Tuesday, October 5, 2010

A bubble building?

Super-rich investors buying gold in tonne to dodge economic worries

GENEVA: The world's wealthiest people have responded to economic worries by buying bars of gold, sometimes by the tonne, and moving assets out of the financial system , bankers catering to the very rich said on Monday.

Fears of a double-dip downturn had boosted the appetite for physical bullion as well as mining company shares and exchange-traded funds, UBS executive Josef Stadler told the Reuters Global Private Banking Summit.

"They don't only buy ETFs or futures, they buy physical gold," said Stadler, who runs the Swiss bank's services for clients with assets of at least $50 million to invest.

UBS is recommending top-tier clients hold 7-10 percent of their assets in precious metals like gold, which is on course for its tenth consecutive yearly gain and traded at around $1,317 an ounce on Monday, near the record level reached last week.

In a sign of the uncertain times, some clients go further.

"We had a clear example of a couple buying over a tonne of gold ... and carrying it to another place," Stadler said. At today's prices, that shipment would be worth about $42 million.

Julius Baer's chief investment officer for Asia is also recommending that wealthy investors park some of their assets in gold as a defensive stance following a string of lacklustre

U.S.

data and amid concerns about currency weakness.

"I see gold as an insurance," Van Anantha-Nageswaran said. "I recommend 10 percent as minimum in portfolios and anything more than that to be used for trading purposes, to respond to short-term over-bought or over-sold signals."

ULTIMATE BUBBLE?

Billionaire financier George Soros, echoing comments from investment guru Warren Buffett, last month described gold as the "ultimate bubble" because it is costly to dig up and has no real value except its market price. (ET)

Racing ahead

India's auto exports to escalate

Automobile exports from India are expected to shoot up to $12 billion by 2014 from $4.5 billion in the last fiscal, according to a news report.

Firms are witnessing an increase in demand for cheap small cars and two-wheelers from the UK, European Union, Sri Lanka, Bangladesh, Nepal and South Africa.

Exports have been growing at the rate of 25 per cent over the last five years.

“Domestic automobile exports are expected to grow 20-22 per cent over the next few years with demand coming from emerging markets and European countries,” Vaishali Jajoo, auto analyst with Angel Broking, told The Telegraph.

While Maruti Suzuki India is phasing out its M800 model in the domestic market, its export jumped 91.5 per cent to 4,435 units in the April-August period against 2,316 in the same period last year, Siam data showed.

The company exports the M800 to neighbouring countries and other nations such as Algeria, Chile and Egypt.

“Britain has emerged as India’s largest automobile export market where the industry sold cars worth $481 million in 2009-10,” said the Ficci study.

Italy is the second largest market with sales of $433.77 million, followed by Germany, the Netherlands and South Africa.

Source : Telegraph India

Monday, October 4, 2010

Casino entry..

Indian magnate plans casinos in Sri Lanka

Billionaire Rakesh Jhunjhunwala- backed Delta Corp. plans to open casinos in Sri Lanka in the next six months to tap a surge in tourist arrivals to the island nation after the end of a 26-year civil war, Bloomberg wire reported.

Casino operator-Delta, which also develops property and runs an aircraft charter service, will spend 10 billion rupees ($225 million) in the next three years in opening casinos in the region as well as at home in Sikkim, Daman, and Goa, Chief Financial Officer Hardik Dhebar said in an interview in Mumbai. Gambling is not allowed in most Indian states.

Delta wants to benefit from a revival in Sri Lanka’s tourist arrivals, which surged 47 percent in the first eight months of the year, according to the nation’s tourism agency. Shares of companies including John Keells Holdings Plc and Aitken Spence & Co. have more than doubled as tourist incomes boosts earnings at their hotels and resorts.

“We have not even scratched the surface yet” for casino opportunities in the region, Dhebar said. “Sri Lanka is in a hurry to start speed up the process of development and is taking steps to ensure investment flows into the country.”

Delta shares, which have risen 84 percent this year, rose 2 percent to a record 83.8 rupees in Mumbai at 11:08 a.m.

Faster economic growth in India and Sri Lanka is helping boost salaries in the region increasing demand for leisure spending, Dhebar said.

India’s economy grew 8.8 percent in the quarter ended June 30, the fastest pace in two-and-a-half years. Sri Lanka’s $42 billion economy may grow as much as 8 percent in 2010, the central bank said on Sept. 21. The nation’s troops defeated the separatist Liberation Tigers of Tamil Eelam in May last year, ending their 26-year quest for a separate homeland helping attract tourists and investors to the nation.

Billionaire Jhunjhunwala and investor Radhakrishna Damani bought an 11 percent stake in the company last month. Jhunjhunwala, with $1.15 billion in assets is India’s 57th richest man, according to Forbes magazine.

Games bid no-show 'unbelievable'

Gold Coast Mayor Ron Clarke says Sri Lanka's failure to present its bid to the Commonwealth Games Federation over the weekend raises questions about its commitment to hosting the 2018 Games.

The Sri Lankan city of Hambantota is the Gold Coast's only rival for hosting rights.

Queensland Premier Anna Bligh and the Gold Coast bid team outlined the Australian city's advantages to members of the Games federation in New Delhi but there was no presentation from Hambantota.

Councillor Clarke says that is a huge surprise.

