Aviva to axe 1,000 jobs in Ireland -report
No one from Aviva was immediately available to comment on
the report.Aviva, Ireland’s largest general insurer and a major player
in the country’s life insurance sector, has been reviewing its
Irish operations.
US officials, banks to tackle mortgage refinancing plan - WSJ
Federal officials have been trying to broker a settlement
with the five largest mortgage servicers - Ally Financial Inc,
Bank of America , Citigroup Inc , J.P. Morgan Chase
and Wells Fargo & Co — the Journal said.It is not clear how many borrowers would qualify for help,
the paper added.Officials are pushing for a plan in a bid to break a legal
impasse with big banks over alleged foreclosure abuses and ease
problems in the housing market, the paper said.Discussions are still fluid and any final outcome is
uncertain. Talks between government officials and the banks are
expected to continue this week, the newspaper said.JPMorgan declined to comment to Reuters on the Journal
report. Reuters could not immediately reach the other four
lenders for comment outside regular U.S. business hours.
Walgreen tries to stay in Express Scripts’ Tricare
Walgreen and Express Scripts have been engaged in a public dispute over their contract since then. Express Scripts gained more prominence in July, when it announced a $29 billion plan to acquire rival Medco Health Solutions Inc.Express Scripts sued Walgreen in September, alleging the drugstore’s marketing materials about the issue were false. Express Scripts is seeking injunctive relief.Now, Walgreen said it would give Express Scripts “an ironclad guarantee” to match or beat the average costs per adjusted prescription of every other pharmacy in its Department of Defense Tricare pharmacy program. Walgreen also stood by its earlier, rejected offer to contract separately with Express Scripts on just Tricare.”We see this as an attempt by (Walgreen) to move the negotiations further into the public arena, and not a good faith effort to reach a larger agreement between the two companies,” JP Morgan analyst Lisa Gill said in a research note.DEFENSIVE PLAYSThe Tricare program serves U.S. service members, retirees and their families. Beneficiaries can fill prescriptions at military facility pharmacies, through a mail-order pharmacy, at retail network pharmacies and at non-network pharmacies, according to the plan’s Website.”As we’ve said all along, we would welcome (Walgreen) in our network but only at rates that are right for our clients,” an Express Scripts spokesman said.If Walgreen and Express Scripts were to reach an agreement that included lower rates than those proposed for Tricare, Tricare would have the option to switch to those rates, Walgreen added.Along with its latest negotiating tactic, Walgreen last week reached a deal to keep filling prescriptions for Blue Cross Blue Shield of Kansas City patients, even if it is no longer in Express Scripts’ network.That pact shows that Walgreen has been able to hold onto some of the prescriptions it currently fills. However, it still stands to lose out on billions of dollars in revenue if it cannot come to terms with Express Scripts.Walgreen had a stare-down last year with CVS Caremark Corp over prescription reimbursements that was similar to its dispute with Express Scripts. Walgreen had been ready to stop filling prescriptions for millions of CVS Caremark’s drug plan members. The parties reached a deal after just 11 days.Walgreen said that nearly 200,000 military beneficiaries have told it that they are concerned about not having access to its stores as part of the Express Scripts provider network.While that number may seem large, it is just a fraction of those who may fill prescriptions in the program; Tricare offers coverage to 9.6 million beneficiaries.
Kuwait fund aims to boost China investments - official
Kuwait, the world’s No. 6 crude exporter is one of the
richest countries globally with its sovereign wealth fund, KIA,
managing assets in excess of $290 billion. It owns stakes in
companies like Citigroup , Daimler AG (DAIGn.DE) and was a
cornerstone investor in the initial public offerings of
Agricultural Bank of China and insurer AIA Group Ltd
.While Gulf funds have historically preferred to invest in
Europe, many may turn their gaze eastward as growth slows. But
analysts say that investments into Asia is tricky given
regulatory constraints and increased competition from local
funds like Temasek and GIC.Kuwait is open to any investment opportunities in Europe if
they are compatible with risk controls, the OPEC member’s
finance minister Mustapha al-Shamali was quoted as saying by the
state news agency last week.Shatti said he hopes that the KIA hopes to get permission
“very soon” to start trading in the Shanghai Stock Exchange
, as China plans to allow foreign companies to trade on
the bourse. Current regulations allow foreign companies to trade
only on the Hong Kong bourse, he added.Sale of Kuwaiti oil and crude products to China grew from
$400 million in 2004, to about $10 billion now, Shatti said.Kuwait Petroleum Corp, the country’s state oil company, is
working on a $9 billion joint project with Sinopec to build an
oil refinery and petrochemical plant in southern China. The
project, potentially one of China’s biggest foreign investments,
would be 50-50 owned by Sinopec Group, a parent of top Asian
refiner Sinopec Corp.
