Monday, September 29, 2008

US bailout rejected; 1.2 trillion lost in six hours

WASHINGTON/NEW YORK: US lawmakers rejected a $700 billion bailout plan for the financial industry in a shock vote that sent global markets sliding as
More PicturesEuropean authorities scrambled to prop up a slew of banks. The Dow Jones industrial average posted its largest point decline ever while the benchmark S&P 500 had its worst day since the 1987 crisis with an 8.8 per cent drop. Latin American stocks tumbled 13 per cent, their biggest decline in more than a decade. Even before the vote, Asian and European markets had plummeted on fears the crisis was spreading, while US regional lender Wachovia became the latest big bank to succumb to the crisis. And global money markets were frozen even as central banks poured hundreds of billions of dollars into the financial system to persuade financial firms to stop hoarding cash. "There's a monster amount of fear out there. This is global contagion. It's no longer just the United States," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. The House of Representatives voted 228-to-205 against a compromise bailout plan that would have allowed the Treasury Department to buy up toxic assets from struggling banks. House Republicans, in particular, balked at spending so much taxpayer money just before the November 4 US elections. "I can't believe they weren't able to come together and come up with a solution. Complete disaster was predicted if it didn't pass," said Stephen Berte, senior equity trader at Standard Life in Boston. "I can't see what the upside is right now." US President George W Bush huddled with economic advisers, including Federal Reserve Chairman Ben Bernanke, to consider the administration's next move. "We need a plan that works," said US Treasury Secretary Henry Paulson, the Bush administration's point man on the bailout since the first plan was announced over a week ago. "We need it as soon as possible, and we're just committed to working with congressional leaders to get it done." Investors rushed to assets considered a safe haven. Government bond prices and gold jumped, and oil fell below $99 per barrel on the view that world demand will contract as the financial crisis puts the brakes on economic activity. "What should have been a day of hope turned into a day of desperation," said Marco Annunziato, chief economist for UniCredit in London. "We are facing a systemic crisis of confidence in the global financial system that is pushing us increasingly close to a complete meltdown." World stocks, as measured by the MSCI's world index, lost about $1.7 trillion for the day. Bailout prospects uncertain In Washington, the failure of the bailout bill -- after more than a week of intensive closed-door negotiation intended to hammer out a compromise plan -- brought new uncertainty about the response of the US government to the worst financial crisis since the Great Depression. Republican House members voted against the rescue package by a more than 2-to-1 margin. A majority of Democrats voted in favour. Both parties blamed each other for the failure of the closely watched bill after hours of closed-door negotiations intended to add provisions to protect taxpayers and head off criticism that Washington was riding to the rescue of bankers many Americans blame for triggering the housing crisis. "What happened today cannot stand. We must move forward," House Speaker Nancy Pelosi told reporters. "We are here to protect the taxpayer as we work to stabilize the markets." US presidential candidates Barack Obama and John McCain had both offered qualified support for the bailout proposal, which now dominates the election with just over a month before the vote. Obama, a Democrat, said he believed lawmakers would regroup to pass a financial rescue plan. "I'm confident we're going to get there," Obama said as he campaigned in Colorado. "It's going to be a little rocky." McCain, a Republican who suspended his campaign last week in a failed attempt to broker a bailout deal, called on lawmakers to go back to work. "Now is the time for all members of Congress to go back to the drawing board," he said.
source: www.indiatimes.com

Thursday, September 25, 2008

GSPC is planning IPO by end of the year

Date:Sep-17-2008
Gujarat State Petroleum Corporation (GSPC) is planning an initial public offering by the end of the year. The company is planning a public offering of 10-20% of its equity shares to raise about $1 bn.
According to a company official, the company has mandated DSP Merrill Lynch, JM Financial, Kotak, SBI CAP and Citibank for doing dilution for the IPO. He also added that, "The IPO was proposed to hit the market in November, but I now think it will happen in December-January".
GSPC is an oil and gas producing company with a dominant presence in the Energy Sector of India, attracting interest from oil companies all over the world, and signing partnership agreements covering E & P activities, based on its remarkable discoveries in Gujarat. GSPC has grown from a small oil and gas producing company in Gujarat into a vertically integrated energy company across India and overseas within just a decade. Incorporated in 1979 as a petrochemical company, GSPC has today metamorphosed into a large-scale Rs. 3900 crore energy organization, excelling in a wide gamut of hydrocarbon activities.

Thursday, September 18, 2008

Turbulent Lehman Brothers to affect Indian IT-BPO

New Delhi: With the tentacles of Lehman Brothers fiasco unfolding on the Indian software companies, the industry body Nasscom today said, there would be short term and company specific impact.
Stating that the Indian IT-BPO sector is a part of the global financial system that has seen a lot of turbulence in the recent past, the apex body said, "Our preliminary analysis of the current situation indicates that the impact will be short term and company specific; we will continue to keep a watch on any further downstream impacts."
With nearly half of their revenues coming from banking and financial services segments, India's top software exporters are closely monitoring the financial crisis spreading across markets.
While Infosys and TCS, the country's two largest IT firms, said they do not comment on individual clients, the third largest IT firm in the country, Wipro said it was in dialogue with failed Lehman Brothers, although revenues from it were modest.
The fourth largest software exporter from the country Satyam also said that it was "concerned" over the developments in the US. HCL Technologies, however, said that the two US majors, Lehman and Merrill Lynch, were not its clients and therefore, would not adversely affect the company.
When one puts all of this together, there is some loss but given that most of the top 5 companies have over 40-45 per cent exposure to BFSI space, then mood is worried and concerned right now, said an analyst.
Source: www.mid-day.com