Last Thursday, the Belgian, Luxembourg and French government agreed on a plan to help out Dexia. The governments agreed on giving Dexia a yearlong guarantee on their new loans and deposits. Because of this plan, the shares of Dexia gained a lot today after a difficult period.
Our Prime Minister, Yves Leterme, said today that this guaranty give a lot of assurance to the investors. The investors don’t have to worry anymore about the liquidity of Dexia.
According to French Finance Minister Christine Lagarde, this plan shows us that the governments wouldn’t allow banks to go bankrupt, when these are so crucial to the financial system. Dexia will not be split up like Fortis, just a few days ago.
There are still some things unclear. For example, neither Dexia or the governments want to tell us how high the guaranty could go and how much each state will carry. For now the guaranty lasts till October 31, 2009, but the guarantee can be renewed for one year.
It is the first time for three European states to join and to make up a guarantee plan for a bank. Britain, Spain and Ireland also came together to guarantee their banking sector during the financial crisis. The three governments also decided to point out a new CEO for Dexia, because they were unhappy with the current situation. Pierre Mariani, is now the new CEO of Dexia and Jean-Luc Dehaene is the new chairman of Dexia.
It seems that the governments really do their best to maintain the position of the banks. I think this is a really good thing, because now the investors will have a lot more confidence. And as it already showed today, this has had a really good effect on the value of the shares of Dexia.
The only question I ask myself is: Where does the government takes the money from to build up this guarantee? Last week they already invested a lot of money into Fortis and also Dexia. I hope that the government can keep the promise she has made to the investors.
Source: CNN.com : Dexia shares soar on government pledge
http://edition.cnn.com/2008/BUSINESS/10/09/belgium.dexia.guarantee.ap/index.html
donderdag 9 oktober 2008
European markets surge
I watched a video about an overview on the European markets today, 9 October 2008.
Carter Evans, the news reporter, gives comments on the European markets. He sais that the European stocks opened higher today but around noon there is more disorder.
The reason because the European stocks opened higher is because of the positive news about the European Central Bank that reduced their banc lending rate.
IBM did what was expect. They made a net profit of 2,36 billion dollar, the reaction on the market was positive, they made a profit of 20 percent.
Dexia raised with 25 percent because the governments of France, Belgium and Luxembourg said they will support the Dexia Group when they are in trouble. The individual shareholder is relieved and that was tangible on the Belgian market.
Iceland took over their biggest bank: Kaupthing. This is already the third bank that the government took over in Iceland, a few weeks ago they already controlled Glitnir and Landsbanki. For Iceland the financial market is the most important market in Iceland, before the financial crisis they had a “financial boom” in Iceland.
According to me it's very important that the shareholders will be relieved. Only when there is no disorder the markets will repair themselves. That’s why the European government is so important. They have to make decisions to repair the markets. So they have to create some rest on the markets. They reduced their banc lending rate and this is a very important and good step. I hope we sit on the bottom and the markets can repair themselves.
Source: video from CNN: http://money.cnn.com/video/#/video/news/2008/10/09/news.nyse7.100908.cnnmoney
Title: European markets surge
Carter Evans, the news reporter, gives comments on the European markets. He sais that the European stocks opened higher today but around noon there is more disorder.
The reason because the European stocks opened higher is because of the positive news about the European Central Bank that reduced their banc lending rate.
IBM did what was expect. They made a net profit of 2,36 billion dollar, the reaction on the market was positive, they made a profit of 20 percent.
Dexia raised with 25 percent because the governments of France, Belgium and Luxembourg said they will support the Dexia Group when they are in trouble. The individual shareholder is relieved and that was tangible on the Belgian market.
Iceland took over their biggest bank: Kaupthing. This is already the third bank that the government took over in Iceland, a few weeks ago they already controlled Glitnir and Landsbanki. For Iceland the financial market is the most important market in Iceland, before the financial crisis they had a “financial boom” in Iceland.
According to me it's very important that the shareholders will be relieved. Only when there is no disorder the markets will repair themselves. That’s why the European government is so important. They have to make decisions to repair the markets. So they have to create some rest on the markets. They reduced their banc lending rate and this is a very important and good step. I hope we sit on the bottom and the markets can repair themselves.
Source: video from CNN: http://money.cnn.com/video/#/video/news/2008/10/09/news.nyse7.100908.cnnmoney
Title: European markets surge
Who’s buying the banks?
