Beaten down shares of Canadian auto-parts makers may offer outsized rewards for those with a long time horizon, but investors would be wise to wait to see what the future holds for the big U.S. automakers.
Analysts said balance sheets are key and noted firms have stockpiled cash in anticipation of an extended downturn. Major players in the Canadian industry include Magna International Inc, Martinrea International Inc. and Linamar Corp.
But the outlook is far from clear if key customers General Motors Corp. and Chrysler LLC are forced to file for bankruptcy protection.
Reports say U.S. President Barack Obama plans to announce today that the government will give GM enough aid to restructure over the next 60 days, while Chrysler will get up to $6 billion (U.S.) and 30 days to complete an alliance with Italian automaker Fiat SpA.
The automakers have already been given $17.4 billion (U.S.) in emergency loans from the U.S. government.
GM had been seeking an additional $16.6 billion; Chrysler wants $5 billion. Both are trying to cut their debt by two-thirds and persuade union workers in Canada and the U.S. to accept several cost-cutting measures.
Members of the president’s auto industry task force have said bankruptcy could be an option for GM and Chrysler if their management, workers, creditors and shareholders failed to make sacrifices
"The consequences of these bankruptcy filings is unknown, or, the risk is high, so I would say I would stay out for now, given the risk reward ratio, until you have more clarity on the GM, Chrysler side," said Youssef Abboud, an autos analyst at Clarus Securities.
With the North American economy in the grip of a fierce slide and auto sales plunging, no Canadian auto parts maker has seen its share price spared.
Industry giant Magna ended Friday’s session on the Toronto Stock Exchange down 56 per cent from the beginning of last year. Martinrea’s shares have fallen 76 per cent since the start of 2007, while Linamar has dropped 86 per cent.
Both earnings and production at most parts companies are expected to continue to suffer over the next couple of years due to the brutal downturn in the auto sector.
In February, U.S. auto sales plunged 41 per cent compared with a year earlier. It was the 16th consecutive monthly drop and it put sales at their lowest level in almost three decades.
If a company is going to survive, the main factor is going to be a strong balance sheet, analysts said.
"That means they don’t have a lot of debt to refinance, and they don’t have a lot of interest expenses to cover," said Kam Hon, an auto analyst at Dominion Bond Rating Service.
"Those that can survive the lean times for 12 months or 18 months, there will be a lot of upside, because they make parts that are needed cash loans."
Hon said that the balance sheets of both Magna and Linamar look healthy.
"For Magna, they are fairly prudent in terms of their debt structure," he said.
"So, yeah, their earnings will suffer, but then again, they’ve got lots of liquidity and a lot of capacity to finance themselves through the downtime."
As of Dec. 31, Magna said it had $2.8 billion in cash and cash equivalents, $1 billion in available credit, and $1.2 billion in debt.
Abboud said he also likes Magna’s balance sheet, and Martinrea’s as well.
Martinrea said in November it had $37.1 million in cash, $82.2 million on the revolving portion of its main credit line and $103.2 million of debt.
Linamar had $83.5 million in cash as of Dec. 31, and $217.3 million on its revolving credit facility.
At least one analyst has warned that the company may be in danger of breaching covenants when $80 million of private placement debt comes due in October. But Linamar chief executive Linda Hasenfratz told Reuters in a recent interview that the company was in good shape.
"If we thought that we were going to breach covenants, we have a legal obligation to publicly state so, and we have not," she said.
"It is playing absolute havoc with our share price, which is hugely disappointing because we actually have some of the strongest fundamentals in the supply base," Hasenfratz said.
But Michael Willemse, an auto analyst at CIBC World Markets said investors need to be cautious. He said he also didn’t like the amount of risk in the sector right now, given that it could take years for demand to come back.
For investors who want buy into the sector, hoping cheap shares will lead to big rewards later, he said Magna is probably the safest bet. But he cautioned that investors will have to be patient.
As for Linamar, Willemse said their higher debt ratio makes them little bit more of a gamble.
"At the end of the day, I think they should be able to pull through the weak environment, but buying the stock would take a view of several years instead of 12 to 18 months," he said.
