By Carl Delfeld of the Chartwell ETF Advisor
The European DJ Stoxx 50 this morning is trading +0.87%. Asian-Pacific stocks rallied as well today with Japan +2.47%, Hong Kong +4.90%, China +4.18%, Australia +1.28%, Bombay +4.69%.
Country exchange-traded funds also jumped to a strong start this morning but weak credit numbers from HSBC stopped the rally cold.
HSBC recorded a $3.4bn charge for the three months ending September against its US consumer finance business, $1.4bn more than would have been expected if first half trends had continued. Of that $1.4bn, half related to non-mortgage loans.
Stephen Green, Chairman, said in an article by Maggie Urry in the Financial Times that problems with bad debts were spreading from the mortgage business to other loans, such as credit cards and for car purchases, as consumers found it harder to get credit and delinquency rose. He said that while delinquency rates were up, he noted that they were still lower than the level seen in previous downturns.
At the end of the third quarter, $1.6bn or 3.2 per cent of the bank’s US branch based mortgage book were two or more payments in arrears, up from $1.1bn at the end of June. Worse, $3.2bn or 8.2 per cent, of its Mortgage Services portfolio were that far in arrears, up from $2.6bn at the end of the second quarter.
Mr Green said, “I don’t think anybody knows” when the market would begin to recover, but the group now expected “more prolonged weakeness” which would last at least through 2008 and probably into 2009.
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