RUSSIA HEARS ECHOES OF LTCM: FINANCING

摘要

Those with a sense of history will note, perhaps with a sense of irony, that a decade on both Russia and margin calls are, once again, at the epicentre of a market crisis. Back in mid-1998, the giant hedge fund Long-Term Capital Management (LTCM) experienced a sudden fall in the value of its positions. Such a fall would not have mattered so much to the world at large, had LTCM not been so highly geared. It was supporting assets of about $125bn on a capital base of just $4bn. As prices fell, LTCM was forced to liquidate its assets in order to raise money for margin calls. The effect was devastating: asset prices plummeted and huge, widespread losses were felt throughout the financial markets.