Meanwhile in the United States, Citigroup Inc. may be the “third-party servicer” chosen by the U.S. Treasury to manage $5 billion in aid for U.S.-based auto-parts suppliers.
Announced March 19, the delay in the program may mean some suppliers will go bankrupt before the aid begins to take effect, said Laura Marcero, a partner in consulting firm Grant Thornton LLP.
"It’s not going to be in place quick enough to prevent some of the failures that are already starting to happen," said Marcero.
Ontario’s government is vowing to slash business taxes by $4.5 billion over three years as part of its larger financial plan to jumpstart the province’s flagging economy.
The provincial budget provides that tax relief through a slew of measures including the widely-publicized creation of a new provincial-federal sales tax and a largely unexpected plan to cut Ontario’s much-maligned general corporate income tax rate over the coming years.
Stressing the need to boost Ontario’s global competitiveness and the desire to save jobs, the budget is also sprinkled with proposals to drive innovation in hard-hit sectors such as manufacturing.
At first blush, Ontario’s financial blueprint appears to be a business-friendly budget.
But experts note much of the promised tax relief doesn’t kick in until mid 2010, while big businesses will see some of their savings muted for the first five years.
Nonetheless, Finance Minister Dwight Duncan vowed the budget would help Ontario weather the global "financial storm" and hasten the healing of its economy.
"All told, this unprecedented business tax reform will make our businesses better able to compete. This is the right thing to do and now is absolutely the right time to do it," Duncan told journalists prior to his address in the legislature.
"…Reform of our tax system will improve this province’s competitiveness and set the stage for growth and economic recovery."
The budget’s centrepiece is the implementation of harmonized sales tax of 13 per cent commencing July 1, 2010. That single sales tax is expected to slash "paperwork costs" for businesses by more than $500 million a year, Duncan said.
While the single value-added sales tax is expected to reduce input costs for businesses like manufacturers, it also has the potential to increase the overall cost base for other companies such as those in the financial service sector.
Perhaps the most surprising move, according to experts, is the province’s pledge to cut Ontario’s general corporate income tax rate over the coming years. Starting July 1, 2010, the general rate will fall from its current level of 14 per cent to 12 per cent. That rate would be further reduced to 10 per cent in 2013.
The rate paid by manufacturers and processors, currently 12 per cent, is schedule to fall to 10 per cent on July 1, 2010.
The business community has long agitated for corporate tax cuts, arguing that Ontario’s current level of 14 per cent for the general rate is amongst the highest in Canada. The only two provinces, Nova Scotia and Prince Edward Island, charge higher corporate taxes at 16 per cent.
For his part, Liberal Premier Dalton McGuinty has long-resisted calls to cut corporate taxes. Last December, he ruled out such a move when the Canadian Bankers Association suggested the province lower its corporate tax rate to 10 per cent in order to boost the province’s lagging productivity.
Opposition leader Bob Runciman said that while business taxes in Ontario are "too high" but suggested that Premier McGuinty was at fault for keeping them elevated over the past five years pay day loans.
"We could have a more competitive economy and better prepared for this rainy day," he said. "… You’ve heard of someone locking the barn door after the horse was stolen. Well the horse is gone, the barn burned down and we’ve eaten all of our chickens. It is rather late in the day for Dalton to see the light."
Observers also noted the bulk of the corporate tax relief doesn’t kick in until July, 2010 even though businesses are already suffering in the deepening recession. Mary Webb, an economist with Scotia Capital, surmised that mid-2010 is likely the earliest the government could provide that relief.
"The timing of tax change is always tough," she said. "In past, it has been thought that if you promise general corporate tax relief that just the promise that it is going down is also helpful."
For big businesses, however, some of the benefit from the new single sales tax is offset for the first five years by a measure to temporarily prohibit input tax credits on energy, telecommunications services, road vehicles weighing less than 3,000 kilograms, along with food, beverages and entertainment.
After the first five years of a single sales tax, full input tax credits would be phased in over three years, the budget says.
"It manages the cost of the harmonization," observed Paul Hickey, national tax partner with KPMG LLP.
The budget also promises tax savings for small businesses, which Duncan characterized as "the backbone" of the economy.
