Britain’s finance directors are at their most confident for two years and are gearing up for expansion as concerns ease about the availability of credit and the strength of the recapitalized banking system, according to a quarterly study by Deloitte.

The survey, which takes the views of 128 finance chiefs, including 37 from FTSE-100 companies, has found that nearly half of respondents still have concerns about the economy, with many fearing a “double dip” recession before a sustained recovery takes hold.

Despite this, however, the balance of optimists against pessimists has hit a high of plus 44 – the best figure recorded in the 30-month history of the study. That compares with a low of minus 59 in the final quarter of 2008, shortly after the collapse of Lehman Brothers.

The study also found that 78 per cent of finance directors had confidence in the banking system’s ability to sustain the recovery, and there was barely a mention among their chief concerns of liquidity problems and cashflow crises. Credit conditions, respondents said, have improved in terms of both price and availability, suggesting that banks are increasingly willing to lend to larger, well-capitalised businesses, although the debate continues over whether the banks are doing enough to help smaller firms.

Yet most finance directors still say that bank loans are expensive and comparatively difficult to obtain. They are increasingly keen on using equity and bonds as alternative sources of funding to bank borrowing. That finding suggests the wave of bond and rights issues of 2009 is poised to continue through the coming year.

Ian Stewart, the chief economist at Deloitte, said: “The views of finance directors are important because they are on the front line of dealing with the impact of the credit crisis on British companies. While they still expect a weak recovery, this suggests that the real crisis has abated.

“Their priorities still remain cutting costs and preserving cashflow but the survey suggests conditions are much closer to normal than they have been for some time,” he added.

The chairman of the US Federal Reserve last night blamed poor financial regulation for the financial crisis and defended the record of America’s central bank.

Ben Bernanke also called for urgent improvements to financial oversight to prevent a repeat of an economic storm that he said could ultimately prove to be “the worst in history”.

In a speech to the American Economic Association in Atlanta, Georgia, Mr Bernanke argued that low interest rates in the first five years of the new millennium were “appropriate” for the time and had not caused the “bubble” in US house prices. The Fed has been criticised by some economists who argue that it kept rates too low for too long, encouraging the property boom. The subsequent crash led to a surge in repossessions, leaving lenders with huge losses and the financial contagion quickly spread around the world.

Mr Bernanke suggested that the bubble was inflated by poor mortgage underwriting and weak supervision of lenders, and he said this must change.

“Surely, both the private sector and the financial regulators must improve their ability to monitor and control risk-taking,” he added. “The crisis revealed not only weaknesses in regulators’ oversight of financial institutions but also, more fundamentally, important gaps in the architecture of financial regulation around the world.

“Stronger regulation and supervision aimed at problems with [mortgage] underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates.

“Moreover, regulators, supervisors and the private sector could have more effectively addressed building risk concentrations and inadequate risk-management practices without necessarily having had to make a judgement about the sustainability of house prices.”

Mr Bernanke insisted the Federal Reserve had been “working hard to identify problems and to improve and strengthen our supervisory policies and practices”, adding: “The lesson I take from this experience is not that financial regulation and supervision are ineffective for controlling emerging risks, but that their execution must be better and smarter.”

However, despite his remarks, he said policymakers should not rule out using interest rates as a measure to prevent any future build-up of asset price bubbles. “If adequate reforms are not made, or if they are made but prove insufficient to prevent dangerous build-ups of financial risks, we must remain open to using monetary policy as a supplementary tool for addressing those risks,” he explained.

“Clearly, we still have much to learn about how best to make monetary policy and to meet threats to financial stability in this new era.”

Mr Bernanke’s speech comes as the US Senate prepares to debate regulatory reforms that would remove the Fed’s responsibility for overseeing large financial institutions and leave it to focus on interest rates, a move that has already happened in Britain. Here, the Conservative Party has pledged to reverse this policy and return to the Bank of England its responsibility for supervising lenders.

Mr Bernanke has argued against the Senate’s move, saying it would damage oversight of the system by removing a crucial monitor. The Fed chairman, who took office in February 2006 following the long reign of Alan Greenspan, has been nominated for another term by President Obama. The Senate Banking Committee voted in his favour last month and, while his nomination remains contentious with some, it is expected to be confirmed.

By JOHN BUSSEY

Expect many of the big headlines in world affairs in 2010 to be written by Washington — sometimes to the chagrin of other nations, and some Americans, too.

Barack Obama may at times be among the latter. The president has a big domestic agenda still to tend and faces Congressional elections in November. Troubling distractions from abroad can be just that — distractions.

