Last Friday, there was a release in the US of the jobs report of November. The results of that report were very bad. Along the US Labor Department employers cut off 553,000 jobs. This is the highest number in 34 years. This large numbers shows us that our economy is in a very bad situation. The release had a negative impact on the global stock markets. Especially the European markets suffered a lot on Friday. The most European markets lost about 4 percent while wall street just lost 1.7 percent. This new situation tempers the enthusiasm that investors had last Tuesday when the European central bank cut the interest rate from 3.25 to 2.5 percent.
On Friday there was another bad announcement. The German Bundesbank predicts a 0.8 shrink of the German economy in the next year. That was a hard hit for European markets because Germany is one of the biggest economies in Europe.In Asia some stock markets lost something of their value while others gained.
I think this report will only put us in a deeper crisis. As you see, every time there is announced something bad, markets react immediately negative. The loss of 553,000 jobs is very bad for the economy. Those people don’t have spending power anymore. And that is what our economy needs.The fact that the German Bundesbank predict a shrink of the German economy could have a negative influence on the other European markets. Germany is always an indicator for other countries. So I expect that other countries will predict a similar shrink like Germany.
source: http://money.cnn.com/news/newsfeeds/articles/apwire/3f77f412878cfb56d21e8c135e5d0c57.htm
zondag 7 december 2008
zaterdag 6 december 2008
People rush for government bonds, but experts fear they will become part of the problem
The earnings on government bonds dropped down this week. The investors are afraid of the recession and that is why they started to buy so many government bonds. They rather prefer safe investments than shares at the moment. Because of the recession, the inflation reduces and that is what makes bonds more attractive.
This is very good news for the governments, they receive a lot of money to help the economies and financial institutions.
But there is also a negative side. George Buckley, economist at Deutsche Bank, said that the amount of bonds sold has almost doubled. He wonders if the government will be able to offer an attractive yield for them, so that the buyers will still be interested. This rising demand causes an increase of the prices which has its effect on the yields. If the price becomes higher, the yield drifts down. This is often a sign of recession.
For instance the British yields are under constant pressure because of the negative results of certain important sectors, such as the construction and manufacturing industry.
A second example are the 10-year Treasury yields of the US. They plummeted to the lowest level in 50 years, the most important reason is the recession.
Experts and economists fear that the yields will continue to slip back as the whole world goes into a recession.
Alistair Darling revealed in a budget report that he wants to lift up taxes and cut the spending growth. He gave the indication to the markets that he won’t allow the government’s largesse to last for a long time.
But analysts doubt the fact that the markets are convinced. Investors worry about the risk the government might take by have so much debt, that they could have problems paying the interest on the bonds.
I can agree with the investors that they choose for a safe investment at the moment. I would also be more cautious and buy more bonds then before the crisis. Although, I think that now is the moment to buy shares of certain companies.
For the governments it is indeed a good situation that the bonds have so many success. They receive a lot of money which can be used to restore the economy.
But I think that they have to be careful and not sell too much bonds. Because if they do that, their debts will become too high and the governments will get into problems themselves. That is the last thing we want to happen right now.
I hope that Mr. Darling is right and that he does what he said. Then the markets can become confident again, which is necessary for them in order to restore and become healthy. Without it, the crisis won’t be solved!
Source: The Guardian - People rush for government bonds, but experts fear they will become part of the problem -
http://www.guardian.co.uk/money/2008/dec/04/government-bonds-investments
This is very good news for the governments, they receive a lot of money to help the economies and financial institutions.
But there is also a negative side. George Buckley, economist at Deutsche Bank, said that the amount of bonds sold has almost doubled. He wonders if the government will be able to offer an attractive yield for them, so that the buyers will still be interested. This rising demand causes an increase of the prices which has its effect on the yields. If the price becomes higher, the yield drifts down. This is often a sign of recession.
For instance the British yields are under constant pressure because of the negative results of certain important sectors, such as the construction and manufacturing industry.
A second example are the 10-year Treasury yields of the US. They plummeted to the lowest level in 50 years, the most important reason is the recession.
Experts and economists fear that the yields will continue to slip back as the whole world goes into a recession.
Alistair Darling revealed in a budget report that he wants to lift up taxes and cut the spending growth. He gave the indication to the markets that he won’t allow the government’s largesse to last for a long time.
But analysts doubt the fact that the markets are convinced. Investors worry about the risk the government might take by have so much debt, that they could have problems paying the interest on the bonds.
I can agree with the investors that they choose for a safe investment at the moment. I would also be more cautious and buy more bonds then before the crisis. Although, I think that now is the moment to buy shares of certain companies.
For the governments it is indeed a good situation that the bonds have so many success. They receive a lot of money which can be used to restore the economy.
But I think that they have to be careful and not sell too much bonds. Because if they do that, their debts will become too high and the governments will get into problems themselves. That is the last thing we want to happen right now.
I hope that Mr. Darling is right and that he does what he said. Then the markets can become confident again, which is necessary for them in order to restore and become healthy. Without it, the crisis won’t be solved!
Source: The Guardian - People rush for government bonds, but experts fear they will become part of the problem -
http://www.guardian.co.uk/money/2008/dec/04/government-bonds-investments
vrijdag 5 december 2008
New breed of trader heads for Europe
During these financial difficulties we are witnessing the upcoming of a whole new breed of traders. I am talking about a small but progressively more important group of electronic trading firms. These firms have built up a great presence in the US equities markets.
It are young firms and are mostly managed by private owners. Although they are young, they already have a global presence. For example, Getco or Global Electronic Trading Company, trades equities, foreign exchange, fixed income and commodities products on about 30 markets all over the globe. These type of firms are already good for 30-40 per cent of all equities trading volume in the US. These firms can also mean big revenues for European exchanges if they can get the firms to trade on their system. The European exchange needs this new breed of traders because the traditional customers is pulling back a lot of his capital.
But there is also competition from new platforms such as Chi-X. Marketmakers are firms that quote both a buy and a sell price in a financial instrument or commodity, hoping to make a profit on the turn or the bid/offer spread. This competition broke the exchange trading monopolies and the exchange is now also very engaged with these marketmaking firms. This attraction is mutual. The European market is very attractive for these firms because they are now able to trade on multiple platforms and arbitrage between price differences. This comes out very handy to their trading strategies.
The firms are very excited about the evolutions on the European markets. They see a change in the market structure, and this will make their processes more efficient, and this will benefit all investors in the long term. But the traditional players will always stay very crucial in the financial system. Euronext is also trying to attract these kind of firms out of the US, and in Chicago they have found a lot of potential. They are very enthusiastic about coming over to Europe. This type of liquidity provider does not trade on a particular stock, they spread their capital to post bids and offers on various exchanges. In this process they use very sophisticated technology and data analysis to trade more efficiently, make more money on the spread between the bid and offer, and they also make price discovery more efficient.
Despite the restrained outlook for the markets, the optimism over these firms has not been affected. Liquidity providers have always been very important for the entire market by improving the quality of the prices on the exchanges by lowering the bid-ask spread. Even when there is a lot of volatility, the market can always count on the firms to execute trades all day long.
This new breed of traders an liquidity providers can give a new boost to the financial sector. These firms bring a lot of advantages with them to the exchange markets. The markets can always count on these firms, because they trade all day long. It is good that there are structural changes happening on the financial markets, because during this financial crisis we need to attract the traditional customer again, because now they are all pulling back their investment. I believe that these firms can also bring more confidence on the markets, because they work on a highly professional basis with a lot of knowhow.
The fact that they are very popular in the US means that they are effective. I hope Europe succeeds in bringing these firms to our European markets. Euronext can certainly use a boost right now and when these firms are interested as well in coming over to Europe this could mean that the damage of the financial crisis could be controlled.
Source: Financial Times: New breed of trader heads for Europe
http://www.ft.com/cms/s/0/c28e8908-c1a4-11dd-831e-000077b07658.html
It are young firms and are mostly managed by private owners. Although they are young, they already have a global presence. For example, Getco or Global Electronic Trading Company, trades equities, foreign exchange, fixed income and commodities products on about 30 markets all over the globe. These type of firms are already good for 30-40 per cent of all equities trading volume in the US. These firms can also mean big revenues for European exchanges if they can get the firms to trade on their system. The European exchange needs this new breed of traders because the traditional customers is pulling back a lot of his capital.
But there is also competition from new platforms such as Chi-X. Marketmakers are firms that quote both a buy and a sell price in a financial instrument or commodity, hoping to make a profit on the turn or the bid/offer spread. This competition broke the exchange trading monopolies and the exchange is now also very engaged with these marketmaking firms. This attraction is mutual. The European market is very attractive for these firms because they are now able to trade on multiple platforms and arbitrage between price differences. This comes out very handy to their trading strategies.
The firms are very excited about the evolutions on the European markets. They see a change in the market structure, and this will make their processes more efficient, and this will benefit all investors in the long term. But the traditional players will always stay very crucial in the financial system. Euronext is also trying to attract these kind of firms out of the US, and in Chicago they have found a lot of potential. They are very enthusiastic about coming over to Europe. This type of liquidity provider does not trade on a particular stock, they spread their capital to post bids and offers on various exchanges. In this process they use very sophisticated technology and data analysis to trade more efficiently, make more money on the spread between the bid and offer, and they also make price discovery more efficient.
Despite the restrained outlook for the markets, the optimism over these firms has not been affected. Liquidity providers have always been very important for the entire market by improving the quality of the prices on the exchanges by lowering the bid-ask spread. Even when there is a lot of volatility, the market can always count on the firms to execute trades all day long.
This new breed of traders an liquidity providers can give a new boost to the financial sector. These firms bring a lot of advantages with them to the exchange markets. The markets can always count on these firms, because they trade all day long. It is good that there are structural changes happening on the financial markets, because during this financial crisis we need to attract the traditional customer again, because now they are all pulling back their investment. I believe that these firms can also bring more confidence on the markets, because they work on a highly professional basis with a lot of knowhow.
The fact that they are very popular in the US means that they are effective. I hope Europe succeeds in bringing these firms to our European markets. Euronext can certainly use a boost right now and when these firms are interested as well in coming over to Europe this could mean that the damage of the financial crisis could be controlled.
Source: Financial Times: New breed of trader heads for Europe
http://www.ft.com/cms/s/0/c28e8908-c1a4-11dd-831e-000077b07658.html
donderdag 4 december 2008
UAW agrees to help automakers
The United Auto Workers said that they will help 3 important automakers: General Motors, Ford and Chrysler.
They agreed to work together with the embattled U.S. automakers about changing their labor contract so they win 34 billion dollars with this action.
This news was made Wednesday by the president of the United Auto Workers after he had a conference with the presidents of Ford, Chrysler and General Motors.
General Motors was the first one to say that they are in bad papers, they said that they need some financial help otherwise the bankruptcy wasn’t far away. They needed 4 billion dollars by the end of the year. Also Chrysler warned their investors and asked for help, they said that they would run out of cash in the first quarter of next year so they really needed some help because bankruptcy wasn’t far away.
The companies were asked to go to the Congress on Tuesday to talk about their problems and to say how they will use the federal loans and to return them profitable.
The Union came with a “jobs bank” this means that the jobs are saved in General Motors and that they will pay them. This action isn’t only for General Moters. Ford and Chrysler would get the same if they need this. But the president of UAW is not convinced, according to him their need to be more actions to save the automotive sector in these crisis.
He also said that there need to be investments in the retiree health but because of this crisis and the help of the Union this would be difficult.
According to me this is a positive news item. The automotive sector is in problems and they will be the first victims of the global recession and financial crisis. The Union needs to invest money but it’s impossible to give money all the time. We need to learn about this crisis, we need to learn that we have to control much better about the companies and that the governments and other institutions will not always be paying when they are in difficulties.
These are hard times but we have to look forward and when they save these 3 big companies a lot of jobs are saved and the economy can recover again. But we have to learn, stronger regulations are necessary.
