Niveshak November Issue

Thursday, November 20, 2008 , Posted by Team Niveshak at Thursday, November 20, 2008

Our last issue was an attempt to capture one of the most fatal events in the history of high street finance – The fall of all the standalone Wall Street Investment Banks. Before they went down, these extraordinary firms had dealt a body blow to many banks and hedge funds which were highly leveraged on their securities, read Collateralized Debt Obligations. There has been no good news from the world of finance since then. Stock markets from Tokyo to New York have hit rock-bottom. Investors with appetite for bottom-fishing are also hardly seen. Consumers and companies are feeling the pinch as sales and profit figures have shrunk. Poor econom¬ic data around the world, another wave of corporate profit warnings and job cut an¬nouncements have intensified fears of deep global recessions. Most of the big corporate houses of the world ended their Q2 and Q3 in the red zone. Most of the European countries have been pushed into recession while some like France have narrowly es¬caped. Currencies have been experiencing unprecedented volatility. Oil and other com¬modities have tumbled on fears of plummeting demand. In short, the world has en¬tered into “The Age of Turbulence” as predicted by former fed chief Alan Greenspan. 

Central Banks and Governments across continents have been billing overtime to counter this crisis. Multiple liquidity windows have been opened in order to flush out the menacing “Bear” from the bloodshed financial markets. Governments have an¬nounced billions of dollars of bail-out packages while Central Banks have reduced Cash Reserves Ratio, Benchmark rates and Statutory Liquidity ratios. But No amount of money seems enough, Neither in Wall Street, nor in Dalal Street, Asia or the Euro¬zone. Stock Exchange Regulatory Boards in some countries have curbed short selling while some have tried to open floodgates for foreign investment. The much awaited “Bull” which had shied away from the streets as the Bear ripped apart financial mar¬kets has tried to return on certain occasions. But it ran for cover the very next instant. 

The current crisis is more seen as a crisis of confidence and sentiments. Cen¬tral Banks and Treasury Departments have been trying to restore investor confidence with much pep talk but to no avail. Some leaders have also appealed for a new fi¬nancial world order at the G-8 and G-20 summits. The International Monetary Fund has also taken proactive measure to channelize funds from developed nations to cri¬sis hit developing nations. The world is experiencing a series of concerted global ac¬tions to counter the situation. This cover story tries to capture the life after wall street, its impact on corporate results, GDP growth rate, counter actions taken by Govern-ments, Central Banks and Exchange Boards and its faint impact on the markets. This edition does not promise to find the Bull. Some analysts say we may not see the Bull soon. Some wish the soul of the Bull “Rest in Peace”. Lets face the Reality ... 

Team Niveshak

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