Financing capital goods: Keeping the grease

THE headlines focused on the fact that GE, a big industrial conglomerate, is beginning to sell off its $500 billion finance arm in small chunks. This week it put a $40 billion portfolio of corporate loans up for sale. But not all of GE Capital will end up on the block: GE is keeping the $90 billion division that finances purchases of medical equipment, power-generation gear and aeroplanes, or leases them to users. In part, that is because those fields are critical to GE: it makes all or part of the products being financed or leased. But it is also because the financing of old-fashioned capital goods is a booming business.

 
 

The gear GE sells is expensive; would-be buyers often lack the capital to buy it outright. For GE, therefore, the financial engineering that underpins the use of its wares is as important as the mechanical engineering that created them. Many hospitals, for instance, do not buy expensive scanners from GE, but lease them instead. When it develops improved versions, it helps the hospitals swap the new generation for the old, by passing the outmoded gear to another, thriftier institution, and so on down a long chain. By the same token, the sale of a plane that appears to be from Boeing to an airline may in fact be a sale to GE and a lease to the airline. In 85% of these cases, the plane will have engines made by GE or a joint venture.

Manufacturers have financed purchases of their own products for a long time, with mixed results. General Motors started its own finance operation, General Motors Acceptance Corporation (GMAC), in 1919, which helped it to expand its customer base and thus boosted its profits for decades. Eventually, and disastrously, GMAC expanded into mortgages. Just before the crisis, GM sold half of GMAC to raise money. Its subsequent collapse and nationalisation contributed to GM’s own bankruptcy in 2009.

Yet in 2010, shortly after GM had emerged from bankruptcy and while it was still under government control, it spent $3.5 billion in cash—a vast amount given its straitened circumstances—to purchase AmeriCredit, a Texan subprime auto lender. The company has since been renamed GM Financial. Its assets have grown from $11 billion to $49 billion in five years, an astonishing rate for a financial institution in recent years. China, where car-buyers are beginning to rely more on credit instead of buying with cash, is one area where it is growing fast.

Toyota continues to own a bank in America to help customers finance car purchases. BMW does as well. Car loans, after all, proved much more resilient during the crash than other forms of credit. For companies that do not have such financing arms, often because they use all the capital they can raise cheaply in their core business, a relationship with a finance firm is vital. This is all the more true, says Vincent Caintic of Macquarie, a bank, as ever stricter regulation makes it increasingly expensive for banks to offer car loans and the like.

Element Financial, a Canadian firm, has carved out a lucrative niche financing specific items, such as the railcars produced by Trinity Industries, an American conglomerate, and the small diggers made by Bobcat, part of a South Korean one. It went public in 2011 and its shares are up fourfold since (see chart). Over the same period, the S&P index of North American firms in financial services has not even doubled.

Source: http://www.economist.com/news/finance-and-economics/21653674-why-ge-retaining-one-bit-its-finance-arm-keeping-grease

Some European Companies Try Bonds to Raise Cash

Among the midsize, family-owned companies that power the German economy, it has long been an article of faith: credit comes from the friendly local banker, not from cold and distant capital markets.

Andreas Dombret, a member of the executive board of the Bundesbank, said the sale of debt by companies was “limited in scope” but a “welcome response” to tighter lending by banks.

 

So Peter H. Leibold was breaking from the norm last year when he decided to finance the expansion of his company, which makes wood pellets for heating and energy generation, by selling corporate bonds. The company, German Pellets, raised more than 80 million euros ($102 million).

Now he is a convert. 

“The advantage of a bond is that you can raise a large amount from a completely different group of investors,” said Mr. Leibold, the founder and chief executive of the company, which is based in Wismar, on the coast in northern Germany. 

Corporate bonds — essentially, interest-bearing i.o.u.’s that companies sell to whomever is willing to buy — have long been an essential borrowing tool for companies in the United States. 

But in Europe, borrowing from banks, whether local ones or big multinationals, has traditionally been the preferred way to raise money. Just 9 percent of corporate credit in the euro zone comes from debt markets, according to the Bundesbank, Germany’s central bank, compared with 64 percent in the United States.

But as the euro zone’s financial crisis has forced many banks to hoard cash and curtail lending, more European companies are turning to bond markets. If the trend continues, it could not only begin reversing the Continent’s longstanding preference for bank credit, but also make the region less prone to banking crises.

There might be resistance, however, from European regulators, who regard such borrowing as a form of shadow banking that they cannot control. In addition, bank lobbyists might fight what they see as competition. 

“People are afraid of a financial system not based on what they know, which is financial intermediation by banks,” said Nicolas Véron, a senior fellow at Bruegel, a research group in Brussels. 

The fears are not unfounded. The propensity of banks in the United States to turn loans into securities that can be sold to investors arguably helped create the subprime mortgage crisis. 

But later on, there was an upside: the practice meant that the fates of companies in the United States were less coupled to those of banks. Not so in Europe, where the problems of credit institutions remain a grave threat to the rest of the economy. 

“Euro-area firms are particularly vulnerable to reduction in bank credit because of their greater reliance on banks for funding,” the International Monetary Fund said in a report last month. 

Companies’ tapping of euro zone bond markets has surged this year, more than doubling to $107 billion in the first quarter, according to Dealogic, a data provider. For the first time since 2009, bond issues surpassed syndicated bank loans as a source of financing for larger companies. 

When even large European banks are cutting back on risk, bond issues enable companies to raise money from investors outside the euro zone who are less affected by the crisis. 

It remains unclear, though, to what extent debt markets can fill the vacuum left by troubled European banks. Bond markets might not help the thousands of smaller companies that form the backbone of the euro zone economy but are too small to attract investors’ attention. 

