Asian shares down as US faces shutdown

Asian markets have slumped as the US government edged towards a shutdown over a budget battle.

The face-off in Washington also sent the US dollar lower, while the euro suffered selling pressure from a crisis in Italy that has left the country's five-month-old government on the brink of collapse.

Tokyo on Monday fell 2.06 per cent, or 304.27 points, to 14,455.80, Sydney shed 1.66 per cent, or 88.2 points, to end at 5,218.9 and Seoul eased 0.74 per cent, or 14.84 points, to 1,996.96. Hong Kong shed 1.50 per cent, or 347.18 points, to close at 22,859.86.

But Shanghai rose 0.68 per cent, or 14.64 points, to close at 2,174.67 after a survey by banking giant HSBC showed Chinese manufacturing expanded further in September.

Traders have been spooked by the latest row on Capitol Hill, with the US government on the brink of shutting down after the House of Representatives approved a Republican bill seeking to delay President Barack Obama's health care law.

Legislators now have until midnight on Monday to reach an agreement to keep the government open, but analysts say the chances of a breakthrough are slim.

Obama has threatened to veto any bill that undercuts his sweeping health overhaul, while Democratic Senate Majority Leader Harry Reid says his chamber will reject the bill.

Adding to the crisis is a deadline to raise the country's borrowing limit, which comes up in mid-October. With Republicans determined not to raise the debt ceiling unless Obama gives way on the health bill, there are fears that Washington will run out of cash and default on its repayments.

'Things are far from the 'panic stage', but they don't have to be for investors to be spooked by the apparent intractability of the US political deadlock,' said Tachibana Securities market analyst Kenichi Hirano.

The impasse weighed on the US dollar on Monday, with the unit weakening to Y97.87 from Y98.24 in New York on Friday.

The euro fell to $US1.3500 and Y132.16 compared with $US1.3519 and Y132.88.

The single currency suffered selling pressure after Italian Prime Minister Enrico Letta called a vote of confidence in his left-right government, as former premier Silvio Berlusconi pulled his party's ministers out of the coalition.

President Giorgio Napolitano will have to mediate to find a way out of the latest political impasse, and has said he would dissolve parliament, triggering new elections, only 'if there are no other solutions'.

On oil markets New York's main contract, West Texas Intermediate for delivery in November, fell $US1.35 to $US101.52 in afternoon trade. Brent North Sea crude for November was down 95 US cents to $US107.68.

Gold cost $US1,340.86 at 1805 AEST, compared with $US1,324.60 on Friday.

In other markets:

- Taipei fell 0.69 per cent, or 56.81 points, to 8,173.87.

Taiwan Semiconductor Manufacturing Co shed 2.43 per cent to $Tw100.5 while Hon Hai Precision was 0.52 per cent lower at $Tw75.9.

- Wellington eased 0.97 per cent, or 46.29 points, to 4,736.39.

Telecom fell 1.9 per cent to $NZ2.33 and Warehouse Group was off 2.92 per cent at $NZ3.66, while Air New Zealand rose 0.33 per cent to $NZ1.52.

- Manila slipped 2.95 per cent, or 188.01 points, to 6,191.80.

Alliance Global Group fell six per cent to 23.50 pesos while SM Investments dropped 4.41 per cent to 7.80 pesos.

source: bigpondnews.com

Paying off home loans faster

It seems that Australian homebuyers are heeding the advice that has been handed out by banks and financial advisors. That is, to keep paying the same repayment amounts even if interest rates drop.

The Reserve Bank of Australia (RBA) still has concerns over the amount of household debt in Australia; there is some surprising data about the rate of home loan repayments.

Peter Mozo, Data Head at Mozo said, “Data from the Australian Bureau of Statistics found the refinancing slowed during 2009 but, it has been building back towards a peak.

So, even as the value of property is falling or, stagnating, debt remains high for those who bought into the market when housing was more expensive. Yet, recent research from the RBA has found that more and more borrowers are paying more than the minimum repayments required to their home loans.