Nonetheless, Mr. Obama, like George W. Bush before him, may find himself subsumed in important events overseas this year. Here’s a list of some of the bigger ones to watch for:

Terror

The Christmas Day attack on a Northwest Airlines flight will be remembered as coming staggeringly close to success — thwarted only by the failure of the chemicals smuggled on board to explode. The alleged terrorist, a Nigerian with a U.S. visa, overcame European and U.S. intelligence and security and nearly killed all aboard.

Efforts to track and overcome that threat are already gathering new energy, and public opinion is likely to fuel the moves. Nations will set new security at airports, tighten no-fly lists, and focus on new sources of extremist activity, such as Yemen and Somalia. Recent new evidence of homegrown extremism in Western nations, especially the U.S., is likely to fire this resolve.

A U.S. Marine takes up a fighting position during the start of a July operation to take areas in Afghanistan’s southern Helmand Province used by Taliban fighters as a supply route.

Afghanistan

The U.S. and its allies are under pressure to show results in the eight-year conflict. The U.S. is putting more than 30,000 additional troops into the theater this year, pushing its total contingent to about 100,000. Several allies — the U.K., Poland, France and South Korea, among others — have also said they will increase their commitments.

The full-throated debate over whether this is the right strategy will continue. Would the better option be to employ a much smaller fighting force focused just on uprooting al Qaeda and its sympathizers?

Not too far away, the U.S. is drawing down its troop levels in Iraq. War-weary electorates in the U.S. and many other nations are wondering why the same isn’t the case in Afghanistan.

Iranian protesters demonstrate against Mahmoud Ahmadinejad’s regime in late December.

So much for diplomacy — Iran has continued its nuclear-development program, despite entreaties from much of the international community. The U.S. and Europe have threatened sanctions, and the deadlines have passed. Now what? What does an effective sanctions program look like? Will enough nations support it? Wouldn’t Iran’s porous borders thwart it? And is there enough enforcement capability globally, or even in the U.S., to keep companies from doing business with the country?

The U.S. may wait to see if Iran’s own internal unrest — a dissident movement that has found its voice — changes Iran’s political dynamic, and America’s choices.

Watching just as closely: Israel, which not long ago flew practice bombing missions out over the Mediterranean, about the same distance as it is from Israel to Iran’s nuclear sites.

Sovereign Debt

Economies are growing again, which is good news, but the financial crisis that rocked the world is far from over.

A stiff shot of adrenaline to the heart kept the global economy pumping, but now all the bills for that stimulus and those bailouts are coming due. And the budget books — from Asia to Europe to the U.S. — aren’t looking good. Deficits are soaring. Banks are still ailing. Unemployment is still high. And all this is on top of huge national debt that many nations amassed during the robust times.

Japan, Eastern Europe, the U.S. dollar — even as things get better, there’s still plenty of opportunity for painful surprises.

China

An employee counts yuan banknotes at a branch of the Bank of China.

China’s growth has given it new heft internationally, and the country seems ever more willing to flex its vocal chords, especially when blaming the U.S. for the last two years of global economic tumult. This year may bring some new tests to the relationship.

China is still a bicycle economy, pedaling hard to generate enough jobs for the crowds of rural migrants who each year seek a better life in the cities. The ruling politburo fears unrest, and few things stir unrest more than unemployment. A big chunk of China’s economic success depends on clear channels of trade with the U.S., and now trade spats are on the rise. Tires, steel — the list is growing.

If unemployment in the U.S. remains high, and growth sluggish, watch nascent protectionism in Congress pick up steam. So far, the Obama administration has backed away from declaring China a currency manipulator, even though the country all but pegs its yuan to the dollar. But 2010 is an election year, with hot contests in many manufacturing states. The language, and the trade policy, could change.

Global Regulation

The last two years of economic crisis, brought on in part by a familiar episode of Banks Gone Wild, fueled new urgency among the G-20 nations to rethink how the world does business — or at least how financial institutions get regulated.

Everything from executive pay to proprietary trading to how banks manage risk is on the table for review. So far, there’s been more talk than action. But that’s not for lack of interest. The U.S. Congress is busy on its financial regulatory revamp. Expect 2010 to bring more regulation globally — for better or worse.