“The corporate sector in Europe still comprises mostly small- and medium-sized enterprises that will continue to rely on bank loans,” Andreas Dombret, a member of the executive board of the Bundesbank, said in an e-mail. 

The countries that need credit most desperately are also the ones with the highest proportion of small firms least able to gain access to debt markets. Companies with 50 employees or fewer employ 68 percent of the work force in Italy and 62 percent in Spain, according to Goldman Sachs. Those figures compare with 40 percent in Germany. 

“For smaller firms in particular, the fixed costs can simply be too high, rendering a bond issuance uneconomical under all circumstances,” Dirk Schumacher, an economist at Goldman Sachs in Frankfurt, wrote in a report last month. 

But the experience of German Pellets, which had sales of 275 million euros ($350 million) last year and has 500 employees, suggests that bonds could be an alternative for at least some midsize companies.

Mr. Leibold said that it initially had taken some effort to explain to investors why wood pellets were an interesting business. The pellets are a source of renewable energy and are cheaper than oil or natural gas, he told them. 

Mr. Leibold, who founded the company in 2005 after he saw wood pellets being made by small operations in Sweden and realized there was an opening for a mass producer, says his sales are rising — even in Greece — as people and companies look to cut costs. 

Eventually, investors came around. The company used the money it raised to make several acquisitions and build new manufacturing plants, including one in Woodville, Tex., that is to employ 250 people when it is completed later this year. 

German Pellets also continues to draw on traditional bank financing, Mr. Leibold said. But the bond market provides a diversity of fund sources, without the drawbacks of a stock listing. Like many European entrepreneurs, Mr. Leibold expresses an aversion to going public. 

The company reflects his spirit and that of his colleagues, he said. 

“If German Pellets was listed on an exchange, it would change the company from that day on,” he said.

While there has been no broad effort to curtail debt issues, regulators at the European and national levels are now scrutinizing so-called shadow banking. That is a broad category that includes hedge funds and other activities outside the traditional banking system, as well as corporate bond issuance. 

In practice, corporate debt is typically handled within the banking system, with banks earning hefty fees for marketing the bonds. But because the business is dominated by large investment banks, the concern by some regulators is that smaller institutions have trouble competing in that market and could lose revenue as a result. 

Mr. Véron of Bruegel said central bankers might also worry that a shift from traditional banking could make it harder to control interest rates — their main policy tool. 

“The European Central Bank sees a need for more credit,” he said. “At the same time they are concerned about losing the monetary policy transmission channel.” 

For all that, though, officials do not seem to be terribly concerned. 

Mr. Dombret of the Bundesbank said that the sale of debt by companies was “limited in scope” and a “rational and welcome response” by companies to tighter lending by banks in many parts of the euro zone. 

Risks that banks will be bypassed “seem to be rather low at this stage,” he said, but he added that the Bundesbank would “continue to monitor this area.” 

Mr. Leibold of German Pellets, for his part, said he was happy with his bond experience and planned to tap debt markets again. But he was not sure bonds would work for all companies. “You need a story for investors,” he said. 

Source: http://www.nytimes.com/2012/05/19/business/global/credit-flows-through-a-new-channel-for-europe.html?_r=1&ref=global

Reshaping banking: The retreat from everywhere

SOME signs are subtle. Foreign lenders operating in America are tightening loan standards more sharply than domestic rivals; Hong Kong property developers are scrambling to issue bonds for want of other funding. But others—the “for sale” signs hung on the overseas assets of many European lenders—are pretty blatant. The ability and willingness of banks to compete across borders is unravelling.

Related topics

• Public finance
• United Kingdom
• Central banking
• Germany
• Government and politics

The years before the financial crisis saw rapid growth in the cross-border activities of banks. According to the Bank for International Settlements, the average year-on-year growth rate for cross-border bank credit to non-banks during the 2000-07 period was a sizzling 15.2%, compared with 6.7% for total bank credit. Since then cross-border credit has fizzled (see chart 1) and looks likely to fall further.

European lenders were in the vanguard during the era of internationalisation, and around a third of their assets are outside their home markets. They are now under pressure to slim down their balance-sheets quickly, partly to shore up capital and partly because of funding strains. The IMF this week projected that banks in the European Union would undergo a $2.6 trillion deleveraging over the next two years. Much of that will be achieved by running for home.

In March the Reserve Bank of Australia revealed that the departure of European lenders, in particular French banks, had left an A$34 billion ($35 billion) funding gap in the syndicated-loan market for local companies. The story is similar in the Middle East, where a rush this year to issue Islamic bonds, or sukuk, is attributed to a withdrawal of European lenders. Within Europe, too, national boundaries are being reinforced as lenders cut back their exposures to weaker markets (see chart 2). Non-European banks are also trimming their foreign portfolios as they rationalise their businesses: Citigroup agreed to sell its Belgian retail arm in December; HSBC is offloading businesses from Costa Rica to Pakistan.

Some of this is cyclical. After the first contraction of international activity in 2008-09, a rebound occurred, and something similar might be seen in response to the provision late last year of three-year liquidity by the European Central Bank (ECB), which has temporarily eased the strains on euro-area banks. But there is good reason to believe the retrenchment represents a structural change.

Retrenchment need not be disastrous. Much pre-crisis cross-border lending was foolish, after all; think of all the German money in subprime American mortgages. And foreign banks are not the only suppliers of cross-border capital: the importance of foreign direct investment and portfolio flows as a proportion of gross inflows has steadily risen over the past three decades.

