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September 1999

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  • ARAB 100: Methodology
  • Last month an earthquake brought Turkey's economy to a temporary standstill. It was already in the throes of a recession. Now it's time to rebuild, take advantage of extra sympathy from the IMF and international capital markets, and perhaps revitalize and reform the country in a way that wasn't politically possible before August 17. Metin Munir reports.
  • All you need to make good money in Brazil is a banking licence, a few retail outlets and faith that your biggest customer will keep up payments. You don't need to worry too much about credit analysis, operating efficiency or branding. Risk-management skills may help you make even more money, but if you don't have them, relax, you should still come out ahead. Michael Peterson reports
  • The dynamics of the US equities market are such that the old system cannot last much longer without fundamental change. Internet trading, the recent appearance of electronic commissions networks, forthcoming shorter settlement times and decimalization of stock quotes are all turning the screw. Antony Currie reports.
  • World Bank president James Wolfensohn believes the Bank is becoming a more caring place, closer to the client it's trying to serve. One advanced management course includes a taste of poverty: living a week in a slum or village. Social aspects must match financial and macro concerns, he tells James Smalhout
  • Ireland has transformed its economy in recent years, luring multinational companies by offering low taxes and well-educated labour. Its participation in European economic and monetary union has also been an attraction. The economy has boomed. Ireland is running budget surpluses and paying down its debt out of privatization proceeds. But being a small nation in euroland also brings difficulties, like wholly inappropriate interest rates. The Irish economic miracle could be heading for disaster -- extraordinary rates of growth could well lead on to rampant inflation. Nick Kochan reports
  • "Unreal city," wrote TS Eliot about London in his 1922 poem The Wasteland. If London induced feelings of bewilderment in Eliot one struggles to imagine what he might have thought about Washington DC. Between M Street in Georgetown and Independence Avenue on Capitol Hill are a couple of square miles into which many of the world's most rarefied institutions are concentrated. Here decisions are taken with resounding affects both across the US and the world. Yet the institutions are cocooned from the actualities over which they preside. There is an air of unreality about majestic Washington.
  • Forget about the euro. Forget about Y2K. These are no more than simple exercises in crisis management. E-commerce is what you should be preparing for: get the power of the internet around you. It is a power that is revolutionizing equities trading, a power likely to spread into core investment banking, in the process stripping away the inefficiencies previously integral to the financial system. Established market leaders already face an array of upstart competitors. There are new banks, new trading systems. Pricing and research are the main targets. All-comers now have access to liquidity. Huge amounts of research are freely available. Ma, Pa and the Belgian dentist can pile in there with the best of them. All under the cloak of anonymity. As a senior investment banker puts it: "This business used to be a pitched gun-battle. It could get messy but you knew who the opponents were. Not any more. It feels as if we're being shot at from every direction." Heed his words but don't delay in joining the fray. Three years will be too late. E-commerce is the power of the future. But it's here now. Antony Currie goes behind the wires to report from the new frontier.
  • The announcement from Jamil Mahuad, the president of Ecuador, that the country would not meet a coupon payment on its Brady bonds due at the end of August and that Ecuador intends to restructure its $13 billion of foreign debt, has dismayed banks and investors across the developed world.
  • Ten years after the Japanese stock market suffered its dramatic plunge, following a decade in which the Japanese economic model - with its corporate cross-shareholdings, scandal-ridden financial sector, and notorious convoy system which prevents well-managed companies from outperforming the bad - has been pilloried, Japanese equity markets are suddenly soaring.
  • Edited by Brian Caplen
  • Equities might enjoy all the glory at the moment but watch out for credit. This techno-laggard of the financial markets is set for an electronic great leap forward. If proof were needed - even the venerable CBOT has been showing interest. Antony Currie logs on.
  • Emerging market bond investors have up to now been extraordinarily ill-served by the index compilers. Only JP Morgan has made a concerted effort to provide a benchmark index to track emerging market debt, and its Emerging Market Bond Index (EMBI) and EMBI+ have as a result become the market standards.
