Japan Set to Unveil India Currency Swap Deal During Noda Visit

December 27, 2011, 3:03 AM EST By Kyoko Shimodoi and Unni Krishnan

(Updates with comment from economist in fourth paragraph.)

Dec. 27 (Bloomberg) -- Japan is poised to unveil a currency-swap line with India in its second international financial agreement with top Asian powers this week.

Finance Minister Jun Azumi told reporters today in Tokyo that Japan is negotiating an agreement with India, the third- largest economy in Asia behind China and Japan. The deal is likely to be unveiled during a trip by Prime Minister Yoshihiko Noda to India that starts today, with the amount of the swap line about $10 billion, a Japanese government official said on condition of anonymity.

Japan agreed with China two days ago to promote direct trading of the yen and yuan without using dollars and start purchases of Chinese bonds for its foreign-exchange reserves. The deal with India would expand the ability to respond to financial shocks as Prime Minister Manmohan Singh’s administration contends with a slump in the rupee that risks stoking inflation.

“It’s like an insurance cover or padding to the foreign- exchange reserves in a crisis,” said Dharmakirti Joshi, a Mumbai-based economist at Crisil Ltd., the local unit of Standard & Poor’s. “It will help in times of dollar shortage.”

The rupee has plunged about 15 percent against the dollar this year, the worst performance in Asia, after foreign investors sold shares worth $561 million as growth slows and Europe’s protracted sovereign-debt crisis roiled global financial markets. A weakening currency adds to the cost of imported goods in a nation that has the fastest inflation among so-called BRIC nations, with the benchmark wholesale-price index rising more than 9 percent in each of the past 12 months.

Previous Arrangement

While India’s foreign-exchange reserves have risen $4.8 billion in the past year to $302 billion, the country’s holdings are smaller than those of China, Japan, Taiwan, South Korea and Hong Kong.

India and Japan have previously supported each other with similar arrangements. In 2007, the two nations agreed to support each other in the event of a run on their currencies in the first such foreign-exchange accord for the South Asian nation. Under the plan, Japan would lend dollars and other currencies should India find its foreign-exchange reserves insufficient to stem a fall in the rupee.

Japan has also deployed some of its reserves, the world’s second biggest behind China’s, for aiding Japanese companies in making overseas acquisitions.

Direct Trading

Earlier this week, the Japanese government said Asia’s two largest economies will promote direct trading of the yen and yuan without using dollars and will encourage the development of a market for companies involved in the exchanges.

Japan will also apply to buy Chinese bonds next year, allowing the investment of renminbi that leaves China during the transactions, the Japanese government said in a statement after a meeting between Prime Minister Yoshihiko Noda and Chinese Premier Wen Jiabao in Beijing Dec. 25. Encouraging direct yen- yuan settlement should reduce currency risks and trading costs, the two governments said.

China is Japan’s biggest trading partner with 26.5 trillion yen ($340 billion) in two-way transactions last year, from 9.2 trillion yen a decade earlier. The pacts between the world’s second- and third-largest economies mirror attempts by fund managers to diversify as the two-year-old European debt crisis keeps global financial markets volatile.

--With assistance from Lily Nonomiya in Tokyo. Editors: Chris Anstey, Stephanie Phang

To contact the reporters on this story: Kyoko Shimodoi in Tokyo at kshimodoi@bloomberg.net; Unni Krishnan in New Delhi at ukrishnan2@bloomberg.net.

To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net

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Vinik’s U.S. Stock Holdings Jump 11-Fold During First Quarter

May 17, 2011, 12:53 PM EDT By Miles Weiss

May 17 (Bloomberg) -- Jeffrey Vinik, the Boston hedge-fund manager who formerly ran the Fidelity Magellan Fund, increased his U.S. stock holdings more than 11-fold during the first quarter with an emphasis on commodity-related shares.

Vinik, the manager of JNV Partners LP, held stocks with a market value of $4.66 billion at March 31, up from $411.8 million at Dec. 31, according to a Form 13F filed yesterday with the U.S. Securities and Exchange Commission. The largest bet was a $296 million stake in Oil Services HOLDR Trust, an exchange- traded fund that owns shares of companies involved in drilling and other exploration-related tasks, including Houston-based Halliburton Co. and Transocean Ltd. of Vernier, Switzerland.

Vinik, 51, is known for making big moves in and out of economic sectors by trading individual stocks and using leverage to amplify his bets. In recent years, he has also increased investments in ETFs, the term for funds that trade on stock exchanges, allowing investors to buy and sell them throughout the day.

Vinik did not immediately return a telephone call seeking comment. Mark Hostetter, the chief executive officer of Vinik Asset Management, declined to comment.

According to yesterday’s filing, Vinik invested in about 150 stocks as of March 31, up from 31 at the end of last year. He tripled his stake in Apple Inc. to 443,500 shares, acquired 800,000 shares of Deere & Co. and bought 1.25 million shares of FedEx Corp. with a stock-market value of $116.9 million at the end of the first quarter.

Buys SPDR Gold

Vinik’s holdings in energy, metals and natural resources stocks were valued at about $1.05 billion at March 31, up from about $39 million at Dec. 31, according to the filing. These holdings, which include a $111.9 million stake in the SPDR Gold Trust and $86.7 million of shares in the Brazilian mining company Vale SA, had declined in value by about 10 percent since March 31, based on yesterday’s closing prices.

Vinik managed Fidelity Magellan from July 1992 until May 1996, when it ranked as the world’s largest mutual fund with more than $56 billion in assets. He established JNV Overseas in 2004 to invest his own money along with cash from friends, family and a few outside investors, including billionaire George Soros, people familiar with the fund have said.

Money managers who oversee $100 million or more of equities traded on U.S. exchanges must file a Form 13F listing the holdings each quarter. The filing, which includes convertible bonds as well as funds and ETFs, is due 45 days after the quarter’s end.

--Editors: Steven Crabill, Josh Friedman

To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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