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Wall St falls as financials lead decline

Reuters NEW YORK - US stocks tumbled on Monday as fear of more credit and housing market turmoil battered financial shares and a mixed bag of quarterly results added to uncertainty the outlook for corporate profits. Oil prices rose more than 1 percent on supply concerns, further unnerving investors and renewing some worries about inflation and consumer spending. But it was news that federal regulators seized two more failed US banks late last week that triggered Monday's sharp sell-off in financial shares and sent major indexes down more than 2 percent. Among the hardest-hit shares were Merrill Lynch, down more than 11 percent; Citigroup, off over 7 percent and Lehman Brothers, down more than 10 percent. Lehman Brothers Holdings Inc, the fourth-largest US investment bank, stumbled after a Merrill analyst said the firm may post a third-quarter loss and face a round of fresh write-downs on its residential mortgage portfolio. The S&P financial index shed 4.6 percent. The sell-off came after a rally last week that lifted many banks' shares 40 percent or more. "It's all about financials right now. We saw a couple of small banks go 'belly up' over the weekend. Now people are wondering what's going to happen next and when," said Paul Nolte, director of investments at Hinsdale Associates, in Hinsdale, Illinois. The Dow Jones industrial average sank 239.61 points, or 2.11 percent, to 11,131.08. The Standard & Poor's 500 Index shed 23.39 points, or 1.86 percent, to 1,234.37. The Nasdaq Composite Index lost 46.31 points, or 2.00 percent, to 2,264.22. Two weeks after the Federal Deposit Insurance Corp seized IndyMac Bancorp Inc, the Office of the Comptroller of the Currency said late on Friday it closed First National Bank of Nevada and First Heritage Bank NA of California. "This is a reality check," said Jim Awad, chairman of W.P. Stewart Asset Management in New York. "There are going to be other shoes that drop." Merrill Lynch was a major drag on the S&P 500, falling 11.6 percent to $24.33, while Citigroup shares fell 7.5 percent to $17.43; Bank of America shares declined 5.1 percent to $28.06 and Lehman shares lost 10.4 percent to $15.27. Another major loser in the financial sector was insurer American International Group, down 12 percent at $23.96. Shares of mortgage finance companies Fannie Mae and Freddie Mac also plunged, reversing gains seen after Congress, over the weekend, approved a rescue plan for the US housing market. Fannie Mae's stock slid 10.7 percent to $10.31, off its intraday high at $12.96. Freddie Mac's stock lost 6.7 percent to $7.72, off its intraday high at $9.10. "There won't be much good news for the financials until we see a firming in housing, and the odds are we won't see that before the end of the year," said Gail Dudack, chief investment strategist at the Dudack Research Group in New York. Verizon Communications declined 2.5 percent to $33.60 after its second-quarter results showed further weakness in its landline telephone business. On the Nasdaq, shares of iPod and iPhone maker Apple were the biggest drag, falling 4.8 percent to $154.40. US oil for September delivery CLc1 gained $1.47 to settle at $124.73 a barrel, lifted by supply concerns following attacks by militants in Nigeria on two major crude oil pipelines there. Kraft Foods Inc was a bright spot, with its shares gaining 4.9 percent to $30.83 after the maker of Oreo cookies posted a stronger-than-expected quarterly profit. Trading volume was light on the New York Stock Exchange, with about 1.17 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.96 billion shares traded, also below last year's daily average of 2.17 billion. Declining stocks outnumbered advancing ones on the NYSE by a ratio of more than 2 to 1 on the NYSE and by about 3 to 1 on the Nasdaq.

Olympic torch arrives in Pakistan amid security fears

Agence France Presse

ISLAMABAD - The Olympic torch, symbol of the 2008 Games in Beijing, touched down in the Pakistani capital Islamabad amid heavy security early Wednesday on the first stop in its Asian leg of a world tour.

The flame arrived from Oman for what Pakistan's pro-China government hopes will be a peaceful relay, free of the protests by Tibet supporters and human rights activists that has marred much of its journey.

Pakistani authorities however drastically slashed the torch's route at the last minute, citing security fears sparked by an unprecedented wave of Al-Qaeda and Taliban suicide bombings in the past year.