  • The emerging markets are bouncing back - at least some of them are. While they do, the market is holding its breath as crisis-hit countries implement fiscal and monetary reforms. And while economists believe growth rates will improve, they are also resigned to sovereign defaults on foreign debt. Commentary by Rebecca Cicolecchia, research by Alexa Marx.
  • As the risk of a round of sovereign bond rescheduling looms, bondholders are dusting off the documentation to see what it says. By Christopher Stoakes
  • World Bank guarantees are a new way to help crisis-hit countries back into the private capital markets. But the Bank still wants to lend money. James Smalhout reports
  • Ever thought about dropping out of the City or Wall Street, and setting up your own little business, producing something real and tangible, perhaps even socially useful, and fostering it all the way to an IPO? If you're an investment banker, the answer is probably ... yes.
  • A handful of US congressmen have the IMF and World Bank at their mercy. When it comes to fresh capital or even the subject of US withdrawal, these are the guys who have the casting vote, with a mind to their own re-election. Some, like congressman Sonny Callahan, chairman of the House foreign operations committee, are more supportive than others, who'd prefer the IMF to be shut down and the third world left to market forces. The US Treasury and others with a less parochial view have to tread tortuous paths through Senate and House committees to push through the administration's foreign policy. The multilateral institutions have hung back from lobbying on Capitol Hill, but one day it could be a matter of survival. Brian Caplen reports.
  • Last month Front End had a little jest at the expense of one of the runners in the Chase Corporate Challenge fun run recently held in London's Battersea Park. One brave soul, you may recall, was spotted heading for the finishing line in a Yamaichi T-shirt.
  • Just suppose the World Bank's major shareholders decided they could use their money better elsewhere. Who would get the mandate to unwind or sell the bank's loan portfolio and how would it be done? One consultant, who prefers not to be named, suggested this as a hypothetical exercise, but colleagues feared it would be biting the hand that feeds them.
  • Richard Deitz didn't realize how provocative his new firm's name would be when he set it up in Moscow after the crisis. VR Group, the snipers say, stands for "vozrozhdenie or vozkrezenie Renaissance" - Russian for Renaissance revival or resurrected. Others claim it means virtual Renaissance.
  • John Reed's pronouncements that Citibank and Travelers Group are not merging fast enough may be too severe. The banking group's merged corporate and investment banking divisions are trying their best to show otherwise.
  • Management sages are rife but the office is an unenlightened place. Bob McGinnis, head of consumer asset-backed debt at Greenwich Capital in the US, complained to Euromoney that the French windows in his office didn't open and he couldn't practise his golf swing. When his comments found their way into print he was deluged by self-righteous colleagues and clients deploring his waste of valuable time contemplating leisure. For them the best office is one with no windows and the employees locked inside.
  • Philosophers have debated ethics for thousands of years and come up with more questions than answers. But now a super-smart Swiss asset manager has launched an ethical fund using a quantitative model to determine how naughty or nice companies are. Their efforts may not impress followers of Plato, Kant and Hume but will they persuade socially-concerned investors to part with their cash?
  • Deutsche Bank speaker Rolf Breuer recently boasted that his bank's value-at-risk (VAR) models were the only ones in Germany to be approved by the supervisors in Berlin.
  • Fringe protesters at the IMF/World Bank annual meetings are nothing new. But once they could be easily dismissed as Utopians or religious nutters not worth taking seriously. No longer.
  • Banks, like priests before them, have survived in part because of their monopoly of information and access. The internet is changing all that. As Steven Irvine argues, the data and choices that can be accessed with a mouse click must mean the death of banks as we know them.
  • James Wolfensohn is about to reach a milestone. His five-year term at the helm of the World Bank is coming to an end. US president Bill Clinton will shortly decide whether to reappoint him. James Smalhout examines the record.
  • The credibility of the UAE's stock market continues to be affected by the lack of a settlement, clearing and custody system - leaving it highly unregulated, devoid of transparency and subject to manipulation. But, Nigel Dudley reports, a regulatory system now seems on the way
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