Finance Blog number 1

Research In Motion Ltd. has avoided a vote to shake up its combined chair and chief executive management structure, agreeing instead to form a committee to consider investor complaints.

The BlackBerry maker said that after talks with Northwest & Ethical Investments L.P., Northwest will withdraw its motion demanding appointment of a fully independent chair at RIM.

In a proxy filing, the activist investor called for separation of the chief executive and chairmen roles now held by Jim Balsillie and Mike Lazaridis, arguing that RIM

European stocks were helped Friday by an easing in tensions over Greece’s debt crisis after a big Cabinet reshuffle and suggestions that Germany has softened its stance over the need for private creditors to shoulder a part of a second Greek bailout.

The centerpiece of Prime Minister George Papandreou’s wide-ranging Cabinet reshuffle was the appointment of long-time rival Evangelos Venizelos to finance minister and deputy prime minister.

Papandreou will be hoping that the move brings an end to a damaging 48-hour political crisis that raised fears that Greece could run out of money in less than a month.

The reshuffle came after a seven-hour meeting between Socialist lawmakers and Papandreou on Thursday, at which they demanded that the prime minister remove inexperienced loyalists from the Cabinet and replace them with more experienced party veterans, mostly in their late-50s.

The hope in the markets is that Papandreou has done enough to get austerity measures through Parliament, which are necessary for the country to get more bailout funds.

Further relief came from news that Germany may be backing off from its tough stance to get private creditors to take their share of any future second bailout of Greece.

In a press conference with French President Nicolas Sarkozy, Germany Chancellor Angela Merkel agreed that private investors should be part of the solution but that their participation had to be on a “voluntary” basis.

“Markets are currently taking this as a positive step,” said UBS analyst Chris Walker.

In Europe, the FTSE 100 index of leading British shares was up 0.3 percent at 5,713 while Germany’s DAX rose 0.7 percent to 7,156. The CAC-40 in France was 1.1 percent higher at 3,835.

Greek stocks were doing particularly well, with the main ATHEX index up 3.6 percent.

Wall Street was poised for a solid opening, too _ Dow futures were up 0.7 percent at 11,976 while the broader Standard & Poor’s 500 futures rose 0 personal loans for people with bad credit.8 percent to 1,273.

The euro was also a big gainer, climbing 0.5 percent on the day to $1.4284. On Thursday, it had fallen below $1.41 for the first time in three weeks as investors fretted about a possible Greek debt default.

Greece’s debt crisis has been the main driver in markets this week, but with a seemingly calmer mood Friday, investors may turn to U.S. economic data later for more direction. A run of weak U.S. economic news has weighed on stock markets over the past few years.

The University of Michigan’s monthly consumer confidence survey could well be a catalyst to how markets end the week. The consensus in the markets is that the headline index will rise modestly to 74.5 in June from the previous month’s 74.30.

“Any signs of improving demand from U.S. consumers would have wide reaching implications and the hope is that with oil prices tumbling, lower petrol costs will free up cash for discretionary spending,” said Ben Critchley, senior sales trader at IG Index.

Oil prices continued to push lower Friday, with the benchmark rate on the New York Mercantile Exchange down another $1.22 to $93.76 a barrel.

Earlier in Asia, before the reshuffle and the German comments, stocks pushed lower.

Japan’s Nikkei 225 index closed 0.6 percent lower at 9,351.40 while Hong Kong’s Hang Seng index fell 1.2 percent to 21,695.26.

Mainland Chinese shares fell to their lowest level so far this year as investors reacted to news of a rise in the rate for Chinese central bank’s three-month bills on Thursday, seen as a cue that an interest rate hike may be in the offing.

The Shanghai Composite Index fell 0.8 percent to 2,642.82, while the Shenzhen Composite Index fell 1.1 percent to 1,085.11.

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Pamela Sampson in Bangkok contributed to this report.

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QUOTE OF THE WEEK

“For (American workers) you have the twin forces of technology, which means that machines can do things that people used to … and (employers can now) make stuff all over the world. You take technology, you take globalization, and for the American worker this is incredibly difficult. If you look at the state of American labor right now, you have 7 million officially unemployed payday loans. But when you add all the people who have stopped looking for work and all the people working in part-time jobs … that pay half the median wage, that’s 24 million people. And those numbers aren’t getting better anytime soon.”

