Early Edition August 04 2008 at 05:07 AM Chi-Chu Tschang and Harry Maurer
Continued Problems for Citigroup
Citigroup plans to close a $400 million convertible arbitrage fund as part of the final steps in winding down its $2 billion Tribeca Global Investments Group, according to people familiar with the plan. The closure of Tribeca Global, set up in 2004 with a goal of attracting as much as $20 billion, comes as Citigroup struggles with its alternative-asset management unit. The bank most recently closed Old Lane Partners, the hedge fund Chief Executive Officer Vikram Pandit co-founded and sold to the bank last year.
The news comes on the back of accusations made on August 1 that Citigroup destroyed records subpoenaed by New York Attorney General Andrew Cuomo, who plans to sue the bank for its role in the collapsed auction rate securities market. Citi 'repeatedly and persistently committed fraud' by misrepresenting auction rate securities as safe and cash-equivalent investments, according to David Markowitz, chief of the New York's Investor Protection Bureau. Citi said it's practice was to recycle tapes after a few months, but added that the destruction of the tapes related to the securities was an accident.
Source: Bloomberg, Financial Times
Hedge Funds post worst performance since 2002
Despite recent bumper profits, hedge funds are expected to report their worst monthly performance since July, 2002 as previously highflying funds are being hit with double-digit declines while others are down more than 20% so far this the year. Preliminary data from firm Hedge Fund Research based on a basket of 60 hedge funds suggest that the industry could be down 2.8% for the month -- its worst performance since July, 2002. The Standard & Poor's 500-stock index was down 1% for July and has dropped 14% during 2008.
Source: Wall Street Journal
'Oil won't fall below $100,' says Kuwaiti official
Oil is unlikely to fall below $100 a barrel due to strong demand from emerging markets that will put a floor under prices, according to Khaled Boodai, a member of Kuwait's top oil council. Speaking to a local newspaper, Boodai said: "I don't think that prices will return to the record level, nor will they fall below $100 per barrel." The official reiterated that Kuwait's proven oil reserves stood at 100 billion barrels.
Source: Reuters
Fatal attack on Chinese police ahead of Olympic Games
Only four days before the Olympic Games begin in Beijing, China's state media reported on August 4 that 16 police officers were killed and 12 others were wounded after a police station in China's restive Xinjiang region was attacked. The report didn't describe the attackers, but the region in the far northwest of the country has been at the heart of China's security fears leading up to the Olympics.
Source: Financial Times
China's bank dominate world rankings
Chinese banks holds three of the top six places among the world's largest financial companies based on market value despite their shares falling more than 20% since last October. China's financial institutions owe their rankings in part to having avoided almost all of the $480 billion in writedowns and credit-market losses that have sent bank stocks tumbling in North America and Europe, according to data compiled by Bloomberg.
Source: Bloomberg
HSBC negotiates lower bid for Korean bank
HSBC Holdings -- Europe's largest bank by market value -- is trying to lower the $6.3 billion price tag for South Korea's Korea Exchange Bank (KEB) to reflect a weaker KEB share price, according to local media reports. HSBC agreed to buy a 51% stake in the South Korean bank from U.S. private equity firm Lone Star last September on conditions that they would receive regulatory clearance. On August 4, HSBC said it was discussing with Lone Star Funds how to move forward with the deal. On the same day, the bank announced a 28% drop in first-half pre-tax profits to $10.2 billion on the back of $10 billion of bad-debt provisions.
Source: Reuters
One Laptop per Child Lands in India
Despite long-term problems with the Indian government, Nicholas Negroponte -- the man behind the $100 laptop -- is back in India with a new partner that he hopes will provide the necessary impetus to bring his vision to the country's schoolrooms. Negroponte has teamed up with The Digital Bridge Foundation, part of Reliance ADA Group, owned by Indian billionaire Anil Ambani, which is providing the technology backbone and logistics for the installation of Negroponte's white and green XO laptops in primary schools.
Source: BusinessWeek
More trouble for Fannie Mae & Freddie Mac
In an attempt to reduce mortgage-default losses, Fannie Mae and Freddie Mac are redoubling their efforts to prevent foreclosures. Yet in many cases, the moves by the U.S. lenders are only delaying the inevitable and could put a strain on the institutions' long-term finances.
Source: Wall Street Journal
Hollywood actors' union faces mutiny
Infuriated by hard-line tactics by the leaders of the Screen Actors Guild (SAG) during talks with Hollywood's largest studios, a less-militant group of actors has started a campaign to take over the union. On August 5, SAG is expected to recognize members of the new group as candidates for 11 openings on its national board. The hard-liners who currently control the board and set the tone of negotiations will also put up candidates, and the final outcome of the elections should be known by mid-September.
Source: New York Times
Corporate America embraces cloud computing
Google is at the forefront of a fundamental shift in the way companies obtain software and computing capacity. Technology firms are helping corporate clients use the Internet to tap into everything from extra server space to software that helps manage customer relationships through a process called 'cloud computing' that's catching on across Corporate America.
Source: BusinessWeek
Nobel Prize winning author Alexander Solzhenitsyn dies
Alexander Solzhenitsyn -- the Russian writer and winner of the Nobel Prize for Literature whose searching chronicles of Soviet tyranny made him a symbol of freedom -- died in Moscow on August 3. Solzhenitsyn was regarded as one of the greatest and most influential writers of the 20th century after exposing the flaws of Marxist-Leninism in ways from which it never recovered. He was 89 years old.
Source: Washington Post
Conversation of the Day: The Frozen U.S. Economy
Reader Cody Writes: "It can't stay like this forever.can it? I'm buying gold bricks and burying them in my backyard. When currency goes south, I'll dig those out and start to barter!"
Tell Us: Are Your Assets Shivering?
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