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Turmoil in the markets: What happens now?

    US stock markets plunged in early trading Monday following a big drop in Chinese stocks. 

    The Dow Jones industrial average fell more than 1,000 points in early trading and the Standard & Poor’s 500 index fell into correction territory, that’s Wall Street jargon for a drop of 10 percent or more from a recent peak. 

    Treasuries surged as investors bought less risky assets. 

    Growing concerns about a slowdown in China had already shaken markets around the world on Friday, driving the US stock market sharply lower. A big sell-off in Chinese stock on Monday caused the rout to continue. 

    The Dow was 668 points, or 4.1 percent, lower as of 9:57 a.m. Eastern time. The Standard & Poor’s 500 index dropped 81 points, or 4.2 percent, to 1,889. The Nasdaq composite fell 211 points, or 4.4 percent, to 4,496 points.  -- ASSOCIATED PRESS

    Bennie DiNardo 8/24/2015 2:12:48 PM
    Just got off the phone with Patrick Newport, a US economist at IHS Global Insight. He's not panicking. "Right now, we're one of the few economies that's doing well," he said, "and what is happening right now isn't going to change that."
    jack.newsham 8/24/2015 2:41:59 PM
    As in August 1997, 1998, 2007 and 2008 we could be in the early stage of a very serious situation.
    The mood in Boston: “Any time you lose money it’s depressing,” said David, who wouldn’t give his last name for confidentiality reasons. “I’m disappointed that my money is going down the drain. ... But it will come back.” Read more. -- STEVE ANNEAR/GLOBE STAFF
    Christina Prignano 8/24/2015 2:55:14 PM
    Andrew Parker, a general partner at Boston venture firm Spark Capital, notes that VCs invest "on seven-10 year time horizons, so most successful companies we invest in will have to ride through one or two downturns as they grow towards maturity.
    Thinking about a downturn from this perspective, it's inevitable, and all startups will have to face one eventually.
    Fundraising can be a bit harder for startups during downturns, but for companies growing quickly with good economics and excellent products, it's not a problem. For examples, look at all the unicorns today that successfully raised a round in late '08-early '09, such as Facebook, Dropbox, AirBnb, Twitter, etc.
    I don't believe market timing is possible, so I aspire to invest quite consistently in both bull markets and bear markets. I hope my behavior meets my aspirations if indeed we have entered a bear market."
    Curt Woodward 8/24/2015 2:56:59 PM
    Stock Trading in U.S. Will Pause If S&P 500 Reaches a 7% Plunge #BlackMonday via @business
    After the thousand-point drop at the open, the Dow trimmed its losses. Less than an hour after the open, the decline had been reduced to about 300 points. Read more. -- ASSOCIATED PRESS
    Christina Prignano 8/24/2015 3:02:16 PM
    From Boston Globe real estate reporter Tim Logan:

    Even if the entire global economy is slowing down, some see silver linings.

    Greg Vasil, chief executive of the Greater Boston Real Estate Board, points out that slumping demand for steel, concrete and other materials in China and other developing countries could drive down the cost of construction in Boston.

    “When we saw the real runup in prices for materials here it was really because the Chinese economy was so hot and they were building so much,” he said. “They’ve cooled tremendously.”

    Meanwhile, demand for that construction – especially multi-family housing – remains high and interest rates are still low. That should keep development here humming despite turmoil in the stock market.

    “I think it’ll be OK,” Vasil said. “The fundamentals of our market are still strong.”
    Bennie DiNardo 8/24/2015 3:07:10 PM
    .@NYSE invoked arcane rule last used after the Great Recession to speed opening… @TheWeek #BlackMonday
    Monday’s selloff at the start of US trading followed an 8.5 percent drop in the Shanghai Composite index — the Chinese market’s biggest single-day loss since 2007. But American investors were not merely reacting to one bad day in China, according to Harvard economist Kenneth Rogoff.