The plane carrying the flame arrived at Chaklala military airbase outside Islamabad and was welcomed by dignitaries gathered on a red carpet, state television showed live.

"The entire event was re-scheduled due to security threats. We had to re-schedule the program to ensure full security to the torch relay and its participants," Pakistan Olympic Association chairman Arif Hassan told AFP.

He said that "keeping in view the law and order situation which was experienced in the past one year and the blasts and explosions," Pakistani authorities had chosen the shortest of three possible routes.

Instead of being paraded down Islamabad's leafy main boulevard and other streets, it will now circulate around the Jinnah sports stadium in the capital, watched by 8,000 handpicked guests.

The ceremony will be attended by President Pervez Musharraf, who on Monday condemned the earlier pro-Tibetan protests on the tour and vowed to maintain security when the flame arrived.

"There is no one in Pakistan, not one man, who would like to do anything against the interests of China," Musharraf told students following a speech at a Beijing university during a visit to China this week.

Pakistan and China are close political, military and commercial allies.

China's hopes of winning international prestige by sending the Olympic torch through 135 cities on five continents ahead of the August 8 opening of the Olympic Games have already been severely dented.

The early stages in London and Paris were overshadowed by demonstrations against Beijing's crackdown on protests in Tibet, and the third stage in San Francisco was also drastically curtailed and seen by relatively few people.

Before Muscat, the legs in Buenos Aires and Dar es Salaam passed off with little incident.

The torch's next stop will be the Indian capital New Delhi on Thursday.

Indian police detained dozens of pro-Tibet demonstrators shouting "We Want Justice, Stop Killing in Tibet" on Tuesday in New Delhi as they carried an "independence torch" along the route planned for the relay.

The protest was organized by the Tibetan Youth Congress, which is campaigning for a boycott of the Olympics in August and has vowed to step up protests across Indian cities ahead of the rally.

Europe drive vs workers assailed

By Estrella Torres Business Mirror A regional coalition of civil-society organizations in Southeast Asia has criticized the European Union Parliament decision mandating the forcible deportation of more than 60,000 undocumented Filipino workers in Europe. The coalition said the decision, embodied in a draft legislation approved on first reading, negates the goals of the proposed EU free-trade deal with members of the Association of Southeast Asian Nations , seeking to open trade and investments including the seamless entry of Asean workers to Europe. Ellene Sana, director of the Centre for Migrant Advocacy, noted the irony: the EU Parliament decision comes amid a series of Joint Committee Meetings for EU and Asean trade experts who will gather in Manila this week to include cooperation in trade in services. ā€œThe EU is driving away our workers out of Europe, but they want us to welcome with open arms their products and their investments,ā€ said Sana in a statement over the weekend. The EU Parliament approved on first reading last week the EU rules on deportation of undocumented workers in all its 27 member-countries. This includes a provision of detention for foreign workers and their families who failed to legalize their stay under a prescribed period. The decision will affect close to 40,000 undocumented workers in France, mostly in Paris and Nice; and some 20,000 in Rome and Milan in Italy. These workers are mostly caregivers and domestic help. Sana cited a provision in the proposed Partnership Cooperation Agreement that is being negotiated by the EU with Asean members, where the EU has taken a defensive position on the migrant labor issue under the movement of natural persons in the services chapter. ā€œThe EU wants to make it clear that when they speak of labor export, they only refer to ā€˜skilled and highly skilled workers. They want the professionals who can help run their companies but they dont want low skilled, blue-collar workers entering their borders,ā€ Sana stressed. EU is negotiating PCA deals with individual Asean members, seeking to promote the EUs key values of human rights, democracy and rule of law. These would include the ā€œdignifiedā€ deportation of all undocumented workers from Asean member countries from Europe, the ratification of the 1998 Rome Statute of the International Criminal Court and the monitoring and promotion of human rights in these Asean states. The Delegation of the European Commission to the Philippines will host a two-day seminar from June 23-24 in Dusit Hotel in Makati City on the Trans-Regional Asean-EU Trade Initiatives for key trade officials and private investors in Asean countries, with focus on the services trade or outsourcing. The EU noted that trade in services is a vital component of trade that must be included in the EU-Asean free trade agreement, as it is now the key driving force of many Asean economies, particularly the Philippines. The Philippines has posted more than US$3 billion in revenues in 2007 from the business process outsourcing industry, mostly coming from the US and United Kingdom. The Treati seminar is in preparation for the JCM meetings of the EU and Asean trade officials from June 25-27, to iron out the elements of a proposed free-trade agreement between the two regions. ā€œContrary to the recent statements made by European Commission representative to the Philippines Ambassador Alistair Mcdonald that the country should see Europe not in terms of towers , but in terms of bridges, with the new EU directive, Filipinos should see Europe once again as ā€˜Fortress Europe,ā€ added Sana.

