Bear
Stearns 2.0? UK's Largest Property Fund Halts Redemptions, Fears "Vicious
Circle" - (www.zerohedge.com) In
the summer of 2007, two inconsequential Bear
Stearns property-related funds were
gated and then liquidated, exposing the reality of the US housing bubble and
catalyzing the collapse of the financial system. While equity markets have
rebounded exuberantly post-Brexit, suggesting all is well, British
property-related assets have tumbled and, as The FT reports, Standard Life has been forced to stop
retail investors selling out of one of the UK’s largest property funds for at
least 28 days after rapid cash outflows were sparked by fears over falling
real estate values. As one analyst warned,"the risk is this creates a
vicious circle, and prompts more investors to dump property." Standard
Life Investments has suspended trading on its £2.7 billion U.K. Real Estate
fund, effective immediately, following Brexit, Investment Week reported, citing
a statement. The firm has suspended trading on the SLI UK Real Estate PAIF and
the SLI UK Real Estate income and accumulation feeder funds. The company cites
"exceptional market circumstances" following an increase in
redemption requests from the referendum.
China Bank Bailout Calls Grow Louder as Markets
Seen Vulnerable - (www.bloomberg.com) Predictions
of a Chinese banking system bailout are going mainstream. What was once the
fringe view of permabears and short sellers is now increasingly being adopted
by economists at some of the world’s biggest banks and brokerages. Nine of
15 respondents in a Bloomberg survey at the end of last month, including
Standard Chartered Plc and Commonwealth Bank of Australia, predicted a
government-funded recapitalization will take place within two years. Among
those who provided estimates of the cost, a majority said it will exceed $500
billion. While a bailout of that size would be a far cry from the $10 trillion forecast of
U.S. hedge fund manager Kyle Bass in February, the responses reflect widespread
concern that Chinese lenders will struggle to cope as bad loans surge. Even as
some analysts said a state recapitalization would put the banking system on a
stronger footing, 80 percent of respondents predicted news of a rescue would
weigh on Chinese markets -- dragging down bank stocks and the yuan while
pushing up government borrowing costs and credit risk.
EU, Italy weigh public recapitalization of banks before stress tests - (www.reuters.com) Italy is in talks with the European Commission to devise a plan to recapitalize Italian lenders with public money limiting losses for bank investors, an EU executive spokeswoman said on Sunday. The move would aim to help Italian lenders at risk of failing the last round of European stress tests, for which results are due on July 29, as they face a collapse in share prices and remain saddled by a mountain of bad loans that make up roughly one-third of the euro zone's total. "We are in contact with the Italian authorities," a Commission spokeswoman said when asked whether Rome and the EU executive were holding talks on a possible public recapitalization of Italian banks.
Italy could be on a collision course for two key reasons - (www.cnbc.com) Italy's fragile economy was back in focus this week with investors closely monitoring the political landscape ahead of a referendum later this year and a new report suggesting that the country could be prepared to bypass European banking regulations. The Financial Times reported Sunday that Italy was prepared "to defy the EU and unilaterally pump billions of euros into its troubled banking system if it comes under severe systemic distress … despite warnings from Brussels and Berlin over the need to respect rules that make creditors rather than taxpayers fund bank rescues." Citing "several officials and bankers familiar with the plans," the FT said that the threat has raised alarm along Europe's regulators "who fear such a brazen intervention would devastate the credibility of the union's newly implemented banking rule book during its first real test."
Do
Oil Markets Signal A Global Downturn? - (www.wolfstreet.com) Over
the last few months, market watchers have become accustomed to a situation, or
rather a correlation, that makes no sense. Oil and stocks have tended to move
in unison. From a basic, fundamental perspective that is patently
absurd. Energy costs are an important factor in the overall profitability
of businesses and have a big influence on consumer behavior too, so higher oil
should be a warning sign, not an indication that everything in the garden is
rosy. This week, though, we have seen signs that the correlation is now fully
broken. Stocks have recovered rapidly from the Brexit news, while oil has
stayed lower. The question, of course, is which is right? The recent
correlation has come about for two basic reasons. Firstly, from these levels
even higher oil is still, as compared to the recent days of $100+ WTI, low and
therefore nothing to worry about. Secondly the potential negative effects of
higher oil have been less important to stock traders than the implications of
oil’s movements for global growth.
Asian Stocks Retreat After Weekly Gain as Japan Shares Decline
- (www.bloomberg.com)
Renzi ready to defy Brussels and bail out Italy’s troubled banks - (www.ft.com)
Carney Set to Extend BOE Crisis-Management Mode Using New Tools - (www.bloomberg.com)
China’s private sector misses out on credit boom - (www.ft.com)
Renzi ready to defy Brussels and bail out Italy’s troubled banks - (www.ft.com)
Carney Set to Extend BOE Crisis-Management Mode Using New Tools - (www.bloomberg.com)
China’s private sector misses out on credit boom - (www.ft.com)
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