Source: http://money.cnn.com/2008/12/03/news/companies/uaw/index.htm?cnn=yes
They agreed to work together with the embattled U.S. automakers about changing their labor contract so they win 34 billion dollars with this action.
This news was made Wednesday by the president of the United Auto Workers after he had a conference with the presidents of Ford, Chrysler and General Motors.
General Motors was the first one to say that they are in bad papers, they said that they need some financial help otherwise the bankruptcy wasn’t far away. They needed 4 billion dollars by the end of the year. Also Chrysler warned their investors and asked for help, they said that they would run out of cash in the first quarter of next year so they really needed some help because bankruptcy wasn’t far away.
The companies were asked to go to the Congress on Tuesday to talk about their problems and to say how they will use the federal loans and to return them profitable.
The Union came with a “jobs bank” this means that the jobs are saved in General Motors and that they will pay them. This action isn’t only for General Moters. Ford and Chrysler would get the same if they need this. But the president of UAW is not convinced, according to him their need to be more actions to save the automotive sector in these crisis.
He also said that there need to be investments in the retiree health but because of this crisis and the help of the Union this would be difficult.
According to me this is a positive news item. The automotive sector is in problems and they will be the first victims of the global recession and financial crisis. The Union needs to invest money but it’s impossible to give money all the time. We need to learn about this crisis, we need to learn that we have to control much better about the companies and that the governments and other institutions will not always be paying when they are in difficulties.
These are hard times but we have to look forward and when they save these 3 big companies a lot of jobs are saved and the economy can recover again. But we have to learn, stronger regulations are necessary.
Source: http://money.cnn.com/2008/12/03/news/companies/uaw/index.htm?cnn=yes
zondag 30 november 2008
Wall Street ends week with more gains
This week shares on Wall Street made strong gains this week. The reason is the rescue of Citigroup by the US government. This action has strengthen the confidence on the market.At the end of the week, shares were growing less because investors want to know how large the financial crisis actually is. The indicator for knowing that is the shopping habits of people at the start of the holiday season.
Thanks to the rescue action of the US government to save Citigroup, all bank shares gained some extra profits. Citigroup itself rose again to 8.36 dollar. The government has taken over the toxic mortgage of Citigroup. That cost was about 300 billion dollar.
The Federal reserve is also responsible for the good results on Wall Street this week. They keep 800 billion dollar available to help people with getting a loan for a house, a company or for consumers.
Another positive signal was the announcement of President Obama that his team of economists will continue searching for new ways to end this financial crisis.
Because of these good results, some negative news in the economic sector was set aside.The orders for durable goods dropped down with 6.2%.Consumers spend this month one percent less than previous month, but the personal income rose with 0.3 percent.
Like I said in my previous blogs, confidence in the market is the most important fact in the financial crises. Without that companies can’t gain some new capital. I think a lot of people will look very carefully over their budget this holidays. That could have an negative impact on the stock markets.The government of the US did a good job with the help they gave to Citibank. But I ask myself the question were they get all that money. Government all over the world are helping their banks, but they should get their money from somewhere. I think that only helping the banks will not be enough to get out of this crises. Other industries are suffering to and they don’t receive any help.
source: http://www.ft.com/cms/s/0/858d7cf0-bd51-11dd-bba1-0000779fd18c.html
Thanks to the rescue action of the US government to save Citigroup, all bank shares gained some extra profits. Citigroup itself rose again to 8.36 dollar. The government has taken over the toxic mortgage of Citigroup. That cost was about 300 billion dollar.
The Federal reserve is also responsible for the good results on Wall Street this week. They keep 800 billion dollar available to help people with getting a loan for a house, a company or for consumers.
Another positive signal was the announcement of President Obama that his team of economists will continue searching for new ways to end this financial crisis.
Because of these good results, some negative news in the economic sector was set aside.The orders for durable goods dropped down with 6.2%.Consumers spend this month one percent less than previous month, but the personal income rose with 0.3 percent.
Like I said in my previous blogs, confidence in the market is the most important fact in the financial crises. Without that companies can’t gain some new capital. I think a lot of people will look very carefully over their budget this holidays. That could have an negative impact on the stock markets.The government of the US did a good job with the help they gave to Citibank. But I ask myself the question were they get all that money. Government all over the world are helping their banks, but they should get their money from somewhere. I think that only helping the banks will not be enough to get out of this crises. Other industries are suffering to and they don’t receive any help.
source: http://www.ft.com/cms/s/0/858d7cf0-bd51-11dd-bba1-0000779fd18c.html
zaterdag 29 november 2008
Panasonic slashes profit forecast by 40% after surprise sales dip
Yesterday, Panasonic revealed that their operating profit forecast dropped down by 40%. Last month, however, they said that it was too soon to say anything about the effects of the economic crisis.
They expect to have an operational profit of Y340bn and a net loss of Y98.5bn. According to the company, this is due to “restructuring costs and losses on its securities portfolio”.
The finance director of Panasonic causes the decreased sales to "the rapid economic slowdown and lower prices due to fierce competition", but in September, the company’s president said that they were not having serious problems with the sales.
Because of the negative news, the consumers are afraid that the biggest rivals of the Japanese electronics giant have not been honest about the effects of the crisis. For instance, Sony has announced a cut of almost 60% in operational profits.
Of the total amount of reduction, Y80bn is due to price competition with Korea. The rest is caused by a setback in sales, mostly of electronic parts for cars. The Japanese company is thinking of closing or selling product lines that are not profitable.
The company wants to cut Y500bn of capital expenditure this year, and it thinks that the situation will continue for next year.
The president of Panasonic did not commented the take-over bid for Sanyo, one of its biggest rivals.
We see that the crisis is still having its effects. Even after 2 to 3 months, there are still companies that get into trouble. I think that several companies will follow in the next few months, companies of which we thought that they would not get into problems.
It ‘s bad that companies as big as Panasonic get that negative results. These companies are crucial for the economy. This news must be very hard for the shareholders, because of it, the share value decreased.
But as I said above, I think that many shareholders will lose a lot of their investments in the next months, which is kind of logic with a crisis this big.
For people who want to start invest, this is a good time. Shares are low. The only problem is that the people don’t trust it anymore, but I’m convinced that confidence is what we need in order to restore.
Source: The Financial Times - Panasonic slashes profit forecast by 40% after surprise sales dip -
http://www.ft.com/cms/s/0/ea7cef08-bceb-11dd-af5a-0000779fd18c.html
They expect to have an operational profit of Y340bn and a net loss of Y98.5bn. According to the company, this is due to “restructuring costs and losses on its securities portfolio”.
The finance director of Panasonic causes the decreased sales to "the rapid economic slowdown and lower prices due to fierce competition", but in September, the company’s president said that they were not having serious problems with the sales.
Because of the negative news, the consumers are afraid that the biggest rivals of the Japanese electronics giant have not been honest about the effects of the crisis. For instance, Sony has announced a cut of almost 60% in operational profits.
Of the total amount of reduction, Y80bn is due to price competition with Korea. The rest is caused by a setback in sales, mostly of electronic parts for cars. The Japanese company is thinking of closing or selling product lines that are not profitable.
The company wants to cut Y500bn of capital expenditure this year, and it thinks that the situation will continue for next year.
The president of Panasonic did not commented the take-over bid for Sanyo, one of its biggest rivals.
We see that the crisis is still having its effects. Even after 2 to 3 months, there are still companies that get into trouble. I think that several companies will follow in the next few months, companies of which we thought that they would not get into problems.
It ‘s bad that companies as big as Panasonic get that negative results. These companies are crucial for the economy. This news must be very hard for the shareholders, because of it, the share value decreased.
But as I said above, I think that many shareholders will lose a lot of their investments in the next months, which is kind of logic with a crisis this big.
For people who want to start invest, this is a good time. Shares are low. The only problem is that the people don’t trust it anymore, but I’m convinced that confidence is what we need in order to restore.
Source: The Financial Times - Panasonic slashes profit forecast by 40% after surprise sales dip -
http://www.ft.com/cms/s/0/ea7cef08-bceb-11dd-af5a-0000779fd18c.html
European shares surge on bargain-hunting
Their was a lot of turbulence on the markets this week. There was bad news about the economy and corporate news but the investors began also with bargain-hunting.
We are in interesting economic days now and you can see that on the markets. Rallies of this proportion you usually don’t see but the reason for these rallies are the markets, markets that lost 50 percent in 1 year is something you either don’t see.
For example the FTSE Eurofirst 300, they gained 1.1 per cent profit on Friday and only this week they gained 13.3 per cent. But also the FTSE Eurofirst 300 lost 50 per cent when you compare it with one year ago.
Their was a lot of bad news but this didn’t make a difference for the investors. They taught the bad news was already in the price per share. The volumes were also light because Thursday the Thanksgiving holiday started in the United States.
Let’s have an overview about the stocks now.
The solar market that was hit very hard by the crisis made a spectacular rebound. Renewable Energy and Q-Cells won 50 per cent, that is an unexpected rebound.
The technology sector did not so good after STMicroelectronics came with bad news. The investors were surprised and the shares increased. They forecast they will lose some money, the lost would be 13 per cent.
Shares in STM had a bad day Friday but when you compare it with the week results they won. 1 to 2 per cent. Infineon did a good job, they won 8 per cent this week.
Allianz sold Thursday Dresdner Bank division to Commerzbank, this helped to raise the share with 39.8 per cent. The deal was sealed for a long time because they were afraid about the threatens of this transaction. This deal is positive according to Allianz, they were never satisfied about the Dresdner Bank, but this deal is positive for Allianz.
The financial shares did a good job, Commerzbank rose 32.5 per cent this week, Deutsche bank won 48.8 per cent.
The future of the motor industry is dark after Renault halted his productions in Moscow.
I think this week was satisfied for the markets but there is a lot of uncertainty on the markets.
There are a lot of investors who think on short term. They hope the shares that lost a lot one day ago that they will win a lot today. After 1 day they sell their shares.
People with a lot of money influence the markets like this. They buy a lot of shares on Monday for example so the volume gain, and the price also decrease on Tuesday. After Tuesday they just sell their shares, the volume increased and the price per share also.
This is not a good technique for the markets, the markets need investors who think on long term. Not just on 1 day or 2. This will restore the confidence and when the confidence is restored, the markets can recover.
Source: http://www.ft.com/cms/s/0/4ca4fb4a-bd36-11dd-bba1-0000779fd18c.html
We are in interesting economic days now and you can see that on the markets. Rallies of this proportion you usually don’t see but the reason for these rallies are the markets, markets that lost 50 percent in 1 year is something you either don’t see.
For example the FTSE Eurofirst 300, they gained 1.1 per cent profit on Friday and only this week they gained 13.3 per cent. But also the FTSE Eurofirst 300 lost 50 per cent when you compare it with one year ago.
Their was a lot of bad news but this didn’t make a difference for the investors. They taught the bad news was already in the price per share. The volumes were also light because Thursday the Thanksgiving holiday started in the United States.
Let’s have an overview about the stocks now.
The solar market that was hit very hard by the crisis made a spectacular rebound. Renewable Energy and Q-Cells won 50 per cent, that is an unexpected rebound.
The technology sector did not so good after STMicroelectronics came with bad news. The investors were surprised and the shares increased. They forecast they will lose some money, the lost would be 13 per cent.
Shares in STM had a bad day Friday but when you compare it with the week results they won. 1 to 2 per cent. Infineon did a good job, they won 8 per cent this week.
Allianz sold Thursday Dresdner Bank division to Commerzbank, this helped to raise the share with 39.8 per cent. The deal was sealed for a long time because they were afraid about the threatens of this transaction. This deal is positive according to Allianz, they were never satisfied about the Dresdner Bank, but this deal is positive for Allianz.
The financial shares did a good job, Commerzbank rose 32.5 per cent this week, Deutsche bank won 48.8 per cent.
