Home, study loans become cheaper

For a loan of Rs 400,000, the interest rate has been reduced by 25 bps to 11.75 per cent, while for loans between Rs 4 lakh and 750,000, the rate reduction is 100 bps to 12.50 per cent.
And, for the loans of above Rs 750,000, rates have been cut 25 bps to 12.25 per cent.
SBI also offers a concession of 50 bps on interest rates for loans given to female students.
Education loans, which constitute about seven per cent of SBI’s Rs 1.75-lakh-crore (Rs 1.75 trillion) retail portfolio, saw a growth of 14.17 per cent as of December-end.
Another state-run lender, Central Bank of India, has announced a reduction of 25-50 bps on home loan rates to boost credit demand, which has seen a slow growth in the current financial year.
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Financial Stocks: Analysts Expect Bank Profits To Rise 57% in 2012

(Written by Alexander Crawford. Institutional data sourced from Fidelity.)
The perennial bullishness of analysts is back again this year, and it (surprisingly) still includes the financial sector. According to a Bloomberg survey, analysts expect profits for the six largest banks (including JP Morgan, Bank of America, and Goldman Sachs) to jump 57% in 2012, despite 2011 being a dismal year for the sector.
This time last year analysts expected financial institutions to see profits rise 32% over 2011, but profits probably fell 18% as financials were the worst performing sector in the US for 2011. Now, analysts are pinning their hopes on “improved trading results, more investment-banking deals, expense-cutting measures and lower credit costs.” (via Bloomberg)
Last year, banking profits were pummeled by Europe’s sovereign-debt crisis, protests across the world, and natural disasters in Japan. US GDP only expanded an estimated 1.8% last year, when 3.1% growth was expected. According to Paul Miller, analyst at FBR Capital Markets Corp., “The banks need GDP growth to grow loans. We all thought there would be loan growth, and Europe didn’t help anybody.”
Analysts predict that the 2012 rise in banking earnings will be led by Morgan Stanley and Goldman Sachs, which are most reliant on trading revenue and investment-banking operations according to Bloomberg.
Business Section: Investment Ideas
Do you agree with analysts that 2012 will see the grand return of the financial sector? If so, here are some ideas to get you started.
We ran a screen on the financial sector for stocks exhibiting the technical “golden cross,” in which the stock’s 50-day moving average has recently crossed above its 200-day moving average. This indicates recent momentum to the upside that may persist.
We screened these momentum stocks for those seeing the most significant net institutional purchases over the current quarter.
Do you think these companies will see the large earnings growth analysts expect for the industry?
Analyze These Ideas (Tools Will Open In A New Window)
1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned
List sorted by net institutional purchases as a percent of share float.
1. First Republic Bank (FRC): Provides private banking, private business banking, investment management, brokerage, trust services, and real estate lending services in California, Nevada, and New York. Market cap of $4.04B. SMA50 at $28.85 vs. SMA200 at $28.80 (current price at $31.26). Net institutional shares purchased over the current quarter at 20.2M, which is 37.57% of the company’s 53.77M share float.
2. EastGroup Properties Inc. (EGP): Focuses on the development, acquisition, and operation of industrial properties in the United States. Market cap of $1.19B. SMA50 at $41.98 vs. SMA200 at $41.16 (current price at $43.83). Net institutional shares purchased over the current quarter at 2.8M, which is 10.87% of the company’s 25.76M share float.
3. Avalonbay Communities Inc. (AVB): Engages in the development, redevelopment, acquisition, ownership, and operation of multifamily communities in the United States. Market cap of $12.12B. SMA50 at $125.73 vs. SMA200 at $124.94 (current price at $127.48). Net institutional shares purchased over the current quarter at 8.0M, which is 8.49% of the company’s 94.24M share float.
4. Presidential Life Corp. (PLFE): Engages in the marketing and sale of various fixed annuity, life insurance, and accident and health insurance products in the United States. Market cap of $311.96M. SMA50 at $9.85 vs. SMA200 at $9.80 (current price at $10.55). Net institutional shares purchased over the current quarter at 2.1M, which is 8.43% of the company’s 24.91M share float.
5. Glimcher Realty Trust (GRT): Operates as a real estate investment trust (REIT) in the United States. Market cap of $976.01M. SMA50 at $8.69 vs. SMA200 at $8.69 (current price at $9.08). Net institutional shares purchased over the current quarter at 7.8M, which is 7.41% of the company’s 105.32M share float.
6. Excel Trust, Inc. (EXL): Engages in financing, developing, leasing, owning and managing community and power centers, grocery anchored neighborhood centers and freestanding retail properties. Market cap of $367.11M. SMA50 at $10.99 vs. SMA200 at $10.75 (current price at $12.12). Net institutional shares purchased over the current quarter at 1.8M, which is 6.26% of the company’s 28.75M share float.
7. Platinum Underwriters Holdings Ltd. (PTP): Provides property and marine, casualty, and finite risk reinsurance products worldwide. Market cap of $1.26B. SMA50 at $33.37 vs. SMA200 at $33.30 (current price at $33.87). Net institutional shares purchased over the current quarter at 2.2M, which is 6.07% of the company’s 36.23M share float.
8. Pebblebrook Hotel Trust (PEB): Operates as a real estate investment trust. Market cap of $983.90M. SMA50 at $18.43 vs. SMA200 at $18.42 (current price at $19.33). Net institutional shares purchased over the current quarter at 2.3M, which is 4.55% of the company’s 50.58M share float.
9. Health Care REIT, Inc. (HCN): Engages in investment, development, and management of properties. Market cap of $10.29B. SMA50 at $50.81 vs. SMA200 at $49.67 (current price at $53.77). Net institutional shares purchased over the current quarter at 7.9M, which is 4.44% of the company’s 178.01M share float.
10. Aspen Insurance Holdings Ltd. (AHL): Provides insurance and reinsurance products and services worldwide. Market cap of $1.85B. SMA50 at $25.95 vs. SMA200 at $25.58 (current price at $26.17). Net institutional shares purchased over the current quarter at 2.9M, which is 4.43% of the company’s 65.39M share float. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc

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Canadians see 2012 as a year of low jobs growth, business investment

OTTAWA – After two months of declines in employment data, Canada’s jobs picture is looking anything but bright heading into the new year.
A new survey for the Bank of Montreal suggests Canadians are significantly more pessimistic than at this time last year about employment prospects and their firms’ investment plans.
The BMO poll conducted in early December found that only 17 per cent of Canadians surveyed believed hiring would improve this year, a drop from the 29 per cent who responded positively to the same question a year earlier.
Similar declines were also found on questions about whether they expected their firms to offer employee training and development, or to invest in new machinery and equipment.
“A general sense of economic uncertainty may be reflected in employees’ expectations for 2012,” said Cathy Pin, vice-president of commercial banking at BMO.
“Canadians likely expect that the current economic conditions will have a measurable impact this year on the investments companies are prepared to make in their workforce.”
The online survey of 1,542 Canadians is considered accurate, plus or minus 2.5 percentage points,19 times out of 20.
Pin said the pessimism was not shared in an earlier survey of businesses the bank conducted in September. In that sampling, about four of five business owners indicated they would invest at the same level or more this year as in 2011, and 39 per cent said they planned to hire.
The survey of Canadians, however, likely reflects generally worse conditions in the past few months, particularly on the jobs front.
After a strong start to 2011, Canada’s labour market stalled during the summer and began retreating in the fall, shedding 73,000 jobs in October and November.
Scotiabank economist Derek Holt said the fear is that employers may have front-loaded the jobs recovery, and now will focus more on addressing productivity issues to ensure their firms are competitive in the global market.
Canada has created close to 600,000 new jobs since the recession, in contrast to the United States, which is still several million jobs shy of pre-slump levels.
While hard economic data has not been as weak as confidence surveys, Holt said it is rational for businesses to adopt a cautious wait and see posture given the uncertainty over Europe’s debt crisis and the U.S. economy.
Two upcoming releases — the employment data for December due out Friday, and Monday’s release of the business outlook survey from the Bank of Canada — will give a clearer picture of where labour markets are headed this year, at least in the short term.
Most experts say 2012 will likely see the unemployment rate remain near the current 7.4 per cent rate, meaning employment must rise about 15,000 a month to keep up with growth in the labour market.
The early consensus for Friday’s data is that the economy added about 20,000 jobs in December, although there is a wide range in the opinion, from a low of minus 10,000 to a high of plus 43,000.
Holt, who is near the low end of the consensus, said the fact that salaries have not kept up with inflation in the past year is telling of the weak state of the jobs market.
“We can’t continue to experience such extremely weak productivity growth and loss of competitiveness on exports, so eventually we’re likely to see that loss of jobs growth,” he said.
“And so many different elements of (the) key domestic household sector are at or near structure peaks (such as housing and spending), that’s it’s tough to see much jobs gain out of that sector in the next one to two years.”

