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September 2005

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  • News of an election is already perking up the Germany economy. If a centre-right coalition wins, as seems likely, expect yet more improvement
  • Sabic's upcoming $267 million Shariah-compliant domestic bond should set the pattern for issuance in a Saudi market that has seen little corporate paper up to now.
  • Several leading private Saudi companies are preparing to go public by launching IPOs following the successful flotation of dairy company Al Marai in July.
  • Euromoney does not seek to encourage improper behaviour but we have to share news of one of the hottest websites sweeping the City of London.
  • The ability to lend is closely tied to capital markets business, writes Laurence Neville
  • From quiet beginnings as one of the world's smallest states, Qatar has emerged as a regional player as a result of shrewd investment in natural gas and sound economic management. Although oil and gas revenues still account for about 60% of GDP, the non-oil sector grew by 10.8% last year, and the financial sector is performing particularly strongly.
  • Alpha-driven US volume growth starts to outpace that in UK
  • CFOs are in danger of becoming slaves of the leveraging cycle. It might be in their best interests to resist bankers' blandishments
  • %3CBODY%3E%3Cul%3E%0D%0A%09%09%3Cli%3E%0D%0A%09%09%09%3Cstrong%3EChina%20pushes%20into%20North%20America%20%u2013%20again%3C/strong%3E%0D%0A%09%09%3C/li%3E%0D%0A%09%3C/ul%3E%0D%0A%09%3Cp%3E%0D%0A%20%20Not%20to%20be%20put%20off%20by%20Chinese%20oil%20major%20CNOOC%27s%20failure%20to%20seize%20control%20of%20US%20oil%20company%20Unocal%2C%20China%20National%20Petroleum%20Corporation%2C%20China%27s%20biggest%20state-owned%20oil%20company%2C%20paid%20%244.18%20billion%20to%20acquire%20Canadian%20oil%20company%20PetroKazakhstan%2C%20a%2020%25%20premium%20to%20where%20the%20stock%20was%20trading.%20The%20company%27s%20shares%20are%20traded%20in%20New%20York%20and%20its%20oil%20fields%20are%20in%20the%20north%20of%20Kazakhstan.%0D%0A%3C/p%3E%0D%0A%09%3Cp%3E%0D%0A%20%20The%20deal%20has%20to%20be%20approved%20by%20the%20Kazakh%20government%2C%20and%20could%20be%20scuppered%20by%20a%20counter-bid.%20However%2C%20if%20it%20is%20successfully%20completed%2C%20it%20will%20be%20the%20largest%20overseas%20acquisition%20to%20date%20by%20a%20Chinese%20company.%20CNOOC%20withdrew%20its%20%2418.5%20billion%20offer%20for%20Unocal%20at%20the%20beginning%20of%20August%20after%20strong%20opposition%20from%20the%20US%20government.%0D%0A%3C/p%3E%0D%0A%09%3Cp%3E%0D%0A%20%20%A0%0D%0A%3C/p%3E%0D%0A%09%3Cul%3E%0D%0A%09%09%3Cli%3E%0D%0A%09%09%09%3Cstrong%3ETakeover%20Panel%27s%20new%20director%3C/strong%3E%0D%0A%09%09%3C/li%3E%0D%0A%09%3C/ul%3E%0D%0A%09%3Cp%3E%0D%0A%20%20Mark%20Warham%2C%20head%20of%20UK%20mergers%20and%20acquisitions%20at%20Morgan%20Stanley%2C%20has%20been%20chosen%20to%20be%20the%20next%20director%20of%20the%20Takeover%20Panel%2C%20the%20body%20that%20regulates%20M%26A%20activity%20in%20the%20UK.%0D%0A%3C/p%3E%0D%0A%09%3Cp%3E%0D%0A%20%20He%20will%20take%20a%20two-year%20secondment%20from%20Morgan%20Stanley%20to%20take%20up%20the%20new%20role%20at%20the%20end%20of%20November.%20He%20is%20the%20first%20Morgan%20Stanley%20banker%20to%20hold%20the%20post%2C%20replacing%20Richard%20Murley%20of%20Goldman%20Sachs.%0D%0A%3C/p%3E%0D%0A%09%3Cp%3E%0D%0A%20%20%A0%0D%0A%3C/p%3E%0D%0A%09%3Cul%3E%0D%0A%09%09%3Cli%3E%0D%0A%09%09%09%3Cstrong%3EGMAC%20sells%2060%25%20of%20its%20mortgages%3C/strong%3E%0D%0A%09%09%3C/li%3E%0D%0A%09%3C/ul%3E%0D%0A%09%3Cp%3E%0D%0A%20%20GMAC%2C%20the%20finance%20subsidiary%20of%20General%20Motors%2C%20has%20announced%20that%20it%20will%20sell%2060%25%20of%20its%20commercial%20mortgage%20business%2C%20GMAC%20Commercial%20Holding%20Corporation%2C%20to%20private-equity%20groups%20KKR%2C%20Five%20Mile%20Capital%20Partners%20and%20Goldman%20Sachs%20Capital%20Partners.%20GMACCH%20wants%20an%20independent%20credit%20rating%2C%20superior%20to%20that%20of%20its%20parent%2C%20to%20give%20it%20access%20to%20cheaper%20funding.%0D%0A%3C/p%3E%0D%0A%3C/BODY%3E%0D%0A
