BetOnMarkets Afternoon report

Erik

BetOnMarkets Representative
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Please find below the Afternoon Report from David Evans, market analyst
at BetOnMarkets.com

Considering the dead weight financial sector, stock markets aren't
making a bad fist of things today. The FTSE is down 'just' 1.5% today,
but it could be a hell of a lot worse considering the complete meltdown
the share price of RBS and Lloyds today. Defensive stocks Pennon and
United Utilities are enjoying 1 and 2% gains respectively, indicating
that the panic is contained to financials (for now at least).

However there's no getting away from the mess that is RBS. Just over two
years ago today, the RBS share price hit an all time high of £7.24.
Today's fall to just 10p highlights the market's underlying concern that
the financial cancer is has not been completely removed. Today's
treasury announcement regarding a second round of bail outs seem to have
had little impact. In fact, in many ways they seem to have had the
opposite effect.

Short sellers will no doubt get some of the blame for recent major sell
off in banking shares, and although they may have a role to play, it is
not the whole story. For starters, short sellers look to exploit
weakness and inefficiencies in a share price, just as a value investors
looks for companies that are undervalued. Considering the massive losses
announced by RBS today, anyone who sold last week, (whether 'short' or
closing a long position), was ahead of the curve on this one. Even RBS'
own analysts have commented that the company along with other major UK
banks is theoretically insolvent on a fully marked to market basis.

Arguably, the lifting of the short selling ban may have caused a chain
reaction by proxy. Investors may have pulled any share holding at the
first sign of selling, perhaps panicking that someone out there knows
something they don't and selling so they are not the only ones left
holding damaged goods.

Lack of detail and lack of transparency have been at the root of this
crisis right from the start. Even now, the treasury doesn't know the
extent of the losses that that tax payer may be liable for.


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