Archive | International Finance News – World RSS feed for this archive

Borrowing costs swell as banks clamp down

NEW YORK – STUNG by billions of dollars in bad debts, banks in the United States are clamping down on loans, making borrowing costlier for the consumers and companies that are the best hope for keeping the US economy out of recession. Economists are increasingly worried that reluctant banks plus skittish borrowers will create a […]

Leave a Comment Continue Reading →

A quick guide to sub-prime issues

How individual loan defaults in a faraway land can have a domino effect all over the world – including here PAUSE for a moment to consider these facts: HSBC, the world’s third-largest bank, announced that 50 per cent of its earnings in 2006 were wiped out by sub-prime losses from its US subsidiary. Since the […]

Leave a Comment Continue Reading →

Rate cut not always needed: Fed official

Market disruptions can be addressed using tools available (NEW YORK) Federal Reserve Bank of Philadelphia president Charles Plosser said there is an ‘underlying stability’ in the US economy and officials need not always cut interest rates in response to turmoil in financial markets. ‘Disruptions in financial markets can be addressed using the tools available to […]

Leave a Comment Continue Reading →

Fed has effectively cut funds rate: analysts

They say unusually large spread between fed funds target and effective rates signals Fed’s next move (NEW YORK) Here’s a secret: The Federal Reserve has already cut the fed funds rate. Yes, the Fed’s target rate is still the same 5.25 per cent it has been since June 2006, and the US central bank has […]

Leave a Comment Continue Reading →

ECB, Britain’s central bank leave rates unchanged

This comes as US Fed pumps $48b into banking system to bring down lending rate LONDON – THE European Central Bank (ECB) and Bank of England (BOE) held interest rates steady yesterday, saying it was too soon to gauge the damage wrought by a global credit crisis. The ECB also pumped 42.2 billion euros (S$87.6 […]

Leave a Comment Continue Reading →

Property bubble may burst: Daiwa House

A concerned CEO of Japan homebuilder aims to cut costs and expand in China (TOKYO) Daiwa House Industry Co, Japan’s second biggest homebuilder by market value, wants to cut local costs and expand in China as the developer is concerned a property ‘bubble’ may burst, slashing land prices. ‘The property market has become dangerous,’ Takeo […]

Leave a Comment Continue Reading →

Hedge fund investors withdrew US$32b in July

Outflows may increase in August, industry survey finds (NEW YORK) Investors withdrew a net US$32 billion from hedge funds in July, the most in any month since at least 2000, helping to spark global stock and bond sell-offs, according to a new industry survey. Funds of hedge funds, which invest clients’ money with other managers, […]

Leave a Comment Continue Reading →

Sub-prime beast won’t drown in sea of liquidity

IN TOKYO WHAT one veteran banker dubbed the ‘securitisation monster’ created by financial innovation has bitten back. And it is proving to be a painful lesson for those who reposed faith in securitisation to make financial risk a thing of the past by spreading it around so thinly that it could no longer be detected. […]

Leave a Comment Continue Reading →

Harvard economist warns of recession, urges rate cut

FED CONFERENCE Key rate slash to shield US economy from sub-prime fallout: Feldstein (JACKSON HOLE, WYOMING) Harvard University economist Martin Feldstein said that the United States housing slump threatens a broader recession, and the Federal Reserve should lower interest rates. ‘The economy could suffer a very serious downturn,’ Mr Feldstein, head of the group that […]

Leave a Comment Continue Reading →

Wild ride for investors ahead: analysts

WALL STREET INSIGHT But they expect rally once sub-prime uncertainty clears IN NEW YORK ON Wall Street, stock market analysts and money managers see stocks ready to register gains once the considerable cloud of dust kicked up by the turmoil in the world’s credit markets sparked by the sub-prime mortgage market settles in the weeks […]

Leave a Comment Continue Reading →

CCB reveals US$1.06b sub-prime exposure

HONG KONG – China Construction Bank, one of the country’s ‘big four’ state lenders, said it held US $1.062 billion worth of US sub-prime mortgage loan-backed securities at the end of June and expects the securities to have ‘limited impact’ on its operating results for the year. The exposure is far lower than the US$9.65 […]

Leave a Comment Continue Reading →

ECB rate rise uncertain, Asia sub-prime fears grow

NEW YORK/LONDON – Central bank officials said market turmoil made a euro zone rate rise far from certain while three Asian banks’ heavy exposure to the limping US home loan sector reinforced global credit worries on Friday.In the US, the Federal Reserve refrained from open market operations ahead of a weekend for the first time […]