Among the key measures, the government will cut the corporate tax rate for small businesses from 5.5 per cent to 4.5 per cent, effective July 1, 2010. It will also eliminate the small business deduction surtax.
"This claw back is a barrier to growth. Ontario would be the only jurisdiction in Canada to end this barrier to growing businesses," Duncan said.
The province will also exempt more small and medium-size businesses from the corporate minimum tax and cut the CMT rate from 4 per cent to 2.7 per cent.
"Once fully implemented, the comprehensive tax reform package would cut Ontario’s marginal effective tax rate on new business investment in half, making Ontario one of the most competitive jurisdictions in the industrialized world for new investments," the budget says.
There were also more goodies for Ontario’s struggling manufacturers. The province said it would parallel federal measures affecting the capital cost allowance for machinery and equipment, along with computers and software.
Businesses would also reap the benefits of the province’s plan to earmark $32.5 billion for infrastructure spending and nearly $700 million for skills training over the next two years.
A federal judge in Delaware ruled Tuesday that the U.S. Fish and Wildlife Service should not have permitted growinggenetically modified crops in a national wildlife refuge. The judge said the agency should have run studies to determine whether farming with such crops was compatible with habitat preservation. Farming with genetically modified crops is common on other refuge lands, including the Big Muddy National Wildlife Refuge along the Missouri River, with hundreds of acres of genetically modified soybeans and corn planted; and Crab Orchard National Wildlife Refuge in Southern Illinois with more than 2,000 acres in engineered crops paydayloans. The case had added implications in the St. Louis region because most genetically modified crops are sold or licensed by Monsanto Co. of Creve Coeur. =”clear:both”>
Global trade will plunge 9 percent this year, the most since World War II, as the recession engulfs more countries, the World Trade Organization said.
“Economic contraction in most of the industrial world and steep export declines already posted in the early months of this year by most major economies — particularly those in Asia — make for an unusually bleak 2009 trade assessment,” the Geneva- based WTO said in its annual assessment of world trade.
Manufacturers in the U.S., Europe and Asia are struggling as the worst recession in 60 years broadens. Exporters from Volkswagen AG, Europe’s largest automaker, and ThyssenKrupp AG, Germany’s biggest steelmaker, to Goodyear Tire & Rubber Co., the largest U.S. tiremaker, and Sony Corp., the world’s No. 2 consumer-electronics maker, are slashing output and cutting jobs to cope with collapsing demand.
“The contraction in developed countries will be particularly severe, with exports falling by 10 percent this year,” the report said paperless payday loans. “In developing countries, which are far more dependent on trade for growth, exports will shrink by some 2 percent to 3 percent in 2009.”
European exports to the U.S. fell the most in five years in 2008 as the financial crisis curtailed demand in the region’s main trading partners, data released on March 23 show. U.S. shipments abroad, which tumbled in January to the lowest level since 2006, have slumped at a 44 percent annual pace in the most recent six months of data, with imports shrinking 51 percent as Americans stop buying everything from OPEC oil to Japanese cars.
The WTO forecast was scheduled for release March 25. The Dutch newspaper NRC Handelsblad reported the data earlier today.
PICKERING–Warren Beacom may tell you that he’s "just an electrician," but there’s much more to him than that.
The company Beacom founded in 1991, Intellimeter Canada Inc., happens to be around the corner and down the street from Ontario Power Generation’s massive Pickering generating station. It’s also at the heart of Durham Region’s renewed hopes for the future.
Intellimeter has just 26 employees, ranging from office staff to manufacturing workers, engineers and researchers. But it has won over some big Canadian and international customers with its unique energy meters.
These devices, when used with sophisticated Internet-based software, also developed by Beacom’s company, can instantly show customers exactly how much electricity they’re using, information that helps them conserve energy and cut costs.
Intellimeter’s customers include Siemens Canada, Brookfield Properties and Manulife Financial, with addresses as far away as Hawaii, Las Vegas, Houston, St. Lucia and Barbados. "We have not only the hardware but sophisticated software that’s Web-based. That provides them with a total solution," Beacom says. "That has made the product line strong."
