China, Japan Claim Minimal Impact From Subprime - Housing Market Tracker 5 comments
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"Just last week the IMF forecast that Britain would be the fastest growing of the world's major economies this year.'' – Prime Minister Gordon Brown said, after admitting that no economy can insulate itself from the current global financial market volatility.
Global Subprime Fallout
BOJ's Shirakawa Says Subprime Impact on Japanese Banks Limited. “Japan’s central bank Governor Masaaki Shirakawa: “Because investment in [subprime mortgage] products was small to begin with, the losses [for Japanese banks] have been very small compared with financial institutions overseas.” Japanese banks have accounted for a small fraction of the $245 billion of global writedowns and credit losses announced since the beginning of 2007. Mizuho Financial Group Inc., Japan's second-largest bank by revenue, last week said it lost ¥565B ($5.6B) on mortgage securities, the most reported by an Asian company. Swiss bank UBS AG has written off $38B of assets since July.”
U.K. Housing Slump Becomes Worst Since at Least 1978. “The U.K. property market slump deteriorated in March to the worst since records began in 1978 as mortgage lending dried up, a survey of real-estate professionals showed. The number of residential property agents and surveyors saying prices fell exceeded those reporting gains by 78.5 percentage points in March, compared with 65.7 in February, the Royal Institution of Chartered Surveyors said. A separate report showed the first retail sales drop in two years.”
German Bank Governor Steps Down Over Public-Sector Bank Subprime Exposure. “The governor of an eastern German state resigned Monday amid turmoil linked to the government's SachsenLB bank, which continues to be battered by exposure to U.S. subprime mortgages. Georg Milbradt has been under pressure since the bank, the only state-run bank in the former East Germany, announced last August that it was threatened by its exposure in the U.S. market. The public-sector Landesbank Baden-Wuerttemberg swiftly stepped in to prevent SachsenLB from going under, but the controversy continued. The finance minister in the same state, Germany's eastern Saxony, has already stepped down.”
China Says Impacts From US Subprime Crisis Less Than Expected. “China’s central bank chief Zhou Xiaochuan: “China's economy has weathered the US financial crisis better than expected but many external concerns remain… "The negative impact of the US subprime crisis on the domestic economy seems so far smaller than originally expected.” Restructuring in the financial system has made China's financial institutions more healthy and losses caused by the US credit crunch were "controllable and digestible", Zhou said. But Zhou… warned China's economy is faced with mounting external uncertainties.”
Turkish House Prices Won't Fall On Subprime Issue, Agaoglu Says. “Ali Agaoglu, Chairman of Agaoglu Group, a Turkish construction and tourism company, doesn't expect the Turkish house prices to fall following the U.S. subprime mortgage crisis. Ağaoğlu: I expect house prices in Turkey to double in dollar terms in the medium term because only this year the prices of iron, the main building material, rose more than 70%. Turkey needs 1 million new houses every year, because about 700,000 couples get married each year and one third of the current 18 million homes need to be renewed over about 20 year's time. But only about 500,000 houses are built every year.”
IKB Shareholders To Sue Deutsche Bank Over Subprime Deals – Report. “Shareholders of IKB Deutsche Industriebank AG plan to sue Deutsche Bank AG over subprime asset-backed securities it sold to IKB, WirtschaftsWoche reported Monday. The report quoted German lawyer Ralf Plueck, who has been mandated by shareholders to sue IKB. MDAX-listed IKB was hit hard last summer by the subprime crisis and could only be saved by multibillion-euros credit lines since then. Deutsche Bank (DB) continued to sell risky asset-backed securities to IKB even after it expected a decline in value of the papers, the shareholders claim.”
German State Faces Huge Subprime Claims. “Landesbank Baden-Wuerttemberg CEO Siegfried Jaschinski: LBBW acquired its Sachsen LB unit from the eastern German state of Saxony and contends that the former owner must compensate it for losses not yet discovered at the time of sale. At worst, the eastern state could face a bill of €1.2 billion ($1.89B) under a guarantee it offered in the sale transaction, Jaschinksi said… Saxony faces a budget strain after setting aside €830 million for possible payments under the terms of its December guarantee.”
Housing Woes in U.S. Spread Around Globe. “In Ireland, Spain, Britain and elsewhere, housing markets that soared over the last decade are falling back to earth... Once-sizzling housing markets in Eastern Europe and the Baltic states are cooling rapidly, as nervous Western Europeans stop buying investment properties in Warsaw, Tallinn, Estonia and other real estate Klondikes. Further east, in India and southern China, prices are no longer surging... Sales of apartments in Hong Kong, a normally hyperactive market, have slowed recently, with prices for mass-market flats starting to drop. In New Delhi and other parts of northern India, prices have fallen 20% [y/y].”
S&P Lowers Woori’s Credit Outlook Amid Housing Slump. South Korea: “Standard & Poor's Ratings revised its outlook on long-term credit ratings for Woori Financial Group and its banking subsidiary, Woori Bank, to “negative'' from “stable'' Sunday, saying they face greater risks due to sharp loan growth in recent months. The agency also said all Korean banks are exposed to risks of a global economic downturn and a slowdown in the domestic construction sector... “The outlook revision reflects potential risks posed by the simultaneous emergence of negative industry-wide factors that could put Woori's rating under downward pressure, although no single negative factor is likely to trigger a downgrade,'' S&P said.”
Japan’s Mizuho Warns on U.S. Subprime Mortgage Losses. “Japan’s second-largest bank, Mizuho Financial Group, Inc. warned Friday that its securities trading unit lost ¥400 billion ($3.96B) in the twelve month period ending March 31; more than ¥209B ($2.1B) of that loss came since January 1st… “Due to markdowns related to securitization products amid the dislocation in the credit markets stemming from the U.S. subprime loan issues.” The losses… will likely push the bank well below its original profit forecast of ¥480B ($4.7B) to ¥310B ($3B) — a 35% hit to earnings, thanks almost entirely to U.S. mortgage exposure. The bank said its securities unit sold or wrote off the equivalent of $3.7B in collateralized debt obligations and residential mortgage-backed securities during Q1’08.”
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This article has 5 comments:
this link
"Get Seeking Alpha's housing market coverage by email"
does not work.
I've tested the link myself and it brings me to my email preferences. It should offer you a page with a choice of email preferences. The Housing Market Tracker is in the Housing section of Seeking Alpha.
In any case, I've forwarded your comment to our tech team to see if there's anything amiss.
Best,
Judy
I like to explore the situation why Chinese bought less subprime paper compared to other nations ( the sixth largest bank China Mercahnt Bank just reported it had nil subprime paper in its most recent earning filing); the resean might be very simple because they do not speak English very well so the subprime sales people simply had little chance to close the sales. Very funny; is it ? sometime an economic issue is also a cultural one.
It is time for Mr Petti and his loyal pupils to disclose his relationship with the red Chinese government now!!! And all readers on this site should also make such a demand; otherwise it's an insult to the intelligence of all seekingalpha readers!