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May 2005

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  • European financial institutions could be missing out by shying away from M&A activity in the US. The strength of the euro against the dollar favours the acquisition of US businesses by European financial institutions. However, according to M&A advisers Berkshire Capital Securities, European institutions continue to look primarily to domestic markets for investment management transaction opportunities. Last year there were just 12 deals involving European buyers into the US, and interest has not increased so far this year.
  • What with a power struggle for control being waged in the public eye and a raft of senior departures, Morgan Stanley's workforce is having a particularly stressful time. So you can't blame them for wanting to take time out from it all. On one of the first warm, sunny spring days in New York, employees were observed on a roof terrace at 1585 Broadway during their lunch hour doing serious stretching exercises that looked like some sort of pilates or yoga class.
  • The papal funeral prompted yet more heightened security on Wall Street, amid fears that the congregation of world leaders in Rome could prompt a further terrorist attack. There were even more armed police than usual outside NYSE, which has been cordoned off since 9/11. However, at 60 Wall Street, Deutsche Bank's building, the security checks these days are even more rigorous. Not only is it necessary to offer photo ID to get access; now visitors are asked to show a debit or credit card as well.
  • EU stock exchanges are taking action to stop issuers deserting them because of cost increases caused by the impending Prospectus Directive.
  • How do fund managers aim for long-term performance when they are assessed over the short term? Henry Blodget offers an answer.
  • As US takeover activity booms again, corporate executives and their advisers are spending as much time weighing the legal implications of their decisions as the strategic benefits of bids. Welcome to M&A post Enron and Sarbanes-Oxley. Ted Kim reports.
  • A flurry of big private-equity bids by hedge funds has sparked a turf war between two of the hottest growth sectors in recent years. Although some private-equity players reckon the threat to their business has been overstated and that hedge funds are ill equipped to handle private-equity deals, others are taking drastic steps to see off the competition. Joanna Hickey reports.
  • Japan's institutions are increasingly investing in hedge funds. But getting a fund off the ground in Japan is a tough task – institutions prefer large funds, but with few individual Japanese willing to invest it's hard to boost size. Helen Avery reports.
  • The forced merger of three failed institutions to create Bank Mandiri, now Indonesia's largest bank, also spawned a new domestic securities house. Mandiri Sekuritas is half done in reaching its goals, reckons its management. Chris Leahy reports.
  • US smaller-cap growth companies lost much of their investment banking support after the tech boom collapsed in 2000. But three firms with a solid research base and San Francisco roots are working hard to fill the gap. Antony Currie reports.
  • Leonel Fernández, the Dominican Republic's new president, is a man with a thankless task. After overhauling the Caribbean nation's economy during his first presidency in the late 1990s and laying the groundwork for rapid growth from 2000 onwards, he watched as his work was undone by his successor, Hipolito Mejía, who led the country into economic collapse and default in 2003.
  • Analysts were scrambling for their atlases last month after Khelb Altaya (Altai Bread), floated on the RTS. The small flotation, even by Russian standards, of the federation's biggest grain processor is the latest of a wave of "no name" corporates to pop up on investment bankers' radar from the flourishing ranks of second-tier companies.
  • Latin Americans learned long ago that they should not put too much trust in their currencies. Since the 1970s, hyperinflation, capital flight and economic collapse have been commonplace and many businesses have realized that holding their assets in US dollars was the only sure way to protect them. Currencies have been more stable in recent years, but even so between 2000 and 2003 they lost about half their value against the US dollar and Argentines still hold billions of dollars in savings abroad.
  • The drop in stock prices last month had some people wondering whether it was time for Alan Greenspan and the Federal Reserve to call a halt to raising interest rates.
  • Okinawa was always a rather improbable place to hold April's annual meeting of the Inter-American Development Bank (IDB), so perhaps it was not so surprising that this year's event had such an Alice In Wonderland feel to it. The role of Alice was played by hundreds of Japanese and Korean delegates, who took the opportunity to take their families to the beach while learning about the opportunities of trade with Latin America. Most had never been to an IDB meeting before, which probably made the whole event even curiouser to them than it was to those of the repeat delegates.
