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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jul/05/mark-carney-to-outline-bank-of-englands-brexit-stability-moves-business-live
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| M&G and Aviva suspend property fund redemptions as Brexit fears mount – business live | M&G and Aviva suspend property fund redemptions as Brexit fears mount – business live |
| (35 minutes later) | |
| 5.02pm BST | |
| 17:02 | |
| Project feaaaaarrrrrrrrrrrggggghhhhhhhhhh- Third property fund suspends trading on Brexit sell-off, pound at new 31-year low - AFP | |
| 4.56pm BST | |
| 16:56 | |
| The pound is now hitting fresh 31-year lows.... and getting close to the $1.3000 mark for the first time since 1985. | |
| Sterling slides further to 31y low of $1.3024. pic.twitter.com/DX9lgfxWFQ | |
| 4.49pm BST | |
| 16:49 | |
| So, what happens next? | |
| Well, one hedge fund expert has tweeted that investors will now be anxiously wondering which funds might be frozen next, and getting their money out: | |
| While this is not 07/08 money market fun and games, investors will try to second guess where they might be gated next and pre-empt it. | |
| Sometimes, though, it can be best to sit and wait: | |
| Bear in mind that suspension language is *supposed* to be protective to investors. Although it feels punitive at the time. | |
| FOHF = fund of hedge funds, an investment vehicle which puts money into various hedge funds. | |
| Updated | |
| at 4.56pm BST | |
| 4.41pm BST | |
| 16:41 | |
| It’s been another grim day in the markets.... unless you’re the FTSE 100, which has closed 0.3% higher. | |
| A good reminder that the Footsie, which is packed with international companies, is not the best barometer of the UK economy. | |
| 3 property funds now suspended investor redemptions. REITs bleeding, £ down nearly 2% to a new 31yr low. But never fear, FTSE 100 is up! | |
| 4.38pm BST | |
| 16:38 | |
| M&G’s property fund owns an office block near Heathrow airport, several shopping centres, and a bunch of warehouses in Northampton. | |
| And here are the breakdowns of the M&G assets; portfolio was £4.4 bn, bigger than Standard or Aviva pic.twitter.com/vA0KEO8W57 | |
| 4.22pm BST | 4.22pm BST |
| 16:22 | 16:22 |
| M&G SUSPENDS ITS PROPERTY FUND | M&G SUSPENDS ITS PROPERTY FUND |
| NEWSFLASH: M&G has now suspended its property fund after experiencing a surge of withdrawal requests. | NEWSFLASH: M&G has now suspended its property fund after experiencing a surge of withdrawal requests. |
| And like Standard Life and Aviva, M&G blames the Brexit uncertainty for driving investors to the exits (which are now locked) | And like Standard Life and Aviva, M&G blames the Brexit uncertainty for driving investors to the exits (which are now locked) |
| This is significant, as M&G’s is the biggest property fund in the UK. | |
| Here’s the statement from M&G, which is part of Prudential: | Here’s the statement from M&G, which is part of Prudential: |
| M&G SUSPENDS TRADING IN M&G PROPERTY PORTFOLIO AMID BREXIT UNCERTAINTY | M&G SUSPENDS TRADING IN M&G PROPERTY PORTFOLIO AMID BREXIT UNCERTAINTY |
| London, 5th July 2016 - M&G Investments (M&G) announces a temporary suspension of trading in the shares of the M&G Property Portfolio and its feeder fund. | London, 5th July 2016 - M&G Investments (M&G) announces a temporary suspension of trading in the shares of the M&G Property Portfolio and its feeder fund. |
| Investor redemptions in the Fund have risen markedly because of the high levels of uncertainty in the UK commercial property market since the outcome of the European Union referendum. | Investor redemptions in the Fund have risen markedly because of the high levels of uncertainty in the UK commercial property market since the outcome of the European Union referendum. |
| Redemptions have now reached a point where M&G believes it can best protect the interests of the funds’ shareholders by seeking a temporary suspension in trading. | Redemptions have now reached a point where M&G believes it can best protect the interests of the funds’ shareholders by seeking a temporary suspension in trading. |
| This will allow the fund manager time to raise cash levels in a controlled manner, ensuring that any asset disposals are achieved at reasonable values. | This will allow the fund manager time to raise cash levels in a controlled manner, ensuring that any asset disposals are achieved at reasonable values. |
