(My apologies for yesterday. World Cup fever has finally caught up with me. Included is the news events of last 2 days.)
Mongolia to Let Investors Tap Resources Through Overseas IPOs
June 16 (Bloomberg) -- Mongolia’s plan to privatize its state-owned assets will allow international investors access to some of the world’s largest untapped mineral resources through initial public share sales, most likely in Hong Kong.
Dulam Sugar, chairman of the Government of Mongolia’s State Property Committee, said even though the procedure of equity listings hasn’t been confirmed, the Mongolian government has decided to sell shares in both local and international stock markets.
Sugar named Erdenet Mining Corp., a Mongolian-Russian copper producer joint venture, the Tavan Tolgoi coking coal deposit and the Oyu Tolgoi copper mine as the nation’s biggest state-owned assets to be privatized. Uranium companies may also be privatized.
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The Mongolian government is in the process of identifying state-owned enterprises to be privatized, the chairman said. McKinsey & Co. is advising the government, which expects final results in one month, he said.
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The average daily turnover of the Mongolian stock exchange is about $100,000 this year, according to Khangai Altai, chief operating officer of the Mongolian Stock Exchange. That compares with HK$64 billion in Hong Kong, according to data compiled by Bloomberg.
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Hong Kong Bourse Met With Mongolian Mining Companies on Listing
June 16 (Bloomberg) -- Hong Kong Exchanges & Clearing Ltd. has met Mongolian mining companies seeking to list in the city, said Chief Marketing Officer Lawrence Fok, who is in the North Asian country for a forum on corporate capital raising.
Hong Kong Exchanges, which operates Asia’s third-largest stock market, is processing more than 70 initial public offering applications from both overseas and local companies, Fok said in an interview in Ulaanbaatar yesterday. He declined to name the Mongolian companies or give a time frame for possible listings.
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Energy, mining and resources companies account for about 16 percent of both Hong Kong’s market capitalization and daily trading volume, Fok said. ...
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Asia exchanges battle for resource-rich Mongolia IPOs
June 16 (Reuters) - Asia's major stock exchanges have launched an all-out battle for IPOs from the land of Genghis Khan, with Tokyo, Seoul and Hong Kong jostling for a slice of the action from resource-rich and landlocked Mongolia.
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Now, Mongolia's domestic companies are seeking foreign capital to help them expand, and the government is trying to connect local firms and its stock market with the rest of Asia, hoping to turn domestic franchises into regional ones.
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But some analysts say Hong Kong's Mongolian IPO ambitions may be hampered by the city's listing ban on pure exploration companies.
"In terms of interest from the Mongolian side, probably the Hong Kong exchange is the most popular among Mongolia's government and companies because of the valuation, and because Chinese investors may want to show interest in Mongolian assets," said Masa Igata, founder and CEO of Mongolia-based Frontier Securities.
"There are some who can't list their stock in Hong Kong, and may consider listing on another stock exchange."
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Executives from KRX in Korea are eying listings of emerging Mongolian enterprises in all sectors, as long as candidates meet a threshold of 2 billion won ($1.6 million) in net income at the time of listing.
"We are targeting the small-medium size firms in Mongolia," Jung-Suk Jo, head of listing promotions, said at Frontier Securities' Mongolia Capital Raising Conference in Ulan Bator.
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Japan is seeking Mongolian companies for its Tokyo AIM market, but warned that Japanese investors may be wary of the risks involved in Mongolia, and recommended Mongolian companies with Japanese corporate partners bundle their assets into funds and list those on AIM.
"They know you have uranium, you have coal, you have lots of potential to grow," Yutaka Ito, Chief Operating Officer, Tokyo AIM, said regarding Japanese investors' view of Mongolia.
"But they also feel risks. If you make funds with Japanese companies, you make Japanese investors feel safe. These big guys - Nomura, Daiwa - feel safe with funds."
