AN eleventh-hour price jump in the London housing market saved it from a year-on-year fall, according to the latest Rightmove House Price Index.
Asking prices spiked five per cent in October compared to the previous month – from £399,019 to £418,778 – as sellers aim to capitalise on the traditionally lively run-in to Christmas. This was down from a 6.5 increase last October.
The average London asking price increased by 0.6 per cent year-on-year, from £416,157.
Every borough in London saw a month-on-month jump in asking prices, buoyed by the scrapping of Home Information Packs in May.
However, the Comprehensive Spending Review to be announced on Wednesday is likely to have a negative effect on housing market sentiment.
On a nationwide basis, the average asking priced increased 3.1 per cent to £236,849.
The general market remained poor, with the number of properties per branch rising from 69 in October last year to 78 now, and mortgage availability continuing to deteriorate.
Nevertheless, 105,769 new October sellers asked a seemingly illogical £7,082 more for their homes than last month’s sellers.
Monday, October 18, 2010
Tuesday, June 22, 2010
Budget 2010: Lloyds, RBS shares rise despite new bank levy
Lloyds shares rose 4pc, while shares in RBS increased 0.7pc after the Government unveiled plans for a charge on the global balance sheets of every UK bank with assets over a certain threshold.
Analysts – who had been expecting a more punitive measure – said the new levy, which will come into force in January, was not as bad as it could have been. The levy was announced in Tuesday's Budget.
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Ben Brogan: Osborne delivered the unvarnished truth Ian Gordon, a banks analyst at BNP Paribas, in a note titled "UK Bank Levy: Bark Worse Than Its Bite?," said the impact would be less than had been expected and more widely spread.
"As things turned out, for all the pre-election vitriol aimed at the UK banking system, the impact of today's measures appears materially lighter than expected, especially with the burden being broadly spread," he argued.
In its first year the levy is forecast to bring in tax revenues of £1.15bn, based on a 0.04pc tax on the total size of each bank's assets.
The tax will increase in its second year to 0.07pc, taking revenues to £2.32bn, rising to £2.5bn the following year.
Ratings agency Fitch said the levy would have "no impact" on its ratings of any UK bank.
"The sums payable under the levy look manageable in the light of banks' pre-tax profits and should not lead to rating changes," said Matthew Taylor, a senior director in ratings agency Fitch's financial institutions team.
Announcing the levy, which has been agreed in conjunction with the French and German governments, Chancellor George Osborne said it was "fair and right that in future banks should make a more appropriate contribution which reflects the many risks that they generate".
"This was a crisis that started in the banking sector and the failures of the banks imposed a huge cost on the rest of society," said Mr Osborne.
Responding to the announcement the British Bankers' Association (BBA) released a statement saying the banking industry "fully understands the part it must play in helping the UK's economic recovery".
However, investment banking lobby group the Association for Financial Market in Europe (AFME) said the levy could hurt Britain's ranking as major financial centre.
Mark Austen, acting chief executive of the AFME, said: "A unilateral UK bank levy could adversely affect an important sector of the UK economy and threaten the UK's future as the world's leading financial centre."
"The banks are committed to working with the Government to ensure new bank levies balance tax-raising objectives with the need to keep the recovery moving, and for banks to contribute to economic growth through continued support for the wider economy by lending to businesses and individuals," said the BBA.
The main area of controversy surrounding the new levy is the issue of double taxation as last year the US announced plans for a bank levy of its own. The US tax would hit several major UK banks with large American operations, including Barclays, HSBC and RBS.
These banks potentially face the prospect of being taxed twice on the same assets, according to lawyers, who said the UK government must reach an agreement on tax relief with their US counterparts.
Tony Anderson, a banking partner at international law firm Pinsent Mason, said there were many questions surrounding reciprocal arrangements.
"The Chancellor has stated that such levies will also be introduced in France and Germany. Considering the current exposure of French and German banks to defaulting borrowers in the Eurozone, there must be concern for the impact of multiple, accumulating levies on these banks at a time when they are being encouraged to lend more to businesses," said Mr Armstron.
Analysts – who had been expecting a more punitive measure – said the new levy, which will come into force in January, was not as bad as it could have been. The levy was announced in Tuesday's Budget.
Related Articles
Budget 2010: losers
Budget 2010: winners
Budget 2010: as it happened
Budget 2010: key points
Budget 2010: VAT - all you need to know
Ben Brogan: Osborne delivered the unvarnished truth Ian Gordon, a banks analyst at BNP Paribas, in a note titled "UK Bank Levy: Bark Worse Than Its Bite?," said the impact would be less than had been expected and more widely spread.
"As things turned out, for all the pre-election vitriol aimed at the UK banking system, the impact of today's measures appears materially lighter than expected, especially with the burden being broadly spread," he argued.
