Shareholders of companies listed on the New York stock market are a trillion dollars poorer after the decision Standard & Poor’s to cut the U.S rating from AAA to AA +, and some investors consider that the losses are incomprehensible, writes Bloomberg.
While U.S. stock index reference has lost 6.7%, or 1,030 billion dollars, after the downgrade on 5 August, U.S. Treasury securities on the secondary market grew fastest in the last 12 months, and the government U.S. was able to borrow at the lowest interest rates in history.
“One of the most perverse things that we have seen in 25 years of business is that, after S & P downgraded U.S. government, the reaction of investors was to move to the very securities that were downgraded, selling shares without looking at the price “, commented Kevin Rendino, money manager at BlackRock U.S. fund, with assets of 3,650 billion dollars.
For investors like Rendino, sales wave seemed unjustified, it didn’t discriminate between companies that really deserved to fall and the ones that are in a good position. Thus, the “bargains” on the stock market for smart investors.
S & P spokesman Edward Sweeney declined to comment on whether the rating agency’s decision influenced investors to sell shares.
The decision of S & P, which contradicts the positions of the other two major credit rating agencies, took the attention of the investors from the tenth consecutive quarter in which the companies constituting the S & P 500 index have reported profits above estimates.
The shares were sold heavily, with most goods and currencies, the most preferred becoming the gold, U.S. Treasury securities, Japanese government bonds, Swiss franc and the yen.
The yield of the U.S. Treasury securities with the maturity of ten years on the secondary market on August 18 have reached a record low of 1.97%. This rate is the main reference point in determining rates for auto loans and mortgages in the U.S.
U.S. Treasury has sold bonds on August 23 of 35 billion dollars, with maturity of two years at a historic rate of just 0.22%.