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.
Australia Raises Rates; Societe Generale Raising $7.1 Billion; GrainCorp. Buying United Malt Holdings; Caterpillar Raising Prices 2% in Jan.; Samsung 3Q Profit Doubles; Merrill Bull Logo Returning; Euro Leaders Want Yuan Appreciation; U.K. Home Prices Rise in Sept.
- The Reserve Bank of Australia raised its key cash rate 25 basis points to 3.25%, sending its dollar to a 14-month high, Reuters reported. The bank said more increases will follow, as it is safe to rein back stimulus measures. The move makes Australia the first of the world's top 20 central banks to raise bank rates in the aftermath of the global financial crisis. "It will be a gradual move from an emergency rate of 3.0% to a still-easy 4.0%," said Rory Robertson, interest rate strategist at Macquarie. "If everything goes well over time, then we could get back to a more normal 5.0% in the next year or two."
- Societe Generale SA (OTC ADR: SCGLY), France's second-largest bank, said it plans to sell new shares to raise 4.8 billion euros ($7.1 billion), which it will use to pay back a 3.4 billion euro bailout loan from the government and buy a stake in Credit du Nord, The New York Times reported. The debt owed to France's government is half subordinated debt and half preferred stock. Similar share sell plans were announced last week by French counterpart BNP Paribas SA (OTC ADR: BNPQY) and Italy's UniCredit (PINK: UNCIF).
- Australia's GrainCorp Ltd. agreed to purchase United Malt Holdings Ltd. from equity firms Castle Harlan Inc. and Champ Private Equity for $655 million. GrainCorp said it will fund the deal – which will double the company's size – by selling $517 million in new shares and with $200 million in debt. "The deal would give GrainCorp more international diversification where currently it's very exposed to the east coast weather," Hugh Dive, who helps manage about $3 billion at Investors Mutual Ltd. in Sydney, including GrainCorp stock, told Bloomberg. "We're likely to see more consolidation in the agricultural sector."
- Caterpillar Inc. (NYSE: CAT) said it will raise its prices for most of its machine products by 2%, saying in a government filing that the price change is a result of current industry factors and current and expected general economic conditions. The price change takes effect in January. "World need for infrastructure remains very high including…[in] the United States, which has under-invested in it for some time, and clearly the emerging markets are creating that basic infrastructure as they go and as they can afford it," Chairman and Chief Executive Jim Owens during an August analyst meeting, MarketWatch reported.
- Third-quarter profits for South Korea's Samsung Electronics Co. more than doubled – helped by a rebound in prices and a return of demand for phones and televisions. Operating profit for Asia's biggest maker of chips, flat screen monitors and mobile phones jumped as high as $3.7 billion (4.3 trillion won) compared with $1.3 billion (1.48 trillion won) a year earlier. "The results were a surprise," Choi In Ho, a fund manager at UBS Hana Asset Management Co., which manages the equivalent of $17 billion in assets, told Bloomberg. "The market probably wants to know if these earnings are sustainable."
- Bank of America Corp. (NYSE: BAC) is bringing back and relaunching Merrill Lynch's name and its bull logo, and it will spend as much as $20 million in the fourth quarter to do so, Reuters reported. Bank of America's Merrill operations will now be knows as Merrill Lynch Wealth Management, and will be one of two units in Bank of America's investment management division led by Sallie Krawcheck, who's been mentioned as a possible Kenneth Lewis replacement.
- European financial ministers, including Central Bank President Jean-Claude Trichet, said they support China letting the yuan appreciate because the euro is shouldering a large burden from the falling dollar, Bloomberg reported. "We need a rebalancing so that one currency doesn't take the flak for the others" French Finance Minister Christine Lagarde told Bloomberg. "The European economy is not doing badly but it's not doing so well that its currency can be the ultimate recourse."
- Home prices in United Kingdom rose in September for the third straight month, jumping 1.6% from August, MarketWatch reported. Home prices are up 1.7% this year because of increased demand. However, ongoing unemployment will likely put a clamp on rising demand, MarketWatch reported citing a report from lender Halifax.