In its first year the levy is forecast to bring in tax revenues of £1.15bn, based on a 0.04pc tax on the total size of each bank's assets.
The tax will increase in its second year to 0.07pc, taking revenues to £2.32bn, rising to £2.5bn the following year.
Ratings agency Fitch said the levy would have "no impact" on its ratings of any UK bank.
"The sums payable under the levy look manageable in the light of banks' pre-tax profits and should not lead to rating changes," said Matthew Taylor, a senior director in ratings agency Fitch's financial institutions team.
Announcing the levy, which has been agreed in conjunction with the French and German governments, Chancellor George Osborne said it was "fair and right that in future banks should make a more appropriate contribution which reflects the many risks that they generate".
"This was a crisis that started in the banking sector and the failures of the banks imposed a huge cost on the rest of society," said Mr Osborne.
Responding to the announcement the British Bankers' Association (BBA) released a statement saying the banking industry "fully understands the part it must play in helping the UK's economic recovery".
However, investment banking lobby group the Association for Financial Market in Europe (AFME) said the levy could hurt Britain's ranking as major financial centre.
Mark Austen, acting chief executive of the AFME, said: "A unilateral UK bank levy could adversely affect an important sector of the UK economy and threaten the UK's future as the world's leading financial centre."
"The banks are committed to working with the Government to ensure new bank levies balance tax-raising objectives with the need to keep the recovery moving, and for banks to contribute to economic growth through continued support for the wider economy by lending to businesses and individuals," said the BBA.
The main area of controversy surrounding the new levy is the issue of double taxation as last year the US announced plans for a bank levy of its own. The US tax would hit several major UK banks with large American operations, including Barclays, HSBC and RBS.
These banks potentially face the prospect of being taxed twice on the same assets, according to lawyers, who said the UK government must reach an agreement on tax relief with their US counterparts.
Tony Anderson, a banking partner at international law firm Pinsent Mason, said there were many questions surrounding reciprocal arrangements.
"The Chancellor has stated that such levies will also be introduced in France and Germany. Considering the current exposure of French and German banks to defaulting borrowers in the Eurozone, there must be concern for the impact of multiple, accumulating levies on these banks at a time when they are being encouraged to lend more to businesses," said Mr Armstron.
Monday, June 7, 2010
Watch out for this new online phishing scam which uses 'tab napping' to attack your computer - and your finances...
As internet users we’re all vulnerable to online scams. Unluckily for us, as soon as we become pretty good as spotting one type of attack, another more sophisticated version comes along in its place. In fact, technology company, Mozilla - which developed the Firefox web browser - has recently warned against a possible threat from a new scam known as ‘tap napping’ which takes phishing one step further.
What is tab napping?
Tab napping is essentially a new kind of phishing scam. Until now phishing has involved sending hoax emails in an attempt to steal your usernames, passwords and bank details. Often the sender will claim to be from your bank and will ask you to verify your bank details by clicking on a link contained in the email.
The link actually directs you to a fake website which looks just like your bank's own website. Once you have typed in your login details they can be accessed by the criminals who set the fake site up.
But we’re beginning to wise up to phishing attacks like this, and many of us know we should be very wary of clicking URLs even if they appear to be in a legitimate email.
With awareness of phishing on the up, making it more difficult for scammers to succeed, tab napping could be the scam to watch out for next.
Rachel Robson reveals five of the worst scams around...
How does tab napping work?
Tab napping is more sophisticated than the phishing scams we’ve seen so far, and it no longer relies on persuading you to click on a dodgy link. Instead it targets internet users who open lots of tabs on their browser at the same time (for example, by pressing CTRL + T).
How does it work? By replacing an inactive browser tab with a fake page set up specifically to obtain your personal data - without you even realising it has happened.
Believe it or not, fraudsters can actually detect when a tab has been left inactive for a while, and spy on your browser history to find out which websites you regularly visit, and therefore which pages to fake.
So, don't assume that after you have opened a new tab and visited a web page, that web page will stay the same even if you don’t return to it for a time while you use other windows and tabs. Malicious code can replace the web page you opened with a fake version which looks virtually identical to the legitimate page you originally visited.
How might tab napping work in practice?
Imagine you open the login page for your online bank account, but then you open a new tab to visit another website for a few minutes, leaving the first tab unattended. When you return to your bank’s site the login page looks exactly how you left it. What you haven’t realised is that a fake page has taken its place, so when you type in your username and password, you have inadvertently given the fraudster easy access to your account.
Donna Werbner gets your two pence on the scams you hate, and finds out how you can protect yourself and stop the scammers from stealing your cash.
Even if you have already logged into your bank account before opening another tab, when you return you might find you’re being asked to login again. This may not necessarily rouse any suspicion since you might simply assume your bank has logged you out because you left your account inactive for too long. You probably won’t even think twice before logging in for a second time. But this time round you have accidently inputted your security details into a fraudster’s fake page which have been sent back to their server.