The future of the motor industry is dark after Renault halted his productions in Moscow.
I think this week was satisfied for the markets but there is a lot of uncertainty on the markets.
There are a lot of investors who think on short term. They hope the shares that lost a lot one day ago that they will win a lot today. After 1 day they sell their shares.
People with a lot of money influence the markets like this. They buy a lot of shares on Monday for example so the volume gain, and the price also decrease on Tuesday. After Tuesday they just sell their shares, the volume increased and the price per share also.
This is not a good technique for the markets, the markets need investors who think on long term. Not just on 1 day or 2. This will restore the confidence and when the confidence is restored, the markets can recover.
Source: http://www.ft.com/cms/s/0/4ca4fb4a-bd36-11dd-bba1-0000779fd18c.html
vrijdag 28 november 2008
Mumbai Markets Poised For Fall
The Indian stock market was doing very bad, like all other global markets, but any hope of recovery was destroyed when militant attacks hit Mumbai and caused death to 104 persons. People expect that the Bombay Stock Exchange will fall very fast when trading begins again on Friday.
This Thursday, the exchange and all other major bourses like the National Stock Exchange and the currency exchange were suspended because of these militant attacks. This is not the first time that there has been an terrorist attack in Mumbai. In 1993 there has been a similar attack on three hotels and the Bombay Stock Exchange. But the attacks now are different from the ones that happened in 1993 because now the attacks threaten to increase the instability in the country, and it is already suffering a lot due to the financial crisis.
A few weeks earlier, the International Monetary Fund forecasted that the growth of the Indian economy would decline with 0.6%. Tougher credit conditions from the banks will lower the consumer spending and the country’s IT outsourcing sector is also going to have troubles in the near future. The Indian economy strongly depends on the American customer, and when they spend less money, the economy of India will suffer a lot. This is already happening on the Indian equity market. Foreign Investors have pulled out their investments to invest in more safer products. The leading Sensex index has already lost 56.0% since the start of the year.
The militant attacks will have great consequences for the Indian economy. The business will be discouraged and tourism will decrease as well, because the attack happened in what is a prime location for tourists and business people. When people want to invest they want to invest in a country that has law and order. With the lack of confidence of the investors, this kind of attack was the last thing India needed.
It is the first time that I hear news about the economy of India. It seems that the Indian economy is having a lot of trouble, just like all other great economies at the moment. The militant attacks will have a very great impact on the confidence of the investors, and this comes at a really bad timing for the Indian economy. Because they needed to close the bourse, for the safety of the people, investors will pull back a lot of their capital they had invested in India.
The real consequences of the attacks will only be clear within a certain period, but the prospects don’t look very good. It will be necessary for the Indian government to restore the peace and try to keep the damage done as low as possible.
Source: Forbes: Mumbai Markets Poised For Fall
http://www.forbes.com/markets/2008/11/27/india-outlook-friday-markets-equity-cx_vr_1127markets10a.html
This Thursday, the exchange and all other major bourses like the National Stock Exchange and the currency exchange were suspended because of these militant attacks. This is not the first time that there has been an terrorist attack in Mumbai. In 1993 there has been a similar attack on three hotels and the Bombay Stock Exchange. But the attacks now are different from the ones that happened in 1993 because now the attacks threaten to increase the instability in the country, and it is already suffering a lot due to the financial crisis.
A few weeks earlier, the International Monetary Fund forecasted that the growth of the Indian economy would decline with 0.6%. Tougher credit conditions from the banks will lower the consumer spending and the country’s IT outsourcing sector is also going to have troubles in the near future. The Indian economy strongly depends on the American customer, and when they spend less money, the economy of India will suffer a lot. This is already happening on the Indian equity market. Foreign Investors have pulled out their investments to invest in more safer products. The leading Sensex index has already lost 56.0% since the start of the year.
The militant attacks will have great consequences for the Indian economy. The business will be discouraged and tourism will decrease as well, because the attack happened in what is a prime location for tourists and business people. When people want to invest they want to invest in a country that has law and order. With the lack of confidence of the investors, this kind of attack was the last thing India needed.
It is the first time that I hear news about the economy of India. It seems that the Indian economy is having a lot of trouble, just like all other great economies at the moment. The militant attacks will have a very great impact on the confidence of the investors, and this comes at a really bad timing for the Indian economy. Because they needed to close the bourse, for the safety of the people, investors will pull back a lot of their capital they had invested in India.
The real consequences of the attacks will only be clear within a certain period, but the prospects don’t look very good. It will be necessary for the Indian government to restore the peace and try to keep the damage done as low as possible.
Source: Forbes: Mumbai Markets Poised For Fall
http://www.forbes.com/markets/2008/11/27/india-outlook-friday-markets-equity-cx_vr_1127markets10a.html
zondag 23 november 2008
BNP On Tenterhooks
On Tuesday the share of BNP Paribas dropped with 9.2%. There are two big reasons for the decrease. The first one is the prediction that BNP Paribas needs a capital raise for keeping operative. There are speculations that the core capital of BNP is not adequate anymore.
The second reason is the court that must decide whether the purchase of Fortis was valid or not.The Belgian government sold Fortis to BNP Paribas without the permission of his shareholders. The shareholders went to court to argue the sale.
Like other French banks BNP Paribas has raised his capital by a government bailout. Now analysts believe that the money from the bailout was not enough. This is because other European banks have a higher core capital ratio than BNP.
I think the judgement of the Belgium court was a good thing for BNP and FortisThe court in Belgium has approved the sale of Fortis. They have done that in the advance of the households who have their saving money on the bank. I think that when they didn’t approved the purchase the Belgian government and Fortis could get in trouble. Now everything is quiet for a while and BNP can search for solutions to become profitable again. On the other hand I understand the shareholders of Fortis whose shares have a very low value. They should receive a compensation from the Belgian government for selling Fortis whiteout permission.
Source: http://www.forbes.com/markets/2008/11/18/bnp-paribas-fortis-markets-equity-cx_vr_1118markets09.html
The second reason is the court that must decide whether the purchase of Fortis was valid or not.The Belgian government sold Fortis to BNP Paribas without the permission of his shareholders. The shareholders went to court to argue the sale.
Like other French banks BNP Paribas has raised his capital by a government bailout. Now analysts believe that the money from the bailout was not enough. This is because other European banks have a higher core capital ratio than BNP.
I think the judgement of the Belgium court was a good thing for BNP and FortisThe court in Belgium has approved the sale of Fortis. They have done that in the advance of the households who have their saving money on the bank. I think that when they didn’t approved the purchase the Belgian government and Fortis could get in trouble. Now everything is quiet for a while and BNP can search for solutions to become profitable again. On the other hand I understand the shareholders of Fortis whose shares have a very low value. They should receive a compensation from the Belgian government for selling Fortis whiteout permission.
Source: http://www.forbes.com/markets/2008/11/18/bnp-paribas-fortis-markets-equity-cx_vr_1118markets09.html
zaterdag 22 november 2008
Asia stocks sink after Wall Street tumbles
Because of concerns over an ailing U.S. auto industry, a string of layoffs and the lowest closing of the Dow Jones since 2003, the global stock markets were down and the price of oil took a dive under $50 a barrel.
In mid-July the oil price reached an all-time high and now, due to bad economic forecasts and economic recession, the price has sunk under $50 a barrel. Because of the recession, the demand of crude oil has gone down a lot.
Also the high number of unemployment reached a maximum in 16 years. Because of this, the number of unemployment insurances raised to its highest levels. The number of initial filings for state jobless benefits have increased by 27,000 to 542,000 . This is really bad news and the American government is considering to give more benefits for the jobless.
White House press secretary Dana Perino said that the economy has slowed down a lot due to the recent financial and credit crisis, and the president is concerned about the people who have lost their jobs. He wants that anybody who wants to work, can find employment.
Elsewhere, in Europe and Asia, stock markets didn’t do well. In Europe, most important stock markets like the London’s FTSE and the Paris’ CAC have lost 3% while in Asia the Japanese market slumped.
The investors are still very fearful and are holding back their investment. They are also afraid of a bankruptcy in the automotive industry. According to some analysts this could be a sign to the broader economies. According to Todd Morgan, senior director of Bel Air Investment Advisors, this situation brings back the focus on the lack of confidence of the investors.
The markets cry for a solution, that will change the attitude of the investors.
Again really bad news for the stock markets. They make a lot of losses and the fear of the investors just can’t be taken away. I don’t know where this will end. A recession Is inevitable. But thanks to the recession, the price of crude oil has declined a lot. This is good for the people because winter is now coming and a lot of people will have to buy gas for their heating. The high number of unemployment is a real problem for the US, and the government will need to come up with a good plan to tackle this situation. The automotive industry is now also suffering a lot of losses and this will probably cause more layoffs. This is not a good sign towards the investors. The governments really need to do something quick to prevent a further crisis.
Source CNN : Asia stocks sink after Wall Street tumbles (20/11/2008 18u30)http://edition.cnn.com/2008/BUSINESS/11/20/global.markets/index.html
In mid-July the oil price reached an all-time high and now, due to bad economic forecasts and economic recession, the price has sunk under $50 a barrel. Because of the recession, the demand of crude oil has gone down a lot.
Also the high number of unemployment reached a maximum in 16 years. Because of this, the number of unemployment insurances raised to its highest levels. The number of initial filings for state jobless benefits have increased by 27,000 to 542,000 . This is really bad news and the American government is considering to give more benefits for the jobless.
White House press secretary Dana Perino said that the economy has slowed down a lot due to the recent financial and credit crisis, and the president is concerned about the people who have lost their jobs. He wants that anybody who wants to work, can find employment.
Elsewhere, in Europe and Asia, stock markets didn’t do well. In Europe, most important stock markets like the London’s FTSE and the Paris’ CAC have lost 3% while in Asia the Japanese market slumped.
The investors are still very fearful and are holding back their investment. They are also afraid of a bankruptcy in the automotive industry. According to some analysts this could be a sign to the broader economies. According to Todd Morgan, senior director of Bel Air Investment Advisors, this situation brings back the focus on the lack of confidence of the investors.
The markets cry for a solution, that will change the attitude of the investors.
Again really bad news for the stock markets. They make a lot of losses and the fear of the investors just can’t be taken away. I don’t know where this will end. A recession Is inevitable. But thanks to the recession, the price of crude oil has declined a lot. This is good for the people because winter is now coming and a lot of people will have to buy gas for their heating. The high number of unemployment is a real problem for the US, and the government will need to come up with a good plan to tackle this situation. The automotive industry is now also suffering a lot of losses and this will probably cause more layoffs. This is not a good sign towards the investors. The governments really need to do something quick to prevent a further crisis.
Source CNN : Asia stocks sink after Wall Street tumbles (20/11/2008 18u30)http://edition.cnn.com/2008/BUSINESS/11/20/global.markets/index.html
Citigroup plunges as bank mulls next move
Citigroup is the next victim in this global crisis. This is the conclusion after the share decreased with more than 20 percent. Despite the top management did some efforts to save the bank but the shareholders weren’t convinced so the share decreased.
On Friday morning their was an extraordinary meeting for the managers to discuss the problems because when we look to the figures we can see that the share of Citigroup decreased this week with 60 percent.
The share hit a low of 3.05 dollars Friday but when the new president of the United States proclaimed that Timothy Geithner would be his nominee for Treasury Secretary the share decreased.
The media proclaimed Thursday that the management is concerned about selling parts of the bank or maybe the whole bank. The management wants to focus on the strategy.
Friday was also a bad day for the employers, the management said that they want to fire 50,000 workers. After losing 25 percent of its value Wednesday, Citigroup stock fell down with 26% on Thursday to $4.71, its lowest level in more than a decade, and now they are dropped under the 4 dollars. This is a crisis for the bank.
There is a lot of pressure on Citigroup now, shortsellers thought the share would drop down so there are a lot of people that are speculating. Also institutional investors are not allowed to have shares under the 5 dollars, so it’s difficult to come out of this negative circle.
