Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: koan who wrote (41401)	10/15/2008 3:51:11 PM
From: elmatador	Read Replies (5) \| Respond to of 217786

Hungarian Stocks, Currency Drop on Icelandic Concern (Update2) By Zoltan Simon Oct. 15 (Bloomberg) -- Hungary's benchmark stock index and currency plunged as investors pulled out on concern the eastern European country may be the next to be engulfed by the financial crisis that has battered the Icelandic economy. The BUX index fell 11.9 percent and the forint slumped as much as 6.7 percent against the euro today. The stock market is the world's worst performer in euro terms today, while the currency fell more than any other except the Paraguayan guarani. The global financial crisis is hitting more vulnerable emerging markets as investors withdraw from riskier assets in a flight to safety. Foreign currency borrowing by Hungarian consumers and businesses, along with a slower growth and wider budget deficit than elsewhere in eastern Europe, make the country a target, economists said. ``Hungary is the weakest link in the region,'' said Esther Law, a strategist at Royal Bank of Scotland Group Plc in London. International investors holding the country's bonds may also make the market more vulnerable, she said. The forint traded at 267.24 per euro at 4:57 p.m. in Budapest, compared with 253.75 late yesterday. OTP Bank Nyrt., the nation's largest lender, fell 667 forint, or 15 percent, to 3,784 forint. IMF Help Hungary, Iceland and Ukraine are the only European countries that turned to the International Monetary Fund for help during the crisis. Ukraine, Hungary's eastern neighbor, asked for the IMF's ``systemic support'' and ``active cooperation'' after it was forced to take control of a local lender and the central bank doubled the amount of money it injected in the banking system. Hungary's 2 percent annual economic growth in the second quarter compares with rates of 9.3 percent in Romania and 5.8 percent in Poland. The budget deficit was 5 percent of gross domestic product last year, compared with 1.6 percent in the Czech Republic and 2.2 percent in Slovakia. Hungary lined up potential funding from the IMF this week as a ``last line of defense'' after what Prime Minister Ferenc Gyurcsany called a ``significant and strong attack'' against local markets. `Next After Iceland' ``There are market rumors, linked to the IMF agreement, that Hungary may be next after Iceland,'' said Daniel Bebesy, an economist at Budapest Investment Management. ``There isn't much basis for this but when there is panic, a rumor is enough to cause a lot of damage.'' Hungarian assets are being sold off even after government officials and analysts said that the banking system is stable and the country reduced its external vulnerabilities. The government has cut the budget deficit from a record 9.2 percent of GDP in 2006 to a planned 3.4 percent this year and pledged to meet all euro-adoption terms next year. Iceland's financial system has imploded, precipitating the collapse of the currency after the country's three largest banks amassed $61 billion of debt. Iceland's Prime Minister, Geir Haarde, said yesterday the country won't default on its state debt. Stocks fell 77 percent yesterday. `Probably Overdone' While it's more vulnerable than many eastern European neighbors, the Hungarian economy is more stable than Iceland's, said economists including Charles Robertson at ING Groep NV in London. Foreign ownership in most of the country's lending system allows helps avert any possible problems, he added. ``Concerns are probably overdone for Hungary,'' Robertson wrote in a note to clients today. ``We have always shown Iceland on the same charts as others, but only as an extreme outlier, not as a warning to other countries. Ratios in Ukraine and Hungary are generally far safer.'' In Hungary, private sector credit is at 62 percent of GDP, compared with 407 percent in Iceland, while short-term external debt obligations are at 112 percent of reserves, compared with 1,705 percent in Iceland, according to Richardson. Oesterreichische Volksbanken AG's Hungarian unit has suspended Swiss Franc and U.S. dollar loans. It will continue to lend euros it has in reserves. Bayerische Landesbank also suspended new foreign-currency loans. ``There is concern about the banking system and over how much people have borrowed in euros and Swiss francs to finance mortgages and personal consumption,'' London-based RBC Capital Markets economist Nigel Rendell said. Still, the current slide in Hungarian assets was ``exaggerated'' because of the panic in world markets, he said. ``We're not really living in a rational market. It was driven by greed for years and now it's driven by fear.'' To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To: koan who wrote (41401)	10/17/2008 2:58:40 AM
From: Snowshoe	Read Replies (1) \| Respond to of 217786

Koan, Sorry if my comments seemed terse, but I just don't agree with your enthusiasm for Alaska's prospects under the current global financial conditions. Ten yeas ago I was driving east across town one evening and saw a big display of fireworks near the BP building. Turns out they were celebrating the opening of the Badami heavy oil field on Alaska's north slope. But in 2003 BP suspended production at Badami because it was only producing 1,350 bbl/day. BP restarted Badami in 2005 using a 6 month production/recharge cycle, and more recently has been experimenting with a heavy oil project at Milne Point. Both Badami and Milne Point are relatively small projects with a steep learning curve, but eventually we may get some substantial heavy oil production from the North Slope. Keep in mind that the federal government controls ANWR, NPR-A, and much of the offshore, so the state won't get such a big piece of the action if/when these areas are developed. I remain quite cautious about Alaska's economic prospects at the current time. It looks to me like state/federal government spending, resource development, and annual Alaska dividend distributions will all take a hit. -Snow