World financial news

A growing number of U.S. companies such as Facebook and Carlyle Group lining up to go public and a smattering of U.S. and European secondary offerings are once again giving investment bankers hope that the moribund equity capital markets may finally be waking up.

The S&P 500 has risen 12 percent in the first quarter and the market volatility tracker VIX is at five-year lows as fears about the U.S. economy and the euro zone debt crisis ease, prompting more companies to tap the public markets after being effectively shut out for the last few months.

Global equity fundraising, including IPOs and secondary offerings, tumbled 25.8 percent in the first quarter of 2012 to $150.2 billion, compared with the same period in 2011, Thomson Reuters data shows.

Global IPO proceeds, which reached $17.4 billion in 173 issues, sank to their lowest volume since the second quarter of 2009, the data shows.

Many risks to a recovery still persist, such as the impact of slowing growth in China on Asian markets, but bankers said they expect volumes at least in the United States to improve over the rest of the year.

“The IPO market had been very slow to get out of the gate in the first half of the quarter, but the last half has really been catching up,” said David Hermer, head of Americas syndicate at Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz). “A number of recent landmark deals will materially change the landscape, in a positive way.”

Technology deals, which captured nearly a third of all U.S. IPOs during the quarter, are expected to lead the market again, as investors pile into sectors like cloud computing, social media and mobile.

Bankers said even European companies, particularly those with a tech focus, are thinking about U.S. listings.

British vacuum technology firm Edwards, which pulled a London float last year due to choppy markets, and German high-tech lighting company Novaled this month filed with U.S. regulators for IPOs.

In a sign that the recovery might be more broad-based, companies in other sectors are beginning to test the markets as well. Private equity giant Carlyle Group (CG.O: Quote, Profile, Research, Stock Buzz), crafts retailer Michaels Stores MCHST.UL and real estate investment trust Empire State Realty Trust (ESB.N: Quote, Profile, Research, Stock Buzz) are all planning IPOs.

“You’re going to see more industrial companies coming out, many with higher levels of financial leverage, along with technology, energy and consumer retail,” said James Palmer, New York-based managing director of equity capital markets at UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz). “You’ll see a much broader spectrum in both the quality and type of product.”

A big chunk of the activity is expected to come from private equity firms, as they look to exit investments, many of which date back to the buyout boom of 2006-2007, and sell down stakes through follow-on offerings.

“Sponsors are going to play an important role in overall capital formation,” said Phil Drury, co-head of equity capital markets in the Americas at Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz).

For banks, more activity means more underwriting fees fast cash loans. In the first quarter, Citigroup topped the global ranking of equity underwriters with 76 deals accounting for proceeds of $14.3 billion, up from No. 7 in the first quarter of 2011.

Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) came in at No. 2, down from its No. 1 slot in the prior year, and JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) took No. 3, up from its No. 5 position.

Guosen Securities, a Chinese investment bank, was the leader for global IPOs, raising $1.4 billion for clients, thanks to a number of solo deals like a $337.7 million IPO for computer knitting machine producer Ningbo Cixing Co and a $249.8 million offering for silicon maker Xi’an LONGi Silicon Materials.

“The IPO market has been slow to start, but the stars are finally starting to align,” said Brian Reilly, head of U.S. equity capital markets at Barclays (BARC.L: Quote, Profile, Research, Stock Buzz).

TENTATIVE RECOVERY

While the level of activity is expected to rebound from the lows seen over the last six months, bankers said the global markets are far from getting back to normal. Risks such as worries about a fragile global economy, Europe’s debt problems and escalating tensions with Iran continue to add uncertainty and weigh down the markets.

Investors’ concerns over a slowdown in China’s economy put a damper on the Asia-Pacific market, which had dominated equity capital market issuance as the West grappled with the aftermath of the financial crisis of 2008.

“The problems are much closer to home,” said Rupert Mitchell, head of equity syndication for Asia-Pacific at Citigroup. “The world is worried about China right now, where growth is going to be more measured this year.”

Activity in the region tumbled 37 percent in the first quarter from a year earlier to $36.7 billion, the lowest quarterly volume since the second quarter of 2009. IPOs were down 75 percent, accounting for most of the weakness in the beginning of the year.