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Tough India IPO market drives deals between private equity funds

MUMBAI (Reuters) – When Ind-Barath Power Infra Ltd dropped plans for a $200 million IPO earlier this year, it not only thwarted the fundraising plans of its controlling shareholder, but blocked an exit route for a clutch of private equity investors.
Those funds, including Sequoia Capital, Citigroup’s venture capital arm and 3i , invested a combined $223 million in Ind-Barath and may get a breather as the firm is in talks to sell a big chunk to buyout giants such as TPG Capital and Apollo Global Management .
So-called secondary deals, when a private equity investor sells its holding to another such investor, have traditionally been less favored by buyout firms than an exit through an IPO or the sale of a company to an industry rival.
But with weak capital markets shutting off the IPO option for now and mergers between domestic corporate rivals still rare, owners of Indian companies and their private equity investors eyeing the exits will be forced to look at alternatives, including secondary market deals.
KPMG figures roughly $95 billion in maturing Indian private equity investments made during the bull market years of 2006-2008 will come up for sale over the next three years.
“Logic suggests that a good time for exits is not a good time for investing and vice versa,” said Raja Parthasarathy, managing director at IDFC Private Equity, one of India‘s largest private equity funds.
“But the current environment appears to be challenging on both fronts, largely on account of continuing uncertainties around the macro outlook,” he said.
In India, companies tend to want to go public, ready or not.
But India‘s benchmark stock index <.bsesn> is down more than a fifth this year, and 13 rate interest increases since early 2010 by the central bank have pushed up borrowing costs, slowed economic growth and made investors wary.
Private equity exits through the Indian IPO market dropped 66 percent this year to $85 million in 15 deals, according to data from VCCircle.
Overall, some $7 billion worth of public offers were either scrapped or deferred in 2011, of which $1.8 billion was backed by private equity investors, SMC Global said in a recent study.
However, secondary market private equity transactions are up 9 percent this year to $704 million in 29 deals, from $646 million in 14 deals last year, according to VCCircle data, and industry players expect that figure to grow.
SECOND-HAND SHOPPING
While private equity investors in India have generally been reluctant to sell to another buyout firm, as a partial exit through a secondary sale does not provide the liquidity that an IPO does, the current environment and pressure to exit are forcing a re-think.
“A secondary sale should not be viewed as a forbidden option, as it sometimes is,” KPMG said in a recent report on Indian private equity.
“Secondary transactions offer relatively high returns…As the industry matures, more and more PE-funded companies will come up for sale,” it said.
Recent deals include the partial exit in November by UK-based Aureos Capital, when it sold part of its $15 million investment in Continental Warehousing Corp to U.S. fund Warburg Pincus, which invested about $100 million in the company.
Earlier this year, Kotak Realty Fund, a unit of India’s Kotak Mahindra Bank sold its holding in Peepul Tree Properties to local rival Tata Realty Fund for $115 million.
The KPMG study said about one-third of private equity investments in India are in the red.
“In an exit environment driven by IPOs, such underperformers would indeed be hard to exit,” it said.
GHOSTS OF INVESTMENTS PAST
Private equity funds invested more than $31.5 billion in India between 2006 and 2008, according to KPMG.
Assuming a five-year holding period and funds’ expectations for returns of roughly three times, Indian exits valued at roughly $95 billion are poised to take place over the next three years, or $28 billion of exits per year, the study found.
By comparison, private equity funds spent a total of just $14 billion in Indian in their most active year of 2007, KPMG said.
Investors in private equity funds, known as limited partners, typically commit their money for 10 years, but fund managers generally like to turn over specific investments after roughly five years.
“Fund managers are definitely under pressure…as their average holding period is increasing,” said Ajit Kumar, India head of Dubai-based fund Evolvence Capital, who expects a growing number of secondary exits as the industry matures.
Evolvence has invested about $400 million in India and is raising a $400 million India-dedicated fund.
“We may see improvement in secondary deal volumes in the second half of 2012. The public markets are also likely to turn better,” he said.
Meanwhile, worries about the fate of boom-era investments have dampened sentiment in the fundraising market, as some 60 India-focused funds attempt to raise about $15 billion.
Investors whose previous investments in Indian private equity deals have not yet borne fruit may be reluctant to write checks to fund managers this time around.
“Ironically, those investments made then are proving to be one of the most vital roadblocks confronting the industry today,” said Subbu Subramaniam, who was a founding partner at Baring India before setting up his own private equity firm, M-Cap fund advisors.
(Editing by Tony Munroe and Matt Driskill)


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