Click here to download pdf including photos of the event

Securitization went from being the success story of the capital market to the root of all its evils in just a couple of weeks this summer. Some of those caught in the storm relate the experience to Louise Bowman, who finds out how long it will take to stop being a dirty word.

"We want to be the Singapore of Europe." That’s the striking slogan employed by Gligor Tashkovich, Macedonia’s minister of foreign investment. Speaking at Euromoney’s Regional Finance & Investment for South East Europe Conference in Dubrovnik, Croatia, Tashkovich told delegates that the Balkan republic is pulling out all the stops in an attempt to secure the necessary foreign funds to help turn the country into a centre for hi-tech assembly and manufacturing. Tashkovich says that the centre-right government that came to power in late August 2006 is slashing its way through red tape and providing special incentives that it believes will transform Macedonia from a still primarily agrarian economy to one that is more knowledge-based.

Evolvence Capital, a Dubai alternative investment company, is on track to raise $150 million for what it claims is the region’s first hedge fund when it closes to investment next month.

China’s mergers and acquisitions market is gathering steam after a couple of relatively quiet years. Elliot Wilson reports.

Many have struggled to beat regular equity market returns, especially after liquidity crisis, says research.

Citi announced on October 2 that it would acquire the remaining shares in broker Nikko Cordial that it does not already own to make the company a wholly owned subsidiary. The move marks the first usage by a foreign firm of the new triangular merger legislation, which allows firms to use their shares rather than cash to make acquisitions and which has been available since May after a ban on the practice was rescinded.

BNP Paribas has hired Kai Harden, who joins from Goldman Sachs, to co-head its Germany, Austria and Switzerland FIG business alongside Menko Jaekel. He is based in London and reports to Anthony Fane, head of DCM FIG Europe. Harden spent two years at Goldman Sachs and before that worked at JPMorgan.

A growing number of superannuation funds in Australia are turning away from funds of hedge funds and external advisers to set up hedge fund manager selection capabilities in house.

As Brazil’s economy and financial markets pick up, Credit Suisse and UBS face growing competition from other foreign banks and domestic contenders. Chloe Hayward reports.

In March, Taiwan’s voters will go to the polls, and as ever the issue of cross-strait relations with mainland China will be key. And few groups will have more at stake than Taiwan’s banking sector.

Quantitative investment strategies are valid, says report.

Royal Bank of Canada has launched its €15 billion covered bond programme with a jumbo issue in the European covered bond market. The deal is Canada’s first ever covered bond.

The credit market seizure vindicated a few brave hedge fund managers who had spotted the sub-prime crash coming, positioned themselves deftly, and made huge returns from it. These managers recount the challenges of deploying funds against the long-only herd, outline expectations for worse market disruptions ahead and analyze the public policy responses that threaten the potential returns of many investors now seeking to profit from distress. Peter Lee reports.

"They danced with some good-looking girls but they danced with some ugly ones as well"

"This is the leather room, which we reserve for our more intimate client relationships"

The credit crunch fundamentally altered the cash bond/CDS dynamic. As more and more managers are forced to turn to CDS to hedge their bond portfolios, will we ever see a return to highly liquid cash markets? Jethro Wookey reports.

If you cast doubt on the future of the Dubai real estate market, those with stakes invariably tell you that they have heard it all before. "Every year they tell me something will go wrong, and every year I see Dubai growing stronger," Adel Al-Shirawi, CFO of Dubai home financier Tamweel, told Euromoney earlier this year.

If hedge funds have increased systemic risk, we need to find out by how much and whether the benefits outweigh the risks, says Andrew Lo and Amir Khandani’s paper on quants (see story on page 42). But registration is not the way forward. The authors back up proposals made by other academics that instead a monitoring board would make a good starting point. "By establishing a dedicated and experienced team of forensic accountants, lawyers, and financial engineers to monitor various aspects of systemic risk in the financial system, and by studying every financial blow-up and developing guidelines for improving our methods and models a capital markets safety board may be a more direct way to deal with the systemic risks of the hedge fund industry," concludes the paper. "A great idea," comments one manager, "but the banks will never allow it."

According to Olivier LeMarois, CEO of Riskdata, equity market neutral funds’ reliance on one risk model for both trading and risk management exacerbated their losses in the summer.

The credit crisis has forced US enhanced cash funds, which seek to better money market returns by taking on slightly higher levels of risk than regular money market funds, to fight to secure their reputation.

The Hedge Fund Working Group, a UK group of managers headed by Andrew Large, has released its extensive guide to best practices for hedge funds that it hopes will encourage a global standard.

Leading specialist emerging market fund manager Ashmore Investment Management believes that local-currency and high-yield corporate debt could be the prime way for investors to take advantage of US dollar weakness and sub-prime mortgage concerns in the coming year.

The Cairo and Alexandria Stock Exchange (Case) has launched a new exchange for small and medium-sized enterprises. Case has established several new trading capabilities in the past two years, such as margin trading, online trading and short-selling. Case also plans to launch a derivatives exchange late next year. "We would like to see our derivatives market competing with other emerging markets," says Maged Shawky Sourial, chairman of Case since 2005.

Kazakhstan looks set to be the CIS region’s biggest victim of the fallout from the problems in the US sub-prime mortgage market, with the country’s banks seen as the most vulnerable in the Commonwealth of Independent States to any reduction in global liquidity. In recent weeks, the country has been hit by ratings downgrades, whipsawing bond and equity prices, and pressure on the currency. Furthermore, the track record of the banking regulators – previously regarded as the best in the region – is now beginning to look tarnished.

Monte Kristo Capital of the UK is the latest foreign entrant to the burgeoning Georgian banking market, having bought a 70% stake in Tetri Bank for an undisclosed sum. Following the deal, Tetri Bank, the country’s 16th biggest bank by assets, will be renamed First British Bank. Monte Kristo’s move is the latest in a series of acquisitions by foreign banking groups in recent months. France’s Société Générale, Russia’s VTB and Ukraine’s Privatbank have all bought banks in the Caucasian republic.

New-issue activity in the securitization markets of Russia and the CIS has dried up in recent months but VTB Bank Europe is clearly banking on a recovery. The London-based investment banking arm of VTB, Russia’s second-largest bank, has added Eke Neumann as head of retail securitization and Daniel Stadnik as head of commercial securitization. Neumann joins from DZ Bank, and Stadnik was previously at ABN Amro. Both new hires will report to Alex Medlock, head of securitization.

As Euromoney went to press, Bank Saint Petersburg was set to provide an important test of investor sentiment towards the Russian banking sector, with the bank’s initial public offering sure to be closely watched as an indicator of investor appetite for Russian banking assets in the wake of the fallout from the problems in the US sub-prime mortgage market. Joint bookrunners Deutsche Bank and Renaissance Capital set the price range for the IPO at $4.35 to $5.65 per share and $13.05 to $16.95 per global depositary receipt. Post-IPO the bank should have a market capitalization of $1.2 billion to $1.6 billion. As of July, BSPB was the 27th biggest Russian bank by assets

In October, Royal Bank of Canada (RBC) added to its set-up in the Caribbean. The number one Canadian bank announced a $2.2 billion acquisition of RBTT (Royal Bank of Trinidad and Tobago) Financial Group. RBTT had been in discussions with potential buyers since April and suitors included Canadian rivals Scotiabank and CIBC, through its FirstCaribbean unit. RBC is paying for the group with 60% cash in hand and a further 40% in RBC shares.

One of Latin America’s biggest challenges is financing its massive infrastructure needs, and nowhere is this more pressing than in Mexico, especially in toll road development.

Tranches on the LCDX index debuted in mid-October, receiving a warm reception despite the cautious atmosphere in both the cash and synthetic leveraged loan markets. Dealers shrugged off comparisons to the doomed tranches on the ABX index (TABX) and are quietly confident that LCDX tranches will prove to have merit. However, given the still-fragile state of the credit markets, they are not expecting the new product to take off overnight.

180,600,000,000 the dollar amount of equity capital raised in Bric countries (Brazil, Russia, India and China) so far this year. The total is up 137% on the same period in 2006 thanks to record volumes across all Bric markets.

A new study confirms the substantial benefits of a depositary receipt programme.

For much of the past couple of years, ECM bankers have had to sit on the sidelines as IPO mandates slipped through their fingers as companies opted instead for sales to private equity buyers. The current weakness in the credit markets, which is making life difficult for leveraged buyouts, has, however, turned the tables. In October, Cadbury Schweppes announced that it planned to spin off its US beverage unit, the maker of Dr Pepper and 7 UP, after a seven-month search for a buyer was derailed by the credit market crunch.

Spate of high-profile delistings by blue-chip European companies boosts Pink Sheets’ premium market segment.

Despite the help of a couple of jumbo multi-billion euro deals by Fortis and UBS, the European convertibles market appears to be shrinking.

In front of a US Senate committee, the agencies are indignant while investors claim they are focusing on the wrong signals.

Markit and Creditex held the first-ever LCDS credit event auction on October 23. The duo were the official administrators for the auction of US video store chain Movie Gallery’s defaulted contracts. Establishing a cash settlement price via an auction avoids difficulties arising from the fact that many contract holders might not have a position in the loans underlying CDS contracts.

The reaction to JPMorgan, Bank of America and Citi’s proposals to launch a super-SIV called M-LEC to solve the liquidity crisis in the ABCP sector has been an equal mix of enthusiasm and cynicism.

The NFA is seeking to up the ante in its fight against the bucket shops that tarnish the US retail FX market.

The US dollar’s long-term weakness looks set to persist as the currency seems to fall to a fresh historical low against the euro on a weekly basis. The latest G7 meeting, held over the weekend of October 20-21, did nothing to provide any support. In the immediate aftermath of the meeting, the dollar fell to 1.4349 against the euro before bouncing. The reasons for the recovery, at this stage, are not clear.

India’s booming stock market was given a thorough hiding on October 17. Rumours had been swirling for days that the country’s market regulator, the Securities and Exchange Board of India (Sebi), was planning to ban the use of participatory notes (PNs), which allow any foreign institution to invest directly in India-listed stocks without having to be registered in the country as a foreign institution.

While Hong Kong, Shanghai, Singapore and others enjoy unprecedented levels of activity, and London and New York poach more Asian business, the Tokyo Stock Exchange is struggling to recapture the success of its early 1990s’ heyday. Is it too late for Tokyo? Lawrence White reports.

Scotiabank has long had an interest in Latin America, with assets throughout the Caribbean and Mexico. Recently Canada’s number two bank has stepped up its presence by buying a bank in Chile, expanding in the Caribbean and announcing plans to open 100 branches in Mexico. Along with this push, the CEO announced the appointment of Anatol von Hahn, who will take over as head of Latin America in January. Chloe Hayward talks to Peter Cardinal, the head of Latin America at Scotiabank, about its plans for the future before he bows out.

Economic growth, stability, market reform and liberalization have led to a Latin American investors into Chile, Colombia and Peru. Leticia Lozano reports.

Hong Kong’s notoriously volatile investors are again set firm in headless-chicken mode (the bullish version). Ever since China’s foreign securities regulator, Safe, announced in August that mainland investors would "soon" be allowed to begin throwing their hard-earned savings at Hong Kong-listed stocks, the local Hang Seng index has been on a superhuman tear.

After the build-up of its sales and distribution teams under Keenan Altunis and Steve Turner, UniCredit has switched its attention to its trading force. The bank has appointed Ben Welsh, the former head of FX, global markets and US rates at HSBC New York, as its co-head of global FICC. Shortly after he started, it was announced that Welsh had persuaded the well-regarded Dan O’Sullivan, who was head of FX trading North America at HSBC, to join him. The pair, who also worked together at Goldman Sachs, will be based in London.

Saybrook’s Tax-Exempt Opportunity Funds are making money by investing in distressed and defaulted municipal bonds. CIO Jon Schotz talks to Helen Avery about the growth of opportunities in the sector.

Icap’s announcement on October that it was buying Traiana, a held company that specializes in automated post-trade processing services, triggered some talk that the broker was looking to challenge CLS, the regulator-sponsored settlement utility. Not surprisingly, Icap was swift to play this down.

The Mexican stock exchange, the Bolsa Mexicana de Valores, has announced plans to go public before the end of the year as it attempts to lead by example in the poorly performing Mexican IPO market.

In October Venezuela’s president, Hugo Chávez, signed a number of new economic cooperation agreements in Havana with Raul Castro, the island’s temporary leader, in a move to reaffirm the countries’ anti-US alliance and strengthen their bilateral ties.

The expansion of the Panama Canal is set to draw in banks from far and wide because of the increased investment opportunities that the programme will have on all economic sectors in the country, according to bankers and analysts in the region.

Sub-prime slime and the credit crunch have diverted attention from global imbalances. However, any dollar rout would be ugly. Neglect is no substitute for policy.

Only Uruguay and Bolivia have active corporate bond markets.

Many economic indicators in Turkey remain strongly positive despite internal political crises and flashpoints on the country’s borders. David Judson reports.

Market participants will live to regret not getting their own houses in order.

Proposed US legislation shows that patience has snapped with the markets.

Liquidity facilities have come out of the shadows, and many are surprised by what they really look like.

The Euromoney debt trading poll is in its second year, and quite a year it has been. Twelve months ago credit houses were hosing their customers with liquidity in a market awash with happy traders. The action had moved out of the cash market and into a thriving derivatives sector. Structured products and indices were flourishing. "You are no longer a bond trader," Henrik Raber, head of credit trading at UBS, was saying to his staff. "You are a trader in multiple asset classes."

Kaupthing Bank and the state-owned Export-Import Bank of Korea both launched Mexican peso issues in October. The Export-Import bank issued a Ps1 billion ($92 million) 10-year bond. The Icelandic bank launched a Ps2.3 billion bond transaction on October 10 to become the first Nordic bank to do a public issue in Mexico. The deal was led by BBVA Bancomer and Lehman Brothers and aimed at diversifying the bank’s funding sources.

Global liquidity is set to keep contracting and inflation will keep on increasing despite a growth slowdown. There is a serious risk of global recession in 2008.

That a third of hedge fund assets are invested in multi-strategy funds has implications for the wider market when funds need to sell off their most liquid assets.

Leaving to one side the continuing debate about the causes of the credit crunch and how best to cure the dislocation in money markets, the relative inadequacies of European capital markets, especially in fixed income, are undisputed.

Interest in emerging market high-yield debt is at an all-time high.

Research released in mid-October came to the far-from-shocking conclusion that two in five of workers in the UK’s financial services sector are stressed.

Devising le menu is something that the French are famous for turning into an art form. Société Générale certainly did not disappoint for the France vs England semi-final of the rugby World Cup.

France is looking to contest England’s supremacy in the financial world by challenging London’s claim to be Europe’s financial centre.

How do you price liquidity risk?

We don’t usually like to blow our own trumpet at Euromoney, but our Regional finance and investment conference for south east Europe, now in its seventh year and still going strong, is without doubt one of the landmark shindigs in the region. And not just for the sun-drenched charms of the ridiculously picturesque fishing village of Cavtat in Croatia.

They are serious events but the IMF-World Bank meetings always leave plenty of room for frivolities. Investment banks compete to lay on the most lavish parties. Huge amounts are spent to attract the great and the good.

The liquidity crunch of August and September highlighted the intricate relationship between prime brokers and their hedge fund clients. Some managers had their livelihoods threatened by increased margin requirements, while asset valuations were brought into question. Do the two sides of the relationship know each other at all? Helen Avery reports.

The contrast with US regulation could hardly be more stark, writes Neil Wilson.