Once you have done so, you can then be easily redirected to your bank’s genuine website since you never actually logged out in the first place, giving you the impression that all is well.
How can you protect yourself against tab napping?
This is pretty scary stuff but thankfully tab napping should be relatively easy to avoid. Here are five simple ways you can prevent yourself from falling victim:
Make sure you always check the URL in the browser address page is correct before you enter any login details. A fake tabbed page will have a different URL to the website you think you’re using.
Always check the URL has a secure https:// address even if you don’t have tabs open on the browser.
If the URL looks suspicious in any way, close the tab and reopen it by entering the correct URL again.
Avoid leaving tabs open which require you to type in secure login details. Don't open any tabs while doing online banking - open new windows instead (CTL + N).
Finally, take a look at Online banking: How to stay safe to find out other ways to protect yourself from online scams.
What is tab napping?
Tab napping is essentially a new kind of phishing scam. Until now phishing has involved sending hoax emails in an attempt to steal your usernames, passwords and bank details. Often the sender will claim to be from your bank and will ask you to verify your bank details by clicking on a link contained in the email.
The link actually directs you to a fake website which looks just like your bank's own website. Once you have typed in your login details they can be accessed by the criminals who set the fake site up.
But we’re beginning to wise up to phishing attacks like this, and many of us know we should be very wary of clicking URLs even if they appear to be in a legitimate email.
With awareness of phishing on the up, making it more difficult for scammers to succeed, tab napping could be the scam to watch out for next.
Rachel Robson reveals five of the worst scams around...
How does tab napping work?
Tab napping is more sophisticated than the phishing scams we’ve seen so far, and it no longer relies on persuading you to click on a dodgy link. Instead it targets internet users who open lots of tabs on their browser at the same time (for example, by pressing CTRL + T).
How does it work? By replacing an inactive browser tab with a fake page set up specifically to obtain your personal data - without you even realising it has happened.
Believe it or not, fraudsters can actually detect when a tab has been left inactive for a while, and spy on your browser history to find out which websites you regularly visit, and therefore which pages to fake.
So, don't assume that after you have opened a new tab and visited a web page, that web page will stay the same even if you don’t return to it for a time while you use other windows and tabs. Malicious code can replace the web page you opened with a fake version which looks virtually identical to the legitimate page you originally visited.
How might tab napping work in practice?
Imagine you open the login page for your online bank account, but then you open a new tab to visit another website for a few minutes, leaving the first tab unattended. When you return to your bank’s site the login page looks exactly how you left it. What you haven’t realised is that a fake page has taken its place, so when you type in your username and password, you have inadvertently given the fraudster easy access to your account.
Donna Werbner gets your two pence on the scams you hate, and finds out how you can protect yourself and stop the scammers from stealing your cash.
Even if you have already logged into your bank account before opening another tab, when you return you might find you’re being asked to login again. This may not necessarily rouse any suspicion since you might simply assume your bank has logged you out because you left your account inactive for too long. You probably won’t even think twice before logging in for a second time. But this time round you have accidently inputted your security details into a fraudster’s fake page which have been sent back to their server.
Once you have done so, you can then be easily redirected to your bank’s genuine website since you never actually logged out in the first place, giving you the impression that all is well.
How can you protect yourself against tab napping?
This is pretty scary stuff but thankfully tab napping should be relatively easy to avoid. Here are five simple ways you can prevent yourself from falling victim:
Make sure you always check the URL in the browser address page is correct before you enter any login details. A fake tabbed page will have a different URL to the website you think you’re using.
Always check the URL has a secure https:// address even if you don’t have tabs open on the browser.
If the URL looks suspicious in any way, close the tab and reopen it by entering the correct URL again.
Avoid leaving tabs open which require you to type in secure login details. Don't open any tabs while doing online banking - open new windows instead (CTL + N).
Finally, take a look at Online banking: How to stay safe to find out other ways to protect yourself from online scams.
Monday, May 24, 2010
Britain does well in house price league
Britain fared better than any other country in western Europe in the global house price league in 2009, according to a new analysis. The results suggest that the Bank of England's policy of quantitative easing was a short-term success.
However, the warning from the Global House Price Index - estate agents Knight Frank - is that there is a serious risk of Britain falling back in the world league if rate rises are imposed in 2010/11.
The Knight Frank index says that UK prices were rising by 3.4 per cent per year at the end of 2009 - against 27.6 per cent in Hong Kong, 25.1 per cent in mainland China, 21.3 per cent in Israel and 13.6 per cent in Australia.
By contrast, Ireland - which has taken more drastic measures to slash government spending in the past year - saw an 8.3 per cent slide in house prices in the second half of 2009 alone. In the year as a whole, prices slumped 18.5 per cent.