  • Investors have begun pulling money out of Asia, dramatically reversing a six-month trend during which inflows to the region surpassed pre-1997 levels.
  • Forecasts of a soft landing for the global economy are off the mark – disinflation is at an end and interest rates are on the rise. For safe havens investors should look to gold and the euro
  • Have you ever been convinced that colleagues whose work is just as good as yours earn more than you simply because they are better looking? Or taller? Or slimmer? Michael Owyang, senior economist at the Federal Reserve Bank of St Louis, examines some of the research on this in a paper written with colleague Kristie Engemann.
  • Once upon a time, when Australia's rugby union team were world champions, Phil Kearns was a key member of the Wallabies side. But these days his talents are benefiting the South Africans. Last month, the former Aussie captain and hooker joined Investec in Sydney to work as a private banker, using his sporting profile to attract new business. Investec Bank (Australia) chairman Geoff Levy is reported to have wooed Kearns from his position as head of a human resources consultancy firm. It isn't the first time Levy has asked Australian rugby players to sign up with him. In the mid-1990s, he teamed up with Wallabies prop Ross Turnbull, with the partial backing of Australian media mogul Kerry Packer, to establish the short-lived World Rugby Corporation. A rival to Rupert Murdoch's Super League, the corporation tried to sign up Aussie, New Zealand and South African players to broadcasting contracts.
  • Poor old Philip Purcell is a man besieged on all sides. Last month, London theatregoers heading to the Old Vic to see Kevin Spacey perform in National Anthems, a parable of American materialism, found placard-waving demonstrators demanding a better deal from Morgan Stanley for its office cleaners at Canary Wharf. The cleaners are asking for a minimum wage of £6.70 an hour, 28 days' paid holiday each year, sick pay and a company pension scheme.
  • Credit relationships are now a crucial factor for clients deciding on a bank to which to award their interest rate and foreign exchange business. US-based consultancy firm Greenwich Associates says that almost two-thirds of FX users and three-quarters of those using interest rate derivatives do business only with banks that lend money.
  • Economics, not the demands of regulators, will drive the future of research, which will involve investment managers doing more of their own analysis and also a greater integration between equity and credit research.
  • In the late 1990s, the telecoms business – fixed income, equity, buy side, sell side, or I-banking – was one of the hottest Wall Street profit centres. In 1999, the telecoms research group at Salomon Smith Barney, headed by legendary analyst and dealmaker Jack Grubman, had more than 100 staff. By 2002, telecoms departments looked like ghost towns. Many analysts left Wall Street entirely, turning up in real estate and insurance. Fast forward to 2005, and the telecoms business might have come back to life. Driven by hedge funds recruiting for seasoned talent, a booming distressed debt market of 2003 and 2004 – much of which was telecoms related – and a revival in equity research, telecoms analysts are again in demand.
  • Fast thinking and fancy footwork from Metcash Trading, one of Australia's leading grocery businesses, have helped turn a vulnerable company into an acquisitive one. Chris Leahy reports.
  • Multi-billion dollar leveraged buyouts are back with a bang, spurred on by low funding costs in the loan market. But with high yield faltering, can private equity firms and their financiers stomach the risks, or could these deals be the distressed loans of tomorrow? Kathryn Tully reports.
  • Left for dead after the financial crisis, the Philippine stock market is barely a rounding error on foreign investor's portfolios. But despite the country's economic woes, the market has emerged recently from its long sleep. Whether the recovery is a long-term trend or a brief flutter on an otherwise flat line seems to be up to the government. Chris Leahy reports.
  • Governor, National Bank of the Kyrgyz Republic
  • The sector is consolidating fast. And while major banks focus on securing a place in the top tier, smaller firms are left to contemplate a choice between white labelling and finding a profitable niche market.