Trading Screen
“Sun Worldwide”, the Asia-based investment boutique, maintains its view that the availability of credit for business financing for smaller companies remains impaired despite claims to the contrary by central bank statements.
The firm believes that although there is a great deal more liquidity in the markets, the banks have imposed such stringent criteria as to render the money inaccessible to all but the most financially secure and robust companies.
Such restriction, analysts at “Sun Worldwide” suggest, is serving to stifle investment in the growth potential of companies that are perfectly viable.
The shortage of available credit is also reflected in the retail sector with many would-be homebuyers facing demands for large down payments before qualifying for a loan.
Many lenders are trying to rebuild their balance sheets after suffering huge losses from writedowns associated with the US subprime debacle which, at last count, has cost global financial institutions nigh on $1 trillion but “Sun Worldwide” said that the extent of the tightening of criteria risked undermining the recovery of real estate markets.
Following the shut down of the credit markets at the beginning of the financial crisis, only the coordinated efforts of global central banks who injected trillions of dollars in liquidity into the markets, avoided the collapse of the entire financial system.
“Sun Worldwide” say they are not expecting a return to health for the credit markets in light of the continued fragility of the economic recovery which it says could lead to more unemployment when stimulus measures are withdrawn leaving economies to stand without governmental support.
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