Thursday April 7 2016 Housing and Economic stories

TOP STORIES:

Subprime-Housing Risks Raise Red Flags in China - (online.wsj.com) Government efforts to tackle a glut of vacant housing in China by spurring home lending have triggered a bigger problem: a surge in risky subprime-style loans that is generating alarm. Home buyers in China normally put down a third of the cost of a new property upfront. But a rapid rise in buyers borrowing for their down payments—an echo of the easy credit that cratered the U.S. housing market and sparked the financial crisis—has led authorities to clamp down. Peer-to-peer lenders, who raise money from investors and then lend it out at higher interest rates, made 924 million yuan ($143 million) in down-payment loans in January, more than three times the amount made in July, according to Shanghai-based consultancy Yingcan.

Puerto Rico Senate Approves Debt Moratorium Amid Crisis – (abcnews.go.com)  Puerto Rico's Senate approved a measure on Tuesday that would allow the governor to declare a fiscal emergency and place a moratorium on debt payments amid a worsening economic crisis. Senators said the measure would ensure the continuation of essential government services as the U.S. territory runs out of money. It also would create a path to place the troubled Government Development Bank into receivership if needed. "Puerto Rico is in need of immediate relief," the measure states. It "needs tools to exercise its police powers in order to protect the health, safety and welfare of the people of Puerto Rico." If approved, the bill would allow the governor to impose a moratorium until January 2017. It also calls for the creation of a financial advisory authority that would oversee fiscal issues.

Wrong-footed US mutuals run into trouble – (www.ft.com) US mutual funds have underperformed the equity market by the greatest margin in nearly two decades as a turbulent first quarter wrong-footed many traditional asset managers in another blow to their dominance of the investment industry. Investors have already been shifting sharply towards cheaper, passive investment strategies that merely replicate the market’s return. The deteriorating ability of highly paid professional asset managers to navigate the stock market is expected to accelerate the seismic shift in investment management towards low-fee alternatives like exchange traded funds and index-tracking mutual funds. “Investors are voting with their feet,” said Jeffrey Ptak, the head of fund manager research at Morningstar, the data provider. “The flows into passive strategies have been torrential, and have mostly been funded by redemptions from active funds.”

Russia blames "Putinophobia" for massive offshore data leak - (www.cbsnews.com)  The release of a vast trove of documents and data -- the so-called "Panama Papers" -- on offshore financial dealings of wealthy, famous and powerful people around the world is raising questions over the widespread use of such tactics to avoid taxes and skirt financial oversight. Reports by an international coalition of media outlets on an investigation with the Washington-based International Consortium of Investigative Journalists brought to light details of offshore assets and services of politicians, businesses and celebrities, based on a cache of 11.5 million records. Among the countries with past or present political figures named in the reports are Iceland, Ukraine, Pakistan, Saudi Arabia, Russia and Argentina.

A third of Indian firms' borrowing is currently stressed, India Ratings says - (www.cnbc.com)  India has a big debt problem. A third of the country's 500 largest listed non-financial companies failed to earn enough to make interest payments in the financial year that ended March 2015, according to a new report from local ratings agency India Ratings and Research. The report, published last week, said in fiscal 2015, 178 out of the largest listed 500 corporate borrowers had an interest coverage ratio below 1. India calculates its fiscal year from April to March; fiscal 2015 ended Mar. 31, 2015, while FY17 began Apr. 1, 2016. Interest coverage measures a firm's ability to make interest payment on its debt through earnings - the lower the ratio, the less likely the firm is able to make interest payment. India Ratings considers a company stressed if it has an interest coverage ratio below 1. 

OTHER STORIES:

U.S. Stocks Struggle to Advance After Reaching Highs for Year - (www.bloomberg.com)
Stocks Fluctuate With Dollar as Crude Slips, Natural Gas Rises - (www.bloomberg.com)
Asian shares firm after solid U.S. jobs data, dollar soft - (www.reuters.com)
Greek Bonds Drop as IMF Says Deal on Additional Loans Is Far Off - (www.bloomberg.com)

Factory data signals further slowdown in GDP growth - (www.reuters.com)
World figures deny wrongdoing as 'Panama Papers' turn spotlight on tax evasion - (www.reuters.com)
Iceland opposition calls for snap election over PM offshore scandal - (www.reuters.com)
World Leaders Hid Wealth Via Shell Companies, Report Alleges - (www.bloomberg.com)