Another casualty of Subprime mess, UBS bank reports over 12B loss for the first quarter.

Associated Press news in Yahoo

ZURICH, Switzerland - UBS AG’s chairman abruptly resigned Tuesday as the Swiss bank reported a first-quarter loss of $12.1 billion and said it would seek $15.1 billion in new capital.

UBS revealed more serious damage from exposure to the U.S. subprime crisis and said it expects write-downs of approximately $19 billion.

As UBS Chairman Marcel Ospel stepped down, Deutsche Bank AG, Germany’s largest bank, announced similar write-downs of about $4 billion.

It was the latest indication of how far the severe plunge in U.S. housing prices and a credit crisis triggered by rising mortgage defaults has reached.

UBS write-downs for the past nine months have reached $37.4 billion, the largest reported by any bank to date.

Standard & Poor’s cut the bank’s credit rating one notch to AA-, citing “risk management lapses, earnings volatility and need for new capital.” Read the rest of this entry »

Economic Times reports

India has the most number of private equity (PE) funds operating amongst the BRIC markets, considered the emerging hotbed of PE action.

According to Emerging Markets Private Equity Association (EMPEA) estimates, there are some 89 VC/PE firms managing 153 funds in Brazil, about 28 firms in Russia and 115 in China while India has over 160 firms.

About 120 of these India-focused firms are either those who have raised money from outside India or are subsidiaries of non-Indian VC/PE firms. Experts opine that a growing economy, especially on the domestic side, increased entrepreneurial activity and the IT/ITeS effect is attracting newer investors to the country.

The huge number of experienced techies returning to India and setting up companies has also increased the exposure of Silicon Valley venture firms to the country.

Evalueserve’s chairman Alok Aggarwal said the regions that have traditionally received large amounts of VC/PE funding include US, UK, Canada, Germany, France, Nordics (i.e., Sweden, Finland and Denmark put together) and Taiwan. With the 2007 investment figures of $13.5 billion, India will leapfrog into the top seven regions in the world.

This increased deal activity is having its effect. “Another 40 firms are in the process of raising money for investing in Indian market,” he adds. For the record, there are different estimates by different agencies on total investments into India for 2007 ranging from $9.9 billion to $14.2 billion.

While India saw the arrival of billion dollar plus funds during the year 2007, analysts expect the country to see PE commitments of around $40 billion by 2010-11.

Alok Mittal of Canaan Partners argued that more funds could be operating in India because of the bigger investment opportunities available, compared to China or Russia, for instance. “Probably more sectors in India are open to private fund raising,” he added, explaining that a sector-wise comparison between markets like China and India could throw up interesting data.

Its the time for Railways to raise capital as part of the infrastructure building of the nation. China Railway is raising USD 5.5B from the Shanghai capital market. Soon I guess the Indian Railways will think of something like this. It is the best way to make the public participate in the jewels of the respective countries.

Forbes.com reports

From the late Qing Dynasty to the communist era, raising funds to build railroads has been a huge hassle in China. Now thanks to capitalism, the state-owned railroad builder China Railway Group is raising $5.5 billion almost effortlessly through a dual listing in Hong Kong and Shanghai.

China Railway Group, the world’s third-largest construction contractor by contracting revenue, is raising 22.4 billion yuan ($3 billion) from the issue of 4.675 billion shares in Shanghai after pricing the stock Thursday at 4.80 yuan per share (65 cents), at the top of its indicated range.

The offering of A shares, as yuan-denominated stock trading on the Shanghai and Shenzhen exchanges is called, received orders from Chinese investors totaling 3.383 trillion yuan ($456.5 billion), surpassing the 3.378 trillion yuan ($455.9 billion) record set by PetroChina (nyse: PTR - news - people ), according to China Securities Journal. PetroChina tapped 66.8 billion yuan ($9 billion) in its IPO in Shanghai last month, making it China’s biggest IPO so far.

China Railway Group will also issue 3.326 billion so-called H shares in Hong Kong priced somewhere between 5.03 to 5.78 Hong Kong dollars (64 to 74 cents) per share, raising up to 19.2 billion Hong Kong dollars ($2.5 billion). The international tranche of China Railway’s new issues in Hong Kong has been more than 15 times oversubscribed, according to a market source. The company began public subscriptions in Hong Kong Friday and will finalize the H share IPO price next week. Read the rest of this entry »

The sub prime issue is entering the mainstream economy and its no longer just a wall street issue. Every aspects of economy is going to get affected. At this juncture big cos like Citigroup are having a leadership issue as well. It will take humongous effort from the new leadership to steer the boat in the right direction.