Durham, which includes Oshawa, Whitby, Pickering and Ajax as well as smaller surrounding townships, is at the epicentre of the quake that has rocked Ontario’s manufacturing sector. Steady, well-paying jobs that once seemed to pass without question from generation to generation are evaporating.
Unemployment in Oshawa and the surrounding region hit 8.2 per cent in February, above the national average. The area has lost 2,500 manufacturing jobs in the past year, with the most high-profile cuts coming from the ailing automotive sector, including General Motors of Canada Ltd.
Local economic development officials insist they are not just sitting on their hands or keeping fingers crossed for a recovery, but are instead working hard to foster growth in other areas and diversify the region’s economy.
The cuts in the auto sector are devastating, but they represent a small percentage of the area’s overall manufacturing. While there are about 50 suppliers tied to the automotive supply chain, the region is home base for about 800 manufacturers in areas such as aerospace, pharmaceuticals and IT.
As companies such as GM cut jobs, others are expanding. Three recent examples, all from Pickering: SNC-Lavalin Nuclear Inc. opened a new satellite office last month; Norwegian engineering firm Aker Kvaerner is relocating one of its facilities from Toronto and will expand its local workforce; and Purdue Pharma Canada has broken ground on a $32 million expansion. Purdue will create 100 jobs for skilled trades as well as 53 positions in research and development as well as advanced manufacturing.
Collectively, these big firms, along with hundreds of smaller ones such as Intellimeter, may represent the next generation of employers and possibilities for growth for Durham municipalities.
A transition on this scale would be difficult at the best of times. Durham is having to embark on this task during what may be the biggest economic upheaval since the Great Depression. Yet, region officials express optimism.
"This meltdown has happened at the worst possible time when it comes to transitioning your workforce," said Doug Lindeblom, Durham’s director of Economic Development and Tourism. "But we will recover from that. Once that happens, people will find that we are very well positioned to absorb a lot of this transitioning labour force."
Energy companies, transportation and manufacturing, information technology, bioscience, agriculture and the health industry have been identified as the important sources for new employment in the next three to five years and beyond, according to a recent study commissioned by Durham officials.
They shy away from predicting how many new jobs might result, however. "It’s just too early to know that, just as on the flip side it’s difficult to predict just what job losses we’re going to see in the region this year," said Rick Lea, executive director for the Durham Region Local Training Board. "The landscape keeps shifting."
For now, construction will give the region its best new opportunities for employment, stemming in particular from two big provincial projects: a proposed extension of Highway 407 and new nuclear plans, currently out to tender, which will add two new reactors to OPG’s Darlington operations payday loans.
The latter alone is expected to create as many as 3,500 jobs in just three years. "We will need welders to build a nuclear facility. Those skills may rest with people who are at GM today," or one of the threatened local auto-parts suppliers, Lindeblom said.
"Nobody’s suggesting that somebody on the line in GM is going to become a nuclear physicist, but we see a lot of strengths in our economic base here that, in some cases, allow for a short transition time for other industries."
The University of Ontario Institute of Technology (UOIT) is developing training programs that would enable engineers in the automotive sector to reapply their skills in the nuclear industry, UOIT president Ron Bordessa said.
His school already offers Canada’s only undergraduate degree program in nuclear engineering. "In the long run, we are going to be responsible for training a lot of nuclear engineers," he said.
As home to the Pickering and Darlington nuclear stations, Durham already produces more than 30 per cent of the province’s power. Amid growing interest in the environment and the province’s Green Energy Act, locals believe the region is poised to become a leader as well in alternative energy.
That’s the goal of the Durham Strategic Energy Alliance, a not-for-profit group whose members include businesses, government and UOIT. Many are alternative energy companies that benefit from the local cluster of energy expertise.
"We’re trying to foster an environment that will create collaboration, and ultimately generate more ideas and more products and services that will be commercialized and help these companies grow," said Michael Angemeer, founding chair of the group. He is also president and chief executive of the Durham electrical utility Veridian Corp.
An initiative along those lines is the automotive centre of excellence at UOIT, slated to open this fall. It’s meant to function as a research and development ground for new materials and alternative fuels such as electricity or hydrogen.