But banks matter. There is evidence that cross-border banking relationships between pairs of countries encourage other types of capital flow; reduce them, and the other flows may dry up too. And the availability of bank financing is vital to smaller businesses or long-term asset-based activities such as infrastructure projects. “The alternatives to cross-border banking are autarkic financial systems, which means relying on domestic capital formation and thus higher costs, or international flows via bond markets, which are more volatile,” says Peter Sands, the boss of Standard Chartered, an emerging-markets bank.

Home is where the taxpayer is

Three powerful centripetal forces are at play: politics, regulation and deleveraging. Take politics first. The financial crisis, and the sovereign-debt crisis that followed it, have left no one in any doubt about the relationship between banks and the state. If big lenders get into trouble, taxpayers end up bailing them out.

Now it is payback time. Banks have come under pressure from their governments to prioritise the customers that rescued them. “Project Merlin” set Britain’s biggest banks targets for their lending to small and medium-sized enterprises; Commerzbank, a bailed-out German bank, is committed to concentrating its lending on Germany and Poland. In December Crédit Agricole, a French bank, outlined plans that included the closure of corporate- and investment-banking operations in 21 countries. “Crédit Agricole is mobilised on a day-to-day basis to support the plans of the French people,” ran the press release.

In the case of banks in the euro zone’s peripheral nations, the politics of patriotism also mean propping up the debt of their governments. Italian and Spanish banks have used the ECB’s three-year loans to boost their holdings of domestic government bonds. Spanish lenders increased their holdings by 26% in the two months to January; Italian banks upped theirs by 31% in the three months to February. This reflects, in part, a calculation that few banks can survive without a sovereign that looks solvent.

Regulations are also steering banks (and insurers) into holding domestic government debt. Rules on capital and liquidity label government debt as safe and render domestic government debt peculiarly so. The overall effect is to make balance-sheets look a lot more patriotic. Huw van Steenis of Morgan Stanley reckons that euro-zone banks have an average of 6% of their assets invested in domestic sovereign debt, and that their holdings are growing by the day.

Many other rules that are designed to make finance safer also risk making it more parochial. A big lesson of the crisis is that banks which are global in life are national in death. The bankruptcies of Lehman Brothers and MF Global showed regulators how assets could easily get trapped in foreign jurisdictions, leaving a bigger bill for taxpayers back home. There are signs that, in response, regulators are treating foreign assets more harshly than domestic ones. Bankers say that stress tests carried out on American lenders by the Federal Reserve in March put their foreign loans under greater pressure than American ones. Recent guidance from Britain’s Financial Services Authority on lending in areas like commercial property jacked up risk charges on exposures where there is a lack of historical data; Bob Penn of Allen & Overy, a law firm, argues that this has the effect of privileging lending in home markets. With capital scarce, such tinkering matters.

As national regulators seek to stamp their authority on international finance, conflicts and inefficiencies arise in all sorts of areas. Britain has filed lawsuits against the ECB for its proposal to prohibit clearing-houses outside the euro area from being able to handle more than 5% of trading in euro-denominated instruments. Differences between proposed American and European rules on derivatives may mean that banks build separate infrastructures on either side of the Atlantic. Things that matter could fall into the cracks opening up; many worry that trade finance, the lifeblood of cross-border trade, will be heavily penalised under new liquidity rules.

Resolutions and reality

Planning for bank failures is the area where the interests of national regulators collide most forcefully with hopes of international co-ordination. The Financial Stability Board, a global watchdog, wants the big regulators of cross-border banks to work together in the event that banks need resolving, and many banks hope for such agreements. But the regulators’ focus is on their national interests, not those of the world, or of the banks.

As Simon Gleeson of Clifford Chance, a law firm, points out, no government will care as much about treating foreign creditors fairly as it cares about compensating its own people. Iceland, which screwed its banks’ foreign creditors in favour of domestic depositors, is a case in point. A typical regulator wants banks in its purview to have enough assets both to keep operating in times of crisis and to pay back domestic creditors in case of failure, whether the banks are domiciled there or not.

Home-market regulators thus prefer their lenders not to have too great an exposure elsewhere. Austria’s central bank has said that Austrian bank subsidiaries in central and eastern Europe should not exceed a loan-to-deposit ratio of 110%, a way of ensuring that their funding needs do not make too great a call on resources back at headquarters.

Emerging markets, now alive to the possibility that parent banks in the rich world can be a source of instability as well as support, have their own worries about the “portability” of capital, liquidity and assets. Guillermo Ortiz, a former Mexican finance minister who is now chairman of Banorte, a Mexican lender, wants subsidiaries of foreign banks in emerging markets to be ring-fenced so that money cannot be funnelled out of the country.

Particular problems attach to “living wills”, documents in which banks lay out for regulators their plans to survive periods of extreme stress and, if the worst happens, to provide supervisors with the information they need for resolution. The process of agreeing on living wills with regulators in the countries concerned creates pressure for banks to use subsidiaries abroad, which have to have their own capital, rather than branches, which don’t.

The decision to set up a subsidiary in a new market (as opposed to just opening a branch) may be a harder one for boards, since it involves legal incorporation and taking on personal liabilities. Some bankers worry, too, that subsidiary units may be nudged by supervisors into running separate IT and management systems in order to demonstrate that they can keep operating without the support of a parent, making them yet more inefficient. Rules that make it harder to move money around will make it harder to commit to distant opportunities. An executive at a big American bank says that such rules will force his firm to invest less abroad than would be ideal. For emerging markets that have shallow deposit bases and undeveloped domestic bond markets, it all adds up to slower credit growth.

