East Europe banking: It’s a wild, wild ride

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Nov. 10, 2011, 10:39 p.m. | Business — by Jakub Parusinski

Jakub Parusinski

The past decade has been a rollercoaster of a ride for banks in Central and Eastern Europe, with Ukraine experiencing the “the sharpest ups and downs.”
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Anonymous Nov. 11, 2011, 3:12 a.m.    

Is this a joke? The photo captioned "Office of McKinsey & Company" shows a scene from the classic comedy "Office Space".

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Anonymous Nov. 11, 2011, 12:09 p.m.    

There is something I quite don't understand. Money appears on the stock markets but then it goes, but where?

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Anonymous Nov. 11, 2011, 1:12 p.m.    

One way to see this clearer is to think of it in reverse. When a company decides to go public the idea behind it is &quot;We are offering people to buy a share of the company for a certain price&quot;. If the company's prospects are interesting, more people will come to buy those shares, thus driving up their price. As a result, the market capitalization of the company, the number of shares times the price per share, rises. So, if people start selling shares and drive down the price, the value of the stock market falls simply because the market capitalization of companies has taken a hit.

As for where the money made from the sale of those shares, it often goes into other stock markets that present more competitive prospects - in this case other so-called frontier markets, in Asia and Africa, as well as Europe, are taking part of that money from Ukraine. But at the moment the biggest concern for many investors is to protect the value of their assets, or money gained from selling stocks. The two biggest choices at the moment are: government bonds of low-risk states (this is why Germany and the US are enjoying such low interest rates on their bonds, and why US rates are down even after their credit rating was lowered) or money, be it in savings accounts or simply cash. Two other choices, though they peaked a couple weeks/months back, are foreign currencies, like the Swiss Franc or Japanese Yen, or gold.

Hope it was helpful

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Anonymous Nov. 11, 2011, 12:40 p.m.    

How long the so-called rating agencies will continue to terrorize the financial (and not only) community.

They are clearly biased to the eastern Europe. Standard &amp; Poor (average and below average) took an important

part in the fraudulent scheme called sub-prime mortgages rating them often as triple AAA. They defended it

before the congress by saying that their ratings are only opinions and they take no responsibility for them.

A descent man in their place would commit a hara-kiri instead keeping poisoning the markets with their so-called ratings.

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