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Redemptions denied

Several UK property funds has recently halted redemptions from clients, following a peak of requests.

‘Exceptional market circumstances’ are brought forward as reason for the halt in trading, uneasy decision taken in order to avoid huge losses that would occur if investors’ cash appetite was to be immediately satisfied with on-the-spot sale of the funds’ assets, something not possible in the real estate market without accepting fire-sale prices.

Indeed, uncertainty, deriving from the unclear conditions Britain will sign with the EU on its exit, is feeding financial turmoil.

Four factors caught attention: the Pound plunging to 30-year record low against the dollar, touching the 1.30 exchange rate; the worse-than-expected results of the Markit/CIPS UK services PMI, reporting lows registered lastly in 2013 and thereby prospecting a slow-down in the overall economy; the Bank of England loosening bank regulation, allowing for up to $150bn-worth loan releases towards businesses and households, and the pledge among major street banks guaranteeing loans one another to counterbalance the threat of a new credit crisis.


Source: https://www.theguardian.com/business/2016/jul/05/aviva-halts-trading-in-its-property-fund-brexit-standard-life