Wal-Mart’s pork scandal highlights struggles in China
* Food safety a hot issue in China* Other foreign firms have come under state media scrutinyBy Melanie LeeSHANGHAI, Oct 14 (Reuters) - Wal-Mart’s latest
troubles in China involving mislabeling of its pork products
reflect the retail giant’s struggles in a complex market where
rapid expansion and a cumbersome takeover has marred profit and
growth.After entering China in 1996, its expansion gathered steam
in 2007 when the world’s largest retailer bought a 35 percent
stake in Taiwanese hypermarket chain Trust-Mart. It had 346
stores in the mainland as of end-August.As a result Wal-Mart’s market share in the hypermarket space
jumped to 11.2 percent in 2010, from 4.8 percent in 2005, but
spending involved in the expansion has been weighing on its
profitability.The company acknowledges that.”Wal-Mart China made its maiden profit in 2008. Since then,
we have made steady progress every year despite the aggressive
store roll out program. As you know, new stores take time before
they can generate substantial profits,” a Wal-Mart spokesman
said in emailed comments to Reuters.Wal-Mart competes with French hypermarket chain Carrefour
, Britain’s Tesco , Germany’s Metro AG
, China’s Sun Art and China Resources
Enterprise in a hypermarket sector that is forecast to
grow at a compounded annual rate of 10.1 percent between 2010
and 2015, according to Euromonitor.In 2010, Sun Art was the number one player in China with 12
percent of the market, followed by Wal-Mart, China Resources and
Carrefour. Carrefour’s market share has remained flat over the
past three years at around 8 percent.Struggles and difficulties in integrating its Trust-Mart
operation were reasons behind the departure of Wal-Mart’s top
two China executives earlier this year, local media has
reported.”Carrefour and Tesco have a long track record of being
successful outside their home market whereas Wal-Mart has not,”
said Paul French, chief China analyst at retail consultancy
Access Asia.Some other American retailers have faltered too. Best Buy
, the world’s largest consumer electronics chain, closed
all of its namesake stores in China earlier this year to cut
costs, although it said last month that it is mulling a return.”In general, European and Asian (retail) companies are much
better operating outside their home territories than American
companies,” French said.While Wal-Mart’s retail expansion may have mixed success,
analysts see its e-commerce strategy as promising. Earlier this
year, Wal-Mart opened an e-commerce headquarters in Shanghai and
bought a minority stake in Chinese e-commerce firm Yihaodian.
Wal-Mart was also part of a consortium that invested in Chinese
online electronic retailer 360buy.”Recent players like Yihaodian and (other) B2C retailers,
their memberships are growing very fast…It’s a good model for
certain segment so Wal-Mart is moving fast by doing investments
now,” said Adam Xu, a Shanghai-based consultant with Booz & Co.STATE MEDIA INCREASES SCRUTINYAuthorities in Chongqing in southwestern China have detained
37 Wal-Mart employees, arresting two, over accusations that
Wal-Mart mislabeled ordinary pork as organic over the past two
years.The company said on Monday it had temporarily closed 13
stores in Chongqing to “complete comprehensive actions to
upgrade the standards” of the stores.The issue of food safety has been a hot one in China, with
reports of watermelons exploding after being injected with
growth hormones, to poisonous milk and infant formula scandals.Earlier in the year, China’s Premier Wen Jiabao called on
Chinese businessmen to “thicken their moral blood” and not just
focus on profits.”In China you see big (food safety) problems. I think the
problem is widespread, foreign and local retailers all face this
problem,” Xu said.Other major Western firms have recently come under
increasing scrutiny from China’s state media, facing exposes and
fiery criticism over hot issues like food safety, and garment
quality.All retailers in China are vulnerable to food safety issues
as gaps in the supply chain could lead to exploitation by errant
employees, analysts say.In February, China fined Carrefour and Wal-Mart a combined
9.5 million yuan ($1.5 million) for manipulating product prices
in some of their stores.Wal-Mart was also fined in March for selling duck meat past
its expiry date in Chongqing.The problem of price manipulation and mislabeling at
Wal-Mart could be the result of a breakdown in its system due to
the lack of training, consultancy Access Asia’s French said.”Obviously you cannot change the sell-by date on something
and you can’t claim that something is organic when it’s not. But
do these guys (low level employees) think it’s really that big a
deal?,” French said, adding that poor monitoring and training
could be the cause of the problem.Despite the scandals, some consumers remain committed to
Wal-Mart.”There are many problems in the distribution chain and so
even the supermarkets themselves can’t guarantee their food
quality,” a female office worker in her twenties who would only
give her surname as Dong, said outside a Wal-Mart store in
Shanghai.”The scandal won’t affect my choice of Wal-Mart,” Dong said.
