• India’s largest copper and zinc producer, Sterlite Industries Ltd. (ADR:SLT), agreed to buy assets of recently bankrupted miner Asarco LLC for $2.6 billion, Bloomberg reported. Asarco has three copper mines, a smelter and refinery Asarco is the third-largest copper maker in the U.S., producing 235,000 tons in 2007, and Sterlite said it plans to make it the largest.

• Petroleo Brasileiro SA (ADR:PBR), better known as Petrobras, doled out six-year deepwater oil rigging contracts to Scorpion Offshore Ltd. and Sevan Marine ASA. The rigs are for Petrobras’ November discover of the Tupi field, which hold between 5 million and 8 million barrels of oil, but underneath as much as 3,000 meters of water, Bloomberg reported.

• Russia’s inflation rate could reach 14% by the end of the year, the head of the International Monetary Fund said yesterday (Monday). “Inflationary pressures are likely to remain high,” Poul Thomsen said in a statement. “Absent policy changes aimed at slowing growth in demand, we expect inflation to be running at about 14% by end-2008.”

• South Korea has raised its first-quarter growth estimate from 0.7% to 0.8% from the previous quarter, The Associated Press reported. The economy grew 5.8% in the January-March quarter year-over-year, beating the April estimate of 5.7%, the Bank of Korea said on its web site. South Korea, Asia’s fourth largest economy, expanded by 5% in 2007.

• Toyota Motor Corp. (ADR: TM) may downgrade its U.S. sales forecast to account for a bleak outlook for pick-up trucks and other big vehicles, the Financial Times reported yesterday (Monday). Katsuaki Watanabe, Toyota’s president, told the FT that while the company hoped to make up for the lost truck and sport utility vehicle sales by selling more smaller cars including its Prius hybrid, he was “not sure” this would be enough to offset the drop in large vehicle sales. The company, which is America’s second top-selling carmaker and the global sales leader in the first quarter, originally planned to sell just over 2.64 million vehicles in the U.S. market this year.

• Standard & Poor’s did the financial services sector no favors yesterday (Monday) when it cut the credit ratings on a number of major U.S. securities firms including Lehman Brothers Inc. (LEH), Merrill Lynch & Co. Inc. (MER), and Morgan Stanley (MS). “The outlooks on the large financial institutions sector in the U.S. are now predominantly negative,” the credit rating agency said in a statement. Financial institutions have already written down over $350 billion in subprime mortgage related losses globally and S&P said they face more write-offs, Reuters reported.

• The Institute for Supply Management’s Manufacturing Survey increased 1.0 to 49.6 in May, its highest level since January. The bulk of the increase was due to strong exports fueled by a weak dollar. “Manufacturing may not be growing, but it is not falling apart either,” Joel Naroff, president and chief economist of Naroff Economic Advisors Inc. said yesterday (Monday) in a note to clients.

• Business software firm NetSuite Inc. (N) announced yesterday (Monday) that it intends to purchase privately held OpenAir Inc. for $26 million in cash, Forbes reported. The acquisition could cause a 1-cent to 2-cent quarterly loss in the short-term, but should help NetSuite to speed development of products aimed at professional service companies.

Source: Global Investment Roundups Tuesday, June 3, 2008

However, those concerns have been assuaged recently, as many exporters throughout the Pacific have found a significant demand for their goods in other markets.

Exports to the European Union from China, Korea, Japan, and Taiwan grew by 22.4% year-over-year in the first-quarter according to Goldman Sachs Group Inc. (GS). Exports from those four Asian nations to emerging markets, excluding China, have grown by 36.5% for two consecutive quarters now.

“The ability of Japanese exports – and those from around the region – to continue to grow despite stagnant demand from the US has been one of the most striking features of the past year,” Macquarie Bank economist Richard Jerram told the Financial Times.

Exports to the United States from the four Asian export juggernauts grew 4.7% in the first-quarter, their slowest rate of growth since 2003, according to Goldman Sachs.

Demand is even strong in smaller countries such as Singapore. After falling 2.6% in March – when shipments to the United States fell at the sharpest rate in more than six years – non-oil exports rose 1.6% in April from March, Reuters News Agency reported.

Non-oil exports in April rose 5.4% from a year earlier to $10.2 billion, according to trade agency International Enterprise Singapore. That compares with a 5.9% fall in March. Singapore’s shipments to the United States fell at an annual rate of 16.9%, but exports to Europe and China climbed 16.9% and 19.2% respectively.

“Exports to the U.S. continue to be in the doldrums but the EU and China are still strong. Singapore has been able to decouple from the U.S. to some degree,” Joseph Tan, a strategist at Fortis NV told Reuters.

In South Korea, which relies on overseas sales for 40% of its gross domestic product, exports rose 27% in April, the fastest annual pace in more than three years. Lehman Bros. Holdings Inc. (LEH) has already raised its 2008 forecast for export growth in South Korea from 8.2% to 9.3%.

Vietnam plans to raise exports to Africa, the Middle East and south Asia to $2.3 billion this year, an increase of 33% from last year, the Vietnam News reported, citing an unnamed official at the Ministry of Industry and Trade.

