Sunday, April 18, 2010
Wednesday, May 20, 2009
China's recovery may have lost steam
(Reuters) - China's economic recovery may have slowed or even gone slightly into reverse over the past month, two international banks said in separate reports.
Credit Suisse economists said economic activity appeared to have softened in the second half of April and that the trend was more pronounced in May, with weakness in the materials sector and power consumption spreading to retail sales.
"We argue that the recovery in China is still ongoing, but that the pace may not be as strong as many have hoped recently," Dong Tao, Asia economist at Credit Suisse, said in a report.
He forecast that the Purchasing Managers' Index might slip below the watershed of 50 over the next few months, suggesting that the Chinese manufacturing sector was contracting.
Economists at Merrill Lynch said the PMI, which has been closely watched by the market as a leading economic indicator, would soften but remain above the 50-point mark, pointing to a milder expansion.
"Although manufacturing investment growth is not as strong as that of infrastructure, it has actually picked up so far this year, and we believe the momentum could be maintained for another several months," Merrill Lynch economists Ting Lu and T.J. Bond said in a report.
"We need to factor in seasonality and focus on the big picture: the V-shape recovery of PMI," they said, noting signs of more property transactions and faster investment growth.
Read more here
Credit Suisse economists said economic activity appeared to have softened in the second half of April and that the trend was more pronounced in May, with weakness in the materials sector and power consumption spreading to retail sales.
"We argue that the recovery in China is still ongoing, but that the pace may not be as strong as many have hoped recently," Dong Tao, Asia economist at Credit Suisse, said in a report.
He forecast that the Purchasing Managers' Index might slip below the watershed of 50 over the next few months, suggesting that the Chinese manufacturing sector was contracting.
Economists at Merrill Lynch said the PMI, which has been closely watched by the market as a leading economic indicator, would soften but remain above the 50-point mark, pointing to a milder expansion.
"Although manufacturing investment growth is not as strong as that of infrastructure, it has actually picked up so far this year, and we believe the momentum could be maintained for another several months," Merrill Lynch economists Ting Lu and T.J. Bond said in a report.
"We need to factor in seasonality and focus on the big picture: the V-shape recovery of PMI," they said, noting signs of more property transactions and faster investment growth.
Read more here
Tuesday, May 19, 2009
U.K. Banks Get Lawyers for Free as Job Cuts Increase
(Bloomberg) -- U.K. banks such as Royal Bank of Scotland Group Plc, Barclays Plc and HSBC Holdings Plc are increasingly asking law firms to lend them lawyers for free as they’re forced to cut jobs in their legal departments.
The highest-grossing U.K. law firms are getting more requests from financial and corporate clients to provide lawyers on temporary loan, or “secondment,” and are being asked to pay most of or all of the lawyer’s salary for what’s often a six- month stint.
U.K. banks have cut thousands of jobs as they grapple with the worst financial crisis since the Great Depression. Hundreds of lawyers in bank legal departments have been fired and others are having their pay frozen or cut, said Scott Gibson, the director of legal recruiter Hughes-Castell Ltd. in London.
“In-house orgs are thinking, we have fired a lot of people, why don’t we just get the people in who will do that work cheaper?” Gibson said. “In a downturn, organizations want to get lawyers to do things cheap.”
While loaning lawyers to clients isn’t new, requests have risen sharply during the recession. As much as 25 percent of some banks’ legal departments may be staffed by lawyers on loan now, said Andrew Darwin, the managing director of Europe at DLA Piper LLP, the world’s largest law firm by number of lawyers.
“Of the clients I’m closest to, the biggest U.K. banks, the legal teams are clearly being impacted by the general downsizing,” said Darwin, whose clients include RBS, HSBC, Barclays and Lloyds TSB Bank Plc. “I suspect we haven’t seen the full impact on them.”
Law Firm Incentive
Firms are keen to loan out lawyers while work is slow because it helps them maintain good relationships with clients, said Tony Williams, the former managing partner of Clifford Chance LLP and a consultant at Jomati Consultants LLP.
“A year or 18 months ago, it was almost impossible” to loan out lawyers because firms were too busy, Williams said. Now, U.K. firms have about 40 to 50 lawyers on loan at any time.
London-based HSBC has cut more than 7,300 jobs this year, Barclays 5,200 and RBS more than 9,000. Barclays’ spokeswoman Gemma Abbott and HSBC spokesman Tim Pie and RBS spokesman Michael Strachan declined to comment on secondments or firings at in-house legal departments.
