Billionnaire Warren Buffet is not the only one making a profit thanks to the financial crisis. Many small-time Czech investors are trying to find money-making opportunities at a time when stock prices hover at record lows, with Prague Stock Exchange (PSE) losing more than a third of its value since the beginning of this month. Brokerage companies are seeing an influx of clients.
“Over the course of September and October this year, we gained approximately three times more clients than we did during a similar period at the beginning of this year,” said Atlantik FT spokeswoman Zuzana Doležalová. “They are attracted by the low prices,” she added. Shares everywhere have lost nearly a quarter of their value since the beginning of this month, as measured by the MSCI World index.
The company brokerjet ČS registered triple growth in their new client numbers. And the company Fio has experienced the biggest client growth in its history.
An increase in client numbers also means increased profit for these companies. According to Radim Dohnal, a Czech consultant for the British investment bank Saxo Bank, the turbulent market offers interesting investment opportunites and a huge opportunity for banks and stockbrokers.
Dohnal says Saxo Bank clients are not afraid to speculate even on decrease. “They are investing more and with greater aggression, using leverage more often and speculating on growth and on decrease. They trade in what they would normally not have traded in before. Someone might have only invested in currencies, but now he might add stocks because he sees it as a big opportunity,” Dohnal said.
The volume of trade on internatational markets monitored by Saxo Bank grew by at least twice the amount by which they grew last month, according to Dohnal. Such growth means banks’ profits are growing too. Any increased activity on the market increases banks’ and investment firms’ profits – whether investors are buying up stocks or getting rid of them in a panic. “We don’t really care if clients are buying or selling,” said Dohnal.
“We expect a 10% profit increase in 2008. The results will be mostly influenced by the developments of the last few weeks,” said Martin Kodýdka, marketing director at Patria Direct.
The financial crisis has been knocking down stock markets for more than a year. In the last 12 months, the PSE, for instance, lost more than half of its value. Over the last month, markets have been experiencing increased turbulence. “It’s a reflection of the tension on the stock markets,” said Marek Hatlapatka, an analyst with Currus. Fluctuations in October were twice as big as this year’s average.
Dohnal worries that if the turbulence continues for another six months, people lose interest. “They would stop trading. But if there is a big drop or a sudden increase, investment activities could still grow, at least here,” said Dohnal.