PGAL - portugal etf

[theasiareport]

Just a word of caution for those who are intending to buy Europe centric etfs... many of them have high percentage of their holdings in financial firms which is not ideal for obvious reasons.

[specuvestor]

Stock down 50% on open

This fear comes after an extended period of complacency with cheap credit. There is a difference.

By Joao Lima and Henrique Almeida
July 31 (Bloomberg) -- Banco Espirito Santo SA was ordered
to raise capital as it posted a 3.6 billion-euro ($4.8 billion)
first-half net loss on provisions for loans to other members of
the Espirito Santo Group. The stock was suspended and junior
bonds plunged.
The Bank of Portugal required the lender to raise the money
after it set aside 4.25 billion euros for bad loans in the first
half, cutting its common equity Tier 1 ratio to 5 percent, below
the 7 percent regulatory minimum, according to a statement late
yesterday. The central bank is also probing the Lisbon-based
bank’s former managers and suspended executives in charge of
audit, compliance and risk management.
“Over the course of the past few weeks, both shareholders
and potential investors have shown interest in participating in
a capitalization plan, some of them willing to take relevant
stakes in the bank,” Chief Executive Officer Vitor Bento said
in a separate statement. “A process to increase the bank’s
capital will be initiated immediately.”
The bank’s 750 million euros of 7.125 percent bonds plunged
as much as 20.9 cents on the euro to 55.8 cents and were at 62.5
cents to yield 14.6 percent as of 9:10 a.m. in Lisbon, according
to data compiled by Bloomberg. The lender’s stock was suspended
from trading until 10 a.m. “to allow investors to analyze the
statements that were released about the company,” the
Portuguese securities regulator said today.

Capital Raising

Banco Espirito Santo shares have slumped 42 percent this
month as three parent companies linked to the Espirito Santo
family requested protection from creditors. Bank of Portugal
Governor Carlos Costa has tried to reassure depositors and
investors that Banco Espirito Santo could withstand any losses
resulting from loans to Espirito Santo Group companies after
some of that group’s units missed commercial paper payments.

....

http://www.bloomberg.com/news/2014-07-30...euros.html

[Shrivathsa]

Just a word of caution for those who are intending to buy Europe centric etfs... many of them have high percentage of their holdings in financial firms which is not ideal for obvious reasons.

The Europe Stoxx 50 is okay, right?

Top 20 holdings are

TOTAL SA 6.19 %
SANOFI 4.62 %
BANCO SANTANDER SA 4.51 %
BAYER AG REG 4.12 %
SIEMENS AG REG 3.89 %
BASF SE 3.70 %
ANHEUSER BUSCH INBEV NV 3.13 %
DAIMLER AG REGISTERED SHARES 3.11 %
ALLIANZ SE REG 2.93 %
SAP AG 2.87 %
BNP PARIBAS 2.81 %
BANCO BILBAO VIZCAYA ARGENTA 2.78 %
ENI SPA 2.64 %
UNILEVER NV CVA 2.50 %
TELEFONICA SA 2.44 %
SCHNEIDER ELECTRIC SE 1.99 %
ING GROEP N.V. CVA 1.94 %
DEUTSCHE TELEKOM AG REG 1.85 %
AXA SA 1.85 %
LVMH MOET HENNESSY LOUIS VUI 1.76 %

[theasiareport]

The fund has an overall 25% weighting in financial services companies. Whether you're comfortable with that is a personal preference.

Regards,
theasiareport.com

[Shrivathsa]

Oh, okay, should be okay, i guess

[specuvestor]

Aug. 8 (Bloomberg) -- African Bank Investments Ltd., which
plummeted this week after surprising investors with the need for
more funding, is now counting on shareholders or the government
to stave off collapse.
South Africa’s largest supplier of unsecured loans slumped
90 percent since saying on Aug. 6 its chief executive officer
and founder resigned, losses will be at a record this year and
it requires about $791 million of new capital. The bank has cut
funding to its loss-making Ellerines furniture retailer to shore
up returns.
“If the top three shareholders get together and will put
in the money, calculations show that Abil will survive,” Kokkie
Kooyman, the head of Cape Town-based Sanlam Global Investments,
which has $900 million under management, said yesterday in a
phone interview. “I’m amazed that regulators and auditors
didn’t step in earlier and warn of this.”
The speed and magnitude of the decline highlights the
prospect of a second banking bailout in less than a week after
Portugal’s Banco Espirito Santo SA required about $6.6 billion
of government funds following a 73 percent stock plunge. Bank of
Portugal Governor Carlos Costa had sought private investors to
inject the cash, with government funds being a last resort.
The South African Reserve Bank is in talks with Abil,
Hlengani Mathebula, an SARB spokesman, said yesterday by phone
from Pretoria, without giving more details. There’s “no
indications that other South African banks have been affected
negatively by Abil’s trading update,” SARB said on Aug. 6.

Shareholder Demands

Public Investment Corp., the South African pension fund
which is Abil’s second-largest shareholder, said it will only
invest more in the bank if it develops other sources of revenue
to become more like a traditional bank and changes its board.
“If we rescue, it will depend on management’s plan, or
we’ll be throwing good money after bad,” chief investment
officer Daniel Matjila said yesterday by phone. Abil has about a
week to finalize a turnaround plan, Johannesburg-based Business
Day reported today, citing him.
Abil, which offers loans to individuals who might not be
able to obtain them from traditional banks, survived a 2002
crisis among small lenders in South Africa that caused Saambou
Holdings Ltd. and Unifer Holdings Ltd. to fail. Bad loans have
increased amid rising South African unemployment and inflation.
“Even if you accept Abil is relatively small in a systemic
sense, you have to consider the huge impact on a section of the
population that can’t otherwise get funding,” Adenaan Hardien,
chief economist at Cadiz Asset Management, said by phone from
Cape Town yesterday. “The country can ill afford to cut these
people out of the loan market.”

Abil Falters

Abil started to falter in March last year after South
Africa’s National Credit Regulator said the Johannesburg-based
lender had been involved in reckless lending, forcing the bank
to abandon plans to raise $300 million in foreign debt markets.
The bank relies on market funding for its business instead
of deposits, meaning if it failed there would be no need to
compensate angry savers.
Coronation Fund Managers Ltd. and Stanlib Ltd. are Abil’s
two other biggest shareholders. Neither returned calls and
messages seeking comment. South African Finance Minister
Nhlanhla Nene said in Pretoria that while the government is
“keeping an eye” on African Bank, the banking system remains
robust and there’s no indication other lenders are affected.
“When the U.S. banks were collapsing in 2008, they went to
the Fed and no one left the room until they solved it,” said
Kooyman, who has twice been voted fund manager of the year by
Investment Week, a British industry publication. “Abil and the
Reserve Bank should have done that.”
Much of Abil’s troubles stem from the purchase of furniture
retailer Ellerine Holdings in 2008 for 9.2 billion rand ($853
million), a move intended to help the bank find new clients and
boost lending. After a series of writedowns and losses, which
Abil had to fund by selling debt or equity because it doesn’t
take deposits, it tried unsuccessfully to sell the unit.
Ellerines, in a statement late last night, said that
there’s a “reasonable prospect” that the the business rescue
process will help preserve as many of the company’s 8,000 jobs
as possible and help its return to solvency.