Friday December 25 Housing and Economic stories

TOP STORIES:

High-Yield Fund Blocks Investor Withdrawals - (www.nytimes.com) A large mutual fund specializing in risky, high-yielding bonds has blocked investors from getting their money back, citing difficult trading conditions for its securities. The move, announced Thursday by Third Avenue Management funds, was a troubling sign of the recent deterioration in junk bonds, a category that has been hurt in particular by the debt of energy companies struggling with the slump in oil and gas prices. Energy debt accounts for roughly a sixth of the market. More important, the action by Third Avenue highlights a longstanding fear among regulators and economists that too many investors have piled into risky areas of the bond market, like leveraged loans and emerging-market debt, as well as junk bonds.

Currency Traders' Bad Year Gets Worse as Central Banks Surprise - (www.bloomberg.com) December is turning into a cruel month for traders counting on cuts in interest rates to drive down currencies. New Zealand’s dollar jumped the most since November after central bank chief Graeme Wheeler delivered the policy easing that economists had predicted without the promise of further reductions. That came less just a week after his European counterpart, Mario Draghi, sparked the euro’s biggest rally since 2009 by unveiling a smaller-than-anticipated stimulus package. The elephant in the room is the Federal Reserve. Its looming policy decision is making it trickier for speculators to predict the actions of other central banks and to work out where exchange rates are headed. As with the euro, strategists are now reassessing forecasts for the kiwi, becoming less certain how far it can extend this year’s 13 percent drop, which is already the steepest since 2008.

Fosun Built Sprawling Empire Before Guo's Reported Disappearance - (www.bloomberg.com) Fosun International Ltd. -- the firm whose billionaire chairman is reportedly missing -- has built an empire sprawling across insurance, real estate and entertainment, with another $2 billion of acquisitions announced this year and yet to be completed. Fosun is competing for Anglo-German banking group BHF Kleinwort Benson Groupand agreed to acquire Israeli insurer Phoenix Holdings Ltd. in June. Fosun is in the process of acquiring German private bank Hauck & Aufhaeuser Privatbankiers KGaA and is among investors offering to take Chinese movie studio Bona Film Group Ltd. private. Existing assets span finance -- especially insurance -- property, steel, leisure, health and natural resources such as oil and gas. Insurance businesses acquired by Fosun, such as Portugal’s Cia de Seguros Fidelidade Mundial SA and Bermuda-based Ironshore Inc., provide low-cost funding for acquisitions in other industries.

Iron Ore in Worst Run Since '08 as China's Steel Output May Drop - (www.bloomberg.com) Iron ore extended declines for a ninth week, the longest losing streak in seven years, with Chinese steel production data on Saturday expected to signal a further weakening in demand. Ore with 62 percent content delivered to Qingdao dropped 4.3 percent this week, falling to $38.30 a dry metric ton on Friday, a record low in daily prices compiled by Metal Bulletin Ltd. going back to May 2009. The commodity capped its worst stretch of decreases since October 2008 as low-cost supplies expand, according to Metal Bulletin’s weekly data. Iron ore has plunged 46 percent this year on surging output from the biggest miners including Vale SA in Brazil and BHP Billiton Ltd. and Rio Tinto Group in Australia. At the same time, China’s on track for the weakest growth since 1990 as the government steers the economy away from heavy industry, hurting demand for steel, cement and coal. Saturday’s industrial production figures will probably show further cuts in steel output, says Founder Cifco Futures Co.

Fosun looks badly exposed as boss goes AWOL - (www.reuters.com)  Fosun Group’s AWOL boss leaves the Chinese group badly exposed. On Dec. 11 China’s top private conglomerate halted trading in its various listed entities, after Caixin magazine reported Fosun could not locate Chairman Guo Guangchang. That’s worrying amid a graft crackdown. Guo’s team can keep things ticking over, but unless he re-emerges soon Fosun’s strategy and bold overseas dealmaking are both in doubt. Investors have often stuck by state-owned enterprises even as top execs have been hauled in by corruption investigators. They see SOEs as vast bureaucracies that grind onward whoever is in charge. But private sector giants like Fosun, whose Hong Kong unit Fosun International is worth nearly $15 billion, are different. They often revolve around one charismatic founder. Hence bonds in various Fosun-linked companies fell sharply on the news.

OTHER STORIES:

Asia Stocks Set for Worst Week Since September Before China Data - (www.bloomberg.com)
Yuan in Biggest Weekly Drop Since Devaluation as PBOC Eases Grip - (www.bloomberg.com)
Junk Fund’s Demise Fuels Concern Over Bond Rout - (online.wsj.com)
U.S. stock funds post $8.6 bln in withdrawals during weekly period - Lipper - (www.reuters.com)

Fosun Dollar Bonds Drop by Record After Missing Chairman Report - (www.bloomberg.com)
Junkyard Dog: How Oil-Fueled Debt Caught Up With Chesapeake - (online.wsj.com)
Hong Kong on the Brink as Developers Offer Stealth Price Cuts - (www.bloomberg.com)