    “A latent fear that another shoe might drop has been lurking since the financial crisis,” Rogoff said. “If it were to happen anywhere, it could be China because that’s where it wasn’t supposed to happen. One of the cornerstones of the rise of the last six years is the idea that China is a perpetual growth machine. The world is set up for a punch that may or may not be coming.”
    callum.borchers 8/24/2015 3:23:03 PM
    People in the biotech world are tracking the market plunge closely.

    "I'm looking at my iPhone and it's red all over the board," said Lexington-based life sciences consultant Harry Glorikian. "I'm thinking, 'My kids aren't going to college.'"

    Joking aside, Glorikian thinks the logic of the biotech industry should insulate it from the economic fallout of plummeting stocks. For companies with drugs in the pipeline, the scientific progress of their research and the number of potential patients won't be affected by the financial markets, he said.

    "If you look at it, it's irrational," Glorikian said. "What's happening in Asia now dumps the stocks here, but there's no logical connection. There's not going to be less sick people. The demand for drugs is the demand for drugs. It's not like they're going to buy one less tractor or one less plane. With a lot of these drugs, you can do the math on a white board and that's your sales."

    Glorikian acknowledged that the market correction could sour investor sentiment, making it more difficult for smaller biotechs in the research stage to raise capital, at least in the short run.. For companies with drugs on the market or nearing approval, "it should have very little effect," he said.

    Declines in the market value of publicly traded companies could even be a buying opportunity, Glorikian suggested. "If you believe in the fundamentals, especially in our industry, the market is what it is and you should be sticking with it," he said.
    robert.weisman 8/24/2015 3:24:43 PM
    Rogoff, by the way, is an international grandmaster of chess, which means he’s pretty good at thinking several steps ahead. And he says he’s “been worried about China for years.”
    callum.borchers 8/24/2015 3:25:58 PM
    Boston Globe reporter Deirdre Fernandes talked with economists about the fallout from the market plunge:

    Watching the stock market has been fun in recent years, because it’s been going up and regular Americans have felt wealthier, said Mark Zandi, the chief economist of Moody’s Analytics, a research unit of the ratings agency Moody’s Corp.

    But Zandi's advice right now: Don’t look.

    “It could be scary, in an unproductive way,” he said. “People have forgotten, because of the strong gains…that the stock market goes up, but it also goes down.”

    Zandi expects that this is likely a long-anticipated correction in the market, triggered by the slow down in China.

    The market’s performance in recent years, may have lulled Americans into investing more of their money, even their retirement accounts, in stocks than they would have otherwise. But Zandi said Monday’s plunge, is a reminder that it can be a risky investment.

    “The market has pretty much on been straight up in the recession and yields on everything else has been rock bottom,” Zandi said. “That’s probably caused people to stretch more than they would otherwise.”

    Still, if you’re young and can wait decades to pull out your money, this may not be a bad time to start investing, he said.

    Alan Clayton-Matthews, an associate professor of economics at Northeastern University, said he doesn’t expect China’s slowdown and the market volatility to have a significant impact on the US or Massachusetts economy.

    “There’s nothing that’s changing the fundamentals of the economy,” Clayton-Matthews said.

    For example, the region’s bio-technology industry is more reliant on how well drug trials go, than what is happening in China, he said.

    “This is not a problem of the magnitude of the crash of housing market we saw in 2008,” Clayton-Matthews said. “This isn’t anything like that magnitude.”
    Bennie DiNardo 8/24/2015 3:26:56 PM
    Big question today: Does #BlackMonday turmoil dent Chinese investment in Boston real estate or drive it as Chinese investors seek safe bets?
    Stephen Blyth, the new head of the Harvard endowment, and Michael Trotsky, head of the Mass state pension fund, are among chiefs of large portfolios facing their first major correction since 2008-2009. The question is how well they will hold up on the downside, after years of gains.
    beth.healy 8/24/2015 3:44:31 PM
    Jon Hurst, president of the Retailers Association of Massachusetts, said the market swings are happening at a less than ideal time for retailers--the back-to-school shopping season. Nonetheless, he believes low gas prices and high home values will continue to keep consumer confidence up.

