Financial Freedom. Best business news.

Samsung Asset Management Co., South Korea’s largest bond-fund manager, said it’s reducing holdings of short-term government debt and buying more longer-term notes on expectations the central bank will raise interest rates.

The Seoul-based company, which oversees 66 trillion won ($60 billion) of assets in bonds, is shifting into South Korean debt with a maturity of 10 years or more and into corporate bonds, Chief Investment Officer Eugene Kim said in an interview yesterday.

“Short-term debt is hit most when interest rates begin to rise and you’d better stay away from it,” Kim said. “Our central bank may raise the base rate as much as possible in the first half and up to 3.5 percent or even higher this year.”

Nine of twelve economists surveyed by Bloomberg News predict the Bank of Korea will increase the seven-day repurchase rate by 25 basis points to 3 percent when it meets on Feb. 11, joining Thailand and India in extending interest-rate increases this year. Kim said the local bond market will weaken further on selling by overseas investors after the government revived a tax of as much as 14 percent on interest income from treasury and central bank bonds held by foreigners.

“Corporate bonds, especially those of consumer financiers and credit-card issuers with better earnings outlooks, are attractive,” Kim said, without naming any companies. “I won’t be buying inflation-linked bonds because there isn’t enough liquidity yet.”

The company is reducing holdings of three-year local treasuries and shorter-term notes, according to Kim.

Trigger to Buy

Yields on 3 percent government bonds due in December 2013 were at 4.06 percent yesterday, according to prices from Korea Stock Exchange. A basis point is 0.01 percentage point. The won advanced 0.3 percent to close at 1,104.68 per dollar yesterday in Seoul.

“The odds are increasing that the Bank of Korea will raise the base rate to 3 percent this Friday and the market has been quickly pricing it in,” Kim said. He added that if yields on three-year bonds reach as high as 4.5 percent, Samsung may start buying again.

The yield on the 3 percent bonds has jumped 117 basis points since Dec. 7, compared with 50 basis points for equivalent 10-year debt, according to the data provided by the Korea Financial Investment Association.

The consumer-price index rose 4.1 percent in January from a year earlier, after gaining 3.5 percent in December.

China Impact

Consumer-price inflation may stay around 4 percent in the first quarter and exceed the government’s 3 percent target this year, with pressure coming from rising raw material costs and accelerating inflation in China, finance ministry Director- General Yoon Jong Won said on Feb. 1.

Asia’s fight against price gains lacks “urgency” and policy makers need to raise interest rates more aggressively to restrain inflation expectations, Morgan Stanley Asia’s Stephen Roach said in a note on Feb. 7.

President Lee Myung Bak last month declared “war” on inflation and tightened price controls, saying it must be contained at 3 percent to protect people on low incomes.

Kim at Samsung said that foreign investors have already started their exit from the South Korean bond market, disappointed at the bond taxes and emboldened to invest in riskier assets elsewhere as the U.S. economic outlook improves.

“Thai investors are no longer rolling over much of their Korean short-term bonds at maturity and global funds, including hedge funds, are shifting from debt to equities,” Kim said. “Still, Asian central banks, including China, seem to be still buying, partly for asset diversification.”

Thailand cashed out a net 249 billion won from the Korean debt market in December while China invested a net 425 billion won, according to the Financial Supervisory Service data. Net outflows by overseas investors were a record 5.3 trillion won in December, according to the data.

Source

Facebook has launched a new feature in Canada that allows mobile users to claim discounts through smartphones by

DETROIT

The Toronto stock market was lower Friday as the latest moves by China to slow down its economy in order rein in inflation raised concerns about demand for commodities.

The resource-heavy S&P/TSX composite index slipped 10.69 points to 13,390.79 while the TSX Venture Exchange lost 11.88 points to 2,277.12.

Lower prices for oil and gold helped push the Canadian dollar lower against the American currency, down 0.35 of a cent to 100.74 cents US.

China

Chrysler will try to refinance its government loans this year as it prepares for an initial public stock offering, and the reduced expense could let the company post a net profit for the first time since it left bankruptcy protection in 2009, CEO Sergio Marchionne said Monday.

Marchionne told reporters Monday at the Detroit auto show that the automaker, which lost $453 million in the first three quarters of last year, will need to post two quarterly net profits before it returns to the stock market as a publicly traded company. He has said the IPO could take place in the fourth quarter of this year, although no date has been set.

