically bankrupt.His recovery, after a rescue of 30 billion dollars, has been boosted by the strong growth experienced in the country and the state control over the banking sector.

In Hong Kong, AGBANK sold 25.4 billion shares, representing 8% of its enlarged capital, at a price of 3.20 Hong Kong dollars part, totaling 10.4 billion U.S. dollars, it was reported Tuesday source close to the matter.

The bank had tightened Monday its price range, between 3.18 and 3.38 dollars per share in Hong Kong, against an initial range of 2.88 to 3.48 dollars.

In Shanghai, the price was fixed at the top of its indicative range which started at 2.52 yuan.AGBANK will sell 22.24 billion of yuan-denominated A shares at a price of 2.68 yuan coin, or 59.6 billion yuan (8.8 billion dollars).

In total, AGBANK rise $ 19.3 billion through its dual listing and even 22.2 billion dollars if the over-allotment option is exercised, an event likely in view of the application.

Previously, the largest ever IPO was that of Industrial & Commercial Bank of China with 21.9 billion in 2006.

OFFER 20 times oversubscribed

China International Capital Corp (CICC), Deutsche Bank, Goldman Sachs, JPMorgan, Macquarie and Morgan Stanley are the banks organizing the operation in Hong Kong, with the brokerage firm of AGBANK.

For placing on the market in Shanghai, banks are CICC, CITIC Securities, Guotai Junan Securities and Galaxy.

AGBANK is quoting on the stock market to allow the government to achieve its objective, namely to have the four largest banks in the country publicly traded.

Having for many of them had periods of insolvency, it are now among the largest banks – and companies – in terms of market capitalization.

A source familiar with the matter, it indicates that the offer of AGBANK in Shanghai was 20 times oversubscribed by institutional investors.

In Hong Kong, the institutional demand came from Asia to 4%, 30% U.S. 25% Europe thee, according to sources involved.

Individuals have however shown little enthusiasm in Shanghai, like Hong Kong.

The IPO allotment option included, values AGBANK about 150 billion dollars (nearly 120 billion euros), making it the fourth largest bank in terms of global market capitalization behind ICBC, China Construction Bank and HSBC .

Chaired by Xiang Junbo, headline writer and war hero, AGBANK operates 24,000 branches, employs 441,000 people and boasts 320 million customers.

The price for AGBANK bodes well for the four Chinese banks wishing to raise capital as is the case for Bank of China and ICBC.

The Shanghai stock market has lost nearly 25% since mid-April and fell sharply last week, partly because investors sold shares to participate in the offer AGBANK.

The Autorité des marchés financiers (AMF) announced Wednesday it had exonerated Natixis in an investigation into financial information of the bank in November 2008 at the height of the financial crisis.

In late 2008, the AMF had launched an investigation against the bank owned almost 72% BPCE (People's Savings Bank) after announcing a loss of 234 million euros and information from press reports at the same time a trading loss of one billion euros.

In its decision, the Sanctions Committee of the AMF does not hold grievances against the bank regarding the sincerity and accuracy of its financial information.

"It does not appear that the emergency situation in which it was placed to make before markets opened an initial response to articles in The Tribune, Natixis has disregarded the requirements of accuracy, precision and fairness set out in Article 223-1 of the AMF General Regulation, "reads the decision of the Sanctions Committee.

Sales of new homes in the United States has declined more sharply than expected in May and reached a record low with the end of a tax credit related to real estate, official statistics show, adding to fears a slowdown of economic recovery.

These sales fell by 32.7% to 300,000 annualized, against 446,000 (revised) in April, ending two consecutive months of increases.

This is their biggest decline ever in percentage since the launch of this statistical series began in 1963.

Economists and analysts polled by Reuters on average had forecast 410,000 annualized sales figure of 504,000 after the originally announced for April.

Since the buyers had to sign a contract later than April 30 to qualify for federal tax credit, which expired, observers expected a slowdown in new housing last month.

The median sales price of new homes fell 1% between May and April fell to 200,900 dollars. In one year, prices fell 9.6%, evening their biggest drop since July 2009.