    “Those positives create a balance for the market swings,” Hurst said. “Hopefully this is some temporary gyration and won’t affect the economy overall.”
    taryn.luna 8/24/2015 3:55:51 PM
    Massachusetts state treasurer Deb Goldberg, who chairs the state pension fund, said she and the pension staff "are monitoring the situation with the market closely." She said the $61 billion fund has "reduced its equity position in recent years to lower risk, and the current market volatility highlights the importance of this change."
    Goldberg also noted that as a long-term institutional investor, the pension fund's performance is measured over years, not days.
    beth.healy 8/24/2015 3:58:17 PM
    Mass state treasurer @DebGoldbergMA : pension fund is "monitoring situation with the market closely." notes cuts in equities, risk #mapoli
    Allied Minds, a Boston investment firm that commercializes intellectual property from US universities and labs, isn't rattled by the market turmoil.

    "These short blips in the market don't affect our day to day jobs," said Allied Minds chief executive Chris Sliva, whose firm has set up 22 portfolio companies across the United States to bring technology and life sciences products to market based on licensed patents.

    Allied Minds went public on the London Stock Exchange last year, raising about $200 million, and struck a partnership with drug giant Bristol-Myers Squibb Co. to commercialize multople drugs based on compounds pulled from academic labs.

    "These things aren't market sensitive," Silva said. "It will take a year or two before they get into the clinic. Right now it's all about the science."
    robert.weisman 8/24/2015 4:07:58 PM
    Another question to consider: How will the stock market plunge in China impact tourism in Boston? About 173,000 Chinese travelers visited the state last year, up 65 percent from the year prior. Here's my story from Saturday on record overseas tourists in 2014:
    taryn.luna 8/24/2015 4:09:10 PM
    Savvy investors understand that Friday’s stock market drop and Monday’s early selloff were overreactions to a slowing economy in China, according to Boston College economist Robert Murphy. In fact, he views the market rally since 9:35 a.m. as a correction to the correction.

    “The people who were really scared sold,” Murphy said. “Those who haven’t jumped are saying, ‘Gee, it’s time to actually load up on more stocks. Now might be a good time to buy.”
    callum.borchers 8/24/2015 4:18:35 PM
    Many advisers are telling their clients to wait things out. At Morgan Stanley Wealth Management in Boston, managing director Raj Pathak said staff are reaching out to their clients to reassure them that this isn't a repeat of 2008. Unemployment is low and job creation is robust, he said, and consumer debt isn't as high as it once was.

    There's no one-size-fits-all approach to investment advice, however. For clients invested in tax-free bonds, there's not much that can be done. Even for elderly clients approaching retirement who may be about to draw down their assets, he said, today isn't a panic situation if their portfolio was adjusted.

    "As you have approached closer to retirement, you tend to adjust the portfolio, make it more conservative," Pathak said. "When these drops happen, they're not as severe."
    jack.newsham 8/24/2015 4:21:07 PM
    Murphy’s optimism comes with one caveat: If the US economy were to slide back into a recession, pulling it out again could prove difficult because interest rates already are near zero. And would politicians get behind another stimulus package?

    “If things really do go bad, what do we do?” Murphy said.
    callum.borchers 8/24/2015 4:23:27 PM
    Eddie Perkin, chief equity investment officer at Eaton Vance, says there were technical aspects to the Dow's big dive this morning. Some ETFs made dramatic downward trades on the news of market drops overnight in China and Europe.
    "It felt a little bit like the flash crash, not human panic," he said.
    beth.healy 8/24/2015 4:23:34 PM
    Eddie Perkin, equity chief @EatonVance : big ETF trades made this a.m. feel "a little bit like the flash crash, not human panic" #BlackMonday

    "You call THIS volatility?" #Bitcoin boosters must be having a chuckle about #BlackMonday .

    Globe technology reporter Hiawatha Bray talked with Lycos about the effects of today's stock market plunge:

    Suresh Reddy, chairman and chief executive of Lycos Internet Ltd., the Indian parent company of the Waltham-based Lycos Internet search service, said the market turmoil is the inevitable result of over-inflated stock prices. “Sometimes valuation starts to go beyond reason, and then reason comes back in, “ said Reddy. “There are some markets in the world that were held artificlaly high.”