ASEAN ministers offer help in Thai-Cambodia dispute

Reuters
SINGAPORE - The Association of South East Asian Nations urged Thailand and Cambodia to show "utmost caution and restraint" and offered to help resolve a stand-off between them, the head of the bloc's secretariat said on Monday.
Surin Pitsuan, ASEAN Secretary-General, said Phnom Penh also denied lodging a complaint or seeking intervention from the United Nations Security Council to resolve the dispute over a temple along Cambodia's border with Thailand.
"The ministers have urged utmost caution and restraint," Surin told reporters at the start of the annual ASEAN ministerial meeting in Singapore.
"The two sides had expressed a desire to respond to the goodwill, and request and urging of their colleagues. They are hoping that the two sides will find amicable resolution to the situation."
Surin said the ASEAN foreign ministers were informed on Sunday night by Thailand and Cambodia that there would be a meeting later on Monday near Bangkok to find ways to defuse tension and end the stand-off.
"The ministers also expressed readiness to extend ASEAN facilities in order to help resolve the situation and find resolution," he said, adding Cambodia clarified it was not seeking any action from the United Nations Security Council.
"It was just informing the UN Security Council and was not asking for any involvement or any help at this point."
Hundreds of Thai and Cambodian troops faced each other at the 900-year-old Preah Vihear temple for a seventh day on Monday, a stand-off some fear could turn violent.
The temple, perched on a jungle-clad escarpment that forms a natural boundary between the two nations, has been a source of tension since the International Court of Justice ruled in 1962 that it belonged to Cambodia, a decision that still angers Thais.
At the heart of the current dispute is a 4.6 sq km area around the temple claimed by both sides.
Thai troops moved into the disputed area last Tuesday after three Thai protesters were detained by Cambodian soldiers as they tried to plant a Thai flag on the temple.
On Monday, The two defense ministers will meet in Thailand to try to end the impasse, which has revived memories of a 2003 spat over another Cambodian temple, Angkor Wat. That dispute saw a nationalist mob setting fire to the Thai embassy in Phnom Penh.
Analysts say domestic politics in Thailand, where the temple is known as Khao Pra Viharn, have played a key role in fueling the border dispute.
Preah Vihear's listing as a World Heritage site this month triggered a political uproar in Bangkok, where the People's Alliance for Democracy accused the government of selling out Thailand's history by initially backing the listing.
The PAD, a coalition of activists and royalists, is waging a street campaign against Prime Minister Samak Sundaravej, whom they accuse of being a proxy of former premier Thaksin Shinawatra, ousted in a coup in 2006.
ASEAN, the Association of Southeast Asian Nations, groups Thailand, Cambodia, Singapore, the Philippines, Brunei, Myanmar, Indonesia, Laos, Vietnam and Malaysia.

