The Indian markets have collapsed. After a good gap up opening, the Sensex tumbled in the afternoon after the weak European markets and news of BNP Paribas closing 3 asset backed funds. The tech sector, which led the rally yesterday was down sharply today. SBI, Reliance, Hindalco and Ranbaxy are the major losers.
The Sensex ended at 15,100, down 207 points, while the Nifty closed out the day at 4403.20, down 58.90 points.
The Bloomberg reports that BNP Paribas has freezed 3 Asset Backed Funds on US Subprime losses. The European markets are down on BNP Paribas' freeze on these 3 funds. Dow Futures are down over 100 points. Meanwhile the European Central Bank says ready to act if needed to ensure smooth functioning of markets
BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it can't 'fairly' value their holdings, as concern over U.S. subprime mortgage losses roils credit markets. BNP Paribas will temporarily suspend the calculation of net asset value for the funds, which are called Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia, the Paris- based company said in an e-mailed statement today.
The French bank follows Union Investment Management GmbH and Frankfurt Trust in stopping redemptions from such funds. Late payments on U.S. subprime mortgages to borrowers with poor credit histories are at the highest since 2002, driving down the value of bonds backed by home loans. The BNP Paribas funds had about 2 billion euros ($ 2.8 billion) of assets on July 27, including 700 million euros in U.S. subprime mortgages rated AA or higher.
"The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating," BNP Paribas said in the statement. BNP Paribas shares fell 2.54 euros, or 3%, to 82.91 euros by 9:12 a.m. in Paris. When the company reported a 20% increase in second- quarter net income last week, Chief Executive Officer Baudouin Prot said the bank's exposure to the U.S. subprime meltdown was "absolutely negligible."
Losing Value
Union Investment, Germany's third-biggest mutual fund manager, stopped redemptions from one of its funds on Aug. 3 after investors pulled about 10 percent of the assets. Frankfurt Trust, the mutual fund manager of Germany's BHF-Bank, stopped withdrawals from a fund after clients removed 20 percent of their money since the end of July.
The ABS Euribor fund's assets dropped 18% to 850 million euros between July 24 and Aug. 7, according to data compiled by Bloomberg. The ABS Eonia fund's total assets dropped 7 percent to 73 million euros over the same period. Euribor, or the Euro interbank offered rate, is an interest rate that measures how much the biggest banks charge to lend each other euros. Eonia is an index that measures inflation in the countries that use the euro.
The Sensex ended at 15,100, down 207 points, while the Nifty closed out the day at 4403.20, down 58.90 points.
The Bloomberg reports that BNP Paribas has freezed 3 Asset Backed Funds on US Subprime losses. The European markets are down on BNP Paribas' freeze on these 3 funds. Dow Futures are down over 100 points. Meanwhile the European Central Bank says ready to act if needed to ensure smooth functioning of markets
BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it can't 'fairly' value their holdings, as concern over U.S. subprime mortgage losses roils credit markets. BNP Paribas will temporarily suspend the calculation of net asset value for the funds, which are called Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia, the Paris- based company said in an e-mailed statement today.
The French bank follows Union Investment Management GmbH and Frankfurt Trust in stopping redemptions from such funds. Late payments on U.S. subprime mortgages to borrowers with poor credit histories are at the highest since 2002, driving down the value of bonds backed by home loans. The BNP Paribas funds had about 2 billion euros ($ 2.8 billion) of assets on July 27, including 700 million euros in U.S. subprime mortgages rated AA or higher.
"The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating," BNP Paribas said in the statement. BNP Paribas shares fell 2.54 euros, or 3%, to 82.91 euros by 9:12 a.m. in Paris. When the company reported a 20% increase in second- quarter net income last week, Chief Executive Officer Baudouin Prot said the bank's exposure to the U.S. subprime meltdown was "absolutely negligible."
Losing Value
Union Investment, Germany's third-biggest mutual fund manager, stopped redemptions from one of its funds on Aug. 3 after investors pulled about 10 percent of the assets. Frankfurt Trust, the mutual fund manager of Germany's BHF-Bank, stopped withdrawals from a fund after clients removed 20 percent of their money since the end of July.
The ABS Euribor fund's assets dropped 18% to 850 million euros between July 24 and Aug. 7, according to data compiled by Bloomberg. The ABS Eonia fund's total assets dropped 7 percent to 73 million euros over the same period. Euribor, or the Euro interbank offered rate, is an interest rate that measures how much the biggest banks charge to lend each other euros. Eonia is an index that measures inflation in the countries that use the euro.
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