Home Business Terrible sale! 12 trillion assets in an emergency, Wall Street “bloodthirsty” bargain hunters! Britain’s “black swan” phantom flashes, how big is the impact? Europe’s energy crisis adds to the haze | Investing.com

Terrible sale! 12 trillion assets in an emergency, Wall Street “bloodthirsty” bargain hunters! Britain’s “black swan” phantom flashes, how big is the impact? Europe’s energy crisis adds to the haze | Investing.com

by admin
Terrible sale!  12 trillion assets in an emergency, Wall Street “bloodthirsty” bargain hunters! Britain’s “black swan” phantom flashes, how big is the impact? Europe’s energy crisis adds to the haze | Investing.com

Wall Street “hunting” British assets.

After the huge shock of the British government bond, British pension funds are being forced to sell assets, including real estate, private credit and venture capital fund shares. The range is 20% to 30%. According to data from the UK Pension Protection Fund, as of the end of August this year, UK pension assets totaled about 1.5 trillion pounds (about 12 trillion yuan).

Another “black swan” phantom in the UK is emerging. On October 6, according to the reference news network quoted by Agence France-Presse, Fitch International Credit Ratings Co., Ltd. lowered the outlook on the credit rating of the UK government debt from “stable” to “negative”. The more dangerous moment in the UK may be on October 21. At that time, Standard & Poor’s and Moody’s, among the world‘s three major rating agencies, will reassess the credit rating of the British government. Once the credit rating is downgraded, it will put a huge pressure on the UK’s foreign debt, or it will have another impact on the UK financial market.

There is also bad news about the energy situation in Europe, and Europe’s largest natural gas field is at risk of closing. Recently, the Dutch government said that the output of the Groningen gas field will be limited to 2.8 billion cubic meters, and the production of natural gas will be completely ended by 2024 at the latest. It should be pointed out that the Groningen gas field is the largest natural gas field in Europe. It once produced more than 40 billion cubic meters of natural gas every year, which is equivalent to 10% of the EU’s consumption. At present, there are still 450 billion cubic meters of underground recoverable natural gas reserves in Groningen. , worth about $1 trillion.

A Dangerous Moment for 12 Trillion Assets

The negative shock from the epic turmoil in the UK bond market continues.

As one of the largest holders of British government bonds, the British pension fund, due to the huge shock in the bond market, needs to collect huge margins and is selling liquid assets, including real estate, private credit and venture capital fund shares.

According to the British “Financial Times”, since the British bond market crisis, in order to raise funds, many pension funds are selling equity, venture capital fund shares, real estate and other more illiquid assets at the fastest rate on record.

At the same time, Wall Street institutions that “haven’t missed any crisis” are aggressively “buying down” the discounted assets of British pension funds, including Goldman Sachs, Blackstone Group, and Partners Group, a Swiss private equity firm.

See also  Technogym: quarterly turnover slightly below expectations (Equita)

Recently, Gabriel Möllerberg, managing director of Goldman Sachs Asset Management, told the media that some of the high-quality private equity fund portfolios of British pension funds have been discounted by 20% to 30%, which is definitely an opportunity.

Separately, a unit of Blackstone Group Inc. is also preparing to buy assets sold at a discount by UK pension funds, some of which are priced well below face value. The deals could take months to negotiate and move forward, with volumes likely to surge in the coming months.

At present, the Swiss private equity firm Partners Group is also interested in purchasing these assets. Ross Hamilton of the agency said that under the current market conditions, it is possible to obtain a very attractive buying opportunity. Currently, more than $9 billion of funds have been prepared. An exciting opportunity.

Francesco di Valmarana, a partner at Pantheon, an institution specializing in investing in private equity and fund shares, noted that some investors are now considering selling their shares of funds at a discount of around 10 percent, compared to when these assets were generally sold at near face value at the beginning of the year.

It should be pointed out that the pension market in the UK is very large. According to the data of the UK Pension Protection Fund (PPF), as of the end of August this year, the UK pension assets totaled about 1.5 trillion pounds (about 12 trillion yuan). dollars), up from £400 billion in 2011. Pension funds hold 40% of the UK institutional asset management market and account for two-thirds of UK GDP.

Another “Black Swan”

Another “black swan” phantom in the UK is emerging.

On October 6, according to the reference news network quoted by Agence France-Presse, after the new British Prime Minister Liz Truss announced the implementation of the debt-driven emergency tax cut plan, Fitch International Credit Ratings Co., Ltd. raised the UK government debt credit rating outlook from “Stable” downgraded to “Negative”.

