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After the big crash, are Credit Suisse shares an opportunity?

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After the big crash, are Credit Suisse shares an opportunity?

Credit Suisse stock analysts

Credit Suisse shares, already at historic lows, lost 55.7% on the stock market, closing at 0.82 francs. Just a week ago the stock was hovering around 2.66 francs. The Saudis, who had injected 1.4 billion francs at the end of November in the Swiss bank they lost 1.1 billion. But in the Middle East many are licking their wounds: the Qatar Investment Authority was the second shareholder with 6.9%, the Saudi Olayan Group had 3.3%. All investments have been drastically shorn.

It could have been even worse if the shares had also been canceled, in addition to the bonds. And it doesn’t end there. Swiss pension funds criticize the exhaustion of shareholders’ meetings which will not be able to vote on the merger. They also complain about the polarization of the Swiss banking market requesting the transfer of Credit Suisse’s local businesses to other institutions. “All options will be examined in the coming days, including legal ones, to determine the responsibilities for this debacle,” announces the Ethos Foundation which represents them in a statement.

What analysts say

A very intricate situation from which to stay away, even if in the evening S&P analysts declared their intention to raise the rating on Credit Suisse. The only exception, (absolutely obvious) is the rejection of the AT1 Bonds downgraded to “junk bonds”. At least a late decision considering that this category of bonds was canceled during the night. In this regard, one must question the function of the agencies that intervene when the damage has been done.

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At this point there is a question to ask: given the so low valuation of Credit Suisse, is it worth buying by betting on the future recovery with the shares that will become Ubs? Just yesterday, UBS shares rose to 17.32 francs, up 1.2%. At one point, however, they also earned 5%. Is it worth buying? The answer is negative and the reason, for once constructive, comes from S&P.

Staying away from this match will be good for a long time. No one knows exactly what UBS executives will find on Credit Suisse’s balance sheets. They didn’t have time to do an investigation nor did they get it from the government a full guarantee for any legal issues. They went ahead because this was the order but there is no guarantee that the offer will be executed, S&P experts recall.

Investors who had bet on Credit Suisse are on a war footing. It is not clear the size of the hole that prompted the Saudis to pre-announce that they would not make any further investments in Credit Suisse. The default was born as a result of this declaration. One wonders: why this announcement? The answer is in the quotations that already in the week preceding the declaration of surrender had almost halved the value. Evidently the Saudis saw the storm coming and being unable to stop it they called out. They burned more than a billion francs. But it could have been even worse.

This article has been prepared for informational purposes only, it does not constitute advice or a solicitation to buy or sell financial instruments. The information reported is in the public domain, but may be subject to change at any time after publication. We therefore decline all responsibility and remind you that any financial transaction is carried out at your own risk.

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