A mad rush for liquidity: The biggest, brightest and best of Euromarket names.
Suddenly the search for higher yield goes out the window and investors, we are told, are clamouring for greater tradeability. The bond salesman's answer is super-jumbo bonds upward of $4 billion and market-maker commitments to dealing spreads of a few basis points. Big tickets, reversible short positions and hefty benchmarks are the result. Does this mark a sea-change in the bond markets or is it just a fin de siècle fad? The search for greater and greater liquidity hasn't yet been tested in a bear market. Peter Lee kicks off our 82-page report on the biggest, brightest and best of Euromarket names.
The emerging-market crisis will roll on, mutating like a virus as it kills investor dreams. Sure, Latin America's flaws are not those of Asia. But they're deep enough for the region to get whacked.
When the Asian crisis first struck, many investors in Europe drew a line under the global emerging-market crisis and continued to pour money into Latin America. "Latin America is different," they said.
It's true the region didn't suffer from a surfeit of cheap foreign capital or from overinvestment, as Asia did. And the aftermath of Latin America's 1980s hyperinflation had left the region with a bank-credit-to-GDP ratio of under 40% compared with Asia's average 120%. What's more, the bankers (and some corporate managers) I regularly meet in Brazil and Argentina are world class. The same cannot be said for their Asian peers.
So, if Latin America suffers few of Asia's excesses, there will be no Latin American crisis - right? Wrong. Latin America will not have an Asian-style crisis. The virus of crisis is too smart for that. That's why all those predictions based on the last crisis are just rear-view mirrors that tell you why the next crisis will be different.