    Reddy said that the current downturn could mark a welcome return to common sense. “It brings people back to basics,” he said, “and fundamentally sound companies will emerge from this shakeup.”
    Bennie DiNardo 8/24/2015 4:38:36 PM
    Jeremy Allaire also talks to Hiawatha Bray:

    Jeremy Allaire, founder of Boston-based electronic currency exchange Circle Internet Financial Ltd., said the market upheavals would have no effect on his startup company, which uses the digital currency Bitcoin to help people inexpensively transfer money around the world.

    “The market has felt overbought for some time,” said Allaire. “The economy continues to grow, so I think it is pretty natural to see some profit taking and market correction and adjustment.”
    Bennie DiNardo 8/24/2015 4:39:16 PM
    Globe reporter Deirdre Fernandes spoke with investment advisers:

    Chris Chen, a Waltham financial planner, started getting phone calls from clients at 9:40, 10 minutes after the markets opened.

    His clients, many of whom have invested their retirement pot into the stock market, weren’t so worried about the conditions in China.

    “People are scared, they are asking, ‘Are we in 2008?'” said Chen, who owns Insight Financial Strategists. “They want to know, ‘Is this the same thing over again?’”

    Chen said he has been trying to calm some of his clients who may feel powerless right now and may be in a hurry to sell. If some had sold this morning, “you would have been hitting yourself because it rebounded,” Chen said.

    Brian Konish, a senior vice president of investments at Boston-based Hertel & Konish Wealth Management Group of Wells Fargo Advisers, said he has been talking to clients and trying to prepare in recent weeks and months for some sort of correction.

    Konish, who advises about 130 high-net-worth families, said his phones haven’t been ringing off the hook, but that may also be because many are on vacation.

    Individual investors may not shudder at a loss here and there, but if they see their monthly statements repeatedly down by up to 5 percent, they may start to panic, Konish said.

    “It can start to wear,” he said.
    Bennie DiNardo 8/24/2015 4:41:26 PM
    Globe columnist Steven Syre says the market's drop in recent days is painful, but not a disaster.
    Bennie DiNardo 8/24/2015 4:43:18 PM
    The Globe's Evan Horowitz explains why the troubles in China are reverberating around the world.
    Bennie DiNardo 8/24/2015 4:44:52 PM
    Stocks in the state's 25 largest companies, led by Biogen, all fell in trading Monday morning.
    Bennie DiNardo 8/24/2015 4:46:37 PM
    The 10 largest point drops in the history of the Dow.
    Bennie DiNardo 8/24/2015 4:47:37 PM

    Bob Davis, a partner at Cambridge venture investment firm Highland Capital Partners, said the market’s movements won’t much matter to the companies in his portfolio. “We invest in companies that build value over many, many years,” Davis said. “A sub-one-week correction doesn’t impact our thinking.”

    In addition, Davis saw no need to fret over the general health of the economy. “The market was overdue for some level of correction given the turmoil in China and the uncertainty around monetary easing at the Fed. However, corporate earnings continue to be very strong and fundamentals in the US on a broader basis are solid. Periods like this present good opportunities not to run, but to buy.”
    Hiawatha Bray 8/24/2015 5:04:58 PM
    More from Deirdre Fernandes: Some financial planners said they are using Monday as an opportunity to swap out stocks and take the losses, so they can offset gains, for tax purposes.
    "That’s something we’re doing very actively," said Brian Konish, the senior vice president of investments at Boston-based Hertel & Konish Wealth Management Group of Wells Fargo Advisers.
    Bennie DiNardo 8/24/2015 5:08:18 PM
    The wild gyrations of the stock market have a profound effect on working families, many of whom have been relying on mutual funds as a safe place to grow their money for retirement or college tuition, said Gary Chaison, a professor of industrial relations at Clark University.
    Unions that invest pension funds in the market also take a hit when it plunges, Chaison said. Unions are already reeling as membership, and membership dues, decline, and shrinking pension money can make an already precarious financial situation even more so, especially for small unions, he said. Union members will also be more likely to protest higher membership dues if they are watching their own investments falter, Chaison noted.
    “These people are being buffeted by forces they don’t understand and they have no control over,” he said. “This is a rude awakening that people have, that we’re not really out of the recession yet, that the recovery is not really ironclad.”
    katie.johnston 8/24/2015 5:08:56 PM