"We’re not going to stop driving vehicles," Lindeblom said. "But we’re going to start driving different kinds of vehicles. Durham is extremely well positioned to design, test and make those vehicles."
Officials concede the local information technology, biosciences and health sectors are still in their infancy, but demographics and wider trends are on their side. "As the population ages and grows, we’re going to need more food and health care and (Durham companies) are well positioned to grow in those areas," Lindeblom said.
Oshawa has its own reasons to be optimistic. In 2008, the city had its best-ever year for government, institutional and commercial building. Construction activity topped $171.6 million in government and institutional sites and $60.8 million in commercial projects.
"There are good things happening here," said Cindy Symons-Milroy, Oshawa’s director of economic development services. "There’s public sector growth occurring in the city that offers just as well paying jobs if not better."
The new downtown courthouse, due to open next January, will employ about 550 and attract as many as 1,500 visitors each working day – a boon to surrounding businesses. "Workers and people visiting who are shopping and eating nearby will be a great economic benefit to downtown merchants. It’s going to have significant impact," Symons-Milroy said.
As well, renovations at Lakeridge Health Oshawa, the local hospital, that have a 2011 completion date are expected to nearly double the number of beds to 637, raising the requirements for doctors, nurses and other health-care workers.
Durham council recently endorsed a community adjustment study, and the training board’s Lea will meet with educators, government and industry to settle on what jobs will be most in demand and how to focus retraining programs.
"In some respects we’re just scratching the surface," Lea said. "It’s going to be a very tough year (economically) so it’s going to require all of us to work together to map out what is possible, and be able to open all those doors."
German industrial conglomerate ThyssenKrupp plans to cut more than 3,000 jobs or about 1.5 percent of its total staff amid a slump in demand, the Financial Times reported on Friday.
The cutbacks will affect the group’s steel and car parts unit as well as its shipyards, the newspaper cited people close to the situation as saying.
In a separate article, Financial Times Deutschland cited unspecified sources as saying ThyssenKrupp, Germany’s biggest steelmaker, plans to transfer parts of its stainless steel business into an alliance with Finland’s Outokumpu fast cash advance.
ThyssenKrupp warned on Thursday it could post a net loss this fiscal year as the global economic downturn hits demand for capital goods such as cars and ships. The group also announced a restructuring that will trim its management board to five from eight.
(Reporting by Ludwig Burger; Editing by David Holmes)
General Electric stock has fallen 72% over the past year amid concerns about rising losses at its finance arm, GE Capital. In an attempt to reassure investors, the company will deliver a detailed, five-hour presentation on GE Capital to investors in New York this Thursday.
In an interview on CNBC that aired March 5, GE’s chief financial officer Keith Sherin acknowledged that GE (GE, Fortune 500) has a credibility problem with investors. "We’ve got to earn that trust back." he said.
"We recognize that we’ve made statements about both not raising equity and about not cutting the dividend and we’ve had to backtrack on those," Sherin said. He blamed these reversals on the uncertain economy.
He said that the best way to regain trust is to be as transparent as possible, and that Thursday’s presentation about GE Capital should help provide that clarity.
"This meeting is clearly an attempt to lessen investor worries about rising credit losses, asset write-downs and dilutive equity raises," wrote Sanford Bernstein analyst Steve Winoker in a research note. "GE Capital has always been a ‘black box’ in terms of disclosure relative to its banking peers. CFO Keith Sherin has promised more detailed disclosure of GE Capital’s assets and loss estimates at this meeting, and we applaud the move, but our opinion is that GE must disclose nearly everything investors demand or else risk exacerbating investor doubts about credibility and transparency."
The big questions
Some analysts believe credit losses at GE Capital will be greater than the company says it expects, specifically in commercial real estate, U.S. credit cards, and U.K. residential real estate. In his CNBC interview, Sherin said that these segments would all be discussed during the presentation.