Mongolian telecom firm Mobicom is a joint venture between Sumitomo (8053.T), KDDI (9433.T) and Mongolia's Newcom. Cosmetics giant Shiseido Co Ltd (4911.T) is currently establishing a presence in Mongolia, and Itochu Corp (8001.T) is invested in Hopu-backed Winsway Coking Coal.
Japanese firms Marubeni (8002.T) and Mitsubishi (8058.T) are exploring uranium projects in the country, Ito added.
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London, too, is seeking Mongolian candidates for its AIM board, where companies from China and elsewhere are listed, while Australia's ASX (ASX.AX) is promoting its experience in natural resources, touting the listing of Mongolia-focussed Hunnu Coal (HUN.AX) as a springboard for more Mongolia IPOs.
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Cabinet releases export data for miners operating in TT
June 16 (www.open-government.mn) Government Press Office website releases the following info regarding coal mining in TT and Nariin Suhait.
1.Export datas for 5 companies: Tavan Tolgoi JSC and Energy Resources, operating on TT of Tsogttsetsii Soum, and Mongolyn Alt (MAK), Chinhua-MAK-Nariin Suhait, and Southgobi Sands (of Southgobi Resources), operating in Nariin Suhait Coal Deposit of Gurvantes Soum (both soums are located in Umnugovi Aimag).
In 2009 exports:
Tavan Tolgoi JSC ("Little TT") - 2,6 mln tones
Energy Resources LLC (ER) - 1.4 mln
Mongolyn Alt LLC (MAK) - 1.6 mln
Chinhua-MAK Nariin Suhait 0.73 mln
SouthGobi Sands LLC (SGS) - 1.327 mln
In total 7657 thousand tonnes.
In 2010, they plan to export:
2.6, 3.8, 3, 1.1, 2.5 mln tonnes respectively.
In total 13 mln tonnes.
As of May 2010, they have exported:
0.6, 0.8, 1.4, 0.33, 0.7 mln tonnes of coal respectively
The article further says that Erdenes MGL SOE and QGX is working to export a million tonnes each this year.
2. Currently coal from UHG and TT JSC is transported by 9 contractors, 225 kms to "Tsagaan Had" coal offloading point, 20 kms from the Gashuun Suhait border point. 1000 trucks with 80 ton capacity is transporting 300 tru%ckloads a day, the article says.
Coal from MAK, Chinhua-MAK-Nariin Suhait and SGS is transported 56 kms to Shivee Huren Border Point by 500 trucks
3. 56 km paved road from Nariin Suhait to Shivee Huren to be completed in August this year. Construction began in 2007 and 50% complete.
4. Border point capacity
Gashuun Suhait Border Point operates from 08:00-22:00, and closed on Sunday. 300 transport vehicles cross the point daily.
Traffic in connection with OT is estimated to increase by 50-150 trucks. Further, border traffic is suspended from 12:00-14:30 in connection with China's customs schedule. Traffic is increasing significantly to a point where trucks often stay overnight at the border.
Government is currently working to open the border 24/7 and has decided to allocate the necessary funds in this year's budget.
5. Coal is offloaded and loaded 3 times before crossing the border. Government is working to decrease this number.
6. Local authorities
Tsogtsetsii soum's decision to auction off 11 points in Erdenes MGL's TT land to transporters was deemed illegal and the auction was postponed the Government Representative.
SGS has requested the government to review whether Gurvantes soum's decision to auction off land in SGS's licensed area to SGS itself is illegal. Land permits are required from soum or aimag authorities even on mining licensed areas. SGS wants to use its own licensed land to build coal stockpile, facilities to improve working conditions, and coal processing plant.
7. Government represantive's work
8. Short-term tasks to be carried out
Groundbreaking ceremony for UHG to Gashuun Suhait Road
June 16 (summarized by Mogi from www.open-government.mn) On the same article above Government Press Office announces the start of a 245 km paved road from Energy Resources UHG mine in TT to the Gashuun Suhait Border Point. The groundbreaking ceremony was held on May 27.