Leave a Comment Continue Reading →

Dow up but analysts warn there could be more upheaval yet

NEW YORK -WALL Street is heading for another volatile week, but the bulls could get a further reprieve if calm brought on by the Federal Reserve’s liquidity injections and a surprise cut in its discount rate lasts. The coming week will see the release of a slew of economic indicators, including July existing home sales […]

Leave a Comment Continue Reading →

BNP to reopen frozen funds in sub-prime mess

Paris – FRENCH banking giant BNP Paribas has said it plans to unblock three of its investment funds, whose suspension earlier in the month sparked turmoil on global stock markets. On Aug 7, BNP Paribas suspended the funds, which had made investments linked to risky sub-prime home loans in the United States, because of difficulties […]

Leave a Comment Continue Reading →

Keeping rates too low may spur risky investing: BOJ

(Japan) Although bank keeps rates unchanged, governor’s words signal he intends to raise borrowing costs TOKYO – BANK of Japan (BOJ) governor Toshihiko Fukui said there is a risk that keeping interest rates too low will spur risky investment, signalling that the central bank intends to raise borrowing costs. ‘Distortions and the misallocation of resources […]

Leave a Comment Continue Reading →

UAE annual mortgage lending jumps 86% in Q1

(DUBAI) United Arab Emirates mortgage lending increased an annual 86 per cent in the first quarter as foreigners bought property in the Gulf state. Outstanding loans to buy homes rose to 42 billion dirhams (S$17.4 billion), the central bank said in its quarterly statistical bulletin published yesterday on its website. Bank lending for mortgages has […]

Leave a Comment Continue Reading →

ECB to lend $82b to banks, may still raise rate

FRANKFURT – THE European Central Bank (ECB) said it will lend 40 billion euros (S$82 billion) to banks for three months to further support a ‘normalisation’ of the money market and that it may still increase the key rate. The ECB decided to ‘conduct a supplementary liquidity- providing longer-term refinancing operation’, it said in a […]

Leave a Comment Continue Reading →

Fed ‘cautiously upbeat’ bourses will stabilise

TOKYO – UNITED States Federal Reserve officials are cautiously optimistic that the steps they have taken to relieve a squeeze in credit markets are working, The Wall Street Journal reported yesterday. It added that the Fed may wait until its next policy meeting before considering a cut in the federal funds rate. The paper said […]

Leave a Comment Continue Reading →

Sub-prime crisis infects $459b of money market funds

Some of the largest funds invest in debt packages backed by risky mortgage loans LOS ANGELES – MONEY market funds were invented to offer investors better returns than bank savings accounts while providing a high degree of safety. Most of the US$2.5 trillion (S$3.8 trillion) in these funds is invested in assets like United States […]

Leave a Comment Continue Reading →

Beware the bubble fixes of Greenspan era

TOSHIHIKO Fukui is looking more and more like Asia’s answer to Alan Greenspan. It’s exactly what many Japanese politicians had hoped for. When Mr Fukui became Bank of Japan (BOJ) governor in March 2003, lawmakers urged him to be the ‘Greenspan of Japan, if not Asia’. It was a bow to the then Federal Reserve […]

Leave a Comment Continue Reading →

Asian stock markets make sharp rebound

INVESTORS who could not exit fast enough last week rushed back into Asia stock markets yesterday, sending share prices soaring. The gains stunned even hardened traders. Singapore’s Straits Times Index (STI) rocketed 191.67 points, or 6.12 per cent, to 3,322.38, its second biggest single one-day gain ever, following a 204.27 point surge on Feb 2, […]

Leave a Comment Continue Reading →

Asian firms prepare for sub-prime fallout

(HONG KONG) Asian companies will have a tough time raising funds and will face weaker export demand if the global credit squeeze persists and a deteriorating US housing market crimps consumer spending. But most firms in the Asia-Pacific, where robust consumption provides a driver beyond the traditional reliance on exports, are waiting to see how […]

Leave a Comment Continue Reading →

Sub-prime woes spread to short-term securities

Several issuers of commercial loans backed by housing mortgages may get downgraded NEW YORK – TURMOIL in the sub-prime mortgage market spread again yesterday – this time to a type of short-term security held by money market mutual funds. These funds have become the investment of choice for many people seeking a safe haven. Ratings […]

