Archives » 2007 » October

When The Police describe the rush hour hell faced by hapless commuters in the song 'Synchronicity II', the lyrics might also apply to the behaviour of the world’s investment banks who crowded into the shiny boxes that were collateralised debt obligations containing subprime mortgage debt.

— Gael de Barmon, founder and president of NPE Asia

NPE Asia, a subsidiary of French-based Natixis Private Equity, is gearing up to launch a new fund later this year that will allow pension schemes and other institutional investors to access mainland China’s potentially lucrative private equity market.

The high volumes in the credit derivatives market this summer provided the first major acid test for the automated credit default swap (CDS) processing systems implemented by financial institutions in response to regulatory pressure over the past 18 months. However, the industry is giving mixed messages as to how they fared.

— Martin Raiser, World Bank

The pace at which Ukraine’s capital markets will develop depends on pension reform and increasing investor appetite, but political stability and tighter regulation remain crucial to its progress, an event held at the London Stock Exchange (LSE) last week concluded.

— Roger Urwin, Watson Wyatt

Sovereign pension funds can be the investment industry’s dream product, with the power to influence, writes Roger Urwin.

— Philippe Collas, SGAM

SGAM’s Philippe Collas may be living the Paris high life, but deals cooked up in the basement have proved successful.

Since Société Générale Asset Management (SGAM) moved into its custom-built HQ in the futuristic Parisian outpost of La Défense in 2005, arrangements for entertaining key clients have changed due to logistical considerations.

— David Karsboel, Saxo Bank

In the past months, markets have been hit by worries about the US subprime mortgage exposure in the financial system. In our view, the subprime and credit turmoil has been correctly diagnosed as a problem that is not contained and it will continue for at least 18 months from now. It may even take 24-36 months to resolve in Europe.

— Jeremy Baskin, Northern Trust Global Investments

As September closed, returns for most US equity indices for the quarter were positive. Returns year-to-date are reasonably robust, with some sectors (mid- and large-cap growth) reaching double-digits. This belies the volatility of July and August, a shock for market participants, with particular impact on quantitatively-managed strategies.

— Maarten-Jan Bakkum, ABN Amro Asset Management

Mexico is a market with two faces. On the one hand, with 85 per cent of its exports sold in the US, it is probably one of the economies most exposed to a sharp slowdown in US consumer demand. On the other hand, it is one of the most dynamic economies in the world, seeing heavy investment in infrastructure, strong credit growth and an exciting reform momentum.

— Peter Dalgliesh, Pacific Assets Trust&Management

Emerging market giant China, the economic engine of the Asia-Pacific region, continues to offer investors compelling investment opportunities. The country’s equity market has been assisted by very strong corporate earnings growth, faster-than-expected GDP growth and negative real interest rates, creating an abundance of liquidity.

— Jon Little, BNY Mellon Asset Management

As BNY Mellon Asset Management celebrates an impressive partnership in China with Southern Fund Management, vice chairman Jon Little gives Henry Smith his insights on how to succeed in China and talks about the firm’s plans for European tie-ups.

BNY Mellon is in negotiation with a potential joint venture partner with a view to establishing a JV fund management business in mainland China.

— Richard Gröttheim, AP-Fonden 7

Swedish pension reserve fund AP-Fonden 7 has been talking-up its ‘pure alpha’ equity mandates as a way to optimise transparency, assess performance within a liability-matching context, and make your beta allocation sweat. Martin Steward reports.

— Andreas Schmidt, RZB Österreich

After a strong start to the year, recent turbulence in the credit markets has hit structured finance in emerging Europe. So how soon is a likely recovery? Nat Mankelow reports.

The next six months will represent a defining period for the structured finance industry in emerging Europe, as originators and investors take stock of the recent turmoil that has plagued securitisation’s home market of Western Europe and the US.

— Alain Dubois, Lyxor Asset Management

This summer’s subprime fallout and subsequent credit contraction has again highlighted issues of leverage, style-drift, transparency and liquidity in hedge funds. Should investors take another look at the managed account route? Martin Steward investigates.

— Andrew Smith, Goodmans Property Investors

The property derivatives market has been growing significantly recently, with the strongest quarter at the start of this year since its inception in 2004. Gerry O’Kane takes a look.

— Jonas Rinné, Informed Portfolio Management

Sweden’s hedge fund industry punches far above its weight. But alpha/beta separation and an appetite for long-term inflation hedging may see institutional investors favouring real or long-duration assets, especially private equity and property. By Martin Steward.

Private equity buyouts have come under increased scrutiny in the UK, and both the Walker consultation and a Treasury Committee inquiry have made some criticisms. But what is the industry’s reaction? Martin Steward reports.

— Tim West, iShares Europe

Exchange-traded funds have discovered a silver lining to this summer’s difficult markets. Their liquidity is attracting interest from Europe’s fund managers, as Ceri Jones reports.

— Manooj Mistry, Head of equity ETF structuring

The exchange-traded fund market in Europe is set for strong expansion, spurred by regulatory changes. Manooj Mistry, head of equity ETF structuring at Deutsche Bank explains.

— Collin Crownover, State Street Global Advisors

All players in the currency sector are claiming expanding books of business, although specific strategies and solutions on offer differ widely. Gerry O’Kane reports.

FX volumes are booming, with the bulk of trades conducted electronically. Jake Smith, head of marketing at FXMarketSpace, describes how sophisticated technology is powering this trend.

Craig LeVeille, director FX products at CME Group, looks at how the FX options market is beginning to experience the growth spurt previously seen in the futures market.

— Mark Mobius, Franklin Templeton

Portfolios with core, diversified holdings appear to have outperformed in this sector – top-placed value-investing guru Mark Mobius is the notable exception. But there is some consensus from the bottom-up stockpickers that increasing regional demand is a key theme in these economies. By Martin Steward.

— Mayiz Habbal, Celent

Companies looking to go public are increasingly raising capital by issuing 144A securities, a trend that looks set to grow with the launch of a new Nasdaq trading platform. Peter Guest explains.

Absolute return strategies have proven effective at generating alpha, but as institutional money continues to fuel the sector, this continued growth is imposing new risks and responsibilities on hedge fund managers.

As Canada modernises its trading infrastructure, new stock markets are emerging. Peter Guest reports.