The major listings expected in Asia this year include the $1 billion IPO by high-end jeweler Graff Diamonds and $1.5 billion offering by Haitong Securities in Hong Kong; the $1 billion IPO by football club Manchester United MNU.UL in Singapore; and nearly $4 billion from two deals in Malaysia: Felda Global Ventures and healthcare company Parkway Pantai.

In Europe, German chemicals maker Evonik and insurance group Talanx and Italian aero-engine parts maker Avio are among those seen as most likely to launch their IPOs in the first half. The sale of the Russian central bank’s stake in Sberbank (SBER.MM: Quote, Profile, Research, Stock Buzz), worth around $6 billion, could also be launched in mid-April.

But overall companies are likely to wait at least until the second half of the year before tapping the markets, bankers said.

“The market in Europe is open and investors are engaged, but every deal will be evaluated on its own merit and on a case-by-case basis,” said Viswas Raghavan, global head of equity capital markets at JPMorgan.

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The 17 countries that use the euro should boost their crisis firewalls to at least (EURO)1 trillion ($1.3 trillion) to help the struggling currency union return to growth, the head of the Organization for Economic Cooperation and Development said Tuesday.

Angelo Gurria, the head of the Paris-based international development body, said current commitments to the rescue funds, which are limited to (EURO)500 billion ($664 billion), are not enough to restore market confidence in the eurozone.

“A credible firewall will provide governments with the breathing space they need to focus on revitalizing Europe’s economic growth and competitiveness,” Gurria said in a statement linked to the release of the OECD’s annual report on the eurozone economy.

According to the report, which also spells out a raft of economic reforms for individual countries, vulnerable states may need more than (EURO)1 trillion in aid over the coming two years.

Gurria said eurozone finance ministers should take a decision to boost their bailout funds at their meeting in Copenhagen later this week.

Germany, the bloc’s largest economy, signaled on Monday that it would only support a temporary increase to around (EURO)700 billion ($929 billion) instant payday loans.

But that falls below the recommendation of the International Monetary Fund and the European Commission, the European Union’s executive. It may also not be enough to convince other large non-euro economies, such as China and the U.S., to help in the beefing up of Europe’s defenses by sending more money to the IMF.

International institutions argue that a big and credible bailout fund would restore confidence in vulnerable countries like Italy and Spain and prevent them from actually having to seek help.

Gurria said it could also allow weak economies to focus on kickstarting growth by reforming their economies.

“Europe is stalling,” he said. “It needs to get out of first gear and make growth number one priority.”

However, countries like Germany fear that easy access to financial support could stop countries from implementing reforms.

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Arch Coal Inc. said on Monday that investment banker George C. Morris III was added as a director, increasing the company’s board size to 14.

Morris, 56, is president of Morris Energy Advisors Inc., a Houston-based boutique investment banking firm. Before that, he worked as senior energy banker at Merrill Lynch & Co.

Morris has specialized on the petroleum pipeline and refining sectors for most of his three decades on Wall Street, according to a biography on his company’s website.

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The National Highway Traffic Safety Administration has decided to postpone the creation of a new rule that would have required rearview back-up cameras in all new cars, pickups and SUVs by 2014.

The agency had been expected to announce the rule Wednesday. Instead, NHTSA issued a statement saying that "further study and data analysis" were needed before a final regulation could be issued.

"The Department remains committed to improving rearview visibility for the nation’s fleet and we expect to complete our work and issue a final rule by December 31, 2012," NHTSA said

According to a proposal the auto safety agency announced in late 2010, drivers would be required to be able to see directly behind the vehicle whenever the vehicle is shifted into reverse. Since virtually all cars and trucks have significant "blind spots" — areas in which the driver cannot see either by turning around or using the mirrors — that would require video cameras.

Rear back-up cameras are especially helpful in trucks and SUVs because those vehicles can have very large blind spots due to their size and design.

Under that proposal, the rule would be phased in over the next few years, starting with 10% of new cars sold expected to comply with the mandate by September 2012; 40% by September 2013 and 100% by September 2014.

