Seeking Green Alpha- Investor enthusiasm for clean-tech plays in China remains strong, despite signs of faltering local government support for green projects.

July 12, 2009 — finetik

Investor enthusiasm for clean-tech plays in China remains strong, despite signs of faltering local government support for green projects.

Almost every investor conference or salon we attend these days has a separate panel discussion on clean tech – and the recent China CEO Investment Summit in Shanghai was no exception. During a packed session, a panel of lawyers, representatives from various stock exchanges and venture capitalists impressed the audience with the enormous and diversified opportunities offered by China’s green investment sector.

One of the main areas of opportunity highlighted by the panel was water. China has historically struggled to supply many of its regions with sufficient water supplies and the rapid industrialization and urbanization over the past few decades has exacerbated this problem. According to a survey by the State Environmental Protection Administration (SEPA) published in July 2008, 35% of China’s urban water supply did not meet safe drinking-water standards, up from 20% in 2006.

This dire situation has, however, created an investment opportunity. Speaking during the session, Huang Gefei, head of China Galaxy Investment Management, said his company had been investing in wastewater treatment companies for some time. Unlike other clean-tech sectors, such as solar and wind, wastewater treatment remains relatively untapped by investors, despite enormous demand. China’s total wastewater capacity in 2008 met less than 60% of demand, below the 70% base-line set by the State Council’s Comprehensive Working Program on Energy Saving and Emission Elimination issued in 2007. The central government included plans to increase spending on expanding wastewater treatment capacity in its RMB 4 trillion stimulus package.

FiNETIK recommends:   The State of the Environment of China in 2008, Ministry of Environment, 24.06.2009

Another clean-tech investment area that interested the panelists was coalbed methane (CBM) exploitation. CBM, which is stored in coal and is generally not extracted by most coal mines, is an ideal substitute for natural gas and could help to ease gas shortages in China. In addition, panelists said that it had the potential to make coal mining safer and mitigate the risks of mine explosions – mine safety is a serious issue in China, with official statistics reporting 413,700 mining accidents and around 90,000 deaths last year. The government plans to bolster the CBM industry and increase CBM consumption to 10% of total gas use until 2010. Several supportive policies have been announced, including full VAT refunds, and the shelving of import duties on CBM equipment. Another factor that makes CBM exploitation attractive for investors is the relatively high profit-margin. CBM producers are allowed to sell gas at market prices that are not subject to the price ceiling set for natural gas. Although the sector is still in its infancy in China, it has seen several deals, including Baring Asia and Chengwei Venture’s $88 million joint investments in China Coalbed Methane Holdings Limited and IFC’s $15 million investment in Far East Energy (OTC:FEEC). Other investment opportunities highlighted during the session included energy storage, hybrid vehicles and thin-film solar technology.

The panelists stressed, however, that the continued growth of the clean-tech space in China was heavily reliant on government support. With the economic downturn continuing to bite, there is evidence that some Chinese local governments are letting environmental protection standards and clean-tech investments slide in their determination to maintain GDP growth in line with the nationwide 8% FY 09 growth target. This could create problems for clean-tech companies, especially in areas where heavily polluting industries such as paper and steel are key GDP drivers. Panelists mentioned that some desulphurization and wastewater treatment companies in particular were having difficulties as a result. This was a timely reminder that while clean-tech investments in China have enormous potential, they also carry significant potential risks.

Such a situation should not be a surprise in a country which has traditionally chased rapid GDP growth at the expense of environmental protection. But this same reason has convinced us of the central government’s new-found resolve to address environmental problems, as it now appears to recognize the fact that environmental degradation has eaten into China’s GDP growth. While conditions for clean-tech industry growth may vary from locale to locale, overall conditions appear promising – and judging by the number of people attending the recent session at the China CEO Investment Summit, this has not gone unnoticed by investors. The light at the end of the tunnel could be green.

