KeNo's Housing and Economic Portal: Monday December 28 Housing and Economic stories

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Unicorns suddenly looking a lot less enchanting - (www.cnbc.com) The unicorn club is filling up, and it's causing unease among investors. The number of privately held tech start-ups valued at $1 billion or more now tops 140. But there's a widespread concern on Wall Street that because this new breed of start-ups isn't profitable and can't live up to the super-high valuations, companies are staying private a lot longer. This year has seen the lowest number of tech companies come public since 2009. According to Renaissance Capital, there have been just 22 tech IPOs in 2015 thus far, compared to 55 in 2014. When Fidelity and BlackRock marked down their investments in companies like Dropbox and Snapchat in November, alarm bells were rung. Has the bubble burst? According to PrivCo, a company that provides financial data on major privately held companies, these tech names are reluctant to go public because of the shaky IPO market. The companies that have gone public end up facing little flourish, and have found their worth on Wall Street is often lower than in the private market.

Junk-Bond Fund’s Demise Highlights SEC Mutual-Fund Worries - (online.wsj.com) The demise of a Third Avenue Management LLC junk-bond fund last week underscores financial regulators’ concerns about risks in mutual funds and highlights Washington’s urgency in trying to address those worries. Recently proposed rules are aimed at addressing the problems for investors exposed by the high-risk mutual fund’s struggles, but those regulations are unlikely to take effect until 2017 at the earliest. The Securities and Exchange Commission earlier this fall proposed new rules aimed at preventing the very types of problems that caused Third Avenue’s fund to essentially declare bankruptcy and bar investor withdrawals while liquidating the high-yield Focused Credit Fund. Those problems boiled down to the junk fund’s inability to raise sufficient cash to meet a sudden flood of investor redemptions without resorting to fire sales of its assets. The concern from regulators is that mutual funds and other asset managers fail to adequately foresee economic shocks, such as rising interest rates, which cause a fund to drop in value and prompt investors to bolt for the door. Widespread redemptions, in theory, could strain a fund’s ability to convert quickly assets into cash for redeeming shareholders, particularly during a crisis.

Dubai stocks dragged down with Brent oil at lowest since 2004 – (www.thenational.ae) Regional markets faced further downward pressure as falling oil prices dragged Dubai, Saudi Arabia and Qatar to multiyear lows on Sunday. Brent crude futures on Friday fell to levels last prevailing in 2004, closing down 4.5 per cent to $37.93 per barrel, after the International Energy Agency warned that oversupply of crude oil may worsen next year, putting further pressure on prices. The US crude benchmark West Texas Intermediate also declined, ending down 3.1 per cent at $35.62 a barrel, with domestic demand hit by forecasts of warmer temperatures in the United States. The drop in prices prompted a sell-off of equities worldwide, with the S&P 500 and London’s FTSE 100 falling 1.9 per cent and 2.2 per cent, respectively, despite better-than-forecast economic data from China. The Qatar Exchange in Doha was the worst-affected market in the region, closing down 3.7 per cent at 9,643.65, its lowest closing level since October 2013. Shares in Saudi Arabia, the world’s largest exporter of oil, followed close behind, closing down 2.6 per cent at 6,764.60, its lowest close for more than three years.

Hong Kong on the Brink as Developers Offer Stealth Price Cuts - (www.bloomberg.com) Kowloon Development Co.’s Upper East project in Hong Kong’s Hung Hom area is offering a raft of rebates and hidden discounts that can reduce the cost to a buyer as much as 14 percent, and it will throw in a second mortgage too. The enticements are paying off. Since its Sept. 5 launch, the company has sold 940 out of 1,008 units. One buyer even snapped up two apartments on the sixth and eighth floors, according to transaction data published on the company’s website. Kowloon Development is not alone. Cheung Kong Property Holdings Ltd. and Henderson Land Development Co. are among Hong Kong developers offering inducements including stamp-tax rebates, first and second mortgages to keep buyers coming. That’s allowed them to avoid the outright price cuts they fear could spur a sharp reversal of gains that made the city the world’s least affordable major housing market.

Junk Bonds Stagger as Funds Flee - (online.wsj.com) Traders and regulators have fretted for more than a year that mayhem might ensue if U.S. mutual funds sought to sell rarely traded bond investments. After junk-bond prices posted their largest drop since 2011 on Friday, investors say they are bracing for another difficult week, likely featuring hectic trading and large splits between buy and sell orders. Gaps as wide as 10% between the price bondholders are willing to accept and buyers are willing to pay are likely to be commonplace until at least the conclusion of the Federal Reserve’s two-day meeting Wednesday, hedge-fund and mutual-fund managers said. The worst selling lately has hit bonds of especially risky, or distressed, companies, reflecting the turmoil at the Third Avenue Focused Credit Fund, the junk-bond fund that shook markets when it halted investors’ withdrawals last week, they said. But some traders were focusing on large price declines in the securities of firms that are rated well above distressed levels, which they took as an unwelcome sign that some investors were selling stronger securities to raise cash.

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