There are a lot of solutions said analysts and professionals.
One rumor is that they could break up parts of their organization and sell it to other companies.
But this is denied by the management in a conference call.
Another solution is a possible tie-up with a peer but that would be the end of Citigroup.
The question we have to ask is who has the potential to organize and run an organization in this difficult times and in this negative circle.
This is an evolution in the financial crisis. Citigroup was influenced by the news of Lehman Brothers and Bear Stearns. The only way to put Citigroup in bad papers is when loan losses were so overwhelming that it barred off cash flow. So they need to keep the rest.
I think it is really necessary to protect Citigroup to go bankrupt. They are very important, they operate in a lot of countries so they really need to be protected, otherwise a lot of customers will get in trouble. I don’t know how, maybe the government can save them when they are in bad papers but I don’t know because the government can’t give money all the time to financial institutions.
We really need rest on the markets now, and especially on the financial markets. The financial shares are on a bad point and it’s difficult to come out of this negative light but when their would be rest again on the markets, the shares of the financial institutions will increase again.
So first we have to create rest and confidence in the markets, than can we work on the saving plans and see what the consequences are.
Source: http://money.cnn.com/2008/11/21/news/companies/citigroup/index.htm?cnn=yes
On Friday morning their was an extraordinary meeting for the managers to discuss the problems because when we look to the figures we can see that the share of Citigroup decreased this week with 60 percent.
The share hit a low of 3.05 dollars Friday but when the new president of the United States proclaimed that Timothy Geithner would be his nominee for Treasury Secretary the share decreased.
The media proclaimed Thursday that the management is concerned about selling parts of the bank or maybe the whole bank. The management wants to focus on the strategy.
Friday was also a bad day for the employers, the management said that they want to fire 50,000 workers. After losing 25 percent of its value Wednesday, Citigroup stock fell down with 26% on Thursday to $4.71, its lowest level in more than a decade, and now they are dropped under the 4 dollars. This is a crisis for the bank.
There is a lot of pressure on Citigroup now, shortsellers thought the share would drop down so there are a lot of people that are speculating. Also institutional investors are not allowed to have shares under the 5 dollars, so it’s difficult to come out of this negative circle.
There are a lot of solutions said analysts and professionals.
One rumor is that they could break up parts of their organization and sell it to other companies.
But this is denied by the management in a conference call.
Another solution is a possible tie-up with a peer but that would be the end of Citigroup.
The question we have to ask is who has the potential to organize and run an organization in this difficult times and in this negative circle.
This is an evolution in the financial crisis. Citigroup was influenced by the news of Lehman Brothers and Bear Stearns. The only way to put Citigroup in bad papers is when loan losses were so overwhelming that it barred off cash flow. So they need to keep the rest.
I think it is really necessary to protect Citigroup to go bankrupt. They are very important, they operate in a lot of countries so they really need to be protected, otherwise a lot of customers will get in trouble. I don’t know how, maybe the government can save them when they are in bad papers but I don’t know because the government can’t give money all the time to financial institutions.
We really need rest on the markets now, and especially on the financial markets. The financial shares are on a bad point and it’s difficult to come out of this negative light but when their would be rest again on the markets, the shares of the financial institutions will increase again.
So first we have to create rest and confidence in the markets, than can we work on the saving plans and see what the consequences are.
Source: http://money.cnn.com/2008/11/21/news/companies/citigroup/index.htm?cnn=yes
donderdag 20 november 2008
BASF cutbacks will affect 20,000 staff
BASF is one of the largest chemicals companies in the world, not to say the largest. It employs almost 100,000 people.
But this week they came out with some very negative news. The company revealed that it would reduce its working hours by 20%, which means that 20,000 people will have “flexible use of working time arrangements such as overtime and vacation”.
But that was not all, they will also reduce a part of the production in about 100 factories and close down 80 others.
BASF causes the measures to a strong decrease in orders, especially from car manufacturers.
This is a serious difference with the past few weeks, when the firm announced that the sales in 2008 would be similar to those in 2007, also the operating profits would be comparable.
This situation shows us that the financial crisis still has its effect on several companies. As a result of the news, the shares of BASF suffered a setback of 17 per cent to €21.19. Jürgen Hambrecht, the chief executive, said that the next months will be a very difficult time for the company.
There is also positive news. The chemicals giant promised that the takeover of Ciba, a Swiss company, would not be put aside.
As I said in earlier blogs, we see that the crisis is definitely not over yet, it will drag on for a long time. I think that more companies will follow and also get into trouble, especially when the markets indices keep drifting down.
I think it is too bad that BASF has to completely shut down 80 factories, but I think that it is a good idea of the company to regulate flexible arrangements for the employees. It is better than losing their jobs entirely.
I really hope that BASF can fix their problems soon and that they become a healthy company again.
However, Europe is in a recession and we will have to wait for the moment when the economy recovers. The sooner the governments find good solutions, the sooner the global economy can restore and grow again.
Source: The Financial Times – BASF cutbacks will affect 20,000 staff - http://www.ft.com/cms/s/0/e1a19a1a-b637-11dd-89dd-0000779fd18c.html
But this week they came out with some very negative news. The company revealed that it would reduce its working hours by 20%, which means that 20,000 people will have “flexible use of working time arrangements such as overtime and vacation”.
But that was not all, they will also reduce a part of the production in about 100 factories and close down 80 others.
BASF causes the measures to a strong decrease in orders, especially from car manufacturers.
This is a serious difference with the past few weeks, when the firm announced that the sales in 2008 would be similar to those in 2007, also the operating profits would be comparable.
This situation shows us that the financial crisis still has its effect on several companies. As a result of the news, the shares of BASF suffered a setback of 17 per cent to €21.19. Jürgen Hambrecht, the chief executive, said that the next months will be a very difficult time for the company.
There is also positive news. The chemicals giant promised that the takeover of Ciba, a Swiss company, would not be put aside.
As I said in earlier blogs, we see that the crisis is definitely not over yet, it will drag on for a long time. I think that more companies will follow and also get into trouble, especially when the markets indices keep drifting down.
I think it is too bad that BASF has to completely shut down 80 factories, but I think that it is a good idea of the company to regulate flexible arrangements for the employees. It is better than losing their jobs entirely.
I really hope that BASF can fix their problems soon and that they become a healthy company again.
However, Europe is in a recession and we will have to wait for the moment when the economy recovers. The sooner the governments find good solutions, the sooner the global economy can restore and grow again.
Source: The Financial Times – BASF cutbacks will affect 20,000 staff - http://www.ft.com/cms/s/0/e1a19a1a-b637-11dd-89dd-0000779fd18c.html
zondag 16 november 2008
Shares fall on more economy fears
Shares all over the world have been falling down this week. This is because the fear investors have. They think there will be a global recession. On Tuesday the Down Jones lost 2 percent.
The fact that the future of General Motors is uncertain has lead to more doubts.
In Europe and Asia the shares also fell. Just as the oil price, who felt from 147 dollars a barrel in July to 59 dollar on Tuesday 12/11.In the UK the FTSE 100 share index lost 3.6 percent. In Japan the Nikkei lost 3 percent.Along Neil Mackinnon, chief economist at ECU Group, markets are afraid of the economy and the daily bad news.On Monday European and Asian markets made some profits after the Chinese government had announced they would invest 586 billion dollar in the economy. But all the shares who made profit that Monday lost everything again on Tuesday.Jim Herrick, manager of equity trading at Baird & Co thinks we need clarity. Without clarity the bad times could last a long time.
I think our economy will slow down because of the bank crises and because of the fear people and organizations have at the moment. Investing your money in these times is very risky. People also prefer saving their money than spending it. They don’t know what will happen in the future so they are playing safe. I agree with Jim Herrick on the fact there must be clarity. When companies keep silent about problems they could get further into these problems. The perfect example is Fortis.
Another problem is the car industry, I think the governments need to invest in these sectors. It are big companies and when one of those companies goes bankrupt, there could be a new and harder crises.
source:
http://news.bbc.co.uk/2/hi/business/7723127.stm
The fact that the future of General Motors is uncertain has lead to more doubts.
In Europe and Asia the shares also fell. Just as the oil price, who felt from 147 dollars a barrel in July to 59 dollar on Tuesday 12/11.In the UK the FTSE 100 share index lost 3.6 percent. In Japan the Nikkei lost 3 percent.Along Neil Mackinnon, chief economist at ECU Group, markets are afraid of the economy and the daily bad news.On Monday European and Asian markets made some profits after the Chinese government had announced they would invest 586 billion dollar in the economy. But all the shares who made profit that Monday lost everything again on Tuesday.Jim Herrick, manager of equity trading at Baird & Co thinks we need clarity. Without clarity the bad times could last a long time.
I think our economy will slow down because of the bank crises and because of the fear people and organizations have at the moment. Investing your money in these times is very risky. People also prefer saving their money than spending it. They don’t know what will happen in the future so they are playing safe. I agree with Jim Herrick on the fact there must be clarity. When companies keep silent about problems they could get further into these problems. The perfect example is Fortis.
Another problem is the car industry, I think the governments need to invest in these sectors. It are big companies and when one of those companies goes bankrupt, there could be a new and harder crises.
source:
http://news.bbc.co.uk/2/hi/business/7723127.stm
Eurozone officially in recession
The Eurozone is officially in a recession today. Everybody thought this would happen and now it’s officially. The EU came with figures today and they are not satisfying. The economy shrank with 0.2 percent and this figure shows that the Eurozone is in a recession.
This figure is about the third quarter of this year so it’s shrank when we compare it with the last quarter.
Also the second quarter the economy shrank and technically that will say that we are in a recession now.
This figure isn’t a surprise because Germany and Italy, 2 big countries in Europe, already came with their figures and they weren’t satisfying at all. When two big countries their economy is bad they pull the rest of Europe with them.
It’s the first recession Europe has to deal with since we came with the Euro but analysts think the worse has to come for Europe. They say we will have bad figures till the third quarter of 2009 so we got a difficult year to deal with and we haven’t seen the impact of the unemployment and the financial crisis.
Especially the car industry got bad figures. The car industry is the biggest in Europe and very important. Their figures aren’t satisfying, they show that the sales went down with 14 percent.
Also the export is important and especially for Germany, they get the biggest economy in the world, their economy went down with 0.5 percent.
Also Italy and Spain followed this trend and for Spain this is the first such drop since 1993.
Analysts think the household spending will drop down.
The ECB already cut their interest rate but it’s possible they will cut their interest rate further.
This is bad news on the end of the week but the stocks did well on the markets this week.
I think this is a logical step after the crisis we got. We have to deal with this and we all know this would happen.
It’s now the ECB and the EU that will have to come with some solutions. They have to do that because we need some rest right now. It’s normally that we are in a recession nowadays and households will not spend as much as they did. Everybody knows this and also the leaders of Europe. They have to come with a solution so we can come out of this crisis.
Source: http://newsvote.bbc.co.uk/2/hi/business/7729018.stm
This figure is about the third quarter of this year so it’s shrank when we compare it with the last quarter.
Also the second quarter the economy shrank and technically that will say that we are in a recession now.
This figure isn’t a surprise because Germany and Italy, 2 big countries in Europe, already came with their figures and they weren’t satisfying at all. When two big countries their economy is bad they pull the rest of Europe with them.
It’s the first recession Europe has to deal with since we came with the Euro but analysts think the worse has to come for Europe. They say we will have bad figures till the third quarter of 2009 so we got a difficult year to deal with and we haven’t seen the impact of the unemployment and the financial crisis.
Especially the car industry got bad figures. The car industry is the biggest in Europe and very important. Their figures aren’t satisfying, they show that the sales went down with 14 percent.
Also the export is important and especially for Germany, they get the biggest economy in the world, their economy went down with 0.5 percent.
