Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:32 AM ET
S&P 500: +6.20; 1,535.00
NASDAQ 100: +12.25; 2,109.75
Dow: +52; 13,920
NIKKEI 225: +0.21%; 16,435.74 (+34.01) 03:00 HANG SENG INDEX
HANG SENG: 26,430.29 [9/25]
SHANGHAI SE COMPOSITE: -1.61%; 5,338.52 (-87.36)
BSE SENSEX 30: +0.13%; 16,921.39 (+21.85)
FTSE 100: +0.87%; 6,452.50 (+55.60)
CAC 40: +0.85%; 5,689.32 (+47.73)
XETRA-DAX: +0.42%; 7,802.05 (+32.61)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.67%; $80.06 (+$0.53)
Gold: -0.22%; $737.20 (-$1.60)
Natural Gas: -0.22%; $6.35 (-$0.01)
Silver: -0.44%; $13.56 (-$0.06)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Citic To Give U.S. Firms a Run For Their Money
Bloomberg reports the rapidly growing market value of China's Citic Securities has eclipsed Lehman Bros., Bear Stearns and Charles Schwab., and is now the fourth-largest among brokerages in the world behind Goldman Sachs, Morgan Stanley and Merrill Lynch. Citic was founded 12 years ago and is currently valued at $40.7B or $8.8B more than Lehman, $16.4B more than Schwab and $24.4B more than Bear. Its shares have tripled so far in 2007, while U.S. brokerages' shares have struggled due to the subprime mess. A year ago, Chinese brokerages were not among the world's top-10, but now there are two, with Citic and eighth-ranked Haitong valued at $22.1B. Citic's H1 profit announced last month grew fivefold to $559M. The latest earnings releases for Morgan, Lehman and Bear all showed declines in profit, with only Goldman outperforming. Some analysts are concerned about Citic's valuation at 34x forward earnings, compared to 8.8x for securities firms in the S&P 500 Index -- Haitong trades at 52x estimates. However, one Hong Kong-based asset manager says she's not worried, because Citic has the best chance of overseas growth among peers and is growing at a 300% clip (not sustainable long-term), growth "Morgan Stanley can't give you." Another asset manager argues Citic is a proxy for China and deserves the premium.
Commentary: Problems Ahead for Brokers - Barron's • Strengthening Asian Currencies: Buy China, Hong Kong and India • People's Bank of China Hikes Rates Again
Stocks/ETFs to watch: GS, MS, MER, LEH, BSC. ETFs: IAI, KCE
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Climb for Third Day; Mizuho, National Australia Bank Advance Asian stocks rose for a third day, driving a regional benchmark to a two-month high, on speculation the U.S. Federal Reserve will cut interest rates.
• BHP Raises Olympic Dam's Copper, Uranium, Gold Estimates by 75 Percent BHP Billiton Ltd. (NYSE:BHP), the world's largest mining company, raised its estimate of copper, gold and uranium resources at Australia's Olympic Dam mine by 75 percent, forecasting prices for the minerals will stay high.
• Aiful, Takefuji Credit Risk Rises on Concern Over Outlook for Earnings The perceived risk of owning bonds issued by Japanese consumer lenders such as Aiful Corp. (OTCPK:AIFLY) and Takefuji Corp. rose on concern the financial health of the companies that aren't affiliated to banks will deteriorate.
• RAMS to Sell Bonds Backed by Australian Mortgages to Ease Funding Crunch Rams Home Loans Group Ltd., the Australian lender that last month failed to refinance $5.3 million of short-term debt, plans to sell mortgage-backed bonds to ease funding shortages.
European Headlines (via Bloomberg.com)
• Smiths Names Bowman Chief Executive Officer, Fueling Breakup Speculation Smiths Group Plc fanned speculation of a breakup by naming utility executive Philip Bowman, who has overseen $36 billion of takeovers in two years, as chief executive officer of the world's biggest maker of airport-security scanners.
• U.K. Banks to Reduce Company Credit `Significantly,' Bank of England Says U.K. banks will reduce the supply of credit to companies ``significantly'' in the fourth quarter as they tighten loan conditions and respond to higher market borrowing costs, the Bank of England said.
• Quaden Says ECB Opposes `Excessive and Brutal' Moves in Currency Markets European Central Bank council member Guy Quaden said the bank is against ``brutal'' currency moves after the euro rose to a record high against the dollar today.