Hedge funds deny blame for banking sector collapse
Hedge funds across the world have today denied being instrumental in the recent collapse of the UK banking sector. There have been rumours and counter rumours of substantial profits from "short selling" which many believe has piled yet more pressure on the sector. However, the hedge funds deny they are to blame instead suggesting that the banking sector has been slow to come forward and clarify certain funding issues, which have left investors in "no man's land".
Any professional investor will tell you that the worst-case scenario is uncertainty because without certainty on the facts it is near impossible to value the company and its share price. The move by Barclays bank while surprising to many has actually placed something of a floor underneath the sector in the short term with the company confirming no funding issues and reaffirming that it is still profitable.
While there is no doubt that uncertainty, often caused by short selling, in the banking sector has led to something of a knock-on effect, and seen many investors dumping their shares in panic, fundamentally there are still issues which need clarifying. The more banks which come forward as Barclays did and confirm their current trading, current funding and prospects of future the more chance we can return to a more stable environment.
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