The outgoing week was full of events, both in Russia and internationally, the financial crisis revitalized merger and acquisition market, made businesses suspend many projects or even reduce personnel. Analysts think that is just a beginning
The situation in the world economy is still tense. As it was easy to predict, the financial crisis now affects all market segments, it is no longer an issue for bankers only. Developer companies, "the most vulnerable in terms of credit resource need", have suffered the most. Within one week, a few developers, such as Midland Development and X5 Retail Group, have reported suspension of their construction projects, and analysts think that is only a beginning. "The effect of this financial crisis will only show when developers have to refinance their loans", said business analyst Ivan Zavadsky. "Turbulence in the real estate market will b a long-term trend", Zavadsky believes, and experts predict a lot of M&A activity in the segment.
Retail chains are also experiencing trouble. Some companies in the market have been following an "incorrect strategy" for a few years, Dmitry Shusternyak of Finexpertiza Consulting group. "They have been investing in growth while sacrificing efficiency". Now that there is no "cheap money" in the market, retailers are having trouble, and there soon may be fewer of them left, Shusternyak thinks. And, as they are major advertisers, the crisis cannot but affect the media. Yesterday, RBC Media Holding reported it was dismissing 5 % of its staff.
In the second half of the week, the news from America catalyzed the situation, where many troubled banks and financial instates were bought by others.
In Russia's financial sector, the asset consolidation process was re-started: Mikhail Prokhorov bought 50 % in Renaissance Capital and later said he wanted to "reincarnate" MFK bank, while Ivan Tyryshkin purchased AntantaPioglabal's managing company. Analyst Agvan Mikaelyan thinks now is the best time for asset consolidation.
Oddly, but experts tend to asses the results of the week as positive. "What is happening in the market today is a moment of sobering", Mikaelyan believes.
Many analysts are welcoming the steps the government has taken in order to save economy. "Generous infusion of state capital helped prevent a total collapse of Russia's market", Vladimir Tikhomirov, chief economist of Uralsib FK, states. Nevertheless, most forecast say economic growth will slow down in the near future.
Olga Shevtsova
Photo: stroim-v-sochi.ru
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