The Bank of England's decision to pump money into the economy and to slash interest rates kept repossessions in Britain down and left us looking stronger than rivals on mainland Europe.
Britain left most of western Europe behind during 2009. While Portugal showed a 0.2 per cent rise for the whole of 2009, there were falls in Germany (1.7 per cent); Greece (3.6 per cent); Italy (4.2 per cent); Spain (6.3 per cent) and France (4.4 per cent). Had the pound held firm too, Britons might have been looking to snap up bargains in European holiday destinations. But Knight Frank says the busiest market for British buyers abroad is actually about £300,000.
Liam Bailey, Knight Frank's head of residential research, said: "The recovery in global housing markets is still somewhat shaky."
The disaster areas for housing markets are in Estonia (down 40 per cent); Dubai (down 42 per cent) and Latvia (down 50 per cent).
Mr Bailey added: "The UK position has been buttressed by the stimulus packages and the low cost of finance. But nobody can guess what resilience the market will show if rates are forced upwards later this year, or perhaps in 2011. There is certainly a clear risk of the market weakening significantly."
However, the warning from the Global House Price Index - estate agents Knight Frank - is that there is a serious risk of Britain falling back in the world league if rate rises are imposed in 2010/11.
The Knight Frank index says that UK prices were rising by 3.4 per cent per year at the end of 2009 - against 27.6 per cent in Hong Kong, 25.1 per cent in mainland China, 21.3 per cent in Israel and 13.6 per cent in Australia.
By contrast, Ireland - which has taken more drastic measures to slash government spending in the past year - saw an 8.3 per cent slide in house prices in the second half of 2009 alone. In the year as a whole, prices slumped 18.5 per cent.
The Bank of England's decision to pump money into the economy and to slash interest rates kept repossessions in Britain down and left us looking stronger than rivals on mainland Europe.
Britain left most of western Europe behind during 2009. While Portugal showed a 0.2 per cent rise for the whole of 2009, there were falls in Germany (1.7 per cent); Greece (3.6 per cent); Italy (4.2 per cent); Spain (6.3 per cent) and France (4.4 per cent). Had the pound held firm too, Britons might have been looking to snap up bargains in European holiday destinations. But Knight Frank says the busiest market for British buyers abroad is actually about £300,000.
Liam Bailey, Knight Frank's head of residential research, said: "The recovery in global housing markets is still somewhat shaky."
The disaster areas for housing markets are in Estonia (down 40 per cent); Dubai (down 42 per cent) and Latvia (down 50 per cent).
Mr Bailey added: "The UK position has been buttressed by the stimulus packages and the low cost of finance. But nobody can guess what resilience the market will show if rates are forced upwards later this year, or perhaps in 2011. There is certainly a clear risk of the market weakening significantly."
Sunday, May 9, 2010
United Tech extends insurance to employees' kids
United Technologies says it will extend health care benefits to employees' unmarried dependent children up to age 26 who aren't eligible for group coverage elsewhere.
The company says the move comes four months before federal law requires it. It's offering the benefit at the same rates employees now pay for other dependent children. The federal requirement kicks in Sept. 23.
United Technologies Corp. is the parent company of jet engine manufacturer Pratt & Whitney, elevator maker Otis and other businesses. It's based in Hartford, Conn. It has a payroll of about 72,000 employees in the United States.
Connecticut Democratic Rep. Joe Courtney says the work force of United Technologies is large enough for the company to absorb the cost.
A United Technologies spokesman says the cost is unknown because the company doesn't know how many employees will sign up.
The company says the move comes four months before federal law requires it. It's offering the benefit at the same rates employees now pay for other dependent children. The federal requirement kicks in Sept. 23.
United Technologies Corp. is the parent company of jet engine manufacturer Pratt & Whitney, elevator maker Otis and other businesses. It's based in Hartford, Conn. It has a payroll of about 72,000 employees in the United States.
Connecticut Democratic Rep. Joe Courtney says the work force of United Technologies is large enough for the company to absorb the cost.
A United Technologies spokesman says the cost is unknown because the company doesn't know how many employees will sign up.
Monday, April 26, 2010
Use of discount vouchers jumps 25%
Figures from moneysupermarket.com show that the recession prompted more retailers, restaurants and service provides to offer special reductions on their prices in order to encourage customers to loosen their grip on the purse strings.
It added that despite the nascent economic recovery, shoppers are showing "no intention" of giving up their discounts.
On average, consumers search online for special deals coupons six times a week, with 20 per cent of adults admitting to becoming voucher addicts.
UK shoppers typically use at least one money off slip every three weeks, with those living in London getting discounts every fortnight.
The site said that customers are saving an average of £55 a month using vouchers and online discount codes, with one in seven reducing their spending by as much as £100.