Cars also have increasingly large blind spots as the demands of style and improved aerodynamics — needed for better highway fuel economy — hinder rearward visibility in many newer models.

"Every vehicle has a blind zone immediately behind the rear bumper. It can be five feet or 50 feet, depending on the car’s styling. Lost in that space might be a fire hydrant, a pet, or even a child," said Ami Gadhia, senior policy counsel for Consumers Union, in a statement.

While Consumers Union is eager for the new rule to be created, Gadhia said the group understands the need for more research.

While the systems first became popular on luxury cars they have become available on all types of cars. Usually, an image of what’s behind the vehicle is displayed in a screen similar to a computer monitor. Some cars now display the video image in the rearview mirror itself, however.

The new rule was demanded by legislation passed in 2007 called Cameron Gulbransen Kids Transportation Safety Act. The act was named after a 2-year-old boy who was killed when his father accidentally backed over him in the family’s driveway.

Consumer’s Union, the non-profit group best known for publishing Consumer Reports magazine,

Benefits vs. costs: According to NHTSA’s 2010 proposal, this "blind spot" regulation could save 95 to 112 lives per year, and prevent 7,000 to 8,000 or more injuries.

The agency estimates that the addition of rear-view camera equipment would cost between $159 to $203 per car, or $88 to $158 on vehicles already equipped with some sort of display screen, such as one used for navigation.

NHTSA says the total approximate cost to equip its estimate of 16.6 million vehicles sold in 2014 would be between $1.9 billion and $2.7 billion.

Within their proposal, NHTSA said that the additional costs of this regulation would be worthwhile, because so many of those killed are children.

Backover accidents cause an average 229 deaths and 18,000 injuries per year, according to NHTSA. The agency said that small children and the elderly are particularly vulnerable. Of those killed each year, 44% are under the age of 5, and 33% are over the age of 70. 

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China, the biggest supplier of rare earths, may almost double exports this year and meet quotas set by the government as lower prices stimulate demand.

Chinese exports were 49 percent of the government-alloted quota in the first 11 months of last year because the slowing global economy sapped demand, the Ministry of Commerce said in a Dec. 27 statement. Overseas sales quotas may be virtually unchanged this year at 31,130 metric tons, based on Bloomberg calculations.

Billionaire Warren Buffett wants Berkshire Hathaway shareholders to know that the company has someone in mind to replace him eventually, but he’s emphasizing that he has no plans to leave.

Buffett offered a couple new details about Berkshire’s succession planning in his annual shareholder letter Saturday. Investors have long worried about who will replace Berkshire’s 81-year-old CEO.

Buffett isn’t naming the successor. But he says the Berkshire board is enthusiastic about the executive it has picked. He says there are two good back-up candidates.

Previously, Buffett had said only that the board had three internal candidates for the job.

Berkshire has also cleared up some succession questions by hiring two hedge fund managers. Buffett says those two have the “brains, judgment and character” to manage Berkshire’s entire portfolio eventually.

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Mining company Anglo American PLC posted Friday a record operating profit for last year following big advances in its coal and diamonds operations.

The group reported a record operating profit before special items and remeasurements of $11.1 billion, up 14 percent on the year before. Underlying earnings per share were 23 percent higher and the full-year dividend was raised 14 percent to $0.74 per share.

However, its net profit declined 6 percent to $6.17 billion from $6.54 billion in 2010, when it posted a big gain on asset disposals. Gains on asset disposals last year fell to $183 million compared to $1.6 billion in 2010, as the company said sales of noncore operations have been largely completed.

Anglo American shares were up 1.2 percent at 2,675 pence in early trading on the London Stock Exchange.

Chief Executive Cynthia Carroll said the group completed three major projects in 2011: the Kolomela iron ore mine in South Africa, the expansion of the Los Bronces copper mine in Chile and the Barro Alto nickel operation in Brazil.

Anglo American agreed in November to sell its 24.5 percent stake in Anglo American Sur, its copper assets in Chile, to Mitsubishi for $5.4 billion. That sale is being challenged by Codelco, Chile’s state-owned copper miner, which has an option to take a 49 percent stake.

A more detailed look at the results shows that overall revenues swelled 11 percent to $36.5 billion.

