Stock markets and what you should know

Ab inbev creates us business unit for premium beers


LONDON Aug 6 Anheuser-Busch InBev, known for its mass market Budweiser beer, is creating a new business unit in the United States devoted to premium beers. The new unit, which will include brands such as Goose Island and Blue Point, will be based in Chicago and led by Felipe Szpigel, who joined the brewer 15 years ago as a global management trainee, according to an internal announcement made on Wednesday and seen by Reuters.

Another internal message announced the departure of Bud Light vice president, Rob McCarthy. McCarthy will be replaced by Alexander Lambrecht.

Adb to help in adoption of islamic finance standards


Oct 5 The Manila-based Asian Development Bank (ADB) has signed an agreement with the Islamic Financial Services Board (IFSB) to help member countries adopt the IFSB's prudential standards. The five-year agreement, signed earlier this week, will see the ADB support member countries in legal and regulatory aspects of meeting the IFSB's standards, Ashraf Mohammed, assistant general counsel at the ADB, told Reuters. IFSB guidelines are widely used in the Islamic finance industry, but they are not mandatory - it is up to national regulators to decide whether to adopt them.

"The real test of all this is for financial institutions to apply these standards," Mohammed said. "We will review mid-term in two years to see how it has been effective."At present, the IFSB's membership of regulatory bodies and private institutions such as banks and law firms is concentrated on more developed countries; the majority of its 187 members come from the Gulf and Malaysia.

In contrast, only seven IFSB members come from Indonesia, Pakistan and Bangladesh, the world's three most populous Muslim-majority countries. These are some of the countries where the ADB is most active, as its main objective is poverty alleviation.

In the short term the agreement will focus on Indonesia, Bangladesh, Pakistan, the Maldives, Afghanistan, Kazakhstan and the Philipinnes, Mohammed said. Islamic finance can help to bring people in such countries into the banking system, he said. The agreement includes encouraging countries to align their infrastructure financing needs with Islamic finance, which could help meet Asia's enormous needs for infrastructure spending, said Bindu Lohani, the ADB's vice president for knowledge management and sustainable development. The ADB provided its first fully sharia-compliant financing in May, assisting the Jeddah-based Islamic Development Bank with two partial credit guarantees worth up to $66 million for two wind farms in Pakistan.

Asset management trade group holds line on us money fund reforms


* ICI reiterates concerns on floating NAV, buffers* Backs fund "circuit breakers" for crisis, like BlackRock planBy Ross KerberJan 24 The asset management industry's chief trade group said it would support temporary withdrawal restrictions for U.S. money market mutual funds, but said in comments to regulators Thursday that bigger changes are not needed to help sustain financial markets during crisis. Standing its ground, the Investment Company Institute reiterated positions it had previously spelled out for the $2.6 trillion industry, and offered few of the compromises presented by some fund sponsors recently. Instead, the organization - known as the ICI - outlined a more limited plan resembling one pushed by BlackRock Inc , the largest asset manager. It lets money funds put "gates" - or temporary redemption limits - in place during times of market stress, along with extra redemption fees. Coupled with reforms to the money funds in 2010, the fees would act as circuit breakers to slow heavy withdrawals, the ICI said."A lot of members believe that if something more is needed, this is a way to stop redemptions," said Karrie McMillan, the ICI's general counsel, in a telephone interview. Other financial firms have been more flexible. Last week Charles Schwab Corp outlined a plan to let some prime money funds "float" their net asset values away from a fixed price of $1 per share, for instance, as a way to make it easier to cope with a deluge of shareholder redemptions.

McMillan said such tweaks would require sweeping accounting changes that could be hard to put into practice. Among the ICI's biggest members are money fund sponsors Fidelity Investments and Federated Investors Inc, which have been much less enthusiastic about changes. The ICI filed its comments to the Financial Stability Oversight Council. The risk council is led by the U.S. Treasury Department and includes officials from the Securities and Exchange Commission and the Federal Reserve. FURTHER REFORMS

Officials from all three bodies have been pushing for further reforms because, as major debt holders, money funds play a key role in the financial system. The industry's problems threatened to freeze up global markets during the 2008 financial crisis. The biggest scare came when investors rushed to pull cash from the well-known Reserve Primary Fund in the fall of 2008 because of its heavy holdings in the collapsed Lehman Brothers. The fund was unable to maintain its $1 per share value, known as "breaking the buck." Support from other fund companies kept at least 21 prime funds from a similar fate, a later Fed study found. Fund officials have pushed back against further rule changes, worried about driving away investors.

Last summer the fund industry successfully stalled a proposal by then-SEC chair Mary Schapiro that would have pushed money funds to abandon the $1 per share value, or create capital buffers to absorb swings in the value of fund holdings. That shifted the action to the risk council led by the Treasury Department, which in November supported plans much like the ones Schapiro offered. A Republican member of the SEC, Dan Gallagher, has since said tax and accounting issues could be resolved to allow changes like floating NAVs. DAILY ASSET VALUES Lance Pan, director of investment research for Capital Advisors Group in the Boston area, said the ICI's letter offers some subtle flexibility. Firms like Fidelity and Federated have made plans to disclose daily asset values for money funds in recent weeks, which other filings show have not varied much from $1 per share in practice, Pan noted. The ICI seems to embrace those moves as well, Pan said, citing a section of the trade group's comment letter in which it mentions "frequent public disclosures" of mark-to-market share prices. Those disclosures would be as useful to shareholders as a floating NAV, Pan said."The ICI is trying to preserve the fixed NAV at any cost, so this is their compromise," Pan said.