    How worried should we be about the stock market? Not very, says Josh Bevins, research and policy director at the left-leaning Economic Policy Institute: “All in all, the stock market is a terrible gauge of overall economy-wide health, so even large swings in it by themselves do not provide much of a signal for how to assess this broader health.” Read more of Bevins' thoughts here.
    katie.johnston 8/24/2015 5:19:28 PM

    Just got off the phone with Patrick Prevost, who heads Cabot Corp., a chemical business based here in Boston that does about a sixth of its business in China. He said recent volatility isn't a major cause for concern for Cabot. Its products are used in tires, computer ink, electronics, and many other segments of the economy, so the company's growth will still track closely to the growth of the broader economies where it does business, he said.

    "China is seeing a slowdown. There's no question about that. But I think what one must not forget is that even with a slowdown, China is still a relatively attractive growth environment," he said. "I'd say most countries around the world would kill for 5 percent GDP growth."
    jack.newsham 8/24/2015 5:20:45 PM
    Apple leads the Dow back from this morning's woes, recovering from a 10 percent drop to move back into positive territory Monday afternoon.
    Bennie DiNardo 8/24/2015 5:28:28 PM
    More from Deirdre Fernandes:

    Igor Tiguy, a financial planner with Concord-based Twelve Points Wealth Management, said he expects some US stocks are still overvalued and that the market needs a correction.

    “There are lot of expensive stocks out there,” Tiguy said.

    For the past year, he has advised some of his clients to sell and hold their cash or invest in alternative investments, such as private real-estate. But Monday’s quick and deep fall was still scary, he said.

