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December 1999

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  • Most Asian economies have in recent months recovered strongly from the 1997 crisis. But there's a distinct lack of irrational exuberance among both borrowers and lenders. The irresponsible big spenders have been cleared away and the best credits don't necessarily want to borrow at all. Banks aren't exactly falling over themselves to lend to responsible corporates that survived the crisis because of their prudence and integrity. But their merits are increasingly being recognized. Peter Lee reports.
  • Excessive reliance on short-term foreign currency debt lay behind the Asian financial crisis. Asia needs local sources of long-term funding to prevent a recurrence, especially with the banking systems still so unhealthy. Bond markets in a range of local currencies are springing up, with active encouragement from financial authorities. Peter Lee reports.
  • Author: Peter Lee
  • After the summer craze for investing in all things electronic and e-commerce-related, things have calmed down on the surface in the US. Now the challenge is to make the investments work. The major stock and derivatives exchanges know they have to respond more forcibly to the myriad threats to their franchises. At the same time the start-ups and the investment banks which are equity partners must transform their ideas into reality while trying to avoid the organizational nightmares which have plagued the exchanges. The next few months are more likely to be ones full of frustration for both groups, reports Antony Currie.
  • Europe's largest telecoms operators have a new ambition. Having lost monopolies at home, they now want to build networks that stretch across Europe all the way to Vladivostok. Charles Piggott reports on the telecoms battle for central and eastern Europe.
  • Author: Pauline Loong
  • Author: David Roche
  • Climbing Steadily From Behind
  • The World Bank's mission is to alleviate poverty by channelling resources to developing nations - but without displacing the private sector. Instead, over the last seven years, it has concentrated on heavily subsidized financing for countries with ready access to private capital. 70% of its non-aid resources went to 11 nations - equal to an insignificant 1% of private sector flows. Funding for countries without international ratings dropped from 40% to less than 1%. Adam Lerrick argues that the Bank must transform itself from a capital-intensive lender into the designer of an intellectual infrastructure for the emerging world.
  • Take your pick: Latin America is a basket case doomed to a constant cycle of spurts of short-lived growth followed by economic collapse; Latin America is a continent transformed, with a healthy respect for economic freedom, a burgeoning middle class and an economy on course for convergence with the developed world. Michael Peterson reports.
  • Asia 100 table
  • Author: Rebecca Bream
  • Bad vibes in Bishopsgate
  • During 1999 there has been a steady improvement in investor sentiment towards Asian issuers of debt and equity. For the right deal, American, European and Asian buyers have all shown themselves willing to bid for Asian paper at competitive prices. For the most part, it has been only the top quality corporate and quasi-sovereign names that need apply. At the start of the year a highly successful loan for the Hong Kong Airport Authority and a debut euro deal for Hutchison Whampoa showed leading Hong Kong names reopening markets for the region's issuers. Even then below investment grade deals could be done, as the Philippines proved. Equity markets have been open, if highly selective, with offers from Korea Electric Power Co and China Telecom notable successes. An undoubted highlight was the recapitalization of Siam Commercial Bank which showed the benefits of full transparency. Luciano Mondellini reports.
  • John Grisham got it wrong of course. Grand Cayman is not a place where private aircraft land at night and men in dark glasses deliver bulging suitcases of banknotes to dummy banks sporting no more than brass nameplates.
  • Euromoney's latest brokers' poll of Asia's Best Companies took place against the backdrop of cyclical economic recovery accompanied by partial reform. India's best have come top in a number of sectors for the first time, while Korean and Hong Kong corporates also do well. After robust growth this year IT and other technology companies continue to top several country polls. Research by Andrew Newby and Alexa Marx.
  • Bad vibes in Bishopsgate
  • A year on from the Basque separatists' ceasefire and the region is booming, led by Bizkaia, largest of the three Basque provinces. Its capital city, Bilbao, is upgrading its infrastructure to cope with the huge numbers of visitors to the new Guggenheim Museum. It's attracting international banks and technology companies, partly thanks to favourable tax rates. But Madrid is contesting these. Meanwhile ETA extremists remain a threat. Jules Stewart reports.
  • Author: Dominic Jones
  • The conditions are right to transform this year's steady stream of European bank capital issues into a torrent. That is good news for firms who see these finely crafted products as one of the last areas of value in an increasingly low-margin bond business. Michael Peterson reports.
  • Bad vibes in Bishopsgate
  • Rumours about an impending sale of Warburg Dillon Read have been circulating for over a year, ever since more derivatives losses were announced following the merger with UBS. This year they have resurfaced, despite a healthy performance so far (WDR accounted for 30% of UBS's pre-tax profits for the first nine months of the year, bringing in $1.34 billion). Chase Manhattan, which lacks an equity operation, and Salomon Smith Barney, which lacks a significant European equities operation, have both been touted as buyers.
  • Author: Nigel Dudley
  • Author: Antony Currie
  • The US could be in for more than a few surprises this holiday season as it unwraps the Financial Modernization Act of 1999 - its latest gift from Congress. It's a big bill with lots of attachments. Principally, it allows banks to conduct securities and insurance business under the umbrella of new financial holding companies and boosts the power of the Federal Reserve as regulator of these. Another outcome may be to extend federal safety net protection to lending for pork-barrel projects. James Smalhout reports.
  • Greece has come a long way in a short time. The economy looks good and business is booming. But is there a danger of declaring victory while the battle is still raging? Greeks are starting to argue that Greece is different and that excessive stock market valuations are justified. Many other countries have done the same in the past and lived to regret it. Brian Caplen reports.
  • Author: David Shirreff
  • Triple-A Dutch bank Rabobank wanted to build a flourishing international business in London. Things didn't go well, not least because the local staff were given too free a rein. A crackdown had to come. Now Rabo's taken a new tack, an alliance with Germany's DG Bank. It could be a fruitful match, but negotiations are protracted and the final arrangements far from settled. Laura Covill reports.