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Tuesday, November 24, 2009


Asian markets drop as China warns banks about capital position
Japan's Nikkei 225, which was closed for a holiday Monday, fell 1% on Tuesday as shares of Japan Airlines slid because of investor concerns about the carrier's restructuring. Australia's S&P/ASX 200 gave up 0.7%, South Korea's Kospi Composite dropped 0.8% and China's Shanghai Composite plunged 3.5%. Hong Kong's Hang Seng Index lost 1.5%, Taiwan's Taiex added 0.4% and Singapore's Straits Times Index slipped 0.3%. The Wall Street Journal (24 Nov.)

Nearly a quarter of U.S. homeowners are "underwater"
About 23% of U.S. homes have a higher mortgage balance than the property is worth, according to First American CoreLogic. The nearly 10.7 million households with negative equity present a huge obstacle to residential-housing recovery. Homeowners with an "underwater" mortgage are more likely to allow their property to go into foreclosure. The Wall Street Journal (24 Nov.)

IMF says banks have yet to reveal full losses from crisis
At the Confederation of British Industry's conference, Dominique Strauss-Kahn, managing director of the International Monetary Fund, said financial institutions have more losses to reveal. "It is our view we are still in the situation where a lot of losses haven't been disclosed," Strauss-Kahn said. "How much is a difficult assessment, but let's say something which is close to half of it." Strauss-Kahn also discussed banks' capital requirements, regulatory proposals and exit strategies. Bloomberg (23 Nov.)

Attention turns to banks' mountain of maturing debt
Banks are starting to focus on their trillions of dollars in debt that will mature during the next couple of years. Some might be forced to refinance that debt at significantly higher borrowing costs. During the credit-market boom, banks took advantage of inexpensive borrowing costs. Then, when the financial crisis hit, government guarantees propped them up and allowed them to continue selling debt. Maturities on the new debt, however, are much shorter. The Wall Street Journal (24 Nov.)

Asset managers gear up for tougher investment climate
The Federal Reserve's loose monetary policy has made it easier for fixed-income buyers to make money during the past year. While the Fed is not expected to quickly tighten policy, asset managers are expecting the climate to become much tougher because markets may have peaked. Portfolio managers are watching the market of U.S. Treasuries as a possible trouble spot because it sets benchmark yields for borrowing. The Wall Street Journal (23 Nov.)

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