Europe and Asia Advance

123jump.com Staff
04 Jul, 2007
New York City

Global markets conitnued to climb on the day when markets in New York were closed. European markets closed higher across the region on takeover rumors and positive earnings outlook. Hotel and property stocks were lifted on the $20 billion buyout for Hilton Hotels. Chipmakers in Asia and Europe rallied on expectations of price hikes. Nuclear industry related stocks rallied in Tokyo. Bank of England is expected to increase rate by 25 basis points tomorrow.

[R]4:00PM New York, 10:00PM Frankfurt, 1:30 AM Mumbai – European markets closed higher across the region on takeover talks, Asian markets closed to a record high for the second day in a row.[/R]

U.S. Stock Markets were closed for July 4th Independence Day holiday.

Latin Markets closed mixed on light trading with market closed in New York. Argentina gained 0.7% and led the region followed by 0.3% increase in Mexico. Brazil and Chile closed a fraction lower.

Congress in Mexico ratified the appointment of Roberto del Cueto on the five-member central bank board. Mexico bonds, currency and IPC Index has gained in the last three sessions on rating revision from S&P. Brazil

Brazil May industrial output jumped 4.9% compared to 6% rise in April. Seasonally adjusted output increased 1.3% in May from April. Steady decline in interest rate from 19.75% in the fourth quarter in 2005 to 12% in June of this year has lifted the economic growth.

European Markets closed higher for the second day in a row across the region. Takeover rumors and earnings expectations lifted averages. Dollar closed 25-year low against European currencies a day before rate decision from Bank of England.

Spain with a gain of 0.8% led the rising markets in the region followed by 0.74% gain Norway, 0.6% in Switzerland, 0.5% in the U.K. and France and 0.3% in Germany. Italy edged 0.08% higher.

In Frankfurt trading, DAX Index gained 0.3% on takeover talks. Semiconductor memory makers rose in Asian and European trading. Infineon gained 1.1% following a similar rise in Samsung Electronics and Hynix Semiconductor in Korean trading on the hopes that chip prices may be increased by 10%. Rumors about Apple iPhone distribution in Germany lifted Deutsche Telekom. Volkswagen and BMW increased 1.2% and Porshce edged 0.4% higher on rising sales in the U.S. and China. MLP Ag, independent financial broker, gained 7% on the possible buyout offer from AXA.

In London trading, FTSE 100 Index gained 0.5% to 6,673.1 on property, hotel, and airlines stocks. Market expects Bank of England to increase the rate by 25 basis points to 5.75% driving the pound to 26 year high against the dollar. British Airways reported fall of 1.4% in traffic but the traffic in first and business class increased by the same amount. The stock jumped 5.3% on the news. News of $20 billion buyout for Hilton from Blackstone lifted hotel and restaurant stocks. Whitbread, owner of Travel Inn, and Punch Taverns increased 3%. Intercontinental Hotels gained 4% and Accor in Paris trading jumped 10%. British Land jumped 3% and Land Securities Group, the largest European, added 2.1%. Ryanair June traffic gained 18%, stock edged 0.2% and EasyJet increased 2.6%.

The largest home lender, HBOS Plc, reported that home prices increased in June by 0.4% to 197,500 pounds compared to 0.3% gain in May. Four rate hikes in the last ten months have not cooled the housing markets.


Asian Markets closed at record level for the second day in a row. Indonesia, India, and South Korea reached new record, Thailand advanced to a 10-year high and Taiwan to 7-year high for the second day in a row. Philippines declined from its record close yesterday. South Korea led the region with a gain of 1.82% followed by a rise of 1.4% in Thailand, 0.8% gain in Taiwan, 0.5% in India and 0.3% in Hong Kong and Indonesia. China led the decliners in the region with a loss of 2.1% followed by 0.5% decline in Philippines, 0.4% decrease in Singapore.

In Shanghai trading, CSI Index fell 2.1% on the worries that moderate tightening from the central bank may slow growth and several large IPO listings will reduce liquidity in the market. Banks led the index lower. China Citic bank dropped 2.4%, Bank of China fell 1.6%, and ICBC fell 1.2%. Privately controlled banks Shanghai Pudong Bank fell 4.5% and China Minsheng dropped 2.9%.

In Hong Kong trading, Hang Seng rose 0.3% on rising banks and property stocks. While banks in Shanghai trading fell, in Hong Kong they advanced. China Construction Bank gained 2.6%, ICBC edged 0.7%, and Bank of China increased 0.3%. Chinese Estates Holdings soared 19% on company statement that talks with buyers may or may not yield company sale.