FEATURE-Syria’s uprising exacts heavy toll across economy
* Access to trade financing becomes more difficult* Investment projects progress more slowly* May affect political stance of business communityBy Suleiman Al-KhalidiAMMAN, Oct 12 (Reuters) - In a restaurant in the once
bustling Hamidiyah souk of the old city of Damascus, waiters
prepare to serve a handful of customers in an ornate room with
many empty tables. A singer now performs there weekly, instead
of every day.”The number of customers has almost halved,” says Ahmad, a
manager at the famous Abu al Izz restaurant, as he reminisces
over days when he would turn away diners who could find no place
to sit at the establishment’s 250 tables.Across cities, towns and rural parts of Syria, six months
of pro-democracy protests aimed at overthrowing President Bashar
al-Assad, and their violent suppression, have claimed hundreds
of lives and put severe stress on the country’s $60 billion
economy.Business sentiment has soured alongside a strong security
presence in the capital and major cities, while in the restive
provinces of Hama and Idlib, army checkpoints have transformed
some residential areas into conflict zones.In the five years before the uprising, when the authorities
reformed a Soviet-style command economy to allow greater private
sector involvement, boutique hotels sprang up in the old city of
Damascus to cater to tens of thousands of tourists from Europe
and weekend visitors from neighbouring countries. Many of these
hotels say they are now welcoming few if any guests.”There is no occupancy at all and I don’t know if I am going
to close or continue,” said the owner of a 12-room boutique
hotel in an area where several establishments that housed
European and American tourists have shut.”I wish we could see foreigners, but the only people in the
old city are Iranians. These are now the only visitors, along
with weekend shoppers from Lebanon who are supporting the
markets,” the owner, who requested anonymity because of the
sensitivity of the issue, said by telephone.The economy has also been hit by international sanctions
designed to pressure Assad, including a ban on Syrian oil sales
to the European Union. The country has been earning some $2.5
billion a year from oil exports but must now look for customers
further afield, who may pay less than Europe.Last month Syrian Finance Minister Mohammad al-Jleilati
played down the impact of the sanctions on government revenues,
predicting the economy would grow 1 percent this year. Syria is
cushioned by foreign reserves that were estimated at around
$16-18 billion before the crisis — a sizeable amount for an
economy of its size — and low government indebtness, estimated
at just $6 billion by private economists.But businessmen and analysts say the economy is shrinking;
the International Monetary Fund last month forecast a 2 percent
contraction for Syria in 2011, in contrast to 3 percent growth
which it predicted earlier this year. Some private economists
think the recession could be worse.”The impact of the unrest is very negative and in many
sectors it’s hard to quantify, but there is a recession almost
across the board, from tourism to real estate to investment,”
said Nabil Sukkar, a former economist with the World Bank who
runs an economic think tank in Damascus.RESERVESLast month authorities imposed a ban on most imports in an
effort to save foreign currency reserves, but this was revoked
days later after soaring domestic prices provoked outrage in the
business community, which has close ties to the government.”The ban was short-sighted. It would have led to
unemployment and encouraged smuggling. Even now prices have not
gone down sufficiently as yet,” said Sukkar, who predicted the
economy would suffer stagflation — stagnant growth and high
inflation — in coming months.The authorities subsequently announced the central bank
would reduce its role in financing imports. Minister of Economy
and Trade Mohammad Nidal al-Shaar said the government had made a
“mistake by financing everything in the past and is now leaving
businessmen to seek other financing outlets”.Now, monetary authorities will only help importers of basic
commodities and essential foodstuffs with tariffs of under 1
percent, Shaar said.”Let’s say if we were financing 100 million before, now we
are only financing 25 or 27 million so as to prevent the
depletion of Syria’s currency reserves, which is our wealth,
while continuing to finance the essentials and food requirements
of people.”Frankly, I am against financing the imports of the private
sector by the central bank. This is not its job,” Shaar added.This has caused private businessmen to worry about access to
trade financing. In more normal conditions, private banks could
be expected to step in and play a bigger role, but this may be
difficult as the political uncertainty causes hoarding of
foreign currency.A run on the currency, the Syrian pound, was only averted
after the central bank raised interest rates. Bankers estimate
Syria’s reserves have dropped by at least $2 billion this year
as the central bank has pumped in foreign currency in an attempt
to halt the pound’s fall in the black market.Despite its efforts, pressure has been mounting on the
pound, which has been changing hands in the black market at more
than 52 to the dollar. In recent weeks authorities have allowed
the official exchange rate to rise just above 49 pounds from a
previously fixed rate of 47.4.”There is a shortage of dollars in the market and it’s gone
up almost 10 percent in the last few weeks. No banks or the
state are selling dollars and you have to go to the black
market, where rates are going up,” said Ghaith al-Mufti, a local
businessman.INVESTMENTThere is one bright spot for Syria’s economy this year: the
end of a drought that has ravaged crops over the last few years.