Leave a Comment Continue Reading →

Sub-prime woes push STI to 4-month low

Banks lead decline in index’s 6th triple-digit loss this year; other regional bourses hit too (SINGAPORE) Regional stocks were yesterday swept under by US sub-prime mortgage and other related worries for the third time this month, resulting in the Straits Times Index (STI) suffering its sixth triple-digit loss of 2007, taking it to a four-month […]

Leave a Comment Continue Reading →

High-yielding NZ$ bears brunt of sell-off as investors cash out in flight from risk

Key currencies fall as investors sell assets funded by yen loans THE United States sub-prime crisis that has wreaked havoc on stock markets has spread to currencies, hitting key units like the sterling and leaving experts wondering where it will end. In three weeks, the sterling, the euro as well as the New Zealand, Australian […]

Leave a Comment Continue Reading →

Market crisis just a speed breaker?

While agreeing that the bull market is intact for long-term investors, analysts say it would be prudent to revisit your asset allocation in the wake of the sub-prime crisis. THE fallout from the crisis in sub-prime mortgages in the US has sparked a rout in credit and equity markets in recent days. The biggest question […]

Leave a Comment Continue Reading →

Asian markets steady even without liquidity pump

Early trading in Europe, US shows signs of markets recovering (SINGAPORE) Asian stock markets regained their composure yesterday after central banks around the world helped ease fears of a global credit crisis by pumping money into banking systems. Interestingly, central banks in Asia refrained from trying to boost liquidity in their own markets. They appeared […]

Leave a Comment Continue Reading →

Portfolios take a ‘sub-primal’ beating

HOW quickly investment sentiment can sour. Up till a few weeks ago, punters were still betting on penny stocks like there was no tomorrow. But the turning point came last month when a US bank, Bear Stearns, spooked the markets with news of major losses and accounting difficulties with its investments linked to risky US […]

Leave a Comment Continue Reading →

Prices slump amid US housing woes

(LONDON) Global commodity prices slumped last week as speculators rushed to bank profits amid concern that demand for oil and metals will slide should the world economy dampen due to the US housing crisis. Oil: World oil prices dived, with a barrel of Brent below US$69 for the first time since June, on concern that […]

Leave a Comment Continue Reading →

Markets fear more volatility ahead

Uncertainty as traders watch developments THE dramatic intervention by the world’s central banks helped to calm jittery bourses on Friday, but as Asian markets reopen for trading today, investors will be watching to see if the relief is only temporary. Many traders believe that any move by the more optimistic investors or ‘bulls’ to stage […]

Leave a Comment Continue Reading →

IN ASIA: Rough ride for many more weeks: Analysts

HONG KONG – IF THE past week’s roller-coaster ride in Asian stock markets is anything to go by, investors should strap in tight for another bumpy ride in the coming sessions. Ongoing jitters about a global credit squeeze and uncertainty about the fallout from the US sub-prime mortgage crisis will continue to roil markets, analysts […]

Leave a Comment Continue Reading →

Morgan Stanley adds more sub-prime loans

MORGAN Stanley’s Saxon Mortgage is expanding its presence in sub-prime mortgages, capturing borrowers turned away by skittish lenders and taking business from rivals that abandoned the struggling market. Saxon representatives on Thursday moved to assure brokers that Morgan Stanley is a strong backer and is giving business won from other lenders first priority, according to […]

Leave a Comment Continue Reading →

Sub-prime domino hits Asia again

Painful pattern takes shape as US ripples exact their toll (SINGAPORE) For the fourth time in two weeks, stock markets in Asia plunged following steep losses in the United States and Europe the previous trading day. As the fallout from rising defaults in US sub-prime mortgages continues to spread, the Straits Times Index fell 53.99 […]

Leave a Comment Continue Reading →

How a liquidity crunch affects global economies

(NEW YORK) A capital crisis that roiled Wall Street on Thursday and took nearly 400 points off the Dow Jones Industrials has the potential to impact regular people on Main Street as well. Here are some questions and answers about exactly what a ‘liquidity crisis’ is and how it impacts global economies. Q. What is […]

Leave a Comment Continue Reading →

Central banks move to ease credit crunch

Asian currencies and carry trades hurt as liquidity fears escalate (SINGAPORE) Asian central banks acted swiftly yesterday to calm renewed fears of a liquidity crunch in the financial markets, after both Asian favourites and the high-yielding currency duo Down Under came under heavy selling pressure. As the jitters escalated overnight, the Bank of Japan was […]

Leave a Comment Continue Reading →