“We have a lot of evidence to support the decoupling view,” Timothy Bond, Merrill Lynch & Co. Inc.’s (MER) chief Asia economist, told the AFP, referring to a view that Asian economies are moving away from dependence on the U.S. market, to a more diversified base.

According to Bond, the stronger euro, which makes Asian goods cheaper to European customers, is the main reason Asian exports to Europe have been growing 25%-28% annually.

“Europe has been the main driver of Asian exports over the past few years, not the [United States],” Bond said.

Source: Asian Exports Continue to Surge Despite U.S. Slowdown

The Wall Street Journal reports that many U.S. cities are now desperate to step up their levels of high-speed Internet access. They rightly see broadband as a backbone of future possibilities, from commerce to education to better delivery of basic goods and services.

While it’s not so hot to see the U.S. so far down the league tables on broadband, it is exciting to think of the opportunity being created elsewhere. As countries like Hungary and Poland pick up blazing speed online, opportunity for growth picks up speed, too.

It’s great news for investors to see the rest of the world charging ahead in key areas like broadband. That means more countries to invest in, more places to shelter from a falling dollar, and more chance to participate in the biggest story of the 21st century — emerging market growth.

Justice Litle

Editorial Director, Taipan Publishing Group

Source: The Broadband Arms Race

He’ll be joined by Vice Chairman Lee Hak Soo and Presient Kim In Joo, who will quit by the end of June.

“The resignation by Chairman Lee Kun Hee is unprecedented,” Tom Coyner, who helps advise foreign investors in Korea as president of Soft Landing Consulting Ltd. in Seoul, told Bloomberg. Coyner said it signals “an end to the era of the Masters of the Universe.”

After more than two decades on top of Samsung, Lee was shrouded in controversy. Last week, he was charged with evading $133 million (112.8 billion won) in taxes and breaching his chairman duties by enabling his son to reign control of several of the group’s units.

These charges stem from a four-month investigation that began when Lee’s house was raided in January after a former company lawyer alleged the company created several “slush funds” valued at $200 million.

Lee tactfully apologized in a televised briefing – not so much for the base of the charges, but for the trouble they are causing.

“I’m truly sorry for causing so much concern with the investigation,” Lee said. “I will assume full legal and moral responsibility.”

Interestingly, the current charges pale in comparison to previous charges brought against Lee. In 1996, he was convicted of bribing South Korean presidents Chun Doo Hwan and Roh Tae Woo, which earned him a two-year prison term that was soon pardoned by sitting president Kim Young Sam.

And in 2005, Lee was investigated for – and later cleared of – using corporate funds to pay presidential candidates.

No change expected, somehow

For Samsung, the resignation trifecta creates a serious hole atop the conglomerate. In the meantime, the group will dismantle its strategic planning office.

Some analysts are skeptical of the move’s ambiguity, especially when timed after top brass resignations.

“I don’t see anything more than a change of people in charge. There’s no change at all in the fact that (the Lee family) will remain the owner,” Citibank economist Oh Suk-tae told Reuters.

It would take a team of lawyers to dissect the degree and specifics of the Lee family’s ownership of Samsung, but put simply, they own a large majority of the parent company and its units’ shares.

And it isn’t likely that the scandal – as colossal as it would be if it occurred in the United States – will affect the company’s operations.

Samsung’s businesses include high-tech offerings, semiconductors, telecommunication, life insurance, fiber optics, supertankers, compressors and more – all of which account for about one-fifth of South Korea’s exports, Reuters reported.

Samsung Electronics Co. Ltd. alone is Asia’s largest maker of cell phones and televisions.

Once we see that happen – and I’m convinced we will – you can kiss goodbye to the dollar.

Right now, business from the Middle East is about the only thing keeping the greenback above water.

But it’s already starting to drown!

You see, oil – the Gulf’s greatest export – is priced in dollars. It’s traded in dollars. Therefore a huge part of their foreign currency reserves are invested in dollars.

Trouble is… the dollar’s plunging. And the only thing propping it up is this Middle East investment.

But they’re losing patience by the day!

And no wonder…

As the Fed slashed interest rates in a desperate attempt to stave off recession, they’ve unwittingly landed their unlikely saviours up the proverbial creek!

Thanks to their peg to the dollar Gulf States have seen record rises in inflation – between 7% and 10% by Dec 2007, up from just 1.4% in 2005.

Why don’t they just go ahead and dump the dollar now?

The fact is they are SO heavily invested in dollar-denominated assets it would be domestic political and economic suicide if they were to instantly pull the rug. Dollars accounted for 67% of Gulf Corporation Council state assets in 2007.

So it’d be bad for business to do it now, but they are working very hard on diversifying their investments.

Already the Qatar Investment Authority, the emirate’s sovereign wealth fund, is looking at investment opportunities in countries like China, Japan, Korea and Vietnam to diversify currency risk, says head of strategic and private equity, Kenneth Shen.

So here is my prediction…

Doom for the dollar… boom for Vietnam

Economic necessity will see the Gulf de-peg from the dollar and establish a single currency.

