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November 2013

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  • Autumn is a wistful season: the balmy summer days redolent of hope are behind us. We wince at the prospect of grey winter and another year drawing to its close. The autumn is often a tricky and tumultuous period for markets. Some of us still remember the 1987 equity market crash. This occurred on October 19 when the Dow lost over 500 points and 22% of its value evaporated.
  • And talking of Goldman, I have to admit to being surprised at how mediocre its third-quarter earnings were. In mid-October, the firm announced that revenue in fixed income, currency and commodities fell some 45% to $1.25 billion. This was a bigger drop than that experienced by rival flow houses. Goldman’s third-quarter net income was actually flat at $1.4 billion because the firm cut remuneration costs. Revenues fell to $6.7 billion from $8.4 billion a year earlier.
  • Is it time for bank CEOs to put their IPO money where their mouth is?
  • Euromoney’s business cards open many doors in the financial community. But we never realized the full extent of their powers until they nearly shut down one of the world’s busiest airport terminals.
  • The telecoms company’s $130 billion acquisition deal has both M&A and debt bankers salivating at the prospects for more jumbo takeovers. Are they getting ahead of themselves?
  • "You cannot call that many people on the streets for just one park"
  • Verizon’s $49 billion bond deal rewrote the corporate finance record books. Banks say it opens up new possibilities in corporate finance. Investors who bought the bonds will hope so – they can’t believe they got them so cheap. Is Verizon’s real legacy a new type of bond deal: one where price doesn’t matter? And what does that mean for the role of bookrunners?
  • October also saw a changing of the guard at Buckingham Palace. By which I mean, after more than 30 years, Paul Tucker, deputy governor of the Bank of England, left the Bank for a teaching post at Harvard. Tucker, who was widely viewed as the likely successor to the dour Lord King, lost out to Bank of Canada governor Mark Carney.
  • "The price was absolutely ludicrous and people were openly asking if the old man had finally lost it"
  • Much of Euromoney’s editorial desk is rather obsessed with the US TV drama Homeland. The ‘is or isn’t he a terrorist’ twists surrounding former US marine Nick Brody have kept us all hooked, despite the increasingly far-fetched storylines the writers of the series have offered up.
  • Recommendation 10 of the Financial Stability Board’s Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos instructs local authorities to "evaluate, with a view to mitigating systemic risks, the costs and benefits of proposals to introduce CCPs [central counterparties] in their inter-dealer repo markets where CCPs do not exist. Where CCPs exist, authorities should consider the pros and cons of broadening participation."
  • Just as international institutional investors bought into the Spanish recovery story this summer, Sabadell caught the moment with a €1.4 billion equity deal to shore up its balance sheet and provide for future loan growth. Two Latin American billionaire cornerstone investors ensured the deal’s success and drew other investors’ attention away from the Spanish banking sector’s problems and towards its prospects.
  • Global regulators are pumping out new rules to address potential systemic risk within the shadow banking system, with money-market funds and repo in the firing line. While governments and central banks continue to offer underhand guarantees to non-bank credit intermediation, however, the moral hazard associated with the shadow sector is unlikely to go away.
  • Bovespa is to abandon its volatility-driven index methodology. Its replacement should better represent the Brazilian market, but its relevance is being challenged by bespoke indices created by third parties, especially as ETFs grow in popularity.
  • Since 2002, Ali Babacan has earned Turkey’s government the trust of markets. But what can the ruling party’s economy chief say to reassure investors now, after some government members’ attacks on the local financial sector? The answers are not all encouraging.
  • Argentine president Cristina Kirchner’s growing unpopularity and health problems suggest she will not seek a third term of office in 2015. This raises uncertainties about economic reform. Why are Argentina’s bankers so optimistic?
  • Norges Bank ties up with Axa for real estate loans; AUM at global sovereign wealth funds top $5 trillion
  • Rwanda’s ranking has improved significantly between March and September 2013 in Euromoney’s Country Risk Survey, with the country climbing six places to reach 124th in the global table. Although still included in ECR Tier 5 – meaning investors should consider the country a high-risk investment destination – Rwanda’s scores in the survey categories for Monetary Policy/Currency Stability and Access to Capital Markets have both risen in the last six months, suggesting that economists believe the country is becoming more attractive to investors while enjoying greater macroeconomic stability than in previous years. Both scores appear to have been influenced by the successful launch of the country’s debut Eurobond in April.
  • Hong Kong’s exchange, starved of big IPOs, is adopting a more conciliatory tone on the landmark potential listing.
  • AS Watson under strategic review; IPO would be Asia’s biggest in three years
  • Domestic funding only small-ticket, short-term; Sovereign’s status a hindrance
  • Tinkoff has sold a clever story of another kind of Russian bank.
  • Fitch upgrade a propitious sign despite default history; Oil-field developments and hydro-power prospects
  • Kenya has waited nearly seven years to get its debut Eurobond issue off the ground, so why not wait a few more weeks?
  • Foreign-currency availability a constraint; Transport costs weigh heavily
  • Forward-thinking branding experts are already adjusting their plans for 2014 and beyond: Yahoo recently unveiled a new logo designed to symbolize its fresh start under CEO Marissa Mayer; and the Republic of Iran is reportedly considering a change to the slogan ‘Death to America’ that has been in place since the revolution in 1979.
  • Emerging market lender's regional CEO targets Nigeria, Angola; Sets hopes on electronic channels
  • Post-crisis, you can’t just run a bank in the interests of shareholders.
  • Banks look to mutualize costs; Accenture builds new utility
  • Swap agreement reflects growing trade; London has competitive advantage
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