Economics
Construction activity in the UK fell to a record low in July. The
Chartered Institute of Purchasing and Supply’s (CIPS) Construction
Purchasing Managers’ Index, which measures the industry’s performance,
dropped 2.1 points to 36.7 in July — the lowest since the survey begun in
April 1997. A reading of above 50 represents growth.
Repossessions Thousands more homeowners are having their houses
repossessed than official figures suggest, Shelter, a leading housing
charity, has said as the City Watchdog prepares to publish repossessions
data for the first time today.
Eurozone producer prices rose by 0.9 per cent in June, pushing the
annual increase to a record 8 per cent. This was up from 7.1 per cent in May
and the highest figure since records began in 1991.
US consumer prices jumped at their sharpest rate in more than a quarter
of a century during June. An inflation gauge tied to consumer spending rose
0.8 per cent in June, its steepest gain since a 1 per cent rise more than 27
years ago, in February 1981. Prices rose by an annual rate of 4.1 per cent
in June, up from 3.5 per cent in May. This is the biggest annual gain since
May 1991.
Factory orders in the United States rose by a bigger than forecast 1.7
per cent in June after an upwardly revised 0.9 per cent gain in May. It was
the strongest monthly gain in orders since last December and beat Wall
Street economists’ forecasts of a 0.7 per cent rise.
US incomes rose at the lowest rate in more than a year during June.
Personal incomes edged up 0.1 per cent after rising 1.8 per cent in May. It
was the smallest rise in personal incomes since April 2007, when they were
flat.
Banking
& finance
HSBC’s chairman, Stephen Green, described financial markets as “the
most difficult for several decades” as the bank posted a 28 per cent fall in
first-half pre-tax profits to $10.2 billion (£5.1 billion). It set aside
another $10.1 billion to cover bad debts. Britons typically have 5 per cent
less money in their bank accounts than a year ago, the bank said, largely
because of rising food and utility bills.
UBS won a court order barring a group of former and departing
executives from poaching clients of its UK wealth management arm. The Swiss
bank accused Vestra Wealth, a new wealth manager backed by Goldman Sachs,
David Scott, its founder, and four departing fund managers of orchestrating
a “smash and grab raid” on its British business.
Sigma Creditors of a $30 billion finance company managed by Gordian
Knot, the City investment firm, have called in Deloitte, the accountant, to
advise them on recovering their cash amid fears that Sigma Financial may not
be able to pay its debts.
Fortis, the Belgo-Dutch bank that joined forces with Royal Bank of
Scotland last year to buy ABN Amro, has told investors that the credit
crisis is far from over after unveiling a 48 per cent fall in profits in the
second quarter. The bank made an €830 million (£659 million) profit in the
three.
Mortgage banks gave homeowners more cause for hope as HBOS and Abbey,
Britain’s two biggest lenders, cut rates again on some of their deals.
Société Générale The biggest rogue trader scandal
in history spread last night as a second employee of the French bank was
placed under formal investigation in connection with the loss of almost €5
billion. Thomas Mougard, is alleged to have helped Jérôme Kerviel, the
trader at the centre of the scandal, to input fictitious deals to hide
illegal transactions.
UBS said that David Aufhauser, general counsel of its investment bank
and of the Americas, had resigned, as Andrew Cuomo, the New York
attorney-general, investigates his involvement in the Swiss bank’s sale of
auction-rate securities.
Construction
& property
Bluewater The value of the Bluewater complex, one of Europe’s biggest
shopping centres, has fallen by almost £80 million, according to its
co-owner Lend Lease, the Sydney-based developer that is building London’s
2012 Olympic Village.
Morgan Sindall, Britain’s biggest supplier of office interiors, said
that it had achieved a record half-year performance, with profits up 31 per
cent as recent acquisitions buoyed results. It reported underlying pre-tax
profits of £33.1 million against £25.2 million in the first six months of
2007.
Consumer
goods
SABMiller, the brewing group, announced a management reshuffle in which
Norman Adami will return to the company eight months after he retired as
head of its Americas region for family reasons. He has been named chairman
and managing director of its South African business. Analysts see his return
as a response to the recent decline in volumes in South Africa.
Bacardi, the Bermudan spirits group, reignited speculation over an
eventual initial public offering by appointing a new chief executive. Seamus
McBride, an executive vice-president at Colgate-Palmolive Company, will take
over from Andreas Gembler when he retires next month.
Palm oil prices will remain at record levels in 2008, according to New
Britain, the Australasian producer. The Papua New Guinea grower reported a
93 per cent jump in first-half profit to $68.1 million (£34.5 million),
underlining the resurgence in demand for palm oil, which is increasingly
used as a bio-fuel as well as a basic ingredient for many foods.