"It almost seems as if they are not going on with it but there was no official word about that," he said.

"It is almost unbelievable that they would be still serious and not go across and make a presentation - they have a shorter presentation that what we have."

Meanwhile, Queensland Opposition Leader John-Paul Langbroek wants the Gold Coast Commonwealth Games Board to clarify plans for an athletes village at Parklands near Southport.

Mr Langbroek, who is also the Member for Surfers Paradise, says he has offered bipartisan support for the Gold Coast bid but he has reservations about moving the Gold Coast show to another venue.

"The Gold Coast Show Society, of which I am a member, just being told they are going to be evicted from the site," he said.

"I have not been happy with the lack of consultation from Anna Bligh, Labor and Stirling Hinchliffe the Minister.

"Although I have provided bipartisan support, it is not support for the Government to just evict long-term tenants and the people of the Gold Coast from publicly owned land."

Enthiran fever grips Lanka

Sri Lanka is in the grip of Enthiran fever, with the Rajnikanth-Aishwarya starrer running to packed houses in Tamil-speaking parts of the nation, including Colombo and northern and eastern provinces.

“So far, 12,000 people have seen the film in our complex,” said an administrator of Cinecity multiplex here, which has four theatres, each running four shows a day. The management was finding it difficult to cope with the heavy demand, he added. The film carries sub-titles in English to attract non-Tamil speakers.

Chellam theatre in Chengaladi, Batticaloa, is running a continuous show and the house is always full, according to a theatre official. “Even the heavy rain on Saturday night did not deter fans,” he said.

On the opening day (October 1), the first ticket was bought by eastern province Chief Minister S Chandrakanthan alias Pillayan.

The film has received a similar response in Jaffna. The scene is slightly different in Trincomalee, where a Nelson theatre spokesman said the fight scene at the end of the film did not go down well with the audience.

Kingdom slaps ban on recruitment from Lanka

The National Recruitment Committee has called upon all private recruitment offices in the Kingdom to sign no further contracts for the employment of Sri Lankan nationals from abroad.

The “extremely urgent” call followed disputes between the Sri Lankan Labor Union (ALFIA) and the Sri Lankan Labor Office, which could lead to delays in the arrival of workers to the Kingdom.

It is also a response to the Sri Lankan media’s negative portrayal of the memorandum of understanding (MoU) between the National Recruitment Committee and ALFIA which was due to come into effect on Sep.10.

The MoU signed with ALFIA set recruitment charges at a maximum of SR5,500 for housemaids.

The Sri Lankan Ministry of Labor reportedly backtracked on the pretext that the MoU will deprive the Lankan economy of an additional income of over $50 million.

Recruitment offices in the Eastern Province said Sunday that most of them had already put the suspension into effect, and that with the situation currently “unclear” it would remain in force.

“Most offices are now turning to Indonesia as a viable alternative,” said one office representative. “Indonesia remains committed to the MoU it signed and which came into effect early Ramadan.”

The MoU with Indonesia sets recruitment costs at SR6,000, with visa fees on top.

– Okaz/Saudi Gazette __

Tata Comm to acquire Sri Lanka's Suntel

NEW DELHI: Tata Communications (TCL) is set to acquire Sri Lanka’s second-largest land-based telephone company Suntel. TCL (formerly VSNL), which was acquired by the Tatas following the government’s divestment in 2002, has received the approval of the government, which still owns 26% stake in the company, for the proposed acquisition.

The Indian firm had submitted the bid last month and is in advanced negotiations with Suntel, a senior government official familiar with the development said. According to documents available with ET, the acquisition will be routed through the company’s wholly-owned subsidiary Tata Communications Lanka. “TCL intends to acquire 100% of Suntel, Sri Lanka, with a view to providing domestic data services wireless network and to access local customer business,” says the company’s business plan.

One of the key reasons for the proposed acquisition is the change in the business plan by TCL. The company, which has till now been in inbound voice business, plans to enter the outbound voice traffic and data business. The Indian company is also looking for enterprise businesses, said a person familiar with TCL’s business plan. TCL also has long-distance and internet service provider licences in Sri Lanka.

In 2008, TCL attempted to buy for $90 million, but it was outbid by other players. State-owned Mahanagar Telephone Nigam Ltd (MTNL), which had submitted an aggressive bid (around $180 million), withdrew it in 2009 due to pending legal issues and high liabilities.

Although the exact valuation is not known, a senior official familiar with the development said this time, the bid would be smaller than the previous one since the company’s performance has not been in line with growth projections in the last couple of years.

“This time, the deal size is likely to be much lower than the previous bid amount as the Sri Lankan company has not grown according to the projection in the last two years,” a person familiar with the transaction said. TCL spokesperson declined to comment. Suntel is the second-largest fixed-line telecom provider in Sri Lanka with about 20 % market share, an MTNL official, who was involved in the process last time, said. Suntel, which caters to nearly 550,000 homes and offices in Sri Lanka, is the largest land-based telephone competitor to incumbent Sri Lanka Telecom (42% market share). Its services include a range of voice, data, ISDN, dedicated packet solutions and internet services.

Suntel is currently owned by a joint venture between Swedish telecom giant , Metrocorp, Townsend of Hong Kong, National Development Bank, and International Finance Corporation (IFC), a member of the World Bank Group. (ET)