Car sales in China rose 48% in June from a year ago, boosted by government incentives and the continuing resilience of the country’s economy.

Sales hit 872,900 vehicles last month, the biggest increase since February 2006, said the China Association of Automobile Manufacturers.

Chinese car sales are continuing to benefit from cuts in sales tax, and subsidies to trade in older vehicles.

It comes as the wider China economy continues to grow at more than 6%.

The most recent official data showed that the economy expanded at an annual rate of 6.1% in the first three months of 2009, a slight slowdown from 6.8% in the final three months of 2008, against the backdrop of the global recession.

‘Proud result’

Domestic Chinese car sales overtook those in the US for the first time in December of last year, and this trend has continued.

While 872,900 cars were sold in China in June, 859,847 were bought in the US.

Global carmakers are now increasingly targeting China as a key growth market.

“It was really hard for our auto industry to achieve such a proud result against a backdrop of general gloom in the international auto industry,” said the China Association of Automobile Manufacturers, which is authorised by the Chinese government to release the data.

US carmaker General Motors recently reported that its sales in China rose 38% in the first half of this year, while Ford’s sales in China increased 14% over the same period.

The worst of the recession is over, according to the business group the British Chambers of Commerce (BCC), but talk of a recovery is premature.

Its report based on a survey of 5,600 companies found there had been “welcome progress” in confidence levels between April and June.

But the BCC is still predicting that unemployment will reach 3.2 million by the middle of 2010.

It warned that the increase in confidence was fragile.

“It is absolutely vital that the improvement in business confidence is nurtured,” said BCC director general David Frost.

“Our economy is based on confidence, and wealth-creating businesses need to know they will be given the freedom and flexibility to drive the UK out of recession and into a sustainable recovery.”

He added that the proposed increase in National Insurance contributions in 2011 was a “tax on jobs”, which should be scrapped.

British banking giant HSBC Holdings plc is looking to raise about £2.7 billion ($4 billion) through the sale of three of its biggest office buildings as it hopes to avoid a government bailout.

HSBC, Europe’s largest bank, confirmed the proposed sale on Monday after it was reported in The London Sunday Times.

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M&A continued its resurgence on Monday as investors are still wondering if this dealmaking is a sign of a possible turnaround of the bipolar market and sluggish economy. The chatter of Express Scripts Inc. (NASDAQ:ESRX) acquiring a unit of WellPoint Inc. (NYSE:WLP), Pfizer Inc. (NYSE:PFE) possibly buying a larger stake in an Indian unit and
Anheuser-Busch InBev NV/SA reportedly interested in putting its Rolling Rock brand on the auction block didn’t trigger a wave of buying.

The Nasdaq closed up 77 points, or .05%, to 1,653.51 while the Dow closed down 26.76 points, or 0.33%, to 8,056.62. But some feel the market is poised to make some ground this week as some banks expect to announce stronger-than-expected earnings in the coming days. Despite the relatively flat market, some deal stocks did make some big moves.

Drug benefits manager Express Scripts skyrocketed $7.64, or 15.54%, to $56.81 on news of its agreement to buy the health benefits unit of insurer WellPoint for $4.68 billion. The union would add 25 million members. The news also sent WellPoint shares up $3.24, or 8.03%, to $43.58. The deal is just one of a slew of mergers in the healthcare industry with the biggest being Pfizer acquiring Wyeth (NYSE:WYE) for about $64 billion in January.

Pfizer’s purchase of Wyeth is already one of several pharmaceutical deals in 2009. In fact, the New York-based pharmaceutical giant also wants to buy a 33.77% stake in its Indian unit Pfizer Ltd. for about $136 million. Pfizer finished down 7 cents, or 0.52%, to $13.48.

AB InBev is looking to trim down with the possible sale of its Rolling Rock brand. The Wall Street Journal writes that New York private equity firm KPS Capital Partners LP’s portfolio company North American Breweries Inc. may be a possible bidder. - Gerald Magpily

See CD: Pfizer tries acquiring 34% of Indian unit on the cheap
See Dealscape: Recession nearly over?

When they’re not bankrolling the latest in high tech startups, Chicago venture capitalists evidently like to splurge on treats, with the general partners at Ascent Equity Capital apparently very partial toward cupcakes, as the Windy City-based firm recently invested $1.5 million in Phoebe’s Cupcakes LLC.

The maker and marketer of gourmet cupcakes and pastries used some if its new capital to open a store in Chicago over the weekend, with plans to bake up locations in another 15 to 20 cities in coming months. With a rotating menu of more than 200 gourmet flavors of handmade cupcakes, the bakery is also targeting events such as weddings and parties as well as wholesale to upscale restaurants and grocers.