    “You saw CVS sell off 20 percent in the morning,” he said. “People aren’t going to stop having prescriptions because of China.”
    Bennie DiNardo 8/24/2015 5:29:21 PM
    Diane Mulcahy manages the private equity and venture capital portfolio for the Kauffman Foundation, a large nonprofit focused on entrepreneurship.
    If these day-to-day twitches in the market turn into a real, persistent correction, highly valued "unicorn" companies and their investors could be stymied by fewer options for cashing out their investments, she said.
    "I would be very curious to track the number of unicorns, which will which will go down if there is a persistent and significant stock-market correction," she said. "And I think this dry bubble that we’re in — high private, late-stage valuations and no exits — I think that will get worse for investors. You can argue how open the exit window is at the moment, but it will definitely be smaller."
    Curt Woodward 8/24/2015 5:40:53 PM
    Mike Nugent is the CEO of Bison, a Boston-based startup that provides financial analysis software for private-market investors, and a former senior analyst at the NASDAQ exchange.
    He said tremors like this should be expected in a world where prices are high and big-picture worries about geopolitical instability — bailouts in Greece, saber-rattling in Korea, the rise of ISIS — are making investors nervous.
    “There is a pre-existing concern of the market being overheated, so people are waiting to see the shoe that drops that gives them the sell signal. And you’ve got these itchy trigger fingers, whether they’re programmatic or human-driven, that are causing these drops. And, likewise, the spikes,” he said. “The world is not just a happy place where things are going to keep going up in value.”
    Curt Woodward 8/24/2015 5:48:13 PM
    Nugent adds that there are "a historic number" of private-equity funds trying to raise money from investors right now, somewhere between 2,500 and 3,000. Those who are still trying to hit their targets have bigger worries when the broader stock markets begin to quiver, he said.
    "It’s a case of the haves and have-nots. Some funds are raising very quickly, in 60 to 90 days. Some are out there on their second or third extension trying to hit their target. I think everyone has concerns that if the market comes down, their window is going to close and they're going to come up short," he said. "Right now, most people want to be selling stuff not buying, because prices are high."
    Curt Woodward 8/24/2015 6:07:01 PM
    Looking at the history of the stock market, a 10 percent drop can be expected about once a year, said Heather Walsh, a wealth management adviser and resident director for Merrill Lynch in Burlington. The last time the market dropped as far as it did today was in October of 2011, Walsh said, which means the correction was long overdue.
    Like many financial advisers, Walsh is spending the day calling clients to make sure they are not upset about the roller coaster that is the stock market in the last few days. But so far, she hasn’t had to talk anyone off a ledge.
    “I hate to say it,” she said. “It hasn’t been that exciting.”
    katie.johnston 8/24/2015 6:09:53 PM
    The market's fall ramps up the pressure on early-stage biotechs seeking to raise cash.
    Especially affected will be startups seeking "cross-over' funding from hedge funds and other private investors before going public, companies selling shares in initial public offerings, and newly public companies seeking follow-on financing rounds, said Jeffrey L. Quillen, partner and co-chairman of the life sciences practice at Boston law firm Foley Hoag.
    "Those are the companies that are really sweating today," Quillen said. "Their CEOs are in a tough spot. They're getting calls from their directors. They're calling their underwriters and asking, 'what's this going to do to my deal?' In the end, it's going to depend on the Fidelities and the other buyers of the [IPO] stock. It's going to depend on how nervous they are."
    While few pre-IPO biotechs are expected to price their shares in the two weeks before Labor Day, the real test will come in early September when a queue of companies can be expected to go public, Quillen suggested.
    "IPOs are very sensitive to the stock market," he said. "This could easily delay some IPOs, but it's hard to say how long."
    robert.weisman 8/24/2015 6:17:50 PM
    “The stock market captures the two most powerful human emotions, which are fear and greed," said Jo Tango, a venture capitalist with Kepha Partners. “I view the stock market as not herding a bunch of cats, but herding a trillion cats, where no one knows what’s really causing what. Because if they knew, they’d be trading.”
    Tango noted that longer-term investors like VC firms need to keep an eye on swings in the public markets because they have the power to affect behavior all along the investment chain, even down to illiquid private company stocks.
    “When the public stock markets are running in fear, it affects everybody because fear is contagious. That’s why I think it’s important to watch the stock market, and it’s important to understand what human psychology is doing, because people move in packs.”
    Curt Woodward 8/24/2015 6:22:57 PM
    From Globe reporter Dan Adams:

    Today's market whiplash is an immediate concern for publicly-traded companies. Nonprofits -- which often have investment funds of their own and can see donations drop off during economic slowdowns -- are watching too, but mostly taking the long view.

    "Market turmoil in a day is just that -- it's one day," said Barry Shrage, president of Boston-based Combined Jewish Philanthropies, or CJP. "What can you really tell?"

    CJP is no small-time, drop-a-dollar-in-the-jar outfit. Founded in 1895, it's one of the largest nonprofits in the region, with well over $1 billion in assets. Dozens of smaller charities rely on CJP for funding, and wealthy donors trust the group to effectively invest and distribute their millions for worthy causes.

    CJP weathered the 2008 recession especially well, thanks to a conservative investment strategy. That steadiness was a big boost for the Jewish philanthropic community, which was reeling from the Bernie Madoff scandal at the time.

    Schrage said the recent market tumult doesn't have him worried.

    "CJP thinks how the Jewish people have to think, which is long-term," he said. "Our endowment management policy is very, very strong, so we'll take a wait-and-see attitude."
    Bennie DiNardo 8/24/2015 6:25:11 PM
    Stocks recover somewhat after steep dive, but questions remain… via @BostonGlobe #BlackMonday
    “Everything that’s happening in the market is happening on extremely low volume,’’ said Elaine Stokes, a fixed-income portfolio manager at Loomis Sayles & Co. in Boston. “We’re dead in the center of the time of year when most of the traders on Wall Street take their two-week vacations. That affects markets.”
    beth.healy 8/24/2015 6:45:04 PM
    Boston investment giant State Street shares are down 5 percent, amid global stock declines Monday.
    beth.healy 8/24/2015 6:47:45 PM
    State Street Corp. is the biggest loser among the state's biggest companies Monday; its stock is down 5 percent as of 3 p.m.
    Bennie DiNardo 8/24/2015 6:59:04 PM
    More from Globe reporter Dan Adams on today's market upheavals:

    Here's one answer from a credible observer to our earlier question about what this turmoil means for Chinese money in Boston-area real estate.