France’s Axa Private Equity says it has agreed to buy a $1.7 billion private equity portfolio from Citigroup Inc. as the big U.S. bank sheds some of its non-core businesses.

Terms of the deal announced Wednesday were not disclosed.

The portfolio includes 207 limited partnership interests in private equity buyout funds and a portfolio of direct stakes in companies. It does not include funds or investments managed by Citi Capital Advisors.

Citi, and other banks hard hit by the financial meltdown in 2008 and subsequent downturn, have been selling off some assets to reduce noncore businesses.

Axa has been buying up private equity portfolios, including a $1.9 billion portfolio from Bank of America in April 2010.

Citi shares fell 24 cents to $37.34 in pre-market trading.

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New Zealand’s dollar reached its highest level since exchange-rate controls ended in 1985 after a report showed the nation’s trade surplus widened by almost twice economists’ estimates to a record in April.

The so-called kiwi has risen 8.8 percent against the greenback since Feb. 25, the second-best performer among 16 major counterparts, as Asian demand drove up prices for New Zealand’s milk, lumber and meat exports. Australia’s dollar touched a three-month low against its New Zealand counterpart amid signs the bigger nation’s economy is cooling.

“Resilience of the kiwi has been very impressive,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Credit Agricole CIB, a unit of France’s second- biggest bank. “The numbers today from New Zealand are obviously helping out as the trade data was far stronger than the market had expected.”

The kiwi rose to as high as 82.19 U.S. cents before trading at 81.78 cents as of 3:41 p.m. in Sydney. It closed at 81.92 U.S. cents in New York on May 27. The previous record of 82.14 U.S. cents was established in February 2008.

Australia’s dollar was at $1.0684 from $1.0706 on May 27 in New York, after earlier rising to $1.0737, the highest since May 11. The currency was at NZ$1.3066 from NZ$1.3058 after touching NZ$1.3019, the weakest level since Feb. 2. The Aussie fell to 86.30 yen from 86.49 yen.

Commodities Driving Surplus

The New Zealand dollar’s gain makes its exports more expensive, hampering the nation’s economic recovery from two earthquakes in the South Island city of Christchurch that killed more than 180 people and caused an estimated NZ$15 billion in reconstruction costs. Prime Minister John Key told reporters in Wellington today that the kiwi was trading at “unsustainable levels” for non-commodity exporters.

The exchange rate was “more bearable” for the commodity sector because of high export prices, he said.

Exports outpaced imports by NZ$1.11 billion ($908 million) from a revised NZ$578 million surplus in March, Statistics New Zealand said today in Wellington. The median estimate in a Bloomberg News survey of economists was for a NZ$600 million surplus.

Prices of New Zealand’s commodity exports gained for an eighth month to a record in April, according to an index calculated by ANZ National Bank Ltd. Exports to China, New Zealand’s second-biggest export market after Australia, surged 42 percent to NZ$5.39 billion in the year ended March 31, government figures showed.

‘Rising Incomes’

“Rising incomes in the Asian region will generate a long- run demand for agricultural commodities, with the New Zealand economy better placed than most” as a supplier, Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia, wrote in a note to clients May 27. “These developments will be reflected in a higher New Zealand dollar.”

The Aussie halted its two-day gain against the greenback as the statistics bureau in Sydney said that gross operating profits at companies declined 2 percent in the first quarter from the previous three months, when they dropped a revised 1.7 percent.

Weaker GDP

Australia’s Treasurer Wayne Swan said before a government report on gross domestic product this week that natural disasters in the nation probably cut more than 1 percentage point from economic growth in the first quarter.

Swan’s latest estimate was higher than one he made in April that put damage to GDP in the first quarter at 0.75 percentage point. The median estimate in a Bloomberg News survey of economists is for a 0.3 percent contraction from the final three months of 2010.

Gains in New Zealand’s dollar were limited as its 10-day relative strength index versus the U.S. dollar rose to 70.23, above the level of 70 that suggests an asset’s price has risen too fast and is poised to reverse course.

“The kiwi’s recent rise was rapid,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest currency margin company. “It’s not surprising to see some correction.”

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Federal regulators are seeking to block VeriFone Systems Inc.’s proposed purchase of rival electronic-payment provider Hypercom Corp.

The Justice Department on Thursday filed a civil antitrust lawsuit in federal district court to stop the deal, warning it would harm competition in the market for point-of-sale terminals in the U.S. Such terminals are used by retailers and other firms to accept electronic payments with credit cards and debit cards.

VeriFone Systems announced plans to buy Hypercom in November in an all-stock deal valued at $485 million, including $65 million of debt.

Christine Varney, head of the Justice Department’s antitrust division, said that allowing VeriFone to buy Hypercom would likely drive up prices for point-of-sale terminals since the two companies together control more than 60 percent of the U.S. market for terminals used by the largest retailers.

Last month, Hypercom said it would sell its U.S. payment systems business to France’s Ingenico SA for $54 million in cash to alleviate antitrust concerns about the deal with VeriFone cash advance to savings account. Verifone would then acquire Hypercom’s networking products operations.

But that was not enough to satisfy the Justice Department since Ingenico is the only other significant provider of point-of-sale systems in the United States.

The sale of part of Hypercom’s business to Ingenico, the Justice Department said in a suit filed in U.S. District Court in Washington, D.C., would not create a new, independent competitor in the market and would make it easier for VeriFone and Ingenico to coordinate pricing for point-of-sale terminals.

“The proposed divestiture does not resolve the significant competitive concerns posed by the merger, and in some ways exacerbates them,” Varney said in a press release.

Verifone had no immediate comment. And Hypercom did not respond to requests for comment.

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China’s new home price growth slowed in Beijing and Shanghai in March as the government intensified property curbs, sending the property stock index to its highest in a year.

New home prices in the capital of Beijing rose 4.9 percent in March from a year earlier, easing from a 6.8 percent gain in February, the statistics bureau said on its website today. In Shanghai, the country’s financial hub, prices climbed 1.7 percent last month, down from 2.3 percent growth in February. Of the 70 cities monitored by the government, 67 cities posted gains, down from 68 in the first two months, the data showed.

The government said last week that its measures are working. About 40 cities said last month they will cap new home prices below annual economic and disposable per-capita income growth or keep them steady following the central government’s measures to rein in housing values. China also said yesterday it will raise banks’ reserve requirements starting April 21 to cool inflation, and central bank Governor Zhou Xiaochuan said monetary tightening will continue for “some time.”

“The turning point for home prices is getting closer and closer,” Shen Jian-guang, a Hong Kong-based economist at Mizuho Securities Asia Ltd., said in a phone interview. “The government is sending a strong signal to further tighten the liquidity and continue to control home prices.”

Challenges

Premier Wen Jiabao said last week in a cabinet meeting that the country faces challenges including rising property prices in many cities even as real estate transactions shrink. The government also raised the minimum down payment for second-home purchases this year and levied taxes on residences in Shanghai and Chongqing. Beijing and Guangzhou imposed restrictions on housing purchases in February, while the central bank raised interest rates twice this year.

The measure tracking property stocks on the Shanghai Composite Index rose 0.9 percent to the highest since April 16, 2010, at the 11:30 a.m. midday break. It also posted the biggest gain among the five industry groups on the benchmark gauge.

Home prices in Sanya on southern Hainan island fell the most by 0.6 percent last month from a year earlier. Nanchong in the western Sichuan province posted a 0.5 percent decline, while prices in Quanzhou in the country’s southeast were unchanged, the statistics bureau said.

‘Clear Sign’

New home prices in Beijing were unchanged in March from February, when they recorded a 0.4 percent month-on-month gain. In Shanghai, they added 0.2 percent in March, down from a 0.9 percent increase in February from the previous month. Of the 70 cities, 12 posted price declines in March from February, when only eight cities reported a drop in housing values, according to the data.

It’s a “clear sign that the market is cooling,” said Sun Mingchun, chief economist at Daiwa Securities Capital Markets in Hong Kong, adding that month-on-month data is more reflective of market trends. “Once we get higher bases and further price declines in the coming months, we should see year-on-year price changes turning negative in more and more cities.”