| The decision to suspend was taken in agreement with the Fund’s Depositary and the Financial Conduct Authority has been informed. Orders placed after 12pm on 4th July 2016 will not be processed until the suspension is lifted. M&G will review the suspension every 28 days. | The decision to suspend was taken in agreement with the Fund’s Depositary and the Financial Conduct Authority has been informed. Orders placed after 12pm on 4th July 2016 will not be processed until the suspension is lifted. M&G will review the suspension every 28 days. |
| The Property Portfolio is a broadly diversified fund which invests in 178 UK commercial properties across retail, industrial and office sectors on behalf of UK retail investors. The Fund, which managed assets of £4.4 billion as at 30 June 2016, has no borrowings. | The Property Portfolio is a broadly diversified fund which invests in 178 UK commercial properties across retail, industrial and office sectors on behalf of UK retail investors. The Fund, which managed assets of £4.4 billion as at 30 June 2016, has no borrowings. |
| M&G SUSPENDS TRADING IN M&G PROPERTY PORTFOLIO FUND | M&G SUSPENDS TRADING IN M&G PROPERTY PORTFOLIO FUND |
| Updated | Updated |
| at 4.59pm BST | |
| 3.56pm BST | 3.56pm BST |
| 15:56 | 15:56 |
| Afternoon summary: Brexit crisis hits property sector | Afternoon summary: Brexit crisis hits property sector |
| To help anyone just tuning in, here’s a quick recap of the key points today: | To help anyone just tuning in, here’s a quick recap of the key points today: |
| Aviva, the UK investment group, has become the second company to suspend withdrawals from its property fund, following the Brexit vote. | Aviva, the UK investment group, has become the second company to suspend withdrawals from its property fund, following the Brexit vote. |
| Aviva followed Standard Life, which shuttered its fund last night after experiencing a wave of redemption requests from nervous investors. | Aviva followed Standard Life, which shuttered its fund last night after experiencing a wave of redemption requests from nervous investors. |
| It’s the latest signal that last month’s EU referendum result is now hitting confidence in the UK economy. | It’s the latest signal that last month’s EU referendum result is now hitting confidence in the UK economy. |
| Related: Aviva halts trading in its property fund as Brexit contagion spreads | Related: Aviva halts trading in its property fund as Brexit contagion spreads |
| An Aviva spokesperson blamed “extraordinary market circumstances”, adding that freezing the fund will protect all investors. | An Aviva spokesperson blamed “extraordinary market circumstances”, adding that freezing the fund will protect all investors. |
| Suspension of dealing will give Aviva Investors greater control in managing cashflows and conducting orderly asset sales in order to meet our obligations to investors wishing to redeem their holdings.” | Suspension of dealing will give Aviva Investors greater control in managing cashflows and conducting orderly asset sales in order to meet our obligations to investors wishing to redeem their holdings.” |
| Otherwise, it would have been forced to start selling its assets (which include supermarkets and offices across the UK) to raise funds. | Otherwise, it would have been forced to start selling its assets (which include supermarkets and offices across the UK) to raise funds. |
| Analysts believe other funds will come under pressure too, if investors begin to worry that commercial property values are going to tumble in the aftermath of Britain’s decision to leave the EU. | Analysts believe other funds will come under pressure too, if investors begin to worry that commercial property values are going to tumble in the aftermath of Britain’s decision to leave the EU. |
| Aviva has now suspended trading in its property fund. I expect others will follow. | Aviva has now suspended trading in its property fund. I expect others will follow. |
| The move came just a couple of hours after the Bank of England took new steps to tackle the consequences of the Brexit vote. Britain’s central bank relaxed the capital rules imposed on UK lenders, meaning firms and households will get access to an extra £150bn of potential credit. | The move came just a couple of hours after the Bank of England took new steps to tackle the consequences of the Brexit vote. Britain’s central bank relaxed the capital rules imposed on UK lenders, meaning firms and households will get access to an extra £150bn of potential credit. |
