Business & Financial News

The Chinese government will send next year a delegation of Chinese investors in Europe to acquire companies. Nicolas Sarkozy and Hu Jintao in Beijing, April 28, 2010. French President visited China for the inauguration of the Expo.

The Chinese government will send next year a delegation of Chinese investors in Europe to "buy European companies," said Chinese Commerce Minister Chen Deming, quoted Tuesday by the newspaper Global Times. "China wants to invest its large trade surplus and will not hold billions of dollars that depreciate," said Chen Deming Monday at a conference in Beijing."We are prepared to further open our market, for example the financial sector, but other savings should in turn be more open to our place," he said, always cited by the Global Times.

The paper does not specify the countries that the Chinese delegation will visit, or the composition of the delegation, or the amount or nature of such acquisitions. China holds huge reserves, which exceeded the end of September 3200 billion. She had invested the same date of $ 1.148 billion in U.S. Treasury bills while according to experts, it holds more than 550 billion sovereign debt of European countries.

European stock markets have reduced their initial losses Thursday mid-morning, investors hope that Greece renounces its proposed referendum on the European aid plan for the country while Angela Merkel and Nicolas Sarkozy launched an ultimatum Wednesday night Athens ordered to implement the overall European level or risk not receiving any help.

At 10:31, the CAC 40 index yields 0.12% after briefly gained 0.3%. The benchmark index of the Paris lost up to 2.6% in early trade.

The London Stock Exchange gained 0.05%, while Frankfurt was down 0.25% and pan-European Euro Stoxx 50 index drops 0.43%.

Wall Street opened the session sharply down Monday after four consecutive weeks of gains, including a fold related to the decline in commodity prices, hurt by the strong dollar.

In early trade, the Dow Jones lost 1.05% to 12.10,05 points.

An official with the International Monetary Fund said Wednesday that if any institution could buy bonds Spanish and Italian, along with the European Financial Stability Fund (EFSF) prior to distance himself a little later with this idea.

Antonio Borges, Director of the IMF's European Department, said at a news conference that the IMF "might even invest with the European Financial Stability Facility (EFSF).We would definitely ready to play this role. "

Greater involvement of the IMF in attempts to resolve the debt crisis in the euro area could reassure some investors who feel it is out of control.

"The investments we would do in Spain or Italy would be based on the certainty that these countries are on track, they are solvent and to take all necessary measures," said Antonio Borges.

"Because the EFSF now has the opportunity to invest in secondary markets, we could invest with him, to support the debt markets in Italy and Spain with an additional element of credibility," he said.

Later, Antonio Borges, issued a statement saying he wanted to "clarify some comments earlier held" by saying that the IMF could act directly on the bond markets.

"The IMF can only offer our resources to countries, it can not be used to intervene directly in the bond markets. We do no involvement in the market with the EFSF," said he.

The EFSF, with 440 billion euros, is seen as not sufficiently abundant in case of worsening of the crisis.And European officials are already thinking about increasing its response capacity through leverage.

ECB must remain active in the bond market-BORGES

At the press conference before his release correcting his remarks, Antonio Borges had said he wanted to wait for the ratification of the new powers of EFSF before further action by the IMF.

The IMF could go further and invest directly in bonds in Italy and Spain and for this he will have to create an investment vehicle specific, had said Antonio Borges.

He also felt that the European Central Bank should remain active in the bond market to help stabilize it, even after strengthening the powers of the European Financial Stability Fund, the EFSF.

ECB buys government bonds Spain and Italy on the secondary market since August to prevent the cost of borrowing in these countries do not rise to prohibitive levels.

The ECB considers that this action is somehow an extension of its monetary policy decisions.But many economists believe the central bank in the euro zone will no longer intervene in the market when the EFSF will feature its new powers including the purchase of debt on the secondary market.

"The ECB has a very important role to play in restoring market stability in Europe," said the director of the IMF's European department, Antonio Borges, at a press conference. "It is not possible to have a monetary union with the debt markets of extraordinary instability, as is the case today."

It is not, says the IMF, the spendthrifts save states, but to smooth out market fluctuations."A steady market intervention to stabilize the conditions would be most appropriate," said Antonio Borges.

Governments in the euro area might consider a way to make such operations more acceptable to the ECB, whose statutes forbid it to fund government.

"If that means give the ECB some degree of support from finance ministries across Europe, in order to provide additional comfort to make it easier, we would certainly very happy to see that happen, "said Antonio Borges.

"There are several ways to do so. This could simply be guaranteed by several ministries of finance, this could be the EFSF, there are many possibilities.The most important thing is to make it easier for the ECB to stabilize a presence in the markets, "he added.

The automotive supplier Plastic Omnium, a world leader and external fuel systems, Tuesday maintained its 2011 growth targets despite the economic uncertainty felt by some stakeholders.

Plastic Omnium is always improving its revenue and profitability and debt reduction over 2010, said CEO Laurent Burelle during a press conference at the motor show in Frankfurt.

