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Tuesday, January 19, 2010


Most Asian markets fall in quiet session
Investors were awaiting earnings reports from the U.S., sending most Asian-Pacific share markets lower Tuesday. Japan's Nikkei 225 dropped 0.8%, Australia's S&P/ASX 200 gave up 1% and South Korea's Kospi Composite inched down 0.1%. Taiwan's Taiex fell 1.1%, China's Shanghai Composite rose 0.3% and Hong Kong's Hang Seng Index gained 1%. New Zealand's NZX 50 gave up 0.6%, while shares in the Philippines dropped 0.7%. In late trading, Singapore's Straits Times Index had gained 0.1% and Indonesia's JSX was up 0.7%. The Wall Street Journal (19 Jan.)

Abu Dhabi's rescue package for Dubai is less than expected
Abu Dhabi, United Arab Emirates, pledged a $10 billion rescue package for neighbor Dubai, but the fresh funding is only half of that amount because it includes $5 billion worth of loans previously granted, according to the Dubai government. The disclosure reinforces the emirate's reputation for communication issues and indicates that it has less cash to meet creditors' claims. Financial Times (tiered subscription model) (19 Jan.)

Japan Airlines files for bankruptcy but will continue flying
Japan Airlines, the biggest carrier in Asia, filed for bankruptcy in Tokyo District Court, with the government pressing for a court-supervised turnaround. Enterprise Turnaround Initiative Corporation of Japan, a government-backed fund set up to bail out companies, said it will support continued operations by Japan Airlines. Bloomberg (19 Jan.)

Citi matches estimates with Q4 loss of 33 cents per share
Citigroup Inc. had a fourth quarter loss of $7.6 billion, or 33 cents a share, up from a loss of $17.24 billion, or $3.40 a share, a year ago. Results for the three months ended Dec. 31 matched analysts' consensus estimates of a loss of 33 cents per share. Excluding items, including the repayment of Troubled Asset Relief Program money, Citi's fourth quarter loss was $1.4 billion, or 6 cents a share. MarketWatch (1/19)

Market sees diverging outlooks for Goldman Sachs, Morgan Stanley
While Morgan Stanley is poised to rebound, Goldman Sachs is expected to reach a profit plateau this year. The market has started indicating diverging outlooks for the banks' earnings growth in their stock prices. Goldman Sachs has fallen 2.2% this year, while Morgan Stanley has advanced 2.6%. "It makes sense that Morgan's rebounding; they're coming from a lower level," said Ralph Cole, a senior vice president in research at Ferguson Wellman. Bloomberg (1/18)

Weaker issuers could face problems when TALF ends
When the Federal Reserve winds down the Term Asset-Backed Securities Loan Facility in March, some types of securities backed by consumer loans will face bigger issues than others, industry participants said. Higher-quality bonds and stronger issuers will be fine, while weaker issuers and those with deals backed by underperforming consumer loans will struggle. "The impact of the end of TALF may be different for the generic on-the-run asset classes versus less-liquid, less-frequently securitized asset classes," said Michael Wade of Barclays Capital. The Wall Street Journal (1/19)

Investment banks split over Obama's bank fee
While a group representing financial services firms has hired a top lawyer to study the constitutionality of the bank fee proposed by the Obama administration, some financial institutions are urging caution as political backlash against the industry grows. Bloomberg (1/19)

Bond insurers sue banks regarding securities losses
With their portfolios still under siege, bond insurers such as Ambac Financial Services, Assured Guaranty and MBIA are suing Wall Street investment banks. The lawsuits allege that investment advisers did not create prudent securities portfolios, developed fraudulent collateralized debt obligations to offload liabilities and did not appropriately underwrite securitization pools. (1/19)

Economists try to price services provided by nature
The concept that nature provides valuable services is nothing new, but putting a monetary value on "ecosystem services" is adding a twist. Ecologists and economists are trying to put a price tag on nature because much of mankind's harm is simply a misallocation of resources, according to The Economist. GDP is an imperfect measure of progress because it does not account for nature's provisions, said Partha Dasgupta, an economist at Cambridge University. The Economist (18 Jan.)

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