Refinancing the loans could reduce interest expenses and help the company become profitable, although Chrysler could make money without the refinancing, Marchionne said.

Chrysler owes the U.S. government $5.8 billion and the Canadian government $1.6 billion. The money is part of a $12.5 billion loan package that funded the automaker’s bankruptcy in 2009. The U.S. government also got a 10 percent stock ownership in the company while Canada got 2 percent. Chrysler has already repaid nearly $4 billion of the loans, but it is paying more than $1 billion a year in interest to Canadian and U.S. taxpayers.

“The interest costs associated with this funding today are pretty high,” Marchionne said. “It is possible that if the debt load would change by either changing the interest rate associated with the funding or the size of the financing would change, then obviously we would reduce the burden associated with carrying the debt and we could be profitable.”

Chrysler has narrowed its losses considerably after losing $3.8 billion in the second half of 2009. In the third quarter of 2010, the company lost only $84 million. It has yet to report fourth-quarter 2010 results.

Marchionne, who also runs Italy’s Fiat Group SpA, hinted that the company may post a net profit as soon as the first or second quarter of this year, but didn’t make a definite prediction best flat iron.

Fiat also announced Monday that it raised its stake in Chrysler by meeting a government requirement to build a new fuel-efficient engine in the United States. It got 20 percent of the company in 2009 when Fiat took control of its management. The stake rose to 25 percent on Monday, and could go up to 35 percent if Fiat meets certain government-set benchmarks. Fiat also has the option to get another 16 percent, which Marchionne said it may take this year. That would give Fiat a controlling interest in the company with 51 percent of the stock.

Marchionne has been trying to resurrect Chrysler from financial disaster after it was neglected by two previous owners. Its U.S. sales rose 17 percent last year, and it has rolled out 16 new or refurbished models in an effort to be more competitive, including a new Chrysler 300 large sedan unveiled at the Detroit show on Monday.

He said Monday that Fiat got the additional 5 percent stake for building a small four-cylinder engine at a factory in Dundee, Michigan.

Currently Fiat is the second-biggest shareholder in the company, which is almost 68 percent owned by a United Auto Workers retiree health care trust fund.

Turin, Italy-based Fiat includes Fiat Group Autos plus Maserati and Ferrari.

Marchionne also said that Fiat’s industrial unit is interested in buying Volkswagen’s interest in the MAN and Scania commercial truck units and is not interested in selling Alfa Romeo to Volkswagen.

Volkswagen AG has stakes in both the German MAN SE and Sweden’s Scania AB.

Source

A St. Peters marketing company that sells extended auto-service contracts racked up more than 200 complaints filed with the Better Business Bureau last year, with many claiming that the aftermarket vehicle-protection plans seldom paid out claims.

The St. Louis BBB on Thursday warned consumers to beware of NRRM Enterprises, which does business as Stop Repair Bills.

The company was formed in December 2009 in a merger of two area service-contract sellers, St. Charles-based National Dealers Warranty and St. Peters-based Auto Warranty Protection Services.

No one from Stop Repair Bills responded to a request for comment.

Companies administering service contracts sold by Stop Repair Bills routinely reject claims, the BBB said.

The company denied consumer claims by deeming that mechanical problems existed before they bought the protection contract, because they couldn’t produce certain maintenance records, or because of fine-print exclusions in the contracts, consumers told the BBB in complaints.

According to the BBB, the company is showing a complaint pattern similar to that of Wentzville-based US Fidelis, which was the nation’s No. 1 seller of auto-service contracts. It stopped selling vehicle-service contracts in December 2009 amidst allegations of consumer fraud and filed for bankruptcy on March 1.

Some area companies selling the service contracts have reduced the number of consumer complaints filed against them, St. Louis BBB President Michelle Corey said in a prepared statement. “Many still have a long way to go,” she said.

Corey’s office has given Stop Repair Bills an “F” grade, its lowest. The BBB says that Michael Carter, a lawyer for Stop Repair Bills, told the watchdog group that the “F” grade is unfair and that the grade, “at worst,” should be a C-minus or a D.

Stop Repair Bills, and the two companies that formed it, are no strangers to controversy.