Analysts also have questions about GE Capital’s earnings. Citigroup analyst Jeffrey Sprague believes that it is unlikely that GE Capital (referred to in his note as GECC) will meet the company’s previous guidance. He writes: "S&P noted that management’s GECC earnings guidance of $5 billion is unlikely and even has the potential to be negative in ‘09 same day payday loans. We are currently modeling GECC net income at [about] $3 billion."
Deutsche Bank sees GE Capital earning $2.9 billion for 2009. Citi’s Sprague adds that large tax credits could offset losses at GE Capital, but that "the reliance on big tax credits underscores the erosion of GECC’s earnings power. That said, it is clear management’s outlook remains substantially too optimistic."
Sanford Bernstein’s Winoker says he wants more clarity around GE exposure to what he calls "at-risk geographies," including Eastern European banking and real estate exposure in Florida, California, and Nevada.
He also wants to know whether the industrial side has the capacity to inject more money into GE Capital and, if so, how much more. He also wants to know under what circumstances the company would raise common equity or consider using TARP, or even spin off GE Capital.
The company has on several occasions said that it has no plans to separate GE Capital from GE. In his CNBC interview, Sherin said that an "incredibly disastrous economic situation" would have to unfold before GE would use TARP funding, and it would only do so if all other backup plans would not work.
Sherin also said that the speculation about GE Capital is overdone, that the company is in an "incredibly strong liquidity position" that includes $45 billion in cash, and that GE Capital will be profitable in the first quarter.
Much is riding on Sherin’s ability to back up these statements. As Winoker said in his note, "After numerous quarters and years of disappointments, with GE, investors have adopted a ’show me’ attitude to the company and are now punishing the stock with the same pressures faced by financial institutions over the last year."
Irish Finance Minister Brian Lenihan said that the weakness of the pound has hurt the competitiveness of his economy, which is suffering a “hangover” after a decade-long boom.
“Sterling has depreciated against the euro and therefore there is a competitive disadvantage to Ireland,” Lenihan said in a speech in London. Separately, he said in an interview with Bloomberg Television that “we’re now at the hangover stage as the party went a little too far.”
The pound has dropped 15 percent against the euro in the last year, making it harder for Irish exporters to sell goods in Britain and prompting some consumers to start shopping across the border in Northern Ireland. That’s inflicting more pain on the country as it endures the biggest contraction among the 16 euro nations.
While the end of a decade-long boom has left Ireland with a soaring budget deficit and the riskiest debt in the region, Lenihan said the government would pursue fiscal discipline. He pledged to keep this year’s budget gap close to the government’s forecast of 9.5 percent of gross domestic product.
The deteriorating fiscal position has prompted both Standard & Poor’s and Moody’s Investors Service to downgrade the outlook on Ireland’s credit rating to “negative” from “stable” this year.
‘Corrective Action’
“The public finances have come under pressure,” Lenihan said. “We’re absolutely determined to take corrective action credit reports.”
Credit-default swaps on Irish government debt, which reached a record 396 basis points on Feb. 17, have since dropped to 280 points. Lenihan said “I’m confident we can fund ourselves.”
Speaking at the same event, Oliver Whelan, director of funding and debt management at the National Treasury Management Agency, said the government had had “no difficulty” selling bonds.
The government is “setting up a treasury bill program in the very near future just to have another funding option in the short-term market,” Whelan said in London today. “So far we have seen no difficulty in being able to sell our bonds.”
The finance minister ruled out the option of Ireland leaving the euro-area. “Membership of a strong currency is essential to Ireland’s economic wellbeing,” he said. He also said that continental help for any stressed country would be specific to the nation involved.
Ireland’s government is even more pessimistic than the European Commission, which forecast the country’s economy to shrink by 5 percent this year. Prime Minister Brian Cowen expects a 6.5 percent contraction in 2009, he said last week, cutting a forecast issued less than two months earlier.
“As we were first to go into recession we’ll be first to get out of it,” said Lenihan.
Turkey’s central bank will probably reduce the benchmark interest rate to a record this week, the fifth consecutive cut, as manufacturing plummets and unemployment rises.
The overnight borrowing rate will be lowered by a percentage point to 10.5 percent, according to the median estimate of 17 economists surveyed by Bloomberg. Forecasts ranged from a half point to a point-and-a-half reduction. The Ankara-based bank will announce its decision at 7 p.m. on Thursday.
