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May 2008

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  • Foreign exchange has arguably held up better than any other financial market in the fallout from the sub-prime crisis. Will its robustness result in it being taken more seriously as both a business and as an asset class? And which banks have fared best in Euromoney’s benchmark industry poll?
  • Conifer Securities, which provides back- and middle-office solutions to hedge funds, family offices and endowments, has bought Morgan Stanley’s outsourced trading business. The platform provides independent trade execution in equities, options and ETFs to Morgan Stanley’s prime brokerage hedge fund clients. Conifer has also recently hired UBS’s former head of prime brokerage for the Americas, Dick Del Bello, as a senior partner.
  • In the first few weeks of April, the Tadawul, the Middle East’s most liquid equity exchange, had returned to form and bucked the downward trend of developed global markets. But until then, 2008 seemed to be the year of recoupling with western markets, rather than decoupling, as far as the Saudi stock market was concerned.
  • There are complaints that investors are being misled by funds.
  • There may be plenty of doom and gloom among private equity practitioners in the US and western Europe as a result of the global credit crunch that has all but dried up their cheap financing. In Russia, though, the mood among their peers is almost euphoric. "I am amazed by how relatively easy it is to raise money for a private equity fund in Russia," says Florian Fenner, managing partner at UFG Asset Management in Moscow, which is fundraising for its second private equity vehicle. UFG is looking to raise at least $500 million and expects to make a first close at least half that figure in May.
  • Kazakhstan’s banks have built up onerous debt repayments after a splurge of Eurobond issuance. Are they facing a liquidity crunch?
  • The US secondary market in life insurance is being extended to sellers who can ill afford to relinquish their policies.
  • Osman Semerci, Merrill Lynch’s former global head of fixed income, currencies and commodities, and co-president of the EMEA global markets and investment banking business, has joined $1.7 billion alternatives group Duet as its chief executive. Duet Group, which started in 2002 with just $10 million in a single fund, now has 14 funds, and is looking to further expand its range of strategies, in addition to growing its private equity business.
  • UK PFI deal taps loan market for entire £2.2 billion.
  • According to market participants, cash holdings are at an all-time high among investment managers.
  • It has become increasingly recognized that the attraction of flow from the retail aggregators can have a huge impact on the volumes of sell-side institutions.
  • More on LTROs
  • South Korea’s new president, Lee Myung Bak, urgently wants the privatization of Korea Development Bank; he hopes it will become globally competitive. But some question the wisdom of the deal. Lawrence White reports from Seoul.
  • If you’re sick of hearing about Goldman Sachs beating the competition, look away now. Euromoney has conducted its first (somewhat unscientific) poll of investment banks’ online popularity as measured on social networking site Facebook, and the US firm has won by a clear margin. Facebook allows companies to create ‘fan’ pages: "...a unique experience where users can become more deeply connected with your business or brand. Users can express their support by adding themselves as a fan, writing on your Wall, uploading photos and joining other fans in discussion groups."
  • "The problem is that banks have ended up lending to these deals by accident – they thought that they were underwriting them"
  • "Who is this?"
  • BNP Paribas is presenting MillionTreesNYC in New York, a citywide, public-private scheme with the goal of planting and caring for a million trees across New York’s five boroughs over the next 10 years. Introduced as one of mayor Michael Bloomberg’s 127 PlaNYC initiatives to create a healthier, sustainable city, MillionTreesNYC will increase the city’s tree-count by 20%.
  • As a new approach to financial PR it may take some time to bed in.
  • UBS has done a service to all investors in bank stocks and bonds by making public the report requested by the Swiss Federal Banking Commission into the root causes of its sub-prime losses.
  • The International Capital Markets Association raised SFr100,000 ($97,000) for underprivileged children with its annual ski weekend in Davos at the end of March. The event is more than 30 years old, but the potential for charitable contributions was only realized last year.
  • The rise of alternative beta strategies seems inevitable as investors chase greater levels of diversification in their portfolios. What are the secrets of alternative beta’s success and what obstacles can still impede its progress?
  • The sideways, low-volatility markets of the past two years are gone, so how should investors review their currency management strategies? Should they consider shifting mandates from quant to discretionary? And should capital preservation take over from return maximization?
  • Competition between trading venues is leading to soaring trading volumes in Europe. Brokers are reaping the benefits and incumbent exchanges have yet to feel any pain, despite the success of new competitors.
  • Liquidity remains the primary challenge in the present environment, meaning that few credit managers have ventured beyond the relatively liquid credit derivative indices. Managers including BlueCrest, Cairn Capital, CQS and Pimco are all seeking to take advantage of the unique opportunities the dislocation in the credit market has created, say market participants.
  • Bad infrastructure, a weak economy and vulnerable financial assets – but bankers in South Africa remain confident.
  • Figures released by Isda during April show that the notional amount of credit default swaps outstanding during 2007 grew by 37% from the first half of the year to the second half. After the first six months of 2007 – before problems in the US sub-prime mortgage market tipped the credit markets into turmoil – there were $45.5 trillion of CDS outstanding but by the end of the year there were $62.2 billion. CDS notional growth for the whole year was a full 81%. The figures are a stark illustration of the extent to which CDS were embraced as a means of hedging credit risk when the markets turned.
  • A reduction in foreign capital flows means that many banks in eastern Europe are indirect victims of the credit crunch.
  • Credit Suisse has appointed Chris Tuffey as the new head of European debt syndicate. Tuffey replaces John Fleming, who, after nine years in the job, and 14 at the bank, has left the business. Tuffey has worked at Credit Suisse for 21 years, spending much of the past 10 associated with emerging markets and investment-grade corporate syndication. In addition to syndication, he ran emerging markets origination for the past two years.
  • Tradeweb has unveiled an electronic market for deposits. The platform’s management say that Tradeweb Deposit will support the placement of new and maturing deposits in euro, sterling, dollar, Swiss franc and yen. The timing of this launch comes just as the focus on the money markets has sharpened as discrepancies between the reported fixing of the interbank offered rate and the real level of bank funding have emerged. The new offering has been running on beta since January and 1,500 placements had already been conducted as of April 22. Tradeweb’s belief that electronic trading will help price transparency in the market will no doubt be challenged by the leading brokers. But the benefits of e-finance around processing are less disputed.
  • The grip of the credit crunch seems to be easing for Brazilian corporates wanting to issue debt. This optimism from Brazil is in line with the rest of Latin America, where the debt market fog is clearing.