Asian markets lower on Japan credit downgrade (AP)

BANGKOK – Asian stock markets gave up early gains Wednesday after Moody's Investors Service downgraded Japan's credit rating.

Japan's Nikkei 225 index fell 0.2 percent to 8,714.58 after opening higher. South Korea's Kospi index dropped 1.1 percent to 1,756.81 while Hong Kong's Hang Seng index lost 0.8 percent to 19,725.73.

Australia's S&P/ASX 200 index was 0.6 percent up at 4,197. Shares in mainland China and New Zealand were also higher.

Moody's Investors Service downgraded Japan's government bond rating to Aa3 from Aa2 late Tuesday. The new rating is three notches below Moody's top Aaa rating.

The downgrade puts Moody's Japan rating in line with other major agencies. Both Standard & Poor's and Fitch rate Japan AA-, three notches below their top AAA ratings.

In May, Moody's warned it could downgrade Japan after the world's No. 3 economy slipped back into recession in the first quarter due to tumbling output and exports following the March 11 earthquake and tsunami.

In New York on Tuesday, the Dow Jones industrial average jumped 322 points, following modest gains Monday. Not even an earthquake on the U.S. East Coast on Tuesday afternoon could halt its advance. The Dow dipped about 60 points shortly after the quake hit but soon recovered and soared higher in the last two hours of trading.

Oil rose above $85 per barrel Tuesday following reports of better-than-expected manufacturing activity in China and Europe. Benchmark oil for September delivery was 21 cents higher at $85.65 on the New York Mercantile Exchange.

The contract rose $1.02 to settle at $85.44 per barrel on Tuesday in New York.

In currencies, the euro fell to $1.4405 from $1.4423 in late trading Tuesday in New York. The dollar rose to 76.77 yen from 76.66 Japanese yen

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Man Utd ponders Asian flotation

17 August 2011 Last updated at 03:26 GMT Fuse Sport's Ben Heyhoe Flint on Manchester United's possible share sale in Asia

Manchester United's owners, the Glazer family, are considering a share sale in Singapore to help raise money to reduce some of their debts.

The BBC's sports editor David Bond says an initial public offering (IPO) is one of a number of refinancing options the American family is examining.

But, he says, they are only considering selling a minority stake - perhaps no more than 25%.

If successful, such a move could raise £400m ($657m).

The Old Trafford club was listed on the London stock market until it was taken over by the Glazers in 2005.

Small sale, big move

A partial share sale would mean that no outside person could take control of the club.

At the same time, it would provide the Glazers with much needed revenues that would help pay down some of the debt that was taken on to finance the takeover.

In March, Manchester United's chief executive David Gill said that the club had net debt of £370m and annual interest payments of £45m.

"They clearly need to relieve their debt burden from a financial point of view," Ben Heyhoe Flint of Fuse Media told the BBC's Asia Business Report.

"Financially, this is going to make sense," he added.

"They're going to open the door to fans by creating a foothold in Asia. They're also going to open up channels to new sponsors. I see this as a more aggressive move to make an even bolder presence in Asia."

Growing market

United has more than 300 million fans around the world and more than 190 million of those are in Asia.

The region has become a growth area for the club and other Premier League teams.

Football is one of the fastest growing sports in Asia

"Tottenham Hotspur are coming through here prospecting; Chelsea is setting up management operations," Fuse Sport's Mr Heyhoe Flint explained.

"All of them want to engage with the fans out here, find partners, increase their TV distribution and increase their commercial partnerships."

Analysts said that the rise in football's popularity may help Manchester United get a better price for its shares by tapping into this new fan base.

"They will pay a higher price to say they own a piece of Manchester United," said Stephen Schechter, chairman of London-based investment bank Schechter Co.

He added that the Glazer family would also be keen to free up capital for reasons other than just servicing their debt.

"Obviously the leverage has been bothering the Glazers so they want to use whatever cash they get in to get a return for themselves on capital, to reduce leverage and to give Manchester United cash to go out and buy players," Mr Schechter said.

No comment

Manchester United and chief executive David Gill have not commented on the plans for a share sale in Asia.

In March, Manchester United's parent company said it made a loss of £108.9m in 2009-10. Red Football Joint Venture is the Glazer family parent company that owns the Old Trafford club.

Its loss, for the year to the end of July 2010, included one-off costs from setting up a £526m bond scheme last January to replace outstanding debts of £509m.

There was also a drop in player sale income, compared to the previous summer when Cristiano Ronaldo was sold.

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Asian stocks fall on U.S. debt impasse

 

Stocks in Japan opened lower Monday as Asian markets reacted to the failure of U.S. leaders to reach a deal on the nation's debt limit.

NEW YORK (CNNMoney) -- Asian stocks opened lower Monday, the first reaction in major markets after congressional leaders and the Obama administration failed to reach agreement on a deal to raise the U.S. debt limit.

Tokyo's Nikkei 225 was down 0.6% to 10,087 about 90 minutes after the start of trading. (Check the latest in world markets)

In Hong Kong, the Hang Seng index lost 0.8% in the first minutes of trading. The Shanghai Composite index declined 0.6%.

In Sydney, the Australian Stock Exchange's All Ordinaries index was down 0.8%.

Meanwhile, trading in U.S. stock futures -- which indicates the likely direction when actual stock trading begin Monday morning -- were lower. S&P 500, Nasdaq-100 and Dow Jones industrial average futures were down a little less than 1%.

President Obama and congressional Republicans have been at odds for weeks over a debt-reduction plan that some lawmakers demanded in response for raising the debt ceiling.

The United States hit the debt ceiling in May. Treasury Secretary Tim Geithner has said that by Aug. 2 he will no longer have enough cash to pay all the country's bills on time.

Legislative leaders on Capitol Hill spent the weekend in talks trying to strike a deal in time to make an announcement before the Asian markets opened. After expectations were raised of a possible deal earlier Sunday, weekend talks to resolve the nation's debt-ceiling crisis appeared to reach a new impasse as each side pursued a separate plan.

-- The CNN Wire contributed to this report  

First Published: July 24, 2011: 8:22 PM ET

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