"What I read in the papers does not match what I saw on a daily basis," he said. "What I saw is that the months of July and August were very high, my order book for September, October and November, is very high.July and August were excellent, and the outlook for the coming months are very good. "

At the end of the first half, sales of Plastic Omnium was divided equally between Europe and the world. The group is growing in Asia, which accounted for 14% of sales in the first half of the year, including China where it plans to open ten new plants within three years.

Plastic Omnium also benefits from the race for emission reductions.On its stand at Frankfurt, it has elements of composite structure fiberglass and carbon that can reduce by 2017 to 110 kg weight of a car, or 10 grams less CO2 per kilometer .

Asked if his clients were builders show a fit of caution against the backdrop of sovereign debt crisis, Laurent Burelle said: "As of today, no. But they are like everyone else, dependent on world of finance. "

The survival of the euro area requires a strengthening of the capital of its banking sector and especially by the federalization of its debt, says economist Jacques Delpla.

By accepting the principle that a member may be lacking, the agreement of July 21 on Greece threatens the euro area short-term burst, the judge on the Board of Economic Analysis, regularly consulted by policy makers French .

In this scenario, and without further action in the medium term, only a massive intervention by the European Central Bank may allow the euro area to remain in one piece, he said in a telephone interview with Reuters.

"The bursting of the euro area is the default position if we stick to the agreement of July 21," he said."It opens the Pandora's box.It was agreed that a country may be lacking in the euro zone and therefore the infection is there. "

Spain and Italy are already in sight and France, notably due to the exposure of its banks could follow, he argues.

"If we stick to the agreement of July 21, there is more than euro area before the end of the year unless the ECB buys all that problematic," he said.

To avoid this nightmare scenario, Jacques Delpla has a solution.

Its mechanism, developed with the German economist Jakob von Weizsäcker and a new version which will be presented next month, is to reform the structure of the European bond market by dividing into two legally public debt of each country in the euro area.

THE BLUE AND RED

On the one hand, debt payment, up to 60% of GDP, which would be pooled at the European level and managed by a European debt.

The rest of the debt would be red and focus on default risk of each country.

"There will be no euro area if there is no federal debt," said Jacques Delpla.

Debt blue, very safe, would be attractive to a market hungry for reliable asset and may even compete with the U.S. debt, he said.

Economist breath are two ideas to Nicolas Sarkozy and Angela Merkel, who will meet Tuesday at the Elysée with the menu how to strengthen the governance of the Euro weakened by the crisis of sovereign debt.

"The first is to strengthen the equity of the massive European banking sector, South and North, and the second is to go to debt payment," he said.

"I have not seen a proposal on the market better than ours," he insists.

STILL OPTIMISTIC

Jacques Delpla do not think that Europe but also in France, who must announce the August 24 new measures to meet its targets for reduction of public deficits.

"The objectives of the France based on a growth assumption is too high," said he.

"In the draft budget law is coming, there would be a reduction of public deficits, relative to what had been considered, two additional percentage points of GDP over two years, which would find 30 billion in 2012 and 10 in 2013.

"Otherwise, (Jean-Claude) Trichet will send the letter, or (Mario) Draghi, consult only the Parliament and it will no longer bother to ask France to be co-leader of the Europe ", he added, referring to the current president of the European Central Bank (ECB) and his designated successor.

The authors of the Maastricht Treaty had foreseen everything except a panic attack sovereign debt, estimated Delpla Jacques, who does not pay, however, not pessimism.

His reasons for optimism are three in number.

"First, I think the government will do what it takes," he said. "It is in the interest of Nicolas Sarkozy to be hard on deficits and he knows that if it does not, by default, it is beaten.

"Then I think the Germans will do the right thing too," he says. "At the foot of the wall, they still choose Europe."

The third reason is illustrated by the train he said drastic measures recently announced by Silvio Berlusconi.

"Countries are now obliged to take measures conducive to growth that they did not until now for reasons of petty politics," he says.

Germany said Wednesday it was not necessary to strengthen the European Financial Stability Fund (EFSF), while the European Commission called last week to the revaluation of all components of EFSF, including its size.

"He (EFSF) is far from exhausted.In saying that, all is said, "said the spokesman of the German government at a press conference.

The current capacity is 440 EFSF billion, increasing to $ 750 billion if we add the contributions of the European Union and the International Monetary Fund, participating in bailouts of countries in the euro area.

The emergency EU summit on July 21 has dramatically reformed the EFSF into an embryonic "European Monetary Fund."

But European leaders have not committed one way that investors called for: EFSF give more firepower.

The fund, which borrows on the markets with the guarantee of the member states of the euro zone and then lend to countries in difficulty, has now committed at least 142 billion euros of aid, benefiting Greece, the Ireland and Portugal.This leaves 298 billion to meet future deadlines.

