Market Briefing---Kathleen (slow)
Tokyo market---Cathy (medium)
>> goldman sachs group extended its dominance of the shrinking merger market by giving advice on four of the 10 biggest acquisitions. goldman managed almost $86 billion of acquisitions. merrill lynch started strong but finished second followed by citigroup and credit suisse first boston. the value of announced acquisitions worldwide dropped 12% to $495 billion in the first half, the lowest its been in six years. tom burnett is president of merger insight. he’s not expecting to see a rapid pick up in m&a activity.
>> our conclusion is we’ll bump along at this level we are running now, down 22% year to date. compared to last year we’ll probably end somewhere around 18% to 20% for the whole year, looking better for the first half of 2004.
>> burnett says that the strengthening euro could attract european buyers to a number of u.s. natural gas companies such as kerr magee, burlington resources and devon energy. he wouldn’t be surprised, he says, by more biotech deals before the end of the year.
>> we are always looking at healthcare because we view the biotechs as kind of a minor leagues for the big pharma companies like merck, pfizer, j&j and lilly who are looking to expand, improve their product pipeline, can’t do it fast enough internally so you cherry pick among the biotech companies. we suspect there will be further consolidation in that sector. >> and that’s tom burnett, president of the merger insight. kraft foods will limit portion sizes and put nutritional labels on all of its products and will eliminate marketing in schools. the moves come as companies face lawsuits over health related issues, including obesity. in may a lawyer sued the nation’s largest food maker seeking to ban the sale of oreos in california because of the level of transfat in them. he dropped the suit shortly after filing it, but the maker of oreo cookies and velveeta cheese says that obesity is a complex public health challenge and it will develop new standards to combat the problem. shares of kraft lost a quarter in today’s trading.
>> japanese auto makers may be among the stocks to watch when trading starts in tokyo. bloomberg’s catherine yang has more.
>> the increase in japanese auto makers in the u.s. will help sales of motor, the nikkei chicago 25 closed higher than the nikkei singapore. it’s a sign. the bank of new york japan a.d.r. index rose. nissan gets about 75% of its profit from north america. toyota motor derives 80% of is sales from the u.s. standard & poor’s levy says japanese automaker sales may rise in the second half. part of the thing is the reputation of the products. the quality is really good for the japanese. they krumg outd with products that people want to buy. that’s really the key.
>> levy says light trucks will lift the sales of asian auto makers in the second half. now, the nasdaq’s rally in gains and microsoft and intel may help lift shares of its asian rivals in japan it’s going to be n.e.c. and south korea samsung electronics. samsung electronics gets about a fifth of its sales in the u.s. n.e.c. is japan’s second largest maker of semiconductors. the manager of $2 billion recently raised holdings in jpgs equities because of cheap valuations.
>> we have japanese companies that on average now are making money. they were not making money a year ago, and earnings are on average up 17% to 18% which is actually very nice. that brings average valuations to levels that can easily and fairly be compared with european or u.s. valuations.
>> he likes consumer doubles, financials, utilities and telecoms. dollar fell against the yen and may limit gains in sony shares. a stronger yen erodes the value of sales of the world’s second largest computer electronics maker. sony gets 67% of its sales from outside japan. kathleen.
>> cathy, i gather canon is increasing spending in the next three years. what’s the story not that. >> canon is spending more than $1.6 billion, kathleen, over three years, so to enter the display market. the nikkei english newspaper said japan’s biggest maker of office equipment will use the money for research and development because canon is looking for ways to tap nuclear power plant technologies in order to boost sales. i’ll be watching exporters as well as tech stocks .
>> catherine yang from our tokyo bureau. our global coverage from tokyo continues with bloomberg international. that’s live at 6:00 p.m. new york time, 3:00 p.m. california time.
>> now, demand for air travel has fallen off because of the spread of severe acute respiratory syndrome or sars. and, of course, because of the war in iraq as well. that’s prompted standard & poor’s to cut its rating on british airways debt to junk status. europe’s biggest airline long-term corporate credit rating was cut to double b plus from bbb negative. now, british airways chief financial officer john rishton told bloomberg news that he was astonished at the ratings cut.
>> crude oil today rose above $30 a barrel while the o.s.x. index fell more than 1%. when we come back we’ll take a look at the issues facing the energy market and how it’s affecting their corresponding stocks .
