When André Perold, professor of financial management at Harvard Business School visited JP Morgan Investment Management in 1987, it was a momentous occasion for Adrian Lee, president and CIO at Lee Overlay Partners, who was then working at JPMIM.

Convertibles

Russia's re-emerging middle class is driving strong growth in the country's embryonic mortgage market as pent-up housing demand and limited supply have caused property prices to soar 30% in Moscow and St Petersburg in the past year.

India

If the role of a banking system is to finance corporates through the bad times as well as the good, the German system is failing. At least that's what the recent decision by the Federal government to establish a Mittelstand bank strongly suggests.

Keen to exploit the massive oil deposits found in its segment of the Caspian Sea, Kazakhstan is pushing for an end to the decade-long dispute over how to draw borders between the five countries that share its coastline.

Bond performance

Is the burgeoning credit derivatives market still best seen as a hedging device? Or have some participants turned it to unfair advantage over bond investors on the basis of what amounts to inside information?

Few capital markets participants will be sorry to see the back of 2002. Fear dominated the year: fear of more terrorist attacks, fear of the consequences of a war against Iraq, fear of more corporate scandals, fear of losing yet more money, fear of losing one's job, fear of going to jail.

Russia’s central bank is launching a controversial new scheme aimed at creating stability and competition. Deputy central bank chairman Andrei Kozlov explains why the reforms are needed.

A dispute over the funding of oil pipeline development pinpoints increasing tension between foreign investors and the Kazakh authorities that may hamper the development of offshore Caspian oil resources.

E-finance

Few if any currency managers attempt to forecast precise exchange rates. The trick is to predict directional moves. Different managers work to different time horizons but, broadly speaking, currency management can be separated into two categories: a technicals-based approach and one that looks to fundamentals.

After the blows many investment banks' reputations took in 2002, equity researchers might have been expected to keep their heads down. Not Steve Galbraith, who put his foot deftly in his mouth with a note advising clients to avoid investing in companies with highly unionized workforces.

Despite the supposed fiscal rectitude demanded by dollarization, Ecuador has once again spent itself into trouble.

Deutsche Telekom hasn't been that successful in 2002 in making asset disposals or cutting debt. The sale of its cable businesses, for example, has been delayed and the price it is negotiating is unlikely to reach the e2.5 billion it predicted halfway though the year.

Years of heavy losses from traditional assets are prompting investors to seek new havens for their money. Overlay managers sing the praises of going beyond hedging to invest actively in forex.

Few would dispute that 2002 was an awful year for equities. The MSCI World index plunged nearly 20% and the same was true for the MSCI North America and MSCI Europe. While stock markets and investors' portfolios crashed in nearly every developed market except for New Zealand (where the index rose 16.2% last year) and Austria (up 9.5%), net capital flows to emerging markets turned negative.

A recent UK court judgment has stopped minority lenders blocking a workout because it is not in their interests. Rob Mannix explains why the ruling is good news for the banking industry

With trading costs bearing down on them, UK fund managers are tentatively exploring the savings offered by alternative trading venues.

Electronic trading

A radical overhaul of Russia's creaking pension system is set to release billions of dollars into the country's debt and equity markets over the next few years and will stimulate dramatic growth of the financial industry.

Kazakhstan has had a good run, but the easy things have been done and the strong economic growth of the past two years has eased. The republic is banging up against a ceiling that will only be breached if there is more reform.

It was billed as a "good-natured rugby challenge amongst representatives of corporate Hong Kong". But last month's Professions Sevens 2002 tournament, with CSFB, Goldman Sachs, Morgan Stanley, Deutsche Bank, JPMorgan, CLSA and HSBC among those fielding teams, turned into a free-for-all.

Last month's surprise resignation of US Treasury secretary Paul O'Neill and White House economic adviser Lawrence Lindsey smacks of desperation in the Bush administration. Only two weeks earlier, O'Neill had indicated that a costly stimulus package was unnecessary as the US economy was recovering nicely. He suggested that a simplification of the tax code was his sole priority and that government funds should be directed only to troubled sectors, such as the airlines.

Indices

Financial engineering for ethical investors

Head of credit research, Gartmore

A complex debt exchange during a merger transaction saved AT&T Broadband and Comcast the expense and the hassle of raising new debt. Bankers won’t want other companies to follow suit.

Bank reform in Russia is hampered by the dominance of the two big state-owned banks, neither of which can be speedily rationalized or sold off without disruption. So although the central bank is now intent on regulatory activism it is seeking to enable competition rather than enforce it.