Sian Harrison, moneysupermarket.com's voucher expert, said: "With hundreds of new offers going live every week, canny consumers are set to reap record savings."
According to research by Santander, 84 per cent of women and 77 per cent of men are looking to cut their spending as a result of the recession.
It added that despite the nascent economic recovery, shoppers are showing "no intention" of giving up their discounts.
On average, consumers search online for special deals coupons six times a week, with 20 per cent of adults admitting to becoming voucher addicts.
UK shoppers typically use at least one money off slip every three weeks, with those living in London getting discounts every fortnight.
The site said that customers are saving an average of £55 a month using vouchers and online discount codes, with one in seven reducing their spending by as much as £100.
Sian Harrison, moneysupermarket.com's voucher expert, said: "With hundreds of new offers going live every week, canny consumers are set to reap record savings."
According to research by Santander, 84 per cent of women and 77 per cent of men are looking to cut their spending as a result of the recession.
Tuesday, March 30, 2010
Friday, March 19, 2010
Foreclosures leveling off
The national foreclosure rate fell 2% in February from a month earlier, according to an industry report released Thursday, the latest sign that the pace of foreclosures is slowing.
In January, the foreclosure rate had fallen 10% from December, according to RealtyTrac. And though foreclosures were up 6% in February from a year earlier, even that marks the smallest jump since RealtyTrac began calculating year-over-year increases in January 2006.
Still, RealtyTrac CEO James Saccacio cautioned against calling an end to the foreclosure crisis, citing several factors that could be masking underlying weakness.
"This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity -- albeit at a historically high level," he said.
Lenders create the processing delays by not putting borrowers in default as soon as they fall behind on their payments. Instead, they evaluate their situations to decide whether they can benefit from the Obama administration's mortgage modification program.
That means many distressed mortgages are not counted in RealtyTrac's report; its numbers may be artificially depressed.
Also keeping a lid on foreclosures in February was foul weather, with heavy snow storms leading to court closings.
"If the county clerk's office is dark, it affects our numbers," said RealtyTrac's spokesman Rick Sharga.
It's possible that March will see a resurgence of foreclosure numbers. "We saw the same thing last January and February," said Sharga, "then, all hell broke loose in March."
Six states accounted for 60% of all foreclosure filings. California, with 68,562, led all states and had the fourth highest rate, with one of every 195 households receiving a filing.
The other top states for total filings included Florida, Michigan, Illinois, Arizona and Texas.
Nevada recorded the highest foreclosure rate of any state with one household of every 102 getting hit.
The number of homes actually taken back in bank repossessions fell to 78,683 during February, from 87,648 a month earlier.
According to Sharga, once those homes go back on the market, they're selling quickly. "In most parts of the country when a bank-owned home goes back on the market, it's getting multiple bids," he said.
In January, the foreclosure rate had fallen 10% from December, according to RealtyTrac. And though foreclosures were up 6% in February from a year earlier, even that marks the smallest jump since RealtyTrac began calculating year-over-year increases in January 2006.
Still, RealtyTrac CEO James Saccacio cautioned against calling an end to the foreclosure crisis, citing several factors that could be masking underlying weakness.
"This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity -- albeit at a historically high level," he said.
Lenders create the processing delays by not putting borrowers in default as soon as they fall behind on their payments. Instead, they evaluate their situations to decide whether they can benefit from the Obama administration's mortgage modification program.
That means many distressed mortgages are not counted in RealtyTrac's report; its numbers may be artificially depressed.
Also keeping a lid on foreclosures in February was foul weather, with heavy snow storms leading to court closings.
"If the county clerk's office is dark, it affects our numbers," said RealtyTrac's spokesman Rick Sharga.
It's possible that March will see a resurgence of foreclosure numbers. "We saw the same thing last January and February," said Sharga, "then, all hell broke loose in March."
Six states accounted for 60% of all foreclosure filings. California, with 68,562, led all states and had the fourth highest rate, with one of every 195 households receiving a filing.
The other top states for total filings included Florida, Michigan, Illinois, Arizona and Texas.
Nevada recorded the highest foreclosure rate of any state with one household of every 102 getting hit.
The number of homes actually taken back in bank repossessions fell to 78,683 during February, from 87,648 a month earlier.
According to Sharga, once those homes go back on the market, they're selling quickly. "In most parts of the country when a bank-owned home goes back on the market, it's getting multiple bids," he said.
Wednesday, March 10, 2010
Stocks post modest gains
Stocks rose Wednesday, with the Nasdaq ending at its highest level in more than 18 months, on strength in the financial services sector and an upbeat report on wholesale inventories.
The Dow Jones industrial average (INDU) rose 3 points, or less than 0.1%, at 10,567, according to early tallies. The S&P 500 index (SPX) added 5 points, or 0.5%, to 1,145.