Present were the Government Representative in Umnugovi Aimag, Umnugovi Governor, governors of Tsogttsetsii (where TT is located), Bayan-Ovoo, Deputy Governor of Khanbogd Soum (county in Umnugovi where OT is located) (the governor of Khanbogd Soum was detained a few weeks ago on charges of granting illegal gold export licenses to Chinese individuals and is still detained as far as I know), contracters and transporters.
7 companies, National Development, ESTO, Erdene Zam, World Eruna, Jiliin Mandal, MonRoad, Nasny Zam (*actual names in English may differ) are contracted to build the paved road within this year.
The article further says the road will be able to carry 100 tonne trucks and is unique in that only Mongolian companies were chosen to construct it.
MERITUS RECEIVES RESULTS OF UP TO 231.2g Au/t FROM FLOAT SAMPLES AT MONGOLIAN GOLD PROJECT
June 16, Vancouver, B.C.: Meritus Minerals Ltd. (MML) (C-MER) is pleased to announce that it has now received results from recent sampling at the Gutain Davaa Project in Mongolia. An independent consultant, who is preparing a NI 43-101 report to satisfy the requirements of the TSX Venture Exchange, and Meritus staff collected samples from the Toordogiin Shil and Toordogiin Hayr Prospects at Gutain Davaa during a recent visit.
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At Toordogiin Hayr Prospect, Meritus collected eight samples and the consultant two. All were float collected from a ridge top where exposure was poor. Three of these samples gave very high gold grades of 115.97g Au/t; 125.69g Au/t; 231.28g Au/t respectively. With these 10 samples and the 9 float samples previously collected by Troy, 8 of them have given gold assays between 115.97g Au/t and 542.4g Au/t, and three have returned values between 0.10g Au/t and 1.0g Au/t.
There has thus been an unusually high percentage (42%) of very high-grade gold bearing samples (+100g Au/t) collected from this area.
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The samples were assayed by Actlabs Asia LLC in their laboratory in Ulaan Baatar, Mongolia, by Fire Assay using a 50gram charge and AAS finish.
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Inflation reaches 16.1 percent in Ulaanbaatar
June 14 (news.mn) Inflation at the end of May was 13.1 percent nationwide and 16.1 percent in Ulaanbaatar, where meat prices rose 50 percent and that of vegetables 20 percent. There are concerns that the inflation rate would rise to the level of two years ago, when it stood at 34 percent, with the price of wheat and flour rising the most.
The consumer price index last month was up by 3.2 percent nationwide, and 4.2 percent in Ulaanbaatar. The CPI usually rises by no more than 2 percent a month, and the present higher rate is also traced to the meat price. Price of beverages also rose by 6.4 percent in May, while fuel and diesel prices rose by 2.7-4.2 percent. Inter-city transportation expenses rose by 25 percent last year.
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Men constitute 76.3 percent of the unemployed. The poverty rate stands at over 35 percent for the third year in a row. People between 16-34 are 54.7 percent of the registered unemployed.
Entrée Files NI 43-101 Technical Report on Hugo North Extension and Heruga Development Options
VANCOUVER, June 15 /PRNewswire-FirstCall/ - Entrée Gold Inc. has filed a comprehensive NI 43-101 Technical Report ("ETR10") on SEDAR, which can be viewed in its entirety on www.sedar.com or Entrée's website at www.entreegold.com.
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-------------------------------------------------------------------------
Table 1 After Tax NPV8% * After Tax NPV8%**
($ millions) ($ millions)
-------------------------------------------------------------------------
Reserve Case 79 129
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LOM Sensitivity Case 176 327
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- * Based on long term metal prices of: copper US$2.00/lb, gold US
$850/oz, silver US$13.50/oz, molybdenum US$13.50/lb
- ** Based on recent metal prices of: copper US$3.00/lb, gold US
$1200/oz, silver US$13.50/oz, molybdenum US$13.50/lb
- The LOM Sensitivity Case includes Inferred Resources. Under NI 43-101
guidelines inferred resources are too speculative to have economic
considerations applied to them that would allow categorization as
mineral reserves, and as such there is no certainty that the
Preliminary Assessment will be realized. The Reserve Case includes
Mineral Reserves identified at Entrée's Hugo North Extension and
Ivanhoe Mines' Hugo North underground operations. There is no
contribution from Heruga. Reserves from the Hugo North Extension are
included in the first lift of the underground block cave mine and
production could begin as early as Year 4.