Markets that erect firewalls around their banking systems may also be sacrificing resilience in the event of a future crisis. For all the worries about wobbly international banks, the support of Western parents has proved more helpful than not in eastern Europe so far. Other sources of finance can be flighty, too. When bond markets closed to Dubai in late 2009, international banks kept providing liquidity. “There is a trade-off here between probability of default and loss given default,” says Standard Chartered’s Mr Sands. “People are losing sight of the first and obsessing about the second.”

The LDR of the pack

Even if regulators and politicians were carefree onlookers, the need to deleverage would remain. Once again, Europe is home to the banks with the most work to do, less because of the need to raise more capital than because of the way they fund themselves. European banks are more reliant on wholesale markets than any other big banking system (see chart 3). According to Simon Samuels of Barclays Capital, lending by listed European banks exceeds their deposits by $1.3 trillion. American banks, by contrast, are awash in deposits, with a funding surplus of $1.3 trillion.

The European gap is filled by borrowing on wholesale markets. The capital markets have peeped open in the wake of the ECB’s three-year lending operations. But a peep is not enough. The ECB’s intervention was needed precisely because the euro-zone sovereign crisis and the increased need to factor in the losses that follow when a bank fails have left bond investors a lot less interested in holding bank debt than they were. So lenders have little choice but to bring down their wholesale-borrowing needs.

In practice, that often means pruning back activities abroad. Banks typically establish a presence in new markets by lending, and wait for deposits to catch up later. Foreign subsidiaries that have loan-to-deposit ratios (LDRs) in excess of 100% and that rely on cross-border funding from their parents are obvious deleveraging candidates. Eastern Europe is the region that looks most vulnerable on this score. It is the most reliant on foreign banks; and although those banks also raise local deposits, countries such as Hungary, Romania and the Baltic states are all big recipients of cross-border funding as well (see chart 4).

European banks are not about to shut down their foreign networks altogether, not least because the business they do abroad is often their best prospect of growth. Lenders are more likely to manage LDRs down by letting loans run off or by competing for more deposits than to pull out of countries altogether. But the effect will still be felt in the form of scarcer and dearer credit.

There is a faster route to funding salvation than reducing bread-and-butter commercial lending. One particularly striking feature of the pre-crisis expansion of Europe’s banks was that so much of their activity was in dollar-denominated areas such as commercial-property lending, leveraged buy-outs, syndicated loans and commodity financing.

Some of that dollar activity was funded by deposits gathered by banks’ American units; another wodge of dollar funding came from swapping local deposits into foreign currency. But lots was gathered on wholesale markets, often in the form of short-term debt that needed to be constantly rolled over (think of the money provided to French banks by American money-market funds, whose flight from Europe last year caused so much trouble). This type of funding—short-term, wholesale and with an added dollop of foreign-currency risk for good measure—could not be further removed from the liabilities lenders, or their regulators, now want. With French banks in the vanguard, they are offloading dollar-denominated assets.

Among the sectors most exposed to this retreat are project finance, asset-based lending in shipping and aviation, and infrastructure funding. These are areas where assets tend to remain on banks’ balance-sheets for 10-15 years or more. That makes them unattractive bets: long-term dollar funding is hard to come by; short-term funding presents rollover risk; and lenders are wary of locking up bits of their balance-sheets inflexibly when things are so uncertain. To make matters worse, risks are high, so these kinds of lending use up lots of capital.

Alternatives to bank finance are harder to come by in these areas than in areas like syndicated lending. The risks inherent in shipping, a notoriously cyclical industry, or infrastructure finance, where there is lots of construction risk, mean that credit ratings are low, making them a hard sell to bond investors. New regulations called Solvency 2 could make it harder for European insurers to hold long-dated assets. Bankers are now trying to cook up new ways of distributing such assets to investors. One option in infrastructure finance, says the boss of a big European bank, is for the bank to offer financing for the riskier construction phase and then hand over to bond markets when projects start to generate cash flows (although it is unclear what yield investors would demand in return).

The hidden harm

Such innovations are a reminder that the international financial system has many moving parts. New ways of securitising dollar-denominated assets could mean that banks end up slimming their balance-sheets more slowly. The homeward migration of European lenders opens the door to others: Japanese banks, which sit on a surplus of deposits and are willing to lend on a long-term basis, are now the first port of call for project-finance deals. Banks of no fixed abode, such as HSBC and Standard Chartered, may also be poised to benefit in some markets, and American banks could yet decide to become more expansionist. Corporate-bond markets provide another source of funding for larger firms.

But, for all this, a homeward bias in banking will raise costs for some countries, and some classes of client, a lot. Where the process of retrenchment is too swift, it will be hard to refinance some existing debts. Ring-fenced subsidiaries risk being more brittle in the event of a crisis. The costs of infrastructure finance will go up and its availability decline.

There may also be costs for markets that have previously exported deposits and are now seeing them return: some in Germany already worry that too much credit is sloshing around. Some of the forces pulling banks back home are reasonable ones. But once trillions of dollars are set in motion, getting them to settle back down in an optimal way is next to impossible.

Source: http://www.economist.com/node/21553015

Thị trường chứng khoán chưa có dòng tiền mới

(TBKTSG Online) - Các chính sách vừa ban hành vẫn chưa có gì cụ thể để hỗ trợ cho dòng tiền vào thị trường. Các công ty chứng khoán cho biết hiện tại tiền đang “chạy lòng vòng” từ kênh đầu tư này sang kênh đầu tư khác, còn dòng tiền mới đến tham gia thị trường thì chưa thấy.

