In a stark flashback to the catalytic event that ultimately brought down Bear Stearns in 2008, and subsequently unleased the greated financial crisis in history, last night we reported that Standard Life, has been forced to stop retail investors selling out of one of the UK’s largest property funds for at least 28 days after rapid cash outflows were sparked by fears over falling real estate values.
As we further noted, citing an analyst, “given the outflows the sector seems to be experiencing, this could well put downward pressure on commercial property prices,” said Laith Khalaf, senior analyst at Hargreaves Lansdown. “The risk is this creates a vicious circle, and prompts more investors to dump property, until such time as sentiment stabilises.”
As we concluded, whie Brexit is not a Humpty Dumpty event, where all the Fed’s horses and all the Fed’s men can’t glue the eggshell back together, it is an event that forces investors to wake up and prepare their portfolios for the very real systemic risks ahead. And, indeed, if Standard Life was the first domino, moments ago the second domino also tumbled when as Bloomberg reported that Aviva Investors Property Trust is as of this moment “frozen” citing “extraordinary” market conditions.
Cited by Bloomberg, Aviva said in an email that “market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity” adding that “we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect”
As Laith Khalaf, a senior analyst at Hargreaves Lansdown, put it, “the dominoes are starting to fall in the U.K. commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote. It’s probably only a matter of time before we see other funds follow suit.”
We could not have said it better ourselves.
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