With venture capital investment overall slowing down, it appears that firms may be somewhat more ready to listen to nontech companies with innovative business plans. At the same time that Phoebe’s was enticing Ascent with its pastries, men’s luxury clothier J. Hilburn LLC sewed up an undisclosed amount of venture funding from Battery Ventures. Conspicuous consumption may be out of favor — for now — but the retailer’s plan to provide high-end personalized custom-tailored dress shirts through a combination of a direct sales force and an e-commerce site clearly caught the giant venture firm’s attention.

Maryland is galloping to pass legislation to avoid the potential loss of Pimlico Race Course and the Preakness Stakes, the Triple Crown horse race it hosts every May.

The state Senate on Saturday approved a bill that would allow Maryland to bid on Pimlico in a Section 363 auction run by bankrupt track owner Magna Entertainment Corp. Alternatively, the legislation clears the way for the Old Line State to claim Pimlico through eminent domain. The Maryland House of Delegates is expected to also pass the bill, the Baltimore Sun reports, although there are concerns about the viability of the plan.

Under one potential scenario, Maryland would purchase Pimlico, fellow Maryland racetrack Laurel Park and other assets and then sell them to a private entity that would preserve the state’s horse-racing tradition. Financing such a transaction, however, could be difficult with the credit markets still tight.

Still, notwithstanding the legislation and Pimlico and Laurel’s importance to Maryland — the state has had racetracks since the 1600s and been the site of organized races since the 1700s, it says in court documents — the Preakness may not be going anywhere. The Sun says at least four bidders want to keep the race at Pimlico, including Baltimore Orioles owner Peter Angelos and real estate developer Cordish Cos. (also a recent bidder for the Tropicana Casino & Resort in Atlantic City, N.J.). The 134th Preakness will be run May 16.

Magna wants to start the race for its assets on April 20, when Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware in Wilmington is set to consider bidding procedures for two sales. Under the proposed procedures for the assets including Pimlico, bids would be due July 8, with an auction following on July 30. Magna has not selected a lead bidder for the assets, which also include Santa Anita Park near Los Angeles as well as Thistledown in Ohio, Remington Park in Oklahoma City, Magna Racino near Vienna, Austria, and the operating rights of Portland Meadows in Oregon.

Magna’s controlling shareholder, MI Developments Inc., is stalking-horse bidder for the other assets, which include Golden Gate Fields near San Francisco, Gulfstream Park in Florida and Lone Star Park near Dallas. MID has offered $195 million in cash, debt and assumed liabilities. Magna has proposed a July 8 deadline for rival bids for those assets and an auction on July 16. - David Elman

Employees at American International Group Inc.’s (NYSE:AIG) black sheep AIG Financial Products unit are holding the U.S. taxpayer hostage with a $1.6 trillion credit default swap bomb that could blow at any moment, and the only way to talk them down is with a hefty ransom payment.

AIG Financial Products interim chief operating officer Gerry Pasciucco told The Wall Street Journal on Monday that 20 of AIG FP’s 370 employees quit amid the controversy over bonus payments at the very business unit that toppled the insurer due to the sale of credit default swaps and nearly brought the global financial system to its knees.

Congress has pushed to tax recipients of AIG’s $165 million bonus program 90% on their bounty. However, the legality of such an employment-contract-breaking measure was questioned by President Obama and has since stalled in Congress. In addition to facing a possible massive tax clawback, AIG bonus recipients have felt the wrath of New York Attorney General Andrew Cuomo, who holds the list of all AIG employees who received bonuses and is investigating whether AIG paid them fraudulently under New York law. As Cuomo dangled the bonus list, some AIG employees had received written death threats from a seething public.

WSJ reported that AIG chief executive Edward Liddy has told Treasury Secretary Timothy Geithner that AIG would try to reduce its $230 million 2009 bonus package by at least 30%, that some employees would take a 10% pay cut and the 25 highest paid, active contract employees would cut their remaining 2009 salary to $1, in line with what Liddy himself stands to make this year. Also, 15 of the top 20 bonus recipients had agreed to return their bonuses worth about $30 million in cash, and $50 million has been paid in total.

With Congress’ vitriol fading for the time being, so have the death threats, but Pasciucco told the WSJ that the financial products staff still needs “certainty” about compensation as they are afraid their pay could again be placed under the congressional microscope.

They want certainty? What about the lack of certainty that taxpayers will ever see the roughly $80 billion back that the Federal Reserve lent to AIG as part of its roughly $180 billion rescue package?

Pasciucco told the WSJ that public and political attacks hurt employee morale and “stunned people” such that the wind-down of AIG FP’s $1.6 trillion portfolio has slowed down, which could hurt the taxpayer in the end. Translation: Don’t give them any more trouble, or they are going to let this thing explode.

What ever happened to bonuses as a reward for performance? A $60 billion-plus loss for the fourth quarter, the largest recorded quarterly corporate loss, is not exactly bonus-worthy, is it?