Banks are offering continuously new shares. Many people have lost a lot of money in this financial crises. Funds both home and foreign are also suffering because they had invested in banks. Now the big question is, are there still buyers who are interested in new bank shares?
The answer is yes. This year banks, insurance companies, etc. have sold new shares for the amount of 228 billion dollar. Remarkably is the fact that 68 of the biggest banks in the world sold on their own for 128 billion dollars of new shares. For 20 of those banks it’s didn’t remained to one time of capital raising.
Joe Morford, bank analyst at RBC Capital Markets, thinks a lot of other banks will have to raise their capital. Otherwise they would not survive this crises.
A negative point for the banks could be the fear investors have at the moment. Investors are very cautious to invest in the financial market. So the sale of bank shares could stagnate and the capital raising could fail.
In my opinion, the capitals raising of banks are necessary. But people won’t continue buying their shares. Many people have lost a lot of their saving money and they are anxious to take another risk. Maybe funds will continue buying bank shares in hope the financial crises soon will be over. In the meantime banks have to survive and they must hope the crises will end soon so they could regain the confidence of private investors and funds.
source: http://www.forbes.com/wallstreet/2008/10/08/banking-capital-stocks-biz-wall-cx_lm_1008banks.html
The answer is yes. This year banks, insurance companies, etc. have sold new shares for the amount of 228 billion dollar. Remarkably is the fact that 68 of the biggest banks in the world sold on their own for 128 billion dollars of new shares. For 20 of those banks it’s didn’t remained to one time of capital raising.
Joe Morford, bank analyst at RBC Capital Markets, thinks a lot of other banks will have to raise their capital. Otherwise they would not survive this crises.
A negative point for the banks could be the fear investors have at the moment. Investors are very cautious to invest in the financial market. So the sale of bank shares could stagnate and the capital raising could fail.
In my opinion, the capitals raising of banks are necessary. But people won’t continue buying their shares. Many people have lost a lot of their saving money and they are anxious to take another risk. Maybe funds will continue buying bank shares in hope the financial crises soon will be over. In the meantime banks have to survive and they must hope the crises will end soon so they could regain the confidence of private investors and funds.
source: http://www.forbes.com/wallstreet/2008/10/08/banking-capital-stocks-biz-wall-cx_lm_1008banks.html
Banks are collapsing, but cash is still king
Last month was a very negative month for the financial sector, not to say a disaster. First there was the failure of Lehman. Then the rescues of the European banks by their governments. Although these are very serious situations, this crisis is just the worst one of the past 20 years.
Sometimes there is a company that rises on the stock market, but most of the other businesses are impacted by the financial crisis, even though they are not related to the banks. Examples are Vodafone, Unilever, GlaxoSmithKline and many more.
According to Anthony Bolton, fund manager, now is the time to invest in stocks. He explains by saying that “volatility in stock markets is natural”. It’s normal that the stock prices go up and down. He also said that, in the past, several major falls were followed by even bigger increases.
As longer as the crisis continues, the more severe the damage will be on the general economy. Experts say that a recession is inevitable, but they don’t know how long it will last.
There is also positive news. Oil prices, in general, are still on the same level of the past summer. Secondly, the government bonds. They are taking advantage of the crisis. Because the government guarantee the safety, this is very attractive for investors. In a few months time, they could make a nice profit. The gold prices also increased.
Source: The guardian - Banks are collapsing, but cash is still king.
http://www.guardian.co.uk/money/2008/oct/05/investments.shares.stocks
Sometimes there is a company that rises on the stock market, but most of the other businesses are impacted by the financial crisis, even though they are not related to the banks. Examples are Vodafone, Unilever, GlaxoSmithKline and many more.
According to Anthony Bolton, fund manager, now is the time to invest in stocks. He explains by saying that “volatility in stock markets is natural”. It’s normal that the stock prices go up and down. He also said that, in the past, several major falls were followed by even bigger increases.
As longer as the crisis continues, the more severe the damage will be on the general economy. Experts say that a recession is inevitable, but they don’t know how long it will last.
There is also positive news. Oil prices, in general, are still on the same level of the past summer. Secondly, the government bonds. They are taking advantage of the crisis. Because the government guarantee the safety, this is very attractive for investors. In a few months time, they could make a nice profit. The gold prices also increased.