Source: www.jlmpacificepoch.com, 10.07.2009 by Ivy Cheng

Posted in Asia, China, Energy & Environment, News. Tags: , , , , , , , , . 1 Comment »

BMV – Bolsa Mexicana de Valores June 2009 Performance Report

July 11, 2009 — finetik
Posted in BMV - Bolsa Mexicana de Valores, Exchanges, Latin America, Mexico, News. Tags: , , , , , , . Leave a Comment »

Brazil- The Sleeping Giant – Webinar July 15th at 2pm CDT

July 10, 2009 — finetik

Join us for an interesting webinar to learn more about why BM&FBOVESPA is to become more than simply the largest exchange in Latin America.

Seats are limited   Reserve your Webinar seat here

As technology has improved access to markets in Brazil and the regulator increasingly facilitate foreign participation, interests from international markets continues to grow.

Learn why Brazil has been so successful in the past and how market participants are ramping up their offering to fully profit from Direct Market Access opportunities.  Also, speakers will touch on initiatives as sponsored access, co-location and incentive programs for traders.

Key learning points include:
•  Why Trade Brazil?
•  Market Structure & Market Participants
•  International Access: What is really needed to trade Brazil out of the US?
•  The cost of trading: technology and infrastructure challenges
•  Is Brazil ready for Algorithmic Trading?

Panelists:
•  Cicero Augusto Vieira Neto, COO, BM&FBOVESPA
•  Charles Farra, Director, Intl. Products & Services, CME Group
•  Achilles Couto, CME Group, Sao Paulo
•  Alex Lamb, Executive Board Member, RTS Realtime Systems

Seats are limited   Reserve your Webinar seat here or e-mail  at  events@rtsgroup.net for more information

Event Details

Title:                 Brazil- The Sleeping Giant
Date:                 Wednesday, July 15, 2009
Time:                2:00 PM – 3:00 PM CDT

Organized by: RTS Real Time Systems

RTS Brazil The Sleeping Giant


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Overhaul of fund regulations looms in China

July 10, 2009 — finetik

In October, China’s National People’s Congress will review a substantial reform of the fund laws proposed by the CSRC.

Less than six months after taking charge of the fund supervisory division at the China Securities Regulatory Commission (CSRC), the new director-general Wu Qing is already making his presence felt in the industry.

Under Wu’s leadership, the division has recently submitted a proposal to the National People’s Congress (NPC) advocating a serious overhaul to the regulations controlling the Rmb2 trillion ($292.8 billion) fund industry in China. On July 6, the NPC called the first financial committee meeting to review the suggested rule changes.

Prior to taking up his role at the fund division, Wu was best known as a ‘risk hawk’ responsible for cleaning up bankrupt securities firms. He was involved in drafting China’s first set of risk disposal rules for the brokerage industry.

Hubert Tse, managing director and head of the international business group at Yuan Tai PRC Attorneys in Shanghai, says depending on the political will and consensus to be gathered at the NPC level, the regulatory review could either result in minor tweaking to the existing securities investment rules, covering issues such as investor protection, fund manager compensation and trading restrictions; or it could be a major overhaul, changing the way the investment industry is regulated in China.

If fully passed, the CSRC will see its regulatory power expand to cover the private fund industry in China. Tse believes the move will be the CSRC’s most forceful attempt yet to create a level playing field between private and mutual funds, and ensure stability in the functioning of the capital markets.

The NPC is expected to vote on the matter in the coming annual gathering in October. If passed, the changes would be implemented by March 2010 at the earliest.

Currently, private funds are not regulated and have benefitted from operating opaque investment structures. They also rob the mutual fund sector of talent; at one point in 2007, private funds were said to be responsible for a 30% turnover in investment staff in the mutual fund sector.

One of the most feted private fund operator is Lv Jun, a former CIO and star manager at China International Fund Management, J.P. Morgan’s asset management joint venture in Shanghai. Lv has since banded with Chung Man-Wing, a former MD at JF Asset Management in Hong Kong and Peter Tang, a portfolio manager in charge of JF’s Taiwan portfolio in founding their Greater China fund.

