Analysts are predicting another rollercoaster ride this week, as some say that up to $300bn of US subprime loans are thought to be at risk. And Financial News has calculated that the current crisis has wiped some $860bn off the stock market values of European and US investment banks, insurance companies and listed asset managers.
Bloomberg has quoted unnamed 'people familiar with the situation', who have said that Goldman's Global Alpha hedge fund has fallen some 26% this year, having dropped 8% in the last week of July alone. The firm's Global Equity Opportunities Fund has lost 28% in the last two weeks. Goldman has lined up $3bn in new capital for the fund (using its own money, and funds from former AIG CEO Hank Greenberg and billionaire investor Eli Broad). A spokesperson for the firm said Monday that 'we believe the current values that the market is assigning to assets underlying various funds represent a discount that is not supported by the fundamentals. The investment (however) will also provide the fund with more flexibility to take advantage of the opportunities we believe exist in current market conditions'.
Barclays Global Investors is thought likely to come out shortly and comment on the performance of its quantitative equity funds, which rely on computer models to make investments. And the news is not expected to be that good.
The Financial Times reports that Citigroup is thought to have lost around $700m in credit business in the last few weeks. The losses are said to have been made largely in the company's structured credit business. The newspaper also reports that Renaissance Technologies has revealed losses of 8.7% in its institutional equities fund during the first few days of August.
Bloomberg says Deutsche Bank has come out and confirmed that assets in the DWS ABS Fund have fallen by 30% since the end of July. The decline is mostly down to client redemptions, however, as the fund is said to have no investments in US subprime-related debt. Deutsche has just also announced that it has hired Alan Greenspan, the former Chairman of the US Federal Reserve, as a senior adviser to its corporate and investment banking unit. Greenspan, 81, will speak at conferences and attend meetings and conference calls with Deutsche clients, analysts and traders.
The Financial Times reports that shares in Man Group fell 9% Friday, after the firm confirmed that it had shelved plans to float the Man Dual Absolute Return hedge fund in New York next month. The newspaper quotes an unnamed 'person close to the transaction', who said that 'the reason for postponing the float is recent turbulent market conditions, which include a very uncertain market for closed-end funds'.
Finally, The Wall Street Journal reports that Allainz has come out and confirmed that subsidiary Dresdner Kleinwort has around $2.3bn of US subprime-related exposure, all of which the unit is carrying at fair-value. The newspaper also reports that WestLB has confirmed that its total exposure to the US subprime market is some $1.64bn. 98% of the investments are said to have a credit rating of at least A.
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