Ngân hàng Nhà nước (NHNN) vừa ban hành Chỉ thị 01/CT-NHNN. Trong chỉ thị này, NHNN tiếp tục đưa việc đầu tư, kinh doanh chứng khoán vào danh mục phi sản xuất, tức tỷ trọng cho vay so với tổng dư nợ trong năm 2012 của các ngân hàng tối đa là 16%, không đổi so với năm 2011. Trong khi trước đó, ông Vũ Bằng, Chủ tịch Ủy ban Chứng khoán cho biết là đã đề xuất với NHNN đưa chứng khoán ra khỏi danh mục phi sản xuất nhằm khơi thông dòng vốn vào chứng khoán.

Trước thông tin NHNN để nguyên mà không giảm bớt tỷ trọng dư nợ cho vay đối với các lĩnh vực không khuyến khích, trong đó có chứng khoán, ông Bằng nói với Thời báo Kinh tế Sài Gòn Online rằng đó đã là một quyết định tích cực trong thời điểm này, ít nhất cũng không rút bớt dòng tiền vào chứng khoán. Điều đó cho thấy động thái hỗ trợ thị trường bằng nguồn vốn ngân hàng trong thời gian tới xem như không thể nới rộng hơn.

Tuy vậy, một số công ty chứng khoán cho rằng, trong đợt tăng mạnh vừa qua ( hơn 1 tháng, VN-Index đã tăng gần 20%-PV) thì sự tham gia của dòng vốn vay từ ngân hàng là không nhiều, một phần do chứng khoán vẫn nằm trong đối tượng hạn chế cho vay của nhiều ngân hàng, một phần vì lãi suất cao, khoảng từ 22- 25%/năm nên nhà đầu tư không vay. Hiện tại hoạt động cho vay ký quỹ đã được nhiều công ty chứng khoán áp dụng nhưng không nhiều nhà đầu tư mặn mà. Dòng vốn vào chứng khoán trong các tháng gần đây chủ yếu đến từ vốn nhàn rỗi của nhà đầu tư. Vì vậy, chỉ thị mới của NHNN cơ bản sẽ không tác động nhiều đến dòng tiền vào chứng khoán.

Ông Nguyễn Hồng Nam, Phó giám đốc Công ty Chứng khoán SSI, cho biết hiện tại chỉ còn một số công ty chứng khoán lớn cho nhà đầu tư vay ký quỹ, tức dùng vốn của ngân hàng liên kết hoặc vốn của công ty cho vay, nhưng mức vay cũng hạn chế. Và tại SSI, tổng giá trị nhà đầu tư vay trong đợt tăng vừa qua không lớn. Trong khi đó, đa phần các công ty nhỏ rất ít cho vay vì bản thân công ty lỗ, tiền có được không đủ bù đắp chi phí nên không thể cho vay.

Ông Phan Dũng Khánh, Trưởng phòng Phân tích Đầu tư Công ty Chứng khoán Kim Eng, cũng cho rằng dòng vốn vào thị trường hiện nay chủ yếu đến từ các kênh đầu tư khác, tức những người đầu cơ vàng, ngoại tệ khi thấy các kênh này không sinh lãi, trong khi chứng khoán liên tục tăng, giá cổ phiếu lại thấp thì đã quay về nộp tiền vào các tài khoản đã mở trước đó, khiến cho dòng tiền vào chứng khoán tăng lên. Nhưng ông Khánh cũng thấy những dòng tiền này khó ổn định, do hiện tại chưa có thông tin vĩ mô tích cực nào thực sự hỗ trợ cho chứng khoán.

Ông Nam cho biết, hiện không có nhà đầu tư nước ngoài lớn nào mở tài khoản mới tại SSI, dòng tiền đến từ nhóm này không có gì đột biến. Việc mua ròng chỉ là một hoạt động đầu tư thông thường của quỹ đầu tư. Con số giải ngân cũng chủ yếu của các quỹ đầu tư cũ, họ giải ngân vào thị trường nhiều hơn so với cuối năm ngoái, chỉ là do nhìn thấy giá cổ phiếu đã rất thấp, vì vậy có thể mua để nhận cổ tức hoặc sở hữu công ty với giá rẻ.

Theo tiến sĩ Lê Đạt Chí, Trưởng bộ môn Đầu tư tài chính, trường Đại học Kinh tế TPHCM, với giá trị giao dịch chỉ vài trăm tỉ đồng mỗi phiên, không tăng đột biến so với năm ngoái thì dòng tiền thực sự chưa vào thị trường nhiều. Với dòng vốn đầu tư nước ngoài, ông Chí cho rằng phải chờ các tín hiệu rõ ràng hơn từ tái cấu trúc 3 trụ cột là đầu tư công, doanh nghiệp nhà nước, và tái cấu trúc hệ thống tài chính thì mới mong nhà đầu tư giải ngân vào chứng khoán. Việc này cần rất nhiều thời gian thực hiện, do đó khó kỳ vọng sớm có dòng tiền mới nào vào thị trường.

Trong đợt tăng vừa qua, theo ông Chí, đó là hiệu ứng của việc Sở Giao dịch Chứng khoán TPHCM đưa ra chỉ số VN30. Việc này đã làm cho nhà đầu tư hy vọng vào sự tăng giá của các cổ phiếu trong rổ tính chỉ số này. Tuy vậy, đà tăng do yếu tố trên sẽ chấm dứt, khi vấn đề nội tại của nền kinh tế như lạm phát, lãi suất vẫn chưa được giải quyết và các công cụ hỗ trợ thị trường chứng khoán như rút ngắn thời gian thanh toán, nới rộng biên độ cho sàn TPHCM…chưa được triển khai. Thêm vào đó, nhà đầu tư hiện cũng chờ đợi các biện pháp đối với công ty chứng khoán để tiền của mình được bảo vệ, trước việc nhiều công ty chứng khoán dùng tiền của nhà đầu tư vào mục đích riêng.