“You’ll find secondees from one firm working for secondees at another” in a client’s legal department, Darwin said. “We may find ourselves doing work for an Allen & Overy secondee.”
Magic Circle
U.K. law firms are also struggling, being forced to slash lawyers, staff and salaries as mergers and financing work dried up last year. Three of the so-called Magic Circle firms, London’s largest by revenue, have cut jobs. They include Clifford Chance, Allen & Overy LLP, and Linklaters LLP.
During a typical secondment, a salaried lawyer with at least five years experience is loaned to a client for about six months. While the salary is often split, companies are increasingly asking firms to pay the entire amount, said Laurie Robertson, the global head of business development and client focus at Clifford Chance.
“We hear from clients that are saying ‘Can you help us out?’” Robertson said. “Clients are facing pressures on the costs of their legal departments and obviously getting help from a law firm from a secondee helps.”
Clifford Chance, the largest U.K. law firm by revenue, now has about 125 lawyers on secondment to clients or regulators, 20 percent more than the same time last year, Robertson said.
Read more here
The highest-grossing U.K. law firms are getting more requests from financial and corporate clients to provide lawyers on temporary loan, or “secondment,” and are being asked to pay most of or all of the lawyer’s salary for what’s often a six- month stint.
U.K. banks have cut thousands of jobs as they grapple with the worst financial crisis since the Great Depression. Hundreds of lawyers in bank legal departments have been fired and others are having their pay frozen or cut, said Scott Gibson, the director of legal recruiter Hughes-Castell Ltd. in London.
“In-house orgs are thinking, we have fired a lot of people, why don’t we just get the people in who will do that work cheaper?” Gibson said. “In a downturn, organizations want to get lawyers to do things cheap.”
While loaning lawyers to clients isn’t new, requests have risen sharply during the recession. As much as 25 percent of some banks’ legal departments may be staffed by lawyers on loan now, said Andrew Darwin, the managing director of Europe at DLA Piper LLP, the world’s largest law firm by number of lawyers.
“Of the clients I’m closest to, the biggest U.K. banks, the legal teams are clearly being impacted by the general downsizing,” said Darwin, whose clients include RBS, HSBC, Barclays and Lloyds TSB Bank Plc. “I suspect we haven’t seen the full impact on them.”
Law Firm Incentive
Firms are keen to loan out lawyers while work is slow because it helps them maintain good relationships with clients, said Tony Williams, the former managing partner of Clifford Chance LLP and a consultant at Jomati Consultants LLP.
“A year or 18 months ago, it was almost impossible” to loan out lawyers because firms were too busy, Williams said. Now, U.K. firms have about 40 to 50 lawyers on loan at any time.
London-based HSBC has cut more than 7,300 jobs this year, Barclays 5,200 and RBS more than 9,000. Barclays’ spokeswoman Gemma Abbott and HSBC spokesman Tim Pie and RBS spokesman Michael Strachan declined to comment on secondments or firings at in-house legal departments.
“You’ll find secondees from one firm working for secondees at another” in a client’s legal department, Darwin said. “We may find ourselves doing work for an Allen & Overy secondee.”
Magic Circle
U.K. law firms are also struggling, being forced to slash lawyers, staff and salaries as mergers and financing work dried up last year. Three of the so-called Magic Circle firms, London’s largest by revenue, have cut jobs. They include Clifford Chance, Allen & Overy LLP, and Linklaters LLP.
During a typical secondment, a salaried lawyer with at least five years experience is loaned to a client for about six months. While the salary is often split, companies are increasingly asking firms to pay the entire amount, said Laurie Robertson, the global head of business development and client focus at Clifford Chance.
“We hear from clients that are saying ‘Can you help us out?’” Robertson said. “Clients are facing pressures on the costs of their legal departments and obviously getting help from a law firm from a secondee helps.”
Clifford Chance, the largest U.K. law firm by revenue, now has about 125 lawyers on secondment to clients or regulators, 20 percent more than the same time last year, Robertson said.
Read more here
Sunday, May 17, 2009
Lloyds Chairman Victor Blank Plans to Step Down by June 2010
(Bloomberg) -- Lloyds Banking Group Plc said Chairman Victor Blank plans to step down by June of next year, after the government-brokered purchase of HBOS Plc at the peak of the credit crisis led it to fall into state control.
