Ten years ago, reverse mortgages were primarily used by widowed or single women well into their 70s with little other means of retirement income. Now, big losses to retirement savings as a result of the financial crisis have stoked interest among younger retirees of both sexes.

Reverse mortgages let a homeowner age 62 or older convert a portion of the equity in his home into cash. Unlike a traditional mortgage or home equity loan, repayment isn’t required until the borrower either no longer uses the home as his primary residence, sells it, or dies. Instead, he receives a lump sum for the amount of the loan less up-front fees, or monthly payments from the lender.

In the 22 years that Home Equity Conversion Mortgages, or HECMs, have been available, 637,000 have been issued and 500,920 were outstanding at the end of July 2010. That represents roughly 7.2 percent of the 6,933,404 owner-occupied housing units for people age 65 and older recorded by a U.S. Census Bureau survey in 2008. HECMs, which are insured by the Federal Housing Administration (FHA), are now roughly 99 percent of the reverse-mortgage market.

“It’s viewed even now as a niche product that people only make use of in desperation,” says Anthony Webb, research economist at the Center for Retirement Research at Boston College. “Given the inadequacy of retirement savings, it really is something that everyone ought to be thinking about, even if in the end they choose not to take advantage of it.”

Demand Expected to Rise
Demand for reverse mortgages is expected to rise, not only because more retirees need extra income since the recession, but due to efforts by the U.S. Housing & Urban Development Dept. (HUD) to lower up-front costs for borrowers. Lenders have indicated to Peter Bell, president of the National Reverse Mortgage Lenders Assn. (NRMLA), that the largest number of borrowers so far this year has been 62- and 63-year-olds, most of whom want to use some of the money to pay off an existing mortgage as they prepare for a drop in income during retirement.

Americans’ retirement assets took a big hit from the financial crisis and income shortfalls are projected to worsen as health-care costs continue to rise faster than general inflation in the years ahead, says Jack VanDerhei, research director of the Employee Benefits Research Institute in Washington. The median holdings for individuals ages 55 to 64 in 401(k)/IRAs at the end of 2008 was $56,000, down 30 percent from $78,000 at the end of 2007, according to the Federal Reserve’s Survey of Consumer Finances.

A look at clients’ monthly cash-flow needs shows that a reverse mortgage is often an economic necessity, according to Margaret McDowell, the founder and principal of Arbor Wealth Management in Miramar Beach, Fla. “[A] reverse mortgage can offer financial salvation for retirees. Often the additional capital will allow them to stay in their homes and get out from under a mortgage payment or simply improve their monthly cash flow,” she wrote in an e-mail message. “However, the ongoing success of that decision relies on the self-discipline of the individuals.”

Jim Heitman, an independent, fee-only financial adviser in Alta Loma, Calif., has seen a big jump in client interest in reverse mortgages in recent years. “When I introduce the topic, I need to do a lot less educating as to what that is than I used to,” he says.

Slump in 2010
Any increase in issuance would come on the heels of a slump following the collapse in U.S. home values. After climbing steadily since 2000, the number of HECMs issued fell to 79,106 for fiscal year 2010, which ended Sept. 30, from 114,692 in fiscal year 2009, according to the NRMLA. That would make fiscal 2010 volume the lowest since before 2006.

The median value of homes that have already taken HECMs is around $300,000, says NRMLA’s Bell. He estimates that about 60 percent of reverse mortgages are used to pay off an existing mortgage using a lump sum, with borrowers taking the balance as a line of credit. The market for HECMs is expected to grow, aided by a temporary boost in the FHA loan limit under the 2009 Economic Recovery Act to $625,500 from a prior ceiling of $363,000. Congress recently extended the higher loan limit through Sept. 30, 2011. (Data on the average size of a reverse mortgage are not readily available, partly because the Mortgage Industry Standards Maintenance Organization has yet to finalize a tracking methodology.)

Older people intent on leaving a legacy to their children may resist tapping into their home’s equity. Another major objection is the higher up-front costs vs. home equity lines of credit, the closest alternative for people who want to stay in their homes. The up-front fees can be as much as double those for a HELOC, says Andy McVay, a financial adviser at Avalon Financial Advisors in Orange, Calif. Where HELOCs will generally cost users a couple of percentage points of the total loan value, up-front costs can run as high as 18 percent of the amount of a reverse mortgage. A borrower can get a fixed interest rate only by taking a lump sum, which incurs higher interest costs over the long term. Variable rates are initially lower than fixed rates but have to be watched since they could rise as the economy improves.

Another disadvantage is the premium borrowers have to pay for mortgage insurance required by lenders, which was raised to 1.25 percent from 0.5 percent on Oct. 4, and which increases the loan’s interest rate vs. a home equity loan, warns McVay.

Some Advantages over HELOCs
Fear of losing access to Medicaid-funded assisted living facilities has also damped interest in reverse mortgages, since eligibility is based not only on income but total assets, excluding a primary residence. But that’s only a problem for reverse mortgage holders if they take out a lump sum or squirrel away monthly payouts instead of spending them on living expenses.

Reverse mortgages have some clear advantages to retirees over HELOCs. They continue to generate income and don’t have to be repaid until the house is sold. Borrowers won’t be thrown out of their homes as long as they continue to pay property taxes, and lenders can’t cut or eliminate the lines of credit even if the property value falls below the loan amount. It’s also much easier for older, low-income retirees to qualify for them than for HELOCs. The amount you can borrow depends on your age, the current interest rate, and the lesser of the appraised value of your home, sales price, or the FHA’s mortgage limits. Generally, the more valuable your home, the older you are, and the lower the interest rate, the more you can borrow.

Another benefit of federally insured reverse mortgages: Neither the homeowner nor his heirs has to make up the difference if the home is sold for less than the total amount of the mortgage once accrued interest is added to the principal loan amount. That’s one reason the ongoing insurance premium more than doubled starting this week.

Three Changes Under Way
Three major changes are expected to usher in a new era for federally insured reverse mortgages, says Bell at the NRMLA. To bolster demand, HUD launched the HECM Saver on Oct. 4, which slashes up-front costs for borrowers who need smaller loans than those available under standard HECMs. The HECM Saver has a mortgage insurance premium of 0.01 percent rather than 2.0 percent of the loan value, in exchange for reducing the loan size by 10 percent to 18 percent. The FHA expects roughly one-third of all new borrowers to opt for the Saver loan and hopes the increased revenue will lower its total insurance risk.

Second, HUD has stepped up its counseling process. Since most counseling is done by telephone, there’s now a series of questions counselors must ask to confirm a client is grasping what he hears, and a Benefits Check tells a client if there are financial alternatives to a HECM for which he may qualify.

Lastly, higher investor demand for securitized pools of HECMs offered by Ginnie Mae, part of HUD, is driving more competitive interest rates and letting lenders waive the up-front mortgage insurance premium for fixed-rate mortgages. That’s a substantial savings at 2.0 percent of the first $200,000 of a home’s value, plus 1.0 percent of the remaining value, up to a maximum of $6,000. Some lenders are also waiving origination fees, which can run as high as 2.0 percent of a home’s appraised value.

Even if costs decline, David Diesslin, a financial adviser in Fort Worth, recommends that reverse mortgages be done as private family transactions when feasible instead of using a third-party lender. If a homeowner’s grown son or daughter can afford it, it saves the estate money in the long term. The family would need to get a real estate attorney and connect the loan to the home’s title, so it’s an official lien, he says. And when the house is eventually sold, any funds over the lien go to the estate.

Michael Kay, president of Financial Focus, an advisory firm in Livingston, N.J., advises clients, especially older ones, to bring someone they trust, whether a family member, close friend, or CPA, to sit in on meetings with lenders and be part of the decision-making process. “[Having] someone who has competency in financial issues and can also ask questions that might not occur to you adds to the level of comfort,” he says.

