Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

[Sapiens]

I hope you prepared....!

We are about to go for a ride!!!

[Sapiens]

Panic selling shuts £2bn fund

http://www.guardian.co.uk/money/2008...neyinvestments

The Guardian, Friday January 18 2008
Contact usClose Contact the Money editor
money.editor@guardianunlimited.co.uk Report errors or inaccuracies: reader@guardian.co.uk Letters for publication should be sent to: letters@guardian.co.uk If you need help using the site: userhelp@guardian.co.uk Call the main Guardian and Observer switchboard:
+44 (0)20 7278 2332
Advertising guide License/buy our content About this articleClose This article appeared in the Guardian on Friday January 18 2008 on p1 of the Top stories section. It was last updated at 01:55 on January 18 2008. One of Britain's biggest property funds was forced to shut its doors to withdrawals yesterday after the slump in commercial prices triggered panic selling by small investors.

The move prompted fears of a Northern Rock-style run on billions of pounds invested in once high-flying funds which many savers have seen as a safe haven for their pensions.

Scottish Equitable said yesterday that 129,000 small investors in its £2bn property fund will not be able to access their money for up to a year.

It said that the giant fund, invested in London office blocks and shopping centres across Britain, no longer had sufficient cash reserves to meet demands from investors wanting to withdraw their money. Its "buffer fund" was down to 1% of its total assets, instead of the usual 10%-15%.

Commercial property values, especially in the crucial City of London office market, have dived amid fears of a recession brought on by the global credit crunch.

In late December another insurer, Friends Provident, halted access to its £1.2bn property fund and last night speculation was growing that Scottish Widows may be on the verge of restricting customer withdrawals on some of its funds. The insurer said last night: "We are looking at all the options, but no decisions have been taken."

Scottish Equitable's parent group, Aegon UK, is due to announce the closure of its fund today.

It said last night: "Aegon UK has decided to take this step to protect investors following a significant level of customer withdrawals from the UK property fund market." It blamed "worldwide phenomena relating to concerns over the US sub-prime mortgage market fallout, rising interest rates and talk of recession."

The Financial Services Authority said that it was closely monitoring the situation and had been informed by Aegon of the decision to halt withdrawals.

The crisis in Britain's commercial property market is now worse than at any time since the early 1990s, when Olympia & York, the company that began the Canary Wharf office development in London, went into administration.

The credit crunch has raised borrowing costs, making many property deals no longer attractive. Financial institutions hit by the fallout are already beginning to axe staff numbers, reducing demand in the City office market in which most of the UK's property funds are invested. A downturn in consumer spending growth is also making retail shopping developments less attractive to investors.

Small investors have put around £15bn into property unit trusts - £5bn pouring in during 2006 and early 2007 alone. Billions more are invested through pension funds held by millions of company employees. Investors bought into the glossy advertising and promises of rich returns after a decade in which returns far outstripped gains on shares or bonds.

But the downturn in values since the middle of 2007 has been savage. Shares in British Land, the UK's leading property company, have fallen by nearly half, and most funds are showing falls of between 20% and 40%. But investors stampeding for the exit are now finding that they cannot access their cash.

The crux of the problem is that the funds are invested in buildings which can take months to sell, and therefore cannot produce the cash to pay out money to small investors if they all want it back at the same time.

Usually the funds hold a cash "buffer" of 10%-15% of total assets to meet withdrawals. But Scottish Equitable said yesterday that the cash buffer in the £2bn fund had fallen to just £80m following a wave of redemptions, giving it little choice but to suspend the fund. The only alternative was a "fire sale" of its holdings which could leave investors even worse off.

It emerged yesterday that staff at some of the property managers have been informing key clients in advance that a fund is heading for suspension. The FSA said that such trading may fall foul of its rules regarding treating customers fairly.

Financial advisers continue to recommend that investors take their cash out of the funds that remain open. Jason Hemmings of Albannach Financial Management in Edinburgh said: "There are lots of rumours going about that other providers may be considering following Friends Provident and Aegon."

The Aegon/Scottish Equitable property funds are managed by Morley Fund Management, which also runs the £4bn Norwich Union Property unit trust, the UK's biggest property fund. This week Norwich Union said the fund had fallen in value by a fifth over the year, but its cash buffer was at 6.4% after selling office blocks in London and Manchester worth £165m.

Aegon UK added that it believes the "underlying fundamentals of the asset class remain healthy".