In 2008, then-Missouri Attorney General Jay Nixon sued six companies, including National Dealers Warranty, for deceptive telemarketing. The state dropped the suit after the company agreed to pay $29,995 in restitution and penalties and change its business practices.

In January 2009, Canadian officials issued a cease-and-desist order to both companies for selling service contracts illegally.

In August 2009, a Post-Dispatch investigation revealed that National Dealers Warranty was among the local firms charging customers several thousand dollars for otherwise inexpensive engine additives bundled with warranties. The company had marketed the additives as service contracts.

Missouri officials later called that practice illegal, forming part of the basis for a November 2009 suit against the company by Missouri Attorney General Chris Koster. That suit is still pending.

Source

Treasurys are inching lower in light trading despite another round of bond-buying from the Federal Reserve.

Treasury prices had been slightly higher Tuesday ahead of the New York Fed’s $7.8 billion purchase. But soon after the Fed announced that it bought the Treasurys, prices slowly sank.

In afternoon trading, the 10-year note is down 6.25 cents on the day for every $100 invested. The yield is hovering at 3.35 percent.

Treasury yields have been rising steadily since early November even after the Fed launched a bond-buying program intended to keep interest rates low. The 10-year yield reached a seven-month high of 3.56 percent Dec. 16.

Source

A federal judge in California has ordered the removal from the ground of plants grown to produce seeds for genetically modified sugar beets, citing the potential for environmental harm.

The ruling by U.S. District Judge Jeffrey White has again raised questions about the use of genetically modified crops and what will happen if growers aren’t allowed to plant GMO seeds.

About 95 percent of the sugar beet crop has been genetically modified to resist the weed killer Roundup. The crop provides roughly half of the nation’s sugar supply.

In his decision, White cited, “a significant risk of environmental harm.”

White ruled in a lawsuit filed by environmental groups challenging a decision in September by the U.S. Department of Agriculture’s Animal and Plant Health Inspection Services to issue permits to seed companies to plant sugar beet stecklings. The young plants produce seeds that then are planted to grow sugar beets.

The agency decided to issue the permits despite an August ruling by White that put a hold on future planting of genetically modified sugar beets. The ruling allowed this year’s crop to be harvested and processed, but the current seed crop was not to be planted until the USDA reviewed the effects the crops could have on other food.

In his order Tuesday, White wrote that the environmental groups had shown that the genetically modified sugar beets could contaminate other crops, including through cross-pollination.

“The likely environmental harm . . . is irreparable,” White wrote.

The plants in question would produce seeds for crops to be planted in the spring of 2012. Crops that will be planted next spring won’t be affected by the decision.

Analysts have said an inability to plant genetically altered sugar beets would likely force a big jump in sugar imports and increased prices.

The defendants in the case filed a request for an emergency stay of White’s ruling, saying that without it, the sugar beet industry would suffer “massive harm . . . and very likely lead to its demise in the Western Plains and Northwest where farmers on dependent on the technology for their livelihoods.”

The request filed last Thursday in U.S. District Court in California said uprooting the stecklings would create an unavailability of seeds for sugar beets in 2012, resulting in $482 million in damages to the industry.

It also stated that it would destroy millions of dollars spent by the companies on research and development and hinder an effective appeal.

“We believe the court’s action overlooked the factual evidence presented that no harm would be caused by these plantings,” said David Snively, general counsel for Monsanto, in a written statement. “We intend to seek an immediate stay of this ruling and appeal to the Court of Appeals.”

Monstanto is joined by American Crystal Sugar Company, Syngenta Seeds and Betaseed Inc., in seeking the stay instant credit report.

Luther Markwart, executive vice president of the American Sugar Beet Growers Association, said the group was not a party in the lawsuit and that the potential impact on the sugar beet crop in 2012 wasn’t yet known.

“But clearly, the bottom line is we disagree with what the court ruled,” Markwart said.

Sugar beets are planted on more than 1 million acres in 10 states, with Minnesota, North Dakota and Idaho being the top producers.

The judge said the USDA failed to conduct the environmental review he demanded in his August ruling before issuing permits authorizing the planting of the seed plants.

The August ruling came after a challenge by the environmental groups to the Animal and Plant Health Inspection Services’ deregulation of genetically modified sugar beets. The beets have been planted in the U.S. for four years.