Also Italy and Spain followed this trend and for Spain this is the first such drop since 1993.
Analysts think the household spending will drop down.
The ECB already cut their interest rate but it’s possible they will cut their interest rate further.
This is bad news on the end of the week but the stocks did well on the markets this week.
I think this is a logical step after the crisis we got. We have to deal with this and we all know this would happen.
It’s now the ECB and the EU that will have to come with some solutions. They have to do that because we need some rest right now. It’s normally that we are in a recession nowadays and households will not spend as much as they did. Everybody knows this and also the leaders of Europe. They have to come with a solution so we can come out of this crisis.
Source: http://newsvote.bbc.co.uk/2/hi/business/7729018.stm
donderdag 13 november 2008
World markets down as Germany hits recession
Last Thursday, European markets opened lower following some earlier sell-off across Asia, while the biggest economy of Europe, the German economy has slipped into a recession. Shares in Paris, Frankfurt and London all went slightly down with 0.5 to 1.5 percent in early morning trading. But earlier on the day, Germany’s Federal Statistical Office said that the economic output has lowered with 0.5 percent in the third quarter compared with previous quarter. This was due to a 0.4 percent decline in gross domestic product earlier this year.
The prospects in the UK were also very pessimistic, because telecoms giant BT announced 10,000 layoffs. This news came as the unemployment rate in the UK reached an 11-year record high of 1.82 million.
Also Asian stocks slipped deeper, when investors became more and more convinced that a long recession is on the way. Hugh Johnson, chief strategist at Thomas Lloyd Global Asset Management in New York, says that the main concern of the investors is that the recession will be longer and more severe than expected. Japan’s Nikkei finished the day 5.3 percent lower while the KOSPI index in Seoul has lost 3.2 percent and the Hang Seng index in Hong Kong slipped 6 percent. Australian stocks also went down, as the All Ordinaries finished down 5.4 percent.
Another sign, that shows us the global recession is starting to take hold is that China announced that its powerhouse manufacturing sector has slowed down in October. The industrial output of China grew with only 8.2 percent, when compared with year-ago levels, a decline of 3.2 percent.
Elsewhere, a Kuwaiti Administrative Court ordered a temporary closure of the country’s plummeting stock exchange. This ruling went into effect due to a lawsuit filed by two stock brokers, who were concerned about the steep falls in the Kuwait Stock Exchange.
Before the sell-off across the Asia and Pacific region, Wall Street already knew three straight down days. The Dow Jones lost 7percent and that was the lowest close since October 27. There was also bad news for de Tech stock. NASDAQ fell more than 5 percent, to its lowest level since 2003 and the Standard & Poor’s 500 index fell 5.2 percent. Todd Morgan, senior managing director of Bel Air Investment Advisors, says that this is a culmination of continuing bad economic news and a lack of confidence and fear is disturbing the market. There is also no immediate improvement expected.
It seems to me that it really doesn’t look good for our global economy now the recession has started in Germany. Germany has the biggest economy of Europe, and the fact that a recession has started there shows that it won’t be long before other countries will be suffering from a recession. I think that after all the actions that the different governments have taken, it will be hard to find a solution. All we read in the news today is a string of bad economic news from all over the world.
At first the Asian economy was staying out of the line of fire, but now we see that the problems have started there as well, with a lot of losses on the stock market. I don’t have a good eye in this situation because the economy has always been very protected by the Asian government, and it was a real strong economy. But it seems that it is an inevitable situation.
The question I ask myself is what the governments can do to restore the economy and whether they still have the means to do this. They have taken a lot of actions to help the financial sector, and they have spent a lot of money in these rescue plans, so I hope they are still able to help the real economy now that a recession seems unavoidable.
Source: CNN: World markets down as Germany hits recession
http://edition.cnn.com/2008/BUSINESS/11/12/markets.thurs/index.html
The prospects in the UK were also very pessimistic, because telecoms giant BT announced 10,000 layoffs. This news came as the unemployment rate in the UK reached an 11-year record high of 1.82 million.
Also Asian stocks slipped deeper, when investors became more and more convinced that a long recession is on the way. Hugh Johnson, chief strategist at Thomas Lloyd Global Asset Management in New York, says that the main concern of the investors is that the recession will be longer and more severe than expected. Japan’s Nikkei finished the day 5.3 percent lower while the KOSPI index in Seoul has lost 3.2 percent and the Hang Seng index in Hong Kong slipped 6 percent. Australian stocks also went down, as the All Ordinaries finished down 5.4 percent.
Another sign, that shows us the global recession is starting to take hold is that China announced that its powerhouse manufacturing sector has slowed down in October. The industrial output of China grew with only 8.2 percent, when compared with year-ago levels, a decline of 3.2 percent.
Elsewhere, a Kuwaiti Administrative Court ordered a temporary closure of the country’s plummeting stock exchange. This ruling went into effect due to a lawsuit filed by two stock brokers, who were concerned about the steep falls in the Kuwait Stock Exchange.
Before the sell-off across the Asia and Pacific region, Wall Street already knew three straight down days. The Dow Jones lost 7percent and that was the lowest close since October 27. There was also bad news for de Tech stock. NASDAQ fell more than 5 percent, to its lowest level since 2003 and the Standard & Poor’s 500 index fell 5.2 percent. Todd Morgan, senior managing director of Bel Air Investment Advisors, says that this is a culmination of continuing bad economic news and a lack of confidence and fear is disturbing the market. There is also no immediate improvement expected.
It seems to me that it really doesn’t look good for our global economy now the recession has started in Germany. Germany has the biggest economy of Europe, and the fact that a recession has started there shows that it won’t be long before other countries will be suffering from a recession. I think that after all the actions that the different governments have taken, it will be hard to find a solution. All we read in the news today is a string of bad economic news from all over the world.
At first the Asian economy was staying out of the line of fire, but now we see that the problems have started there as well, with a lot of losses on the stock market. I don’t have a good eye in this situation because the economy has always been very protected by the Asian government, and it was a real strong economy. But it seems that it is an inevitable situation.
The question I ask myself is what the governments can do to restore the economy and whether they still have the means to do this. They have taken a lot of actions to help the financial sector, and they have spent a lot of money in these rescue plans, so I hope they are still able to help the real economy now that a recession seems unavoidable.
Source: CNN: World markets down as Germany hits recession
http://edition.cnn.com/2008/BUSINESS/11/12/markets.thurs/index.html
America's not beautiful, but it might look better soon
Barack Obama has won the elections, but just now, when the US is having a terrible economical crisis. Some say it might be the worst since the 1930s. The growth has fallen 25% and specialist don’t expect it to stop soon. The unemployment has taken a leap.
The first thing that Obama will have to do is restore the confidence of the people in the banks. Other plans and policies will be moved at the back. He promised to invest $150 billion in a period of 10 years.
Peter Thomson says that it is possible that the US benefits of the situation. The other countries were having the effects of the crisis much later than the US. So the Us was the first one to get in, it could also be the first one to get out of the crisis and the recession. Besides, the valuations are very low. These 2 circumstances could make sure that the stock market recovers sooner than in Europe.
The dividends that the banks paid out last year, were over 30% of the total dividends. This year, there are only 2 of them that are allowed to pay dividends.
The Royal Bank of Scotland (RBS), HBOS and Lloyds TBS are making a lot of promises to attract people to invest.
For instance, RBS is promising that “their strategy will be much more lower-risk and domestically focused.”
HBOS, on the other hand, will be taken over by Lloyds. They promise savings for a total of £1.5 billion. They will also try to sell some combined businesses, so they would be able to pay off the government, in order to be able to give dividends in 2009.
I also think it is the first activity of Obama to restore the confidence. Without it, the problems will not get solved, on the contrary, they will only become worse. The growth and the unemployment are very bad, those figures really need to get better in order to have a healthy economy.
It is true what the specialists say about the US. They really could benefit of the fact, that will be the first ones to come out of the crisis. While Europe and the rest are still in it, the US can begin to rebuild their economy.
I hope that banks like RBS and Lloyds don’t just make promises, but that they also accomplish them. It is good that Lloyds tries to take measures to pay dividends to their shareholders. After all, that is why people buy the shares, they want an extra above their normal income.
Source: The Guardian – America’s not beautiful, but it might look better soon - http://www.guardian.co.uk/money/2008/nov/09/american-economy-crisis
The first thing that Obama will have to do is restore the confidence of the people in the banks. Other plans and policies will be moved at the back. He promised to invest $150 billion in a period of 10 years.
Peter Thomson says that it is possible that the US benefits of the situation. The other countries were having the effects of the crisis much later than the US. So the Us was the first one to get in, it could also be the first one to get out of the crisis and the recession. Besides, the valuations are very low. These 2 circumstances could make sure that the stock market recovers sooner than in Europe.
The dividends that the banks paid out last year, were over 30% of the total dividends. This year, there are only 2 of them that are allowed to pay dividends.
The Royal Bank of Scotland (RBS), HBOS and Lloyds TBS are making a lot of promises to attract people to invest.
For instance, RBS is promising that “their strategy will be much more lower-risk and domestically focused.”
HBOS, on the other hand, will be taken over by Lloyds. They promise savings for a total of £1.5 billion. They will also try to sell some combined businesses, so they would be able to pay off the government, in order to be able to give dividends in 2009.
I also think it is the first activity of Obama to restore the confidence. Without it, the problems will not get solved, on the contrary, they will only become worse. The growth and the unemployment are very bad, those figures really need to get better in order to have a healthy economy.
It is true what the specialists say about the US. They really could benefit of the fact, that will be the first ones to come out of the crisis. While Europe and the rest are still in it, the US can begin to rebuild their economy.
I hope that banks like RBS and Lloyds don’t just make promises, but that they also accomplish them. It is good that Lloyds tries to take measures to pay dividends to their shareholders. After all, that is why people buy the shares, they want an extra above their normal income.
Source: The Guardian – America’s not beautiful, but it might look better soon - http://www.guardian.co.uk/money/2008/nov/09/american-economy-crisis
zondag 9 november 2008
Sunny times for European stocks.
Many data point to a recession in Europe, but on Monday European stocks were successful.
Investors are willing to take some more risky investments again. This results in a growth for the stock of mining and materials. The more easy credit conditions worldwide helped the raise the equity on long term, but it could not prevent a further slowdown of the economy.
Interbank decreased their three-month lending rate to 2.86%. That’s the lowest rate since mid-September.
On the other hand, the oil and car sector lose some of their gains. Especially the car sector who sold 40% less cars in October than in the same month last year.
On the currency market, the dollar is still becoming stronger. For 1.26 dollar you get 1 euro.
I think people are getting little by little their confidence back in financial products. But still the crises isn’t over yet. For people who are willing to take some risk on the stock market, this could be a great time. Stock are low and they are raising every day. I think the car sector could get problems if the demand for cars stays as low as it is on the moment. The drop of the oil is a good fact.
source: http://www.forbes.com/markets/2008/11/03/briefing-europe-update-markets-equity-cx_ll_je_1103markets25.html
Investors are willing to take some more risky investments again. This results in a growth for the stock of mining and materials. The more easy credit conditions worldwide helped the raise the equity on long term, but it could not prevent a further slowdown of the economy.
Interbank decreased their three-month lending rate to 2.86%. That’s the lowest rate since mid-September.
On the other hand, the oil and car sector lose some of their gains. Especially the car sector who sold 40% less cars in October than in the same month last year.
On the currency market, the dollar is still becoming stronger. For 1.26 dollar you get 1 euro.
I think people are getting little by little their confidence back in financial products. But still the crises isn’t over yet. For people who are willing to take some risk on the stock market, this could be a great time. Stock are low and they are raising every day. I think the car sector could get problems if the demand for cars stays as low as it is on the moment. The drop of the oil is a good fact.
source: http://www.forbes.com/markets/2008/11/03/briefing-europe-update-markets-equity-cx_ll_je_1103markets25.html
World markets down following Obama victory
Because of the election of Barack Obama last Wednesday , the worries over the struggling economy grew. The Asian market did well but the European and American markets couldn’t follow. The markets did well until election day and many investors were hoping that the new president would focus again on taking actions to stop the difficulties on the economic markets.