Existing home prices in Beijing fell 0.1 percent from February, while those in Shanghai jumped 0 low fee cash advance.4 percent.

China’s home sales value rose 26 percent in the first quarter to 860.7 billion yuan ($132 billion) from last year, driving all property transactions 27 percent higher to 1.02 trillion yuan, the statistics bureau reported last week.

Hot Money

Hot money inflows into the Chinese property market is creating bubbles in some cities, Jiang Jianqing, chairman of Industrial & Commercial Bank of China Ltd., the world’s largest bank by market value, said on April 15.

Moody’s Investors Service lowered its outlook for China’s property sector on April 14 to “negative” from “stable” on concern residential sales could decline by as much has 30 percent as local government enforce housing restrictions.

The effects of the government’s controls on the property market were evident in the first quarter, Sheng Laiyun, spokesman for the statistics bureau, said in Beijing on April 15. China’s investment in real estate rose 34 percent to 885 billion yuan in the first quarter, the government said last week.

“Property investment is still robust and we are seeing a mixed picture,” said Shen Minggao, Citigroup Inc.’s China research head. “It’s too early to draw a conclusion on whether the government curbs took effect. It might also be because these are lagging indexes.”

Mounting Concerns

The International Monetary Authority said April 11 that rapid credit growth has created “mounting concerns about the potential for steep corrections in property prices” in China.

Today’s figures came after private data showed the country’s housing market remained robust. China’s home prices rose 0.6 percent in March, expending gains, SouFun Holdings Ltd., operator of China’s biggest real estate website, reported on April 1.

There will be more government measures in the next month, Du Jinsong, a Hong Kong-based analyst for Credit Suisse Group AG, said in an interview with Bloomberg Television today.

“This is a wakeup call for some of those who are very bullish,” said Du, who predicted in November the government will introduce more property curbs. “That means the government will definitely come up with more measures.”

China Vanke Co., the country’s biggest publicly traded developer, said March contracted sales value fell 37 percent from a year earlier in 14 major cities including Shanghai, Beijing and Guangzhou.

“Local government implementation will be critical, and all developers are quite cautious and are focusing on getting presales early,” Christie Ju, head of Hong Kong and China research at Jefferies Equity Research, said in an e-mailed response to queries.

China stopped releasing national average property prices and changed methodology of the survey starting this year, the statistics bureau announced on Feb. 17.

–Bonnie Cao. Editors: Linus Chua, Malcolm Scott

To contact Bloomberg News staff for this story: Bonnie Cao in Beijing at +86-21-6104-3035 or bcao4@bloomberg.net

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Global stocks recovered Friday despite a fresh 30-month high in oil prices, as investors breathed a sigh of relief that a strong aftershock in Japan did not cause much damage.

The main source of relief was that there was no fresh damage at the Fukushima Dai-ichi nuclear power complex, where workers have been frantically trying to control overheated reactors since they lost cooling systems in last month’s tsunami.

Japan’s Nikkei 225 index led the advance, finishing up 1.9 percent at 9,768.08 _ its highest closing since the quake.

Shares of Tokyo Electric Power Co., which owns the Fukushima plant, soared 13.5 percent. The company, known as TEPCO, has been under intense pressure to stabilize the tsunami-damaged plant since it began leaking radiation. After weeks of struggling, workers finally managed to stop highly radioactive water from flowing into the Pacific Ocean on Wednesday.

The strong performance in Japan carried through into European trading, where the main indexes recouped losses recorded in the wake of the quake Thursday.

“After a weak close on Thursday, following another earthquake in Japan, stocks have bounced back strongly as it became clear this was not as bad as first feared,” said Anthony Grech, head of research at IG Index.

The FTSE 100 index of leading British shares was up 0.8 percent at 6,056 while Germany’s DAX rose 0.5 percent to 7,218. The CAC-40 in France was 0.8 percent higher at 4,060.

Wall Street was poised for a solid opening, too _ Dow futures were up 0.3 percent at 12,390 while the broader Standard & Poor’s 500 futures rose 0.4 percent to 1,333.

