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November 2014

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  • Recognising wealth management industry leaders in client services, products, and back office technology.
  • Wealth managers must innovate or else stand to lose high net-worth clients. New players with technology at their core are shaking up the private banking industry.
  • Blackstone and Pimco are talking a good fight when it comes to possible credit market dislocation. The widening in high-yield debt spreads that accompanied a bout of panic in global equity markets in mid October prompted displays of bravado from the investment firms.
  • When Ukrainian state energy company Naftogaz paid $1.6 billion to redeem a bond maturing on October 1, one Twitter commentator accused the country’s policymakers of “defaulting on its citizens”.
  • High-frequency trading is not confined to Europe and north America. Some Asia-Pacific countries are further along in embracing the strategy than others.
  • Investment is easy when you can immanentize the eschaton. But even radioactive assets such as uranium can be worth running a Geiger counter over.
  • “Why wouldn’t I buy market share when it is so cheap?”
  • “Phones 4U serves as a timely reminder that even in low default environments, fundamentals do matter”
  • Big bankers saying absolutely nothing at all with utter conviction often take centre stage in the theatre of financial politics that is the IMF annual meeting. Most financiers, therefore, tend to snub the official proceedings in favour of meeting clients.
  • Talking about the paranormal might get you some interesting looks in your next meeting at a bank. But in tech, talk of angels and unicorns is par for the course.
  • Private equity professionals have always prided themselves on their business acumen. It takes real smarts to buy an underperforming company and turn it around (or, ahem, just flip it in a rising market).
  • Last month’s volatility provided a worrying reminder of how illiquid the bond markets have become, how piecemeal has been the response of traders, investors and issuers and how concerned regulators now are
  • The feelgood factor from the election of Narendra Modi as prime minister does not seem to be translating into better fees for IPO bankers – yet.
  • The financial sector remains central to the eurozone’s economic woes. Promises of ECB support only prolong the problem.
  • Euromoney Country Risk
    Peru’s investor safety has come under close scrutiny from economists over the past year, forcing it down to 45th in the global rankings. Although its risk rating remains far better than it was 10 or 15 years ago, several of the country’s economic and political risk indicators have slipped recently, mostly in response to falling minerals prices, weakening production and investment in the mining sector. This, in conjunction with lower state capital spending has pushed GDP growth down to around half the 6%-plus average recorded for the past decade. The resignation of finance minister Luis Miguel Castilla and impending sub-national elections are unsettling the political environment, and there are question marks hanging over corruption in Peru and its institutional strengths – two of the political risk assessment factors scoring fewer than half the points available. Yet the sovereign’s prospects remain favourable, with orthodox policies and large infrastructure projects continuing, including a gas pipeline, new copper and gold mines scheduled to start production over the next few years, and expansion of the Lima metro railway system.
  • Albert Essien has brought much-needed calm to a bank that, just a few months ago, was in crisis. Ecobank’s African network remains intact. It now has two powerful, strategic shareholders. But can the bank avoid repeating the mistakes of the past?
  • The country’s banks will not be able to shoulder the debt burden of its planned infrastructure programme. But palatable alternatives that don’t involve government guarantees aren’t yet ready, so for the foreseeable future, debt refinancing of projects is confined to after construction.
  • Politicians have promised that reform is on the way. International investors are apparently ready to step in if the conflict calms. But will it be in time to rescue an economy bedevilled by fighting, corruption and currency shortages? Banks are struggling to survive, hamstrung by lack of funding and capital. On the eve of parliamentary elections, Euromoney visited Kiev to canvass the views of policymakers, bankers and international sponsors. Is there light at the end of the tunnel?
  • With volatility returning to bond markets, investors are fretting once more about illiquidity. Policymakers too worry that it might turn a bond market meltdown systemic. A new project for a shared messaging language to improve the flow of information connecting holders of inventory sounds unglamorous next to all-to-all trading platforms and central limit order books. But the rush of support from both buy-side and sell-side suggests Project Neptune could make a vital contribution.
  • Stock exchange consolidation is back in focus in emerging Europe after the appointment of a new head for the Warsaw bourse. Further tie-ups across the region could yet prove politically problematic.
  • Euromoney Country Risk
    Mexico has continued to find favour among risk experts in recent years and the country’s image as an investment destination is much improved, particularly since its risk rating surpassed Brazil’s last year. On a score of 62 points and lying 37th on Euromoney’s global risk rankings, the sovereign is closing in on tier-2 status, pointing to a future upgrade of its triple-B credit rating. At the heart of Mexico’s improving risk profile is a more stable and consensus-seeking political approach that is encouraging risk experts to raise their scores for government stability, as well as the regulatory and policymaking environment under the presidency of Enrique Peña Nieta, who has been working congenially with opposition parties to pass legislation since 2012. All five of Mexico’s economic risk indicators have enjoyed a rising score trend on the back of an expanding middle class driving a consumer boom, as well as improvements in educational standards and structural reforms boosting cost efficiencies. Removing entry barriers to private investment in oil, gas, electricity and telecoms sectors has bolstered Mexico’s global competitiveness, alongside the benefits of its highly productive maquiladora manufacturing base enjoying duty free access to the US market and solid economic growth.