China’s central bank has gradually loosened its control over banks benchmark lending and deposit interest rates in recent years and has pledged to further liberalize the country’s interest rate system. In 2004, it removed the ceiling for lending rates but maintained a floor for lending rates, which can’t be more than 10% below the benchmark lending rate.

China’s one-year benchmark lending rate is 5.31%, compared with the one-year benchmark deposit rate of 2.25%.

China, unlike many other countries, didn’t cut its interest rates to around zero at the beginning (confirming he said at the beginning) of the global financial crisis, because “overly low interest rates” would discourage bank lending, Zhou said at the Oxford China Business Forum in Beijing.

Setting a minimum level for lending rates also encourages firms to seek financing through direct channels such as bond markets, he said, adding that China doesn’t have a minimum interest rate for corporate bonds.

Zhou also reiterated that the PBOC’s monetary policies have various targets, including maintaining low inflation, and that its priorities can change over time. The PBOC has said its targets include promoting fast economic growth.

Zhou told Dow Jones Newswires on the sidelines of the forum that he discussed the yuan exchange rate issue with U.S. National Economic Council Director Lawrence Summers during the official’s visit to China earlier this week, but didn’t provide any details.

Some U.S. politicians have expressed their frustrations regarding the yuan, saying its feeble rise since Beijing’s pledge in June to boost the currency’s flexibility suggests China intends to protect its exporters’ interests.

In an official statement on Wednesday, the White House said that Summers and Deputy National Security Adviser Thomas Donilon held talks with Chinese officials on a wide range of topics including North Korea, Iran, and “global rebalancing,” but didn’t specifically mention the yuan issue.

A former PBOC adviser, Yu Yongding, said at the forum that “China is facing yuan appreciation pressures” and the country must “seek a good balance” on the issue.

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Bubble not expected, but caution urged for developers

The severity of the global financial crisis also saw the government introduce additional sweeteners for buyers a 300,000-baht income tax deduction for any buyers of a new home that was transferred within 2009. At the same time, mortgage interest that could be deducted from taxable earnings was increased to 100,000 baht from 50,000 and has now become a permanent tax benefit.

Property market in Thailand remained in a strong position thanks to good sales in the first quarter which were not only driven by the incentives. The stock market is risky to invest in, while buying gold for investment has limitations.

The recovering economy is re-building consumer confidence while homebuyers purchasing power is also strong, he said. Development of the mass transit network in Bangkok was another boost for the market. Politics has had little impact on condominium sales but it has dampened investment and the industrial, commercial and tourism sectors.|

The mid to high-end segment boomed this year in Thailand as demand was wide and remained strong. The high-end will recover in the third or fourth quarter. But supply in this segment is very limited due to scarcity of land for new developments. Around 80% of the new launch in this segment was taken up. New supply in the high-end segment, now quoted at 150,000 to 200,000 baht a square metre, will be provided by developers with a strong financial status, experienced teams and products that match demand.

“This is among the largest mortgage fraud schemes ever prosecuted in the Western District of Missouri” Phillips said. “As in so many fraud cases, the culprits thought they were getting away with their crime for awhile; but inevitably, their scheme collapsed and left a paper trail that federal agents diligently followed.

“This should be a warning to anyone who might consider exploiting a financial crisis for personal gain” Phillips added. “Short-term profit isn’t worth the certainty of prosecution, punishment and prison.”

Nathan N. Anderson, 32, of Grain Valley, and Kyle J. Wine, 29, of Lee’s Summit, each waived his right to a grand jury and pleaded guilty before U.S. District Judge Gary A. Fenner this morning to a two-count federal information that charges both men with participating in a conspiracy to transport money obtained by fraud across state lines and with money laundering. Kyle Wine is the brother of Jeffrey Tyler Wine of Kansas City, who pleaded guilty to a related mortgage fraud scheme and was sentenced in May 2007 to five years in federal prison without parole.

Anderson and Kyle Wine admitted that, from February 2002 to November 2005, they defrauded mortgage lenders by inducing them to loan investors a total of $23,324,114 to purchase 350 residential properties. Anderson was involved with 264 properties totaling $18,918,542; Kyle Wine was involved with 86 properties totaling $4,405,572.

Anderson and Wine were in the business of purchasing, rehabilitating, managing and selling residential properties in the metropolitan area. Both Anderson and Kyle Wine worked at Sunrise Equities, Inc., which was operated by Jeffrey Wine. Anderson left to work as co-owner of AMIC and Real Estate Holdings, Inc., at which point Kyle Wine began working at Sunrise Equities and took over Anderson’s duties. Kyle Wine likewise worked with AMIC, and he also did business as Rockhill Realty LLC, selling residential real estate.

Anderson and Kyle Wine acquired residential properties at reduced rates. After rehabbing the properties (at times, they admitted, doing poor quality work), they were advertised for sale as investment properties with no money down. Anderson and Kyle Wine told investors that they would provide the down payment and closing costs for the sale, secure renters for the property and ensure that mortgage payments were paid even if the properties were not rented. Anderson and Wine guaranteed a positive cash flow from the properties.

Anderson and Wine, along with their co-conspirators, prepared false and fraudulent loan applications and supporting documents to submit to mortgage lenders in the names of investors.

Anderson and Kyle Wine, along with their co-conspirators, managed the rental properties for the investors for one year after purchase. During that time, they submitted false monthly reports to investors of rent received, expenses incurred, and income earned, and paid to the investors the amount of income reflected. This induced victim-investors to purchase additional properties.

Under federal statutes, Anderson and Kyle Wine are each subject to a sentence of up to 15 years in federal prison without parole, plus a fine up to $500,000. Sentencing hearings will be scheduled after the completion of pre-sentence investigations by the United States Probation Office. This case is being prosecuted by Assistant U.S. Attorney Linda Marshall. It was investigated by IRS-Criminal Investigation, the U.S. Department of Housing and Urban Development ” Office of Inspector General, and the Federal Bureau of Investigation.

Financials, resources and industrials stocks are among the notable gainers in the Australian market. Stocks from various other sectors are also trading firm. The benchmark S&P/ASX 200 index is up 96.2 points or 2.1% at 4,664. The broader All Ordinaries index is currently trading at 4,683, up 92.4 points or 2% over its previous close.

On Tuesday, the S&P/ASX 200 index had ended up 22.3 points or 0.49% at 4,568, while the All Ordinaries index moved up 20.4 points or 0.45% to 4,591.

Among bank stocks, ANZ Bank is up 3.5%, National Australia Bank is trading higher by 3.3%, Westpac Banking Corporation is gaining about 2% and Commonwealth Bank of Australia is up with a gain of 2.5%. Macquarie Group is trading higher by 1.4%.

In the materials space, BHP Billiton is up 1.8%, Rio Tinto is gaining about 2.8% and Newcrest Mining is trading higher by 3.75%. Bluescope Steel, Orica, Incitec Pivot, Fortescue Metals and Lihir Gold are also trading notably higher.

Among energy stocks, Woodside Petroleum is up 1.6%, Santos is gaining 1.65%, Oil Search is up 2.2% and Origin Energy is trading stronger by about 2.5%.

Shares of Warrnambool Cheese & Butter Factory Co Holdings Ltd are up nearly 8% after the group received an improved takeover offer from Murray Goulburn Co-Operative Co Ltd. On Tuesday, WBC had reported a significant rise in first-half profit and said its outlook is positive.

Coffey International is down nearly 8% due to weak results. The global engineering and project management provider’s net profit fell 20% to A$10.85 million in the six months to December 31, from A$13.51 million in the prior corresponding half. Operating earnings before interest, tax, depreciation and amortization fell 14% to A$31.1 million. The company has blamed a strong Australian dollar exchange rate and the global financial crisis for the fall in its first-half profit.

