Nikkei plunges on economy fears

Japanese investor confidence is not running highJapan's main share index has fallen sharply, hit by fears about the state of both the Japanese and US economies.

Data on Monday showing a 1.2% slowdown in the Japanese economy in the three months to 30 June, came after Friday's shock fall in US employment.

The gloomy figures caused Japan's main Nikkei 225 index to end down 2.2% or 357 points at 15,765.

Europe's share indexes were mixed in Monday afternoon trade, with London's FTSE up while Germany's Dax was down.

The FTSE 100 was up five points to 6,196, while the Dax had lost 12 points to 7,425.

'Bad news'

Japan's biggest exporters led the declines in Tokyo, as the dollar fell to a fresh 14-month low against the yen.

Sony's shares lost 6%, Canon declined 3.7%, and Toyota slid 2.4%, but analysts said falls were seen by firms in all sectors of the economy.

"Stocks are being sold across the board," said Yoshinori Nagano, chief strategist at Daiwa Asset Management.

"US employment data is bad news on fundamentals, and it's unclear how long negative market sentiment will linger."

Japan's second quarter 1.2% fall in gross domestic product, compared with a year earlier, was worse than market expectations of a 0.9% dip.

It was also the first time Japan's economy has contracted since the third quarter of last year, when it fell 0.5% in annual terms.

The Nikkei's Monday falls were mirrored elsewhere in the Far East, with Hong Kong's main Hang Seng index down 128 points to 23,854.

Raised Intel outlook boosts stock

The world's biggest chipmaker Intel says stronger-than-expected demand means it will beat its earlier forecasts for three month revenues.
Intel is seen as a gauge for the whole of the technology sector so this news may boost the rest of the Nasdaq.

Intel shares rose 2.5% to $26.11 in early trading following the news.

The company expects revenue for the three months to the end of September to be between $9.4bn (£4.6bn) and $9.8bn (£4.8bn), up from $9.0bn to $9.6bn.

Intel also says that its gross margin will be in the upper half of the previous range of "52% plus or minus a couple of points". ,

New chips

It has been a good day for chipmakers with Intel's rival Advanced Micro Devices (AMD) unveiling its much-hyped new server chip.

It is AMD's first "quad-core" chip, which features four processors on a single chip.

The product launch is a key part of AMD's attempts to compete with Intel, which has a market value 21 times bigger than AMD.

AMD shares rose 2% in early trading.

L&T, Siemens may float JV for airport projects

Diversified engineering and construction major Larsen & Toubro (L&T) and the Indian arm of Germany’s Siemens AG is planning to join hands to bid for airport modernisation projects. Both companies are now discussing the possibility of floating a joint venture similar to the one formed by the Tatas and Singapore-based Changi Airport, L&T sources said.

The deal will formalise L&T and Siemens’ alliance that started with the development of Bangalore International Airport. L&T and Siemens hold 17 and 40 per cent each, respectively, in the company that is piloting the development of the greenfield international airport in Bangalore. Flying high

Flying high

Projects won by L&T• Bangalore (Rs 890 crore)• Hyderabad (Rs 1,110 crore)• New Delhi (Rs 5,400 crore)• Mumbai (Over Rs 5,000 crore) (Expected soon) Projects won by Siemens• Bangalore Airport• Indianapollis airport ($22.8 million) (baggage system contract) • Guatemala Airport (baggage handling system

The alliance is expected to be a win-win deal for both the companies. L&T is keen on a strong partner since it has bagged engineering procurement contracts for some key airport projects in the country, including New Delhi, Hyderabad and Bangalore.

“We have recently received a Rs 5,400-crore contract from the Delhi International Airport Ltd. We are expecting a similar order for the Mumbai airport as well,” L&T Chairman AM Naik said. The company is planning to bid for airport projects outside India as well.

L&T’s competitor and Hyderabad-based GMR has recently won a $2.7-billion contract to modernise the Istanbul airport. “It will be easier for L&T to bid for future projects if there is a strong partner,” company sources said.

According to sources in the aviation industry, Siemens is gung-ho about the fast-growing opportunities in airport projects in India. In addition to the modernisation of Delhi and Mumbai airports, the government wants to create alternate hubs in Chennai and Kolkata as well.
There are also plans to modernise 35 non-metro airports. The bidding process to set up the proposed Rs 4,235-crore Navi Mumbai airport project is also expected to take off shortly.

Daewoo plans to build world's largest floating dock

South Korea's Daewoo Shipbuilding and Marine Engineering on Monday said it plans to build the world's biggest floating dock to meet growing demand for large container ships.

The world's third largest shipyard intends by June 2009 to build the new dock which could produce six or seven container vessels per year, said spokesman Yoon Yo-Han.

"A final decision has not been made but we plan to build the world's largest floating dock due to a surge in orders," he told AFP.

He gave no details but Internet news provider edaily said the dock would measure 438 meters by 84 meters.