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Apple Google or View resultsThe Nasdaq composite (COMP) rose 18 points, or 0.8%, to 2,358. The tech-heavy index closed at its highest level since August 2008. Wednesday marked the 10th anniversary of the Nasdaq's all-time closing high of 5,048.62 at the peak of the dot-com bubble.
Bank stocks advanced on upbeat analyst comments and bullish statements from some executives. Citibank (C, Fortune 500) rose 3.6% after the company priced a $2 billion offering of trust-preferred securities. Bank of America (BAC, Fortune 500) gained nearly 2%.
American International Group (AIG, Fortune 500) soared over 10% as investors cheered the insurance giant's recent asset sales. Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) also gained significant ground.
Citi, AIG, Fannie and Freddie: The Not Fab 4
Technology stocks also posted strong gains. The Sox (SOX), an index of semiconductor shares, gained about 2%.
However, traders said volumes have been declining this week as many market participants move to the sidelines amid a lack of market-moving economic reports.
"There are no buyers to get us over the next hump," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. He said the market has stalled, with the S&P 500 struggling to push past its Jan. 19 high of 1,150. "Until that happens, the market is just going to drift."
0:00 /2:35Many missed the markets big bounce
Shares of energy producers weakened as oil prices pared earlier gains. Oil briefly traded above $83 a barrel after the government reported a smaller-than-expected increase in oil supplies and a dip in gasoline inventory but ended 60 cents higher to settle at $82.09 a barrel. Gold prices fell.
Stocks managed slight gains Tuesday, which was the one-year anniversary of what many consider to be the bottom of the bear market.
Looking ahead, investors will turn Thursday to the government's weekly report on initial claims for unemployment benefits. Economists surveyed by Briefing.com expect claims to have risen last week by 9,000 to 460,000.
The Census Bureau's report on the January trade gap is also due out Thursday.
Economy: The U.S. Commerce Department said wholesale inventories fell 0.2% in January, after a 1% drop the month before, raising expectations that consumer demand is strengthening.
"It's not that inventories are rebuilding, but the declines are waning," said Bruce McCain, chief investment strategist at Key Private Bank. "Sooner or later, businesses will have to begin producing more."
Separately, the Labor Department said fewer states reported increases in unemployment in January.
The Treasury Department said the government suffered a record $220.9 billion budget deficit in February, after a shortfall of $42.6 billion in January. It was the 17th consecutive monthly deficit and was slightly smaller than the $221 billion shortfall economists had forecast.
Company news: Shares of Facet Biotech (FACT) surged 66% after Abbott Labs (ABT, Fortune 500) announced plans to acquire the company for $27 a share. Abbott gained about 0.7%.
Airline stocks rallied on growing expectations that 2010 is shaping into a profitable year for the industry. Shares of UAL (UAUA, Fortune 500), holding company for United Airlines, and Continental Airlines (CAL, Fortune 500) surged about 5%.
World markets: European markets posted solid gains, while Asian shares ended the session flat.
China reported a 46% increase in exports during February. The rise was due in part to stronger demand from consumers in the United States and Europe, analysts said.
The dollar and commodities: The dollar slipped versus the euro but rose against the yen and the pound.
The price of oil rose 60 cents to settle at $82.09 after hitting a high of $83.03 earlier in the session.
Meanwhile, the price of gold fell $14.20 to close at $1,108.10 an ounce.
Bonds: The price of the 10-year note fell, pushing up the yield to 3.71%. The government sold $21 billion worth of reopened 10-year notes Wednesday as part of a $74 billion offering of U.S. debt this week.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by two to one on volume of 961 million shares. On the Nasdaq, advancers topped decliners by just under two to one on volume of 2.2 billion shares.
The Dow Jones industrial average (INDU) rose 3 points, or less than 0.1%, at 10,567, according to early tallies. The S&P 500 index (SPX) added 5 points, or 0.5%, to 1,145.
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Quick Vote
Which company do you most admire?
Apple Google or View resultsThe Nasdaq composite (COMP) rose 18 points, or 0.8%, to 2,358. The tech-heavy index closed at its highest level since August 2008. Wednesday marked the 10th anniversary of the Nasdaq's all-time closing high of 5,048.62 at the peak of the dot-com bubble.
Bank stocks advanced on upbeat analyst comments and bullish statements from some executives. Citibank (C, Fortune 500) rose 3.6% after the company priced a $2 billion offering of trust-preferred securities. Bank of America (BAC, Fortune 500) gained nearly 2%.
American International Group (AIG, Fortune 500) soared over 10% as investors cheered the insurance giant's recent asset sales. Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) also gained significant ground.
Citi, AIG, Fannie and Freddie: The Not Fab 4
Technology stocks also posted strong gains. The Sox (SOX), an index of semiconductor shares, gained about 2%.
