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Japan Economy Chief Warns Against Panic Over Stock Sell-Off
- (www.bloomberg.com) Japan’s
economy minister said there’s no reason to be perturbed by today’s sell-off in
the nation’s stocks, as the recent surge in equities was faster than expected
and the economy is steadily recovering. “There’s no need to be perturbed as the
Japanese economy is recovering soundly,” Akira Amari told reporters in Tokyo
today. “We will closely watch market movements.” Amari spoke after Japan’s Topix Index (TPX) of equities tumbled
6.9 percent, the most since the aftermath of the earthquake and tsunami in
March 2011. Volatility also hit the bond
market today, with a surge in 10-year government-debt yields to
the highest level in more than a year prompting the central bank to inject
liquidity. Bonds later rose, sending yields down, as stocks plunged, while the
yen strengthened. “Stock prices and the exchange
rate are correlated, so it’s natural that such a big fall in
stocks brings about a swing to a stronger yen,” Amari said. “We will continue
to calmly proceed with pragmatic policies.”
China
Development Bank Calls Meeting as Bundled SME Bond Sours - (www.bloomberg.com) China Development Bank Corp. will call
a meeting of investors in a bundled bond that the bank underwrote to arrange
for payment of interest and principal after one of the borrowers became
insolvent. Harbin Huijiabei Foods Co. was one of four companies that issued the
170 million-yuan ($27.7 million) three-year bond in 2010, the bank said in a statement today on the website of the National
Association of Financial Market Institutional Investors. The maker of baby
formula has stopped operations, its owner can’t be contacted and it’s no longer
able to repay principal or interest, according to the statement. China introduced
bundled bonds in 2009 to help smaller companies raise funds by combining the
debt of several enterprises into one security. The
Shenzhen Small & Medium Enterprises Credit Financing Guarantee Group Co.,
the guarantor of the bundled bond, will make payments if Huijiabei can’t,
according to the statement. The investor meeting, scheduled for May 24 in the
city of Harbin, comes as slowing economic growth spurs concerns that more
companies may be unable to repay borrowing. Bad loans at Chinese banks
increased for a sixth straight quarter in the first three months of this year,
wheneconomic growth slowed to 7.7 percent
from 7.9 percent in the fourth quarter of last year.
Millions falling into poverty in recession-racked Italy: report
- (www.reuters.com) Millions of Italians cannot
afford to heat their homes properly or eat meat as their country is racked by
recession and soaring unemployment, said a report which found the number of
people considered seriously deprived had doubled in the past two years. The
findings from national statistics institute ISTAT underline the scale of the
challenge faced by the new coalition government of Enrico Letta, which has
vowed to stimulate growth and tackle a youth jobless rate of almost 40 percent.
A recession that has lasted almost two years has taken a heavy toll on ordinary
Italians who are increasingly digging into their savings, ISTAT said in its
annual report.
Loanowners
are in no hurry to list and sell their houses - (www.ochousingnews.com) I recently had an extended
conversation with a loanowner who doesn’t make enough money to afford the house
he currently owns. We talked about his situation and options, and here is what
he told me. First, like most loanowners, he and his family are emotionally
attached to their property. They want to stay because it’s a nice home they’ve
decorated and customized to their tastes. They don’t want to move, and if given
the chance, they will stay in their family home. One of the reasons many loanowners
don’t want to sell is because they will endure the unceremonious fall from entitlement. People who can’t
afford their homes are living beyond their means. If they sell and find a
rental, they will be forced to live within their means in a property they can
afford. For most loanowners, that means taking a step down the property ladder,
and nobody wants to do that. So unless they are forced to, people won’t
voluntarily sell a nice house to move into one they consider substandard. When
combined with the emotional attachments of home ownership, most people will
chose to struggle and fight rather than capitulate and sell.
Appraisers
now complicit in efforts to reflate the housing bubble - (www.ochousingnews.com) Appraisers are supposed to be impartial
third-party arbiters of value. If appraisers do their job right, prices can’t
get out of control and rise too rapidly. For quite a while, this system worked.
However, probably on instruction from lenders, appraisers are now “hitting the
number” and ceasing to be a brake on home price appreciation. Lenders want
prices to go up. Appraisers are ostensibly there to protect lenders and buyers
by ensuring loans and prices are in line with prevailing values. However, since
lenders do want prices to go up, they aren’t coming down on appraisers when the
appraised value has little or no bearing on reality. At this point, as long as
prices are moving higher, banks don’t feel the need for protection, so appraisers
are giving them what they want — appraisals that allow prices to move up
rapidly.
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