Newsletter 6

THIS ISSUE
Awaiting another crisis p.2

Dear Friends,
The autumn is starting to hit its peak, yet the iFund board is working intensively on the new iGame platform, which is going to be massive and really interactive. Moreover, by this time we are trying to finalize with our sponsors, so stay tuned for more news. For now just get another dose of the financial and economic news, and enjoy the 6th Newsletter of the Investment Fund. Perhaps those of you who watch financial news or just keep up with the latest trends have seen the astonishing video where a Goldman Sachs trader announced that the new crisis was about to hit next year and that all people should be aware of that. His speech has a dose of truth, which we will try to elaborate on in our first article. The second article concerns the LME event, the worlds largest metal event, which dictates many trends in the world commodity trade. They say that the decisions and discussions made there largely reflect the state of the worlds economy and its nearest future. As always, comments and suggestions are more than welcome, so we hope you will enjoy reading the newsletter. Yours financially, iFund

You are wondering where all this gruel comes from? The stock trader Alessio Rastani who describes himself as an investment speaker and independent trader summed up our woes in just three and half minutes. He has become the face of the global debt crisis and a new internet sensation. The metal business p.3

LME Week, the metal industrys top annual event, took place last week. Every year the event attracts not only elite mining companies, but also many leaders of the financial world as industrial metals are seen as a good indicator of the current state of the global economy. Board updates Upcoming Events p.4 p.4

On the threshold of another crisis

Learn more about the topic

The three and half minutes when BBC is speechless as they have got more than bargained for. http://www.youtube.com/watch ?v=Bp-MQhssCqI Goldman Sachs rules the world. In some sense, Alessio Rastani is not completely wrong

Markets are going to crash and fall pretty hard, I have been dreaming for this recession for three years, Everybody get prepared...the governments dont rule the world, Goldman Sachs rules the world quite potent and compelling statements which cannot be thrown accidently. Notwithstanding this for some traders is less than a piece of cake to state that even on BBC. You are wondering where all this gruel comes from? The stock trader Alessio Rastani who describes himself as an investment speaker and independent trader summed up our woes in just three and half minutes. He has become the face of the global debt crisis and a new internet sensation. Firstly, Mr. Rastani said that the market would crash as it was now ruled by fear and that all the big players in the field know that the market was toast. He then stated that the governments also do not care about the state of the European or worlds economies. When asked to pin down the things that would keep investors happy in todays economic climate Mr. Rastani just said very candidly that he was a trader and, like most traders, didnt care as long as he could made money. In fact he said that he had always dreamt of such a recession because of the money making opportunities that recessions offer. Comparing the financial crisis to a cancer he said that action was needed now or it would be too late. As it was not bad enough, he predicted that within 12 months millions of people would see their savings devastated and that this was just the beginning. But on that night many of us were left facing questions about how qualified Mr. Rastani is

to speak about the markets. Instead of operating from an office in an investment bank in Canary Wharf Mr. Rastani works and lives with his partner in Bexleyheath, south London. So, how a man who has never been authorised by the Financial Services Authority (FSA) and has no discernible history working ended up being interviewed by the BBC remains a mystery. The uncertainty led to some commentators speculating Mr. Rastani was a professional hoaxer. Nevertheless, the BBC denied the hunch: "We've carried out detailed investigations and can't find any evidence to suggest that the interview with Alessio Rastani was a hoax." A man who doesn't own the house he lives in, but can conclude the financial crisis in just three minutes a skill that escapes many financial experts. The interviewee reveals even more facts: "I agreed to go on because I'm attention seeker. But I meant every word I said." In a sense, the trader has achieved his purposes i.e. in less than 10 days more than 10000 news fans have commenced to follow its Facebook and Twitter. In spite of statements like Alessio Rastani's, Euro policymakers pursue to implement possible reforms. Currently, they are working to extend their 440 billion-euro rescue fund and contemplating about writing off 50% of Greece debt. In conclusion, Mr. Rastani has brought the commotion in the already unstable situation and to the question if he has done it on purpose will answer the time... By Liudvikas Galvanauskas

http://www.economist.com/nod e/21531013 CNN conducted an interview with the trader after his performance in BBC. This time the tone is gentler and not so fearsome. http://www.zerohedge.com/new s/alessio-rastani-makes-usprime-time-tv-circuit Finally, Mr. Rastani mixed all cards even more by revealing new facts. http://www.telegraph.co.uk/fina nce/economics/8792829/BBCfinancial-expert-AlessioRastani-Im-an-attention-seekernot-a-trader.html