[Sapiens]

Aussie stocks drop for 10th session; miners fall

http://money.ninemsn.com.au/article.aspx?id=368507

The index has now retreated 17.6 percent from its lifetime high hit in November, and a fall of more than 20 percent would indicate the start of a bear market.

"At this moment we are still seeing momentum players bailing out of the market and there is quite a bit of panic selling," Hook added.

[Gordo]

Re: Irish stock mkt down 31%

Aussie stocks drop for 10th session; miners fall

Piling on.

The Irish Stock Market made modest gains yesterday but so far in 2008 it has dropped almost 8pc. On Tuesday, the Irish market saw €3.2bn of its value disappear. The Irish market is now down 31pc in the past 12 months.

Fears of US recession wipe €4bn off private pensions
Irish Independent, Ireland - Jan 16, 2008

[DemonD]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

Sapiens, is this the kind of stuff you were referring to when you told us to get safe, get cash, and wait for a buying opportunity?

[FRED]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

See Myth of the Slow Crash

[Gordo]

Hang Seng down 23%

Japan's Nikkei 225 Stock Average dropped 2.5 percent to 13,518.56. Toyota Motor Corp., which counts North America as its biggest market, fell to the lowest in more than two years.
Australia's S&P/ASX 200 Index slumped 1.8 percent, extending its longest sell-off in a quarter of a century. Rio Tinto Group Plc, the world's third-largest mining company, slid after rival BHP Billiton Ltd. failed to make a new offer.
Hong Kong's Hang Seng Index lost 2.9 percent, extending the decline from its Sept. 30 high to 23 percent. Air China Ltd. plunged the most in four months after China Eastern Airlines Corp. snubbed its initial approach


Asian Stocks Fall to Five-Month Low on U.S. Recession Concerns
Bloomberg.com - 16 minutes ago

[olivegreen]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

Pity us Canadians. We're a day ahead of you. Is the Toronto Stock Exchange doing what I think it's doing?

Olive
(I knew I picked a lousy time to try and learn anything about money. Turns out there's probably not going to be any money to muck about with anyway)

[FRED]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

Pity us Canadians. We're a day ahead of you. Is the Toronto Stock Exchange doing what I think it's doing?

Olive
(I knew I picked a lousy time to try and learn anything about money. Turns out there's probably not going to be any money to muck about with anyway)

Looks that way.

Toronto stocks dive 500 points on U.S. worries

TORONTO, Jan 21 (Reuters) - Toronto's main stock market index dived more than 500 points at the open on Monday, following overseas markets lower, as worries persisted over the well-being of the U.S. economy.

Just after the open, the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 506.70 points, or 4 percent, at 12,230.42. ($1=$1.03 Canadian) (Reporting by Scott Anderson)

[olivegreen]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

well... at least I'm past the stage of denial... and anger... i'm moving into the despondency/bargaining/resignation stages. That puts me one up on most people out there...

Do we have a PTT up here?

[GRG55]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

Looks that way.

Toronto stocks dive 500 points on U.S. worries

TORONTO, Jan 21 (Reuters) - Toronto's main stock market index dived more than 500 points at the open on Monday, following overseas markets lower, as worries persisted over the well-being of the U.S. economy.

Just after the open, the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 506.70 points, or 4 percent, at 12,230.42. ($1=$1.03 Canadian) (Reporting by Scott Anderson)

Signs of desperation setting in rather quickly. The Alberta Govt is apparently going to back off on some of its very recent royalty increases. TYpical government...wait until the industry is already on the downslope, vilify it in the press, hammer it with new taxes wildly popular with the voters, then tinker and give back some of the money when the layoffs become obvious. Same old videotape... :p

[WDCRob]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

LONDON (MarketWatch) -- If futures contracts traded on a day when U.S. stocks weren't even due to open are anything near accurate, then markets will be in for a major decline on Tuesday, with concerns about bond insurers and the health of financial institutions dragging markets lower.

March contracts on the Dow Jones Industrial Average traded 353 points lower to 11,753.

The S&P 500 futures fell 55 points to 1,270.10 and the Nasdaq 100 futures lost 72.25 points to 1,777.25.

[touchring]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

Market decapitulation on Tuesday? :confused:

[olivegreen]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

It's a watch and see isn't it?

Now, given this inconceivable coalescence of events, all that is needed is for China to call in its debts from US... wouldn't that be fun... won't happen right?

olive

[WDCRob]

Re: Chatter, Chatter, Chatter everywhere....There is panic in the air!!!

Market decapitulation on Tuesday? :confused:

Capitulation? Decapitation?

Or did you mean the market will "surrender before losing its head?"