November 2005

Cover story

Why CFOs should stop mistrusting hedge funds

Why CFOs should stop mistrusting hedge funds

Hedge funds are overflowing with money, and margins on traditional strategies are shrinking. One solution to their search for returns is to offer their services to companies in need of financing. Some are nervous about taking up the opportunities but others are discovering just how useful these new financiers can be.

Hedge funds

Banks create corporate finance hotline to hedge funds

Banks create corporate finance hotline to hedge funds

Do hedge funds need strategic advice from investment bankers? And do banks need to set up new departments to offer it? Yes, reckon UBS and CSFB; no, say many of their competitors. Antony Currie reports on whether treating hedge funds like other corporate or private-equity clients is the latest development in the industry or just a fancy bit of spin.

European banking

The banks in play in European M&A

The banks in play in European M&A

Investors are pushing bank CEOs to produce growth. Some are now touting their ability to wring cost savings from IT, capital management and the rationalization of wholesale businesses after big mergers. National regulators are losing their power to block cross-border deals. We are almost at the point, Peter Lee reports, where every big bank is in the firing line.

Germany

What's the buzz in German NPLs?

What's the buzz in German NPLs?

Sales of non-performing loan and real estate portfolios to foreign investors have stirred controversy in Germany, with the buyers being described by a senior politician as “a plague of locusts”. But the medium-term benefits could go beyond a much-needed injection of liquidity and balance sheet repair and provide a fresh impetus to the German economy.

Covered bonds

Has Brussels got the market covered?

Has Brussels got the market covered?

The European Union is introducing the first uniform covered bond legislation. The long-term effects could be beneficial, but some issuers still point to discrepancies between countries that could stifle the development of a cross-border European mortgage funding market. Mark Brown reports.

Jumbo liquidity hit by a big freeze

The jumbo covered bond market was 10 years old this year. Its key characteristic has always been liquidity. But one analyst thinks this is no longer the case. Is the jumbo market in for a shock? Mark Brown finds out more.

Investors force the pace

In 2005, while issuers, underwriters, rating agencies and regulators have still been grappling with the question of covered bond identity, investor concerns have been more basic – spreads, yields, and the arrival of new investors. Mark Brown reports.

Old product, new law

Another round of changes to financial legislation could reshape the German covered bond market. But it isn’t the new Pfandbrief Act that has got banks most excited. Laurence Neville reports.

Roundtable

Why pension funds need commodity exposure

Why pension funds need commodity exposure

Pension funds’ need to outpace the effects of inflation has prompted growing exposure to alternative investments. Commodities look to be a good source of such diversification. But should exposure be direct or through an index? And if the index route is chosen, which benchmark is to be preferred?

Turkey

Dancing to Turkey's tune

Turkey looks set to be the next great EU convergence play. Now foreign banks want a piece of the aciton. But the owners of the country's financial institutions are seeking to form strategic partnerships rather than relinquish ultimate control. Kathryn Wells reports.

Arab banking

Editorial

What the new breed of hedge funds have to offer

What the new breed of hedge funds have to offer

The hedge fund industry has matured at a faster pace than anyone could have anticipated. Sure, there are still problems, but the old habit of tarring all hedge funds with the old brush of suspicion must surely be left in the past.

Front End

Market leaders

Refco deals out harsh lesson

Concerns about hedge fund positions in the face of Refco’s collapse have been overstated. The real consequence should be that investors are more wary of what they buy into.

Debt

Structured credit

Foreign Exchange

Equity markets

Speculative money puts in an appearance to plague IPOs

Speculative money puts in an appearance to plague IPOs

Recent popular new issues rapidly faced heavy trading and price falls. With the tendency of speculative money to disappear as quickly as it arrives, it remains to be seen whether it will continue to plague IPOs later in the year.

ECM bankers thrive on M&A boom

The M&A boom is good news for equity capital markets. M&A, as well as generating more transactions, tends to be more profitable than other types of ECM deals. Banks with strong M&A businesses stand to benefit most. Peter Koh reports.