On the economic front, an index measuring skilled job vacancies in Australia added 1.6% to 44.4 in February compared to the previous month, the Department of Employment and Workforce Relations said. That follows a 1.1% monthly increase in January.

Among the individual components, marketing and advertising positions jumped 9.9% on month, while metal trades and construction jobs also were sharply higher. The availability of health profession and accounting positions saw significant declines. By region, New South Wales, South Australia, Western Australia and Tasmania saw an increase in skilled vacancies, while Victoria, Queensland and the Northern Territory all saw declines.

A forward-looking index measuring the Australian economy added 1.3 points or 0.5% in December compared to the previous month, the Westpac/Melbourne Institute index revealed, coming in at 245.8. That follows the 1% monthly increase in November. On an annualized basis, the index jumped 6.2% after jumping 5.4% on year in the previous month. The survey also showed that the coincident index climbed 1 point or 0.4%.

In the currency market, the Australian dollar opened notably higher thanks to the positive close on Wall Street overnight. The Aussie was quoting at US$0.9008-US$0.9011 in early trades, up 0.85% from Tuesday’s close of US$0.8932-US$0.8937. The Australian dollar is currently trading at 0.9007 to the U.S. dollar.

The Japanese stock market is trading firm on Wednesday with investors picking up stocks cutting across various sectors.

The benchmark Nikkei 225 index, which rose to 10,258, was up 210.37 points or 2.1% at 10,245 at the end of the morning session.

The mood is so positive that just three stocks out of the 225-stock strong Nikkei 225 index are currently down in the red.

Automobile and banking stocks are mostly trading higher. Shares of securities firms, real estate companies and insurance firms are moving up. Manufacturing and electric power stocks are also gaining in strength.

Several stocks from machinery, services and communications sections are trading with notable gains. Paper stocks Nippon Paper Group and Oji Paper Co. are trading lower due to rating downgrades.

Shares of Toshiba Corp. moved up sharply following reports the U.S. government will promote domestic construction of nuclear power plants.

After opening higher thanks to a positive close on Wall Street overnight, Toyota Motor shares have drifted down into negative territory on recall concerns.

Pacific Metals, Japan Steel, Sumitomo Metal Industries, Mitsui Minerals and Nippon Steel are trading sharply higher.

Mitsui & Co shares are up sharply following an announcement by the company that it will participate in a project to develop shale natural gas in the U.S state of Pennsylvania.

Mitsui OSK Lines, Toshiba Corp., Canon, Fujitsu, Shinsei Bank, Honda Motor are also trading with impressive gains.

On the economic front, an index measuring the activity of tertiary industries in Japan was down 0.9% in December compared to the previous month, the Ministry of Economy, Trade and Industry said on Wednesday. That was sharply lower than analyst forecasts for a decline of 0.2% on month, which was also the same rate of decline in November. For the third quarter of 2009, the index was down 0.2% compared to the previous three months.

In the currency market, the U.S. dollar traded in the lower 90-yen level in early deals in Tokyo. The yen is currently trading at 90.28 to the U.S. dollar.

Bank and technology stocks are among the top gainers in the South Korean market. Steel, oil and telecom stocks are also trading firm.

The benchmark KOSPI index, is trading at 1,627, up nearly 26 points or 1.62%, over its previous close.

Among bank stocks, Korea Exchange Bank, Woori Finance and Shinhan Financial are trading higher by 2%-2.5%, while KB Financial is up sharply by about 4%.

In the technology space, heavyweight Samsung Electronics is gaining about 2.2%, LG Display LCD is up 2.8% and Hynix Semiconductor is trading higher by 4.5%. LG Electronics, which is a bit subdued, is up with a modest gain of 0.5%.

Steel stocks Hyundai Steel and POSCO are up 1.2% and 1% respectively. Among Oil stocks, SK Holdings is trading 2.1% up and S-Oil is gaining about 1%. KEPCO is up with a gain of 1.2%.

Among shipping stocks, Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding are up with modest gains, while STX Pan Ocean is down in negative territory with a loss of 3.3%.

Telecom stocks SK Telecom and KT Corp are up 1.8% and 2% respectively. Automobile and airlines stocks are trading mixed.

Among other markets in the Asia-Pacific region, Hong Kong and Singapore are trading notably higher. Indonesia, Malaysia and New Zealand are also trading firm. Markets across the region closed higher on Tuesday. Chinese markets are closed this week due to a holiday.

On Wall Street, stocks rallied by sizable margins on Tuesday, as data showing a notable improvement in New York State manufacturing and a batch of upbeat earnings reports drove markets higher on the day. The major averages all closed in positive territory, building on last week’s gains.

One local expect projects Brazilian property prices could appreciate by up to 200% over the next decade, driven by the country’s burgeoning economy, and the pending introduction of mortgages to overseas nationals. Investment banking firm Goldman Sachs believes that Brazil’s economic growth could outstrip that of the other BRIC (Brazil, Russia, India and China) member nations over the next few years.

Brazil’s economy is widely expected to become the fifth largest in the world by the time the Olympic Games kicks off in 2016, and yet Brazil property and land prices still remain a fraction of those found in more developed nations. The Brazilian president Luiz Inacio Lula da Silva has already pledged to spend up to ??11.5bn on building a million new homes in Brazil between now and 2011. However, potential high property investment rewards are not with out their risks, as crime and corruption still remains widespread in Brazil.

2. France
In stark contrast to the relatively high risk, high return nature of investing in Brazil, the risks associated with investing in French property are far lower. France has traditionally always been a rather safe haven for property investors. The nation was the first European country to come out of recession in 2009, reflecting the fact that the global credit crunch had much less of an impact, compared to other European counterparts.

France’s strong economy is having a positive impact on its property market, which now appears to be on the road to recovery. Increasing property and mortgage transactions are boosting residential values, with the latest FNAIM data revealing that the average price of a French property appreciated by 2.8% between April and September 2009.

Although average prices remain down 7.8% year-on-year, the market is generally expected to improve further, due to France’s prudent attitude to mortgage lending. Anyone taking out a mortgage in France is generally only permitted to borrow one third of their total gross monthly income. This has ensured that mortgages remain readily available, with 100% loan-to-value home loans available at competitive borrowing rates.

Consequently, mortgage lending in France is soaring. French mortgage broker Athena Mortgages reports that there was a 21% rise in mortgage enquiries in Q3 2009 compared with the previous quarter.

The buy-to-let and leaseback sectors are reportedly attracting particular interest from investors, due to improved yields across the country. The capital city of Paris has long been identified as one of the most attractive European cities for investment, and is typically the most popular place to buy a home in France, along with Cannes, Marseille and Nice, which are all located along the southern Mediterranean coast.

3. USA
The USA property market may be showing tentative signs of improvement, following one of the worst economic and property crashes in living memory, but the downturn has come at a cost to many US homeowners. Data from RealtyTrac shows that a record high of 938,000 US homes foreclosed in the third quarter of 2009. If this trend continues, foreclosures would reach around 3.5m by the end of 2009, up from around 2.3m properties last year.

Properties in Nevada had the highest foreclosures rates in Q3, followed by homes in Arizona, California, Florida, Idaho, Utah, Georgia, Michigan, Colorado and Illinois. Rising unemployment levels – currently at a 26-year high of 9.8%?? was cited as the main reason for the increase in foreclosure levels. Yet, there may be worst to come, as the unemployment rate is not expected to peak until mid-2010.

Unfortunately, one person’s misfortune is another’s gain. With around 7m properties currently in the foreclosure process, compared with 1.3m for the same period in 2005, predatory investors are buying up distressed, abandoned and repossessed homes at bargain-basement prices, as now appears to be the ideal time to fill your boots.

Although the sub-prime mortgage crisis started in the USA, there are growing signs that the property market may now be at or near the bottom of the cyclical downturn. Various indices reveal that average residential prices started to rise, albeit marginally, during the second quarter of 2009.

