China Tightens Lending, World Markets Fall

123jump.com Staff
26 Jan, 2010
New York City

World markets declined after more banks tighten lending in China. The lending in the first two weeks surged to more than $200 billion, nearly 20% of the annual quota. UK barely emerged from the recession that dragged its GDP down by 6% in the previous six quarters.

[R]9:00 AM New York – World markets declined after more banks tighten lending in China. The lending in the first two weeks surged to more than $200 billion, nearly 20% of the annual quota. UK barely emerged from the recession that dragged its GDP down by 6% in the previous six quarters.[/R]

Worries about the global economic recovery hobbled investors’ confidence in Asia and Europe. Indexes in China declined after more media reports suggested more banks are tightening lending standards.

China has targeted 22% lower lending in the current year to 7.5 trillion yuan, however in the first two weeks banks lent 1.45 trillion yuan or $210 billion. Banks have lent nearly 20% of the entire year quota in the first two weeks of the year.

The lending data was reported by the 21st Century Business Herald today.

European markets edged lower with the UK down more than 0.7%. UK emerged from the recession after fourth quarter GDP increased barely at 0.1%.

The economy expanded after shrinking for the six quarters in a row and declined 6% in the period. In the previous recession in the eighties the economy shrank 4.7% in four quarters.

Europe Earnings Review

Luxottica Group S.p.A., the manufacturer of fashion, luxury and sports eyewear said fourth quarter sales rose 6.4% to €1.16 billion from €1.24 billion a year ago and fell 1.1% at constant exchange rates.

For the full-year sales fell 2.1% to €5.09 billion from €5.20 billion a year ago and fell 4.5% at constant exchange rates.

Luxottica Group S.p.A., in the last one year traded as high as €19.40 in January 2010 and as low as €9.40 in March 2009. Based on the yesterday’s closing price of €18.76 the company has market cap of €8.65 billion.

Novartis AG, the pharmaceutical company said fourth quarter revenues rose 28% to $12.9 billion from $10.08 billion a year ago. Net profit for the quarter rose 54% to $2.3 billion or $1.01 per diluted share compared to net profit of $1.5 billion or $0.67 per share a year ago.

Revenues for the full-year rose 7% to $44.3 billion from $41.5 billion a year ago. Net profit for the quarter rose 2.4% to $8.4 billion or $3.69 per diluted share compared to net profit of $8.2 billion or $3.59 per share a year ago.

Siemens AG, an engineering company said first quarter revenues fell 11% to €17.4 billion from €19.6 billion a year ago. Net profit for the quarter rose 23% to €1.48 billion or €1.68 per diluted share compared to net profit of €1.20 billion or €1.39 per share a year ago.

Siemens AG, in the last one year traded as high as €69.39 in October 2009 and as low as €37.32 in March 2009. Based on the yesterday’s closing price of €64.60 the company has market cap of €55.97 billion.

Earnings Review

Amgen Inc, the biotechnology company said fourth quarter revenues rose 1.6% to $3.81 billion from $3.75 billion a year ago. Net income in the quarter rose 0.6% to $931 million or 92 cents per diluted share compared to net income of $925 million or 87 cents per share a year ago.

Total revenues for the fiscal year 2009 fell 2.6% to $14.6 billion from $15.0 billion a year ago. Net income for the year rose 14% to $4.61 billion or $4.51 per diluted share compared to net income of $4.05 billion or $3.77 per share a year ago.

Apple Inc., the manufacturer of computers and mobile communication devices said first quarter sales rose 32% to $15.68 billion from $11.88 billion a year ago. Net income in the quarter rose 49.5% to $3.38 billion or $3.67 per diluted share compared to net income of $2.26 billion or $2.50 per share a year ago.

Texas Instruments Incorporated, the chipmaker said fourth quarter sales rose 20% to $3.0 billion from $2.5 billion a year ago. Net income in the quarter rose 512% to $655 million or 52 cents per diluted share compared to net income of $107 million or 8 cents per share a year ago.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 187.41 or 1.78% to 10,325.28, and Hang Seng index in Hong Kong decreased 489.22 or 2.38% to 20,109.33, and CSI 300 index in China lower 85.22 or 2.56% to 3,242.80. The FTSE Bursa KL Composite index in Malaysia was lower 13.77 or 1.06% to 1,283.02. Markets in Australia were closed today.

The Kospi Index in South Korea decreased 32.86 or 1.97% to close at 1,637.34. SET index in Thailand closed lower 8.73 or 1.23% to 701.66. JSE Index in Indonesia decreased 19.44 or 0.75% to 2,578.42. Markets in India were closed today for the Republic Day holiday.

Europe Markets Review

In London FTSE 100 Index traded lower 35.91 or 0.68% to 5,224.40, in Paris CAC 40 Index decreased 28.65 or 0.76% to 3,753.20 and in Frankfurt DAX index traded lower 32.49 or 0.58% to 5,598.88. In Zurich trading SMI decreased 48.54 or 0.75% to 6,402.76.