Whether this is due to economic uncertainty and job insecurities isn’t known. But, it is fair to assume that the old saying ‘make hay while the sun shines’ is making sense for those who do not have job security. These people are continuing to make payments that were established when interest rates were higher, rather the decreasing the minimum repayments and pocketing the rest.

If a bonus is earned, it is deposited into the home loan rather than spending it, using it to fund renovations or, investing in something else. This has meant that up to 30 per cent of those ahead in their repayments have a buffer of two years. This means, that if things were to take a turn for the worse financially, the household would have up to two years to recover before that surplus was eroded and further repayments would need to be made.

“Over the last four years, people who have had their mortgage for 10 or more years tend to have more equity in their home loans than previously,” said Steve Jovcevski, Home Loan Expert at Mozo.
Home ownership remains key of financial success

Further research from Nielsen found that 68 per cent of home borrowers stated their financial goal was to pay off their home.

Some industry experts are concerned that sinking all available ‘extra’ cash into a home loan does not promote a balance financial plan, many Australians view outright home ownership to be a critical measure of their financial success.

In the same Nielsen survey, on 13 per cent of home borrowers said their top goal was to save for retirement. This means, that adding additional cash into superannuation is taking a back seat over paying off the family home.

There is concern that this will create a generation that is asset rich but, cash poor when it comes to retiring age.

This is despite a home not being able to generate any income in retirement apart from when it is sold, meaning future retirees could find themselves debt-free but cash poor.

Overall, this trend to be ahead in home loan repayments is further indication that Australia was developing a culture towards saving, rather than borrowing. The Deputy Governor of the RBA, Philip Lowe said, “The rate of savings in Australia has increased and is back to the level it was in mid 1980s.”
Refinancing to pay off a home loan sooner

There has been a trend in the refinancing of home loans in the wake of the rate deceases. In the mid 2000s, borrowers who had over extended often sought refinancing to lower interest rates in order to meet repayments.

Now, borrowers are refinancing to access the lower interest rates, but are making repayments over and above the minimum. If the household had budgeted for a higher repayment when interest rates are high, they are continuing to make repayments at that rate.

source:  bigpondmoney.com.au

FCDU loans up 23% to $7.768B

MANILA, Philippines - Foreign-currency loans increased by more than a fifth in the second quarter on the back of continued market confidence in the local economy, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Loans extended by banks’ foreign currency deposit units (FCDU) jumped 23 percent to $7.768 billion as of June from previous year’s $6.314 billion, data from the BSP showed.

Compared with the first quarter, lending of FCDUs- which are branches or subsidiaries of foreign banks in the country- rose 7.3 percent from $7.240 billion.

More loans were granted “due to the stable macroeconomic conditions, low interest rate environment and strong consumer confidence” in the country, BSP Governor Amando Tetangco Jr. said in a statement.

Loans were channeled mainly to public utility firms, which accounted for 26.9 percent of the total, as well as merchandise and service exporters (22.5 percent) and manufacturers including oil companies (14.9 percent).

Filipinos accounted for the bulk of loan customers, BSP said. Residents were granted a total of $6.468 billion in foreign loans, 83.3 percent of the total and up 26.6 percent and 10.4 percent from previous year and quarter, respectively.

Most loans were also long-term in nature as data showed 61.5 percent of the total will be payable over a one-year term. The balance of 38.5 percent will have to be settled with 12 months or less.

With more lending, BSP hopes banks will be able to contribute to consumption growth and boost economic activity in the process.

The Philippine economy grew by 6.1 percent as of June, slightly faster than the government’s five- to six-percent target for the year.

source: philstar.com

Chase, NYSE Websites Targeted in Cyber Attacks

J.P. Morgan Chase (JPM: 41.25, -0.09, -0.22%) and NYSE Euronext (NYX) experienced website trouble Wednesday after being targeted by apparent cyber attacks. The problems come a day after Bank of America experienced prolonged issues following a separate attack.

