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Financial Institutions and Markets FIN 304. Dr. Andrew L. H. Parkes Day 16 “How do financial markets work?”. 卜安吉. Chapter 17: Thrifts and Credit Unions. Chinese shares end more than 7% lower – Tuesday, Jan. 22.

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Financial Institutions and Markets FIN 304

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Financial institutions and markets fin 304

Financial Institutions and MarketsFIN 304

Dr. Andrew L. H. Parkes

Day 16

“How do financial markets work?”

卜安吉


Chapter 17 thrifts and credit unions

Chapter 17: Thrifts and Credit Unions

Chinese shares end more than 7% lower – Tuesday, Jan. 22

The benchmark Shanghai Composite Index tumbled 7.22% to close at 4,559.75 points.

·Losses led gains by 780 to 17 in Shanghai and 599 to 8 in Shenzhen.

·The index plummeted as much as 8-plus percent in late afternoon trading.

China’s stocks will they fall?

Prescient again, I didn’t mean they HAD to fall …

Financial Institutions & Markets, Day 16


Chapter 17 thrifts and credit unions1

Chapter 17: Thrifts and Credit Unions

Ping An Insurance plunged by the daily limit of 10 percent to 79.55 yuan. The country's second-largest life insurer said Sunday it planned to issue 1.2 billion A shares and no more than 41.2 billion yuan worth of convertible bonds.

Heavyweight ICBC lost 8.60 percent to 6.9 yuan and trading of BOC was suspended pending profit announcement.

PetroChina, which accounts for about 25 percent of the Shanghai Composite Index, fell 4.73 percent to 26.18 yuan, the lowest closing since its record high of 48.62 yuan on its debut on Nov. 5. China Petroleum and Chemical Corp. (Sinopec) dropped 8.70 percent to 18.25 yuan.

Financial Institutions & Markets, Day 16


Chapter 17 thrifts and credit unions2

Chapter 17: Thrifts and Credit Unions

Hua Sheng, an industry analyst and president of Yan Jing Oversea Chinese University, said the drop was "normal and positive" because it helped squeeze out assets bubbles.

    Another analyst who declined to be named said he expected the downward trend to continue through August.

XINHUA News - http://news.xinhuanet.com/english/2008-01/22/content_7472244.htm

Hong Kong is now down by a third from its recent high of 31,600 …

STAY TUNED IN OVER THE SPRING FESTIVAL HOLIDAY!

Financial Institutions & Markets, Day 16


Chapter 17 thrifts and credit unions3

Chapter 17: Thrifts and Credit Unions

Shanghai today?

Hong Kong yesterday! Today?

In Japan , the benchmark 225-issue Nikkei Stock Average plunged 752.89 points, or 5.65 percent, from Monday to end at 12,573.05, its lowest closing since Sept. 8, 2005.

Australia's main share index, ASX/S&P 200, suffered its biggest daily loss on record with 7 percent being wiped out in the share market on Tuesday. South Korea saw the steepest daily fall since Aug. 16, 2007 as the benchmark Korea Composite Stock Price Index fell 74.54 points, or 4.43 percent, to 1,609.02 on Tuesday.

Financial Institutions & Markets, Day 16


Chapter 17 thrifts and credit unions4

Chapter 17: Thrifts and Credit Unions

Fed Cuts Rate 0.75% and Stocks Swing

Small Investors?

China Wonders if Its Stock Boom Is Over

Financial Institutions & Markets, Day 16


Chapter 17 thrifts and credit unions5

Chapter 17: Thrifts and Credit Unions

Fed Cuts Key Interest Rate As Recession Fears Well Up

The move is unlikely to be the last cut, the Fed indicated. "Appreciable downside risks to growth remain," it said, vowing to "act in a timely manner as needed to address those risks." Markets see a high likelihood of a half-point cut at next week's meeting, scheduled for Jan. 29-30, and see the rate falling as low as 2.25% by the end of the year. - WSJ

NEXT – Jan 30?

Financial Institutions & Markets, Day 16


Chapter 17 thrifts and credit unions6

Chapter 17: Thrifts and Credit Unions

Bank Capital – Equity or Net Worth

Two types of deposits

Reserves – two types

Borrowing

Loans

What are they?

Deposit Outflow now!!!!

Financial Institutions & Markets, Day 16


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Chapter 17: Thrifts and Credit Unions

Show the balance sheet of the Third Savings Bank.

The bank has $100,000 in checkable deposits, $50,000 in time deposits, $5,000 in bank capital, a 12 % required reserve ratio and $70,000 in loans and $70,000 in securities too.

What is the amount of excess reserves?

Financial Institutions & Markets, Day 16


Chapter 17 thrifts and credit unions8

Chapter 17: Thrifts and Credit Unions

Now explain what will happen it the bank has a deposit outflow of $2,000.

Now what about $5,000?

What are the four methods the bank can use?

How to deal with a deposit outflow?

Now that the stocks are down!

Financial Institutions & Markets, Day 16


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