February, 2009
Lunch Wrap
On FT Alphaville Tuesday morning,
- Legal & General’s £1.3bn hit.
- CEE under heavy fire.
- Chinese liquidity and stocks go boom.
- It’s off to the deleveraging races…
- Fun and games in the people’s republic of Oz.
CDS report: Emerging exposures hurt banks
Concerns over exposure to eastern Europe and other developing markets weighed on banks in both the credit and stock markets on Tuesday after a report from Moody’s, the rating agency, which added to the growing consensus that such countries would suffer more in the global economic downturn.
Chinese liquidity -and stocks- go BOOM
This is an arresting chart.
From Standard Chartered, it shows loan growth in China — nominal and real. The country’s central bank said last week that Chinese banks extended a record 1.62 trillion yuan ($237bn) worth of loans in January.
Who controls the stock market, or, physicists do it differently
Imagine a group of physicists looked into the global financial industry. What remarkable things could they find?
Covariance strategies? New risk management models? The origin and prevention of asset price bubbles?
Or,
Markets live transcript 17 Feb 2009
Markets live chat transcript for the chat ending at 12:15 on 17 Feb 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH)
PM:
Okay
PM:
It’s 11.03
Fun and games in the ‘People’s Republic of Oz’
Despite Australia’s recent gloom over its slumping economy, flailing international commodities markets and worries about collapsing demand from China, there are undertones of heady old gold rush days Down Under,
Super-losers amongst Russia’s super-rich
You think Wall Street is having some hard times? Look at Russia’s impoverished oligarchs.
RealClearMarkets has taken a look at the annual Russian “rich list” produced by Finans, the Russian business magazine.Oleg Deripaska,
CEE under heavy fire
The troubles facing central and eastern Europe intensify on Tuesday with news of further downgrades to western banks by Moody’s due to losses in the region. As Bloomberg reports (our emphasis):
Feb.
Legal & General’s £1.3bn hit
The market has reacted positively to Legal & General’s statement earlier this morning. Shares in the insurer are currently trading up 10 per cent – having taken a bashing on Monday and last week on persistent rumours of capital trouble.
Off to the deleveraging races
Rolfe Winkler at Option ARMageddon provides us with an update on US bank leverage.
The latest table is at the top, the older one at the bottom. (Go here and here for details of the calculations).
In the banking deleveraging races then,
Being Japanese means always having to say you’re sorry
Shoichi never had any intention of quitting his job. He liked being finance minister. And actually, he really was very good at it – at least on the days he could remember. He was definitely one of the more intelligent members of the Cabinet,
Further reading
Elsewhere on Tuesday,
- Don’t read this unless you’re really, really interested in banks and their crisis.
- Is cash king again?
- Russia’s super-rich, super-losers.
- Brother, can you spare a stock?
- Anti-bonus fever – where it’s leading.
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Comment: Green growth is essential to stimulus
Former US vice-president, Al Gore, and UN secretary general, Ban-ki-moon, write: Economic stimulus is the order of the day.
Snap news
The latest on Tuesday,
- Legal & General says capital surplus at the end of 2008 is £1.6bn, after more than doubling credit default reserves — statement.
- Corporate: United Drug “working to achieve a profit”
Lloyds loses top credit rating
Lloyds Banking Group suffered another blow Monday when Moody’s removed its long-held Aaa credit rating amid continued worries about accelerating losses from HBOS. In cutting Lloyd’s long-term rating,
BHP eyes Rio’s Chinalco deal
BHP Billiton advisers have surveyed investors in Rio Tinto about their support for “an alternative” to the debt-laden mining group’s proposed $19.5bn cash injection from Chinalco. Citigroup and Merrill
Santander seeks to halt payouts
Santander has sought regulatory permission to freeze payouts from its main real-estate fund after investors sought to withdraw 80% of the vehicle’s capital at once, reports the FT. The Spanish bank said in a filing Monday that the Santander Banif Inmobiliario FII fund,
Japan’s finance minister to quit
Japanese finance minister Shoichi Nakagawa said he would resign after the opposition party claimed he appeared drunk at a G7 press conference in Rome, reports Bloomberg. Nakagawa publicly apologised on Tuesday for his behaviour and said a medical examination had diagnosed he was exhausted,
GM to receive $4bn extra aid
The US government will release $4bn in additional aid to General Motors on Tuesday as planned, a White House aide said Monday, ahead of the deadline for the automaker to submit its revised survival plan,
BG raises bid for Pure Energy
BG Group has raised its bid for Pure Energy Resources, the Australian gas company, by 25%, in the latest sign of the UK oil and gas company’s determination to build its position in Australia’s emergent coal bed methane industry.
Capital fears hit L&G shares
Shares in Legal & General fell 11% Monday to a low of 44.3p on continuing concerns that it could be forced to cut its dividend or raise capital. The FT on Saturday revealed that L&G was in talks with the FSA watchdog on the amount of money it should set aside for potential defaults in its £22.5bn corporate bond portfolio.
Trump unit eyes bankruptcy
Trump Entertainment Resorts, Donald Trump’s casino group, is expected to file Tuesday for bankruptcy, reports the WSJ. The company’s board authorised the filing late Monday night after deciding that the company would otherwise be forced into bankruptcy involuntarily by creditors.
Korea’s Woori Bank taps state aid
Woori Bank, South Korea’s second largest lender, on Monday said it would draw more than Won2,000bn ($1.4bn) from a state recapitalisation fund to boost its capital base amid a rise in bad loans. Woori is the first Korean lender to announce plans to tap the government’s new Won20,000bn bank rescue fund.
Groups exit Gatwick bid
Two of the five consortia considering bids for Gatwick airport have abandoned the process six weeks before final binding offers are due to be submitted, posing a problem for majority owner Ferrovial of Spain.
Malone comes to aid of Sirius
John Malone’s Liberty Media is expected to offer about $250m in a senior secured loan on Tuesday as the first step in a “multi-stage” deal to rescue Sirius XM ahead of an imminent debt deadline. The deal offered by Liberty would involve a debt for equity swap and leave Malone’s group,
S&P warns on CLO defaults
S&P has flagged another systemic risk that could yet emerge from the structured credit markets, warning in a report that investors in about €80bn ($102bn) of debt issued by complex structured loan funds could be at greater risk of losses than they realise if only a few companies default on their debt.
Stanford depositors seek redemptions
Depositors from as far away as Colombia have begun arriving in the island nation of Antigua, seeking to withdraw their money from an offshore bank under investigation by US state and federal authorities,
Overnight markets: Quiet
Asian stocks mostly declined on Tuesday, led by finance and commodity companies, amid concern insurers may have to boost capital reserves and as metals prices and shipping rates declined. Futures on the US S&P500 Index fell 1.1%;