    James Tierney, the managing director of New England markets for Boston commercial brokerage Jones Lang LaSalle, said the amount of Chinese capital in Boston is often overstated. In fact, he said, it's the Canadians who are the biggest foreign investors in the city.

    Just last week, for example, Canadian-based Oxford Properties Group teamed up with JPMorgan Chase to buy a pair of Back Bay office buildings for $1.3 billion, likely a record-high price. Norway's central bank, Norges Bank, is also a major foreign player; last year, it plunked down more than $1 billion for a 45 percent stake in the office towers at Atlantic Wharf and 100 Federal Street.

    "There's been an unprecedented influx of foreign money, but the vast majority is not Chinese," Tierney said. That means Boston's exposure to China's woes is limited.

    Tierney noted that lenders are operating with far more restraint than in the years leading up to the 2008 recession, and said he remains bullish on the region's economy. The consensus in the commercial real estate world? The market crash this morning was "a blip."

    "We have not been fielding panicked calls from investors or occupiers," he said. "Nobody's immune from global economic forces, but I'd like to think that our relative strengths as a region will mean that difficult times will be less difficult for us than for others. Real estate in Boston is only becoming more attractive."
    Bennie DiNardo 8/24/2015 7:01:23 PM
    A temperamental market can stall mergers and acquisitions or drive one or both sides to demand the relative certainty of cash, instead of stock, said James J. Hanks Jr., who specializes in mergers and acquisitions at Northwestern Law School.

    “The acquirer is worried that it will have to issue more shares than it would have had to issue at a higher price, and the seller is worried that the value of the acquirer’s shares will decline further,” Hanks said. “Parties sometimes agree to a floor and a ceiling — known as a ‘collar’ — on the acquirer’s share price, but that, too, has risk. So, in unsettled markets, cash deals are more prevalent.”
    callum.borchers 8/24/2015 7:11:16 PM
    Huh. Turns out the Canadians are much bigger investors than the Chinese in Boston real estate:… #BlackMonday
    Philip J. Ferneau, managing director of Borealis Ventures in Hanover, N.H., said the market upheaval of Friday and Monday likely isn’t dramatic enough to instantly kill venture capital deals. But he said it’s a reminder to entrepreneurs to “get money in the bank when you can and avoid a protracted investment process because you never know when that chill is coming.”

    If the public market’s erratic behavior were to continue for several weeks, high-tech dreamers hoping to fund their disruptive ideas could struggle. Venture capitalists often depend on IPOs in strong market conditions to turn profits on their early-stage investments.

    “When they don’t feel confident, they tend to stop investing or raise the hurdle,” said Ferneau, an adjunct professor at Dartmouth College’s Tuck School of Business. “Things they would go for in more optimistic times suddenly look too risky.”

    Entrepreneurs who do get funding often have to give up larger stakes in their companies during down markets, he added.
    callum.borchers 8/24/2015 7:59:24 PM
    With worries of a China market downturn affecting tech companies, Vecna Technologies CTO Daniel Theobald said that Vecna’s focus on manufacturing locally could help it avoid turbulence in the global supply chain.

