WHAT are the key trends after the recent crisis? Everyone seems to have forgotten that we are still in crisis as stock markets are up 50%-60% from the beginning of the year; gold has reached record levels and commodity prices, including oil, remain fairly buoyant. China has celebrated the 60th anniversary of the founding of the People’s Republic and everyone returned from the holiday in a spending mood while growth seems back on the 8% track.
The first major trend is that the deleveraging of the Western financial system will still continue. Despite banks making profits, we should not forget that a number of the larger financial institutions still need capital and the banks that have been hit are still talking about increasing new capital or selling down assets. Recently, Citibank sold its Phibro commodities trading unit; Lloyds Bank was trying to get approval to raise more capital and sell down some assets; Spanish Bank Santander shrewdly floated off its Brazilian subsidiary in an IPO and raised capital that way.
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