MBC: Campaign vs Meralco weakens SEC, ERC

An influential business forum has castigated the Arroyo administration for its campaign to wrest control of the country's largest power distributor, Manila Electric Co. , saying it was damaging public institutions and weakening government credibility.
In a statement issued Thursday, the Makati Business Club , said the Arroyo administration's campaign to replace the Meralco board has "damaged several public institutions and sent wrong governance signals to the private sector."
Taking a similar stance as Meralco, the MBC said the resort by the Government Service Insurance System to Securities and Exchange Commission intervention in resolving the intra-corporate dispute was a wrong move.
GSIS chief Winston Garcia tried to take control of Meralco in the May 27 stockholders' meeting. GSIS, which owns one-third of Meralco, sought and got a cease and desist order from the SEC telling Meralco to exclude management-solicited proxies in the election of a new board.
But Meralco argued the order was invalid and went ahead with the election of a new board, foiling Garcia's takeover bid.
"Since R.A. 8799 transferred all intra-corporate disputes from the Securities and Exchange Commission to the Regional Trial Courts designated as Commercial Courts, the resort to SEC intervention by the GSIS was improper. By allowing itself to be used by the GSIS to wrest management control, the SEC has contributed to the diminution of its own credibility in the eyes of the business community," the MBC said.
RA 8799 is the Securities Regulation Code signed into law in July 2000.
Aside from the SEC, the MBC said the campaign against Meralco has also affected the role of the Energy Regulatory Commission .
"The Administration has used the consumerist cause of lowering the price of electricity as the rationale for revamping Meralcos management. Yet the responsibility for protecting consumers interest in this particular area lies with the Energy Regulatory Commission. By shifting that responsibility to the GSIS, the Administration has weakened the authority of the proper government institution to handle this issue," the MBC said.
The MBC urged the Arroyo administration to fully implement the Electric Power Industry Reform Act of 2001 to bring down power rates instead of trying to do it through a Meralco takeover.
"In order to bring down the cost of electricity, Congress passed R.A. 9136, otherwise known as the Electric Power Industry Reform Act of 2001. As the law encourages the development of a more competitive environment, electricity rates should come down as and when the EPIRA comes into full effect. But because its own executives have not achieved the benchmarks set by the EPIRA, this Administration appears to have lost faith in that law and has resorted to forcing down electricity rates on its own by bludgeoning Meralco, one of the private distribution companies," the MBC said.
The MBC said there may even be a political motive behind the takeover bid, saying "it is no coincidence that Meralcos major owners may not share the Administration s political views."
The business group also noted that the GSIS campaign to take over Meralco was hurting the interests of government pensioners.

"The funds invested by the GSIS belong to its membersā€”current and retired government employees who have dedicated their careers to public service. The GSIS has a fiduciary responsibility to act in a manner that enables the investments it enters into to grow. Yet ever since the GSIS increased its holdings in Meralco to at least 25% of the company, Meralcos stock has fallen from P80 per share to P56 per share due to the very public denigration of Meralcos management and its major owners by the GSIS itself! In so doing, the actuarial soundness of the government employees retirement fund may have been adversely affected," the MBC said.
The MBC said the administration's strategy to bring down power rates was an example of "bad governance."
"The Securities and Exchange Commission, the Energy Regulatory Commission, the Electric Power Industry Reform Act of 2001, and the GSIS itself have all been undermined in the course of the Administration s professed effort to take over management control of Meralco as the ultimate solution to high power costs. Damaging public institutions in this way is plainly bad governance. It sends the signal to the private sector that this Administration is prepared to sacrifice public institutions and its own reform program for political objectives," the MBC said.
The MBC supported call recently aired by the Joint Foreign Chambers of the Philippines that the government should continue the policy of privatization as a means to bring down power costs.
"The Makati Business Club stands firmly against the use of state power to intimidate the private sector and vigorously opposes the nationalization of the electric power industry. Reverse-privatization is the worst way to bring down the cost of electricity, as state-owned enterprises in this country are vulnerable to political patronage and are inefficient due to lack of competition. With few exceptions, government-owned and -controlled corporations have been a heavy burden on the resources of the state," it said.
The MBC also said that while it supports the Arroyo administration's call for "transparency" in Meralco's management, it said this should be done through properly.
"We support the Administration s call on Meralcos management for transparency, but we also call for transparency on the part of National Power Corporation. A full and sober analysis of the causes of high electricity costs is needed at this time. Let reason and good governance prevail," it said.
The MBC is a "private non-stock, non-profit business association organized as a Forum for Constructive Ideas." Its main thrust is "to foster and promote the role of the private business sector in national development efforts, both in the planning and the implementation of policy."
It was founded in 1981 and is "composed of over 800 chief executive officers and senior executives representing almost 450 of the largest and most dynamic corporations in the Philippines."
Its current chair is former Finance Secretary Ramon del Rosario, president of Philippine Investment Management Inc. .
ABS-CBN is a sister company of Meralco. is the online news department of ABS-CBN Interactive, Inc., a subsidiary of ABS-CBN Broadcasting Corporation.