| Banks, who met with chancellor George Osborne today, have just announced that they will make the extra capital available to the real economy. | Banks, who met with chancellor George Osborne today, have just announced that they will make the extra capital available to the real economy. |
| But Bank governor Mark Carney also issued a warning that the risks around Brexit are now ‘starting to crystallise’, | But Bank governor Mark Carney also issued a warning that the risks around Brexit are now ‘starting to crystallise’, |
| “The UK has entered a period of uncertainty and significant economic adjustment. | “The UK has entered a period of uncertainty and significant economic adjustment. |
| The efforts of the Bank of England will not be able fully and immediately to offset the market and economic volatility that can be expected while this adjustment proceeds.” | The efforts of the Bank of England will not be able fully and immediately to offset the market and economic volatility that can be expected while this adjustment proceeds.” |
| Carney also urged borrowers to be prudent, and warned that Britain’s current account deficit with the rest of the world was a key risk in the post-Brexit world, as foreign investors may lose faith in the UK. | Carney also urged borrowers to be prudent, and warned that Britain’s current account deficit with the rest of the world was a key risk in the post-Brexit world, as foreign investors may lose faith in the UK. |
| Earlier, new economic data showed that UK service sector growth slowed last month. | Earlier, new economic data showed that UK service sector growth slowed last month. |
| Fresh fears over Brexit are gripping the markets again. The pound has been rocked, hitting a new 31-year low around $1.305 against the US dollar. | Fresh fears over Brexit are gripping the markets again. The pound has been rocked, hitting a new 31-year low around $1.305 against the US dollar. |
| And the FTSE 250 index, which includes many small UK firms, is currently down 2.1% today. | And the FTSE 250 index, which includes many small UK firms, is currently down 2.1% today. |
| 3.41pm BST | 3.41pm BST |
| 15:41 | 15:41 |
| Q&A: What the commercial property fund freeze means for you | Q&A: What the commercial property fund freeze means for you |
| My colleague Jill Treanor has rattled out a Q&A about Aviva and Standard Chartered’s decision to block investors from cashing out of their property trusts. | My colleague Jill Treanor has rattled out a Q&A about Aviva and Standard Chartered’s decision to block investors from cashing out of their property trusts. |
| Here’s a flavour: | Here’s a flavour: |
| What are commercial property funds? | What are commercial property funds? |
| They are funds that allow people to invest in commercial property developments such as office blocks and shopping centres – projects that normally rely on money from major professional investors. | They are funds that allow people to invest in commercial property developments such as office blocks and shopping centres – projects that normally rely on money from major professional investors. |
| How much money is invested in them? | How much money is invested in them? |
| Around £35bn, around 7% of the total investment in UK commercial property, is invested in these property funds. | Around £35bn, around 7% of the total investment in UK commercial property, is invested in these property funds. |
| Could this affect the residential property market? | Could this affect the residential property market? |
| It is not immediately clear how this this feeds through into residential properties, although a hit to sentiment in the commercial property industry can quickly feed through to homebuyers, who might decide to pull out of transactions. | It is not immediately clear how this this feeds through into residential properties, although a hit to sentiment in the commercial property industry can quickly feed through to homebuyers, who might decide to pull out of transactions. |
| The Bank of England is concerned that if these funds all seize up at once that it could amplify any fall in commercial property prices.... | The Bank of England is concerned that if these funds all seize up at once that it could amplify any fall in commercial property prices.... |