Governor Durmus Yilmaz has cut a total 5.25 percentage points from the rate in the last four months, joining monetary authorities worldwide in reducing the cost of borrowing as the global crisis sends industrial output and inflation tumbling.
“This will be an important decision that may give us some signal about when the central bank will decide to pause the easing,” said Sengul Dagdeviren, chief economist at ING Bank AS in Istanbul. “For the moment, however, it’s very clear that Durmus Yilmaz wants to carry on cutting on the basis of sharp falls in growth and in inflation.”
Inflation slowed in February to 7.7 percent, the lowest rate in a year-and-a-half. The bank’s goal for the end of the year is 7.5 percent and Yilmaz said on Jan. 26 that overshooting the goal would be “at the cost of falling output and rising unemployment online payday loans.”
Rising Jobless
Industrial output slumped 21.3 percent in January, the most since 1986 when the statistics agency began producing monthly data. Unemployment hit a four-year high of 12.3 percent in November. The agency will release unemployment figures for December today.
The economy grew 0.5 percent in the third quarter of 2008, the slowest pace in more than six years. The IMF forecasts a 1.5 percent contraction in 2009.
Turkey is seeking IMF support to help finance its current account deficit. The two paused negotiations on Jan. 26 in a dispute over budget planning and the fund said on March 12 that it had submitted a revised set of proposals to Turkey.
The official statistics agency will also today release figures for February consumer confidence at 10 a.m.
The benchmark ISE National 100 Index rose 1.7 percent last week to 23,615.25. The lira gained to 1.7143 per dollar as of 5:56 p.m. on March 13 from 1.7902 a week earlier. The yield on the benchmark lira bond tracked by ABN Amro declined to 14.59 percent from 15.34 percent.
A federal judge has granted the U.S. government’s request to indefinitely freeze the assets of Allen Stanford, and three of his companies, as the Texas financier is accused of running a massive Ponzi scheme.
U.S. District Judge David Godbey also agreed to release most brokerage accounts over $250,000 that have been frozen since the U.S. Securities and Exchange Commission accused Stanford of an $8 billion fraud scheme involving certificates of deposit.
At a brief hearing in federal court in Dallas, Godbey agreed to the SEC’s request for a preliminary injunction that freezes Stanford assets until a trial in the civil lawsuit is complete. The three group companies involved are Stanford International Bank, Stanford Group Co. and Stanford Capital Management. The original temporary restraining order freezing the assets was set to expire on Thursday.
Godbey also approved a plan submitted by court-appointed receiver Ralph Janvey to release most customer brokerage accounts with a net asset value of $250,000 or more, brokerage accounts held by JPMorgan Clearing Corp and brokerage accounts managed by Stanford companies.
Hundreds of Stanford investors have sued Janvey to get access to their accounts.
The release would affect about 16,000 accounts with about $4.1 billion in assets, with about 4,000 accounts with assets of $1.8 billion still subject to the freeze, based on data in court document filed by Janvey.
Accounts with net assets of less than $250,000 held at Pershing LLC have already been released bad credit payday advance.
Stanford and his top aide, James Davis, are accused by the SEC of a massive Ponzi scheme involving high-yield certificates of deposit (CDs) issued by Stanford’s offshore bank in Antigua.
Both have asserted their constitutional right to avoid self-incrimination and have declined to cooperate in the government’s probe.
Charles Meadows, a Dallas-based lawyer who had previously represented Stanford, said in a recent filing that the allegations against his client are "false and the SEC has presented no evidence of any such Ponzi scheme." Meadows on Thursday filed notice that he no longer represents Stanford, leaving Stanford’s legal representation unclear.
Janvey has been enforcing a court-ordered freeze of Stanford funds since February as a means of preserving assets for investors and creditors.
Many Stanford customers who have been barred from accessing their accounts have argued in court that the freeze is causing them undue hardship, leaving them unable to pay mortgages, medical bills and daily expenses.
Accounts that remain frozen include those related to the CDs issued by Stanford’s offshore bank and those controlled by defendants or some employees.
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