The metal business

LME Week, the metal industrys top annual event, took place last week. Every year the event attracts not only elite mining companies, but also many leaders of the financial world as industrial metals are seen as a good indicator of the current state of the global economy.
Hosted in London by the London Metal Exchange each October, the LME Week attracts thousands of traders, researchers, and leaders of the global mining corporations to discuss the situation in the industrial metal markets and share their expectations about the worlds economy. This year, the participants discussed three major topics, namely the outlook of the global metals market, the valuations of mining corporations and possible M&A deals, and the future of the LME itself. Global trends The current turmoil in the European credit markets is reflected not only in the recent drop in stock prices, but also in the slide of many industrial metals. Copper, the main indicator of the metals market dropped roughly 21% in just a month and is now at $7,095 per tonne. While some experts expect the prices to drop below $6,000, many others remain bullish as chief executives of mining companies claim that the demand, although at a decreased rate, is still growing. The most optimistic forecasts predict that copper may hit $10,000 again in 2012. These forecasts are based on the fact that many Chinese buyers will have to replenish their stocks after letting them run down earlier this year when the prices were high. Additionally, assuming that the prices remained this low or dropped even further, the producers are expected to cut down the supply to push the prices back up. While the development of industrial metal prices, to no surprise, remains a subject of speculation, the general consensus is that the traders left London relatively more optimistic. M&A opportunities The LME Week was a truly busy season to many investment bankers who spent the past week pitching M&A deals. The shares of mining companies generally follow the prices of metals, and with many industrial metals dropping significantly, so have the miners. In fact, many shares are down 40% this year, thus pushing the P/E ratio, the most commonly used criterion in the industrys company valuation, down. This means that many mining businesses could possibly be acquired at a bargain. The major difficulty is that hardly anyone from the sell side is willing to accept any deals at the current price levels. Furthermore, although many mining companies have the cash for acquisitions, some expect that they will be more likely to save it for fear Greece may go down and cash reserves will be needed to see the end of the crisis. LME takeover The London Metal Exchange, which handles nearly 80% of the global metals deals, has itself attracted a number of bidders after a significant growth in its contract turnover due to both increased prices and speculative demand for commodities. While the current owners are generally willing to look into offers, the potential buyer would need support from at least 75% of the shareholders, meaning that a relatively small group could block the sale. The LME is valued between $1 billion and $1.6 billion and the potential buyers include CME Group Inc., IntercontinentalExchange Inc., Singapore Exchange Ltd. as well as the London Stock Exchange.

Learn more about the topic:

The copper bulls bet that Chinas metals demand will eventually overcome the European credit crisis: http://www.reuters.com/article/2011 /10/07/lmeweek-moodidUSL5E7L63IY20111007 http://www.foxbusiness.com/indust ries/2011/10/06/lme-weekantofagasta-credit-crunch-will-nothit-key-china-buyers/ CEO of Freeport, the largest publicly traded copper producer in the world, remains positive: http://www.reuters.com/article/2011 /10/03/lmeweek-freeportidUSL5E7L320Z20111003 Commodity analysts at Barclays forecast copper to be at $10,075 next year, Goldman sees copper at $9,500 12 months from now: http://www.bloomberg.com/news/2 011-10-04/copper-rout-unlikely-tohalt-chile-s-67-billion-bet-onmines-commodities.html Some more in-depth information on the potential LME takeover deal the buyers, the sellers and similar deals in the past few years: http://www.bloomberg.com/news/2 011-09-25/london-metal-exchangefacing-takeover-bids-as-tradevolumes-reach-record.html A short summary of the LME Week highlights: http://agmetalminer.com/2011/10/0 4/lme-week-amidst-copper-dropand-commodities-selloff-what-toexpect-in-london/

By Justinas Sukys

Board updates
Here the iFund board posts weekly updates on what has been done or achieved during the week by the board: 1. Cooperation with NASDAQ OMX as the information partner of the iGame will most likely continue Proposals of cooperation with Snoras Bank, Unicredit Bank and Rietumu Banka have been sent Currently the work on the new trading platform is on its way, and all possible work is being done to make it more interactive and user-friendly Negotiations commenced with Gild Bankers to provide tasks and prize money for Investment [UN]limited competition

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Upcoming Events
Seminar 3: Introduction to Financial Markets III
4.

October 17, 15.00-16.00 in 311 (TBA)

Movie Night: Rogue Trader (1997)

October 20, 16.00 17.00 in Soros (TBA)

Seminar 4: Fundamental Analysis

October 27, 16.00 17.00 in 311 (TBA)

Seminar 5: Technical Analysis

November 4, 16.00 17.00 in 311 (TBA)

SSE Riga Investment Fund

Strlnieku iela 4a, Rga LV-1010, Latvia Ifund.sseriga@gmail.com http://www.ifund.lv