U.S. Stocks Edge Higher, Merrill Rises 4%

123jump.com Staff
24 Dec, 2007
New York City

The U.S. averages advanced led by the optimism that holiday retail sales will be better than earlier forecasted. Nasdaq, Dow, and S&P 500 inched 0.5%. Merrill Lynch added 4% after it received investment from Singapore and Davis Fund in New York. Target added 2.5% after activist investor Ackman raised his stake in the company to 10% from 9.6%. Asian markets surged led by a sharp rise in India, Hong Kong, and China.

[R]10:30AM New York – Merrill Lynch rises after selling its commercial finance business and receiving investment from Singapore and Davis Fund.[/R]

Dow Jones Industrial Average jumped 91 to 13,452, Nasdaq increased 15.87 to 2,707, and S&P 500 added 10.71 to 14,95.18.

Merrill Lynch ((MER)) after a recent string of losses in sub-prime market jumped 4% to $57.80 today on the news of fresh investment from Singapore government controlled fund and from a mutual fund company Davis Select. Merrill also sold its commercial finance business to General Electric with assets of more than $10 billion.

GE Capital has agreed to purchase most of Chicago-based Merrill Lynch Capital, Merrill Lynch and Co., Inc.’s wholly owned middle-market commercial finance business according to a statement on Merrill web site.

Financial terms were not disclosed.

The acquisition, expected to close in the first quarter of 2008, will add more than $10 billion in assets and $5 billion in commitments to GE Capital Commercial Finance’s base of $260 billion.

Temasek, sovereign fund controlled by Singapore agreed to invest $5 billion according to sources in Singapore. Davis Selected Advisors P agreed to buy stocks worth $1.2 billion in Merrill Lynch according to news report on Bloomberg. Calls to Davis Funds were not returned seeking information on the purchase.

Temasek Holdings will invest $4.4 billion in Merrill Lynch common stock and has the option to purchase an additional $600 million of Merrill Lynch common stock by March 28, 2008. Its ownership position will at all times represent less than 10 percent of Merrill Lynch's outstanding common stock.

Davis Selected Advisors will be making a long-term investment of $1.2 billion in common equity. Both Temasek Holdings and Davis Selected Advisors will be passive investors and will not have any rights of control and have no role in the governance of Merrill Lynch.
According to the term sheet released on Merrill Lynch web site, Temasek has agreed to a lock up period of one year for the investment. Temasek has agreed to pay $48 per share for a total of $4.4 billion.

Target ((TGT)) increases by $1.16 to $51.84 after an activist investor William Ackman increases his fund stake in the company to 10% from 9.6% according to a filing with SEC.

Asian markets closed sharply higher led by a surge in India, Shanghai, and Hong Kong.

European markets at mid-day traded higher led by advance in Norway and UK.


[R]7:30AM New York – Asian Markets closed higher led by a surge in India, Hong Kong, and Shanghai.[/R]

Asian markets closed higher ahead of the holiday week.

The talks of continued weakness in the U.S. economy and probable weakness in the interest rate lifted property stocks in Hong Kong. Mining stocks closed higher in Australia. India closed higher as investors supported the rising market on the higher close in the U.S. on Friday.

Markets in Japan, Thailand, and Indonesia were closed.

In Hong Kong Hang Seng index closed up 501.88 or 1.82% to 28,128.80 and in Australia ASX 200 increased by 78.60 or 1.25% to close 6,388.00.

In South Korea Kospi Index increased 41.15 or 2.35% to close at 1,919.47. In India Sensex Index surged 691.55 or 3.61% to close 19,854.12.

Brokerage stocks lifted Chinese stocks. Shanghai Composite Index jumped 2.6% to 5,234.26. Citic Securities rose 5.3% and Northeast Securities soared 7.3%.

Investors in China have been pouring money into real estate and stock market as banks pay interest rate less than the prevailing inflation. The recent surge in stock market indexes and real estate prices in urban areas is a reflection of current account surplus and rising trade surplus. The macro picture for stock markets and real estate is not likely to change unless the trade surplus declines dramatically.

PetroChina closed higher by 5%.

Sensex in India surged 3.6% to close at 19,854.12 after Gujarat State election returned pro-business BJP party with a higher margin and just short of two-thirds majority.

Banks led the gainers in the session. HDFC, the housing finance company soared 6%. Software exporters gained led by a 6% rise in Wipro. GAIL, Gas Authority of India soared 9% and ONGC added 4.8%.