4. Norway
Sales in Norway have nosedived over the past year or so, as residential values have cooled. However, the Norwegian property market downturn, which has not been anywhere near as severe as in other neighbouring countries, appears to have already bottomed out, and looks ready to lead the Scandinavian property market recovery.

The key to the Norwegian property market is the strength of the country’s economy, which has made it one of the wealthiest in the world, while new housing output has dropped below average, which could fall short of demand next year.

Norway is rich in both gas and oil and this helps to support the country’s economy and ensure that its currency also stays strong both alluring to property investors. The country’s population is estimated to increase by 23%?? approximately one million people over the next 40 years, which should make sure that long-term residential demand is robust.

Another positive is the fact that unemployment is extremely low approximately 3% compared to its European counterparts. Almost half of the Norwegian population resides in the counties of Oslo, Rogaland, Akershus and Hordaland, and so this is where property investors should focus their attentions. Property prices in these places remain relatively cheap compared to wages in Norway.

5. Switzerland
Many of the high earners currently living in Britain look set to quit the UK in droves ahead of the introduction of a 50% top tax rate in April 2010, and escape to more tax-friendly shores, such as Switzerland.

The Swiss authorities are actively lobbying to attract many of these disillusioned high-net worth individuals, who are being tempted by assurances that they will be allowed to steer clear of European Union regulation and Britain’s Financial Services Authority. It is estimated that hedge funds managing in the region of ??10 billion in assets have already moved to Switzerland in the past year alone. This has increased demand for homes to rent and buy.

Due to canton restrictions, it has previously been difficult for foreigners to buy property in Switzerland. However, the country has now eased its strict property buying regulations, and opened its doors to more international buyers, partly through the introduction of residence de tourisme style investments, which is similar to the ever-popular leaseback formula in France.

Switzerland, one of the richest nations in the world, is of course a tax haven.
Anyone who sets up permanent residency in Switzerland would be entitled to take advantage of the country’s favourable tax law, including the lump sum taxation, which charges a levy based on people’s lifestyle and spending habits.

Given that one’s taxable income is charged at just five times their annual rent or rental value of their property, and the fact that assets outside Switzerland remain tax-free, should ensure demand for Swiss properties?? to rent and buy?? remains strong for years to come.

Historically, Swiss property values have typically appreciated in line with inflation. Properties located at the top end of the market, in cantons like Valais and Vaud, have reportedly increased by up to 20% in the past year.

6. Australia
The Australian economic and property market recovery has been swifter than the other leading nations around the world. It has been claimed that the revival in the country’s property market and economy is as much as 12 months ahead of the other developed countries in the economic cycle.

Unemployment peaked in September 2009, in stark contrast to Britain and the USA, while increasing commodity demand from China has forced the Australian Central Bank to raise benchmark interest rates. Yet this has failed to cool strong residential demand, which coupled with a general housing shortage, is forcing property values higher.

The latest Australian Bureau of Statistics house price index shows that the average price of a residential property in Australia appreciated by 4.2% in the third quarter of 2009, which means that in the year to September, residential prices increased 6.2%. Australia could be set for a residential property price boom over the next few years, as the country’s economy continues to show genuine signs of recovery.

A recent Australia property report projected that average residential prices in nearly all capital cities would increase by between 11% and 19% by 2012, with the greatest property price rises expected to be recorded in Sydney, Adelaide and Melbourne.

7. Malaysia
I tipped Malaysia to be the number one place to invest in property in 2009, due to the country’s robust property ownership laws, lack of capital gains tax and attractive mortgage rates. However, residential sales were sluggish during the early half of the year, as the market struggled as a direct consequence of the global credit crunch, while there are some political uncertainties emerging.

But with consumer sentiment improving, the recent positive market recovery, supported by the construction of new residential schemes across the country, should continue in 2010. While property prices race ahead across much of Asia?? in countries like China, Vietnam and Singapore?? which has led to heightened fears of budding property bubbles, the Malaysian property market has merely stabilised, making it suited to more balanced investors.

With an extremely young and well-educated population, long-term demand for property in Malaysia looks set to grow. Domestically, an increasing number of people are moving from the countryside into the larger cities, while internationally Malaysia looks set to cross a demographic landmark of huge social and economic importance.

Malaysia’s population is growing by around 2%, or an extra 500,000 people, every year. The World Bank projects the country’s population will grow annually by 1% until 2050, which will place further pent-up demand on property values. Malaysia’s property prices are still lower than they were in 1997, due partly to the Asian financial crisis in the late 1990′s, suggesting very real room for growth.

8. Abu Dhabi
The recent property price falls in the fast growing UAE capital of Abu Dhabi, the richest and largest of all the seven UAE states, have been nowhere near as severe as in neighbouring Dubai.

The tax-efficient emirate has the largest fossil fuel reserve in the UAE, is the fourth biggest natural gas producer in the world, has the world’s highest income per capita, is home to almost all of the Arabic Fortune 500 companies, and is currently sitting on over 88 billion barrels of proven oil reserves.

Yet Abu Dhabi is now actively trying to reduce its reliance on oil, and is diversify its economy into the financial services and tourism sectors. Billions of pounds have been allocated for infrastructure projects and the development of residential, leisure and cultural schemes across the oil-rich emirate. The plans are truly remarkable.

Nevertheless, investors seeking out bargain deals will find some of the best opportunities for distressed property investments in the Gulf region in Abu Dhabi.?? The recent slowdown in the property market means that just 45,000 are anticipated to be completed in the capital in the next four years, augmenting the exiting housing shortage.

The supply of housing stock remains scant, partly because Abu Dhabi is not part of a community master-plan like those pioneered by Emaar and Nakheel in Dubai. The housing shortfall in the capital is expected to stand at around 15,000 homes next year, which could mean that property prices and rents are forced up, while residential demand?? domestic and international is expected to increase.

Because Abu Dhabi does not have the same high level of exposure to the global financial crisis, compared with other UAE emirates, mortgages for non-residents at up to 75% loan-to-value are readily available again. This is likely to appeal to buy-to-let investors, as well as those people seeking equity release and to remortgage their properties in Abu Dhabi.

9. Oman
The relaxed Arabian state of Oman, voted destination of the year 2008 by Vogue magazine, has long been a popular holidaying destination for people living within the GCC. With a population of around 2.3m, Oman is being modernised and liberalised culturally and economically by hereditary Sultan, Qaboos Bin Said Al-Said, a forward-thinking leader.

Sultan Qaboos strategy for economic growth?? Vision 2020 aims to diversify Oman’s economic dependency on oil, and focus on other industries, such as property and tourism.

Demand for property in Oman is primarily being driven by the Sultan’s decision to introduce legislation in 2004 ratified in 2006 permitting foreigners to buy freehold property and land in designated tourist areas, most notably Muscat. These projects are referred to as Integrated Tourism Complexes (ITC). Furthermore, foreign homeowners can now apply for residency visas.

A number of luxurious developments are being erected across Oman including, The Chedi, Azaiba, Wadi Kabi, The Wave, Barr Al Jissah Residences, Jebel Sifah, Salalah Beach, The Malkai, Muscat Hills, Al Madina A’Zarqa, Jebel Sifah, and Salalah Beach. The fact that Oman appeals to end-users not just investors means that the medium to long-term prospect for Omani property market growth looks good.

10. South Africa
South African property market conditions look ripe for investment, as the country starts to come out of recession. Recent property price falls appear to be bottoming out, while FIFA’s 2010 football World Cup fast approaches.

From the moment world football’s governing body, FIFA, awarded South Africa the rights to host the World Cup in 2010, shrewd property investors from around the globe have been looking on with great interest, with one eye firmly on cashing in on the sport’s popularity.