If I had enough money, I would definitely buy stocks now. Because I also believe that now is the right moment to do so. The prices are all very low, so they have to rise again. I am not saying that this will happen immediately, but in a year from now they will have risen. I think I would hesitate to buy stocks from companies in the financial sector, because I don’t think the crisis is completely over yet. But companies like Unilever, Vodafone and GSK would be on my list. They are impacted by the crisis, but should recover rather quickly.
I am not surprised that the government bonds do good businesses. Especially when the interest percentage is high (about 7 %) and the government guarantees the safety.
I am not surprised that the government bonds do good businesses. Especially when the interest percentage is high (about 7 %) and the government guarantees the safety.
Source: The guardian - Banks are collapsing, but cash is still king.
http://www.guardian.co.uk/money/2008/oct/05/investments.shares.stocks
zaterdag 4 oktober 2008
Dexia alive but diluted
Tuesday, the governments of Belgium, France and Luxembourg announced, they will invest 9.2 billion dollar in Dexia. After investing in Fortis, this is the second time the Belgian government inject capital into a destitute bank. At closing time on the Brussels stock market Dexia already rose 8.8 percent. So after the drop of 30 percent on Monday, shareholders are regaining confidence in the bank. On the other hand, the capital injection is involving a dilution of the dividend. So the gain less money on their investment. The government’s investment hasn’t solved all Dexia’s problems. Their stock is still low rated and a lot of their shares aren’t available for the free float anymore. Only 29.4 percent. The crises by Dexia has forced the chief executive and chairman of Dexia to resign.
In my opinion the crises is only temporary, the financial markets will recover slowly. The crises in Belgium is not as bad as the crises in America. But the connections between our banks and the American banks have made investors afraid and cautious. After the intervention of the Belgian government, people must have more confidence in Dexia because emptying their saving accounts will only enlarge the problem. I think this is the moment to invest in Dexia or Fortis because their stocks are so low and according to me, they will only raise.
http://www.forbes.com/markets/2008/09/30/dexia-belgium-update-markets-equity-cx_ll_0930markets16.html
Bart
In my opinion the crises is only temporary, the financial markets will recover slowly. The crises in Belgium is not as bad as the crises in America. But the connections between our banks and the American banks have made investors afraid and cautious. After the intervention of the Belgian government, people must have more confidence in Dexia because emptying their saving accounts will only enlarge the problem. I think this is the moment to invest in Dexia or Fortis because their stocks are so low and according to me, they will only raise.
http://www.forbes.com/markets/2008/09/30/dexia-belgium-update-markets-equity-cx_ll_0930markets16.html
Bart
donderdag 2 oktober 2008
Stock market back on its feet after last week's whirlwind
The stock market knew a calm day last week after a very turbulent week. But the investors were still waiting very nervously for more news about the US governments emergency plan to invest $700 billion, to take over the mortgage debts held by banks. The investors are relieved that the US government is taking action, but they are uncertain about how successful the plan will be.
There was also good news for hundreds of workers at Lehman Brothers in London. There were reports that bidders are interested in taking over parts of the Canary Wharf-based investment bank. The administrators of Lehman brothers in London, PricewaterhouseCoopers, are also demanding the return of $8 billion, that was transferred to New York just before the bank’s collapse 2 weeks ago.
But next to the good news, there was also some bad news for the real economy. For example, the asking prices for homes fell one per cent this month. There was also bad news about the fixed rate mortgage rates, these rates could raise by as much as 0.25 per cent this week in a reaction to shocks on the stock market. This could bring a stop to the recent trend of falling rates.
British analysts say that the measures taken by several governments appeared to have stopped the panic and it seems that the stock market is restoring itself. But there are still some factors that haven’t gone away, such as the slowdown in the US and UK economy.
In my opinion it seems that the stock market is restoring after a very difficult and turbulent period. I understand the uncertainty of the investors about the US governments rescue plan. Will the investment be enough to restore the financial market? I think the plan is a good solution on a short term, but it is not a solution that deals with the structural problems. But the plan gives the US government more time to think about a solution that can work on a long term. The good news shows us that the actions, taken by the several governments, are helping the banks to proceed with their activities. But I think it is necessary that the financial world and the governments need to communicate more.