The company also reported record operating profits for coal and diamonds. The operating profit for iron ore and manganese, the biggest sector within Anglo American, was up 23 percent.

Anglo American raised its stake in the De Beers diamond business to 85 percent in November when it bought the Oppenheimer family’s shares. DeBeers’ sales were up 26 percent last year to $7.4 billion

“Despite short term uncertainty persisting in the global economy, particularly in Europe, the longer term outlook for Anglo American’s diversified mix of commodities remains strong,” Carroll said.

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The era of falling food prices has come to an end with the world population set to add another 2 billion people, according to Cargill Inc., the U.S. farm commodities trader.

The United Nations

Asian stocks fell Thursday as Japanese business confidence and Chinese manufacturing both slipped, but European shares rose as data showing the region’s economic output contracted less than anticipated.

Benchmark oil rose to near $96 per barrel after a big slide the day before while the dollar rose against the euro but fell against the yen.

Stock markets headed higher in early European trading. Britain’s FTSE 100 rose 0.7 percent to 5,404.36. Germany’s DAX jumped 1.1 percent to 5,734.83 and France’s CAC-40 added 0.9 percent to 3,001.80.

Wall Street was headed for a higher opening, with Dow Jones industrial futures rising marginally to 11,770 and S&P 500 futures gaining slightly to 1,207.20.

The purchasing managers’ index published by financial data company Markit showed eurozone manufacturing and services output contracting for a fourth month in December, although at the slowest rate since September. The composite output index stood at 47.9 in December, up from 47.0 in November.

“The December Eurozone purchasing managers surveys are better than feared and show welcome, much-needed improvement. However, the likelihood remains that Eurozone GDP will contract in the fourth quarter, even if the decline may not be as has been feared,” said Howard Archer of IHS Global Insight in a report.

But stocks faced strong headwinds earlier in Asia as business confidence fell in Japan and Chinese manufacturing data showed a contraction, although at a slower rate.

Japan’s Nikkei 225 index shed 1.7 percent to close at 8,377.37, a three-week low. South Korea’s Kospi lost 2.1 percent to 1,819.11 and Hong Kong’s Hang Seng tumbled 1.8 percent to 18,026.84.

Mainland Chinese shares lost ground for a sixth straight trading day, with the benchmark Shanghai Composite Index falling 2.1 percent to 2,180.90, while the Shenzhen Composite Index lost 2.3 percent to 886.01.

In Japan, confidence at major manufacturers fell over the last quarter. The Bank of Japan’s “tankan” survey of business sentiment fell to minus 4.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.

Japan’s strong yen has hit multiple historic highs this year against the dollar, making business conditions difficult for Japan’s export-reliant economy.

Meanwhile, preliminary manufacturing figures showed that Chinese factory output contracted, but at a slower rate, in December. HSBC’s purchasing manager’s index for December stood at 49 us fast cash.0, up from 47.7 in November. Any number below 50 indicates a contraction in manufacturing activity.

But the figure didn’t raise hopes that China might ease its monetary policy anytime soon.

“I don’t think there will be an interest rate cut in the short-term,” said Dickie Wong, executive director of research at Kingston Securities Ltd. in Hong Kong. “Sentiment is really bad in China.”

On Wall Street, stocks plummeted Wednesday amid a growing sense that Europe’s leaders have failed to contain that region’s debt crisis.

Since European leaders reached an agreement to rein in future government budget deficits last week, investors and credit rating agencies have criticized the deal for failing to address current problems.

Italy had to pay higher borrowing rates in its last bond auction of the year Wednesday. The third-largest economy among the 17 nations the use the euro paid 6.47 percent interest to borrow 3 billion euros ($3.95 billion) for five years _ up 0.17 percentage point from last comparable auction _ and the highest rate since the euro came into existence in 1999.

The higher rates make it more expensive for Italy to borrow money and reflect rising doubts that the country will be able to repay its debts.

Oil prices, which plunged more than $5 on Wednesday, drove down energy-related shares. South Korea’s S-Oil Corp. fell 4.7 percent. Hong Kong-listed China National Offshore Oil Corp. dropped 4.6 percent.

