MPLT Chairman Alvaro A. Santos told Variety, “MPLT does not expect any drastic and immediate effect of the S&P downgrade.”
He said the downgrade of the U.S. credit rating, Wall Street reaction, global market reaction, political debates, Committee of 12, attacks on S & P’s credibility, stock sell outs, among others, have the financial markets and investor confidence in a whirlwind.
“So much has happened since the S&P downgrade and the enormous debate that it generated,” he said.
In spite of recent events, Santos said MPLT will not be revising its asset allocation.
“MPLT is a long-term investor and we do not react to short-term market conditions or corrections,” he said.
For Santos, there may be likelihood of a lowering of valuations for the portfolio as a whole in the short term.
He also said MPLT will not be revising its investment policy; however, he said this will only occur if there are changes to the asset allocation or specific money managers.
MPLT posted 8 percent in overall return in fiscal year 2010 with $72.7 million in principal fund and the $1.6 million increase in net assets last fiscal year was attributed to improved market valuations.
S&P is the first credit agency to topple the United States from its longtime perch with a AAA credit rating, downgrading it to AA+ as it believes the fiscal consolidation plan that the U.S. Congress and White House agreed to falls short of “what would be necessary to stabilize the government’s medium-term debt dynamics.”
According to S&P, “We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially in entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.”
Due to the downgrade, stock markets fell sharply on Monday; however, there were signs of recovery as of yesterday.