However, traders said volumes have been declining this week as many market participants move to the sidelines amid a lack of market-moving economic reports.
"There are no buyers to get us over the next hump," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. He said the market has stalled, with the S&P 500 struggling to push past its Jan. 19 high of 1,150. "Until that happens, the market is just going to drift."
0:00 /2:35Many missed the markets big bounce
Shares of energy producers weakened as oil prices pared earlier gains. Oil briefly traded above $83 a barrel after the government reported a smaller-than-expected increase in oil supplies and a dip in gasoline inventory but ended 60 cents higher to settle at $82.09 a barrel. Gold prices fell.
Stocks managed slight gains Tuesday, which was the one-year anniversary of what many consider to be the bottom of the bear market.
Looking ahead, investors will turn Thursday to the government's weekly report on initial claims for unemployment benefits. Economists surveyed by Briefing.com expect claims to have risen last week by 9,000 to 460,000.
The Census Bureau's report on the January trade gap is also due out Thursday.
Economy: The U.S. Commerce Department said wholesale inventories fell 0.2% in January, after a 1% drop the month before, raising expectations that consumer demand is strengthening.
"It's not that inventories are rebuilding, but the declines are waning," said Bruce McCain, chief investment strategist at Key Private Bank. "Sooner or later, businesses will have to begin producing more."
Separately, the Labor Department said fewer states reported increases in unemployment in January.
The Treasury Department said the government suffered a record $220.9 billion budget deficit in February, after a shortfall of $42.6 billion in January. It was the 17th consecutive monthly deficit and was slightly smaller than the $221 billion shortfall economists had forecast.
Company news: Shares of Facet Biotech (FACT) surged 66% after Abbott Labs (ABT, Fortune 500) announced plans to acquire the company for $27 a share. Abbott gained about 0.7%.
Airline stocks rallied on growing expectations that 2010 is shaping into a profitable year for the industry. Shares of UAL (UAUA, Fortune 500), holding company for United Airlines, and Continental Airlines (CAL, Fortune 500) surged about 5%.
World markets: European markets posted solid gains, while Asian shares ended the session flat.
China reported a 46% increase in exports during February. The rise was due in part to stronger demand from consumers in the United States and Europe, analysts said.
The dollar and commodities: The dollar slipped versus the euro but rose against the yen and the pound.
The price of oil rose 60 cents to settle at $82.09 after hitting a high of $83.03 earlier in the session.
Meanwhile, the price of gold fell $14.20 to close at $1,108.10 an ounce.
Bonds: The price of the 10-year note fell, pushing up the yield to 3.71%. The government sold $21 billion worth of reopened 10-year notes Wednesday as part of a $74 billion offering of U.S. debt this week.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by two to one on volume of 961 million shares. On the Nasdaq, advancers topped decliners by just under two to one on volume of 2.2 billion shares.
Wednesday, January 13, 2010
Living on Chinese stocks
NEW YORK (Fortune) -- Third Ave. Value Fund: (TAVFX)
Manager: Marty Whitman
Return since 12/01/08: 56%
While some investors fear a stock bubble in China, Marty Whitman, manager of the Third Avenue Value fund, still sees value in Hong Kong-based shares. "When I say we're buying equities there at 30 to 50% discounts, I'm not stretching," he says.
Whitman has put his money where his mouth is: Hong Kong-based real estate and private equity companies compose a whopping 40% of Third Avenue Value's portfolio. He says that's why the fund, which has $5.4 billion in assets, is up 39% so far this year, 21 points better than the S&P 500.
Emerging markets took a plunge last year, which is part of the reason why Third Avenue Value, which had about 30% of its holdings in Hong Kong at the time, dropped 46% in 2008.
While Whitman's long-term record is still impressive -- he has beaten the MSCI World Index by 5.3% annually since the fund's 1990 inceptions -- shareholders left the fund in droves, forcing him to sell many of his stocks.
Despite the wave of redemptions, Whitman continued to scan the market for deep values. He told Fortune in December: "I've never seen pricing like this in high-quality, creditworthy companies."
When Whitman goes bargain hunting, he follows a set of long-held investing tenets, looking for companies that are well financed, trade at discounts to "readily ascertainable NAV" of at least 25%, and have long-term growth prospects of at least 10% over the next five to seven years.
After last year's meltdown, he added a new rule: Don't invest in common stocks of companies that need to regularly refinance. "The short sellers, i.e., bear raiders, have become too powerful," he wrote in July.
Those guidelines, says Whitman, are what led him to Hong Kong. "The companies are magnificently financed, they have income producing real estate, and they have huge presences in mainland China," he says.
His top holding is Henderson Land Development, a Hong Kong real estate business (which doesn't trade in U.S. markets). When Whitman increased his stake in Henderson last fall, he told shareholders that he liked its low net debt-to-shareholders equity ratio, as well as its ability to increase ownership of local subsidiaries.