Borrowers must be aware that most lenders offer a variety of repayment options. A flexible repayment scheme helps the borrower select an option that best suits his needs. In essence, it reduces the EMI burden and minimises chances of default. Here are a few popular repayment schemes:

Accelerated repayment

Here, the borrower is allowed to increase his EMIs whenever his income goes up. His payment is apportioned against the principal outstanding that helps clear a long-term debt faster. When the disposable income of the salaried class goes up with an increment or bonus, they can make accelerated repayments towards their home loans. Making part prepayment helps save on the interest component of the loan.

Step-up and step-down

Step-up loan is tailor-made for borrowers who are in the initial stages of their careers. Here, the EMIs due to the lender vary as the years pass. It is lower in the initial years, and it gradually starts increasing. The lender also sanctions the borrower a greater loan amount, keeping in view his growth potential.

In step-down loans, the EMIs are high during the initial years and come down as the years roll by. This scheme is best-suited to borrowers close to their retirement who may be currently earning good money. But their income levels could drop towards the end of the loan tenure.

Balloon repayment scheme

In the case of this scheme, the borrower has the option of paying a lower EMI in the initial years. Just as a balloon swells at the top, a balloon payment of around 30 to 40 percent of the loan amount must be made in the last installment. Flexible repayment options might enable you to borrow more since the EMI repayments become convenient. However, borrowers must borrow only as much as is actually required.

Bangalore: JP Morgan has planned to declare dividend under dividend option of JPMorgan India Alpha Fund on January 4, 2010. The quantum of dividend decided for distribution under the scheme is one percent that is Rs. 0.1 per unit and the face value per unit is Rs.10.

JP Morgan India Alpha Fund is an open ended interval scheme, with the investment objective to achieve a total return in excess of the return on short-term instruments through various strategies of buying and selling equity and equity-linked securities including derivatives, and money market and debt securities. The strategies would be designed to minimize market exposure for investors with a medium to long term horizon.

Mumbai: Equity shares of Godrej properties will be listed on Bombay Stock Exchange on January 5, 2010. The company had fixed the issue price for its initial public offering (IPO) at Rs.490 a share, at lower end of price band of Rs.490-530 per share.

As per data available on NSE, the IPO of 9,429,750 equity shares of Rs.10 each was opened during December 9-11, 2009 and was subscribed four times. The company has got the major support from qualified institutional investors; their reserved portion got subscribed 7.45 times. Retail and non-institutional investors’ portion remained undersubscribed.

The company managed to collect over Rs.460 crore from this issue. It also received commitment from anchor investors and collected nearly Rs.90 crore from them at Rs.530 per share.

Mumbai: Though, 2009 can be regarded as a year of major initial public offerings (IPOs), most of the companies that have gone public this year are seeing their shares trade lower than their issue price. According to research firm Prime Database, in 2009, there were 21 IPOs that raised Rs. 19,535 crore. In 2008, 36 IPOs raised Rs. 16,927 crore. In 2007, 105 IPOs mobilized Rs. 34,179 crore.

The year 2009 saw as many as five issues of over Rs. 1,000 crore each, and for the first time the year did not witness any issue below Rs. 10 crore, reports Business Line. The average size of the IPOs in 2009 rose to Rs. 931 crore from Rs. 445 crore in 2008 and Rs. 426 crore in 2007. “This year only large- and medium-sized companies came out with their IPOs. Smaller companies stayed away from the primary market,” said Prithvi Haldea, Chairman and Managing Director of Prime Database. Investors were cautious and went for IPOs of better known companies as risk appetite remained low, he said.

The smallest IPO of the year was Edserv Softsystem’s Rs. 24 crore issue, while the largest was NHPC’s Rs. 6,039 crore IPO. Though only a few IPOs this year are trading above their issue prices, the deal sizes remained of a good amount, said merchant bankers. “The deal sizes remained big this year as the all the IPOs of this year received good response. They were all completely subscribed. None of the issues were rejected because of pricing,” Haldea added.

Sharp rally in most of the sectors paved the way for both the key indices, Sensex and Nifty, to hit a nearly 16-month highs and improved further by about three percent during last week, stimulated by a host of positive factors.

Sensex was in the vicinity of 17000 mark, while Nifty pierced through the 5000 mark during the intra-week trade.

After moving in a range of 16,820.02 and 16119.95 points, the Bombay Stock Exchange 30-share index ended the week at 16,741.30, the level not seen since May 22, 2008, a rise of 477.00 points or 2.93 percent over its previous weekend close.

The broader 50-issue Nifty of the National Stock Exchange touched a high of 5,003.05 before concluding the week at 4,976.05, a net gain of 146.50 points or 3.03 percent.

