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  • maccleanse maccleanse Jul 10, 2014 10:15 AM Flag

    Bank fears reignite Portugal market tensions

    Wait for China next with run on the banks????

    Bank fears reignite Portugal market tensions
    Lisbon stocks fall sharply amid fears over fate of major Portuguese financial group
    Worries over the health of one of Portugal's largest financial groups hit the country's stock market hard Thursday and pushed up its borrowing rates.

    The tensions are centered on the Espirito Santo group of companies, which includes Portugal's largest bank Banco Espirito Santo.

    Share trading in the bank was suspended after a precipitous fall of more than 16 percent, dragging the Lisbon stock exchange down more than 4 percent and pushing up the yield on Portugal's benchmark 10-year bonds by 0.13 percentage points to 3.89 percent. Sentiment was knocked across Europe, and the Stoxx 50 index of leading European shares was down 1.4 percent.

    The market moves provided an unwelcome reminder to investors of the tensions that gripped Europe for much of the past few years, when concerns over the state of the public finances in a number of countries that use the euro were at their most acute.

    Portugal became the third eurozone country after Greece and Ireland to require a financial rescue when it got a 78 billion-euro ($106 billion) bailout in 2011. In return, successive governments have had to enact tough austerity measures, such as cutting spending and reforming the economy.

    Portugal's efforts in recent years to get its public finances into shape have helped it regain the trust of investors. That was manifested in the fall in the interest rates the country pays on its borrowings. As a result, Por

    Sentiment: Strong Sell

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    • Indeed, China has very frothy housing market. The housing prices in many major cities have jumped 500-1000% during the past ten years.
      But China banks are more or less heavily regulated by the government. Expect the government to step in a housing collapse.
      I think that they learned lesson from countries such as Argentina, which used to be a developed country more than one hundred years ago. They do not trust the global banking cartels.

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