• Bank of America Corp. (BAC) announced yesterday (Tuesday) that it would increase its stake in China Construction Bank Corp. to almost 11%, The Associated Press reported. The Charlotte-based bank plans to purchase 6 billion H-shares on or about June 5th, bringing Bank of America’s total investment in the Beijing-based bank to 10.75%.

• The S&P/Case-Shiller home-price index declined 14.4% from the same period the year prior, representing the biggest decline since the data began to be compiled in 2001. The home-price index has declined every month since January 2007, Bloomberg News reported. Rising foreclosure rates are adding to the oversupply of homes on the market, helping to keep home prices low.

• Vodafone Group PLC (ADR: VOD) announced yesterday (Tuesday) that Chief Executive Officer Arun Sarin plans to step down in July after five years as CEO, MarketWatch reported. The announcement came on the same day that Vodafone announced a record $13.2 billion (6.66 billion pounds) first quarter profit. Vittorio Colao, Vodafone’s deputy CEO and head of the group’s European operations will succeed Sarin.

• Homebuilder Standard Pacific Corp. (SPF) announced yesterday (Tuesday) it would receive a $530 million investment from private-equity firm MatlinPatterson Global Advisers LLC, Bloomberg News reported. Standard Pacific stock has been hard-hit by the housing recession, having lost over $1.4 billion in market value since 2005. “It’s definitely good news,” Matt Wilcox, a bond analyst at KDP Investment Advisors Inc. told Bloomberg. “It certainly gives them additional liquidity and time to weather this housing downturn.”

• Privately-held Switzerland company Landis&Gyr announced yesterday that it signed a deal to set up nearly 7 million “smart meters” in Texas that will allow consumers to manage their electrical consumption, Reuters reported, citing a source familiar with the talks that estimated the deal in the $360 million ball park. The deal comes in the face of rising energy prices around the world and heightened environmental awareness about wasted electricity.

• South Africa’s economy grew a pithy 2.1% in the first quarter, significantly below the 5.3% it moved in the previous three quarters and the slowest quarterly gain in more than six years. “The figures are grim,” Dennis Dykes, chief economist at Nedbank Group Ltd., South Africa’s fourth-largest bank, told Bloomberg. “The consumer side will remain under pressure given the higher interest rate environment and power problems are still a factor. We’re in a cyclical downturn that will extend into next year.”

• Gold futures dipped $18 an ounce to $907.90 in trading yesterday as the dollar regained strength. Another reason could be profit-taking, as gold moved 3% last week, Mark O’Byrne, a director at Gold and Silver Investments Ltd., suggested to MarketWatch.

Source: Global Investing Roundups: Wednesday, May 28th, 2008

That drop-off from the fourth quarter to the first quarter in the OFHEO’s “purchase-only index” exceeded the 1.4% decline between the third and fourth quarters of last year, and was the biggest decrease in the 17-year history of the index. On a year-over-year basis, home prices have fallen 3.1% since the first quarter of 2007.

All the figures were reported on a seasonally adjusted basis.

“For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets,” James Lockhart, OFHEO’s director, said in a statement.

However, Lockhart also noted that the decline in prices could be good news for some.

“To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news,” he added.

The size of the first-quarter decline is yet another signal that the housing recession is still weighing heavily on the home market.

The steepest declines were in areas that experienced overbuilding, such as California and Nevada, where home prices dropped as much as 8% in the quarter, the OFHEO reported.

The drop in housing prices only serves to exacerbate the ongoing subprime crisis.

“It’s a dismal picture, there’s no way around it,” Paul Kasriel, chief economist at Northern Trust Corp. (NTRS) in Chicago, told Bloomberg News. “A complicating factor is the fact that so many homeowners owe more on their mortgages than their houses are worth. This is a financial crisis. You can’t put lipstick on this pig.”

As home prices drop, overextended owners are unable to sell for a price high enough to cover the outstanding balance on their mortgages. The result has been a large upswing in the number of home foreclosures.

Foreclosure filings have hit an all-time high, with a 65% year-over-year increase in April and a 4% increase from March, RealtyTrac reported earlier this month.

Almost two-thirds of U.S. banks have raised standards for mortgages, even to their most creditworthy borrowers, Bloomberg reported. For those with limited or bad credit history, so-called subprime borrowers, three-fourths of banks have raised lending requirements, according to a U.S. Federal Reserve survey of senior loan officers published May 5.

At the same time that consumers are finding it hard to obtain needed financing, the high level of housing inventory, currently at an 11-month supply, is making it very difficult for distressed homeowners to sell. The glut of homes currently on the market is putting downward pressure on home prices.

“The large overhang of real estate inventory awaiting sale continues to force price declines in many areas, but particularly in places that had seen very sharp appreciation in previous periods,” said Patrick Lawler, OFHEO chief economist.

Source: U.S. Housing Prices Suffer Worst Quarterly Decline on Record