Blank, 66, plans to retire by the annual meeting in June 2010, the London-based company said in a statement yesterday. Alexander Leitch, 61, was named the bank’s deputy chairman with immediate effect.
Blank’s departure is “definitely a good thing,” said Roger Lawson, a spokesman for the U.K. Shareholders’ Association. “The decision to buy HBOS was clearly a mistake and has resulted in a good quality bank, which paid a high dividend, being intermingled with the poor assets of HBOS.”
Lloyds agreed to buy HBOS for about 7.7 billion pounds ($11.7 billion) in September as the government sought to prevent HBOS from collapsing after credit markets froze. HBOS posted a 2008 net loss of 7.5 billion pounds, greater than Lloyds had originally expected. The British government now owns 43 percent of Lloyds and its stake may rise to as much as 75 percent.
Lloyds’ market value plunged 73 percent in 2008. The stock has declined a further 27 percent this year, valuing it at 15 billion pounds.
The bank wouldn’t have needed government money if it hadn’t taken over HBOS, Chief Executive Officer Eric Daniels told a parliamentary committee in February. Lloyds would have liked more time to examine HBOS’s accounts before making the purchase, he said.
Read more here
Blank, 66, plans to retire by the annual meeting in June 2010, the London-based company said in a statement yesterday. Alexander Leitch, 61, was named the bank’s deputy chairman with immediate effect.
Blank’s departure is “definitely a good thing,” said Roger Lawson, a spokesman for the U.K. Shareholders’ Association. “The decision to buy HBOS was clearly a mistake and has resulted in a good quality bank, which paid a high dividend, being intermingled with the poor assets of HBOS.”
Lloyds agreed to buy HBOS for about 7.7 billion pounds ($11.7 billion) in September as the government sought to prevent HBOS from collapsing after credit markets froze. HBOS posted a 2008 net loss of 7.5 billion pounds, greater than Lloyds had originally expected. The British government now owns 43 percent of Lloyds and its stake may rise to as much as 75 percent.
Lloyds’ market value plunged 73 percent in 2008. The stock has declined a further 27 percent this year, valuing it at 15 billion pounds.
The bank wouldn’t have needed government money if it hadn’t taken over HBOS, Chief Executive Officer Eric Daniels told a parliamentary committee in February. Lloyds would have liked more time to examine HBOS’s accounts before making the purchase, he said.
Read more here
Thursday, May 14, 2009
Satyam Win for Mississippi Pension Fund Boosts Plaintiff Role
(Bloomberg) -- Mississippi’s pension system, the 65th largest in the U.S., has emerged as one of the nation’s most aggressive institutional litigants against companies it says committed securities fraud.
The Public Employees’ Retirement System of Mississippi is involved in at least 21 active federal securities-fraud class actions. It’s a lead plaintiff, either on its own or as part of an investor group, in at least 11 of them, including its May 12 appointment to co-manage litigation against Satyam Computer Services Ltd., the software-services provider at the center of India’s biggest corporate fraud inquiry.
“It certainly is at the high end of public pension fund participation,” said Michael Perino, a securities-law professor at St. John’s University School of Law.
The lead plaintiff in a class action manages the case, including approval of any settlement. It can push for corporate- governance changes at the targeted company.
“You have control of the litigation, and you’re going to make sure you not only protect your retirement system and the employees, but also other states and other retirement systems,” Mississippi Attorney General Jim Hood said in a phone interview. Hood’s office oversees the state’s lawsuits.
Under Hood, a Democrat elected in 2003 with support from trial lawyers, Mississippi has become a leader in the field, though Hood denies he’s doing the bidding of the plaintiffs’ bar.
Lead Plaintiff
The Satyam litigation in New York federal court is the third this month in which Mississippi PERS was appointed a lead plaintiff. Among institutional investors, Mississippi PERS was the most frequent lead plaintiff last year, with three cases, either on its own or as part of an investor group.
Teachers’ Retirement System of Louisiana was the most frequent lead plaintiff from 2000 to 2008, with 18 cases, according to Stanford Law School’s Securities Class Action Clearinghouse and Michael Klausner, a Stanford law professor. Mississippi PERS is now the second-most frequent, with 14.
Since 2005, Louisiana’s lead-plaintiff activity has fallen off while Mississippi PERS’s has risen.
Mississippi PERS, based in Jackson, ranked as the 65th largest U.S. pension fund or sponsor, with $18.8 billion, as of Sept. 30, according to Pensions & Investments magazine. The largest pension system is California Public Employees Retirement System, with $214.6 billion.