But there was bad news on the U.S. jobs front. The U.S. employers announced in September 95,094 job cuts, but these job cuts are now estimated to 112,884. This is the highest number of layoffs in almost 4 years. Bad news for the European and American markets, but the Asian and Australian markets rose. The markets of Singapore and India also did well. The cause for these markets to do well was the fact that the investors looked past more signs of a struggling U.S. economy.
The Dow Jones index knew his biggest Election Day rally ever, while in Japan a weaker yen boosted the shares of major exporters, mostly automakers and consumer electronics firms. The dollar was trading at 99.70 yen compared to 98 yen the previous day. Also the oil prices retreated after going over $70 a barrel overnight.
We have seen that the elections have had a very good influence on the stock markets but the closer we came to the Election Day, the uncertainty of the investors grew again because of the bad news on the U.S. job front. The people were already expecting some layoffs but not this much. This is a sign that the economy is not doing very well. It looks like we’re almost stuck in a vicious circle, where the aggravating economy makes the number of layoffs grow, and the high number of layoffs takes away the confidence of the investors. The investors keep their money instead of investing it in the companies, and the story starts all over again.
Source: CNN : World markets down following Obama victory.
http://edition.cnn.com/2008/BUSINESS/11/05/world.markets/index.html
But there was bad news on the U.S. jobs front. The U.S. employers announced in September 95,094 job cuts, but these job cuts are now estimated to 112,884. This is the highest number of layoffs in almost 4 years. Bad news for the European and American markets, but the Asian and Australian markets rose. The markets of Singapore and India also did well. The cause for these markets to do well was the fact that the investors looked past more signs of a struggling U.S. economy.
The Dow Jones index knew his biggest Election Day rally ever, while in Japan a weaker yen boosted the shares of major exporters, mostly automakers and consumer electronics firms. The dollar was trading at 99.70 yen compared to 98 yen the previous day. Also the oil prices retreated after going over $70 a barrel overnight.
We have seen that the elections have had a very good influence on the stock markets but the closer we came to the Election Day, the uncertainty of the investors grew again because of the bad news on the U.S. job front. The people were already expecting some layoffs but not this much. This is a sign that the economy is not doing very well. It looks like we’re almost stuck in a vicious circle, where the aggravating economy makes the number of layoffs grow, and the high number of layoffs takes away the confidence of the investors. The investors keep their money instead of investing it in the companies, and the story starts all over again.
Source: CNN : World markets down following Obama victory.
http://edition.cnn.com/2008/BUSINESS/11/05/world.markets/index.html
donderdag 6 november 2008
Europe slashes interest rates
To take care that the economy stay stable the interest rates in Europe were reduced.
The Bank of England decided to reduce their interest rate to 3 per cent, that’s a reduce of 1.5 percent.
This interest rate is the lowest in 54 years and the cut was three times bigger since 1997.
The European Central Bank set their interest rate on 3.25 percent. The president of the ECB said that he wouldn’t exclude a further cut in December.
The Czech and Swiss bank also proclaimed to reduce their interest rate.
The rate cuts came after the International Monetary Fund published an update about the economy and the need to take some action because the economy need it. The world his economy would shrink by 0.3 percent next year the first negative figure since the second world war. This isn’t satisfying news because last month they calculated that there would be a growth with 0.5 percent. The IMF recommended the United States, Europe and China should raise public spending and cut taxes.
The markets weren’t satisfied because they are concerned about the situation of the global economy.
The FTSE 100 lost 5.7 percent.
German and French markets fell down with 6 percent and the S&P 500 index had fallen 4.26 percent.
The reason why the Bank of England reduced their interest rate is because there is a lot of pressure on the economy these days.
The analysts think the interest rate will drop down under two percent in Europe after they said that it could be possible the ECB would make another rate cut.
The president of the ECB said that he hopes that the banks will bring down their market interest rate, that’s the only solution to restore the confidence on the markets and in the economy. This is the opposite of the thoughts of the Bank of England who don’t expect a cut in the market interest rate.
I think we really need a economy that is stabile now. It is a good decision on the long term. We made a deep crisis and everybody was in panic, also the leaders of big countries and nobody knew a real solution so we need some rest and confidence. An stabile economy is part of this so I think it’s a good decision. On the markets it isn’t really good after this decision but this will come okay. A stabile economy is a part of rest and confidence of the consumer.
Europe isn’t the first one who made this decision and in the future there will be other countries who have to follow the example of the ECB.
Today the markets were negative but I think this will change after some time because it will bring rest and confidence.
Source: http://www.ft.com/cms/s/0/bfcae896-abf2-11dd-aa46-000077b07658.html?nclick_check=1
The Bank of England decided to reduce their interest rate to 3 per cent, that’s a reduce of 1.5 percent.
This interest rate is the lowest in 54 years and the cut was three times bigger since 1997.
The European Central Bank set their interest rate on 3.25 percent. The president of the ECB said that he wouldn’t exclude a further cut in December.
The Czech and Swiss bank also proclaimed to reduce their interest rate.
The rate cuts came after the International Monetary Fund published an update about the economy and the need to take some action because the economy need it. The world his economy would shrink by 0.3 percent next year the first negative figure since the second world war. This isn’t satisfying news because last month they calculated that there would be a growth with 0.5 percent. The IMF recommended the United States, Europe and China should raise public spending and cut taxes.
The markets weren’t satisfied because they are concerned about the situation of the global economy.
The FTSE 100 lost 5.7 percent.
German and French markets fell down with 6 percent and the S&P 500 index had fallen 4.26 percent.
The reason why the Bank of England reduced their interest rate is because there is a lot of pressure on the economy these days.
The analysts think the interest rate will drop down under two percent in Europe after they said that it could be possible the ECB would make another rate cut.
The president of the ECB said that he hopes that the banks will bring down their market interest rate, that’s the only solution to restore the confidence on the markets and in the economy. This is the opposite of the thoughts of the Bank of England who don’t expect a cut in the market interest rate.
I think we really need a economy that is stabile now. It is a good decision on the long term. We made a deep crisis and everybody was in panic, also the leaders of big countries and nobody knew a real solution so we need some rest and confidence. An stabile economy is part of this so I think it’s a good decision. On the markets it isn’t really good after this decision but this will come okay. A stabile economy is a part of rest and confidence of the consumer.
Europe isn’t the first one who made this decision and in the future there will be other countries who have to follow the example of the ECB.
Today the markets were negative but I think this will change after some time because it will bring rest and confidence.
Source: http://www.ft.com/cms/s/0/bfcae896-abf2-11dd-aa46-000077b07658.html?nclick_check=1
Housing market lures back first-time buyers
The prices of the housing market are going down. This is a good reason for buyers to invest money in the sector.
Especially young people want to invest. They can do this because their parents lent them large amounts of money, so they can pass the mortgage lending criteria and get a loan.
According several estate agencies, the sales rose about 10% thanks to these young buyers. The ‘first-time buyers’ , with incomes that are not very high, are also able to buy houses. They are even responsible for a big part of the 10% rise.
For instance, there was an increase of 16% of mortgage loans given to people with incomes less than £40,000 between July and October.
The government thinks that first-time buyers are essential for the industry on long-term. In order to help these people, the government came up with a lot of schemes.
Although it may seem easy to get a loan, if you don’t have a good credit history, it is hard to find a good mortgage provider.
I think it is a good thing that the prices start to decrease. Maybe we could expect this, the prices increased with more than 40% in the last 5 years.
The fall is indeed a good thing for the young people. If the prices remained that high, they wouldn’t be able to buy their own house. And I think that everybody dreams of having a house of their own.
The price of a house declines, but the price of building sites will not do the same. Every year, there are less building sites, so the price will rise even more, which makes this situation even more interesting.
Source: The Financial Times - Housing market lures back first-time buyers -
http://www.ft.com/cms/s/0/fb8a52f6-ab2d-11dd-b9e1-000077b07658.html
Especially young people want to invest. They can do this because their parents lent them large amounts of money, so they can pass the mortgage lending criteria and get a loan.
According several estate agencies, the sales rose about 10% thanks to these young buyers. The ‘first-time buyers’ , with incomes that are not very high, are also able to buy houses. They are even responsible for a big part of the 10% rise.
For instance, there was an increase of 16% of mortgage loans given to people with incomes less than £40,000 between July and October.
The government thinks that first-time buyers are essential for the industry on long-term. In order to help these people, the government came up with a lot of schemes.
Although it may seem easy to get a loan, if you don’t have a good credit history, it is hard to find a good mortgage provider.
I think it is a good thing that the prices start to decrease. Maybe we could expect this, the prices increased with more than 40% in the last 5 years.
The fall is indeed a good thing for the young people. If the prices remained that high, they wouldn’t be able to buy their own house. And I think that everybody dreams of having a house of their own.
The price of a house declines, but the price of building sites will not do the same. Every year, there are less building sites, so the price will rise even more, which makes this situation even more interesting.
Source: The Financial Times - Housing market lures back first-time buyers -
http://www.ft.com/cms/s/0/fb8a52f6-ab2d-11dd-b9e1-000077b07658.html
zaterdag 25 oktober 2008
Crisis wreaks havoc on shares
The effect of the global bank crisis became clear this weak. Friday the shares decreased around the world.
For example in London, the FTSE 100 closed down with 5 percent, The markets of Germany and France fell down with 4.96 percent and 3.5 percent. But also Asia got swept away. The Nikkei fell down with 9.6 percent.
Not only the shares were hit by the crisis but also the currencies. The cause of this problem is the fear for the global recession.
But also bleak outlook for corporate earnings played their role.
On the currency market the yen was the biggest winner. Investors want to invest in currencies with a low interest rate. And the yen is one of them. They jumped 8 percent against the pound, 6.5 percent against the euro and 4.7 percent against the dollar.
Ashraf Laida, the chief currency strategist at CMC Markets said that the magnitude of such historical market moves in currencies could only be the result of imploding hedge funds leading to massive liquidations.
According to Marco Annunziata, chief economist at UniCredit said that we need some drastic steps to restore the confidence. The European Central Bank and the Bank of England staid too long optimistic about the economic growth and they need to act fast in slashing the interest rate. The ECB cut their interest by another half percentage point at 3.25 percent.
The Eurozone purchasing managers’ indices showed the strongest fall since the survey’s start in 1998.
According to me the financial crisis is almost over, we have had the worst on the markets. Now we can see an evolution in the currencies and it’s the task of ECB and the Bank of England to act to the point and on time.
They know that their will be hard times now and it’s their chance to act on time. They have to restore the confidence, when this happened the worst of the crisis is over.
I think Asia is one of the markets who suffered not so hard as Europe. Especially now with the financial crisis because in Asia you got a lot of countries like China where the banks are nationalized. The banks of Asia don’t have to cut their interest rate and that’s why a lot of investors invest in the yen. But I think it’s now time for actions of the ECB and the Bank of England so they can restore the confidence.
Source: http://www.ft.com/cms/s/0/5130339a-a202-11dd-a32f-000077b07658.html
For example in London, the FTSE 100 closed down with 5 percent, The markets of Germany and France fell down with 4.96 percent and 3.5 percent. But also Asia got swept away. The Nikkei fell down with 9.6 percent.
Not only the shares were hit by the crisis but also the currencies. The cause of this problem is the fear for the global recession.
But also bleak outlook for corporate earnings played their role.
On the currency market the yen was the biggest winner. Investors want to invest in currencies with a low interest rate. And the yen is one of them. They jumped 8 percent against the pound, 6.5 percent against the euro and 4.7 percent against the dollar.
Ashraf Laida, the chief currency strategist at CMC Markets said that the magnitude of such historical market moves in currencies could only be the result of imploding hedge funds leading to massive liquidations.