  • Euromoney Country Risk
    Paraguay’s claims for an investment-grade rating have been bolstered by a five-place jump in Euromoney’s risk survey this year, taking the sovereign to 80th in the global rankings. Economists are more confident of prospects since the election as president last year of the right-wing Colorado Party candidate Horacio Cartes, a reform-minded businessman, and the emergence of a more dynamic, investment-led economy. Cartes is enduring considerable opposition to the workforce dislocation that comes from reforms. The economy is vulnerable, moreover, to a reliance on cash crops – hence the still comparatively low risk score. Yet having long suffered from corruption, poor transparency, weak institutional underpinnings and inadequate policymaking, the shift in political ethos back to the right following six years of left-wing government has spawned optimism the country will shake off its economic and social challenges. A focus on transport and energy projects has seen Paraguay’s score for its hard infrastructure improve, while low inflation and debt, a current account close to balance and solid reserves epitomise the rewards of a policy approach shining in the shadow of Brazil’s failings.
  • Euromoney Country Risk
    One of the most striking performers in Euromoney’s survey, Uruguay has seen its risk score increase by more than any other Latin American sovereign over three years, taking the sovereign to 48th out of 189 countries in the global rankings. Much of that is down to politics, with all six indicators, ranging from non-payment/non-repatriation risk, to policymaking and government stability, on improved score trends. The predominantly agricultural economy faces risks from weakened FDI from Argentina and interrupted capital flows resulting from US liquidity withdrawal. The country’s road network and port facilities remain challenging, too, hindering logistics and preventing its infrastructure scores from rising much above five out of 10. But the economy is still performing admirably, growing by 3.7% year on year during the second quarter after a 4.4% expansion last year. Inflation, likely to exceed 8% in 2014, is a little high for comfort. However, the fiscal and current account deficits (scratching up 3% and 5% of GDP respectively this year) should improve in 2015 in response to a tourism drive and the start-up of export-oriented production from the Montes del Plata industrial complex, a huge wood-pulp investment in Punta Pereira, Colonia.
  • Euromoney Country Risk
    The time when international fund managers saw Latin America as a homogenous investment call is gone. The days of differentiation are here. And as many of the region’s leading countries look to make the difficult transition from developing to developed economies, their finance ministers are fully aware of the need to create, and tell, their individual investment cases.
  • Euromoney Country Risk
    The darling of Latin America’s bond issuers for many years, Chile remains by far the safest sovereign in the region. Commanding a first-rate score of 77 points out of 100, the business-friendly nation is comparable with safe havens such as New Zealand, Hong Kong and even the US. However, Chile’s macroeconomic scores have slipped since last year. Economic headwinds include reduced demand from China weighing on copper prices – its principal export – and on the peso’s exchange rate, boosting inflation. Investment is also contracting slightly. Yet although economic activity has slowed, 3% growth is still expected for 2014, the current account deficit is narrowing and FX reserves exceed five months of import coverage. Chile’s survey score for government finances remains rock solid and less risky than any of its other economic sub-factors. A strong starting point and a manageable debt profile allow for a small fiscal deficit to arise in 2014/15 without derailing sovereign creditworthiness. Political risk is lower too than any other country in the region, with investors facing limited threats from non-repayment, opaque fiscal accounting or weak institutions.
  • Euromoney Country Risk
    Colombia had a bumpy path in the previous decade, reflecting the costs and uncertainties of its civil conflict with leftist rebels. Yet the sovereign’s score has lately improved to 58 points and to within a hair’s breadth of Brazil, ranking 42nd on ECR’s global scoreboard. The re-election of president Juan Manuel Santos provides a mandate to deliver peace with the Farc rebels. The sovereign’s brighter outlook rests too on a rising score for its economic outlook, which is higher than Brazil’s, as are its survey scores for monetary policy/currency stability and bank stability. A strong policymaking environment is responsible, with monetary policy enhanced by inflation-targeting and a flexible exchange rate; financial stability benefiting from improved supervision and regulation; and fiscal credibility underpinned by structural sustainability with a fiscal balance rule and tax reform containing the deficit. Admittedly Colombia is as vulnerable to negative shocks as any country and plagued by a depressingly low score for corruption.
  • There’s no doubt mobile money is Africa’s future, but who is best equipped to benefit most: the telcos with their networks, or the banks with their products and service? And why are they fighting when they could be cooperating?
  • Investor demand tops $11 billion; Oil price, rouble falls raise devaluation fears.
  • The short- and medium-term outlooks for Argentina are increasingly diverging, says the Institute of International Finance.