Romanian financial companies crash 10% after the Paulson plan failed to calm financial markets

Publish date: 07-10-2008
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The index measuring the five financial companies SIF collapsed 10 percent today because investors' fears continued to grow, despite the Paulson plan meant to smooth markets.

Panic took over the capital market, after stocks in the U.S. fell immediately after the plan to save the financial system was adopted, Gabriel Aldea, broker with Intercapital Invest.

The Chamber of Representatives endorsed at the end of last week the 700 billion dollars plan to bailout markets, after it had initially rejected it four days before, causing global slump of stocks.

However, the recently-voted plan failed to calm investors and instead of generating increases, caused more steep falls on the capital markets, Aldea said.

The Dow Jones Industrial Average (DJIA) index lost 1.50 percent to 10,325.38 and the S&P 500 index representing the best 500 companies on the market dropped 1.35 percent to 1,099.23. Nasdaq Composite fell 1.48 percent to 1,947.39.

Investors looked for a ray of hope in macroeconomic indicators, especially in the United States, Aldea said, adding the official figures on the labor market were disappointing.

Thus, the spiral effect could next affect consumer companies as well, not only the financial sector, he added.

Moreover, the capital exits on the emergent markets such as the Romanian one create pressure on the currencies in the region, including the leu.


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