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April 2008

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  • Despite the volume of high-profile mergers and acquisitions between exchanges, the number of trading venues in the US is an astonishing 55 and rising. According to industry consultant Larry Tabb: "The US financial markets are not just in flux; they are in full-out, no holds-barred, free-for-all radical change." Moreover, it is a trend that he believes is likely to be exported.
  • Last month two interdealer brokers unveiled their participation as official venues for the trading of Dutch bonds.
  • Rapid growth can mean rising inflation, as Vietnam is discovering.
  • One characteristic that both the ABS and leveraged loan markets share – apart from having had a hideous time over the past nine months – is that fledgling indices for both (the ABX and LCDS/LevX respectively) have been subjected to the most testing market conditions in memory very early on in their development.
  • March 7
  • Are banks biting the hand that feeds them? Perhaps, but what choice do they have?
  • If there’s another Bear Stearns or Northern Rock-style blow-up, will any other bank be willing or able to pick up the pieces?
  • But CDO managers are paying a premium, especially in the US.
  • Rating agency considers wider implications of CDO methodology change.
  • "Low sovereign default rate reflects buoyant global market conditions."
  • $20,500,000,000 The value of equity capital raisings postponed or withdrawn so far in 2008, according to Dealogic. The value of deals pulled is more than 10 times as much as the $1.9 billion over the same period in 2007 and is the highest ever on record.
  • Small-cap stocks in the US have so far weathered the deteriorating credit market conditions better than their international peers. According to Credit Suisse, however, the situation, is looking increasingly anomalous and is likely to change as the effects of the liquidity crunch catch up.
  • The Fed is finding innovative ways to fund US financial institutions to combat the systemic risk that has done for Bear Stearns.
  • "The private equity party is over," says Kevin Dolan, chief executive of $5 billion fund of hedge funds La Fayette Investment Management in London. The credit crunch has made it difficult for private equity firms to take companies private, and that is good news for activist hedge funds, he claims.
  • Even though spreads for most foreign exchange products are often so thin that they barely exist, the use of transaction cost analysis (TCA) to measure execution is on the increase.
  • Citadel Known to be taking full advantage of the carnage in the markets, Citadel is now launching a multi-strategy macro investment business to cash in on arbitrage and trading opportunities. Kaveh Alamouti has been hired from Moore Capital to run the business.
  • The highly respected Gavin Wells has left Citi after a 14-year stint at the bank. Wells originally joined as part of the bank’s experiment of recruiting former British army officers; he successfully marched through the ranks to ultimately head the bank’s e-commerce trading force. Following Wells’s decision to stand down, Citi has decided to use its existing forces and deploy them in more distinctly divided specialist areas.
  • Despite avoiding the worst effects of the global credit crunch, Kazakh banks will need to undertake reforms in the coming months if they are to regain trust and confidence, concludes Standard & Poor’s credit analyst Ekaterina Trofimova. She says: "The Kazakh banking system has reached a decisive point in its development, with the continuing turbulence highlighting the need for a deep transformation of business practices, strategies and regulation."
  • "It is an inauspicious year because the rat year brings about slower world economies where unemployment, money matters and environment matters would be the key issues. There would be plenty of natural disasters/diseases which could affect the world."
  • Deutsche Bank is believed to have suspended two of its Italian FX sales team because of procedural irregularities. Sources say that Riccardo d’Antonio, the bank’s head of Italian FX sales based in London, and his subordinate, Santo Caristo, who was based in Milan, were told of the action in early March. Their suspension is believed to relate to a small loss incurred by one of their clients, which led to an abuse of the bank’s booking procedures. Deutsche and the Financial Services Authority, which held d’Antonio’s registration, decline to comment.
  • Commodity prices continue to break records, defying the spectre of slowing growth in the US and the performance of other asset classes. With some commentators attributing the price rises to the billions being poured in by investors, is it boom or bubble? Peter Koh reports.
  • First Avenue Partners, a hedge fund advisory firm based in New York and London, is raising money for a new multi-strategy fund of hedge funds investment vehicle that will focus on Brazilian managers. The fund, which will be managed by Brazilian investment boutique Arsenal Investimentos, plans to raise $300 million.
  • The stellar returns from reinsurance that lured in hedge funds in the wake of the 2005 hurricanes have dissipated. But this won’t deter managers with long-term strategic plans, reports Helen Avery.
  • Spanish bank BBVA has announced plans to open a new platform in Brazil, following the sale of its 5.01% stake in Banco Bradesco.
  • India’s nascent and relatively isolated financial markets have been spared the worst of the credit crunch but leading corporates are feeling the squeeze in other ways.
  • More assets are yet to be hit in the credit crisis and, as leverage continues to fall out of play, liquidity will keep on drying up. Equity prices are bound to fall still further too.
  • As part of plans to boost Moscow’s position as an international financial centre, the Federal Financial Markets Service has announced plans to exempt investment in securities from taxation. The proposal forms part of a strategy document covering the period to 2012. If approved, the FFMS proposal will come into force in 2009.
  • Investors looking for attractive long-term return potential could do worse than look at bank stocks in southeastern Europe. That’s the conclusion of a recent report by Günther Hohberger and Gernot Jarny, banking analysts at Erste Bank in Vienna. Entitled South east European Banks: Boom or bust? the report looked at the banking sectors in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, Romania and Serbia, and concluded that overall growth rates for banks in the emerging economies of southeastern Europe versus the more developed markets in central Europe will be higher for the next decade at least.
  • The financing of Nigerian energy company Oando’s acquisition of a 49.8% stake in two offshore oil blocks owned by Royal Dutch Shell was due to close at the end of March, according to Wale Tinubu, the company’s group chief executive.
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