Greg Morcoft of Market Watch Reports

Goldman Sachs analyst William Tanona on Monday recommended that clients sell Citigroup shares, because the bank’s financial problems are likely to grow, and spread beyond current write downs for subprime mortgage losses and into its consumer business like credit cards and retail banking.
He said, those issues, combined with an ongoing search for a new CEO and growing concern about possibly having to trim its dividend preclude any “quick fix” for the shares.
“The lack of leadership at this point in Citi’s storied history could not have come at a worse time. With deteriorating consumer and housing metrics, Citigroup is facing mounting pressure across many businesses,” Tanona said.
He estimates that the firm will end up taking a total of about $15 billion to write down the value of collateralized debt obligation (CDOs), a type of derivative debt security popularized in recent years and used to market mortgage loans to investors.
CDOs are a bit like mutual funds that hold asset-backed securities. The products are then sliced up and sold to institutional investors. Some CDOs have been big buyers of subprime mortgage-backed securities. As subprime delinquencies surged this year, rating agencies have been downgrading some CDOs and their market value has slumped.
Citi has already announced plans to write down as much as $11 billion in CDO exposure to date.
Citi shares fell almost 6% $32.

Citi shares have fallen 40% so far in 2007, and almost 30% in the last several months, but Tanona said further declines are likely as earnings slow. Read the rest of this entry »

The hottest real estate market is in India. With many foreign funds buying into Real Estate equities and the recent ipos of all the big real estate companies there, organisized housing is available for those needed in the country. The development is not only happening in major cities but it is even in C category cities like Cochin, Nasik, Indore, Coimbatore, Jaipur, Faridabad, Vaizag, Nagpur, Mysore. The valuation of these companies are land bank based,..which is like MF industry,..

PTI News in Rediff

India’s booming real estate sector has more than doubled the number of billionaires from this space in just 12 months, with DLF’s Kushal Pal Singh emerging “the world’s richest real estate developer.”Among 54 Indian billionaires identified by Forbes magazine, there are seven real estate developers with a net worth of over a billion dollar each.

A year ago, there were just three billionaires from this sector - K P Singh, Ramesh Chandra and Rajan Raheja, who have now been joined by Rakesh Wadhawan of newly listed HDIL, Niranjan Hiranandani of London-listed Hirco, Parsvnath Developers’ Pradeep Jain and Omaxe’s Rohtas Goel.

Singh, the wealthiest in this space, has been ranked as the fourth richest Indian with a net worth of $35 billion, according to ‘Forbes’ India’s 40 Rich List’ for 2007.

“Kushal Pal Singh is fourth on the 2007 India Rich List with a net worth of 35 billion dollars, making him the world’s richest real estate developer,” Forbes said.

Singh’s wealth appreciated over 250 per cent after his company, DLF, went public in June this year and the stock has surged 60 per cent since then, it added.

Unitech’s Ramesh Chandra ranks 8th with a net worth of $11.6 billion, followed by Wadhawan at the 26th spot with a wealth of $2.35 billion.

Raheja and Hiranandani, real estate developers from the financial capital of India - Mumbai, rank 30th and 31st with a net worth of $2.15 billion and $2.1 billion respectively.

Although there are 54 billionaires in India according to Forbes, 14 of them could not make the cut for the ‘India’s 40 Richest’ list which required a minimum wealth of $1.6 billion.

Pradeep Jain of Parsvnath Developers ranks 46th with $1.25 billion net worth, while Rohtas Goel of Omaxe is positioned at 48th place with $1.2 billion. Parsvnath and Omaxe are based in India’s capital New Delhi.

Of the seven real estate companies that have entered the Forbes’ list, DLF, Omaxe and HDIL got listed in the stock exchanges this year, while Parsvnath entered the stock market last year.

Sensex has touched almost 20000, though this number is arrived out performance of 30 big companies listed on the exchange. Some of the stocks are quoted on a all time high basis but still investors want a pie in these India based equities. Fundamentally speaking there is growth there and any growth in earnings will take the stock price high with a favourable macro economic factors.

Economic Times reports

Stocks on Indian bourses may be commanding huge PE (price-to-earnings) multiples, but for brokers and investors they translate into an ‘extra price’ they pay for higher returns on investments.

A dipstick study, conducted to see how well-priced desi blue chips are vis-a-vis their peers in developed and emerging markets, reveal that Indian shares are far more expensive (in terms of PE multiples) than global majors with better revenues and adjusted profits.