Backed by the region’s massive energy reserves, the new Gulf currency will emerge as one of the world’s major currencies alongside the dollar, euro, sterling and the yen.

It’ll result in falling inflation in the Gulf and lay the basis for a sustained economic boom in the region. Gulf investment houses will then become major players on the global stage.

Gulf merchant banks should be a big beneficiary of this. But another market with their coffers open, ready for filling – and which you won’t expect – is Vietnam.

You see, as Gulf investors begin looking for new opportunities to invest their petrodollars, many of them are waking-up to the potential of Vietnam.

Just listen to Bader Al-Sa’ad, CEO of Kuwait’s sovereign wealth fund, the Kuwait Investment Authority:

“The government has a will to change the economy; there is a huge jump in direct foreign investment year over year,” he says. “They are learning from the Chinese experience and it is easier to enter Vietnam than other emerging economies . . . We are interested in buying a stake in a financial institution but these stakes are not cheap.”

With Vietnam’s market now some 50% below its peak last November, Mr. Al-Saad may soon get his chance.

I’m predicting it’s going to be a big winner as the tide of petrodollars hits this gloriously undervalued Southeast Asian state.

For clever way to ride this trend, click here.

Regards,
Manraaj Singh
Editor Profit Hunter

Stocks on Wall Street took a beating yesterday, but on the other side of the Earth, the Shanghai exchange soared… up nearly 5%.

Rumors suggest the Chinese government may enable gamblers worldwide to trade futures on the Shanghai Composite. And up she went.

If you haven’t been paying attention, the mainland Chinese market has been witnessing some serious bloodletting for the past five months. The Shanghai Composite is down 40% from its all-time high set in October 2007.

In the last month alone, the SSE has suffered a textbook 10% correction:

After putting U.S. markets to shame in 2007, Chinese stocks are looking less attractive by the day in 2008. If you’ve got the cajones to trade futures on that market, more power to you.

Also of concern in the Far East, rice prices skyrocketed overnight. Since we mentioned the rising cost two weeks ago, rice has risen as much as 30%.

Yesterday alone, traders goosed the price double digits after Egypt — a leading rice producer — announced a ban on rice exports. Global stockpiles have dropped to levels not seen since Carter entered the Oval Office.

Following Egypt’s decree, the Philippines announced a massive purchasing plan to shore up reserves. India installed additional restrictions on rice exportation. Vietnam officials vowed to cut exports, and Cambodia followed suit.

China, as we’ve come to expect, added its own twist. The government promised to pay farmers more than market price for their rice in order to grow stockpiles. They’ll need extras supplies for the Olympic hordes they’re pining to impress.

Thus, the price of Thai rice, the global benchmark, has doubled since January.

Rice trades a bit differently in the U.S. But a quick look at futures in Chicago and we think you’ll get the idea:

The price has doubled, to $19 per 100-pound contract, in a little over 15 months. At this pace, you’ll see blood in the streets in many of the world’s poorest nations before the end of the year.

The U.S. stock market resumed its losing ways yesterday. The Dow and S&P 500 both fell around 1%. In keeping with the trend, a down day for the Dow spelled an even worse day for the Nasdaq. The tech index fell nearly 2% on a Google downgrade and poor earnings guidance from Oracle.

J.P. Morgan released its 2008 Global Internet Snapshot this morning. It paints a surprisingly optimistic future for global “tech.” Here are some highlights:

Cell phones: For every 100 U.S. citizens, 77 have a cell phone calling plan. In Italy and Hong Kong, there are 135 mobile subscriptions for every 100 people. The global average? Only 41 out of every 100 citizens subscribe to cell phone service.

Mobile phone users are growing at an annual rate of 27%… Indian cell phone users grew by 84% last year alone. Computers: For every 100 Americans, there are 80 PCs. Global PC ownership is a humble 13 for every 100.

Internet: 1.3 billion people now have reliable access to the Internet, thanks to an annual growth rate of over 20% during the last eight years. Yet global Internet advertisers spent only $40 billion last year, 6% of the total estimated worldwide advertising expenditure.

If the global economy doesn’t melt down completely, cell phones and computers still look like a long-term growth opportunity. The trick is finding the right players.

Former Bear Stearns bridge champion and part-time CEO Jimmy Cayne sold every last one of his BSC shares yesterday. Cayne unloaded some 5.7 million shares at $10 a pop for a net “profit” of $61 million.

In a shocking twist, Bear stock fell about 4.5% in aftermarket trading.

Two years ago, Cayne became the first Wall Street CEO to own a $1 billion stake in his own company. Now that he’s cashed out and the stock has ticked down… what are the odds of J.P. Morgan continuing to woo the failing bank above $10 per share?

The Fed took on $75 billion worth of mortgage-related securities in exchange for U.S. Treasuries yesterday.

In its first and much hyped TSLF, our lender of last resort allowed banks and brokerage houses to unload their toxic mortgage-related investments for government debt… for a mere 0.3% rate of interest. We’re sure our grandchildren will thank you for the effort when they get the chance.