The first ever FIFA World Cup to be hosted on African soil has the potential to be the biggest sporting event of all time. The tournament is expected to attract around 350,000 football fans for a month of football mayhem, starting on 11 June 2010, which is tipped to contribute around ??1.5bn to South Africa’s gross domestic product and generate another ??500m in government taxes.

South Africa property prices haven softened over the past year or so, due to a fall in residential demand, caused by reduced housing affordability, higher inflation and interest rates. But residential prices could soon experience growth, on the back of what should be a reinvigorated economy, spurred by the football tournament.

While the odds may be stacked up against the South African football winning the World Cup in 2010, it is not too far fetched to assume that the country’s housing market could prove to be the real winner of the tournament, generating significant returns for property investors in the process.

Standard Chartered Bank managing director ,Mizinga Melu said the reduction in the base-lending rate by three per cent was a result of the drop in the level of inflation and other economic benchmarks.

Another bank, Invest Trust Bank, also reduced its rate by a similar margin recently.
Ms Melu, who is vice-chairperson for the Bankers” Association of Zambia, called on other financial institutions to review their base-lending rates downwards to support economic growth.

Last month, President Rupiah Banda, at the official launch of the First National Bank (FNB) in Lusaka, asked commercial banks to bring down loan interest rates because the current harsh lending conditions were responsible for the poor loan recovery rates and were eroding confidence in the banking sector.

The president said there was equally a risk of discouraging both savings and investments due to ironically low rates on deposits.

Mr Banda added that there was need for financial houses to bring down the high loan interest rates and other bank charges, which had made loan repayments exorbitant.

The rates for other banks are Barclays Bank at 25 per cent, First Alliance (23 per cent), Investrust (22 per cent) and Eco-bank (19 per cent).

Ms Melu said from January this year, the Government had managed to reduce inflation rate from 16 per cent to the current level of 12.3 per cent.

“We recognise the efforts and progress from the Government, through the Bank of Zambia, in reducing the level of inflation in the country. Inflation has reduced from a high of 16 per cent in January 2009 to the current level of 12.3 per cent,” she said.

Ms Melu said there had been consistent reduction in the benchmark market rates such as the three months” Treasury Bill rate which had dropped in the last two months.

She said Treasury Bills in the last two months had on average dropped between four per cent and six per cent.

Ms Melu said the bank was committed to assisting the customers in growing their businesses.

She said as a partner in national development, the bank realised that the benefits from reduced benchmark rates needed to be passed on to the productive sectors to increase economic activity and create more jobs.

“We, therefore, believe that with the reduction in the cost of finance, our customers will continue to grow their businesses and create more wealth for the nation,” she said.

While the severity of the global financial crisis had been unprecedented, the Bank of Zambia (BoZ), financial institutions and other stakeholders played an active role in facilitating the development of the financial markets in order to improve their efficiency and effectiveness.

She said the introduction of an overnight lending facility for commercial banks by BoZ with effect from next month would contribute to improved liquidity management for financial institutions.

Ms Melu said the introduction of a wholesale lending rate by BoZ next year would further contribute to the reduction of lending rates in the market and, consequently, the productive sectors of the economy could be able to borrow at lower rates.

Ms Melu said the bank was confident of the resilience of the Zambian economy and still recognised that right across the continent, the economic environment would continue to be challenging going into next year.

“We are seeing “green shoots” in the Zambian economy led by increased productivity in the mining sector,” she said.

Meanwhile, head of asset and liabilities management for global market dealing, Kabwe Mwaba said the dollar base-lending rate had been fairly stable in the last six months.

Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, launched the two key reports which demonstrate the strength and resilience of Australia’s financial markets and how well they have fared in contrast to other major financial centres following the Global Financial Crisis (GFC).

Austrade’s Chief Executive Officer, Peter O’Byrne, said during the last twelve months Austrade has increased its focus on financial services and has a team which extends throughout Austrade’s global network. This dedicated specialist team works to promote exports from Australia’s financial sector as well as attracting potential international investors.

“Working with the industry, the team supports missions and activities to highlight Australian capabilities to offshore markets extending from North America and Europe and into the Asia Pacific region, reflecting our strengths in funds management, investment banking and growing areas, such as Islamic finance,” Mr O’Byrne said.

“Significant steps toward establishing a strong mutual recognition framework between financial regulatory authorities in Australia and overseas markets have been taken, leading to stronger relationships with markets in the US and China.

“The Australian Financial Centre Forum, set up to help position Australia as a financial services centre in the region, will report on further ways to improve the competitiveness of our financial system, address tax and regulatory barriers and improve market access offshore later this year” Mr O’Byrne said.

Austrade’s National Manager Financial Services, Gary Johnston, said the joint launch of the two publications highlights the strong working relationship developed with AFMA.

Mr Johnston said, Austrade’s 2009 Financial Services Benchmark Report highlights the liquidity and sophistication of Australia’s financial markets and also points to the strength of regulatory and governance frameworks and their transparency which has benefited Australia during the GFC.

This year’s Benchmark Report shows Australia’s financial sector fared better than most other major financial centres. The sector remains strong, continuing to develop as a regional and global centre with Australian based institutions seeking global mandates and viewing Australia as a base for their products,” Mr Johnston said.

“Finance and Insurance remains a significant sector of the Australian economy, and contributed 8.1 per cent to Real Gross Value Added during 2008-09. The sector remains well capitalised, with total assets for Australia’s financial institutions exceeding A$4.4 trillion – equivalent to four times GDP.

“Investment funds – which include life offices, superannuation and other managed funds – account for 26.4 per cent of total financial sector assets at March 2009, totalling A$1.2 trillion – up more than fourfold since 1994.”

“Our banking and insurance sectors are actively looking for opportunities, particularly in emerging markets, while the funds management sector is looking to position Australia as a “product manufacturing” hub for the region.”

Mr Johnston said Australia’s leading financial institutions are also increasingly looking to extend their regional and global reach. Australia is also seen as an important market within the region with growing interest from Chinese and Indian financial institutions.

This points to both challenges and opportunities but offers encouragement for the future and supports the Government’s long term commitment to make Australia a global financial services centre in the Asia-Pacific region.

The central bank warned of possible asset price bubbles, raised banks’ provisioning requirements for commercial real estate loans and lifted inflation forecast. Intraday volatility was immense. Banking stocks fell as the RBI did not relax mark-to-market rules for bank’s debt holdings. The market has been agog with talks of the central bank hiking the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM). India’s largest steel maker by sales Tata Steel fell after poor Q2 result.

Telecom stocks declined sharply on concerns about price war. Rate and metal stocks also tumbled. Index heavyweight Reliance Industries drifted lower

Intraday volatility was immense. The market cut losses after an initial fall caused by weak Asian stocks. However, the intraday recovery proved short-lived. The market weakened soon after the central bank at 11:15 IST said at the time of announcing its quarterly policy review that an exit from an easy monetary policy has begun. The market extended losses in volatile trade later.

Volatility may remain high on the bourses this week as traders rollover positions in the derivatives segment from October 2009 series to November 2009 series ahead of the expiry October 2009 contracts on Thursday, 29 October 2009.

The Reserve Bank kept its benchmark lending and borrowing rates on hold at a quarterly monetary policy review on Tuesday, 27 October 2009. It also kept steady cash reserve ratio at 5% but raised the statutory liquidity ratio to 25% from 24% with effect from 7 November 2009. Funds in CRR fetch no return for banks, while returns from SLR are small. The central bank said an accommodative monetary policy stance is required as the ongoing economic recovery was fragile

The RBI kept 2009/10 GDP forecast at 6% with upside bias and said it sees modest decline in agriculture. The RBI raised projection of inflation to 6.5% with an upside bias at end March 2010 from earlier 5%.