Under U.S. securities law, the person or entity with the largest financial interest is typically chosen to lead a class action, and so is often an institutional investor.
Legal Fees
The lead plaintiff’s attorneys usually get the majority of the legal fees of a settlement or court victory. The lawyers only get paid if they win back money for their clients. Typically, contingency lawyers take a third of any recovery. Institutional investors, including Mississippi PERS, push for lower fees, allowing more money for injured shareholders.
For example, Mississippi’s standard contract calls for the law firm to receive -- if a settlement is reached after fact- finding is completed and before a trial is started -- 20 percent of up to $25 million, another 18 percent for any amount between $25 million and $75 million, and so on, with the percentage decreasing as the recovery amount increases.
Last year, New York-based Bernstein Litowitz Berger & Grossmann LLP, which represents Mississippi PERS in Satyam and other cases, had a median settlement of 6 percent of estimated damages in securities class actions, according to Cornerstone Research. That was the highest figure for the most-active plaintiffs firms.
‘Terrific Guardian’
“I view them as a terrific guardian of integrity in the capital markets,” Sean Coffey, a Bernstein Litowitz partner, said of Mississippi PERS. “They are folks who talk the talk and walk the walk, and they’re very active.”
Of six completed cases for which the pension system served as a lead plaintiff, four of the companies settled and two won dismissals. The rest haven’t been resolved.
Delphi Corp., the Troy, Michigan-based car-parts maker, settled for $333.4 million; Mills Corp., the Chevy Chase, Maryland-based real-estate investment trust, for $165 million; Scor Holding (Switzerland) AG, the Zurich-based reinsurer, for $114.6 million; and Sonus Networks Inc., the Westford, Massachusetts-based maker of software used for Internet-based phone calls, for $9.5 million.
The Mills settlement hasn’t yet been approved by the judge.
Read more here
The Public Employees’ Retirement System of Mississippi is involved in at least 21 active federal securities-fraud class actions. It’s a lead plaintiff, either on its own or as part of an investor group, in at least 11 of them, including its May 12 appointment to co-manage litigation against Satyam Computer Services Ltd., the software-services provider at the center of India’s biggest corporate fraud inquiry.
“It certainly is at the high end of public pension fund participation,” said Michael Perino, a securities-law professor at St. John’s University School of Law.
The lead plaintiff in a class action manages the case, including approval of any settlement. It can push for corporate- governance changes at the targeted company.
“You have control of the litigation, and you’re going to make sure you not only protect your retirement system and the employees, but also other states and other retirement systems,” Mississippi Attorney General Jim Hood said in a phone interview. Hood’s office oversees the state’s lawsuits.
Under Hood, a Democrat elected in 2003 with support from trial lawyers, Mississippi has become a leader in the field, though Hood denies he’s doing the bidding of the plaintiffs’ bar.
Lead Plaintiff
The Satyam litigation in New York federal court is the third this month in which Mississippi PERS was appointed a lead plaintiff. Among institutional investors, Mississippi PERS was the most frequent lead plaintiff last year, with three cases, either on its own or as part of an investor group.
Teachers’ Retirement System of Louisiana was the most frequent lead plaintiff from 2000 to 2008, with 18 cases, according to Stanford Law School’s Securities Class Action Clearinghouse and Michael Klausner, a Stanford law professor. Mississippi PERS is now the second-most frequent, with 14.
Since 2005, Louisiana’s lead-plaintiff activity has fallen off while Mississippi PERS’s has risen.
Mississippi PERS, based in Jackson, ranked as the 65th largest U.S. pension fund or sponsor, with $18.8 billion, as of Sept. 30, according to Pensions & Investments magazine. The largest pension system is California Public Employees Retirement System, with $214.6 billion.
Under U.S. securities law, the person or entity with the largest financial interest is typically chosen to lead a class action, and so is often an institutional investor.
Legal Fees
The lead plaintiff’s attorneys usually get the majority of the legal fees of a settlement or court victory. The lawyers only get paid if they win back money for their clients. Typically, contingency lawyers take a third of any recovery. Institutional investors, including Mississippi PERS, push for lower fees, allowing more money for injured shareholders.
For example, Mississippi’s standard contract calls for the law firm to receive -- if a settlement is reached after fact- finding is completed and before a trial is started -- 20 percent of up to $25 million, another 18 percent for any amount between $25 million and $75 million, and so on, with the percentage decreasing as the recovery amount increases.