  • Would you credit it? European central banks looking for yield could soon start investing in credit, if market speculation is correct. Traditionally deeply conservative accounts that have never got into equities, they certainly face the same dilemma as other fixed-income investors. Yields on government and other AAA bonds are low and FX trading opportunities in Europe are limited these days, so credit is one of the few ways to generate positive returns. "They all own some gold, and they're earning very small returns on that," says a London-based credit analyst. A logical strategy would be to start looking at corporate bonds, bank capital, or even ABS – aided, no doubt, by helpful asset managers. Switzerland's Schweizerische Nationalbank has been investing part of its currency reserves in foreign equities and corporate bonds since June 2004, partly as a response to falling yields on 10-year Swiss Confederation bonds.
  • A recent survey by US law firm White and Case throws light on the overseas ambitions of China's larger companies. According to 80 Chinese business leaders, Asia is the most popular destination for overseas expansion, with more than 75% of companies looking there. That compares with 50% of Chinese companies looking at the US and 44% in Europe. Other regions of interest include eastern Europe. Latin America and Africa
  • Poised between stellar growth and a spectacular new collapse.
  • As tensions mount between Iran and the west over the Islamic state's nuclear ambitions, Tehran seems to be adopting an Ostpolitik, looking to China and India for political and energy ties. Opec's second-largest oil producer, which also has the world's second-biggest gas reserves, is wooing Asia's fast-growing and energy-hungry economies.
  • Six-month paper will help investors diversify Shariah-compliant portfolios
  • The regulator's guidelines for UK issuers could have far-reaching benefits for Europe's covered bond markets
  • S&P lists the top 100 companies in the PRC, the 10 largest accounting for 56% of total revenues
  • A new family of volatility indices that will track the Dax, Stoxx, and SMI equity indices will launch this September.
  • The latest target of the hedge fund activist is Time Warner
  • Banks offering real estate investment trusts
  • Fund management AXA Investment Managers has acquired Framlington Group from HSBC and Comerica for £174 million. The deal adds about £4 billion to AXA's £52 billion ($93.5 billion) in UK assets under management, and puts an end to rumours that AXA IM was considering scaling down its UK business.
  • Mifid promises to shake up EU financial markets in a way that will make Big Bang look like a gentle nudge. To have any hope of meeting the implementation deadline of April 2007 investment banks might need to set aside as much as $12 million each in their 2006 budgets. Peter Koh examines the fallout
  • There are signals from Korea that the government and regulators are taking an increasingly tough line with foreign participants in the local markets.
  • Far from bowing to international pressure, China's renminbi revaluation shows it is firmly in control of its own destiny
  • China's currency revaluation is more evolution than revolution but will have a number of knock-on effects
  • This month, Euromoney seeks to debunk two of the great myths of the international financial markets.
  • Public-sector banks in Europe have hit on a new and potentially profitable idea. They're trying to turn themselves into localised versions of the universal banking model. Who are some of the successful early movers? And we look at how Europe's cooperative banks are teaming up in debt capital markets.
  • Shorting scoop picked up
  • Persistent rumours are circulating in China that mainland authorities are likely to auction off a controlling interest in state-owned Guangdong Development Bank. Although unconfirmed, if the rumours prove accurate the GDB sale could presage the start of the true privatization of China's banking sector.
  • What are shareholders to do? Sit back and allow the board to make obvious mistakes and lose them money? Or use their rights as shareholders to make the board take notice and maybe make some money? Dysfunctional corporate management has had too easy a ride from institutional investors.
  • The growth of Iceland's banks – now centred on three main groups, profiled on the following pages – is one of the success stories of the past decade. The pace of development has led to concerns that such growth might be problematic and unsustainable. But the banks themselves are confident they are well placed for the future.
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