The RBI said it will continue to monitor the price situation in its entirety and will take measures as warranted by the evolving macroeconomic conditions swiftly and effectively. It said it is mindful of its fundamental commitment to price stability. The central bank said the current large overhang of liquidity could engender inflation expectation even if credit demand remains subdued.

The central bank said the policy dilemma for India is different in some important respects from that of advanced economies as also other emerging market economies. It said India is confronted with an upturn in inflation, with rising headline inflation and stubbornly elevated consumer price inflation. According to RBI, most advanced economies and emerging market economies do not face an immediate risk of inflation. In several advanced economies, the concerns are about a possible deflation which are just about waning, it said

Effective immediately, the RBI ended a special repurchase facility for banks and another for the funding needs of non-bank financial companies, mutual funds and housing finance companies. It also ended a forex swap facility for banks, and cut an export credit refinance facility to a pre-crisis level of 15% from 50% with immediate effect.

The central bank said the collateralised borrowing and lending obligation liabilities of banks would be subject to cash reserve ratio requirements from 21 November 2009.

The balance of judgement at the current juncture is that it may be appropriate to sequence the exit in a calibrated way so that while the recovery process is not hampered, inflation expectations remain anchored, the RBI said in its quarterly review. The ‘exit’ process can begin with closure of some special liquidity support measures, it said.

The RBI said bank credit remained sluggish and it cut its forecast for adjusted non-food credit growth in 2009/10 to 18% from 20%. Banks are urged once again to step up their efforts towards credit expansion while preserving credit quality which is critical for revival of growth, it said. The central bank has lowered the money supply growth projection for 2009-2010 to 17% from 18%.

The RBI said a large amount of liquidity in the system could potentially result in an unsustainable asset price build-up. There is already some evidence of excess liquidity feeding through asset prices with potential financial stability concerns. Further, capital flows have resumed. Given the limitations of the economy’s current absorptive capacity, these flows will add to the overall domestic liquidity, further fuelling the asset price build-up. Large capital inflows and asset price inflation have the potential to feed on each other, it said.

The central bank also asked banks to ensure by September 2010 that the total provisioning coverage against non-performing or bad loans aren’t less than 70% of the outstanding amount.

The Reserve Bank of India’s monetary policy review, announced on Tuesday, is in line with the government’s thinking, Finance Minister Pranab Mukherjee said. Finance Minister sees FY2010 growth of 6.5 to 6.75 % and said easy monetary policy likely to continue until recovery is firm. Finance secretary Ashok Chawla said on Tuesday, one percentage point increase in banks’ statutory liquidity ratio (SLR) by Reserve Bank of India (RBI) on Tuesday would not impact banks much.

Reserve Bank head D Subbarao said there is scope for banks to cut lending rates further.

The central bank said the precise challenge for the Reserve Bank of India is to support the recovery process without compromising on price stability.

European shares rose on Tuesday, with energy stocks taking the lead after oil heavyweight British Petroleum’s third-quarter results beat forecasts. The key benchmark indices in France, Germany and UK rose by between 0.28% to 0.5%.

Asian stocks declined on Tuesday as raw material prices fell and Hong Kong enacted measures to curtail property speculation. Down payments for homes priced above HK$20 million ($2.58 million) will be raised to 40% from 30%, Hong Kong Monetary Authority Chief Executive Norman Chan said. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan, were down by between 0.14% to 2.83%.

Prices for the luxury property in Hong Kong have exceeded their former historical peak, set in 1997. Prices in the mass market, meanwhile, have risen about 30% since the start of the year, matching highs seen in the run up to the global financial crisis last year, but they remain below their 1997 levels.

Trading in US index futures indicated a flat opening of US stocks on Tuesday, 27 October 2009.

US markets retreated on Monday, led by financials and commodities, as the dollar rebounded. Financials were the day’s biggest decliner after Rochdale Securities analyst Richard Bove downgraded three of the industry’s bigger names- Suntrust, Fifth Third Bancorp, and US Bancorp. The Dow Jones dropped 104.22 points, or 1.05%, to 9,867.96. The S&P 500 Index shed 12.65 points, or 1.17%, to 1,066.95. The Nasdaq Composite Index fell 12.62 points, or 0.59%, to 2,141.85.

Back home, the supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.

Most of these companies – from industries ranging from liquor and spirits to infotech – issued equity shares to a select group of investors by way of qualified institutional placement or QIP. If the enabling resolutions passed by the companies are any indication, Indian firms are gearing up to raise $15 billion (Rs 69,427 crore) in the next six months. The list includes Hindalco (Rs 2,900 crore), JSW Steel ($1 billion), India Cements ($100 million), Essar Oil ($2 billion), Tata Steel (Rs 5,000 crore), Jet Airways ($ 400 million) and Bharat Forge ($150 million).

Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.

The government recently approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country’s resolve to speed up reforms and raise more resources for social schemes. On Monday, Trade Minister Anand Sharma said the Union Cabinet had approved a 5% stake sale in NTPC, and 10% in, an unlisted power producer. On 16 October 2009, Prime Minister Manmohan Singh said many state-run firms are eager to list their shares in the stock market as it would help unlock their value.

The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on Wednesday, 21 October 2009. The Government of India owns nearly 86% of Sail.

The BSE 30-share Sensex fell 387.10 points or 2.31% to 16,352.40. The Sensex fell 41.41 points at the day’s high of 16,699.09 in early trade. The barometer index fell 429 points at the day’s low of 16,311.50 in late trade.

The S&P CNX Nifty fell 124.20 points or 2.5% to 4,846.70. Nifty October 2009 futures were at 4,842, at a discount of 4.70 points as compared to the spot closing of 4,846.70. Turnover in NSE’s futures & options (F&O) segment spurted to a record of Rs 1,21,614.13 crore from Rs 85,283.71 crore on Monday, 26 October 2009.

The market breadth, indicating the overall health of the market was weak. On BSE, 431 shares advanced as compared with 2281 that declined. A total of 67 shares remained unchanged.

Among the 30-member Sensex pack, 23 fell while rest rose.

BSE clocked a turnover of Rs 5899 crore, higher than Rs 4978.15 crore on Monday, 26 October 2009.

From a 17 month closing high of 17326.01 on 17 October 2009 Sensex fell 972.61 points or 5.61% to 16353.40 on Tuesday, 27 October 2009. With foreign funds making heavy purchases, the Sensex is up 6706.09 points or 69.51% in calendar year 2009, as on 27 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8193 points or 100.39%, as on 27 October 2009. FII inflow in the calendar year 2009 totaled Rs 67,931.20 crore (till 26 October 2009).

Coming back to today’s trade, the BSE Mid-Cap index fell 3.69% and the BSE Small-Cap index fell 4.42%. Both the indices underperformed the Sensex.

Sectoral indices on BSE displayed mixed trend. The BSE Realty index (down 6.24%), the BSE Metal index (down 5.82%), the BSE Bankex (down 3.82%), the BSE Consumer Durables index (down 3.26%), the BSE Teck index (down 2.69%), underperformed the Sensex.

The BSE Healthcare index (down 1%), the BSE IT index (down 1.05%), the BSE FMCG index (down 1.29%), the BSE Oil & Gas index (down 1.51%), the BSE Auto index (down 1.55%), the BSE Capital Goods index (down 1.84%), the BSE Power index (down 1.95%), the BSE PSU index (down 2.22%), outperformed the Sensex.

Telecom stocks fell after Idea Cellular’s Managing Director Sanjeev Aga, said on Monday the price war in the teleocom sector which he described as a ‘bloodbath’ would cut local call charges, currently at 40 paise a minute, to ‘unsustainable’ levels. Idea Cellular fell 4.4% extending Monday’s 3.49% fall even as net profit rose 81.62% to Rs 273.15 crore in Q2 September 2009 over Q2 September 2008. The result hit the market during trading hours on Monday.