Last year, New York-based Bernstein Litowitz Berger & Grossmann LLP, which represents Mississippi PERS in Satyam and other cases, had a median settlement of 6 percent of estimated damages in securities class actions, according to Cornerstone Research. That was the highest figure for the most-active plaintiffs firms.
‘Terrific Guardian’
“I view them as a terrific guardian of integrity in the capital markets,” Sean Coffey, a Bernstein Litowitz partner, said of Mississippi PERS. “They are folks who talk the talk and walk the walk, and they’re very active.”
Of six completed cases for which the pension system served as a lead plaintiff, four of the companies settled and two won dismissals. The rest haven’t been resolved.
Delphi Corp., the Troy, Michigan-based car-parts maker, settled for $333.4 million; Mills Corp., the Chevy Chase, Maryland-based real-estate investment trust, for $165 million; Scor Holding (Switzerland) AG, the Zurich-based reinsurer, for $114.6 million; and Sonus Networks Inc., the Westford, Massachusetts-based maker of software used for Internet-based phone calls, for $9.5 million.
The Mills settlement hasn’t yet been approved by the judge.
Read more here
Wednesday, May 13, 2009
SEC proposes suit vs Countrywide founder Mozilo
(Reuters) - U.S. regulators have recommended filing a civil fraud suit against Countrywide Financial co-founder Angelo Mozilo for insider trading, the Wall Street Journal reported on Wednesday.
Staff at the Securities and Exchange Commission had decided to recommend filing the suit against Mozilo, co-founder of the No. 1 U.S. home-mortgage lender taken over by Bank of America Corp, the Journal cited people familiar with the investigation as saying.
Mozilo attorney David Siegel said he would not comment "on any rumors" regarding the SEC's previously-disclosed investigation of Mozilo's trading activities.
"The persistent innuendo in the media and political circles that Mr. Mozilo was selling Countrywide stock because he was aware of some supposedly 'secret' adverse information about the Company is scandalous and inconsistent with even a cursory examination of the facts surrounding the history of his stock holdings," Siegel said in an e-mailed statement.
According to the Journal, the SEC sent a "Wells" notice to Mozilo weeks ago alerting him of the planned charges, which included alleged violations of insider-trading laws, as well as failing to disclose material information to shareholders.
U.S. securities regulators and criminal prosecutors have brought some big insider trading cases in recent years. The SEC, in particular, has made insider trading a priority, setting up a hedge fund unit within its enforcement division to combat unlawful trading.
Two of the biggest recent cases were the 2007 criminal conviction of former Qwest Communications CEO Joseph Nacchio for insider trading in company stock and the 2004 conviction of homemaking expert Martha Stewart on criminal charges of lying to investigators about a suspicious stock sale.
Bank of America, which bought Countrywide for $2.5 billion in July, last month dropped the Countrywide name from its mortgage operations, shedding a 40-year-old brand that became synonymous with risky lending practices that helped fuel a U.S. housing boom and bust.
A Wells notice is a precursor to a civil lawsuit in an SEC investigation. It outlines to an individual or company under investigation what allegations might be filed against them and gives a target a chance to respond to the allegations.
A civil suit against Mozilo, if his lawyers fail to deflect it and SEC commissioners approve a filing, may be announced in coming weeks, the Journal cited unidentified sources as saying.
Lawyers for the Commission were not immediately available for comment.
Founded in 1969, Countrywide -- blasted for offering loans to would-be homeowners who could scarcely afford them -- already faces a string of lawsuits over past business practices, as well as an FBI investigation.
The SEC had been investigating Mozilo's systematic sales of the lender's stock, which began shortly before the housing crisis began. He had received several hundred million dollars of compensation for running Countrywide this decade.
In 2007, Mozilo told a conference call he had engaged in no trading decisions based on any material nonpublic information and said he welcomed the SEC's informal inquiry into his activities.
Bank of America acquired Countrywide last July for $2.5 billion.
During the housing boom, Mozilo ranked as one of the top- paid U.S. executives, getting about $387 million from pay and stock option gains from 2002 to 2006, according to regulatory filings.
Read more here
Staff at the Securities and Exchange Commission had decided to recommend filing the suit against Mozilo, co-founder of the No. 1 U.S. home-mortgage lender taken over by Bank of America Corp, the Journal cited people familiar with the investigation as saying.
