Press release from our friends at the Chartered Financial Analyst (CFA) Society of the Philippines. I personally know several people who passed the exam and who will be getting their CFA charter this year. Congratulations!
Google’s acquisition of Motorola Mobility — a bad move?
Search engine giant Google recently announced it is purchasing Motorola Mobility Holdings, Inc., the former Mobile Devices Division of Motorola, for $12.5 billion. According to Google, the move was meant to protect its Android operating software from intellectual property lawsuits.
But was it a good move?
‘Ghost Month’ in August affecting stocks?
Is the “Ghost Month” to blame for the recent rollercoaster ride in stock markets around the world?
During the first two weeks of August, stock markets worldwide had a freefall, went back up again, slid again, then back up once more. The Dow Jones Industrial Average (DJIA), for example:
- plummeted 4.31% on August 4 after credit rating agency S&P downgraded the United States
- declined 5.5% more on August 8
- bounced back 3.98% on August 9
- fell another 4.6% on August 10
- but rose 3.9% on August 11
And it’s probably just starting.
Philippine stocks slump 4%; down for 3rd straight day
Philippine stocks took a heavy beating yesterday, with the index dropping for the 3rd straight day to close at 4,157.03.
On Tuesday, August 10, the 30-company benchmark index Philippine Stock Exchange index (PSEi) tumbled 4.02% from Monday’s trading, the biggest drop since March 16, 2009 when the index nosedived 4.66% to 1,769.67.
Stocks are already down 9.5% from the peak registered on August 1 this year, and the bourse’s performance is crawling back to negative territory year-to-date with the PSEi dropping 1% from the start of 2011.
(PHOTOS) Riots in London – August 2011
For the past three nights since August 6, London has been besieged by a series of riots and public disturbances. Described by the UK newspaper Guardian as “the worst disturbances of their kind since the 1995 Brixton riots,” the unrest has resulted to burning of cars and buildings, lootings in shops and commercial establishments, and violent clashes between rioters and police.
Below are pictures of the London riots from The Telegraph and BBC News websites.
Impact of the US Credit Rating downgrade by S&P
On August 4, Thursday, US stocks suffered the worst one-day sell-off in two years, with the Dow Jones Industrial Average (DJIA) falling 4.31% and the Nasdaq Composite Index losing 5.08% of its value.
A few hours after US stock markets closed, Philippine stocks followed suit and the benchmark Philippine Stock Exchange Index (PSEi) tumbled 1.4% on Friday, August 5.
My friends and I, together with other investors around the world, were surprised to see such panic and sell-off. A fall is generally expected, given the lingering uncertainty in the US economy partly brought about by the eleventh-hour sealing of the deal regarding the US debt ceiling crisis. But a steep 4%+ decline in the US is unprecedented, considering there were no other major financial news spreading in the market.
Apparently, we were wrong. It looked like several investors already got the leak that credit rating agency Standard & Poor’s (S&P) was about to downgrade the United States’ credit rating.
Credit Ratings by S&P, Moody’s, and Fitch Ratings
What are Credit Ratings?
Credit Ratings are a measure of the credit worthiness of an organization such as a government or a public or private corporation. It is also an assessment of the quality of debt (loan) instruments issued by these institutions. In layman’s terms, a credit rating is a score that shows the capacity of the borrowing entity to meet its financial obligations to investors.
Who are the major credit rating agencies in the world?
There are several credit rating agencies but the three major players in the world, accounting for at least 90% of the market, are Moody’s, Standard and Poor’s (S&P) and Fitch Ratings. Moody’s and S&P are based in the United States while Fitch Ratings has two headquarters, one in London and another in New York. The “Big Three” issue short-term and long-term ratings of debt papers of governments and companies worldwide and also an outlook on the assessed entity, such as positive, negative or stable.
How are credit ratings useful?
Apple has $76 billion free cash, ‘richer’ than US gov’t
Apple Inc., maker of the iconic iPod and iPad, has more available cash than the United States government.
As of June 25, 2011, Apple boasts of cash reserves totaling $75.876 billion.
The Treasury Department of the U.S. government, on the other hand, reports a total operating balance of only $73.768 billion — around $2 billion less than what Apple owns.