With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
Government Planning to Sell Citi Stake; Judge Rebukes BofA/SEC Settlement; China FDI Climbs; China's BYD Soars 648% in Year; Best Buy Misses Outlook By a Penny; Sun Hung Kai Income Falls 62%; Global Wealth Down 11.7% Since Recession's Start; Toys "R" Us Shifts to Mall Strategy;
The U.S. Treasury Department still owns a 34% stake, or 7.69 million shares, of Citigroup Inc. (NYSE: C), and sources told Bloomberg News that the two have begun discussing how to sell the shares acquired to rescue the bank. One of the sources said the Treasury aims to sell the holdings over the next six to eight months. The Treasury is currently sitting on a $9.77 billion paper profit from its original $25 billion bailout investment.
Bank of America Corp.'s (NYSE: BAC) $33 million settlement with the U.S. Securities and Exchange Commission (SEC) over bonuses paid to Merrill Lynch & Co. was rejected by U.S. District Judge Jed Rakoff, who said the settlement "cannot remotely be fair," Reuters reported. New York Attorney General Andrew Cuomo may file civil charges against "some of the very highest-ranking" Bank of America executives.
For the first time in 11 months, foreign direct investment in China moved higher in August. Foreign investment rose 7% to $7.5 billion, China's Ministry of Commerce said. Investment fell 35.7% in July and 17.5% in the first eight months of the year. "Global risk appetite is coming back," Isaac Meng, a senior economist at BNP Paribas SA in Beijing, told Bloomberg. "For multinational companies, China is the place where growth is the most robust."
Since Lehman Bros. collapse last year, Chinese car and battery maker, BYD Co. Ltd., stands as Asia's best performing stock, up 648% in the MSCI AC Asia Pacific Index, Bloomberg reported. Warren Buffet's Berkshire Hathaway Inc. (NYSE: BRK.A), NYSE: BRK.B) sunk $232 million in BYD shortly after Lehman fell, and now it is sitting on a $1.7 billion paper profit.
Best Buy Co.Inc. (NYSE: BBY) missed quarterly profits by a penny below dollar-per-share forecasts. The retailer posted a profit of 40 cents per share excluding the impact of taxes for its second fiscal quarter ended Aug. 29, Reuters reported. The biggest U.S. electronics retailer raised its outlook for the fiscal year, and has been gaining market share since its main rival Circuit City shut down earlier this year.
Sun Hung Kai Properties Ltd. (OTC ADR: SUHJY), Asia's largest real estate developer by market capitalization, reported that net income for the fiscal year ended in June plummeted 62% from the prior year, MarketWatch reported. Net profit clocked in at HK$10.36 billion ($1.4 billion), compared to HK$27.60 billion a year earlier. Sun Hung Kai said it plans to tell HK$23 billion worth in residential property in the current fiscal year.
Global wealth has dropped 11.7% to $92.4 trillion since the onset of the 2008 global recession, and a return to 2007 levels will take six years, according to a study conducted by The Boston Consulting Group Inc. North America was the hardest hit region, with a 21.8% decline in wealth firms' asset under management, Reuters reported. The downturn has "shattered confidence in a way we have not seen in a long time," said Bruce Holley, senior partner and managing director at BCG's New York office.
Toys "R" Us, Inc. is shifting its holiday retailing headquarters away from box stores and into malls. By early October, the toy retailer will open 80 mall-based sites for the holiday shopping season. By January, most of the stores will close, though some may become permanent locations. "This is the first time we've done something of this magnitude," Toys "R" Us Chief Executive Jerry Storch told MarketWatch.