Reports of higher advance payments by some big corporates for the second quarter, indicating revival in the economy amid heavy portfolio inflows, mainly boosted the market sentiment.

Firm global cues also helped local bourses to keep the tempo upbeat. Most of the world markets closed the week up on encouraging rise in U.S. retail sales in August and hopes of global economic recovery after the U.S. Federal Reserve Chairman, Ben S Bernanke, said the worst U.S. recession since the 1930s has probably ended.

Signals by Reserve Bank of India not to hike interest rates till the economic recovery is on a strong footing, too supported the market.

Interest rate is likely to be hardened by current fiscal, according to C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council.

Rangarajan said that though capital flow had improved, but were not of the same order as two years ago. Nevertheless, inflows through foreign direct investment (FDI) and foreign institutional investment (FII) would be larger this year compared with last year. The fiscal actions involving a cut in excise duty and enlarging government expenditure is likely to stimulate aggregate demand. The government has already extended its stimulus package up to March 2010, which could be reviewed thereafter.

In the case of central fiscal deficit, Rangarajan said, “We should revert to fiscal responsibility and budgetary management (FRBM) targets as the economy began to recover. He does not envisage any increase in the 2009-10 fiscal deficit, which is pegged at 6.8 percent of the gross domestic product (GDP).”

RBI had taken right steps by reducing CRR (cash reserve ratio) and repo and reverse repo rates for expanding liquidity. However, it was being pointed out that the actions of the central bank have not percolated to the ground level and credit growth was slow. He envisaged that India would see ‘definite signs’ of recovery in the second half of 2009-10 and the economy would grow between 6 and 6.5 per cent. Fiscal 2010-11 would see a distinct improvement and the economy would grow between seven and eight percent. But to go back to nine percent growth, the country has to wait for the world economy to improve and the world trade to pick up.

According to Rangarajan, the shock waves produced by the current financial crisis would have their own effect on the structure of capitalism. Acceptable capitalism would require more regulations. Future discussions must centre around the nature and scope of such regulations.

Sept. 7 (Bloomberg) — European and Asian shares rose for a third day as a resurgence of merger speculation boosted food and beverage stocks and mining companies and the Group of 20 nations agreed on steps to shore up the global financial system.

Cadbury Plc, the world’s largest confectioner, jumped 40 percent after rejecting a 10.2 billion-pound ($16.7 billion) offer from Kraft Foods Inc. Lonmin Plc rallied 4.4 percent as the Observer said Xstrata Plc is considering a takeover bid. Deutsche Telekom AG advanced 2 percent after a person involved in the discussions said Europe’s biggest phone company is close to deciding whether to sell its U.K. unit.

Europe’s Dow Jones Stoxx 600 Index added 1.4 percent to 237.21 at 1:11 p.m. in London. Mergers and acquisitions are recovering amid signs the worst recession since World War II is easing. Last week, Baker Hughes Inc., the world’s third-largest oilfield-services provider, agreed to buy BJ Services Co. for $5.5 billion and Walt Disney Co. agreed to purchase Marvel Entertainment Inc. for about $4 billion.

“Once we get to grips with the reality that we will see growth in 2010 we’ll be back to mergers and acquisitions again,” Thomas Tilse, Frankfurt-based head of portfolio strategy at Cominvest Asset Management GmbH, which oversees about $65 billion, said in a Bloomberg Television interview. “In basic resources and food and beverages, these long-term themes, there will be a lot of mergers and acquisitions.”

Asian, U.S. Shares

The MSCI Asia Pacific Index climbed 1.3 percent as Abu Dhabi agreed to buy Singapore’s state-controlled Chartered Semiconductor Manufacturing Ltd. for S$2.5 billion ($1.8 billion) to create a challenger to the world’s second-biggest maker of customized chips. Futures on the Standard & Poor’s 500 Index added 0.4 percent today, with U.S. markets closed for the Labor Day holiday.

The Stoxx 600 fell 1.5 percent last week on concern that a six-month rally has outpaced the prospects for earnings and economic growth. The European gauge is valued at 45.4 times profit, near the highest level since September 2003, according to data compiled by Bloomberg.

Finance chiefs from the G-20 nations concluded weekend talks in London with an agreement on a regulatory blueprint aimed at avoiding a repeat of the global financial crisis that spurred $1.6 trillion of credit-market losses and writedowns since 2007. The G-20 measures include forcing banks to curb leverage and raise the amount and quality of assets they keep in reserve once growth takes hold.

