December Confessions #2 December 31, 2008
Posted by Ali in analysis, kuwait.Tags: global, investment, kuwait, TID
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During December the market confessed three important facts. The first is that the Kuwait Investment Authority (KIA) will not provide the optimism needed to restore confidence in the market. The second is that investment banks will fail in succession amid the greatest government intervention since souk almanakh. Finally that oil prices will no longer be controlled by the oil cartel, OPEC.
Investment Banks Collapse
During this crisis many speculators believed that investment companies would not fare well, but none could fathom the utter failure of Global Investment House (Global) or The Investment Dar (TID). This is labeled as another of the December surprises that would rattle the local economy once more following the collapse of Gulf Bank of Kuwait a few weeks earlier.
On December 16th, Fitch downgraded Global five notches down to C, in other words Global went from “investment grade” to “junk.” Global was downgraded because of its default on a payment to WestLB. That was a shock to investors in the market. Investors were not expecting Global to default. Although a few weeks earlier, we heard in the market about TID defaults and the possibility of Global’s default, still it was hard to believe to see these two gigantic investment banks failing. (more…)
A look into Global’s Assets: The Insolvency Question December 28, 2008
Posted by Ali in analysis, kuwait.Tags: Bankruptcy, global, investment
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Investopedia.com defines insolvency as the company status when its liabilities value exceeds its assets value. In other words, it is the status at which it becomes impossible for the company to satisfy its debt obligations. In my previous post, Globals Desolution, I explained the dire seriousness that Global Investment House (Global) is facing this time I will use numbers to emphasize my point. (more…)
Report: Global’s Desolation December 23, 2008
Posted by Ali in analysis, kuwait.Tags: global, investment, kuwait, Report
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Global Investment House (Global), was incorporated in 1998 by a group of mid-age Kuwaiti entrepreneurs who used to work for Kuwait Investment Company. Global has been lead by Mrs. Maha Al-Ghunaim since inception. Global started in 1998 with market cap of KD 15 millions, and by June 2008 its market cap grew to KD 1.5 billion.
Global growth was initially driven by fees and commission, as the company was focused on private placements and marketing its funds. However, when the company started to grow larger and faster these core business earnings became more difficult to grow, thus Global became more aggressive in its investments. Global’s recent growth and return were coming mainly from their investment activities (Chart 1). 
(more…)
Citibank ending operations in Kuwait? October 15, 2008
Posted by mylastresort in analysis.Tags: banking, Bankruptcy, Banks, Citi, Citibank, economy, global, Rumor, Sub-prime, subprime, Systemic Risk, US
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Federal Reserve emergency intervention March 17, 2008
Posted by mylastresort in analysis.Tags: Action Economics, analysis, Ben Bernake, Crisis, David Cohen, Depression, Discount Rate, economy, EURO, FED, Federal Reserve, global, Gold, Record Levels, subprime, US, Wall Street, Yen
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The US federal reserve has set an emergency interest rate cut on Sunday. The news shocked the global economy. This is the biggest sign of how devastating the credit crisis is for Wall Street.
“The fear is how many more skeletons in the closet are still there in the global credit markets? …This is another effort by the Fed to calm things down, but the cloud on the horizon is just how much more of these credit issues are still out there.”
- David Cohen, economist at Action Economics in Singapore.
The market has shrugged off news that the Fed has announced fresh emergency measures to stem the quick spreading financial crisis. It is claimed the tools they are using have not been used since the Great Depression. The weakening dollar has spurred fresh new records across the board.
- Euro $1.5905
- Yen 95.77
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Gold 1,030
“The Federal Reserve in close consultation with the Treasury is working to promote liquid, well functioning financial markets, which are essential for economic growth. To that end we took two steps today… These steps will provide financial institutions with greater assurance of access to funds,”
- Ben Bernanke, Federal Reserve Chairman
Citibank filing bankruptcy? March 13, 2008
Posted by mylastresort in rumors.Tags: banking, Bankruptcy, Banks, Citi, Citibank, economy, global, Rumor, Sub-prime, subprime, Systemic Risk, US
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Rumors in the market that Citibank will be filing for bankruptcy in the coming days… The Federal Reserve will not allow this, due to many factors but, mainly due to systemic risk, in banking a high correlation and clustering of bank failures in a single country due to the collapse a single bank. This type of collapse would expand globally due to the interconnectedness of the banking system.
Gold (XAU) crossing record level March 13, 2008
Posted by mylastresort in analysis.Tags: Economics, economy, Fear, FED, Federal Reserve, global, Gold, Market, recession, Safe haven, Tennis court, USD, XAU
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Gold is regarded as a safe haven for investments. It is a scarce commodity. It is said that if you collect all the Gold excavated all-throughout history it would be the size of a standard tennis court (length x width x height).During times of a recession or fear in the market speculators usually flock to Gold. As per my previous posts I have given my analysis of the markets and the effects on the global economy. As Gold crosses never before seen levels it is proving that the economic events taking place are in fact serious and should be feared.
Gold (XAU) crosses $1,000
more pressure to revalue… March 11, 2008
Posted by mylastresort in analysis, bahrain, qatar, rumors, saudi arabia.Tags: Currencies, global, Gulf, inflation, Revaluation, speculation
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Inflationary pressures around the globe are adding to pressure on the U.S. dollar as central banks from China to Chile choose to fight rising prices by letting their currencies appreciate. Gulf currencies have been seen fluctuating greatly by speculators in an attempt to gain by a revaluation in their currencies….