However, economists have calculated that a bailout would cost Spain EUR 290 billion and an emergency program for Italy would represent some 490 billion euros.

The pressure of the German electorate

Last week, the debt crisis in the euro area has experienced a new peak, yields greater than 6% stake in Spanish and Italian sovereign debt raising fears that Rome and Madrid in turn must seek the assistance of EFSF.

It was against this background that Brussels had called a reassessment of all components of the EFSF to convince markets that the euro area could resolve the debt crisis.

Since the beginning of the week, thanks to such repurchase obligations to 10 years in Italy and Spain by the European Central Bank, the financing costs borne by Italy and Spain returned to more affordable levels, around 5%.

The words of the spokesman for the German government illustrate the difficulties faced by Berlin to convince voters of the merits of the government's commitment in resolving the debt crisis in the euro area.

For example, nearly two-thirds of the conservative party of Angela Merkel are dissatisfied with the management of this crisis by the Chancellor, according to a poll released Wednesday.

Sixty-two percent of respondents say they are worried about the image returned by the CDU (Christian Democratic Union) and CSU (Christian Social Union), according to the survey of the Forsa institute for Stern magazine.

Approximately 52% of 578 members of both parties questioned in the survey said they opposed the bailout of the partners in Berlin in the euro area and only 42% approve of the plan of aid to Greece, Ireland and Portugal.

The survey was conducted on 4 and 5 August, before the lull caused by the acquisition of Italian and Spanish bonds by the ECB.

Fears that Germany's leading economic power in the euro area also enjoying growth prospects correct and historically low financing costs, pay the bulk of the bill for the debt crisis have resulted in an increase in German five-year CDS, which reached the level of CDS UK.

The overall activity was down in France in June to its lowest level in eight months, according to Markit PMI cabinet.

The growth in activity in France has slowed sharply in June, partly due to a sharp decline in the number of new cases, according to the final estimate of the PMI index released Tuesday by the firm Markit.

The final composite index of overall activity in France and withdraws to its lowest level in eight months to 54.9 points against 60.3 in May. The decline was recorded in both industry and services.

These findings "raise concerns about the resilience of French growth in the second half," said Jack Kennedy, economist at Markit, while providing a solid performance in the second quarter because of high rates recorded in April and MayAccording to him, "the slowdown in employment growth in June once again emphasizes the fragility of the labor market, a trend that certainly encourage French consumers to limit their spending in the coming months."

Throughout the French private sector, the rate of expansion of new business volume declined to a low of 22 months, says Mark. The service sector still sees the volume of pending cases increased for the 21st consecutive month, but the increase in backlog is the lowest since November 2010 with a rate below its historical average.

As a result, service providers n'augmentent their numbers only slightly, and if they remain confident about their business outlook at 12 months, however, they display the lowest level of optimism since July 2009.

The PMI, compiled from a survey of 750 companies operating in France, is a leading indicator of economic conditions, considered reliable by analysts.

The title London Stock Exchange (LSE) was sharply higher in early trade Thursday on the London Stock Exchange after the operator of the latter was canceled at the last minute his proposed merger of $ 3.5 billion with TMX Group.

Around 7:35 GMT, the LSE share jumped from 5.02% to 10.04 pounds, investors felt that the group without TMX, is likely to become prey in the current phase of industry consolidation of stock exchange operators.

The LSE and TMX, the operator of the Toronto Stock Exchange, announced Wednesday the cancellation of their planned merger, which was initiated in February.

In short news broadcast one day before the general meetings were to rule on their merger, both groups said they had realized that the shareholders of TMX would not give them the required majority of two thirds.

Analysts point out that Nasdaq OMX, which has already tried twice to get your hands on the LSE, is the candidate most likely to buy the operator of the London Stock Exchange.

MEDEF, UPA CGPME and explain that the payment of dividends does not depend only on the level of results. Dirigenate the MEDEF, Laurence Parisot (here in Paris at a conference in March 2011)

Three employers' organizations, the MEDEF, CGPME and UPA (craftsmen), have reaffirmed their opposition Monday, June 13 at the introduction of a bonus paid to employees of companies with rising dividends, which must be examined Tuesday night or Wednesday by deputies. "The three inter-employer organizations would recall that the project ignores the economic reality of companies and the contribution of social dialogue," they write in a joint statement.

According to them, "the payment of dividends meets many criteria, and does not depend only on the level of outcome or performance of the company, contrary to the participation or profit.""The payment of a premium to improve the purchasing power of the French can only be considered in the framework of a voluntary and universal," continues the UPA CGPME and MEDEF.

They also complained that it "unnecessarily introduces a new requirement to negotiate when the right balance between employees and employers can be found during the annual negotiation required". Launched in mid-April some confusion as the "premium to 1,000 euros," it will be mandatory for companies with more than 50 employees who have paid their shareholders dividends up from the average of the last two years. It should cover four million employees. The trade unions are also opposed.