U.S. mutual funds investing in equities, with the lowest percentage of its assets in cash from 2007 onwards. In January, the share of the cache has fallen to 3.6 percent from 5.7 percent a year earlier, according to the Investment Company Institute. This is the biggest drop of the indicator in the past 18 years. Currently, managers have available funds in the amount of 172 billion dollars. The last time the managers behaved as a small percentage of cash was in September 2007, a month before the broader index S & P 500 to start 57% decline. The index has lost an average of 16% over the last three times, in which managers are beginning to increase their reserves of cash. The reason for this is that the cache is often due to increased sales. In this situation, when reserves have reached the opposite pole, it is assumed that the growth potential has been exhausted. According to the investment company Parnassus Investments growth stock will fall after last year S & P 500 rose by 23%. For the past 12 months did it rose by 67 percent in a remarkable year for U.S. exchanges. “This is not a red semaphore, but it is flashing yellow, which warns that the strongest part of the recovery of the market probably is over,” said Jerome Dodson, managing 3.6 billion dollars for Parnassus Investments. According to him this year S & P 500 will rise by between 6% and 9%. “There is only so much buying power of the market,” he said.
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Sovereign wealth fund Dubai World, which again is bound to lead to tensions in financial markets, will propose plans to restructure its debts. The intention of the Fund are to seek warrants for conversion of debt to 22 billion dollars. One option is for every dollar debt fund to return 60 cents, transmit Market Watch, citing sources from the country. This will happen after a period of seven years and within this period will be paid principal and interest. Only interest would be paid in the last year, and the government of Dubai will be the guarantor. The second option, which is expected to be proposed, provides for obligations to creditors to be made in full, but by assets and shares of the division of the Dubai World Nakheel. The company specializes in construction and is the creator of ambitious projects such as palm and The World. “We think that banks would probably accept the first proposal,” it said in a message of Credit Suisse. According to financial institution creditors are expecting such a development and recovery of 50-60% of their loans to the fund. While it seems unattractive for banks that option is better than bankruptcy, indicated by Credit Suisse. The reason for this is that bankruptcy financial institutions will have to classify 100% of its exposure to the fund as a bad loan, as it happens around 40% of the position. From an accounting point of view it is more profitable, think of the bank.
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