In Seoul trading, KOSPI index advanced 1.8% to a record close on strength in financials, industrials and shipbuilders. Kookmin Bank gained 1.9% and Woori Finance jumped 2.6%. Earnigs expectations for the second quarter and recent surge in ship orders lifted Samsung Heavy industries by 7% and Hyundai Heavy by 5.5%. Samsung Electronics jumped 1.2% on the successful launch of iPhone from Apple. Samsung chips costs 30% of Apple iPhone component cost.

In Mumbai trading, Sensex 30 increased 0.5% on a rally in cement stocks and strong interests in IPOs. ACC, largest cement maker gained 7%, led other cement companies on price hikes. Vishal Retail IPO jumped 180% on heavy volume and Indiabull Real Estate completed its $400 million GDR offering. Banks and software exporters fell.

In Tokyo trading, the Nikkei 225 edged 0.1% higher to 18,169, a fifth rise in a row. Real estate, banks, and retail stocks were in demand. Strength in New York trading helped exporters. Sony gained 1.9% and Canon rose 0.3%. Imperial Hotel jumped 10% on a news report from Nikkei News that American hedge fund Cerberus may sell 40% stake in the hotel. Fast Retailing fell 4.3% on the same-store sales decline of 1.3% and customer traffic loss of 3.3% in June. ABC-Mart surged 7% on earnings revision for the first half by 6.4%. Recent nuclear reactor orders to Toshiba lifted several nuclear industry stocks. Organo Corp jumped 5.5% and Kimura Chemical Plants increased 4.7%.


[R]6:00PM Mumbai – 7:30AM New York – Cement stocks lead Sensex to record close for the third day in a row. Vishal IPO soars 180% and Indiabull Real Estate prices GDR at $10.32.[/R]

Sensex 30 Index in Mumbai trading increased 73.73 or 0.5% to close at 14,880.24, third record in a row.

The index opened up and quickly jumped to a new high after fifteen minutes of trading. The volatile index fell in the afternoon trading to recover from the low of the day. Broader market failed to participate in the advance with 1,445 stocks declining, 1,219 gaining and 68 remaining unchanged. The Sensex index has added 3.1% in the last five days. The turnover on BSE declined to Rs 4,742 crore from Rs 4,948 crore from a day ago.

IPO News

Vishal Retail soared on its first day of trading. The apparel retailer with a network of locations in suburban malls in more than 20 cities jumped 179% at close. The IPO priced at 270 rupees, opened at 472 rupees and touched 809 before settling at 752 rupees.

Indiabull Real Estate Ltd completed its offering of $400 million by selling global depository receipt. The receipt priced at $10.32 represents one stock in the company. The offering of $360 million was increased by $40 million to meet demands from investors in Europe and America. Indiabull is working on two housing projects in Chennai and one in Mumbai and two office buildings in Mumbai. The receipt was priced at 4% discount to the Mumbai closing price on Tuesday of 435 rupees.

Advancing Stocks

Stocks of cement, banks and software export companies led the most active list. ACC, largest cement volume maker, jumped 7% or 83.40 rupees to 1,004. The cement companies have raised prices of 50 Kg cement bag between 3 rupees and 5 rupees. Cement companies have been defiant in ignoring government please for four months to avoid price hikes. UltraTech Cement jumped 4.72% to 926 rupees, Ambuja Cements advanced 4.2% to 130 rupees, and Grasim gained 1.45% to 2,742 rupees.

Larsen & Toubro added 32 rupees or 1.4% to 2,291 on the reports that company may sell stake in its recently formed subsidiary for port and shipbuilding businesses.

Declining Stocks

Bank stocks faced selling pressure after gaining for two weeks. State Bank of India dropped 19 rupees or 1.2% to 1,563. HDFC Bank lost 1.90 rupees to 1,148 and Corporation Bank, controlled by Life Insurance Corporation, fell 12.40 rupees to 323.65. However, ICICI Bank gained 2.4% on the news that the company has received government approval to sell 24% stake in its financial services subsidiary.

Jet Airways fell 7.55 rupees to 794 rupees on a ‘sell’ recommendation from Citigroup. The company recently acquired the low-cost carrier Sahara Airlines. Citigroup lowered earnings estimates by 41% for the merged airlines on higher than expected start up costs on recently launched European and American routes.

Advancing rupee in international trading, left software exporters lower for the third day this week. Tata Consultancy fell 0.9% to 1,117, Infosys declined 0.7% to 1,933, and Wipro lost 1.2% to 509 rupees.