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Download ETR10 at: Link
Entree Receives Green Light for Merger with PacMag Metals
VANCOUVER, June 15 /PRNewswire-FirstCall/ - Entree Gold Inc. is pleased to announce that the Federal Court of Australia has approved the schemes of arrangement ("Schemes") between PacMag Metals Limited ("PacMag") and its shareholders and optionholders to effect a merger between PacMag and Entree ("Transaction").
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Mongolia Scales Back Bond Sale Plan to $500 Million
June 16 (Bloomberg) -- Mongolia’s government scaled back its plans for global bond sales this year, after Europe’s debt crisis drove up borrowing costs.
The government plans to raise $500 million selling bonds this year and the remainder of its $1.2 billion program according to market conditions, Batbayar Balgan, director general of the financial and economic policy department of Mongolia, said at a forum in Ulan Bator today. Finance Minister Sangajav Bayartsogt said in February that Mongolia planned to sell as much as $1.2 billion of bonds overseas this year, its first benchmark offering of dollar-denominated debt.
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“The Greek and European countries’ sovereign debt crisis has some impact on us,” Chuluunbat Ochirbat, parliament member, Government of Mongolia, said at the Frontier Securities Mongolia Capital Raising Conference. “We will have to go for higher rates if we go global.”
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Mongolia is rated B1 by Moody’s Investors Service, four levels below investment grade and on par with Fiji and Papua New Guinea. Standard & Poor’s rates the nation BB-, the third- highest non-investment ranking.
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Prophecy Resource Corp. and Northern Platinum Ltd. Sign Business Combination Agreement
VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 15, 2010) - Prophecy Resource Corp and Northern Platinum Ltd. are pleased to announce that they have entered into a binding letter of agreement for a Business Combination through a proposed all share transaction.
Financial Terms of the Transaction
Pursuant to the Agreement, Prophecy will issue 0.5 common shares and 0.1 warrants for each common share of Northern Platinum held. Each whole warrant will entitle the holder to acquire one additional common share of Prophecy at an exercise price of $0.80 that will expire 18 months following the Transaction closing date. All outstanding Northern options and warrants will be exchanged for options and warrants of Prophecy as discussed below.
The offer represents approximately $0.31 per each common Share of Northern Platinum based on Prophecy's closing share price of $0.62 as at June 14, 2010, representing a premium of 24.5% to Northern's 90 day volume-weighted average price as of June 14, 2010.
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Aberdeen Reports Shareholders' Equity of $1.19 Per Share and Quarter End Financial Results
TORONTO, ONTARIO--(Marketwire - June 15, 2010) - ABERDEEN INTERNATIONAL INC. (TSX:AAB) is pleased to announce that it has released its financial results for the first fiscal quarter of 2011, ending April 30, 2010.
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During Q1 we added to positions in Dacha Capital, Forbes & Manhattan Coal ("Forbes Coal") and Temujin Mining. Temujin Mining is a private exploration and development company focused on the Oyu Tolgoi district of Mongolia with copper and gold projects. During the quarter we were successful in completing a financing to cover the cash portion of the acquisition costs for three very large copper-gold exploration projects. Temujin is currently planning preliminary exploration work, while planning for a drill program on its first target in the coming months.
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Australia
Share rally runs out of steam
June 17 (Business Day) Close Australian stocks fell today, their first clear loss in seven days, with both banks and miners dragging on the main indexes.
At the close, the benchmark S&P/ASX200 index was down 31.7 points, or 0.7 per cent, at 4527.3, while the broader All Ordinaries index fell 25.1 points, or 0.5 per cent, to 4547.