Source: http://www.thesaigontimes.vn/Home/taichinh/chungkhoan/71269/Thi-truong-chung-khoan-chua-co-dong-tien-moi.html

The mortgage market: Home truths

SOMETIMES it takes the interaction of powerful forces for things just to stand still. So it is with Britain’s housing market, which lenders expect to remain characterised this year by low levels of transactions and stable prices. But, quietly, the property market is being transformed.

The forces bearing down on housing are obvious enough. Home sales have fallen sharply since the start of the financial crisis, to around half their 2007 levels. That reflects greater conservatism on the part of lenders—“We don’t assume that home prices will go up, a mistake everyone made in the past,” says one—and of borrowers worried by an uncertain economic outlook at home and endless euro-crisis headlines. Household demand for secured credit fell in the last quarter of 2011, according to the Bank of England.

A slump in volumes has not led to a slide in prices, however. House prices are down by less than 10% from their peak, still well above The Economist’s definition of “fair value”, which is the long-run average ratio of house prices to rents. Prices in America, by contrast, have fallen back to fair value. A shortage of housing supply has helped sustain prices, as have low interest rates: two-thirds of British mortgage-holders are on variable-rate loans. A big rise in unemployment would unsettle this equilibrium, but only if joblessness bites among homeowners rather than, as now, among young people without mortgages.

“This is a broadly flat market and likely to stay that way for the next 12 to 24 months,” says Chris Rhodes of Nationwide, the country’s biggest building society. Regulators are determined to stamp out the speculative element of the market, which helped drive prices up before the financial crisis. The Financial Services Authority is currently consulting on proposals that would require lenders to assess the impact of future rate rises on borrowers’ ability to repay, for instance. That would make it much harder for ordinary folk to take out interest-only mortgages.

A flat market does not mean an unchanging one, however. Parts of the market are livelier than others, and none is more energetic than buy-to-let lending, in which private landlords buy houses to rent out. This sector also suffered during the crisis: gross advances fell from £45 billion ($90 billion) in 2006 to around £13 billion now. But lenders are expecting growth of 10-20% in the buy-to-let segment this year, and are scurrying to beef up their presence in this area.

Some of the rise in renting reflects credit constraints, particularly on first-time buyers. But this cannot explain everything. The proportion of loans allocated to first-timers has remained steady throughout the crisis as parents have stumped up down-payments for their offspring. Loan-to-value ratios are creeping up again. And numbers of first-time buyers and buy-to-let loans are not necessarily mirror images—both were growing just before the crunch, for example (see chart).

Rather than being just a cyclical effect, the growth in demand for private rentals fits into a broader pattern. Loans for first-time buyers were on a downward path well before the crisis, because of high house prices. Meanwhile, immigration and rising numbers of single-person households have driven demand for rented accommodation. “Growth in the private-rental sector is hard-coded into the UK market,” claims John Heron of Paragon Mortgages, a specialist buy-to-let lender.

But so is the aspiration eventually to buy one’s own home. For most people, the housing market still offers a stark choice: rent or take on lots of debt for a house purchase. That could change, however. Castle Trust, a yet-to-be-authorised lender in Britain backed by JC Flowers, a private-equity firm, plans to offer savers investment products tied to a national house-price index. It will use the money it raises to offer mortgage products where borrowers do not pay interest in return for handing over a slice of their equity to the firm. If prices rise, some of the capital gains are shared with the lender; so are a proportion of losses if prices fall.

The marriage of housing and financial innovation may look like an ugly match in light of the crisis. But ideas like these could yet prove one of its lasting legacies.

Source: http://www.economist.com/node/21543558

Freighter Oversupply Weighs on Shipowners and Banks

SINGAPORE — The skyscrapers and immaculate beaches of this seaport look out on one of the world’s largest parking lots: mile after mile of empty cargo ships, as far as the eye can see.

Similar fleets bob at anchor, with empty cargo holds, off the coasts of southeast Malaysia and Hong Kong. And dozens of newly built ships float empty near the giant shipyards of South Korea and China, their owners from all over the world reluctant to accept delivery during one of the worst markets ever for the global shipping industry.

As recently as six weeks ago large freighters that can carry bulk commodities like iron ore or grain were fetching charter rates of $15,000 a day. Now, brokers and owners say, the going rate is $6,000 a day. If any customers can even be found.

Although the fault lies partly with doldrums in the global economy, the bigger factor is a glut of new freighters. The oversupply is putting financial pressure on the shipowners that bought them and the already struggling European banks that financed many of the purchases.

Shipping industry leaders hold little hope of a quick recovery.

“If the tunnel is 2012, I can’t see any light at the end of it,” said Tim Huxley, the chief executive of Wah Kwong Maritime Transport Holdings, a Hong Kong-based shipping line with 29 bulk freighters and tankers.

Back during the global commodity boom, which continued through the spring of 2008, the world’s shipowners could hardly place orders for freighters fast enough. But because of the long lead times in shipbuilding, those vessels only now are being delivered by the hundreds — into a very different, much less robust international economy than when they were ordered.

For the shipping industry, the glut means not only lower charter fares, but also steep declines in the value of their vessels. The bigger losers, though, could eventually be some big European banks, many of which are already struggling with big losses on their holdings of government bonds from Greece, Italy and other heavily indebted European nations.

Basil Karatzas, the chief executive of Karatzas Marine Advisors, a ship brokerage and finance advisory firm in Manhattan, estimated that European banks hold about $500 billion in shipping loans on their books and face nearly $100 billion in losses to restructure them.

