| Legg Mason in search of 'equitable' solution for auction-rate securities crunch
Money manager Legg Mason said Friday that it is working to find a viable market for auction-rate preferred securities issued by seven of its affiliated funds. Auction-rate securities are long-term investments whose interest rates reset regularly based on the results of auctions. But since the credit crunch began spreading across Wall Street, there have been very few willing bidders for the securities, leaving the auctions on the bonds in limbo. Legg Mason (NYSE: LM) said it is working to find solutions for shareholders of $672 million in auction-rate preferred securities issued by seven LMP and Western Asset closed-end funds. Closed-end funds own a set of stocks or bonds and are traded throughout the day on exchanges like stocks. Legg Mason said in a news release it believes the crunch facing its auction-rate securities is a market-wide issue and "not a credit issue related to the funds or their portfolios." Baltimore-based Legg is working on "potential alternative financing solutions" to the problem with banks, broker-dealers and other financial companies, it said.
Battered sectoral indices bounce back
The short covering and the money flow shifting from commodity to equity market was responsible for across the board huge rally in the equity market on Tuesday. A majority of the sectoral indices including Bombay Stock Exchange (BSE) realty, bankex, consumer durable, IT and power, which were battered heavily in the recent carnage at the bourses shined on Tuesday and outperformed the benchmark Sensex. The realty stocks index BSE Realty has led the sectoral pack which went up by 9.48% or 645 points (pts) at 7,451 pts. The Bankex gained the second highest as it went up by 8.1% or 626 pts at 8,371 pts. Jignesh Desai, head, institutional sales, SBI Securities said that two factors were mainly responsible for the rally in the across the board buying. One, the investors opted for short covering ahead of the expiry of the March derivative contracts on Thursday .
Follow the money...out of America
Where are investors putting their money in these uncertain times? Apparently, more and more are seeking safer havens in Europe, India, China and Latin America. With recession fears dogging the U.S. markets, stocks had a dismal first quarter. But according to recent figures from two key research firms that track the mutual fund industry, investors are flocking to overseas markets. Fund tracker TrimTabs Investment Research reported in its latest weekly report about market liquidity that total inflows into equity mutual funds during the week ended March 26 was $7.43 billion. But of that total, $4.4 billion, or nearly 60%, was invested in funds that mainly invest in non-U.S. stocks. What's more, the latest TrimTabs data showed that investors pulled $6.9 billion from exchange-traded funds (ETFs) that invest in U.S.
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