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September 2013

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  • Singapore is shifting its growth model from population-driven to productivity-driven expansion, while maintaining its status as an innovative trade and financial-services hub to diversified export markets. Finance minister Tharman Shanmugaratnam has played an overarching role in the city-state’s economy and serves as the region’s statesman on the international stage.
  • Agustín Carstens is an orthodox central banker in an increasingly unorthodox world. Inheriting an impressive legacy, he has continued the Mexican central bank’s inflation-targeting work while keeping a pragmatic eye on growth. Growth potential is almost unrivalled and Carstens seems intent on ensuring that Mexico’s voice is heard in a new, multi-polar financial world.
  • Liquidity in the world’s bond markets has reached crisis point. Investors can no longer rely on banks to provide a crucial intermediary function in the secondary markets. It is time those fund managers started to think about providing that liquidity among themselves. If they do not, the consequences for the whole of the financial markets might be disastrous.
  • It has been an oddly eerie summer. Everybody seems to have fled to the beach, leaving a few journalists to eke out the occasional interesting story.
  • The revival of viable, well-funded private-label mortgage issuance is the holy grail of the US housing market. Indeed, as the Fed contemplates the tapering of its $40 billion-a-month agency MBS purchases, it is becoming an urgent necessity. But without a wholesale rethink on how US housing is funded, the cards look stacked against it.
  • Investors hold about 99% of all bond inventory. Could all-to-all trading platforms provide the best answer to the crisis in liquidity?
  • Amid the litany of complaints against the sell side, one trader at a large investment manager bemoans the continuing pretence of some banks that they are big traders in many instruments across all markets to all investors. He knows that they are not. Rather, dealers are conserving their ammunition to serve favoured clients and he understands why. He would just like to know where best to direct his business.
  • As Detroit files for Chapter 9 bankruptcy, municipalities need to look at ways to increase revenues. The battle to create and attract jobs is on.
  • Policymakers continue to lavish liquidity on the western world. It will be a long time before short-term money-market rates normalize in the US, the UK, Germany or Australia.
  • Much has changed since I used to work in the City. It is out with the autocratic, eccentric banking demigod (think Dick Fuld or Ken Lewis) and in with the omnipotent regulator. It is out with brash, macho money-making and in with a more cuddly approach to deal-doing. Think of the industry’s greatest survivor, Lloyd Blankfein, his sprouting of facial hair and passionate advocacy of gay rights. See my April 2013 column for more on Loveable Lloyd’s transformation.
  • The emerging market sell-off since May is just the start of a painful multi-year adjustment process – and China has blazed a trail for the next downturn. Capital abundance, deflationary pressures and imbalanced global demand continue to drive the 15-year cycle of credit booms and busts.
  • Prime minister Shinzo Abe’s radical policies have lifted Japan from its slumber. His supporters say he’s slain the deflation dragon. But what tools can he find to win the next fight – a looming fiscal crisis?
  • Blackstone is not just the biggest real estate investor in the world today, it’s the best according to the annual Euromoney survey. CBRE and Hines maintain their leading positions as advisors and developers respectively, while JPMorgan dislodges Deutsche Bank as the top real estate bank overall
  • Ackermann has experienced the chill of unwelcome publicity in recent days but how, I wonder, does Jamie Dimon feel when every day seems to bring another cloud, if not a hailstorm? I have written recently about how Jamie’s halo has become tarnished.
  • Institutions and private equity have stepped into the gap left by banks, not least because of property’s attractive and duration-matching returns.
  • The Chinese economy is growing ever more slowly – probably slipping even faster than officially admitted, and from a base whose size is possibly exaggerated too. In the midst of this, the orthodox banking sector is doing unorthodox things on a grand scale, while being undermined and bypassed by an even more unorthodox grey financial sector.
  • Want to get introduced to senior executives of Facebook, Google, Yahoo? Or looking for funding from the largest venture capitalist firms? Why not head to Burning Man? The hedonistic week-long arts festival that takes places every August in Nevada on a dry lake called La Playa is best known for the elaborate costumes, or lack thereof, worn by the 60,000 plus attendees.
  • Euromoney has been known from time to time to have lunch with the great and the good of the financial markets. It’s a good way to talk to bankers in an environment in which they are comfortable – luxurious restaurants. It also allows our journalists a unique insight into a world – luxurious restaurants – that is otherwise off limits to a humble hack. In Hong Kong last month Euromoney enjoyed a slap-up lunch with a head of investment banking, a chief operating officer and a senior press officer from a large Wall Street bank. We were invited to order anything on the menu and even broke our usual strict and complete abstinence from alcoholic beverages to enjoy a particularly fine Pinot Noir.
  • The market is showing signs of revival, but it will be smaller and less diversified than it was at its peak.
  • "Tell them to start buying something, will you?"
  • Hedge fund managers have plenty to grapple with right now, not least how to hold their clients in the two and 20 position.
  • Bob Wigley, a former chairman of Merrill Lynch EMEA, might also appreciate a large tumbler of Scotch. Wigley, who left the US investment bank after it was devoured by Bank of America in 2009, became chairman of Hibu, the former Yellow Pages printed directory of local businesses, some four years ago.
  • These days banks are desperate for the next business or product line that is capital light, highly profitable and offers masses of potential to command a loyal following.
  • State-owned companies have, until now, set the tone in China. But as economic growth slows and state-driven capital market activity founders, banks are hunting for business from China’s privately owned, ambitious enterprises.
  • A buoyant local economy means Saudi banks are riding high, but they remain over-exposed to their domestic market.
  • In an exclusive interview, Riad Salamé, the longstanding governor of Banque du Liban, discusses Lebanon’s perpetual political and economic challenges, the resilience of its banks and the prospects for needed structural reform. He even ponders what he would do if he were president for a day.
  • As growth in China falters and India seems to spiral ever more helplessly downward, southeast Asia has become central to the fortunes of banks in the Asia-Pacific region.
  • Banks in Chile, Peru and Colombia are building platforms across the Andean region as a single commercial market between the three countries develops.
  • Beyond the shadowy world of the big-four Gulf sovereign wealth funds, which can be opaque, seemingly inactive or conservative, a second tier of sometimes equally elusive SWF-style entities has sprung up.
  • Bank M&A in the Middle East has accelerated over the past year. Although regional events and global markets are already throwing up tests, the motivation for deals is still stronger than ever.