War, epidemics and political uncertainty dominated the financial landscape in 2003, interrupting roadshows, delaying deals and making it difficult to predict market movements. Some issuers pulled their deals. But others found ways to meet new types of investor demand. Volatile equity markets sparked unusual convertibles. Warmer sentiment towards Russia produced a whole range of deals. Hostile takeovers returned. And high-yield bonds and LBOs enjoyed a resurgence. Antony Currie, Julian Evans, Deborah Kimbell, Chris Leahy and Katie Martin report.

Managing director, art and numismatics services, UBS

In December, GM outlined a revised strategy designed to deliver at least a 9% return at its pension plans, including increased allocation to such asset classes as emerging-market debt, high-yield bonds and real estate while reducing global equity allocation to less than 50%. Some commentators feel that investing in more exotic asset classes and using hedge fund managers with the aim of reducing volatility is slightly odd. But GM treasurer Walter Borst insists that investing in additional asset classes will add to diversification and so reduce volatility on a portfolio basis. "We can do this because we have such large assets under management and expertise in house," he says. "Some people have said that by investing in some of these asset classes we must be adding risk. Well, some of the items might be more or less risky, but we like to think we're a little more sophisticated than that."

Public shareholders have grown increasingly antagonistic to private-equity sponsors buying up companies on the cheap and refloating them at a premium in bull markets. Taking companies partially private could win public investors round and increase the potential size of such transactions. Peter Koh reports.

When John Mack (pictured right) was brought in as CEO to turn around Credit Suisse First Boston more than three years ago, he offered a simple diagnosis. "We don't have a revenue problem, we have a cost problem," he said. That might have been so then. But in trying to cut costs, has the former Morgan Stanley CEO created a revenue problem that wasn't there before?

On the first day of next year Turkey will stop being world champion for the number of zeros in its currency. In January the Assembly passed a law authorising the government to redenominate the lira by throwing away six zeros from the currency. The lira became bloated over decades of endemic inflation, which made every Turk a millionaire. The minimum wage is TL303 million ($230). Since 1980 the central bank has been obliged to issue new banknotes every two years.

Valuing private banks for M&A transactions is a complex process, and not one that is unanimously agreed upon. Sebastian Dovey, head of consulting for Scorpio Partnership, thinks it is not enough to look merely at assets under management when putting a price on private banks. "Looking at AUM and the level of wealth per client is not a telling sign of the company's value. You could end up with wealthy clients who are all very old, and want their money to stay static." In this case, the buyer may have overestimated the transaction-based fees that should be achieved from the acquisition.

We enter the year to a deafening beat of bullishness. The long rally since the lows of March last year has brought US and European equity prices back to 70% of their peak in March 2000. Optimism rules and the consensus is for further upside in 2004.

Moroccan negotiators tried to exclude wheat from the proposed free trade pact with the US – and failed – but one flourishing export from Morocco was not discussed at all, even though the country is the world's largest producer.

Regulation, historical rivalries, investor scepticism, language barriers and egos all stand in the way of large bank mergers in western Europe, where consolidation stalled at the end of the 1990s. Unless these obstacles can be overcome, leading European banks will be swallowed by US financial institutions just as soon as they have finished digesting their domestic acquisitions. Katie Martin reports.

Private equity exits, privatizations, and spin-offs will reinvigorate the IPO market this year, helping IPOs to account for a greater share of equity capital markets business. Deals may appear to be done faster but investors remain wary. The same can't be said for bankers when it comes to block trades. Peter Koh reports.

Josef Ackermann (pictured) says his trial is an "image problem for Germany, for Deutsche Bank and for me – in that order". This is certainly true, but almost underplays its significance. The trial has become a flashpoint for those opposed to attempts to overhaul Germany's creaking economic model.

Quality borrowers got away a lot of issues last month, but investors are getting more choosy, especially about dollar bonds. Rising interest rates and an equity revival also raise uncertainties about the year to come. Mark Brown reports.

Equity capital markets bankers agree that accelerated transactions and bought deals are here to stay. Such deals dominated ECM issuance for most of 2003, with fully bought deals accounting for 54% of all block trades. This, however, obscures the fact that many accelerated block trades that are not officially bought deals have aggressive backstop arrangements that make them little different to those officially classed as risk trades. Clients in need of cash like them because the discounts are tighter, sometimes substantially so. This is despite the fact that in every quarter last year they had substantially worse after-market performance.

Investment bankers predict a healthy flow of equity capital markets business this year as stock markets continue the run-up that began last spring. If the secondary markets' tone remains strong, investors may be tempted to buy new issues. But they should remain suspicious over whose interests the investment banks are serving: theirs as investors, or those of issuers' of stock who grant mandates and fees to the banks.

Investors' enduring interest in hedge funds was apparent from record inflows last year. But outperformance of cash equities was already becoming difficult to achieve. This year things could get even tougher for hedge funds unless they can find ways to adapt to a bull market. Julie Dalla-Costa reports.

If there's one woman in the debt markets that bankers have to keep sweet, it's Cynthia Ranzilla, vice-president of US funding and global markets at GMAC. She is responsible for dishing out mandates to banks in every asset class and market where GMAC funds its $275 billion asset base and it's something she takes very seriously. "It's a continuing challenge to manage the relationships so that meaningful business can be provided to the banks while awarding that business based on each firm's attributes," she says.

Parmalat's collapse is leading regulators to question how a multi-billion dollar disaster was not foreseen and averted.

What a coup it could have been for ABN Amro. The flying Dutchman oh so nearly snaffled the top spot on IFR's charity tombstone away from Deutsche Bank just as the Germans were sitting back to admire their victory.

The Chinese year of the monkey looks auspicious, says CLSA's self-styled wicked sorcerer of the east, Kenny Lau.

As November's US presidential election draws near, interest grows in how the Federal Reserve is going to balance managing the economy and managing candidate's demands.

Gartmore's Japanese long/short equity AlphaGen fund was one of the firm's top performers last year despite market conditions that hampered the strategy. The US dollar and yen classes returned 17.1% and 15.9% for the full year 2003.

Big Bang is coming undone. The major investment banks are starting to unpick the full-service equity operations they have built up over the past two decades.

Reform is on the agenda for Morocco, although the king still wields comprehensive power. New openings are being sought to rebalance an economy dependent on tourism and to overcome stubbornly high unemployment. Rupert Wright reports.

Large US banks with ambitions to become national franchise players now see that dream become more possible as slipping earnings bring weaker banks within acquisition range. Mergers look like the only way to grow. But along with the announcement of high-profile deals investors are making it clear that they have not forgotten the mistakes of the merger-manic 1990s. Antony Currie reports.

The European equity-linked market generated over e9 billion in convertible redemptions in January, which is almost a third of what is expected in maturities and puts through the whole of 2004.

Australia's mutual fund industry is set for a bonanza over the next decade, with assets under management forecast to reach a total of US$1.32 trillion by 2015.

The yield curve on European government bonds is set to flatten or even invert from March this year as new regulations force the region's second-largest group of pension funds to change the profile of their assets.

Since 1974, political stability in Cyprus has been tarnished by continued struggles between Turkish and Greek interests. In turn, its progression as a financial centre has been halted by the perception of it as a tax haven for money of questionable origin. But in the past few years, Cyprus has had good reason to celebrate a marked departure from these images, particularly with its accession to the EU due in May.

The beleaguered telecoms industry has another item to add to the list of forces undermining its voice revenues. Voice over internet protocol (VoIP) has been identified as the next revenue killer to attack this sector. In the US, people are talking about how IP is about to hit the fan.