Mozilo attorney David Siegel said he would not comment "on any rumors" regarding the SEC's previously-disclosed investigation of Mozilo's trading activities.
"The persistent innuendo in the media and political circles that Mr. Mozilo was selling Countrywide stock because he was aware of some supposedly 'secret' adverse information about the Company is scandalous and inconsistent with even a cursory examination of the facts surrounding the history of his stock holdings," Siegel said in an e-mailed statement.
According to the Journal, the SEC sent a "Wells" notice to Mozilo weeks ago alerting him of the planned charges, which included alleged violations of insider-trading laws, as well as failing to disclose material information to shareholders.
U.S. securities regulators and criminal prosecutors have brought some big insider trading cases in recent years. The SEC, in particular, has made insider trading a priority, setting up a hedge fund unit within its enforcement division to combat unlawful trading.
Two of the biggest recent cases were the 2007 criminal conviction of former Qwest Communications CEO Joseph Nacchio for insider trading in company stock and the 2004 conviction of homemaking expert Martha Stewart on criminal charges of lying to investigators about a suspicious stock sale.
Bank of America, which bought Countrywide for $2.5 billion in July, last month dropped the Countrywide name from its mortgage operations, shedding a 40-year-old brand that became synonymous with risky lending practices that helped fuel a U.S. housing boom and bust.
A Wells notice is a precursor to a civil lawsuit in an SEC investigation. It outlines to an individual or company under investigation what allegations might be filed against them and gives a target a chance to respond to the allegations.
A civil suit against Mozilo, if his lawyers fail to deflect it and SEC commissioners approve a filing, may be announced in coming weeks, the Journal cited unidentified sources as saying.
Lawyers for the Commission were not immediately available for comment.
Founded in 1969, Countrywide -- blasted for offering loans to would-be homeowners who could scarcely afford them -- already faces a string of lawsuits over past business practices, as well as an FBI investigation.
The SEC had been investigating Mozilo's systematic sales of the lender's stock, which began shortly before the housing crisis began. He had received several hundred million dollars of compensation for running Countrywide this decade.
In 2007, Mozilo told a conference call he had engaged in no trading decisions based on any material nonpublic information and said he welcomed the SEC's informal inquiry into his activities.
Bank of America acquired Countrywide last July for $2.5 billion.
During the housing boom, Mozilo ranked as one of the top- paid U.S. executives, getting about $387 million from pay and stock option gains from 2002 to 2006, according to regulatory filings.
Read more here
Tuesday, May 12, 2009
Sheikh Who Backed Barclays Gets Another Shot With Qatar’s Money
(Bloomberg) -- On a March morning in Qatar’s Ras Laffan Industrial City on the Persian Gulf, a red flame shrouded in black smoke shoots into the haze from a 650-foot stack. The burst of fire is burning off excess fuel as workers rush to finish equipment that will help the nation, already the world’s biggest exporter of liquefied natural gas, more than double output in the next two years.
An hour away in Doha, amid the glass and steel skyscrapers turning this desert capital into a modern metropolis, Sheikh Hamad bin Jassim bin Jaber Al-Thani will invest as much as $20 billion a year from the gas bonanza.
Sheikh Hamad, Qatar’s prime minister and foreign minister, wears a third hat: chief executive officer of the Qatar Investment Authority, which was founded in 2005. A latecomer among nations with sovereign wealth funds, Qatar formed the QIA to preserve its oil and gas wealth.
Last year, the Connecticut-sized emirate -- best known as a staging ground for the 2003 U.S.-led invasion of Iraq -- earned more from LNG than oil for the first time. That milestone followed a 15-year, $120 billion spending binge by the country on its gas, petrochemical and other industries. Gross domestic product has surged to $101 billion, or $101,000 for each of the 1 million men, women and children on the thumb-shaped peninsula -- among the highest per-capita GDPs in the world.
“Qatar is on the verge of being transformed,” says Thierry Bros, a gas companies analyst at Paris-based Societe Generale SA. “It’s a small amount of people with a tremendous amount of wealth.”
Barclays Rebound
Now, as Ras Laffan’s 140,000 workers race to multiply Qatar’s riches, Hamad is navigating investments overseas and at home. He bet QIA money on international banks just as the credit crisis forced many to take government handouts.
