Morning trades: Asian stocks gain as dollar strengthens
Hong Kong: Asian stocks rose second day in a row on Monday, as exporters gained after the dollar strengthened and U.S. core consumer prices data eased worries about higher U.S. interest rates.

Consolidation in the steel sector was on the minds of investors, after Arcelor's latest move in picking up Russian steelmaker Severstal, and South Korea's POSCO Co. Ltd. has gained as a result, rising 3.06 per cent. World number-three steel maker Nippon Steel Corp. rose 1.64 per cent.

A U.S. government report on Friday indicated that core personal consumption expenditure price index, rose 0.2 percent in April, matching economists' forecasts. Global markets have been hit over the past two weeks by fears that higher inflation would spark more interest rate increases in the United States, the world's largest economy.

As of 0015 GMT, the Nikkei average rose 0.50 per cent to 16,050.53, breaking above the 16,000 points-level for the first time in a week, as exporters gained. In South Korea, the benchmark KOSPI index rose 1.64 per cent, recovering further from six-month lows hit last week.

Australia's benchmark S&P/ASX 200 index rose 0.95 per cent, with miner BHP Billiton up 0.64 per cent, following a recovery in copper and gold prices.
Back to News Review index page  

Arcelor and Severstal face investor scepticism over deal
Luxembourg: Guy Dollé, the chief executive of Arcelor, and Severstal's Alexey Mordashov will arrive in London tomorrow in an attempt to persuade investors about the merits of their proposed €13bn (£9bn) acquisition of Severstal. The bid is aimed at derailing Mittal Steel's hostile offer for Arcelor.

Mordashov, who owns Severstal, and Dollé received a mixed reception when they announced the deal on Friday, as concerns were promptly expressed by many Arcelor shareholders about the Russian company's lack of transparency and poor corporate governance.

More important is the concern expressed by some key shareholders that Arcelor may be overpaying for its Russian rival, and have demanded to see the Deutsche Bank report which justifies Severstal's €13bn price tag.
An analyst's note published by Commerzbank on Friday asserted that the true value of Severstal was closer to €10bn, not €13bn, claiming that "Arcelor shareholders will have no benefit at all from the supposed value of €44 per Arcelor share that is said to be implied in this deal".

Mittal's offer values the company at €37 a share.

Mittal said at the weekend that it would push ahead with its bid regardless of the Severstal situation. Already, several key Arcelor shareholders, including Commerzbank, have said they continue to support the Mittal offer over the Severstal deal.

Arcelor does not need to seek approval from shareholders for the Severstal deal. However, Mr Dollé said on Friday that he had scheduled an extraordinary general meeting for 28 June, where he would give investors the chance to vote on the proposal. The board needs only a simple majority to push ahead.

The Severstal deal remains conditional on the Mittal bid failing. Mittal's offer closes in early July, and also requires the backing of only a simple majority of shareholders to succeed.

A combined Arcelor and Severstal would have a 22 per cent market share in the global automotive steel industry, with about 40 per cent of its profits coming from countries such as Russia and Brazil where costs are lower.
Back to News Review index page  

China will maintain stable oil supply over next 15 years
Beijing: China's annual oil output can be maintained at a healthy level, of between 185mn and 195mn tons, over the next 15 years, a senior Chinese oil official has said. The levels could be maintained thanks to new discoveries offshore and in its western regions, the China Daily reported.

Speaking at this weekend's forum on the nation's energy strategy, Zhai Guangming, research division director of the China National Petroleum Corporation, China's largest oil producer, said China produced 182mn tons of crude oil in 2005.

By fully developing old oil fields in the east and increasing drilling in the west and offshore areas, China's annual crude oil output could surpass 200mn tons by 2020 and remain at 170mn tons by 2030, said Zhu.

The National Development and Reform Commission has projected that China will need 330-350mn tons of oil by 2010.
Back to News Review index page  

Vodafone's Sarin set to unveil cost-cutting strategy
London: The chief executive of Vodafone, Arun Sarin, is all set to unveil a deep cost-cutting programme for the company, along with record annual pre-tax losses of around £15bn.

The mobile phone operator's Newbury headquarters is expected to see about 500 jobs being slashed as Sarin's attempts to cut overheads by up to 20 per cent over the next few years.

The cost-cutting drive is important for Sarin, as he responds to concerns within the City over sluggish growth and lacklustre performance. Many back-office jobs are expected to be outsourced to IT specialists, such as Hewlett-Packard and IBM.

Vodafone is set to post one of the steepest pre-tax losses in British corporate history. But that loss, outstripping Vodafone's own £13.5bn record set in 2002, is unlikely to ruffle big City investors as experts believe the company, which is already returning £15bn to shareholders, can afford to lift returns by around 15 per cent.
Back to News Review index page