Investment opportunities make market crisis easier to 'bear'

17 March 2008

Investment opportunities make market crisis easier to 'bear'

Last week saw another casualty of the global credit crunch when, on the verge of collapse, Bear Stearns, one of the largest and most established investment banks in the US, was acquired by JP Morgan Chase. The takeover was in response to the plummeting value of Bear Stearns on the stock market, from a peak of $169 to $2.

Bear Sterns’ downfall was caused by heavy investment in the sub-prime mortgage market over the past few years. When American homeowners started defaulting on loan payments, other banks and financial companies stopped lending to the company, causing it to fail.

The takeover of Bear Stearns is bound to reverberate across the Atlantic and exacerbate the already low confidence in global financial markets. Money is likely to be more expensive, even if base rates fall.

However, there are still opportunities for diligent investors in areas of the world that have not been exposed to the credit crunch fallout. South American countries like Argentina have not been affected by the credit crunch because they don't rely on bank borrowing to the same extent as Western economies.

Argentinean Arable land investments like Project Greengold actually perform better when consumers are apprehensive about spending on luxury goods. The demand for food and animal feed, both of which are produced by Greengold, actually rises in times of financial crisis.

Robin King, movewithus director, commented: “South America is experiencing an economic boom. Like other emerging economies, they have been experiencing a long period of sustained growth built on a solid economic structure. This makes South American investment among the most secure in the world.”

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