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Wednesday, 7 January 2009

HK watchdog hits at StanChart on fund trades

Standard Chartered, a pillar of Hong Kong’s financial establishment, is to compensate more than 1,000 investors after being rebuked by the local securities watchdog in a case relating to mutual fund trading.

Hong Kong’s Securities and Futures Commission ruled that the UK-based bank had “failed to act in the best interests of its clients” after failing to ensure a level playing field for all investors in third-party funds.

Satyam chief confesses to cooking the books

The chairman of India’s Satyam Computer Services B Ramalinga Raju Wednesday confessed to fixing the company’s books for the past “several” years in the country’s first major fraud case to emerge following the global financial crisis.

In a letter to Satyam’s board, Mr Raju resigned after admitting to wildly inflating the company’s margins to paint a picture of good performance and retain his management position in one of the worst scams to have hit India’s outsourcing sector.

LyondellBasell seeks cover

LyondellBasell, the world’s third-largest petrochemicals company, on Tuesday filed to place 79 of its global affiliates under bankruptcy protection after an unsuccessful attempt to restructure its $26bn of debt. The company said last night it had secured $8bn of debtor-in-possession financing, including $3.25bn in new financing, from a group of lenders in order to continue operations. Lyondell Chemical listed assets of $27.1bn and debt of $19.4bn. LyondellBasell, which was created in 2007 when Netherlands-based Basell bought Houston’s Lyondell for $12.7bn, did not include several hundred of its affiliates throughout Europe, Asia and other regions in the bankruptcy filing.

Millennium appoints independent administrator

Millennium Management, the $11bn New York hedge fund run by Izzy Englander, has appointed an independent administrator to provide worried investors with reassurance in the wake of alleged $50bn Bernard Madoff fraud Millennium appointed London-listed GlobeOp to provide independent valuations and checks on its assets, something common among newer funds but rare for the largest, oldest US hedge funds. Investors have become nervous following the arrest of Madoff, who managed money on behalf of some of the biggest hedge fund investors, and many say third-party administration provides an extra layer of protection against fraud.

Settle the Ukraine gas dispute

The European Union is, rather belatedly, waking up to the fact that the Russia-Ukraine gas dispute is more than a bilateral issue for Kiev and Moscow.

While Brussels would still prefer the two sides to settle the quarrel themselves, it is now considering the “extreme option” of a three-way EU-Russia-Ukraine summit.

Dow Chemical and Kuwait

Three wrongs won’t make a right for Dow Chemical. It made its first big mistake last summer by agreeing to buy specialty chemicals firm Rohm & Haas for $15.3bn, a steep 74 per cent premium, just before valuations collapsed. It compounded the error by planning to pay in part with proceeds from a $9.5bn cash infusion it expected this month from its K-Dow commodity chemical joint venture with a state-owned Kuwaiti firm. Blindsided by Kuwait’s withdrawal from the deal a month after agreeing to new terms, Dow faces a financing crunch and may be on the verge of committing a third costly mistake.

India on verge of a bull run

Taped interview from FT.com

The battle of the oligarchs behind the gas dispute

Amonolithic, Putin-led Kremlin using the “energy weapon” to browbeat neighbouring Ukraine and beyond and threaten the rest of Europe with natural gas shortages: the image has become commonplace during the “gas spats” of the past few years. Yet those spats have a longer history than is generally appreciated – they began in 1992 – and, what is more, Vladimir Putin and Gazprom cannot win a prolonged gas war, and they know it.

The Soviet gas industry was born in Ukraine in the 1930s and the infrastructure was built from there. Ukraine remained a central part of the gas pipeline network even as the focus of activity moved to western Siberia. Carving up the Soviet Union along along the borders of its former republics made for an often unworkable allocation of physical assets. Vital assets for Gazprom, the Russian gas monopoly, are located in Ukraine and thus no longer under its direct control: the pipelines are an obvious item, but, just as significantly, Ukraine controls most of the storage capacity of the Russian export system. On the other hand, Ukraine, a heavy industry country, has mostly depleted its gas reserves, making it dependent on gas from Siberia.

Opec production cuts boost prices

Oil prices rose above $50 a barrel on Tuesday amid a growing belief that Opec is succeeding in delivering cuts in production.

Oil traders have been largely sceptical about the cartel carrying out the three output cuts totalling 4.2m barrels a day it has announced since September. But preliminary evidence of lower supplies has now pushed prices higher.

Norway to review fund investments

Norway’s finance minister has ordered a review of investments by the country’s wealth fund in companies active in the Palestinian territories after Israel’s crackdown in Gaza, officials said.

The $300bn (€222bn, £202bn) oil fund, officially known as the Government Pension Fund – Global, invests under ethical guidelines from the ministry of finance and has excluded a few dozen companies that produce nuclear arms or cluster munitions, degrade the environment or violate human or worker rights.

Moody’s downgrades Bahrain outlook

Moody’s Investors Services on Tuesday lowered its outlook on Bahrain’s debt rating to negative from stable as oil prices have declined “well below” the Gulf island’s budgetary plans and the credit crunch hurts the financial industry.

The credit rating agency warned that with limited currency reserves, Bahrain “may not have the resilience to absorb the price shock and avoid impairment to its credit fundamentals.” Bahrain is rated A2 by the agency – five notches above the speculative grade threshold.