Global Investment News Briefs: United Tech, GM, Hedge Funds, SEC’s Uptick Rule

IMF Predicts Global “Great Recession”; United Tech. Cuts 11,600 Jobs; Brazil Economy Grows 1.3% in 4Q; Malaysia Adds $16 Billion to Stimulus; GM to Sell Half of Opel; Big Corporate Bankruptcies Surge in 2009; Hedge Funds to Slash 20,000 Jobs; SEC Will Bring Back Uptick Rule

• Dominique Strauss-Kahn, Managing Director of the International Monetary Fund yesterday (Tuesday) warned of a “Great Recession” taking place this year. “The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes,” Strauss-Kahn told African political and financial leaders in the Tanzanian capital. He added his forecast may “even be too optimistic.”

• United Technologies Corp. (UTX), makers of Carrier air conditioners and Otis elevators, announced a $750 million restructuring plan that includes 11,600 job cuts. The plan is a response to expectations that 2009 revenues will fall $2.7 billion short of projections, Bloomberg reported.

• Brazil’s economy expanded 1.3% in the fourth quarter, and economic growth for 2008 clocked in at 5.1%. The fourth-quarter gross domestic product (GDP) growth is a drastic decline from the 6.8% year-over-year growth rate in the previous quarter, Reuters reported.

• Malaysia’s government yesterday (Tuesday) added $16 billion (60 billion ringgit) in tax incentives and spending to its stimulus plan, and predicted its economy would contract as much as 1.0% this year. That would be the first contraction in 10 years. The additional stimulus measures will take place over the next two years, Bloomberg reported.

• General Motors Corp. (GM) may sell at least half of its Opel unit to private investors with German government support.  GM’s European unit will still have to save $1.2 billion (784 million euros) annually under the plan. The plan could include closing an Antwerp, Belgium, factory and selling a plant in Eisenach, Germany, Bloomberg reported citing a person who didn’t want to be identified because the talks are private.  GM is seeking U.S. and foreign aid to survive the current economic downturn.

• Bankruptcies by publicly traded U.S. companies are running at twice their 2008 pace, fueled by large companies with assets of more than $1 billion, Reuters reported. There have been 46 bankruptcy filings in 2009 by public companies with assets of $74 billion. That’s nearly seven times more than the $11 billion in assets of the 21 companies that filed for bankruptcy by this date last year. Two of the more noteworthy companies were Nortel Networks (NT), and Smurfit-Stone Container Corp (SSCCQ.PK), according to research firm BankruptcyData.com.
• Hedge funds may slash 20,000 jobs worldwide this year, as investment losses and client withdrawals erode fees. The dismissals account for a full 14% of the industry’s jobs, and come on top of the 10,000 jobs that disappeared last year. Employment peaked at 155,000 in 2007, and has since dropped to about 145,000, according to estimates by New York-based Options Group, an executive-search firm. About 920 hedge funds, or 12%, closed last year, Bloomberg reported.

• The Securities and Exchange Commission will restore the uptick rule in about a month, U.S. Rep. Barney Frank, chairman of the House Financial Services Committee, said yesterday (Tuesday). Bringing back the uptick rule, which would only allow short sales when the last sale price is higher than the previous one, could calm volatile markets, market-watchers said. The rule also could stem a stock’s decline by preventing short sellers from piling on one after another, Reuters reported.

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