According to Marco Annunziata, chief economist at UniCredit said that we need some drastic steps to restore the confidence. The European Central Bank and the Bank of England staid too long optimistic about the economic growth and they need to act fast in slashing the interest rate. The ECB cut their interest by another half percentage point at 3.25 percent.
The Eurozone purchasing managers’ indices showed the strongest fall since the survey’s start in 1998.
According to me the financial crisis is almost over, we have had the worst on the markets. Now we can see an evolution in the currencies and it’s the task of ECB and the Bank of England to act to the point and on time.
They know that their will be hard times now and it’s their chance to act on time. They have to restore the confidence, when this happened the worst of the crisis is over.
I think Asia is one of the markets who suffered not so hard as Europe. Especially now with the financial crisis because in Asia you got a lot of countries like China where the banks are nationalized. The banks of Asia don’t have to cut their interest rate and that’s why a lot of investors invest in the yen. But I think it’s now time for actions of the ECB and the Bank of England so they can restore the confidence.
Source: http://www.ft.com/cms/s/0/5130339a-a202-11dd-a32f-000077b07658.html
Dow Drops 5.7% Despite Signs of Thawing Credit
Stock investors still fears the recession in our economy. It was visible on Wednesday when all stock markets lost their gains they had won in the last week. The stock markets had some profits because of the intervention governments made worldwide in their bank-systems. But now everything is gone again.
It all began when big companies of different sectors announced they had bad profits in their last quarter. The reason of those bad profits were the defensive decisions companies made to save money.
Another reason for the fell of the stock market was the lower price for oil. Since there are less demands for oil, the price dropped down. So consumers have more money to consume, but oil companies have less profit. That results in a drop of their stocks.
In the meanwhile the dollar became stronger again. The reason is that investors think the American economy will recover faster than the European.
According to me the financial crisis will still last a long time. Banks and stock markets will need time to recover. When everything stays quiet for a long period the confidence in the financial sector will return and our economy will recover. At this moment investing in stock is risky, but it could lead to large profits when the market recover. So with a lot of patience and a period with a stable economy, everything will return like it was in the past.
source:
http://www.nytimes.com/2008/10/23/business/23markets.html?scp=2&sq=stocks&st=cse
It all began when big companies of different sectors announced they had bad profits in their last quarter. The reason of those bad profits were the defensive decisions companies made to save money.
Another reason for the fell of the stock market was the lower price for oil. Since there are less demands for oil, the price dropped down. So consumers have more money to consume, but oil companies have less profit. That results in a drop of their stocks.
In the meanwhile the dollar became stronger again. The reason is that investors think the American economy will recover faster than the European.
According to me the financial crisis will still last a long time. Banks and stock markets will need time to recover. When everything stays quiet for a long period the confidence in the financial sector will return and our economy will recover. At this moment investing in stock is risky, but it could lead to large profits when the market recover. So with a lot of patience and a period with a stable economy, everything will return like it was in the past.
source:
http://www.nytimes.com/2008/10/23/business/23markets.html?scp=2&sq=stocks&st=cse
vrijdag 24 oktober 2008
China calls for cooperation on financial crisis
Chinese President Hu Jintao is concerned about the poor situation of the financial system in America. Because China holds hundreds of billions of dollars in U.S. government bonds, they have been taking several actions to stimulate economic growth and they are trying to protect their export, that is suffering under the bad economy in America and Europe. China is a growing economy the current problems in the global economy have slowed this growth down. Hu hopes that the measures taken by the government will soon have their effect on the economy and the investors’ confidence. And he also said that there should be a better cooperation between the international governments to stabilize the situation. His Vice President Xi Jinping said that the China government is closely following and evaluating the developments of the financial markets. He also stipulated the fact that governments need to work more closely together.
Later this week there will be an international meeting in Beijing where the economic problems will be discussed. According to spokesman Qin Gang this meeting is an opportunity for the leaders to come up with a good solution. Nicolas Sarkozy will use the meeting to convince the other leaders to redraw the rule book for international capitalism, he wants a global system of regulation to prevent a repeat of the current problems. The banks of China, however, haven’t suffered a lot under the crisis. Because they are well protected by the government and strict credit controls. And the government is now looking what actions it can take against the slowdown of the economic growth. It is possible that the government will decide to boost the export tax rebates for labor-intensive products. And they will also boost their investments in building public housing and roads and also the rebuilding of the region devastated by the May 12 earthquake in central China.
The financial crisis started in America but now we can see that also China will be getting involved into the crisis. Thanks to the strict regulation of the Chinese government and the credit controls, the Chinese banks stay out of the line of fire for the moment. But how long will it last before the trouble starts there as well? The Chinese government is now mostly concentrating its actions to protect the national economy and especially the export. I really support the idea of President Hu to work on a better cooperation between the different countries.
I hope the meeting will be very productive, because we really need a good plan now. There has been taken a lot of actions by several governments but until now we haven’t seen a lot of improvement. Also the idea of French President Nicolas Sarkozy to build up a global system of regulation could help a lot, but I think it will be very hard to develop. But the most important thing to do now is to find a way to bring back some stability to the market and repair the confidence of the investors.
Source: CNN: China calls for cooperation on financial crisis
http://edition.cnn.com/2008/BUSINESS/10/22/china.us.ap/index.html
Later this week there will be an international meeting in Beijing where the economic problems will be discussed. According to spokesman Qin Gang this meeting is an opportunity for the leaders to come up with a good solution. Nicolas Sarkozy will use the meeting to convince the other leaders to redraw the rule book for international capitalism, he wants a global system of regulation to prevent a repeat of the current problems. The banks of China, however, haven’t suffered a lot under the crisis. Because they are well protected by the government and strict credit controls. And the government is now looking what actions it can take against the slowdown of the economic growth. It is possible that the government will decide to boost the export tax rebates for labor-intensive products. And they will also boost their investments in building public housing and roads and also the rebuilding of the region devastated by the May 12 earthquake in central China.
The financial crisis started in America but now we can see that also China will be getting involved into the crisis. Thanks to the strict regulation of the Chinese government and the credit controls, the Chinese banks stay out of the line of fire for the moment. But how long will it last before the trouble starts there as well? The Chinese government is now mostly concentrating its actions to protect the national economy and especially the export. I really support the idea of President Hu to work on a better cooperation between the different countries.
I hope the meeting will be very productive, because we really need a good plan now. There has been taken a lot of actions by several governments but until now we haven’t seen a lot of improvement. Also the idea of French President Nicolas Sarkozy to build up a global system of regulation could help a lot, but I think it will be very hard to develop. But the most important thing to do now is to find a way to bring back some stability to the market and repair the confidence of the investors.
Source: CNN: China calls for cooperation on financial crisis
http://edition.cnn.com/2008/BUSINESS/10/22/china.us.ap/index.html
donderdag 23 oktober 2008
Shareholders lose dividends under banking bail-out plan
The banking bail-out plan of the governments is a good thing for the banks themselves, but not for all the small shareholders. They will not receive any dividends from their investments, not only this year but also the next couple of years they will receive nothing.
In the past years, banks have been paying about one fifth of their total profits. Several banks were planning of doing the same this year. But because of the bail-out plan, all profits of the banks have to be used to repay their debts to the taxpayer and not go towards the shareholders. A second reason to cut the dividends is that there is a lot of pressure on the banks in order to raise their capital.
For the small shareholders this is very bad news. A lot of shareholders are retired and now they lose a part of their income. For the people who invested on the long term, the loss of dividend is nothing compared with the loss they would have had if the banks went bankrupt.
This will also have an influence on the shareholders of funds which have bank shares. Some funds already removed the bankshares, some cannot do that because they have too much shares in banks.
After all what the shareholders of the banks have been through, now they have to deal with this new problem. I can understand that for the shareholders who are retired, this is even more severe. They probably bought shares so they could receive an extra income above their pension.
I agree when specialists say that the cut is nothing compared to the loss in case of bankruptcy. They lose their dividends during a few years, but if the banks go bankrupt, they don’t get any dividends at all and they lose the money they invested in the banks. I think that it’s better to use the money for more important things such as to pay back their biggest debts.
Source: The guardian - Shareholders lose dividends under banking bail-out plan
http://www.guardian.co.uk/money/2008/oct/13/banks-shares
zondag 19 oktober 2008
Russia to Spend Billions Buying Shares on Stock Exchanges to Bolster Confidence
The Russian government has made a plan to support their stock exchange . They will invest 6.7 billion dollars into their suffering market by buying shares. But on Friday the Russian stock markets stayed closed because the Asian and European markets were getting very poor results.
The government and the central bank of Russia will both lend 18 billion dollar to the more commercial banks. With those lending the commercial banks would have enough money to ensure their liquidity.
Another possibility to gain extra money is to shore up the prices of their agricultural products. The money the government gains could be invested into the suffering banks and stock markets.
Russia has gained a lot of money out of their oil fields. Now they are investing their profits very good. They invest everything into their stock market and into their banks.
I think the Russian government is on the good way to help their economy. Using their profits from their oil fields could be an good investment on the long term. Once the financial crises is done they will recover their money. Russia takes a lot of clear measures to help their financial market. That could help to regain the confidence of investors.
Source: http://www.nytimes.com/2008/10/11/business/worldbusiness/11ruble.html?_r=1&scp=5&sq=stock%20exchange&st=cse&oref=slogin
The government and the central bank of Russia will both lend 18 billion dollar to the more commercial banks. With those lending the commercial banks would have enough money to ensure their liquidity.
Another possibility to gain extra money is to shore up the prices of their agricultural products. The money the government gains could be invested into the suffering banks and stock markets.
Russia has gained a lot of money out of their oil fields. Now they are investing their profits very good. They invest everything into their stock market and into their banks.
I think the Russian government is on the good way to help their economy. Using their profits from their oil fields could be an good investment on the long term. Once the financial crises is done they will recover their money. Russia takes a lot of clear measures to help their financial market. That could help to regain the confidence of investors.
Source: http://www.nytimes.com/2008/10/11/business/worldbusiness/11ruble.html?_r=1&scp=5&sq=stock%20exchange&st=cse&oref=slogin
zaterdag 18 oktober 2008
Google's profit rises 26%
Google made a strong increase in sales and a bigger profit than expected in difficult economic days.
Google made a net income for the third quarter of 1.35 billion dollars, That’s an increase of 26 percent. Their goal was they would get 4.75 dollars per share, but they did much better than expected, they earned 4.92 dollars a share.
Chief executive Eric Schmidt said he is happy with the results and he is happy that Google did better than expected in these hard economic days. Their goal is to manage Google on the long term. They want to improve the search of people on the internet, but also improve the ads for the companies and they want to invest in the mobile sector, Google wants to launch their own mobile phone.
When this news appeared on their website Google did good on the markets, they jumped more then 7 percent.
But there are some concerns, investors are concerned about the performances, because its business invest in advertising.
The share of Google felt down in the past 3 months with 36 percent because the investors are worried about the fact that Google wants to pull back on spending on search advertising.
But the facts shows the opposite, there is 18 percent more clicked on the Adsense than the same period one year ago.
Eric Schmidt said that Google will not touched by the economic crisis, when there is a crisis, people still search on the internet, but they search other stuff.
Investors wants that Google jumps over Microsoft, it’s possible that Yahoo! And Google go together with their advertises but the decision is still on hold because the government is concerned that a Google and Yahoo! would produce an online advertising monopoly. If this would happen Google would jump over Microsoft that failed to buy Yahoo!.
I think it’s good that Google made their profit rising with 26 percent.
It’s very normal that Google will not touched by the economic crisis because people still search on the internet. I use Google already 6 or 7 years and I still use it.
The only way that Google will hit by the economic crisis is when people needs to conclude their internet subscription. But in this society it’s impossible to have no internet.
It would be great for investors of Google if the company said yes to Yahoo!.