The most important factor in Fitch’s sudden downgrade of Britain’s rating is tax cuts and a higher budget deficit. Fitch believes the huge and unfunded fiscal package announced by the UK government could lead to a substantial increase in the fiscal deficit in the medium term. Total UK government debt could rise from an estimated 101% of GDP in 2022 to 109% in 2024.

Separately, Fitch noted that increased uncertainty over UK policy, the chancellor’s statement hinting at the possibility of additional tax cuts, and possible changes to fiscal rules legislated in January, have reduced the predictability of UK fiscal policy .

See also  Goldman Sachs, US economy in deceleration not in recession

It is worth noting that the more dangerous moment in the UK may be on October 21. At that time, Standard & Poor’s and Moody’s, among the world‘s three major rating agencies, will reassess the credit rating of the British government. If the fiscal situation continues to be tight, the UK’s sovereign credit rating may be downgraded.

Once the credit rating is downgraded, it will put a huge pressure on the UK’s foreign debt, and external debt financing to the UK will face “additional risks”, which may once again have an impact on the UK financial market.

Earlier, Standard & Poor’s had downgraded the UK’s rating outlook from “stable” to “negative”.

In addition, political uncertainty in the UK is rapidly increasing. On October 5, local time, the latest opinion poll released by YouGov showed that Trus’s approval rating has plummeted to -59, which is lower than the historical lows of Boris (-53) and Corbyn (-55). Worse.

The survey also found that Truss was viewed positively by a majority of Conservative voters in mid-September, while a majority now view her negatively.

Although Truss was elected Prime Minister of the United Kingdom not long ago, it has caused huge waves in the British market. According to data compiled by Bloomberg, since the close of the market on September 2 (the last trading day when the Conservative Party chose Truss as the party leader), the British FTSE 350 index has evaporated about 77 billion pounds of market value; in addition, Bloomberg’s Phnom Penh Bonds (also known as “prime securities”, public bonds issued by the British government) and the inflation-linked gilt index have lost a cumulative £200bn in market value, and sterling-denominated investment bonds have lost a cumulative £26bn. It means that the British stock market and bond market have evaporated nearly 300 billion pounds (about 2.4 trillion yuan) in one month.

At a critical moment, Truss’s statement also aroused market attention. According to CCTV News on the 6th, on October 5th, local time, Truss delivered a speech at the Conservative Party’s annual meeting in Birmingham, where he re-emphasized that the Conservative Party has always supported low tax rates and that tax cuts are morally and economically correct. In this way, tax cuts will help improve the UK’s international competitiveness and attract more talents.

Bad news for European energy markets

Bad news came again in Europe’s energy situation, and Europe’s largest natural gas field is at risk of closure.

See also  Terra Viva Cisl promotes sustainable agriculture

Recently, the Dutch government said that the output of the Groningen gas field will be limited to 2.8 billion cubic meters, and the production of natural gas will be completely ended by 2024 at the latest.

According to Dutch broadcaster NOS, the Dutch government is closing down the Groningen gas field due to frequent local earthquakes caused by natural gas extraction, sparking strong opposition from Dutch residents and erupting protests. Even as Europe braces for what could be its toughest winter since World War II, the Dutch government has been reluctant to increase production and has even begun to push ahead with the shutdown.

It is worth mentioning that the Groningen gas field, located in the north of the Netherlands, is one of the largest gas fields in the world. It once produced more than 40 billion cubic meters of natural gas every year, equivalent to 10% of EU consumption.

Even after half a century of operation, with 450 billion cubic meters of underground recoverable natural gas reserves worth about $1 trillion, Groningen was once dubbed “the only potential game-changer in Europe”.

Currently, Europe is facing a European gas crisis, and the Netherlands is also under pressure from the European Union. In a recent speech, EU Internal Market Commissioner Thierry Breton said the Netherlands should reconsider its decision to close Groningen.

Even so, the Netherlands still adheres to the stance of not expanding production. Dutch Prime Minister Mark Rutte said the use of Groningen to bolster supplies would not be ruled out entirely, but only in extreme cases where everything goes wrong, which is not needed yet.

Dutch Mines Minister Hans Vijlbrief also said that continuing production is dangerous, but that the crisis elsewhere in Europe, where the lack of natural gas, may force the Netherlands to make a decision to expand production.

On October 5th, local time, Fatih Birol, Director of the International Energy Agency (IEA), said that even if the winter in 2022 can be successfully passed, if the situation does not change, the winter of 2023 will be more difficult for European countries.

Birol said that after a winter of gas consumption, European countries are expected to deplete gas reserves to 25% to 30% of their inventories by February-March 2023. At that time, if the natural gas supply in Europe is still not effectively solved, next winter will be more difficult, and European countries will face a more severe energy situation and need to prepare as soon as possible.

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy