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November 2004

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  • Getting regulators to understand complex industries is hard. Insurance companies are finding it harder than most. They are concerned current accounting proposals don't reflect their basic business model, let alone regional and product differences.
  • The senior executive at a French bank leans forward urgently and semi-conspiratorially. After a wide-ranging discussion on the familiar list of hedge fund risks – excessive leverage, style drift, survivor bias in performance figures – he finally has something significant to relate.
  • French government and state agency issues have driven France's bond markets this year, with index-linked bonds taking a healthy share. Corporate issuance has been meagre by comparison, but loan markets have been active, M&A looks set to recover and IPOs have performed well, with a solid foundation of privatization issues.
  • Dresdner Kleinwort Wasserstein is offering UK retail investors a new way into hedge funds by launching the country's first certificates tracking a hedge fund index. These certificates will track the HFRX Global Index, HFR's investable index, and can be traded on the London Stock Exchange. DrKW believes that they offer retail investors an efficient and accessible way into hedge fund performance at a lower cost and for smaller amounts. "We offer daily liquidity and T+3 settlement so the trackers can be traded like equities," says Shahzad Sadique, UK head of covered warrants at DrKW.
  • Prime brokerage revenues could more than double over the next five years to $11.5 billion, according to financial services technology consultancy Celent.
  • There's not much hedge fund managers won't do to raise money and become stars – and not just in working hours.
  • Turks of all classes were jubilant about the European Commission's decision last month that their country was ready to negotiate for EU membership. But it soon became apparent that this implied further substantial reform. Sceptics point out reforms already written into law are barely being implemented.
  • Luis Valls, the former co-chairman of Banco Popular, was reflecting on his decision to step down from his post last month. "I've often discussed with politicians the theory that if you face unavoidable decisions early then you can avoid periods of instability," he said. "That is good for the health of the organization as much as it is for oneself."
  • Current data suggest a gradual tailing off of the house price boom is likely in OECD countries. But there's still room for a sharp decline that could fuel recession and have a serious impact on overstretched banking systems and agency lenders.
  • Belief that a single number can capture the degree of risk being taken within a bank or an investment is mistaken, especially when that number is value at risk. Markus Leippold explains why the measure is flawed, points to the dangers of its widespread acceptance by regulators and investors, and suggests an alternative.
  • UK regulator the FSA has given the fund management industry the opportunity to devise its own more transparent system of client commissions. But there is an impending time limit, and a crucial area - the creation of a competitive marketplace for research - is proving a recalcitrant problem.
  • India's Congress-led coalition government has forged agreements with leftist allies to maintain economic liberalization and reforms initiated by the previous administration. But the left has forced it to limit new openings for foreign investment and queried some privatization strategies.
  • When Serbian president Boris Tadic shook hands with Croatian counterpart Stjepan Mesic at a Euromoney conference last month, the sense of history was palpable. This was the first time these two heads of states had met. It was also the first time that a Serbian president had visited Dubrovnik since the historic Croatian port city was badly damaged by shelling during the Yugoslav civil war in October 1991.
  • Are Russians getting soft? Mikhail Gorbachev tried - unsuccessfully - to curb vodka drinking. These days, though, it's the hazards of a boom in beer drinking that exercise legislators
  • With a history as old as the telephone itself, AT&T used to dominate US telecommunications. Now, after strategic blunders involving the disposal of key building blocks of business growth, its rump looks like a bite-sized takeover target. It might even have to sell at a discount to today's price.
  • A five-year battle between the European Commission and Germany came to a head in October as the commissioner for internal markets launched a lawsuit against the German government for flouting EU competition rules. The state has refused to offload its "golden share" in Volkswagen, Europe's biggest car maker, which prevents a hostile foreign takeover.
  • Following more than a decade of stagnation, the world's second-largest equity market has revived this year. Although the key index, the Nikkei 225, is currently flat year to date, the market has bounced back throughout the year such that at one point the index was up more than 17% from its opening levels. The encouraging performance coupled with more volatility has fuelled a recovery in Japan's IPO market that shows few signs of abating.
  • Barclays Capital is funding an expedition to the North Pole in a bid to solve what it calls the greatest polar mystery of all time. The team of four, headed by British explorer Tom Avery, aims to replicate the disputed expedition of American explorer Robert Peary. Peary claimed to have reached the Pole in a record 38 days in 1909.
  • The Gherkin might be London's most celebrated new building but it isn't popular with all those who work in it.
  • The covered bond market is growing fast on heavy demand for alternatives to supra/agency debt and on buoyant supply as more and more countries pass enabling legislation. Pfandbriefe might still dominate but expansion is bringing in its wake a wide variety of variants on this classical model.
  • The Islamic capital market proves its capacity to fund one of the biggest ever deals outside the oil and gas sector in the Middle East.
  • In Soviet Russia "speculator" was one of the worst of insults. It summed up all the pejorative associations of capitalist activity that the socialist state instilled in its citizens.
  • Heinrich Pecina muses on his 15 years working in banking in central and eastern Europe. "It's a strange thing," he says, "but whenever I have worked for a larger institution in the region, after my departure it has ceased to exist." You could call it the curse of Pecina. He started his banking career working for Girozentrale. After he left it in 1990 it was taken over by Erste Bank. He then joined Creditanstalt as head of investment banking, where for the next seven years he built up the firm's brand as one of central and eastern Europe's top investment banks.
  • Banking is in the blood for Ariel Salama, global head of private banks at ABN Amro's wholesale clients business. For almost 300 years his family ran a bank that financed Egypt's cotton business, until the 1952 revolution forced closure and a move to Paris. There, his great-uncle, Maurice de Botton, (uncle to Gilbert de Botton, founding chairman of Global Asset Management) established Banque Générale du Commerce, where Salama began his banking career.
  • Few Russian companies have done foreign IPOs, and even fewer have issued domestically. That looks set to change in the next 12 months. Investors should expect more diversity, some big winners - and one or two unpleasant surprises.
  • Panama's economy is set to face the biggest challenge in the Republic's 100-year history. A key decision on whether to press ahead with a project to increase the capacity of the Panama Canal and, more important, to find a way to pay the $5 billion it will cost, is due to be taken shortly.
  • Ukraine was evenly divided ahead of presidential elections on October 31 as leading opposition candidate and liberal reformer Viktor Yushchenko faced off with the establishment's candidate, prime minister Viktor Yanukovich. Campaigning has been dirty and the threat of riots will hang over Kiev if the opposition feels it has been cheated out of an election victory that could shake up the balance of power and define foreign policy after a decade of dithering between turning east or west. The stakes are high: the two candidates were running neck and neck on the eve of the vote and Ukraine is the only former Soviet republic that can boast a grassroots political opposition.