Asian banking shares fell on the heels of a downgrade by Fitch Ratings of five major European commercial banks and cooperative banking groups. Hong Kong-listed Industrial & Commercial Bank of China, the world’s largest bank by market value, fell 2.6 percent. Australia’s Westpac Banking Corp. fell 1.8 percent.

The Dow Jones industrial average fell 1.1 percent to close at 11,823.48 on Wednesday. The Standard & Poor’s 500 index fell 1.1 percent to 1,211.82. The Nasdaq fell 1.6 percent to 2,539.31.

Benchmark oil for January delivery was up 76 cents at $95.71 a barrel in electronic trading on the New York Mercantile Exchange. The contract declined $5.19 to finish at $94.95 per barrel on the Nymex.

In currency trading, the euro slipped to $1.2975 from $1.2977 late Wednesday in New York. The dollar slipped to 77.92 yen from 78.07 yen.

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The newspaper coverage was troubling: London’s huge international showcase was beset by planning problems, local opposition and labor woes _ and the transport was a mess.

It sounds like the 2012 Olympics, but this was the Great Exhibition of 1851 generating stories of late trains, unscrupulous landlords and dangerous overcrowding.

Coverage of the event is found in 4 million pages of newspapers from the 18th and 19th centuries being made available online Tuesday by the British Library, in what head of newspapers Ed King calls “a digital Aladdin’s Cave” for researchers.

The online archive is a partnership between the library and digital publishing firm Brightsolid, which has been scanning 8,000 pages a day from the library’s vast periodical archive for the past year and plans to digitize 40 million pages over the next decade.

A glance at the stories of crime and scandal shows some things haven’t changed _ including grumbling letter-writers complaining about disruption caused by the 1851 exhibition, held inside a specially built Crystal Palace in London’s Hyde Park.

“People were saying, ‘This isn’t good, I can’t ride my horse in Hyde Park,’” said King. One regional newspaper editor complained that the “celebrated p.m. fast train service to London” arrived two hours late and warned visitors “not to trust themselves to the tender mercies of the numerous private housekeepers” renting out rooms at exorbitant prices.

The library hopes the searchable online trove will be a major resource for academics and researchers. The vast majority of the British Library’s 750 million pages of newspapers _ the largest collection in the world _ are currently available only on microfilm or bound in bulky volumes at a newspaper archive in north London, where the yellowing journals cover 20 miles (32 kilometers) of shelves.

“We’ve got 200 years of newspapers locked away,” King said. “We’re trying to open it up to a wider audience.”

There will be a cost to download articles online, though they can be accessed for free at the library’s London reading rooms.

Most of the first batch of 4 million pages are from the 19th century, and include stories about huge international events, freak accidents and local crimes, as well as articles about Victorian celebrities such as Florence Nightingale, whose nursing of troops in the Crimean War made her famous.

There are stories of war and famine, crime and punishment, alongside birth and death notices, family announcements and advertisements for soap, cocoa, marmalade, miracle cures and treatments for baldness.

Crime columns provide a glimpse at rough 19th-century justice. Newspapers printed lists of people transported to Australia for stealing money, silver, cloth, hay and, in one case, “seven cups and five saucers.”

The archive includes national and regional newspapers from Britain and Ireland, as well as more specialized publications. The Cheltenham Looker-On reported on society, fashions and gossip in the genteel English spa town. The Poor Law Unions’ Gazette contained vivid accounts of workhouse life, and descriptions of inmates who had absconded.

King said the library hopes the archive will also help amateur genealogists find information about their ancestors.

Library staff have already highlighted a few links to the famous, including an 1852 appearance in insolvency court by Simon Cowell’s great-great-great grandfather, Michael Gashion, and a local newspaper item about the great-great grandfather of actress Kate Winslet, who was “embedded in a mass of bricks and timber” when a hotel facade fell on him in 1903.

Bob Satchwell of press trade group the Society of Editors welcomed the archive _ some good news for newspapers amid all the negative press from Britain’s ongoing phone hacking scandal.

He said the website “opens up a magical new window on a magnificent treasure trove of real history, recording the lives of ordinary people doing extraordinary things in vibrant communities, rather than merely the cold facts of politics and pestilence.”

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