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Wealth funds losing their money to subprime banks
Bangladesh News.Net
Sunday 23rd March, 2008
Sovereign wealth funds, controlled by various world governments, are monitoring multibillion-dollar losses after helping to bail out major western banks.
Lately, banks including Citigroup, Morgan Stanley and UBS have turned to sovereign investment funds to prop up their accounts as stock markets plunged.
Singapore's GIC, one of the world's largest sovereign wealth funds, bought a 9% stake in UBS last year.
Shares in the Swiss bank are down 46% so far this year.
It spent more money in January as part of a multi-billion dollar bailout for the embattled US bank Citigroup.
The Abu Dhabi Investment Authority invested money in Citigroup bonds that will convert to shares in 2010.
The ADIA is now battling with the knowledge that Citigroup’s share price has plunged nearly 40% lower than when it made its investment.
China Investment Corporation's investment in Morgan Stanley, made just before Christmas, is also facing a significant loss.
While the losses sustained by sovereign wealth funds are relatively insignificant compared to the trillions of dollars at their command, it is possible the losses may dampen their appetite for further involvement in bailing out western banks.
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Comments on this story
~galljdaj+
03-24-08, 12:16 PM |
Wealth funds losing their money to subprime banks
When the 'People' saw through the Republican Welfare Plan to prop up their Bribers from Wall Street, and pressed their elected politicians to not support the 'idea/plan of theives' to subvert the Social Security Monies to Wall Street, Plan “B” was concocted to get Foolish Governments to invest in 'Schemes'!
Under the Bush Government Administration, Take Note of the Penalties asscessed against the Fraudsters of Wall Street! Very telling! Approximately 10 cents for every Dollar of PROFIT! pROFIT MIND YOU! nOT EVEN ON TOTAL DOLLARS STOLLEN!
aND nO jAIL tIME!
So the theives got to KEEP 90% OF THE PROFITS THEY STOLE! No jail either!
Now that is enducement! Also paying back the Bribes Given to the Bush/Republican Gang!
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waltky
03-24-08, 03:46 PM |
All does not appear as it seems...
:eek:
Don’t trust the Wall St rally
March 24, 2008: Divining future profitability of the nation’s financial firms tells us stock market valuations are still too high.
]
Up until now, all eyes have been on the losses that are hitting the financial sector from the acronym soup of new instruments such as CDOs and SIVs. Everyone is scared, and rightly so, of the MUB (Monster Under the Bed) that might be lurking in supposedly safe havens. Still, financial stocks staged a big rally on the last trading day before the weekend, and again Monday, due to the belief that the worst is past, and that the government will step in to save the Street should that MUB pop out from under the bed.
But even once the current crisis is past, there’s another issue facing the financial sector: Will it look like it used to? “I think it is important to step back and ask some broader questions about our financial system," wrote Ben Inker, the chief investment officer for quantitative equities in global developed markets at money management firm GMO, in a recent paper. “What it does, how big it should be; and what its sustainable level of profitability might be."
These questions are obviously important for financial services firms. At its recent peak stock price in December 2006, Citigroup, for instance, sold for $53.34, or over 2 times its reported book value (and over 4 times if you exclude goodwill and intangibles) and almost 13 times its reported 2006 earnings. Do those numbers represent a baseline to which we’ll return when this crisis has passed, or are they anomalies?
[url=http://money.cnn.com/2008/03/24/news/companies/McLean_wallst.fortune/index.htm?section=money_mostpopular:
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