Time to take stock

Global M&A volumes are heading back up to levels not seen since 2000. This should give investors pause for thought: 2000 was, after all, a year of excess. Although the market is very different today, some things never change. Peter Koh reports.

The benefits of brain damage: Crack addicts outperform others

Experiments show that individuals with a specific type of brain damage, which prevents them from feeling fear, outperform normal players when it comes to making some investment decisions. Crack and methamphetamine addicts as well as alcoholics similarly outperform.

Montgomery into equities

Montgomery & Co is known for its M&A advisory services. Now, it's pushing into equity research, institutional sales and trading. It will offer specialist research in key areas for growth companies: medical devices, biotechnology, speciality pharmaceuticals, wireless technology, digital media technology and semiconductors.

Fund management

FM round-up: Food for thought:

Quote from Brian Shapiro, president of management and technology consulting firm Carbon360, in regards to the impending registration deadline imposed by the SEC.

Corporate finance

Bankruptcy law: Tighter Chapter 11 regime takes effect

New US bankruptcy laws that came into effect in October will alter the way companies go through restructuring and might make it harder to enter Chapter 11 bankruptcy protection. In addition the ability of companies to manage their own reorganization will be affected – giving creditors more say after a few months.

Antitrust enforcement: Price-fixing costly for chipmakers

Brokerage firm Refco steals the headlines but Samsung faces major fine. South Korean electronics conglomerate Samsung has pleaded guilty to price-fixing in a far-reaching probe by the US Department of Justice and has been handed down the second-largest criminal fine ever

Asia Pacific

Pension reform: Cracking Asia's wall of money

In the first of a series of articles, Euromoney examines the status of pension reform in two countries at the extremes of Asia’s pensions revolution, Taiwan and the Philippines. We ask the authorities charged with pension reform in these economies about plans and progress, challenges and expectations.

Philippines pensions face up to default threat

The Philippines’ state pension schemes are in a parlous financial condition and in desperate need of reform, but the government has no money. A private sector solution is available and there is time to fix the problems, but only if politicians leave well alone. Chris Leahy reports.

Taiwan turns back the sands of time

Taiwan recognized the failings in its existing pension systems early. A new scheme was launched in July. It is already accumulating funds rapidly and the effects on Taiwan’s domestic capital markets are likely to be dramatic. There will also be numerous opportunities for global asset managers. Chris Leahy reports.

China's road to reform

Zhou Xiao Chuan, governor of the People's Bank of China, tells Sudip Roy why the renminbi was revalued and what financial reforms are next on the agenda.

Indian private equity takes a wider view

India’s private-equity business is growing fast again. But unlike the late-1990s boom of flows to technology companies, money is heading into a broad range of sectors, reflecting the strong performance of the economy. Kautilya Shastri reports.

Latin America

Luis Alberto Moreno: IDB shapes up for the future

The Inter-American Development Bank’s new president, Luis Alberto Moreno, speaks to Sudip Roy about his plans to make the bank’s policies more relevant to the private sector in a region that is attracting growing investment inflows.

Meet Chile's Mr Dependable: Vittorio Corbo

Banco Central de Chile president Vittorio Corbo is arguably Latin America’s most respected central banker. He tells Euromoney how he is keeping a lid on the region’s biggest economic danger – inflation. Sudip Roy reports from Santiago.

Debt exchange triggers Dominican recovery

With an amazing recovery from the brink of collapse and a comprehensive debt restructuring, everything seems to be going right for the Dominican Republic. But all the old economic weaknesses are still there and they need urgent attention. Felix Salmon reports.

EMEA

Islamic mutual funds attract strong interest

Saudi and Qatari banks launch new investment products. National Commercial Bank has become only the second Saudi Arabian financial services provider to launch a Shariah-compliant mutual fund that will invest in the countries in the Gulf Cooperation Council.

Against the tide

Weak links in the circle of imbalance

China’s inefficient economy is under threat because its capital costs are set to rise, but it is as likely to falter because US consumerism hits the wall. And there are signs that American profligacy cannot be sustained much longer

Flipside