Among major sub-indexes, financials were down 1 per cent, materials lost 0.8 per cent and energy shares fell 0.6 per cent.
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The dollar declined for a second day on lower volumes as investors wait for further clarity to emerge about the sovereign debt situation in Europe. At the local close, the dollar was trading at $US0.8604, down 0.5 per cent from Wednesday’s close of $US0.8648. It was also buying 78.57 yen and 70.13 euro cents.
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Global mining giant BHP Billiton lost 41 cents to $38.82 and rival Rio Tinto fell $1.27 to $70.07.
Commodity prices were steady in overnight trade, Mr Spiteri said. '‘Some of the gold stocks are better.’’
Lihir Gold added 5 cents, or 1.2 per cent to $4.26 while Newcrest Mining gained 48 cents, or 1.4 per cent, to $34.64.
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In news, Leighton Holdings jumped 70 cents, or 2.2 per cent, to $33.01 after the mining services company said it had won $1.5 billion worth of contracts in Australia and Indonesia.
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China
Housing demand still strong in China, says Roach
June 17 (China Daily) NEW YORK - The property boom in China isn't a bubble because it is supported by "solid" demand for residential housing, according to Stephen Roach, chairman of Morgan Stanley Asia Ltd.
While portions of the real estate market such as high-end apartments are overheating, demand for residential homes will remain robust as rural Chinese migrate to bigger cities, Roach said.
"This is just a sliver of the property boom," Roach said, citing that each year since 2000, between 15 and 20 million people migrate to Beijing, Shanghai, and second- and third-tier cities in the mainland. That's two and a half New York Cities created annually, he said.
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China's lawmakers have raised down payment requirements and mortgage rates and restricted loans for multiple-home buyers as they seek to dampen record property price gains.
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Chinese stocks close lower Thursday
June 17 (Xinhua) BEIJING: Chinese equities reversed early gains and closed lower Thursday as China's last state-owned commercial bank began roadshow for its dual listings in Shanghai and Hong Kong.
The Shanghai Composite Index rose 0.74 percent to open at 2,588.97 but gave up its gains and fell 9.7 points, or 0.38 percent, to close at 2,560.25.
The Shenzhen Component Index went up 0.6 percent to open at 10,300.5 but also dropped 76.97 points, or 0.75 percent to end at 10,162.37.
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The Agricultural Bank of China (ABC), began its roadshow for initial public offering and market expected a great amount of money will be locked during its subscription period till July 6.
According to the ABC prospectus, the rural lender plans to sell up to about 22.24 billion A-shares on the Shanghai Stock Exchange and up to 25.41 billion shares in Hong Kong, excluding an over-allotment option.
The bank would announce its IPO price range on June 29 and the final IPO price for its Shanghai listing on July 7.
Global
Canadian Stocks Rise as U.S. Factory Production Beats Forecasts
June 16 (Bloomberg) -- Canadian stocks rose for a fifth day, the longest rally since April 26, as gold producers gained on demand for a haven from Europe’s debt crisis and U.S. industrial production surpassed most economists’ forecasts.
Ivanhoe Mines Ltd., which is developing the Oyu Tolgoi copper mine in Mongolia with Rio Tinto Group, rose 2.5 percent after an upgrade from TD. ...
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The Standard & Poor’s/TSX Composite Index climbed 13.51 points, or 0.1 percent, to 11,921.05. The S&P/TSX had advanced 4.1 percent from June 9 to yesterday as China exports, Japanese gross domestic product and U.S. consumer confidence increased more than most economists forecast.
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Upgrade
Ivanhoe Mines, which owns stakes in coal, gold and base- metal producers, rose for a sixth day, rallying 2.5 percent to C$15.34 on the upgrade to “speculative buy” from “hold” by TD analyst Craig Miller. The analyst said he “would not be surprised” if a Chinese state-owned company buys a stake in the Oyu Tolgoi project in Mongolia. The company declined to comment.
