The Star Online: Business
The Star Online: Business |
- European banks may need 80 billion euros of additional capital
- Philips surprises with US$1.8b loss
- Support Line
| European banks may need 80 billion euros of additional capital Posted: 18 Jul 2011 05:13 PM PDT LONDON: European banks may have to raise as much as 80 billion euros (US$113bil) of additional capital as the stress tests failed to allay investor concern about a Greek default and governments' ability to bail out their lenders. The eight out of the 90 banks that failed the July 15 tests had only a combined capital shortfall of 2.5 billion euros, the European Banking Authority (EBA) said on July 15. As many as 20 banks need to bolster capital, JP Morgan Cazenove analysts led by Kian Abouhossein wrote in a report after the results' publication. Regulators didn't include a Greek default in the tests even though credit default swaps indicate investors see an almost 90% chance of one. The EBA included a 25% writedown on 10-year Greek government bonds held in banks' trading books even as the securities trade at about 51 cents on the euro. The exams won't succeed in reassuring investors until governments put in place a mechanism to stop failing banks weighing on public funds, said Gary Greenwood, an analyst at Shore Capital. "The EBA are stress-testing the wrong thing," said Hank Calenti, a bank strategist at Societe Generale SA in London in a telephone interview. "They need to be testing the ability of the euro zone to support its banks. It's firstly a question of the ability of the sovereign to bail out the banks, and then who is going to bail out the sovereign." The 46-member Bloomberg Europe Banks and Financial Services Index has slumped 12% this year as the debt crisis worsened. The index fell 0.3% yesterday. "We think the European banking stress test is unlikely to provide much in terms of assurance to the markets," said Dirk Hoffmann-Becking, an analyst at Sanford C. Bernstein in a note to clients yesterday. "The concerns about contagion of the sovereign debt crisis into core Europe have taken centre stage." Euro-area government leaders will hold a special summit on July 21, stepping up efforts to stem the contagion from Greece. Leaders are at odds with one another and with the European Central Bank over demands by Germany and Finland that private investors bear some of the burden for a second Greek bailout. Yields on two-year notes from Ireland, Portugal and Greece soared to euro-era records last week. Yields on Spanish and Italian 10-year bonds surged to the most since the euro's inception in 1999. "You should probably be stress-testing the sovereigns not the banks," said Liverpool, England-based Greenwood. "The only thing that can ultimately give the markets some comfort is evidence that the sovereigns themselves have sorted out their balance sheets." Reuters Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| Philips surprises with US$1.8b loss Posted: 18 Jul 2011 05:09 PM PDT AMSTERDAM: Philips yesterday made a surprise writedown on acquisitions that dragged the group to a 1.3 billion-euro (US$1.8bil) second-quarter net loss, just weeks after warning on profits at two key divisions. The Dutch group which is the world's biggest lighting maker, a top three hospital equipment maker, and Europe's biggest consumer electronics producer said it took writedowns at its healthcare and lighting divisions, leading to a 1.4 billion-euro impairment. Last month the company warned of sharply lower second-quarter profits and slowing sales growth at both its lighting business and the toasters-to-shavers consumer division, citing weak consumer demand in Europe. "This is a wider signal that the consumer is not really recovering," said Hans Slob, analyst at Rabo-bank. Philips CEO Frans van Houten said in a statement: "We do not expect a material performance improvement in the near term as operational risks and issues remain, and also considering the current uncertain economic environment." The company will launch a 500 million-euro cost-savings programme that will run into 2014 and a 2 billion-euro share-buyback programme, which will be completed in the next year. Philips shares have fallen 30% in the past 12 months, versus a 16.5% rise of the STOXX Europe 600 Personal & Household Goods index. Restructuring specialist van Houten, who scrapped Philips' earlier growth targets when he took over as chief executive in April, set new medium-term goals for 2013 yesterday, including sales growth of between 4% and 6%, and earnings before interest, tax and amortisation (EBITA) margins of 10%-12% for the group. Rabobank's Slob said that while the share buyback was positive, indicating that management considered the shares to be heavily undervalued, the overall outlook was disappointing. "The management admits Philips is a lower-margin business," he said, adding that he expected the new guidance to trigger more analysts' downgrades. "The vision 2013 is disappointing. It is low in terms of profitability and the EBITA margin of 10% to 12% is not impressive," said Petercam analyst Marcel Achterberg. Philips has struggled to compete with lower-cost Asian makers of consumer electronics, while tepid consumer confidence and weak economic growth in Europe and the US have hit demand for products ranging from televisions to electric toothbrushes, as well as its street and home-lighting systems. Philips competes with Samsung and LG Electronics among others in consumer electronics, and with General Electric and Siemens in the hospital and lighting markets. Reuters Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| Posted: 18 Jul 2011 05:06 PM PDT CBSA CBSA shares rebounded slightly from the most recent low of 34.5 sen (now the support floor) amid mild bargain-hunting interest yesterday. Technically, the uptick of the stochastic and the 14-day relative strength index from the neutral zone suggest more gains in the short term, but trading may be volatile, with strong overhead resistance anticipated at the 43.5- sen level. DIALOG Group pulled back from an all-time peak of RM2.88 on June 2 to RM2.53 amid extended correction yesterday. The short-term trend is bearish. If the crucial 100- day simple moving average of RM2.52 is violated, the stock may fall to the RM2.40 or the RM2.20 levels. Resistance is expected at the RM2.72 mark. ENG Teknologi Holdings hit an intra-day high of RM2.07 yesterday. Apparently, the positive reading from indicators suggests the stock's price is likely to firm in the immediate term on follow-through interest. Resistance is envisaged at RM2.25 followed by the RM2.50 mark while current support is resting at the RM1.80 line. # The comments above do not represent a recommendation to buy or sell. Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
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