On Oct. 31, he raised the QIA’s 6.4 percent stake in Barclays Plc to as much as 12.7 percent, propping up the U.K.’s third-biggest bank after it had rejected money from Prime Minister Gordon Brown. Since then, Barclays stock has jumped 40 percent through May 11. The QIA’s original stake, purchased in July 2008, had tumbled as much as 82 percent by January. It’s now up 1.8 percent.
The QIA said on April 22 it had sold 35 million Barclays shares, lowering its original stake to 5.8 percent as part of a trading strategy. The Qatari fund said it still planned to increase its overall Barclays stake under the terms of the October deal.
Assets Drop
The value of Qatar’s 9.7 percent stake in Credit Suisse Group AG, Switzerland’s No. 2 bank, dropped to 4.93 billion Swiss francs ($4.45 billion) on May 11. Credit Suisse stock has lost 20 percent of its value since February 2008, when Hamad said he was first buying shares; it’s dropped about half a percent since October 2008, when he added more.
QIA assets, which peaked at about $75 billion in June 2008, dropped to about $50 billion at the end of March, according to estimates by RGE Monitor in New York, which researches sovereign funds. Qatar’s estimated $35.6 billion in 2008 LNG exports spared the fund from a worse decline.
“They got burned,” says Rachel Ziemba at RGE Monitor. “There was a lot of money to manage quickly and get it invested.”
At home, Hamad is deploying as much as $5.3 billion of QIA cash on shares of Qatari banks hammered in the global rout. In March, his government agreed to buy the investment portfolios of seven local banks traded on the Doha Securities Market.
Read more here
An hour away in Doha, amid the glass and steel skyscrapers turning this desert capital into a modern metropolis, Sheikh Hamad bin Jassim bin Jaber Al-Thani will invest as much as $20 billion a year from the gas bonanza.
Sheikh Hamad, Qatar’s prime minister and foreign minister, wears a third hat: chief executive officer of the Qatar Investment Authority, which was founded in 2005. A latecomer among nations with sovereign wealth funds, Qatar formed the QIA to preserve its oil and gas wealth.
Last year, the Connecticut-sized emirate -- best known as a staging ground for the 2003 U.S.-led invasion of Iraq -- earned more from LNG than oil for the first time. That milestone followed a 15-year, $120 billion spending binge by the country on its gas, petrochemical and other industries. Gross domestic product has surged to $101 billion, or $101,000 for each of the 1 million men, women and children on the thumb-shaped peninsula -- among the highest per-capita GDPs in the world.
“Qatar is on the verge of being transformed,” says Thierry Bros, a gas companies analyst at Paris-based Societe Generale SA. “It’s a small amount of people with a tremendous amount of wealth.”
Barclays Rebound
Now, as Ras Laffan’s 140,000 workers race to multiply Qatar’s riches, Hamad is navigating investments overseas and at home. He bet QIA money on international banks just as the credit crisis forced many to take government handouts.
On Oct. 31, he raised the QIA’s 6.4 percent stake in Barclays Plc to as much as 12.7 percent, propping up the U.K.’s third-biggest bank after it had rejected money from Prime Minister Gordon Brown. Since then, Barclays stock has jumped 40 percent through May 11. The QIA’s original stake, purchased in July 2008, had tumbled as much as 82 percent by January. It’s now up 1.8 percent.
The QIA said on April 22 it had sold 35 million Barclays shares, lowering its original stake to 5.8 percent as part of a trading strategy. The Qatari fund said it still planned to increase its overall Barclays stake under the terms of the October deal.
Assets Drop
The value of Qatar’s 9.7 percent stake in Credit Suisse Group AG, Switzerland’s No. 2 bank, dropped to 4.93 billion Swiss francs ($4.45 billion) on May 11. Credit Suisse stock has lost 20 percent of its value since February 2008, when Hamad said he was first buying shares; it’s dropped about half a percent since October 2008, when he added more.
QIA assets, which peaked at about $75 billion in June 2008, dropped to about $50 billion at the end of March, according to estimates by RGE Monitor in New York, which researches sovereign funds. Qatar’s estimated $35.6 billion in 2008 LNG exports spared the fund from a worse decline.
“They got burned,” says Rachel Ziemba at RGE Monitor. “There was a lot of money to manage quickly and get it invested.”
At home, Hamad is deploying as much as $5.3 billion of QIA cash on shares of Qatari banks hammered in the global rout. In March, his government agreed to buy the investment portfolios of seven local banks traded on the Doha Securities Market.
Read more here
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