The stock market is restoring but the problems in the real economy aren’t solved yet. I hope that the governments use this moment of rest on the stock market, as an opportunity to look for a solution to help the economy back on its feet.
Source: Daily mail : Stock market back on its feet after last week's whirlwind
http://www.dailymail.co.uk/news/article-1059515/Stock-market-feet-weeks-whirlwind.html
There was also good news for hundreds of workers at Lehman Brothers in London. There were reports that bidders are interested in taking over parts of the Canary Wharf-based investment bank. The administrators of Lehman brothers in London, PricewaterhouseCoopers, are also demanding the return of $8 billion, that was transferred to New York just before the bank’s collapse 2 weeks ago.
But next to the good news, there was also some bad news for the real economy. For example, the asking prices for homes fell one per cent this month. There was also bad news about the fixed rate mortgage rates, these rates could raise by as much as 0.25 per cent this week in a reaction to shocks on the stock market. This could bring a stop to the recent trend of falling rates.
British analysts say that the measures taken by several governments appeared to have stopped the panic and it seems that the stock market is restoring itself. But there are still some factors that haven’t gone away, such as the slowdown in the US and UK economy.
In my opinion it seems that the stock market is restoring after a very difficult and turbulent period. I understand the uncertainty of the investors about the US governments rescue plan. Will the investment be enough to restore the financial market? I think the plan is a good solution on a short term, but it is not a solution that deals with the structural problems. But the plan gives the US government more time to think about a solution that can work on a long term. The good news shows us that the actions, taken by the several governments, are helping the banks to proceed with their activities. But I think it is necessary that the financial world and the governments need to communicate more.
The stock market is restoring but the problems in the real economy aren’t solved yet. I hope that the governments use this moment of rest on the stock market, as an opportunity to look for a solution to help the economy back on its feet.
Source: Daily mail : Stock market back on its feet after last week's whirlwind
http://www.dailymail.co.uk/news/article-1059515/Stock-market-feet-weeks-whirlwind.html
US academics query bank rescue plan
Several university professors all have their own opinion about the rescue plan of the US government. The plan is to invest $700 billion into the banks by buying assets from them. The purpose is to create more clarity in the banking system.
People, who already had shares before the crisis, started to sell these as quickly as they can in order not to lose any more money. According to Professor Jeremy Siegel, this has had more influence than shorting. Shorting is buying equities to sell them afterwards, without really possessing them. Professor Stephen Ryan, on the other hand, blames it to “holding risky assets with too little equity”.
“Will the banking sector become profitable again?” That’s the question where a lot of people would like to have an answer to.Banks will need to look for more investors in order to get extra capital and not keep trusting on their funds. They shouldn’t only search the investors in the own country, but also overseas. For instance in China.
First of all I don’t think that the rescue plan is a bad idea. On the contrary, I think they waited too long to come up with solutions. When the government injects the money into the system, the banks can proceed with their activities and they don’t head towards bankruptcy. Secondly, this is also a good thing for the government itself. They become shareholders. So they receive a voting right and can keep more control. And as soon as the banking sector recovers, the shares will also start to increase, which means profits.
Source: The Financial Times – US academics query banks rescue plan
http://www.ft.com/cms/s/0/d96ec264-8c02-11dd-8a4c-0000779fd18c.html?nclick_check=1
People, who already had shares before the crisis, started to sell these as quickly as they can in order not to lose any more money. According to Professor Jeremy Siegel, this has had more influence than shorting. Shorting is buying equities to sell them afterwards, without really possessing them. Professor Stephen Ryan, on the other hand, blames it to “holding risky assets with too little equity”.
“Will the banking sector become profitable again?” That’s the question where a lot of people would like to have an answer to.Banks will need to look for more investors in order to get extra capital and not keep trusting on their funds. They shouldn’t only search the investors in the own country, but also overseas. For instance in China.
First of all I don’t think that the rescue plan is a bad idea. On the contrary, I think they waited too long to come up with solutions. When the government injects the money into the system, the banks can proceed with their activities and they don’t head towards bankruptcy. Secondly, this is also a good thing for the government itself. They become shareholders. So they receive a voting right and can keep more control. And as soon as the banking sector recovers, the shares will also start to increase, which means profits.
Source: The Financial Times – US academics query banks rescue plan
http://www.ft.com/cms/s/0/d96ec264-8c02-11dd-8a4c-0000779fd18c.html?nclick_check=1
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