Market Update: Facebook´s IPO, like?
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Week 14 - 16 May 2012
Saturday, People’s Bank of China (PBOC), in an attempt to stimulate domestic growth in the world’s 2nd largest economy, lowered their banks reserve requirement with 50 basis point to 20%. The reserve cut is seen as a policy shift to support growth instead of fighting inflation and containing property prices. The initial marked reaction in Asia was positive, however the good mood quickly evaporated as Europe woke up to new problems Monday morning.
The political mess in Greece continues. Last week’s rumor of a “pro bailout” coalition government, which elevated equities Friday, was finally shot down Monday morning resulting in investors selling of risky assets. The uncertainty on Greece’s euro commitment forced investors on the sideline or into German government bonds, fearing a potential currency breakup. The newly elected parliament has not been able to form a coalition government, and as the president yesterday also gave up on forming a technocratic government the Greek voters now face a new election set for June. This time it could be a referendum on whether Greece exits the euro. The Greek central bank chief later informed the president that the nation’s financial institutions are experiencing increasing withdraws due to the ongoing political crisis.
On the day of his inauguration, the newly elected French president, Francois Hollande, travelled to Berlin to meet with the German Chancellor, Angela Merkel, to discuss the debt crisis and the situation in Greece. The market is eager to see whether the leaders will resume the Franco-German crisis management, or whether they stand divided on how to solve the struggling eurozone.
The world’s most popular social network is going public. Facebook Inc’s initial public offering (IPO) is closing in on $16 billion, an increased offering price range of $34-38 a piece versus the previous $28-35. Facebook’s IPO will surpass General Motors’ from 2010 and will become the second largest in US’ history only exceeded by Visa Inc’s $17.9 billion in 2008.
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