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Asia Stocks, Metals Drop on Housing Starts; Yen Gains on Spain
June 17 (Bloomberg) -- Asian stocks dropped for the first time in six days and metals fell after U.S. housing starts plunged the most in more than a year. The yen gained as Spain’s plan to publish bank stress tests renewed European debt concern.
The MSCI Asia Pacific Index declined 0.3 percent to 115.40 at 4 p.m. in Tokyo after five consecutive gains that pushed the gauge to a four-week high. ...
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The MSCI Asia Pacific Index has lost 4.2 percent this year on concern that Greece and other European countries will struggle to curb their budget deficits. The Hong Kong and Taiwan markets reopened after a holiday and Chinese stocks resumed trading after a three-day break.
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The yen climbed to 112.11 per euro in Tokyo from 112.56 in New York yesterday, when it fell to 113.32, the weakest level since June 4. The currency rose to 91.32 versus the greenback from 91.44, and gained 0.5 percent to 78.60 per Australian dollar. The euro declined to $1.2272 from $1.2311.
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U.S. Stocks Retreat as Treasuries, Dollar Gain on Housing Data
June 16 (Bloomberg) -- U.S. stocks fell, Treasuries gained and the dollar strengthened against the euro after reports showed American housing starts declined the most in 14 months and FedEx Corp.’s profit forecast trailed estimates. Oil rose to a six-week high.
The Standard & Poor’s 500 Index slipped 0.1 percent to 1,114.61 at 4 p.m. in New York as about three stocks slumped for every two that rallied on U.S. exchanges. The measure had fallen as much as 0.7 percent earlier. Yields on 10-year Treasuries lost 4 basis points to 3.26 percent. The U.S. currency climbed 0.2 percent to $1.2312. Crude oil futures rose 0.9 percent to $77.67 a barrel.
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“The recovery is not accelerating, it’s decelerating, and there’s reasons for investors to take a step back and evaluate,” said David Kovacs, head of quantitative strategies at Turner Investment Partners in Berwyn, Pennsylvania, which manages $19 billion. FedEx “is a barometer of economic activity, and the fact that they missed relative to estimates indicates there are some clouds on the horizon.”
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The Securities and Exchange Commission trading curbs started going into effect on June 11. The program, which is being tested through December, pauses Standard & Poor’s 500 Index stocks for five minutes when they rise or fall 10 percent in five minutes or less. Washington Post jumped 103 percent to $929.18 before the halt, then traded at $458.19 as of 4 p.m. in New York after the trading ban stopped.
FTSE higher for seventh day
June 17 (Reuters) - Strong gains from oil company BP (BP.L) hauled the top share index into positive ground for a seventh day on Thursday, outweighing falls from miners and defensive stocks hit by anxiety on Spanish debt
By 8:52 a.m. British time, the FTSE 100 .FTSE was 18.00 points, or 0.3 percent, higher at 5,255.92 after adding 0.4 percent on Tuesday, and is now on its longest winning streak since July.
Under intense pressure from U.S. President Barack Obama, BP said on Wednesday it was to set up a $20 billion fund for damage claims from the Gulf of Mexico oil spill, and sell assets and suspend dividend payments.
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The EU and IMF on Wednesday denied a report they and the U.S. Treasury were drawing up a safety net for Spain. But worries about Spanish banks put pressure on yields and the market will be looking for the result of bank stress tests which Spain's central bank said would be published soon.
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Retail sales, released at 9:30 a.m., were seen rising 0.1 percent month-on-month in May and 2.0 percent year-on-year. The Confederation of British Industry industrial trends data was expected to show a reading of -16 for June, from -18 in May.
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--
"Mogi" Munkhdul Badral
CPS Mongolia
Email: mogi@cpsmongolia.mn
Mobile: +976-99996779
CPS Mongolia is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based ASX Licensed Financial Services Company. To trade ASX stocks, feel free to contact me at mogi@cpsmongolia.mn or +976-9999-6779.
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