    “Because we have followed that ‘build it in Mass.’ policy it could even be a net positive for us in the short- to medium-term. Whereas some of our competitors who are more dependent on the Chinese economy may have challenges created by this which we wouldn't have to deal with,” he said.
    nidhi.subbaraman 8/24/2015 8:05:29 PM
    The Dow has closed down nearly 600 points after a tumultuous day. Read more.
    Christina Prignano 8/24/2015 8:09:21 PM
    The next few weeks will be telling for the IPO market, which has fueled dozens of public biotechs in Massachusetts over the past several years, said Noubar Afeyan, managing partner and chief executive of Flagship Ventures in Cambridge.
    Flagship, which has taken nine of its own portfolio companies public in the last two years, has another seven to 10 in pre-IPO stages. If the market slump persists, those companies may have to look to private financing or partnerships with larger drug makers for capital.
    "I think companies that are in the process [of going public] will be guided by the next few weeks or months," Afeyan said. "Usually people postpone for as long as they can and they they go out or they pull" IPO registrations.
    Historically, the biotech sector has often drawn interest from institutional investors in the aftermath of broad market pullbacks, Afeyan said, because it is driven more by science and patient demand than other sectors. But because of the run-up in biotech shares in recent years, outpacing other sectors, it's too soon to say if that can happen again, he said.
    "The expectations of how a particular sector will do is going to drive what people do with their money," Afeyan said.
    robert.weisman 8/24/2015 8:14:22 PM
    At least one Massachusetts biotech preparing to go public withdrew its planned IPO on Monday.
    RainDance Technologies Inc. of Billerica, which makes genomic tools to enable the early detection of cancers and infectious diseases, pulled its IPO registration in a filing with the Securities and Exchange Commission.
    "The company has determined at this time not to proceed with the offering due to market conditions," the filing said.
    RainDance's filing gave no indication when, or whether, the company plans to reschedule its IPO.
    The company, backed by an consortium of investors that includes GE Ventures and Northgate Capital, had sought to raise as much as $60 million in the IPO, according to its registration statement. RainDance raised $36.5 million last year in a round of venture financing.
    robert.weisman 8/24/2015 8:36:46 PM
    The Globe 25 index tracking the biggest public companies in Massachusetts posted a 4.4 percent drop Monday, with 24 of the 25 stocks losing value. Only Skyworks Solutions bucked the trend, gaining 1.8 percent. The big losers: Alnylam Pharmaceuticals (7.1 percent), Alkermes (6.1 percent), and State Street Corp. (6.0 percent).
    Bennie DiNardo 8/24/2015 9:26:42 PM
    From Globe health care reporter Priyanka Dayal McCluskey:

    Despite the turmoil in Chinese and US markets, the chief executive of​ a local medical device company that recently raised $200 million from Chinese investors said he's taking the long view.

    "Economic and market variability is common in the US and internationally," said Joseph K. Jachinowski, chief executive​ Mevion Medical Systems Inc. of Littleton​. "Over the course of the long term, economies stabilize and we are confident this will be the case in China."

    Mevion makes ​a ​proton beam therapy system​ that​ treats cancerous tumors​ with radiation​. The company​ is planning to ramp up production of its systems and sell more of them in China, where a large and growing ​middle class is demanding better medical care.

    "As the Chinese healthcare system continues to improve its standard of care for cancer patients, we anticipate cancer centers in China will continue to invest in advanced cancer treatments," Jachinowski said.

    Brigham and Women's Hospital's chief business development officer, Steven Thompson, also said he expects the health care sector's growth in China to survive market turmoil and said the market won't change Brigham's plans to work in China -- unless "it causes other people to change their plans." Brigham is co-developing a women's health center at a hospital in Shanghai.

    ​"Our approach rides the wave of health care development in other countries," Thompson said.
    Bennie DiNardo 8/24/2015 9:27:41 PM
    Mike Krupka, managing director in Boston with Bain Capital Ventures, weighed in via e-mail on Monday's market turmoil.

    "The markets have been rewarding high growth public companies with historically high multiples of revenue, generally without regard to whether the company was profitable," said Krupka. "This has driven private company valuations extremely high for venture-backed growth companies. Even if the public markets continue to drop, it will likely take some time for the private markets to adjust. There is a lot of venture and growth capital looking to invest, and a belief that many large companies will be spawned by all the technology evolution which is occurring. Hope springs eternal."
    Hiawatha Bray 8/24/2015 10:02:58 PM
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