But for me it’s sometimes annoying when I go to a site there are always advertises of Google. When they go together with Yahoo! I hope there will be structural rules for them for their advertises but it would be great for the investors.
Source: http://money.cnn.com/2008/10/16/news/companies/google_earns/index.htm?postversion=2008101616
Google made a net income for the third quarter of 1.35 billion dollars, That’s an increase of 26 percent. Their goal was they would get 4.75 dollars per share, but they did much better than expected, they earned 4.92 dollars a share.
Chief executive Eric Schmidt said he is happy with the results and he is happy that Google did better than expected in these hard economic days. Their goal is to manage Google on the long term. They want to improve the search of people on the internet, but also improve the ads for the companies and they want to invest in the mobile sector, Google wants to launch their own mobile phone.
When this news appeared on their website Google did good on the markets, they jumped more then 7 percent.
But there are some concerns, investors are concerned about the performances, because its business invest in advertising.
The share of Google felt down in the past 3 months with 36 percent because the investors are worried about the fact that Google wants to pull back on spending on search advertising.
But the facts shows the opposite, there is 18 percent more clicked on the Adsense than the same period one year ago.
Eric Schmidt said that Google will not touched by the economic crisis, when there is a crisis, people still search on the internet, but they search other stuff.
Investors wants that Google jumps over Microsoft, it’s possible that Yahoo! And Google go together with their advertises but the decision is still on hold because the government is concerned that a Google and Yahoo! would produce an online advertising monopoly. If this would happen Google would jump over Microsoft that failed to buy Yahoo!.
I think it’s good that Google made their profit rising with 26 percent.
It’s very normal that Google will not touched by the economic crisis because people still search on the internet. I use Google already 6 or 7 years and I still use it.
The only way that Google will hit by the economic crisis is when people needs to conclude their internet subscription. But in this society it’s impossible to have no internet.
It would be great for investors of Google if the company said yes to Yahoo!.
But for me it’s sometimes annoying when I go to a site there are always advertises of Google. When they go together with Yahoo! I hope there will be structural rules for them for their advertises but it would be great for the investors.
Source: http://money.cnn.com/2008/10/16/news/companies/google_earns/index.htm?postversion=2008101616
donderdag 16 oktober 2008
Bank stocks rise but fear of recession hits Footsie
On October 15, 2008 bank shares knew a good day. Investors were convinced that banks could rely on a government guarantee and could still pay out dividend. But the fear of recession is as high as ever after two days of euphoria on the stock markets.
Many important banks have seen their shares charge up during the last two days. For example Lloyds TBS has gone up from 15.3p to 166.6p.
But the euphoria was only for a short period. Most traders said that investors were mostly looking to ensure their gains made on Monday or make sure that their losses weren’t as big as after last misadventure. The biggest losses were made with shares of mining and insurances.
We can see that improvement of the financial situation is on the way but analysts advise not to hurry into buying shares because we haven’t seen the end of the difficulties yet. After a lot of capital being pumped into the financial sector we should begin to see some improvement but the uncertainty of the investors remains as high as ever.
I think we haven’t seen the end of the crisis yet. The capital support of the governments is really helping the banks to strengthen their capital position, but it isn’t taking away the uncertainty of the investors. The financial crisis has really had a very bad influence on the global economy. The global economy will need some time to recover itself and until then recession isn’t inevitable. It is a bad moment to buy shares but without the investors capital, we get stuck in a vicious circle. The markets need the money of the investors, but the investors are scared for their investment because the markets are very volatile at the moment.
Source: Daily Mail: Bank stocks rise but fear of recession hits Footsie
http://www.dailymail.co.uk/money/article-1077790/Bank-stocks-rise-fear-recession-hits-Footsie.html
Many important banks have seen their shares charge up during the last two days. For example Lloyds TBS has gone up from 15.3p to 166.6p.
But the euphoria was only for a short period. Most traders said that investors were mostly looking to ensure their gains made on Monday or make sure that their losses weren’t as big as after last misadventure. The biggest losses were made with shares of mining and insurances.
We can see that improvement of the financial situation is on the way but analysts advise not to hurry into buying shares because we haven’t seen the end of the difficulties yet. After a lot of capital being pumped into the financial sector we should begin to see some improvement but the uncertainty of the investors remains as high as ever.
I think we haven’t seen the end of the crisis yet. The capital support of the governments is really helping the banks to strengthen their capital position, but it isn’t taking away the uncertainty of the investors. The financial crisis has really had a very bad influence on the global economy. The global economy will need some time to recover itself and until then recession isn’t inevitable. It is a bad moment to buy shares but without the investors capital, we get stuck in a vicious circle. The markets need the money of the investors, but the investors are scared for their investment because the markets are very volatile at the moment.
Source: Daily Mail: Bank stocks rise but fear of recession hits Footsie
http://www.dailymail.co.uk/money/article-1077790/Bank-stocks-rise-fear-recession-hits-Footsie.html
Fortis reveals value of remnants
This week was very exciting for the shareholders of Fortis. Tuesday October 14th, they knew what the shares were worth on the market, after a suspension period of six days. The answer was a serious shock. In Brussels, Fortis started again at €1.91. At the stock market of Amsterdam €2.00. This is the lowest level that the bank has ever reached since they exist. Which is a big contrast with the price last year, when your share was worth €34.
In the past couple of weeks, there have been a lot of striking changes. First of all, the company was partially nationalised by the Belgian government. Secondly, Fortis was partially sold to the French bank BNP Paribas. Last week, the bank got suspended because they hadn’t given enough financial details about their new structure.
Because of the nationalisation and the sale to BNP Paribas, the stockholders now own a much smaller group.
The market capitalisation before the suspension was about €7.4bn. This Tuesday, it was less the €5bn.
At the beginning of the week, the news was spread that Fortis would receive almost €14.5bn. This came from the nationalisation and the sale of a part of the company.
The board said that all debt will be paid off, but they still had to make “the detailed lines”. The chief executive of Fortis, Filip Dierckx, told that “all options are open for the group’s strategy”. He also wanted to give more information about the management positions before the stockholders meeting in a few weeks.
The suspension was maybe a ‘good’ thing for the company so that they know that they will have to work hard to fix the problems. It is a sign from the government to Fortis in order not to make the same mistake again by keeping information to themselves. Of course, for the shareholders, this is very negative news. They’ve lost a lot of money and now they lose even more.
The shares are incredibly low, but the bank still exists. Without the interventions and other measures, Fortis would be bankrupt.
Now it is up to the company to do everything they can to restore the trust of the shareholders. If they manage to do that, the shares will probably rise again.
I really hope that the board comes up with solid solutions and information before the meeting.
Source: The Financial Times – Fortis reveals value of remnants
http://www.ft.com/cms/s/0/ad4cff3c-99ce-11dd-960e-000077b07658.html
In the past couple of weeks, there have been a lot of striking changes. First of all, the company was partially nationalised by the Belgian government. Secondly, Fortis was partially sold to the French bank BNP Paribas. Last week, the bank got suspended because they hadn’t given enough financial details about their new structure.
Because of the nationalisation and the sale to BNP Paribas, the stockholders now own a much smaller group.
The market capitalisation before the suspension was about €7.4bn. This Tuesday, it was less the €5bn.
At the beginning of the week, the news was spread that Fortis would receive almost €14.5bn. This came from the nationalisation and the sale of a part of the company.
The board said that all debt will be paid off, but they still had to make “the detailed lines”. The chief executive of Fortis, Filip Dierckx, told that “all options are open for the group’s strategy”. He also wanted to give more information about the management positions before the stockholders meeting in a few weeks.
The suspension was maybe a ‘good’ thing for the company so that they know that they will have to work hard to fix the problems. It is a sign from the government to Fortis in order not to make the same mistake again by keeping information to themselves. Of course, for the shareholders, this is very negative news. They’ve lost a lot of money and now they lose even more.
The shares are incredibly low, but the bank still exists. Without the interventions and other measures, Fortis would be bankrupt.
Now it is up to the company to do everything they can to restore the trust of the shareholders. If they manage to do that, the shares will probably rise again.
I really hope that the board comes up with solid solutions and information before the meeting.
Source: The Financial Times – Fortis reveals value of remnants
http://www.ft.com/cms/s/0/ad4cff3c-99ce-11dd-960e-000077b07658.html
donderdag 9 oktober 2008
Dexia shares soar on government pledge
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
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
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
US markets wary over rescue deal
This night the US Senate accepted to support the revised US financial rescue plan.
Thanks to this decision the European stocks have risen in morning trading.
For example the UK’s index raised 73 points and the German index raised with 1 percent. But the Asian stocks finished with mixed feelings, the Nikkei, the Japanese index, lost 1.9 percent. But the index of Hong Kong raised with 1 percent.
But after morning trade France said they want to help the banks who are hit by the crisis.
Thanks to this the shares have fallen. For example the UK’s index lost 1.8 percent and the German index lost 2.5 percent.
The French president wants to talk about an European intervention for banks hit by the crisis, but the EU members are divided. France and Holland wants that Europe helps the banks who are hit by the crisis while Germany and Luxembourg believe a plan is not necessary.
The European investors are hopeful the US House of Representatives will now support the revised rescue plan. Monday the US House of Representatives rejected the first rescue plan off the Republicans, there was a financial support off 700 billion dollars. The Republicans changed a few things in the first rescue plan, they raised the government's guarantee on savings from $100,000 to $250,000, tax breaks to help small businesses,… Now they hope the Democrats are persuaded.
George W. Bush said that the package was "essential to the financial security of every American" but investors are concerned about how this rescue plan can help the global economy.
Also US presidential McCain and Obama said the rescue plan is a good thing.
I think it is good that the US Senate accepted the revised rescue plan, it will bring some rest on the markets. Rest is a good thing on short term but I don’t think this whole crisis is over yet. George W. Bush said that this plan is essential for the American economy, but it’s not only essential for the American economy, it is also essential for the global economy. I hope that after the crisis the European financial market will see how dependent they are from the American financial market and I hope that they will do a lot to be more independent from America. But the most important thing now is that every government will help his financial system to save the money from the savers.
Source: http://newsvote.bbc.co.uk/2/hi/business/7647662.stm
Thanks to this decision the European stocks have risen in morning trading.
For example the UK’s index raised 73 points and the German index raised with 1 percent. But the Asian stocks finished with mixed feelings, the Nikkei, the Japanese index, lost 1.9 percent. But the index of Hong Kong raised with 1 percent.
But after morning trade France said they want to help the banks who are hit by the crisis.
Thanks to this the shares have fallen. For example the UK’s index lost 1.8 percent and the German index lost 2.5 percent.
The French president wants to talk about an European intervention for banks hit by the crisis, but the EU members are divided. France and Holland wants that Europe helps the banks who are hit by the crisis while Germany and Luxembourg believe a plan is not necessary.
The European investors are hopeful the US House of Representatives will now support the revised rescue plan. Monday the US House of Representatives rejected the first rescue plan off the Republicans, there was a financial support off 700 billion dollars. The Republicans changed a few things in the first rescue plan, they raised the government's guarantee on savings from $100,000 to $250,000, tax breaks to help small businesses,… Now they hope the Democrats are persuaded.
George W. Bush said that the package was "essential to the financial security of every American" but investors are concerned about how this rescue plan can help the global economy.
Also US presidential McCain and Obama said the rescue plan is a good thing.
I think it is good that the US Senate accepted the revised rescue plan, it will bring some rest on the markets. Rest is a good thing on short term but I don’t think this whole crisis is over yet. George W. Bush said that this plan is essential for the American economy, but it’s not only essential for the American economy, it is also essential for the global economy. I hope that after the crisis the European financial market will see how dependent they are from the American financial market and I hope that they will do a lot to be more independent from America. But the most important thing now is that every government will help his financial system to save the money from the savers.
Source: http://newsvote.bbc.co.uk/2/hi/business/7647662.stm
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