Currently the shipyard has three floating docks to build ships on land.South Korea, home to seven of the world's top 10 shipyards, has secured record orders last year and this year because of strong demand for crude carriers and offshore exploration equipment amid rising oil prices.

In the first half of this year South Korea's shipbuilding orders soared 38.2 per cent year-on-year in terms of tonnage to 11.

DF to invest more than US$1bn in water, infra works over 2yrs - Mexico

The Mexico City (DF) government will invest some 11.4bn pesos (US$1.03bn) in water and infrastructure works over the next two years, a source from the DF finance ministry confirmed to BNamericas.


The investment will have two sources: some 7.39bn pesos in money saved from the city refinancing its debt, and another 4bn pesos in bond emissions, local daily La Jornada quoted DF finance minister Mario Delgado as saying.

Debt refinancing will provide the city with 1.56bn pesos this year and another 5.83bn pesos in 2008, to be invested in works including the city's drainage system and public transport, said Delgado.

Of the 4bn pesos from the bond emissions, 32% will be set aside for works on the DF metro system, 21% for the city's Metrobús bus rapid transit system, 20% for waterworks and 27% for other works, said the finance minister.

Mayor Marcelo Ebrard defined such areas as priorities during his electoral campaign, said the source, who asked to remain anonymous.

The finance ministry was charged by the mayor with finding areas where income could be generated to fund such works, and its deputy planning ministry was then given the responsibility of defining which works in these areas would have the highest social impact and overseeing them to ensure that they have the expected effects on city residents' quality of life, added the source.
The highest priority for Ebrard's government will be to improve the supply of water to the DF's eastern zone, followed by works to improve its drainage system, including its "Drenaje Profundo" rainwater drainage system, the source said.

This system was only designed for rainwater drainage, but has also been used to transport wastewater - containing chemicals such as methane-sulfuric gasses - that have caused the tunnel lining to deteriorate, previous reports indicated.

Works to improve the system include the construction of the Emisor Oriente rainwater drainage tunnel for the eastern zone of the city, the DF government previously announced on its website.
After this, improvements to the city's public transport system - namely Metrobús and the metro - are prioritized, said the finance ministry source.

Ebrard plans to install 10 new Metrobús lines by the end of his administration in 2012, and DF transport and highway department Setravi is looking to purchase 600-700 articulated and bi-articulated buses for the system, BNamericas reported previously.

In addition, construction of the new, 15km line 12 of the DF metro system will kick off in the second half of 2008, local press previously quoted Ebrard as saying.

The line will connect with a new suburban train line at the Buenavista station, as well as the new Eje 4 Sur bus line, said the mayor.

Chery rolls out a million

Chery Automobile saw its millionth car roll off the assembly line yesterday, becoming the first homegrown automaker to reach that milestone.

The fast-growing private automaker, established a decade ago, said it took six years to make the first half million cars and only 1 for the second.

Chery, based in the eastern province of Anhui, has an annual capacity of 400,000 units and expects to add another 250,000-300,000 units after a new plant starts operation in October.

Chery sold 197,923 units in the seven months until July, fourth on the domestic market after FAW-VW and Shanghai VW, two mainland joint ventures of Germany's Volkswagen, and Shanghai GM, a General Motors joint venture.

The company agreed this month and in July to create joint ventures with Italian conglomerate Fiat and US giant Chrysler respectively.

Commercial paper plunges for second week in a row

Short-term notes on track for record declines in August amid credit crisis

The level of outstanding commercial paper plunged for a second week in a row, evidence of the severe credit crisis that has shaken Wall Street.

Seasonally adjusted outstanding commercial paper fell $90.2 billion to $2.04 trillion in the week ended Wednesday after falling $91.1 billion in the previous week, the Federal Reserve reported Thursday. Most of the decline came in asset-backed paper.

So far in August, commercial paper has fallen $144.4 billion from the level at the end of July, on track for a record monthly withdrawal in August. The previous record was $78 billion in January 2001.

Commercial paper consists of short-term promissory notes issued by corporations. It's a market that "has shown virtually no tolerance for bad credits or risky entities for more than 30 years," said Tony Crescenzi, chief bond market strategist for Miller Tabak & Co.

"It is expected that the commercial paper market could shrink as much as $300 billion, roughly the amount of commercial paper backed by mortgage loans," Crescenzi wrote in note to clients. "The shrinkage of the commercial paper market will force companies to obtain money elsewhere. This will absolutely have a negative effect on the economy, arguably in need of offset via new liquidity from the Federal Reserve."

In the week ending Aug. 22, commercial paper backed by assets fell by $77.1 billion after dropping $48.4 billion, the Fed said.

Commercial paper in the financial sector dropped by $17 billion after falling $34.9 billion. Most of the decline was in foreign financial institutions, which fell $16.2 billion.

Commercial paper in the nonfinancial sector rose $3.7 billion.