The government sought a stay of White’s decision, but he denied the request.

“We are now in discussion with the Department of Justice and we are exploring all options,” said APHIS spokesman Andre Bell.

As part of White’s ruling, a preliminary injunction against planting the seed plants will take effect Dec. 6.

George Kimbrell, an attorney for the Centers for Food Safety, one of the leading groups challenging the USDA’s deregulation of genetically modified sugar beets, called White’s ruling a “groundbreaking victory for farmers and the environment.

“This is the first time ever a federal court ordered an illegal biotech crop destroyed,” he said.

Paul Atchitoff, of Earthjustice, a nonprofit environmental law firm that acted as lead counsel in the lawsuit, said White’s ruling is “an indication that the government needs to start doing its job. The USDA needs to stop ignoring the environmental laws regarding genetically modified crops.”

Atchitoff said APHIS’ decision to issue permits to plant stecklings came less than a month after White ruled the beets could not be grown.

“The government’s conduct is really outrageous,” he said. “The court had just said in August the beets could not be grown and the government turned around and gave the industry the opportunity to grow them.”

White’s ruling followed the release by APHIS of a preliminary plan to let farmers plant genetically modified sugar beets until a lawsuit is resolved. The 365-page report suggested farmers be allowed to plant Roundup Ready sugar beets under a closely monitored permit process to prevent contamination of other crops. Monitoring by APHIS was one of three options outlined in the report and the one preferred by federal officials.

The USDA established a 30-day period for public comment on the plan, which ends Dec. 6, the same date when the injunction granted by the California judge takes effect.

Source

Despite BP’s current status as one of the most hateable companies around, shareholders in a little-known biofuels technology company are probably quite pleased with the oil giant at the moment.

Shares of Verenium (VRNM), an industrial enzyme maker, spiked 42% after BP announced plans to buy its cellulosic biofuels business for $98.3 million.

Under the terms of the deal, BP will acquire Verenium facilities in Louisiana and California, as well as rights to its cellulosic biofuels and enzyme technology.

Verenium, which has had a partnership with BP since February 2009, will retain control of its core business and will continue to collaborate with BP on research and development.

Carlos Riva, Verenium’s chief executive, said in a statement that he was pleased with the deal and called BP "the right company" to invest in biofuels technology.

Philip New, chief executive of BP Biofuels, called the company’s existing partnership with Verenium "fruitful" and said the acquisition will help expand BP’s ability to deliver "low cost, low carbon, sustainable biofuels, at scale no faxing payday loans."

"This acquisition demonstrates BP’s intent to be a leader in the cellulosic biofuels industry in the U.S.," he said.

BP, formerly known as British Petroleum, launched a marketing campaign in 2000 with the slogan "beyond petroleum." While BP has been developing ethanol and other alternative fuels for years, BP continues to reap most of its profits from the oil industry, however.

The purchase comes as BP conducts tests on a new cap it placed on a ruptured well in the Gulf of Mexico, which has been leaking oil for nearly three months.

Despite this relatively small deal, BP (BP) is expected to sell more oil assets to cover costs related to the spill. It pledged last month to put $20 billion in an escrow account for liability payments.  

Source

Frito-Lay North America has received a $1.125 million grant from the Texas Enterprise Fund to launch a long-term project that will install business management software throughout the Plano-based company, creating 125 jobs in the process.

The Texas Enterprise Fund is controlled by the governor and used to recruit companies that want to relocate or expand to Texas.

Aurora Gonzalez, a spokeswoman for Plano-based Frito-Lay North America, said the fund’s interest in Frito-Lay’s IT transformation centers around the project's ability to create more than a hundred jobs.

The software upgrade and IT additions are “significant projects that require specific talents and people to do the work,” Gonzalez added.

The project also will create more than $50 million in business infrastructure, the Office of Governor Rick Perry said Friday when confirming the state’s financial commitment through the TEF fund cash advance flexible payments.

Frito-Lay’s project is the next step in parent company PepsiCo.’s multi-year plan to convert and upgrade the company’s business management software throughout product lines and divisions. The state’s investment will support the team responsible for the software conversion.

In response to the money allotted by the fund, Gonzalez said Friday, “As always we value or partnership with both the state and certainly with the City of Plano. We value their commitment to us, and we remain committed to them.”

Source