Australias first guardian to launch islamic pension in january


Dec 20 Melbourne-based First Guardian plans to launch an Islamic pension fund in January, collaborating with some of Australia's most well-known Muslim organisations to tap the country's $1.5 trillion private pension system, the world's fourth largest. The fund has received regulatory approval and documentation is in the final stages, said Almir Colan, director at the Australian Centre for Islamic Finance who worked with First Guardian in the design of the product. The fund has been developed with the Muslim Community Cooperative of Australia and the Islamic Council of Victoria, the governing body for the state's Muslim community, has endorsed the product as well, Colan added. This would give much-needed support for the superannuation product, as Australia's pension products are known, to reach a small and scattered Muslim consumer base that has yet to fully embrace retirement savings."In the Muslim demographic you have many first- or second-generation Australians where superannuation is not usually a priority," said Colan, who also lectures on Islamic finance at Melbourne's La Trobe University.

"It is a matter of financial literacy as well."First Guardian's Islamic pension would be the second such product in Australia in as many years, after Sydney-based Crescent Wealth launched its own last year.

Islamic fund managers screen their portfolios according to religious guidelines such as bans on tobacco, alcohol and gambling, in much the same way as socially responsible funds. The fund would also seek to attract other ethically minded investors, as First Guardian follows the United Nations principles for responsible investing. But unlike their ethical counterparts in Western markets, many Islamic fund managers still struggle with a lack of scale, so tapping pension pools is seen as one way of boosting assets under management.

Growth targets thus remain conservative: First Guardian could raise A$30 million to A$40 million ($27-$35 million) for its Islamic pension fund in its maiden year, aiming for A$100 million within three to four years, Colan added."The A$100 million is a very important figure, as it is a break-even point for most of these products."The fund will use the globally recognised screening rules of MSCI to form the basis of its investment universe, but would incorporate an additional layer of screens every three months to refine the list further, said Colan. Private pension schemes are also making inroads in majority-Muslim countries such as Pakistan, Turkey and Malaysia, with early experience suggesting Islamic fund managers can benefit from such efforts. ($1 = 1.1295 Australian dollars)

Brazil ready to finance petrobras in offshore oil auction paper


RIO DE JANEIRO, Sept 20 Brazil's government plans to finance state-run oil company Petroleo Brasileiro SA's participation in the Oct. 21 auction of Libra, country's largest-ever oil discovery, the Estado de S. Paulo daily newspaper reported on Saturday. The government is also considering other measures to help cash-strapped Petrobras, as the company is known, pay for the large investments it is required to make in Libra under a 2010 Brazilian oil law, Estado reported citing an unnamed government source. These measures include the raising of Brazilian fuel prices, reduction of dividends on the government's shareholding in Petrobras and changes to the terms of a 2010 oil-for-stock swap, Estado said. Petrobras Chief Executive Officer Maria das Graças Foster said this week that Petrobras has the capacity to explore and produce 100 percent of the oil from Libra, but does not have the financial capacity to cover the investments needed to develop the area, Estado said. Under the oil law, Petrobras will have to come up with 4.5 billion reais no matter which of 11 companies signed up for the auction win the offshore area, the paper said. The payment is Petrobras' minimum share of the 15 billion real up-front fee winners will pay Brazil for the rights to Libra. The winning bidder will be the company or group that gives Brazil's government the biggest share of Libra's future output to sell on its own account.

Under the law, Petrobras must take a minimum 30 percent stake in the winning group and lead exploration and development in the area as the group's operator. Petrobras must also supply at least 30 percent of the estimated 400 billion reais ($180 billion) over 35 years that the government believes will be needed to develop the area. Libra, Brazil's largest-ever oil discovery, has an estimated 8 billion to 12 billion barrels of oil, enough to supply world needs for three to five months.

Decreasing output from older offshore oil fields, delays in bringing on new areas, and government refusal to let the company charge Brazilians world prices for gasoline, diesel fuel and cooking gas has crimped revenue and forced the company to borrow more to pay for investments. The Rio de Janeiro-based company is also in the middle of a $235 billion five-year expansion plan. That plan, the world's largest corporate spending program, does not include spending for Libra. On Thursday, the government said the Libra auction attracted only a quarter of the interest expected after many large, wealthy oil companies with experience in the region declined to sign up for the sale.

With Exxon Mobil Corp, BP Plc, BG Group Plc , Chevron Corp and other investor-owned oil companies choosing to stay away, Asian state-owned companies, such as India's Oil & National Gas Corp Ltd, Malaysia's Petroliam Nasional, or Petronas, and China's CNOOC Ltd, dominate the list of 11 companies that agreed to pay the 2.05 million real ($931,818) registration fee. Magda Chambriard, head of Brazilian petroleum regulator ANP, said on Thursday that she had expected "more than 40" companies to bid for Libra. Petrobras officials were not immediately available for comment. Brazilian government officials at the Presidential Palace and Energy Ministries were not immediately available for comment.

Business inventories in june rise on auto restocking


Washington Business inventories rose in June as car dealers restocked to meet demand, although sales at companies fell the most in over three years, the Commerce Department said on Tuesday. Inventories increased 0.1 percent to $1.58 trillion after rising by 0.3 percent in May. Economists polled by Reuters had forecast inventories rising 0.2 percent in June.

Inventories were lifted by a 1.6 percent rise in restocking by auto dealers, in line with strong demand for motor vehicles from households earlier this year. Inventories are a key component of gross domestic product. Retail inventories outside of autos - a measure which goes into the calculation of gross domestic product - edged 0.1 percent higher.

Inventories at manufacturers increased 0.1 percent in June.

In a more worrisome sign, business sales fell for the third straight month, dropping 1.1 percent to $1.23 trillion. At June's pace of sales, it would take 1.29 months for businesses to clear shelves, the highest measure for the reading since February 2010.