Just as American banks have grappled with huge loan losses for houses that are worth less than their mortgages, European banks face tens of billions of dollars in potential losses on shipping loans.

The banks’ “biggest concern is what is the write-off, and how do you treat it from an accounting point of view,” Mr. Karatzas said. “They do not know how to deal with these losses.”

Banks in Europe have long been the world leaders in ship financing because many of the biggest fleet owners are based there. But many have abruptly stopped lending money to shipowners. Some, as they scramble to muster capital to meet tougher reserve requirements demanded by European banking regulators, have even tried to raise money by asking some shipowners to prepay loans in exchange for a discount.

There is a scant secondary market for ship loans right now, except at deep discounts that banks are loath to agree to, according to shipping finance experts. Even for loans on which the vessel is still worth more than the mortgage, these experts say, the discount demanded is about 20 percent.

Commerzbank in Germany and the Lloyds Banking Group in Britain are among European institutions that have publicly said they were reducing their exposure to shipping loans.

Société Générale in France also has been looking for ways to reduce its holdings of shipping loans and instead focus on providing financial advice to shipping companies, according to two people with knowledge of the bank’s moves.

The bank declined to provide a comment on its shipping exposure ahead of the release of its annual financial report next month.

Shipowners, meantime, are nervously monitoring an industry benchmark, the Baltic Dry Index of bulk freighter charter rates, which has lost more than half its value since the start of the year. The index is now at its lowest level since January 2009, during the depths of the economic downturn after the bankruptcy of Lehman Brothers.

And as charter rates plummet, so do prices of the vessels themselves. A large tanker that sold for $137 million in early 2008, the Samho Dream, was repossessed by bankers late last year and sold last week in Hong Kong for just $28.3 million.

The world’s tonnage of large freighters is climbing by more than 10 percent a year, with 1,650 large freighters for bulk commodities expected to emerge from shipyards this year alone.

As long as the shipped tonnage of world trade is creeping up at an annual rate of only 2 to 3 percent a year, the oversupply can only grow more burdensome for the seaborne freight industry.

Making the glut especially acute right now is the fact that shipyards have delivered a large number of vessels to owners since the beginning of the year. Just as some car buyers wait to buy a car at the start of a model year — because it will hold its resale value longer — shipowners have traditionally taken delivery of as many vessels as possible in January, so as to have a full calendar year’s use before a vessel celebrates its first birthday, said Natasha Boyden, an analyst at Cantor Fitzgerald in New York.

Buyers who might be tempted to refuse delivery of vessels can lose their deposits, which are typically up to 40 percent of the contract price of the ship. But it is getting harder to borrow money from struggling banks to pay for the remaining 60 percent — particularly with resale values now much lower than the prices at which contracts were signed four or five years ago.

Freight rates are now close to operating costs for many bulk freighters, leaving almost nothing to pay the mortgage, so more old vessels may be scrapped in the coming years, which would eventually reduce oversupply.

Worldwide lending for ships totaled about $100 billion last year, down only slightly from previous years, according to industry estimates. But as much as three-quarters of last year’s loans were to refinance or restructure previous loans that the borrowers were struggling to repay, shipping finance executives said.

One big question is whether the plunge in freight rates might also signal further trouble in the global economy. World oil demand has been fairly flat lately because of weak economic growth, so there has been limited need for more tankers to haul oil.

The biggest market for bulk carriers lies in carrying iron ore to China’s voracious steel mills. But with a real estate slowdown in China undermining demand for steel, the annual growth rate of Chinese iron ore imports has abruptly slowed since October.

Harley Seyedin, the president of the American Chamber of Commerce in South China, said that many construction projects had slowed to a crawl, with barely enough work being done for developers to persuade their bankers to continue financing projects already under way.

Yet the growing glut of vessels, combined with seasonal factors, could skew the reliability of shipping as a global economic indicator. Bad weather lately off Australia and Brazil, the two countries where bulk freighters are most likely to take on iron ore and other cargo, has made companies leery of chartering vessels and risk waiting for days for ports to reopen after storms.

Further confusing the picture is that the cost to ship a container from China to the United States or Europe actually jumped in the first two weeks of this year, as factories rushed to fill orders before shutting down for up to a month for the Chinese New Year, which began Monday. But that could be a misleading metric, because container rates temporarily surge every year for the last sailings before the Chinese New Year.

Even if world trade does not slow in the coming months, the shipping industry still has a long way to go before cargo demand can possibly catch up to capacity. Meantime, bulk freighters, container ships, tankers and refrigerator ships by the hundreds may continue to bob idly in the waves here, their hulls showing wide bands of paint that would be submerged if the vessels were fully laden.

Source: http://www.nytimes.com/2012/01/26/business/global/the-global-downturn-weighs-on-shipowners-and-european-banks.html?pagewanted=1&_r=1&ref=global

Loan Market Isn't on Borrowed Time

Remember the halcyon days of June 2007? Stocks were soaring and the phrase "Greek ruins" inspired travel plans rather than bank runs. It was also the month that Canadian telecom giant BCE accepted an offer for what would have been the world's largest leveraged buyout, and the trailing default rate on leveraged loans fell to an all-time low of 0.15%.



A year later, stocks were past their peak and Greece was heading for disaster. Meanwhile, the BCE deal was dead and that default rate was on its way back up toward the 10.8% peak it hit in November 2009.

Today, the default rate is within a whisker of its all-time low, hitting 0.17% in November, according to the LCD team at Standard & Poor's Capital IQ. But the market clearly isn't buying it: Leveraged loans' average spread above Libor is 6.3%, implying a default rate running at 6.6%, according to LCD's Steve Miller.