Investor sentiment remains fairly buoyant even though this week has seen interest rate increases from the European Central Bank and the People’s Bank of China, and confirmation that Portugal is looking to tap a European bailout fund.

The euro remained supported in the markets by the ECB’s decision Thursday to raise its main interest rate by a quarter percentage point to 1 bad credit payday advance.25 percent and expectations it will hike again, despite worries over Portugal.

The 17-nation currency posted a fresh 15-month high of $1.4422 on Thursday and by late morning was trading at $1.4404.

With scheduled economic news sparse, investors will be keeping a close watch on developments in Hungary, where finance ministers from the EU are gathering. Portugal’s bailout request is set to be the main topic of discussion.

In addition, investors will be monitoring news in the U.S., where a government shutdown is looking increasingly likely as the Democrats and Republicans struggle to agree to a budget agreement.

“The potential for unscheduled events to send markets ‘running for cover’ remains extremely potent, and with the U.S. budget deal clock standing at 1 second to midnight, and the EU summit likely to be hijacked by deliberations on a rescue package for Portugal, allied with the ongoing civil war in Libya, speculators will remain very nervous, and many long-term investors sidelined,” said Marc Ostwald, a strategist at Monument Securities.

The fighting in Libya was in fact dominating sentiment in the oil markets, as the country produces a little under 2 percent of the world’s daily oil output. Benchmark crude for May delivery was up $1.30 at $111.60 a barrel, the highest since September 2008, in electronic trading on the New York Mercantile Exchange.

Earlier in Asia, Hong Kong’s Hang Seng added 0.5 percent to 24,396.07, and South Korea’s Kospi was up 0.3 percent at 2,127.97.

Mainland Chinese shares edged higher with the benchmark Shanghai Composite Index closing up 0.7 percent to 3,030.02, and the Shenzhen Composite Index of China’s smaller, second exchange rising 1.15 percent to 1,285.99.

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Japan’s Nikkei stock index nose-dived more than 12 percent Tuesday as the earthquake-shattered country faced an unfolding nuclear crisis after a radiation leak was detected at a crippled power plant. Other Asian markets also tumbled.

The benchmark Nikkei 225 stock average sank a staggering 1,201.2 points, or 12.5 percent, to 8,422.21 in afternoon trading, extending losses of 6 percent Monday _ the first trading day since a devastating earthquake and tsunami struck the northeastern coast, washing away towns and killing more than 10,000 people.

The broader Topix lost 13 percent, while other Asian markets were sharply down, suffering a ripple effect.

The stock sell-off hit nearly every business sector, with electric companies under intense pressure again. The Tokyo Electric Power Co., which operates the crippled nuclear plant, was overwhelmed with sell orders and had yet to trade. Toshiba Corp., a maker of nuclear power plants, was also untraded.

Other companies with nuclear power-related businesses faced a second day of free-falling losses. Mitsubishi Heavy Industries tumbled 19 percent, Kobe Steel Ltd. dived 17 percent, and Hitachi Ltd. shed 8.5 percent. Cosmo Oil, whose refinery caught fire after the quake, slid by 18 percent.

Car makers declined partly because quake-stricken northeastern Japan is a major center for auto production, complete with a myriad of parts suppliers and a network of roads and ports for efficient distribution.

Major vehicle manufactures halted production after the quake, and their shares continued to capsize. Toyota Motor Corp., the world’s largest automaker, fell 11 percent. Honda lost 7.4 percent and Nissan dropped 10.2 percent. Mitsubishi Motors Corp. lost 14.4 percent and truck-maker Isuzu Motors Ltd. plunged 8.6 percent.

Fears about the safety of nuclear power weighed on the shares of companies involved in uranium mining. Energy Resources of Australia Ltd., one of the world’s largest uranium producers, fell 13.2 percent in Sydney.

Even the rare stocks that did well Monday _ industrial and materials companies, which gained due to expectations that they would benefit when Japan rebuilds _ tumbled Tuesday.

Japanese construction company Kajima Corp. dropped 19 percent and Nishimatsu Construction Co. Ltd. skidded 27.2 percent. Analysts said that while the Japanese economy remained virtually shut down, companies in China and elsewhere could fill the void.