Engineering
Tata, the maker of the world’s cheapest car, the Nano, could have a
commercial flop on its hands as surging raw material costs scramble its
low-cost business model, insiders said. Tata could suffer heavy losses on
the car, which it promised to sell for 100,000 rupees (£1,250), analysts
said.
QinetiQ, the British defence technology group, has bought Dominion
Technology Resources (DTRI), a US security company, for $104.5 million
(£53.27 million) cash. DTRI provides a range of consulting services and
technology expertise to intelligence services and other classified
customers.
General Motors The cost of insuring its debt against default has hit a
record high in the wake of a $15.5 billion quarterly loss reported by the
carmaker on Friday.
Health
ImClone Carl Icahn, the billionaire corporate raider seeking to force a
sale of Yahoo!, has become the target of a raid himself after rejecting a
$4.5 billion (£2.29 billion) takeover offer for ImClone, his drugs company.
Industrials
ArcelorMittal, the world’s largest steelmaker, said that it would build
a $600 million (£305 million) steel mill in Mexico and buy a coking coal
plant in the United States. It was still looking at potential sites for the
Mexican mill, which will be able to produce 500,000 metric tonnes of carbon
steel and bars every year.$20 million (£10.19 million) during the quarter to
June 30 on the previous three months.
Orient-Express Hotels Investors speaking for 14 per cent of the luxury
train and hotel operator, are to requisition a special shareholders meeting
in an attempt to force the board to change its “oppressive and untenable”
corporate governance structure.
Media
News Corporation Rupert Murdoch announced plans to invest $100 million
(£50.9 million) in India, including the launch of six new regional
television channels. Mr Murdoch has a strong television presence in Asia’s
third-largest economy through leading broadcaster Star, a wholly owned
subsidiary of News Corp, the parent company of The Times.
The Economist Group said that it had bought Capitol Advantage, the
Washington-based online technology company, for $43 million (£21.9 million).
Capitol Advantage helps American corporations and trade associations to
organise advocacy campaigns and lobby elected officials, the publisher said.
International Brand Licensing posted a lower first-half pre-tax profit
and revenues because of the impact of its withdrawal from the England
cricket sponsorship agreement a year early. Its first-half pretax profit
fell to £148,000 from £1.2 million last year.
Natural
resources
TNK-BP The crisis at the Russian oil company deepened when its chief
financial officer resigned amid a feud between shareholders. James Owen said
that he could no longer work for the company, which is embroiled in a
tug-of-war between rival shareholders. BP, which owns 50 per cent of the
venture, and four oligarchs, who own the rest, are in dispute. Page 40
Rio Tinto, the world’s second-largest miner, has lost control of one of
its most important iron ore projects. The Government of Guinea has rescinded
its licence to mine Simandou, one of the world’s largest undeveloped iron
ore deposits, which could generate revenues of more than $10 billion (£5
billion) a year.
Imperial Energy said that it had received another approach relating to
a possible cash offer for the company. Sinopec, of China, is understood to
have launched a bid last week to rival the offer made by ONGC, an Indian
company.
Retailing
Wrapit, the struggling wedding gifts service, has appointed
administrators after efforts to rescue the business failed. The move is
likely to mean delays and disappointment for hundreds of couples awaiting
gifts from the business.
Support
services
Intertek Group, the testing and inspections group, posted a 20.1 per
cent rise in first-half profit and said that it expected a strong
performance in the second half, adding that although global economic
uncertainty could hit broader trading conditions, it expected the group to
perform strongly in the rest of the year.
Interserve said that its consortium with John Laing had received a
contract worth £310 million from the Ministry of Defence to create and
manage its new office and accommodation complex at Corsham, Wiltshire.
Technology
Sage Group, the business management software company, said that its
results for the nine months to the end of June were in line with
expectations and full-year results should also be in line with expectations.
Statpro Group, the software company, reported a 45 per cent fall in
first-half pre-tax profit and said that it expected trading conditions to
worsen in the second half.
Telecoms
Motorola, the biggest mobile handset maker in the United States, has
appointed Sanjay Jha to lead its mobile devices division before its demerger
from the group next year. Dr Jha is to turn around the loss-making
subsidiary and ensure that it can operate as a standalone business.
Orange is upgrading its 3G network in Scotland, Northern Ireland and
North East England to provide improved voice and data coverage and faster
data speeds.
Transport
Air traffic The number of people travelling by air grew at the lowest
rate for five years in June as the global economic slowdown takes its toll
on demand, the International Air Transport Association said. Global
passenger traffic rose by 3.8 per cent in June, the lowest level since 2003,
when the industry was hit by the Sars crisis.
Utilities
Centrica has confirmed that it is in talks with a third party with a
view to taking a minority stake in British Energy, provided that the third
party succeeds in buying the UK nuclear energy generator. Centrica also said
that if the third party, believed to be EDF, the French utility, did not
proceed with an offer, Centrica would consider alternatives, including a
merger with British Energy.