"Over the next five years, growth prospects in East Asia are much better than they are in North America," says Whitman. Analysts expect the average stock in his fund to boost earnings by 15.2% annually over the next 5-7 years, compared with the fund category average of 13.8%.
Because he owns so many Hong Kong real estate stocks right now, Whitman admits he's unlikely to add more to his portfolio. Instead, he's looking for opportunities in U.S. based distressed companies.
"There's an awful lot of them out there," he says.
Last quarter, the fund added 2.4 million shares of Forest City Enterprises (FCY), a real estate company that needed a capital infusion (It's more than doubled in value since Whitman bought it). Third Avenue Value has also participated in 363 sales, which are auctions of assets by bankrupt companies. Recently the fund placed a winning bid on the housing assets of FleetWood Enterprises (FLTWQ), a bankrupt maker of manufactured housing and RVs.
Another area that Whitman likes is energy. "The long-term outlook is still good," he says. "I'm one of those peak oil people -- I believe the world is running out of fossil fuels."
Whitman prefers natural gas stocks, especially Nabors Industries (NBR), where he's on the board. "They're the leading driller, and they have the technology to drill through shale," he says. "If we get back to $13 gas, it would be a bonanza for them."
--Over the course of this week, we're checking in on five funds we recommended last December: Osterweis, Fairholme, Vanguard Primecap Core, Longleaf Partners and Third Avenue Value. All five are beating the market by big margins.
Manager: Marty Whitman
Return since 12/01/08: 56%
While some investors fear a stock bubble in China, Marty Whitman, manager of the Third Avenue Value fund, still sees value in Hong Kong-based shares. "When I say we're buying equities there at 30 to 50% discounts, I'm not stretching," he says.
Whitman has put his money where his mouth is: Hong Kong-based real estate and private equity companies compose a whopping 40% of Third Avenue Value's portfolio. He says that's why the fund, which has $5.4 billion in assets, is up 39% so far this year, 21 points better than the S&P 500.
Emerging markets took a plunge last year, which is part of the reason why Third Avenue Value, which had about 30% of its holdings in Hong Kong at the time, dropped 46% in 2008.
While Whitman's long-term record is still impressive -- he has beaten the MSCI World Index by 5.3% annually since the fund's 1990 inceptions -- shareholders left the fund in droves, forcing him to sell many of his stocks.
Despite the wave of redemptions, Whitman continued to scan the market for deep values. He told Fortune in December: "I've never seen pricing like this in high-quality, creditworthy companies."
When Whitman goes bargain hunting, he follows a set of long-held investing tenets, looking for companies that are well financed, trade at discounts to "readily ascertainable NAV" of at least 25%, and have long-term growth prospects of at least 10% over the next five to seven years.
After last year's meltdown, he added a new rule: Don't invest in common stocks of companies that need to regularly refinance. "The short sellers, i.e., bear raiders, have become too powerful," he wrote in July.
Those guidelines, says Whitman, are what led him to Hong Kong. "The companies are magnificently financed, they have income producing real estate, and they have huge presences in mainland China," he says.
His top holding is Henderson Land Development, a Hong Kong real estate business (which doesn't trade in U.S. markets). When Whitman increased his stake in Henderson last fall, he told shareholders that he liked its low net debt-to-shareholders equity ratio, as well as its ability to increase ownership of local subsidiaries.
"Over the next five years, growth prospects in East Asia are much better than they are in North America," says Whitman. Analysts expect the average stock in his fund to boost earnings by 15.2% annually over the next 5-7 years, compared with the fund category average of 13.8%.
Because he owns so many Hong Kong real estate stocks right now, Whitman admits he's unlikely to add more to his portfolio. Instead, he's looking for opportunities in U.S. based distressed companies.
"There's an awful lot of them out there," he says.
Last quarter, the fund added 2.4 million shares of Forest City Enterprises (FCY), a real estate company that needed a capital infusion (It's more than doubled in value since Whitman bought it). Third Avenue Value has also participated in 363 sales, which are auctions of assets by bankrupt companies. Recently the fund placed a winning bid on the housing assets of FleetWood Enterprises (FLTWQ), a bankrupt maker of manufactured housing and RVs.
Another area that Whitman likes is energy. "The long-term outlook is still good," he says. "I'm one of those peak oil people -- I believe the world is running out of fossil fuels."
Whitman prefers natural gas stocks, especially Nabors Industries (NBR), where he's on the board. "They're the leading driller, and they have the technology to drill through shale," he says. "If we get back to $13 gas, it would be a bonanza for them."
--Over the course of this week, we're checking in on five funds we recommended last December: Osterweis, Fairholme, Vanguard Primecap Core, Longleaf Partners and Third Avenue Value. All five are beating the market by big margins.
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