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05.03.2009
Federal Reserve Chairman Ben Bernanke told Congress the recession might end this year. In his semiannual report to the Senate Banking Committee, Bernanke predicted the economy is likely to keep contracting in the first six months of 2009. But he also said “there is a reasonable prospect” the recession will end this year. He warns that a recovery will require getting credit and financial markets to operate normally.
15.12.2008
The global market of derivative instruments, the underlying asset for which is real estate (property derivatives), will acquire a new momentum for development, thanks to the financial crisis. The main prerequisites for this to happen are the realization of the need to be more responsible, with regards to the control of risks, by investment fund managers and real estate market players, as well as an increase in investor interest in affordable and effective ways of investing in assets which have greatly decreased in value. This forecast was made at the Global Property Outlook conference organized by Thomson Reuters.
08.12.2008
The collapse in real estate prices on the world market will probably lead investors to reconsider their attitude to these types of assets as “always a safe harbor.” While real estate was growing in value, it justified its status as a profitable instrument of alternative investments. The physical “brick and mortar” was its primary advantage, which supposedly helped it maintain its worth as well as its low correlation to traditional financial assets, most of all, shares. This year these advantages ceased to work – the credit crisis completely destroyed the real-estate market's growth mechanism, punishing the complacent attitude of investors caught up in the party.
01.12.2008
In recent months the number of supporters of the chaos theory, which came to finance from mathematics and turned out to be very applicable here, has certainly increased. Chaos theory refutes the traditional understanding of the financial markets, based on an assumption of their efficiency.
24.11.2008
The fear of global recession, and its unpredictably grave consequences, is still the main factor influencing the world financial markets. Fitch Ratings has concluded in its new Global Economic Outlook that “a recession driven by a contraction in the supply of credit is uncharted territory for the world economy, and there are few historical parallels on which to gauge its possible depth or length.”
17.11.2008
In conditions of absolute uncertainty and a credibility gap, all economic entities now prefer to plan for the future, including assessment of the worst case scenarios in their expectations – just in case. The psychological factor is the strongest multiplier of negative processes, increasing the speed and the level of escalation of the crisis.
10.11.2008
The world stock markets, having lived through two truly “black” months, are trying to regroup and win back at least a portion of the losses they suffered. Their losses were extraordinary: in October, according the experts at Standard & Poor's, the capitalization of 52 world stock exchanges was reduced by $5.8 trillion. This surpassed the previous record of $4 trillion, recorded just a month earlier, in September. But in spite of everything, the markets have proven that they are alive and will survive as long as investors have greed and passion.
03.11.2008
October 2008 will most probably be one of the darkest months in the history of stock markets, having surpassed all records of the last 3 to 4 decades. The month’s third week ended with such destructive losses that some of the most respected specialists began suggesting a temporary halt to trading on world stock exchanges in order for investors to overcome the general panic. The situation somehow improved by the end of the week although market players remain cautious.
27.10.2008
World stock markets keep jumping up and down, trying to find some balance which would allow the intensity of emotions to settle down and bring rationality back to all market players. So far it has not been going so well: the markets react strongly to any important news, and even in a single day the mood of bidders may well change from apathy to inspiration and back again.
20.10.2008
Recently, the overwhelming majority of investors became afflicted with sudden mood swings, which has been the reason of the wide fluctuations in stock prices. In the same day, market players can act either as if attending a wake, forever “burying” all future hopes, or as resuscitation specialists, returning hope to the sinful market.
13.10.2008
The markets are suffering from something like clinical death, with only three treatment possibilities: appropriate intervention by emergency physicians vetoed by monetary authorities, the natural vitality of the financial markets, or … a miracle.
06.10.2008
The present financial crisis has shown its full insidious nature, like an iceberg, which pro tempore only shows its little head and deceives us as to its real scope and danger. It was hard to imagine that the credit crisis, which first made itself known in last summer, has reached a final financial catastrophe.
29.09.2008
The world’s stock exchanges remain tense trying to determine the long-term prospects. The euphoria brought about by the news of the government’s intention to provide the banking sector with liquidity and hence prevent bearish speculative activity has come to an end. It became clear that a manufactured recovery of the market can only be ephemeral, that the crisis has not been overcome, and that the size of its ripples and affect of their reach are beyond any understanding. Many renowned western specialists from the world of investment banking confess that this is the first time that they have witnessed such catastrophic and uncontrollable phenomena.
22.09.2008
After the news about the bankruptcy of Lehman Brothers, one of the largest and oldest investment banks in the U.S., a new wave of panic came to the global stock markets. Investors, anticipating that many companies in the financial sector might reveal huge losses caused by a mortgage credit crunch, started to leave the equity markets. Their apprehensions with regards to possible new troubles came true very quickly – the American insurance giant AIG claimed that it was having problems paying its debts amounting to tens of billions of dollars. One week after placing the mortgage brokers Freddie and Fannie into trusteeship, the American authorities had to act as rescuers once again to prevent the collapse of another key institution. The Federal Reserve System granted AIG a credit of 85 billion dollars in exchange for 80% of its shares, considering that inaction in this case could have carry a higher price tag , because it would surely wreak havoc on the global financial markets.
15.09.2008
Shares of companies operating on the Russian real estate market are following the dynamics of the overall stock exchange, which can best be characterized as free fall. Last week was no exception. The daily 7% to 9% drops in Russian indexes, two-digit losses of our blue chips: it was a rush panic clearance, which in the last few days took place on stock markets worldwide. Shares of companies from developing countries were being cashed in even greater volumes, investors considering them as especially risky.
08.09.2008
In the beginning of September, shares of Russian and foreign companies, working on the Russian and CIS real estate markets and integrated under our CRE Global, were being traded at their lowest ever levels. The few real estate companies quoted on the failing domestic stock exchanges are seriously declining (graph 1). As of September 1, the Moscow Central Stock Exchange fell by 29.9% since the beginning of the year, while PIK shares fell by 36.6%, LSR 35.6%, TRM 52.2%, Sistema Hals 54.5%. The best performance was by OPIN, which “only” lost 22.8%.
01.09.2008
The CRE Global index is made of 20 commercial real estate equities representing the largest commercial real estate market players in Russia and the CIS whose shares and ADRs are traded on stock exchanges. The index also includes stocks of the world leading real estate consultants CB Richard Ellis, Jones Lang LaSalle and DTZ. As for the real estate sector, investors in general are more familiar with direct investments in real estate properties rather than with the shares of real estate companies as their derivatives. Anyway, the stock market, in our opinion, gives a unique opportunity to evaluate the same companies’ potential based on their stock market perspectives. CRE Global will keep on monitoring the sector while reserving the right from time to time to make necessary amendments to the index based on opinions of Russian stock market analysts. For convenience, all stock prices are given in US$, and the companies are listed in the table according to their current market capitalization.
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