TradeWeb sells minority stake to nine banks, as LiquidityHub gets going.

MTS will probably unveil the mechanics behind the new trading structure for its European government bond trading platform before the year-end. A brief statement last month put to rest months of speculation on whether the MTS Supervisory Board would allow non-banking participants to trade on the platform, which up to now has been the preserve of primary dealers. The verdict was positive but surprised many as the decision has been mired in controversy for some time since it was first mooted over a year ago. In fact, such was the level of discord among bankers that few believed the platform would be able to approve a radical move and still retain its market position.

Mifid came into effect on November 1 but the market had already been benefiting from the innovation it encourages. Peter Koh reports.

The CEO suites of Wall Street have their first vacancy sign since the world learnt what sub-prime means.

The news that spot rouble trades have taken place electronically on EBS and LavaFX between Russian and foreign banks has been taken by some observers as proof that the currency has taken a significant step towards full convertibility. However, the deals mask the fact that Russia’s settlement system is still a real impediment to the rouble’s wider acceptance and is harming the government’s hopes that it will one day be accepted as a reserve currency.

The collapse of structured finance issuance has significant implications for the financing of assets such as mortgage loans but has also dramatically changed the nature of the traditional investment-grade bond business in America. Alex Chambers reports.

The high quality of its mortgage assets might not be enough to save Northern Rock’s Granite master trust.

In some parts of Latin America foreign banks continue to head the push for consolidation, but locals are beginning to cross borders. Chloe Hayward reports.

In a move that highlights the broadening appeal of products that offer convenient access to Russia, Lyxor Asset Management has launched the first UK-listed exchange traded fund to cover the Russian equity market. The Lyxor ETF Russia, which is based on the Dow Jones Rusindex Titans 10 index covering the 10 biggest Russian companies by market capitalization, is being offered alongside a family of new ETFs covering all four of the big emerging market economies of Brazil, Russia, India and China. ETFs are index-tracking funds that track the performance of a given index and combine the simplicity and liquidity of shares with the diversification benefits of a traditional collective investment scheme. Since Lyxor ETFs are traded on multiple broker-dealer platforms on leading exchanges, they are designed to offer investors maximum liquidity while levying low annual management fees in the 0.15% to 0.85% range.

RBC Capital Markets has made Mike MacBain co-head of its global debt markets business. MacBain, who will be based in New York, will focus on financial products and commodities, alongside Richard Pilosof. MacBain was most recently president of TD Securities and global head of DCM and cash equities.

Deutsche Bank has appointed Marzio Keiling and Mark Graham as co-heads of the European securitized products group (SPG). Keiling and Graham will report jointly to Erik Falk and Frank Byrne, co-heads of global SPG. The two are responsible for the origination and distribution of securitization products and services in Europe. Graham was a senior member of the Morgan Stanley real estate securitization team behind the Eloc programme. At Deutsche, he previously ran the European special situations group within SPG, focusing on illiquid securitized financings and whole-business securitization. Keiling was head of institutional client coverage for Europe. They replace Jeff Stolz, who joined Goldman Sachs in mid-August.

Maha Al Ghunaim’s rarity factor as a female chief executive in Middle Eastern finance makes her a celebrity. Under her leadership, Global Investment House has become one of the region’s largest investment companies. Here she talks to Euromoney about the secrets of her own and her company’s success.

The economies of China and the Middle East are expanding at breakneck speed. Over the past 18 months, they have woken up to the importance of investing in each other’s growth. But as Chinese and Middle East investors still find it difficult to cooperate, what can be done to help? Dominic O’Neill reports.

Shared service centres or payment factories? Corporates have to choose which system works best for them. There is no one size that fits all, while good working partnerships with banks are as important as ever.

What was hailed as a great success for the credit derivatives market, the tackling of the unconfirmed transaction backlog, has turned out to be far from a mission accomplished.

"You’re fired" is the new "You’re free".

The summer’s financial crisis has helped materialize in the markets a distinction between covered bonds and structured covered bonds that had been a matter of debate for some time. Philip Moore reports.