Flashpoint Partners, an intelligence gathering network specializing in cyber threats, said it believes the Chase outage is "likely due to a sustained denial of service attack." A Flashpoint analyst told FOX Business the attack was probably caused by "a large botnet," a tactic commonly used by hacking group Anonymous. Generally, botnets function by controlling a large number of computers that have been compromised without the knowledge of the machine's owner.

Flashpoint also said that the website of NYSE Euronext’s (NYX: 25.85, -0.26, -1.00%) New York Stock Exchange is subject to a cyber attack from a group called "SaudiAnonymous1." This attack, the Flashpoint analyst said, utilized a different type of denial-of-service tool called a "webhive."

A person familiar with the matter told FOX Business a small number of users in the U.S. had trouble accessing NYSE.com Wednesday in a situation that lasted about an hour. The person said the problem was not widespread and did not impact any of the exchange operator's trading systems. It was unclear as to whether the apparent cyber attack caused the connectivity issues. At 5:30 p.m. ET, the Big Board's website was readily accessible.

A spokesman from NYSE Euronext said the exchange has a policy against commenting on "security matters."

Against this backdrop, a financial-services industry group raised its threat level to “high” from “elevated” on Wednesday, citing "recent credible intelligence."

The Financial Services Information Sharing and Analysis Center warned of the potential for DDoS and other cyber attacks against financial institutions and said members should "maintain a heightened level of awareness," apply all appropriate updates and "ensure constant diligence in monitoring and quick response to any malicious events."

Users attempting to log onto Chase.com were greeted with an error screen, blocking their access to their online bank accounts, though as of about 5 p.m. ET the site appeared to be working properly.

New York-based J.P. Morgan confirmed it was suffering from website issues, saying on its official support Twitter account that Chase.com has been hit by “intermittent issues.” It added, “We’re working to restore full connectivity & apologize for any inconvenience.”

Sitedown.co, which lists website outages, started recording reports of outages on Chase.com as early as 9:21 a.m. ET.

It’s not clear if Chase's website problems are directly tied to the issues that caused slowness and intermittent outages of Bank of America’s website a day earlier. A source confirmed to FOX Business on Tuesday that BofA was hit by a cyber attack focused on its domain name service infrastructure.

However, J.P. Morgan wasn’t named in a threat posted online by a group called “Izz ad-din Al quassam Brigades” that claimed responsibility for the BofA attack and also promised to attack the website of NYSE.

The group claims to be allied with Muslims and was expressing anger over a recent YouTube video mocking Islam. However, there is no way to confirm that this group is indeed Islamic or tied to the terrorist group Izz ad-din Al quassam.

J.P. Morgan didn’t respond to a request for comment.
Shares of J.P. Morgan closed up 0.19% to $41.34. NYSE Euronext shares edged up 0.23% to $26.11.

source: foxbusiness.com

Profits embarrass Aust banks- Shepherd

Australian banks are 'almost embarrassed' to report huge profits, the Business Council of Australia (BCA) president says in the wake of the Commonwealth Bank of Australia's (CBA) record profit.

The CBA on Wednesday posted a $7.09 billion full year profit, the largest ever made by an Australian bank, but chief executive Ian Narev struck a cautious tone as he delivered the news on Wednesday.

'This is a good result given the uncertain environment,' Mr Narev said.

BCA president Tony Shepherd said Mr Narev's modest response to the profit was a distinctly 'Australian thing'.

'Companies are almost embarrassed (to report a major profit) ... particularly the banks,' Mr Shepherd told an Australian British Chamber of Commerce lunch in Melbourne.

'Companies aren't embarrassed in the (United) States about reporting a record profit, in fact the country will celebrate them.

'But we have this problem here with companies making a profit.

'The fact that our banks are profitable is one of the things that got us through the GFC (global financial crisis).

'Ian is quite correctly saying, I'm not sure how long this is going to last, our cost of funds is rising, business confidence and consumer confidence is low, and so we need to continue to work really hard to maintain our profitability.'

'But if he'd come out and said,We just shot the lights out with the profit,' everyone would be all over him.'

source: skynews.com.au