Eagle Eye Opener: Presidential Election; Big Fines for HSBC

Tomorrow’s Presidential Election Leaves Investors Cautious (Reuters)

Far East markets on Monday let investors know that they might as well take the next 48 hours off until the U.S. presidential race is decided. Tobias Blattner, an economist at Daiwa Securities, summed up the investment world’s mentality, “You don’t want to have too much risk ahead of the U.S. election tomorrow, so I think everyone is going to be very cautious until we see the first indications of who will win.” That sentiment was borne out by Far East market performance Monday: the MSCI index of Asia-Pacific outside Japan fell 0.3%; Japan’s Nikkei lost 0.3%, as well; South Korean shares tumbled 0.7%; and Hong Kong’s Hang Seng index gave back 0.3%.

HSBC: Officers Looking at Big Fines (BusinessWeek.com)

Investors in the Hong Kong and Shanghai Banking Corporation (HSBC) cannot be looking ahead to 2013 with any sort of optimism. On top of the company laying off 20,000 employees during the last two years in an attempt to trim at least $2.5 billion in annual costs, investors also learned that the company expects to pay a huge fine due to a U.S.-led criminal investigation. The investigation has focused on lax procedures in HSBC’s money-laundering controls that ultimately gave terrorists and drug cartels access to the U.S. financial system to the tune of hundreds of millions of dollars. While HSBC did anticipate it would have to pay a fine, it now appears that the $1.5