While the legality of tearing up employment contracts may be questionable and while we can not necessarily blame AIG FP employees for wanting what was promised to them, to whine about AIG employee morale is somewhat inadvisable from a public relations standpoint, especially in a situation in which your owner is the very entity you are whining to — Uncle Sam. - Michael Rudnick

See story from The Wall Street Journal

Is the end of the financial crisis finally at hand? The Magic 8-Ball says “Outlook good.” Even if you don’t trust the fuzzy answers the kitschy toy offers, there are some telltale signs that a return to normalcy may be around the corner.

For starters, M&A — especially large deals — is on an uptick. Some notable deal announcements just from the first half of April include:

• Express Scripts Inc. (NASDAQ:ESRX) agreed to buy the pharmacy benefit division of WellPoint Inc. (NYSE:WLP) for $4.68 billion
• Pulte Homes Inc. (NYSE:PHM) agreed to buy rival home builder Centex Corp. (NYSE:CTX) for $3.1 billion
• CVC Capital Partners Group agreed to buy iShares Ltd. from Barclays plc for $4.4 billion
• K+S AG agreed to buy Morton Salt from Dow Chemical Co. (NYSE:DOW) for $1.68 billion

More M&A alone does not a recovery make. Early earnings announcements from consumer businesses were decidedly upbeat last week. Some notable examples include:

• Bed Bath & Beyond Inc. (NASDAQ:BBBY) topped fourth-quarter earnings estimates even as same-store sales fell.
• Brinker International Inc. (NYSE:EAT) forecast third-quarter earnings that are well above analysts’ estimates.
• Family Dollar Stores Inc. (NYSE:FDO) reported strong second-quarter results and raised its outlook for the third quarter.

Another indicator is an early-earnings preview from Wells Fargo & Co. (NYSE:WFC), which said Thursday it expects to post a record first-quarter profit of $3 billion, up about 50% from a year earlier, due to better-than-expected performance from Wachovia (acquired in December) and a strong performance in mortgage lending. The news sent the markets into a tizzy of upward trading even though the actual quarterly report is not due out until April 22.

However, the most telling example that the bottom has come and gone: debuting the Credit Suisse Fear Barometer, a new tool from Credit Suisse Group (NYSE:CS) that gauges fear in the financial markets. It is akin to the Chicago Board Options Exchange Volatility Index, or VIX, which measures the implied volatility of S&P 500 index options. There are some nuanced differences, most notably the time frame used in their equations. The VIX is based on a 30-day measure, whereas the Fear Barometer uses 90 days. (For more, see related story: Credit Suisse gets scary with Fear Barometer.) The creation of the CS Fear Barometer is likely a trailing indicator. In fact the creation of the VIX in 1993 occurred in the aftermath of the 1991 recession.

While other media outlets may continue to chat up the recession, we don’t want to forget our history lessons: Since the Great Depression, only two recessions have lasted longer than 16 months, 1973-1975 and 1981-1982, according to the National Bureau of Economic Research. The current recession started in December 2007, which means April as the 16th month may not be the cruellest after all.

Will this recession continue into May and break a record? Another shake of the Magic 8-Ball returns, “Reply hazy, try again.” - Matthew Wurtzel

Things are so slow in the market for initial public offerings that there was only one U.S. IPO in the first three months of 2009, Mead Johnson Nutrition (NYSE:MJN), which raised $828 million. Add that to one of the worst economies in the U.S. since the Great Depression, and it’s no wonder that Al Gore’s cable television company Current Media Inc. withdrew its $100 million IPO filing, according to an SEC filing. So how will Current Media weather this economic crisis to keep afloat?

The San Francisco-based company will likely continue what many companies have been doing: tightening their belts, pursuing projects intended to get the most bang for the buck and attracting new outside investors. Current Media already reportedly cut 20% of its staff in November, and if things get worst more layoffs are likely. Meanwhile, the company has moved to expand its viewer generated programming.

Current Media had filed an S-1 for the IPO in January 2008 when the economy was still growing and media companies were still looked upon with favor. With the economy now in upheaval, media companies as large as News Corp. (NYSE:NWS), CBS Corp. (NYSE:CBS) and Viacom Inc. (NYSE:VIA) have struggled to operate as advertising has declined and consumers are bombarded with a plethora of entertainment options for their discretionary dollars.

One of Current Media’s saving graces may be Gore’s connection to the company and possible access to investors. He’s currently a partner at venture capital firm Kleiner Perkins Caufield & Byers and on the board of Apple Inc. (NASDAQ:AAPL). In addition to Gore, Current Media’s investors include dealmakers Ron Burkle and Richard Blum, who are both board members.

In the meantime, Current Media will be waiting on the sidelines for better economic conditions for its IPO. Current Media will likely watch the offerings of Rosetta Stone Inc. and Bridgepoint Education Inc. because their IPOs may offer a gauge for whether Current Media tries again. - Gerald Magpily

See San Francisco Chronicle article