The turmoil of the European banking system and the somber predictions for the local economy have turned BSE indices back on red, combined with a rising liquidity compared to last week’s median. Capital market experts polled by Wall-Street draw a gloomy picture for the stock market in first quarter, with a new crisis outbreak in sight.
Citigroup, RBS and carmakers – on the brink of bankruptcy?
The disarrays of the European banking system reflected in the losses reported by RBS and in the meltdown of Erste Bank quotations, together with the somber predictions on this year’s Romanian economic growth are the primary premises heralding a new phase of financial crisis.
“As things appear now, we should probably take into consideration a new wave of the crisis, like the one in October. Macroeconomic news is negative (the analysts forecast an economic slowdown in USA in second quarter), the instability of the financial system is rising again, with players such as Citigroup and Bank of America reporting dark prospects, and international capital markets being extremely volatile with 4-5%-wide bandwidth fluctuations on a daily basis. Therefore, I wouldn’t be surprised to see broad slumps on short term. Prudence remains the word of the day”, said Razvan Pasol, manager of Intercapital Invest.
Experts say a 30-40% one-month decline is possible, if October’s economic climate would be reinstated.
“However, the market could take the blow of a full-fledged economic crisis, because, compared with October, there were only a few distressed companies in United States and Europe. Meanwhile, the crisis deteriorated many other companies from different fields of expertise”, said Marius Pandele, head of research at Vanguard.
Citigroup and RBS seem to be on the brink of insolvency, while the US Government provides artificial respiration to General Motors, and
