EUROPE - Complicated structured products will not survive the current crisis, predicts Peter Brezinschek, chief analyst of the Austrian Raiffeisen Zentralbank (RZB).
The troubles on the financials markets will lead to a return to simple investments like equities and bonds, Brezinschek claimed at a seminar hosted by the Austrian Pensionskasse ÖPAG, in which the RZB is a major shareholder.
"Products like auction-backed securities will not survive," the analyst suggested.
"People's trust in these products and maybe also in hedge funds has declined."
He pointed out investors want more transparency and clarity in their investments and noted OTC markets are "missing this transparency".
That said, the analyst said he does not see the need for more regulation but thinks the markets will regulate themselves.
Brezinschek said it is likely that more fixed-income and structured products will be listed on the stock exchange in the future.
"Stock markets are still working while other markets have collapsed," he explained.
Brezinschek added the stock markets had been rattled more during the crisis "because here people can still buy and sell securities" while with other products they can only wait for the final due date to find out their value.
He agreed pricing was a different matter on equity markets at the moment but stressed it "made sense to look into equity investments not only in times of high returns but also in times like these" - especially for long-term investors.
As for write-offs, the RZB analyst said he expected another $300bn (€200bn) to $400bn to be reported as a direct result of the credit crisis on top of the $514bn which are aleady out - plus another $200bn as a result of the slow down in economic growth.
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