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Asta Pravilonytė
Every manager can call him or herself a good strategist if he or she only works within an environment that is favourable; however, it is only in times of stress that one truly learns what one's capabilities are! |
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Economic growth is supported by well functioning financial markets. So, coordinated measures to restore the stability of the international financial markets remains the main subject for the G7 finance ministers and central bank governors to discuss on the annual summit in September 9-11, Marseille. However, could the current economic climate be recovered in recent turmoil in financial markets and insufficient liquidity? I guess that it is possible and is already underway.
Market values are driven by public expectations. So, according to the recent excessive volatility, market self regulation mechanism come into play. Investors those consider that market value does not reflect the true value of assets, avoid possible lost by investing in mistrusted financial markets.It follows that the crash of stock markets should encourage investors to seek investment opportunities those are independent from market valuations. Consequently, investments in private equities should increase.
Even though, investment in private companies is illiquid, direct investment in business development, participation in business management and control of business performance might be an attractive option. Investors may expect reliable and steady returns related to cash flows generated from invested capital and avoid market risks due to undervaluation of assets.
As a result, stagnation in the financial markets might become a cure for current economy recession when the attention of investors is focused on direct control and improved management of attractive investment opportunities.
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