Throughout Asia, investors fled stocks as the crisis in the world’s No. 3 economy seemed only to escalate. South Korea’s Kospi was down 3.4 percent to 1,903.21, and Australia’s S&P/ASX 200 fell 2.7 percent to 4,500.20.

Hong Kong’s Hang Seng index slumped 3.8 percent to 22,449.60, and mainland China’s Shanghai Composite Index lost 2.1 percent to 2,874.63.

On Wall Street Monday, concerns over the economic impact of the earthquake and tsunami in Japan led to a broad sell-off. The Dow Jones industrial average lost 51.24, or 0.4 percent, to 11,993.16.

The broader S&P index fell 7.89 points, or 0.6 percent, to 1,296.39. Nine out of the 10 sectors that make up the Standard and Poor’s 500 index lost ground. Utilities companies fell 1.4 percent, the most of any group.

The Nasdaq composite dipped 14.64, or 0.5 percent, to 2,700.97.

Benchmark crude for April delivery dropped $1.90 to $99.29 a barrel on the New York Mercantile exchange. The contract added 3 cents to settle at $101.19 on Monday on the Nymex.

The dollar was worth 81.52 Japanese yen Tuesday, down from 81.88 yen late Friday. Major natural disasters like earthquakes tends to bolster the yen because investors expect the Japanese public and insurance companies to buy back their home currency in order to fund the country’s reconstruction, increasing demand for the yen.

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In some quarters, a German firm’s takeover of the New York Stock Exchange is being portrayed as a harbinger of American decline. It may, instead, be a sign of strength.

If you’re troubled by this deal, watch closely the next time a TV reporter does a live shot from the exchange floor. Do you see much activity?

“It looks emptier than a dead mall,” says Michael Alderson, a professor of finance at St. Louis University. “Twenty years ago, it looked like the Galleria on the day before Christmas. Geography doesn’t matter in a world of electronic trading.”

Electrons certainly don’t care whether they’re moving through wires owned by Deutsche Börse, by an American company called NYSE Euronext or, as the exchange was structured until a 2005 reorganization, by a clubby group of Wall Street insiders.

New York hasn’t lost its relevance as a financial center, but the NYSE is no longer the hub of world financial activity. For decades, big companies like Microsoft and Cisco Systems haven’t wanted or needed an NYSE listing.

Even for stocks that the NYSE does list, most of the trading happens elsewhere. “The volume done on the exchange itself is just about 20 percent of the total volume,” notes Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors. “The rest of it has gone to various electronic sytems.”

Those are run by companies like BATS Global Markets in Kansas City and Direct Edge in Jersey City, N.J. But, again, geography doesn’t matter.

In the big picture, the exciting action isn’t even in stock trading. It’s in derivatives.

Whole categories of derivatives that used to be traded bank to bank, such as credit-default swaps, must be cleared through an exchange to comply with new U.S. financial regulations. NYSE Euronext wants to compete in that arena, and its merger with Deutsche Börse will create the world’s largest futures exchange. That will make it a formidable competitor against other derivatives players like CME Group in Chicago and ICE in Atlanta.

If you want to worry about something, worry about the fact that our weak currency gives European firms an advantage in bidding for U.S. businesses. Worry about whether regulations make it too expensive for American firms to raise capital, but don’t worry about who owns a prominent patch of Wall Street real estate.

“It reminds me of the ’80s, when we were all worried that the Japanese were taking over because they were buying Pebble Beach and Rockefeller Center,” Marcouiller says. That scare was short-lived, and in fact was a symptom of a bubble economy back in Japan.

More importantly, the nothing’s-sacred nature of our financial system is actually what makes America great.

“I call it financial Darwinism,” Marcouiller says. “They (NYSE Euronext) can get on this train that’s speeding faster globally, or they can walk alone and be left far behind.”

Capitalism doesn’t work like that everywhere. When prominent companies in Spain or France or Brazil are threatened with a takeover, political leaders talk seriously about the need to preserve and protect a “national champion.”

Here, we may wax nostalgic about the exchange that was founded under a Manhattan buttonwood tree in 1792, but we also know that nostalgia isn’t good economic policy. If the electrons don’t care who owns the wires and computers that make up a global securities market, then neither should we.

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