Wheat production looks set to pick up to about 4 million tonnes
in 2011 from 3.4 million last year.But this is unlikely to offset the damage to the economy’s
medium-term prospects as the political uncertainty deters
investment.Big investment projects to which Gulf investors have pledged
billions of dollars — real estate developments and shopping
complexes — have not been formally suspended. But at least some
of them appear to have been put on hold as local residents
report little or no construction activity at the sites.In the fertile southern province of Houran, the unrest has
disrupted an important cash cow for state coffers in the form of
taxes that range from construction permits to electricity and
water bills, residents say.So far many members of Syria’s powerful business elite have
tacitly backed the regime. Merchants in Damascus and Aleppo, and
landowners in Homs and Hama, need to cooperate with officials of
Assad’s dominant Alawite minority to conduct their businesses.But as the economic slump continues, it raises the
possibility that businessmen will become more ambivalent or even
critical of the government.”They no longer want Assad. They have lost respect for the
regime and they are saying, who are these people? They no longer
fear them as before,” one prominent Damascus-based trader said
on condition of anonymity.A textiles shop next to the Medhat Basha souk in Damascus
prominently displays a poster that reads: “We are with you,
Bashar al Assad, the merchants of Damascus.”The shopkeeper’s neighbour whispers on the phone that
government security forces have in recent weeks been paying more
and more frequent visits to the area, reminding store owners to
hang posters and asking for a share of the shops’ dwindling
profits.
Investor confidence in hedge funds holds
The GlobeOp Forward Redemption Indicator - a monthly snapshot of clients giving notice they want their money back as a percentage of GlobeOp’s assets under adminstration - rose 40 basis points to 3.11 percent in September but the rate of growth in demand to pull out cash is slowing, the index showed.”September 2011 was the lowest September since the Index began,” said Hans Hufschmid, chief executive officer at London-listed GlobeOp Financial Services. “Investor sentiment continues to be positive,” he said.Investors representing 2.71 percent of GlobeOp’s assets under administration requested their money back in August, reflecting a rise in redemption demand of 63 basis points against July’s data.Redemption notices hit a high of 19.27 percent in November 2008 shortly after the collapse of Lehman Brothers but since have trended lower as investors back hedge funds to help them ride out some of the most volatile stock and bond markets since 2008.Hedge fund returns have proved a mixed bag in recent months.While several long/short equity strategies were hit hard by sharp share price falls in August, some macro and computer-driven “black box” funds, like Man Group’s (EMG.L) AHL, have made money even as volatility spread to the safest of asset classes.The average fund was down 1.2 percent for the year to the end of August, according to Hedge Fund Research’s HFRI index, though this still beats a 3.1 percent fall in the S&P 500 index.Earlier this month, GlobeOp’s Capital Movement Index, which tracks flows to and from its clients’ products, showed gross outflows had dropped to 0.57 percent — their lowest level since GlobeOp started to keep records in January 2006.GlobeOp President Vernon Barback suggested hedge fund investors spooked by the instability of traditional safe havens like gold or the Swiss franc appeared “to be quite comfortable staying put”.GlobeOp is an independent financial administrator specializing in middle and back office services and integrated risk reporting to hedge funds and asset management firms.Established in 2000, the company serves more than 200 clients representing $170 billion in assets under administration and approximately eight to 10 percent of the estimated assets currently invested in the hedge fund sector.