To make a point, L&T with a trailing PE of 56 times is far more ‘expensive’ than engineering behemoth GE (18) or a Mistubishi (13). Likewise, ICICI commanding a PE of 41 times is far more expensive than Citigroup (9) and BNP Paribas (8). IT major Infosys with a trailing PE of 24 is undoubtedly valued higher than EDS (13.8) and Oracle (20). PE gives investor an idea as to what the market is willing to pay for the company’s earnings. The higher the PE the more the market is willing to pay for the company’s earnings. PE, as an indicator, helps investor in deciding whether he should invest in a particular stock or not. A scrip trading at a PE of 15-18 times is generally regarded as a ‘fairly valued’ stock across markets, provided the company has decent earning potential.

PetroChina which went ipo in October, supposedly the largest ipo of 2007, got listed today and in its first day of trading the stock shot up to nearly 3 times the original ipo price. It also surged past Exxon Mobil to be the world’s first company with 1 trillion dollars in market capitalization.

As reported in China View

PetroChina, China’s largest oil and gas producer, replaced Exxon Mobil as the world’s largest listed company by market value on Monday as its share price surged 163 percent to close at 43.96 yuan on its first day of trading on the Shanghai Stock Exchange.

The company’s share price opened at 48.6 yuan on Monday, almost tripling its IPO price of 16.7 yuan, and ended the morning session at 43.65 yuan.By offering shares on the mainland, the company is trying to increase its crude oil production to match its refining capacity, said Zheng Yi, an analyst with Guangfa Securities.

The company’s market value on the Shanghai bourse swelled to above the one-trillion-dollar mark, surging past Exxon Mobil, valued at 487.7 billion U.S. dollars. It is the first time a company has been valued at one trillion dollars.

The share offering would reduce the weight of bank and financial institution stocks to 30 percent from 39 percent and help increase that of industrial sectors such as power, coal and refining, said Wang Jing, an analyst with Orient Securities Co. Ltd.

Market at BSE 20,000, Indian’s play their 20x and is world champs of 20xTwenty.

At such a historic milestone, we need not dream where it eventually end.
It would be easy to enlist 20x to remain bullish.

1. x GDP growth of 8 per cent plus for the next 5 years i.e. 8×5 = 20xTwos.
2. x The RBI from behind the wicket is managing the economic growth and reduces the impact of blowouts.
3. x No reason to believe why our economic growth story will be wide off the pitch.
4. x Very aggressive and super fast delivery from all India Inc which would continue upward 20 basis point. Earnings resulting compounded growth through the next 5years.
5. x Brilliant innings from some of the talented entrepreneurs are delight to watch and there would be definitely be an action replay.
6. x Six off Six Sessions, easy capital availability, Indian companies embarking on large capex expansion to ensure future growth
7. x Emerging new sectors like real estate and retail, expanding overall market cap and investment options.
8. x Politics ceases to be a major threat, all central political “Dhoni” think tank more or less alike on economic roadmap. Emergency declared to reach the mount Everest.
9. x Interest rates at their plateau, with dollar investments pouring in.
10. x Global emerging markets ready to take Indian products and services. Read the rest of this entry »

Another big story from India. Reliance Power is going to the capital market for its expansion plans. As we know there is a huge shortage of Power and it only furthers the gap as the economy grows. Huge investment is required to meet the demand of consumers and industries. This IPO is definitely in the right direction as far as raising capital for infrastructure development in India.

Reliance Power IPO

Reliance Power Limited has recently filed its Draft Red Herring Prospectus (DRHP) with SEBI.

Reliance Power Limited IPO which would be one of the biggest IPO in Indian stock markets which will issue 130 crore equity shares of Rs 2 each at a price to be decided later.

The net issue to the public would be 114 crore equity shares after the promotors contribution of 16 crore equity shares.Reliance Power IPO will constitute 11.5% of the post issue paid-up capital of the company and the net issue will constitute 10.1% of the post issue paid-up capital of the company.


The company plans to raise close to USD 3.5 B from this offering.

One of the large Oil & Gas company in China is making its initial public offering of shares. Its clearly unlocking value and getting ready for more expansion in terms of organic and aquisition strategy.China Daily reports today

PetroChina, one of China’s biggest oil and gas producers, will raise 66.8 billion yuan (8.9 billion U.S. dollars) in the biggest share sale of the year, the China Securities News reported Tuesday.

The oil producer will sell four billion shares at 16.7 yuan apiece, according to a statement today.

The share sales are bigger than Shenhua, the country’s biggest coal producer, which sold 66.6 billion yuan worth of sharesin September. PetroChina’s will also rank among the world’s biggest initial public offerings (IPOs) this year.


PetroChina has attracted a record 3.37 trillion yuan in applications for its Shanghai listing, topping Shenhua’s 2.66 trillion yuan.

The statement shows that a total of 484 investors will attend the off-line allotment, more than Shenhua’s 465 investors and China Construction Bank’s 432. Read the rest of this entry »