‘Global Governance’

“The G-20 has shown once again that governments from around the world can come together to agree on the global governance the new global economy needs,” U.K. Prime Minister Gordon Brown said.

The panel that oversees the Basel Committee on Banking Supervision, meeting after the G-20 sought to extend their reach into banks’ pay and profits, yesterday agreed lenders should raise the quality of their capital by including more stock. Financial firms also will have to introduce a leverage ratio and devise ways to boost reserves when the economy is robust.

European investor confidence increased for the second month in September as the euro-area economy starts to recover. An index measuring euro-region sentiment rose to minus 14.6, the highest since July 2008, from minus 17 in August, the Limburg, Germany-based Sentix research institute said today.

German factory orders advanced for a fifth month in July, helping the recovery in Europe’s largest economy gain traction.

Cadbury Offer

Cadbury rallied 40 percent to 798 pence, the biggest jump in at least 21 years, after saying Kraft’s offer “fundamentally undervalues the group.”

Kraft declined 1 percent to $27.83 in German trading. The world’s second-largest foodmaker said the merger would create “a global powerhouse in snacks, confectionery and quick meals.” Analysts said Kraft’s 745 pence-a-share proposal may trigger rival offers from Nestle SA and Hershey Co. for Cadbury’s Trident gum and Dairy Milk chocolate.

A gauge of food and beverage companies in the Stoxx 600 soared 3 percent, the steepest advance among 19 industry groups. Group Danone SA, the world’s largest yogurt maker, rose 3.7 percent to 38.91 euros. Tate & Lyle Plc, the maker of low- calorie sweetener Splenda, added 3.7 percent to 417 pence.

Associated British Foods Plc advanced 4.3 percent to 847 pence after saying it expects sales at its Primark clothing stores to grow as better weather than last year lures customers.

Whitbread Plc rallied 16 percent to 1,188 pence as sales at its Costa Coffee unit increased, and the company said it would meet profit estimates.

Mining Companies

Lonmin surged 4.4 percent to 1,647 pence, extending last week’s 8 percent increase. Xstrata’s Chief Executive Officer Mick Davis asked JPMorgan Chase & Co. and Deutsche Bank AG to conduct a feasibility study on a potential bid for the platinum producer, the Observer reported, citing no one.

Rio Tinto Group gained 1.3 percent to 2,447 pence in London, while BHP Billiton Ltd. added 2.2 percent to 1,620 pence. The world’s No. 1 and No. 3 mining companies are considering a A$1 billion ($853 million) merger of their Canadian diamond operations, the Australian reported, without saying where it got the information.

Metal prices have surged this year, prompting Bank of America Merrill Lynch and Standard Bank Plc to flag more mining acquisitions. Takeovers in the industry are up almost a fifth this quarter from the previous three months as Canada’s Eldorado Gold Corp. and China’s Yanzhou Coal Mining Co. agreed to buy rivals in Australia.

Deutsche Telekom

Deutsche Telekom increased 2 percent to 9.59 euros. The company has been studying options for its T-Mobile UK unit since February and plans a decision soon, said the person, who declined to be identified because the talks are private. Vodafone Group Plc and Telefonica SA made informal offers to buy it for about 4 billion pounds, and Deutsche Telekom is in talks with France Telecom SA for a possible joint venture of their U.K. assets, the Financial Times said today.

Separately, Telefonica, Europe’s second-biggest phone company, said it will pay $1 billion to boost its stake in China Unicom (Hong Kong) Ltd., raising its investment in the world’s biggest communications market. Telefonica added 2.1 percent to 17.75 euros.

European phone stocks were raised to “bullish” from “neutral” at Nomura Holdings Inc. The brokerage also upgraded the pharmaceutical industry to “bullish” from “bearish” and advised investors to reduce holdings of shares most sensitive to economic growth.

Bayer AG rose 3.8 percent to 44.11 euros after the German drug and chemical maker was added to Bank of America Corp.’s “Europe 1” list.

Fortis Gains

Fortis, the insurer that sold all its banking businesses in October to avert a collapse, advanced 3.4 percent to 3.11 euros. RSA Insurance Group Plc may bid for distressed businesses owned by American International Group Inc. and Fortis, the Sunday Telegraph reported, without saying where it got the information.

Groupe Eurotunnel SA rose 8 percent to 4.57 euros. The operator of the Channel Tunnel rail link between England and France said a Goldman Sachs Group Inc. fund will become its biggest shareholder by swapping deferred equity securities for stock.

By Daniela Silberstein