| Could this affect the broader UK economy? | Could this affect the broader UK economy? |
| Around75% of small businesses use commercial property as collateral for loans so they could face problems with their banks if prices fall too sharply. Banks also use commercial property to count towards their capital buffers; around 55% of their core capital – their main safety net in a crisis -– at the end of 2015 was based on commercial property.... | Around75% of small businesses use commercial property as collateral for loans so they could face problems with their banks if prices fall too sharply. Banks also use commercial property to count towards their capital buffers; around 55% of their core capital – their main safety net in a crisis -– at the end of 2015 was based on commercial property.... |
| More here: | More here: |
| Related: Commercial property fund freeze – all you need to know | Related: Commercial property fund freeze – all you need to know |
| 3.25pm BST | 3.25pm BST |
| 15:25 | 15:25 |
| Earlier today, JP Morgan gave a pithy warning of the dangers of Brexit: | Earlier today, JP Morgan gave a pithy warning of the dangers of Brexit: |
| JPMorgan has a message for Tory leadership contenders confidence on trade negotiations pic.twitter.com/OGaQQfnyiz | JPMorgan has a message for Tory leadership contenders confidence on trade negotiations pic.twitter.com/OGaQQfnyiz |
| 3.13pm BST | 3.13pm BST |
| 15:13 | 15:13 |
| Property shares are sliding again | Property shares are sliding again |
| Investors are bailing out of Britain’s building and property companies today, as evidence mounts that Brexit fears are now hitting the sector. | Investors are bailing out of Britain’s building and property companies today, as evidence mounts that Brexit fears are now hitting the sector. |
| Housebuilders Barratt, Taylor Wimpey and Berkeley Group are leading the fallers on the blue-chip FTSE 100 index, down around 6% each. | Housebuilders Barratt, Taylor Wimpey and Berkeley Group are leading the fallers on the blue-chip FTSE 100 index, down around 6% each. |
| The FTSE 100 is still up a bit, thanks to the plunge in the pound (which helps big exporters). | The FTSE 100 is still up a bit, thanks to the plunge in the pound (which helps big exporters). |
| But Mark Carney told us this morning to watch the smaller FTSE 250 index instead, to see what the City really thinks about the UK economy. And that index has fallen by 2.5% this morning. | But Mark Carney told us this morning to watch the smaller FTSE 250 index instead, to see what the City really thinks about the UK economy. And that index has fallen by 2.5% this morning. |
| Two challenger banks, Shawbrook and Virgin Money, have tumbled by 12% each. they are both acutely sensitive to UK consumer confidence, and spending. | Two challenger banks, Shawbrook and Virgin Money, have tumbled by 12% each. they are both acutely sensitive to UK consumer confidence, and spending. |
| Important, given what Mark Carney said about the FTSE 100, that the UK focused FTSE 250 is down around 2.5% on the back 's of today's events | Important, given what Mark Carney said about the FTSE 100, that the UK focused FTSE 250 is down around 2.5% on the back 's of today's events |
| 2.45pm BST | 2.45pm BST |
| 14:45 | 14:45 |
| According to investment site Trustnet, the Aviva Property Trust holds commercial property assets across the UK. | According to investment site Trustnet, the Aviva Property Trust holds commercial property assets across the UK. |
| Roughly a third of its assets were in London and the South East (as of 31 May), including offices in the centre of the capital. | Roughly a third of its assets were in London and the South East (as of 31 May), including offices in the centre of the capital. |
| It also owns shopping centres in Edinburgh, Manchester and Exeter, and offices in Birmingham. | It also owns shopping centres in Edinburgh, Manchester and Exeter, and offices in Birmingham. |
| It will also have invested in shares of UK property companies, which have fallen sharply since the referendum. | It will also have invested in shares of UK property companies, which have fallen sharply since the referendum. |
| Here is the Aviva fund asset allocation pic.twitter.com/ghkYKDva76 | Here is the Aviva fund asset allocation pic.twitter.com/ghkYKDva76 |
| Updated | Updated |
| at 2.56pm BST | at 2.56pm BST |