India’s largest wireless operator by sales Bharti Airtel fell 7.08%. India’s second- largest wireless operator by sales Reliance Communications fell 6.61%. The company said on Monday it does not have to pay any additional licence or spectrum fee to the government nor had it inflated its revenues. The statement came after the company said it had completed a preliminary review of a report issued by a government-appointed auditor which had accused it of various malpractices.

Energy major Reliance Industries fell 1.25% extending recent losses as partner Hardy Oil said late last week a D9 well will be plugged and abandoned. Hardy holds a 10% participating interest in the D9 block, which is located in the Krishna Godavari basin on the east coast of India. Reliance Industries is the operator and holds a 90% stake.

The continued pressure on gross refining margins, or the difference between the price of crude and the price of refined petroleum products, is seen weighing on the company’s bottom-line in Q2 September 2009, in spite of higher gas production and refining throughput. RIL unveils Q2 results on Thursday, 29 October 2009.

A total of eight brokerages expect a between a 9% fall to a 1.4% rise in RIL’s net profit at between Rs 3752.10 crore to Rs 4178 crore in Q2 September 2009 over Q2 September 2008. Their expectations peg a between 23% fall to a rise of 19.8% in revenue at between Rs 34292.90 crore to Rs 53667.70 crore in Q2 September 2009 over Q2 September 2008.

Meanwhile, RIL told the Supreme Court, last week, it had no knowledge of the pact between its chairman Mukesh Ambani and his younger brother Anil.

Mukesh Ambani-controlled Reliance Industries, India’s top conglomerate, is fighting with Reliance Natural Resources, led by younger brother Anil Ambani, over the terms of a deal to sell gas to Reliance Natural at below the price set by the government. Reliance Industries has been presenting initial arguments in the case before the Supreme Court since 20 October 2009, saying the private deal between the Ambani brothers is not binding on the company, and it can sell the gas only at the government-approved price.

The government, which has the power to decide who can buy gas and at what price, had filed an application asserting it is the rightful owner of the disputed gas.

Anil Ambani’s Reliance Natural Resources claims the contract is valid and wants the court to direct Reliance Industries to supply it with 28 mmscmd of gas for 17 years at almost half the government-set price of $4.2 per mmBtu.

The Supreme Court will resume hearing the case today, 27 October 2009, with Reliance Industries expected to conclude its initial arguments by Thursday, 29 October 2009. The court will then hear arguments by Reliance Natural Resources, following which it will consider a petition by the government to become a party to the dispute.

Metal stocks fell on profit taking after recent strong gains. Hindustan Zinc, National Aluminum Company, Hindalco Industries fell by between 0.38% to 7.92%.

India’s largest copper maker by sales Sterlite Industries fell 5.46%. The company recently raised $500 million in convertible senior notes and plans to use the proceeds primarily for expansion of its copper business. The notes are convertible into American depositary shares at $23.33 per share.

Steel Authority of India (Sail) fell 3.02%. The steel minister said last week the government has approved a follow-on public offering of 20%. The government holds 85.82% stake in Sail.

India’s largest steel maker by sales Tata Steel fell 7.26% as net profit fell 49.49% to Rs 902.94 crore in Q2 September 2009 over Q2 September 2008. The results hit the market during market hours today.

Bank stocks fell after Reserve Bank held key rates unchanged. India’s largest private sector bank by operating income ICICI Bank fell 6.11% after Singapore’s Temasek cut its stake to 5.76% as of 30 September 2009 from 7.6% as of end of June 2009. Temasek said in a statement in Singapore that any stake sales are part of regular moves to review and rebalance its portfolio.

India’s largest bank by branch network State Bank of India fell 4.45%. State Bank of India (SBI) announced on 24 October 2009 that it has concluded the issue of $750 million fixed rate senior notes having a maturity of 5 years at a coupon of 4.50% under the Medium Term Notes (MTN) Programme in the form of Regulation S Global Note. The bonds have been issued through the bank’s London branch as of 23 October 2009

India’s second largest private sector bank by net profit HDFC Bank fell 1.01% as its ADR fell 3.31% on Monday. The bank’s net profit rose 30.2% to Rs 687.46 crore in Q2 September 2009 over Q2 September 2008. The results were more or less in line with market expectations.

Banks do not have to make any mark-to-market provisions on securities held in the HTM basket if prices of securities fall. Provisions have to be made out of profit and therefore, impact a bank’s bottom line. Yields on ten-year government bonds have risen sharply this year. Bond prices and bond yields are inversely related.

Realty stocks fell after the central bank raised the provisioning requirement for banks’ advances to the commercial real estate sector classified as ‘standard assets’ from the present level of 0.40% from 1%. Indiabulls Real Estate,DLF, Ackruti City, Unitech, Omaxe fell by between 2.82% to 9.67%.

In view of large increase in credit to the commercial real estate sector over the last one year and the extent of restructured advances in this sector, it would be prudent to build cushion against likely non-performing assets (NPAs), the central bank said.

Realty stocks had risen sharply over the past few weeks on reports that demand for residential projects in major cities is picking up on lower home loan rates, property price cuts by developers and a recovery in the job market. The housing market had slumped last year amid a global credit crunch and buyers fearing job losses

India’s largest drugmaker by sales Ranbaxy Laboratories fell 3.72% on profit taking. The company during trading hours on Monday reported turnaround Q3 results. The company reported net profit of Rs 186.08 crore in Q3 September 2009 as against a net loss of Rs 352.93 crore in Q3 September 2008.

Ranbaxy Laboratories CEO and Managing Director Atul Sobti said revenue growth in some strategic geographical markets and a sharp focus on cost efficiency, were the underlying themes in the third quarter. With good achievements in these fronts, the company is confident that it is on the path to recovery.

Rate sensitive auto stocks fell on profit taking. Hero Honda Motors fell 0.19% even as net profit jumped 95% to Rs 597.14 crore on 26.8% rise in revenue to Rs 4059.44 crore in Q2 September 2009 over Q2 September 2008. The company announced result after market hours on 21 October 2009.

India’s largest car maker by sales Maruti Suzuki India fell 2.37% even after net profit rose 92.5% to Rs 570 crore on 46.6% rise in sales to Rs 7080.67 crore in Q2 September 2009 over Q2 September 2008. The company announced the results on Saturday, 24 October 2009

Maruti said the company remains cautiously optimistic with regard to volume growth in the near future. It said margins in the future may be under pressure due to hardening of commodity prices and strengthening of the Japanese yen. The company said it continues to focus on cost optimization.

India’s largest tractor maker by sales Mahindra & Mahindra fell 2.32%. Total sales rose 10.94% to 28434 vehicles in September 2009 over September 2008. The company unveiled the sales figures during trading hours on 1 October 2009.

Bajaj Auto fell 1.26%. Bajaj Auto’s net profit jumped 117.85% to Rs 402.83 crore in Q2 September 2009 over Q2 September 2008. The company announced the Q2 results during trading hours on 15 October 2009.

But, India’s largest commercial vehicle maker by sales Tata Motors rose 1.56% after its net profit jumped 110.13% to Rs 729.14 crore on 11.87% rise in total income to Rs 8399.75 in Q2 September 2009 over Q2 September 2008. The results were announced after market hours on Monday.

Tata Motors said its operating margins surged 580 basis points at 13.4% in Q2 September 2009 over Q2 September 2008. Stable input costs and accelerated cost reduction efforts boosted margins, the company said. It said higher volumes and improved realizations contributed to growth in revenue.

The company said a change in accounting policy with respect to foreign exchange transaction contributed to a massive 153.3% surge in profit before tax (PBT) to Rs 906.85 crore in Q2 September 2009 over Q2 September 2008. The year-on-year growth in PBT would have been much lower at 49.7% if the company had followed the current accounting policy with respect to foreign exchange transaction in Q2 September 2008, Tata Motors said.

