We often hear about the fall out from financial crises. Those who are hurt line up at the door around the block. Yet, we rarely hear about the winners.
Accompanying the Russian market’s 50% nosedive this year, are news that companies are actually pouring money and buying up their stocks at prices as low as they were 2 or 3 years ago. Who are the winners of such actions? Traditionally, under such conditions, it would be shareholders – a stock buyback would be a smart investment for companies with plenty of cash on hand.
As always, there are good and bad sides to everything. For those with the money, it might be the age of opportunity; while for those without – its a grim future of struggling financial markets, especially in emerging markets where declines have been much more rapid. And while sovereign wealth funds with their vast cash reserves may be reluctant to bail out failing financial institutions, they are certainly looking around for cheap investment opportunities.
Published Date: September 23, 2008