Asia-Pacific Region markets
>> president bush is heading to the annual 21-nation summit of pacific rim leaders in santiago, chile. the two-day asia pacific economic cooperation forum kicks off saturday. companies like fedex and new york life insurance have been pleading with the president to start talks on a pacific rim free trade block to keep u.s. companies from being frozen out. time, now, for a preview of next week’s market action in the asia-pacific region, from our tokyo bureau.
>> japanese banks reporting earnings in the coming week may say profit will fall in coming quarters. banks like mizuho financial group are struggling to find new revenue sources as a slump in lending continues. competition continues the battle with u.f.j. holdings, set to join with mitsubishi tokyo group to create the world’s biggest bank by assets. mizuho reports on monday, sumitomo reports on wednesday. hong kong is benefitting from chinese reexports. gross domestic product probably expanded in the third quarter. the city is handling more trade from gang deng―guandong province. japan is shipping more with the trade surplus widening in october. the association of southeast asian nations meets in laos a week from now. leaders are set to sign an agreement to remove barriers to $78.2 billion of goods. the nations are expected to agree to cut trade barriers within the region, helping automakers, electronics companies and airlines. those are the business news highlights to look for in the coming week in asia. back to you.
>> turning to europe, we get a preview of likely market -moving events from london.
>> on the economic front, the dominant theme for the week will be investor and consumer confidence. reports in europe should bring us insight into whether the recent drop in oil prices and whether or not the re-election of president george bush is sparking a rebound in optimism about the economy. a lack of improvement on the employment side may be weighing on how consumers generally feel. on tuesday, we get belgium business confidence for november.% this index is considered a good barometer for the euro zone because 3/4 of the country’s exports go to e.u. countries. on thursday, we get german business confidence figures. also out in the week to come, consumer and business confidence figures from italy, too. paying attention to currently news on the earnings front, the world’s biggest interdealer broker releases its results. profits may provide proof that an uptick in equity markets has been accompanied by an increase in turnover and volume. we’ll be getting airline figures in the backdrop of surging fuel prices and cut-throat competition. look out for earnings from easyjet out on tuesday. air franceklm updates investors on wednesday. barclays bank is releasing its trading statement on tuesday. and the european i.p.o. market will spring to life with the share sale of the company. finally, shareholders voting on a plan to sell 500 million worth of shares at karstadtquelle.
>> shares of novell closed lower today. the seller of network consulting and software services said sales came in lower than wall street expected. the stock was down 7.5% in the friday session. new software license revenue dropped for the third straight quarter.the per-share profit was a penny ahead of expectations. six cents against five. chief executive jack messman says investors will be rewarded for patience.
>> this will be the second year of our transition. we’re making large investments for the future. not only are we maintaining our existing products, we’re creating new products and taking our legacy products and rearchitecting them so they will appeal outside of our netware install base.
>> novell said expenses will increase next year as the company spends more on research and development of linux products. who was the most generous person in the u.s.? according to “business week,” it’s bill gates, heading the list of top 50 u.s. philanthropists, donating more than $3 billion to their foundation this year. intel founder and his wife are second and warren buffett jumped to third this year. oprah winfrey is the first african-american to make the list. wal-mart tops the list of corporate givers. it’s a big weekend for college football fans. when we come back, while the teams may be top-ranked, some of the athletic departments are in debt.
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Listen Market briefing --- Bob (fast)
Vineyard--- Adrian (slow)
>> welcome back to “world financial report,” i’m bob bowden, recapping the day on wall street. stocks lower on the day. we began with the dow down 1%, s&p down a little over 1% and the nasdaq down 1.6% on the day. all three indexes, on a weekly basis, snapping a three-week winning streak this week. checking u.s. treasuries, the 10-year down 24/32 -- it’s just a week away, the official start to the holiday shopping season. electronic boutique hopes it will be a very merry christmas. the company sells video games at nearly 1,900 stores in the u.s. and abroad. the company is gaining momentum. c.e.o. jeffrey griffiths says revenue is coming in above expectations and demand is particularly strong for higher priced games like “halo two” made by microsoft.
>> margins on new games are about 20% so a $50 game, we make about $10 before all expenses. margins on preplayed games, a big part of our business, are significantly higher than that.
>> strong margins helped the bottom line. electronic boutique earned 36 cents a share in the third quarter, up from six cents last year. shares finished down 7.5%. u.b.s., j.p. morganchase and citigroup are hiring experts in art, coin and sports banking and now vineyards for wealthy clients as the world’s rich get richer. financial assets of millionaires rose nearly 8% last year. investors are branching out from stocks and banks want to attract more clients worth at least $50 million. we bring in bloomberg news reporter adrian cox for more on the story. i guess the idea is people may be tired of stocks and bonds, say, how about a vineyard. is that the case?
>> absolutely. a lot of investors were burnt by the three-year bear market in stocks and felt, why don’t i do something different? u.b.s. realizes that here are some great vineyards you can buy in burgundy or bordeaux and that’s something investors find very appealing. if they can bring out a team of coin or art bankers, that can tell you how to build up a collection or purchase a picasso. that’s an interesting way to invest alternatively.
>> and these customers may purchase other assets through these firms, as well, once they develop the relationship.
>> absolutely. several bankers who deal with these issues say that when you talk about someone’s bond portfolio, but when you talk about the possibility of them having their own bottles with their own label and their own logo, then suddenly they’re interested even though it may only be a small portion of their total portfolio.%
>> what are they recommending to clients who want to buy vineyards. if someone decides they want a vineyard, what do the u.b.s. guys tell them?
>> first they warn them that wine is an easy way to lose a lot of money. i think the same impression is used as is used for theatrical impresarios is that the easy way to become a millionaire is to start as a billionaire in the business. you need to invest for 10 years before you see any return and once you have that you may get a 10% yield every year but every time there’s a nasty harvest, you can come in a cropper. the first thing they do is warn them about that. then, actually, if they’re looking at the kind of vineyards that might be appealing, they’d point to burgundy and bordeaux where they’ve had a lousy harvest the last three years so prices of vineyards have fallen 30%.
>> i wonder how liquid this market is. if you want to sell your vineyard, you may have a limited population to market that to. i guess i want to ask you how the wine bankers are different from an ordinary banker.
>> if you’re an ordinary banker you obviously warn your client about the risks of investing in a high-yield bond but if you’re a wine banker, you really need to be giving some instructions in how to run this productive unit. so, for example, you’ll be telling them the kind of people they need to get in touch with who are going to be able to give them advice on how you lay out the rows of vines on the vineyard, how you buy containers to be able to process the grapes and how you then go about marketing it once it’s produced.
>> i guess the question of liquidity is an issue, though, right?
>> that’s right. if you have a look at vineyards in burgundy or bordeaux where the prices can go up to about 4.5 million euros a hector, there aren’t really many of these vineyards going up for sale at one time. there are small parcels up for sale at any time. another area they’re looking at is a place with cheaper, smaller vineyards available.
>> thank you. when we return, we’ll get a head start on next week’s market action across the globe with reports from london and tokyo.