Sales volume in the domestic market rose on the back of revival of the industrial activity in the country, improvement in liquidity in the financial system, introduction of new products and new variants of existing products. However, exports continue to be impacted by slowdown in the company’s prime export markets and also due to volatility in exchange rates.

Tata Motors said its market share in the domestic commercial vehicles sector surged to 65.5% in Q2 September 2009 from 62% in Q2 September 2008. In the passenger car segment, Tata Motors said it has commenced deliveries of British brands Jaguar and Land Rover in the domestic market which has received encouraging response.

India’s largest cigarette maker by sales ITC fell 1.68% on profit taking after a recently strong rally triggered by robust Q2 results. Net profit rose 25.81% to Rs 1009.91 crore in Q2 September 2009 over Q2 September 2008. The result which hit market during market hours on Friday 23 October 2009, surpassed market expectations.

A surge in profit margins and a decent growth in revenue boosted the bottom line. ITC’s operating profit margin surged to 36.59% in Q2 September 2009 from 31.4% in Q2 September 2008

Among other FMCG stocks, Nestle India, Marico, United Spirits, Tata Tea, Britannia Industries, fell by between 0.1% to 4.67%.

Construction stocks fell on profit taking. Hindustan Construction Company, Nagarjuna Construction Company Era Infra Engineering, Gayatri Projects fell by between 3.74% to 4.84%.

Construction shares rose steadily over the past few days on the government’s thrust on the infrastructure sector. Higher government spending on infrastructure sector in the Union Budget 2009-2010 to provide a stimulus to the economy, may result in increase order flow for construction.

An expected fall in cement prices in the coming months due to capacity new capacity addition may boost margins for construction firms as cement is a key raw material

Jaiprakash Associates fell 3.71% extending recent steep losses. Net profit rose 327.9% to Rs 870.19 crore on 53% rise in sales to Rs 1824.26 crore in Q2 September 2009 over Q2 September 2008. The company announced result after market hours on 21 October 2009. The company also announced 1:2 bonus issue at the time of announcing Q2 results

India’s largest engineering and construction firm by sales Larsen & Toubro fell 1.43%. The company announced on Monday sale of its shares in Voith Paper Technology India (VPTIL) to its long term joint venture partner Voith GmbH, Heidenheim, Germany. VPTIL is a 50:50 joint venture partner between L&T and Voith GmbH providing design, consultancy and other value added services to Indian paper industry .

L&T’s net profit rose 26.1% to Rs 580.4o crore on 3.54% rise in total income to Rs 8136.39 crore in Q2 September 2009 over Q2 September 2008. The result hit the market during trading hours on 22 October 2009.

UltraTech Cement fell 1.03%. The stock fell sharply in the past few days after the company issued a cautious outlook at the time of announcing Q2 results on 16 October 2009. Net profit jumped 53% to Rs 251 crore in Q2 September 2009 over Q2 September 2008.

UltraTech said the performance was affected on a sequential basis due to lower demand in Southern India. The net profit dropped 39.94% to Rs 250.90 crore in Q2 September 2009 over Q1 June 2009.

The company said the cement demand may grow 9% in the year ending March 2010 on the back of government’s initiative to boost rural development, infrastructure and housing. It, however, said new capacities which at various stages of implementation will result in pressure on margins.

The company said its focus on higher volume growth, captive power generation and capital productivity will help offset the impact of lower prices on margins.

Among other cement stocks, ACC, Ambuja Cements, Birla Corporation and ACC fell by between 0.33% to 3.51%.

IT stocks fell on profit taking. However weak rupee supported stocks.India’s largest software services exporter TCS fell 0.49%. The company after market hours on 16 October 2009, reported stronger-than-expected Q2 September 2009 results. Consolidated net profit as per US accounting standards rose 6.81% to Rs 1623.90 crore on 3.16% growth in revenue to Rs 7435.10 crore in Q2 September 2009 over Q1 June 2009.

TCS has a good business pipeline and is pursuing 20 to 25 large outsourcing deals, chief executive N. Chandrasekaran said at the time of announcing Q2 results. The management is seeing signs of recovery but it believes it will be slow. The discretionary spent is still tight but there is spent seen in banking, finance services and insurance (BFSI), retail, utility and pharma verticals, TCS said at a conference call after the results. However, a continuous improvement in volumes cannot be expected, it said. The company is seeing stability in demand environment. The management expects to maintain margins at current levels provided there is no adverse rupee movement.

IT bellwether Infosys Technologies fell 1.29% as its ADR fell 0.7% on Monday. Infosys raised its earnings and revenue guidance in both dollar and rupee terms for the year ending March 2010 (FY 2010) at the time of announcing Q2 September 2009 results before trading hour on 9 October 2009. Infosys, however, said strengthening rupee is a big concern for its earnings.

A foreign brokerage said in a recent note that it expects 2010 IT budgets to be strong given a significant pent-up demand.

But, India’s third largest IT exporter by sales Wipro rose 2.18% on better than expected results. As per consolidated Indian GAAP results, the company recorded 19% rise in net profit to Rs 1162 crore in Q2 September 2009 over Q2 September 2008. The net profit rose 14% to Rs 1162 crore in Q2 September 2009 over Q1 June 2009. The results hit the market before trading hours today

Wipro said order book has gone up and it is seeing a strong second half as pricing stabilises. Wipro expects its IT services revenue to rise 3.8% to 5.7% to $1.09-$1.11 billion in Q3 December 2009 ovfrom Q2 September 2009

The partially convertible rupee was trading at 46.83/84, weaker than Monday’s close of 46.645/655 per dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion’s share of revenue from exports.

Cals Refineries clocked highest volume of 2.92 crore shares on BSE. Unitech (2.2 crore shares), ThinkSoft Global (1.21 crore shares), Ispat Industries (1.06 crore shares) and Zee News Enterprises (0.68 crore shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 370.40 crore on BSE. ThinkSoft Global (Rs 237.78 crore), Unitech (Rs 188.93 crore), Tata Steel (Rs 181.75 crore) and Reliance Industries (Rs 177.83 crore) were the other turnover toppers in that order.

Bad credit payday loans are becoming a more popular way for getting people out of a sticky situation. Sometimes getting a small reprieve is enough to help us get caught up and the ability to move forward in a comfortable manner. A big word of caution should be mentioned in the fact that this is not a solution for supplemental income.

With different companies, different requirements may exist. There are some requirements that are standard business practice with all bad credit payday loans. Although the amount of the loan will depend on your income, the loans usually fall in between $500 to $1000.

You must be employed or be bringing in a verifiable income. If you are receiving social security benefits, you can still qualify for a loan. An established bank account, either checking or saving account, is needed to receive your loan. Some companies will then get their payment form your account, as well. Bad credit payday loans are illegal in some states. And the military will not permit any of their active service people to get a payday loan.

There is a service fee that comes with a loan. The average fee is approximately $25 on every $100 borrowed. And the loan is usually expected to be paid by or on your next payday. If you cannot repay the loan by your next payday then some loan companies will allow you to repay on over a 10 to 12 month basis, for those that qualify.

Before agreeing to an extended repayment plan, you should find out what the interest rate is on the money you borrowed. The interest rate can be rather high in comparison to other loans, but you have to remember that this loan was extended to you without the proof of good credit, actually without a credit check at all.

If you are not totally aware of how these loans are designed, you could be setting yourself up for a major financial crisis. For most people they feel that these loans are a saving grace. However, they could add to your mountain of debt if they are mismanaged. If you even think that there is a possibility that you could not handle the repayment of this loan, then do not get one. This will only turn into a problem rather then a solution.

No one wants to see your situation get worse, the loan company makes money when you pay the loan off, so make sure that you can repay before you ever consider using a service like this.