"Smart Trade Group", the Asian-based private fund, believes that losses on over $60 billion of sovereign wealth fund capital were easily foreseeable and preventable.
Sovereign wealth funds from China, Singapore and the Middle East ploughed huge sums of their countries' wealth into US, European and UK banks at the height of the credit crisis after assurances that conditions were unlikely to deteriorate further. Soon after, Lehman Brothers collapsed and drove the world to the brink of a full-blown failure of the banking system.
A source close to "Smart Trade Group" suggested that it was obvious that there was worse to follow even as firms like Merrill Lynch, Citigroup and Bank of America swallowed billions of dollars in foreign-sourced capital to bolster their battered balance sheets.
"Smart Trade Group" advised its clientele to ignore rights issues from the banking sector citing them at the time as a "black hole from which nothing can escape". It, instead, suggested holding precious metals or cash.
"Smart Trade Group" maintains that the time will come for renewed and sensible interest in banking stocks but that investors should not expect to see a return to the kind of profits that were par for the course in the middle of the decade adding that inevitable government over-regulation would more or less neuter banks' ability to take unreasonable risks of the nature which caused the credit crisis in the first place.
Author: Holly Jacobs
About the author:
Journalist for Markets Press based in New York.
Article source: Free Finance Articles.