The nexus of fear is in Europe—still long on speeches but short on definitive solutions to the euro zone's crisis. A banking panic there, freezing credit, would slam leveraged loans and other risky assets. Such fear is undoubtedly holding back buyout activity in Europe, down about 19% annualized according to Dealogic. Even if clobbered stock-market valuations are tempting, only the bravest private-equity firm would jump in today.

Yet investors with faith in Europe's ability to heal itself— such as those currently pushing down Italian bond yields—can also point to underlying strengths in the leveraged loan market. U.S. corporate profits have been growing strongly, bolstering balance sheets. The ratio of liquid financial assets to total liabilities for non-banks is now at its highest level since the mid-1970s, according to Citigroup.

Firms have also been knocking down the wall of refinancing built during the pre-crisis borrowing binge. At the end of 2009, $404 billion of leveraged loans were set to come due between 2012 and 2014, according to LCD. Now, the burden is under $150 billion as firms have paid off debt and refinanced with bonds.

The bigger issue will be finding buyers for new loans. The financial crisis left lasting scars on credit markets, including the sharp shrinkage of collateralized loan obligations. CLO funds were the go-to buyers of the go-go years. Barclays Capital estimates remaining CLO funds could absorb $60 billion of new loans next year, dwindling to perhaps just $10 billion in 2014. Issuance this year is forecast to be up to $175 billion. Despite the market's underlying strengths, therefore, leveraged loans will have to be priced to tempt non-CLO buyers, such as loan mutual funds.

Although the default rate will surely move higher over time, in the absence of a European meltdown a spike looks unlikely. On that basis, yields look attractive already.

Source: http://online.wsj.com/article/SB10001424052970204083204577082251565060684.html?mod=WSJ_Heard_LEFTTopNews

Cogs of China’s credit machine grind more slowly

Shoreline Capital, a Guangzhou-based investment firm which invests in distressed assets and provides debt capital in China, looked at over 700 opportunities to put money to work in China in recent months. Shoreline ended up providing capital to exactly four companies, despite the fact that the counterparties on all of the deals were willing to pay returns of at least 25 per cent and offered full collateral backing.

“So many people promise that they will pay us 25 to 40 per cent per annum and think they can use the funds to make many times their money,” says Ben Fanger, co-founder of Shoreline. “But many of these are overly speculative or even just get rich quick schemes with no actual value being created. To use borrowed money on such inflated promises to pay such returns can be, as the Chinese saying goes, trying to ‘snatch a white wolf with empty hands’.”

Beijing’s recent tight money policy has given rise to ever more money games, speculation and corruption, though the effects are only now beginning to become evident. Such money games have become a big threat to China’s prosperity and to its social harmony. These games are symptomatic of a society where everyone is on the take, looking for short-cuts.

In the autumn, the great Chinese credit machine began to slow dramatically. Total financing in China (which includes loans, fundraising in the capital markets and activity in the shadow banks) fell 30 per cent year over year in the third quarter. In September, bank loans grew at their slowest pace since October 2008. Growth in M2, the most widely used measure of money supply, is now well below the year end target of 16 per cent.

Beijing’s tight money policy has been effective in taming inflation (now 5.5 per cent) and the rise in asset prices. It has also slowed the number of property transactions and the rise in property prices, squeezing developers lacking deep pockets. At the same time, though, the difficulty in obtaining money through the official channels has given rise to a system in which state-owned enterprises that are supposed to make real things are increasingly turning themselves into financiers, borrowing at the official rate themselves and then turning around and putting the money to work in the grey market. Firms ranging from cellphone operators to shipbuilders have formed finance companies to engage in such activities.

The reversal from the loose money policy of 2009 and 2010 giving rise to an explosion of such games has been sharp. Between 2005 and 2010, bank credit had expanded at a compound annualised rate of 21.2 per cent. Since December 2008, the banks have put $4,100bn of new credit on to their balance sheets (and perhaps another 30 per cent off their balance sheets), and bank credit went from being 100 per cent of gross domestic product to about 130 per cent.

Now there is evidence that the Chinese may relax the current tight money policy at least incrementally. This week, Citic Securities issued a report entitled “Turn on the printing press!!!” Some banks are receiving increases in their loan quotas and analysts expect regulators to cut the reserve ratio requirements soon.

Still, such money games, speculation and corruption are unlikely to disappear – even when monetary policy eases – as long as the Chinese government continues to rely on the banks to allocate credit; controls interest rates, leaving savings depositors to receive a negative 2.5 per cent; and gives its people few other alternatives in which to invest.

If an entrepreneur wants to obtain funds in China, the choices are few and unattractive. Small and medium-sized enterprises are supposed to be the target of the selective easing that is now on the cards but banks don’t trust entrepreneurs because so many of them are more serious about taking money than using it. It isn‘t only the collateral that often turns out to be fake, even the proposed factories can be fake.

Many local governments have established science and technology funds to help struggling entrepreneurs in their districts. But the going rate for such funds now involves a kickback of about 30 per cent of the handout for the officials doling out the funds.

Legitimate businesses are struggling as informal demands for pay-outs multiply. One New York-based company which employs factories in China to make ornaments that it sells to the big box retailers such as Target or Walmart reports that the inspectors will only give their approval to factory conditions and product quality after generous payments.

The move from the hard work of manufacturing and value added to putting up luxury flats and playing money games is not confined to China alone. But the speed of the shift is a growing concern. In the past, there was corruption but things happened. Now, one entrepreneur in Shanghai laments, all the projects are like the reflection of the moon on the water – just an illusion.

Source: http://www.ft.com/intl/cms/s/0/6f851e30-0b8d-11e1-9861-00144feabdc0.html#axzz1do4A9hvt