In 2009, against a background of strong market momentum in the A-share market, private funds have re-emerged as a serious threat to the stability in the mutual fund industry. These funds have handed out handsome perks to lure fund managers who are otherwise attracted to the lack of disclosure in these funds’ daily dealings. Observers have also blamed private funds for creating excessive volatility in the market.

The CSRC has made several attempts to protect the mutual fund industry from private fund threats. It has approved various new lines of business that help the industry to gain ground on the private fund sector.

Further to the segregated mandate business it approved in 2008, it has recently permitted general partnership arrangements in which fund houses can raise funds through quasi-hedge fund setups. Fund houses can tailor-make aggressive investment products specific to clients without disclosing activities in these portfolios to third parties.

Source:AsianInvestor.net, 10.07.2009 By Liz Mak

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CME Group and BM&FBOVESPA talk up order routing agreement results

July 9, 2009 — finetik

CME Group, the world’s largest and most diverse derivatives exchange, and BM&FBOVESPA, the largest exchange in Latin America, announced that more than two million contracts have now traded as a result of their order routing agreement that was fully implemented on February 9, 2009.

The order routing linkage enables customers outside of Brazil for the first time to directly access BM&F segment products on CME Globex, and customers inside Brazil using GTS, one of BM&FBOVESPA’s electronic trading platforms, to directly access CME Group products.

“Facilitating CME Group customer access to BM&F segment products has opened up an entire new set of opportunities for customers outside of Brazil to gain exposure to the Brazilian marketplace,” said Rick Redding, CME Group Managing Director of Products and Services. “With one connection, our customers have an entree to products for one of the most closely followed economies in the world.”

“This new direct access to our markets has been very well received and we now look forward to expanding contract offerings to customers even further with new jointly developed products from CME Group and BM&FBOVESPA. Through this week, more than 2.2 million contracts were traded, representing more than 227,000 transactions, totaling over R$177.36 billion,” said Cicero Augusto Vieira Neto, BM&FBOVESPA Chief Operations Officer.

The order routing agreement includes access to some of the most liquid futures and options contracts in the world on interest rates, commodities such as grains and livestock, equity indexes and foreign exchange listed at CME Group, and One Day Inter-Bank Deposits, the Bovespa Stock Index, which is pending regulatory approval, and commodities such as Arabica coffee, live cattle and corn available at BM&FBOVESPA.

Also as part of the arrangement between the two exchanges, CME Group owns a 4.9 percent equity stake in BM&FBOVESPA, and BM&FBOVESPA owns a 1.7 percent equity stake in CME Group.

Source: CME Group, 09.07.2009

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Dual listings pact to strengthen capital markets in Singapore and Norway

July 9, 2009 — finetik
Singapore Exchange Limited (SGX) and the OsloBørs ASA (Oslo Børs) today inked their co-operation with the signing of Memorandum ofUnderstanding (MOU) to facilitate the process of secondary listing of companies on eachother’s exchange.

This MOU marks the first formal co-operation between the two exchanges. It also represents the first dual listing co-operation with a sector focus between Singapore and Norway.

The MOU will be signed at a ceremony in Singapore on 8 July 2009 at 5.30pm,witnessed by Mrs Lim Hwee Hua, Minister in the Prime Minister’s Office and SecondMinister for Finance and Transport, Singapore. Minister Lim will be joined by HerExcellency, Ms Janne Julsrud, Ambassador, The Royal Norwegian Embassy, Singapore;and Mr J Y Pillay, Chairman of Singapore Exchange.

The proposed co-operation aims to promote the secondary listing of companies listed oneach other’s exchange. SGX and Oslo Børs will institute a framework to enable and facilitate dual listings through mutually agreed listing rules and processes. In addition,both exchanges will set up a process for settlement and clearing of shares traded of these dual listed companies. The co-operation will begin with companies in the energy,offshore and shipping sectors which are key sectors common to both exchanges. Assuch companies expand their business activities to Norway or Singapore, the dual listing framework will allow them to diversify their shareholder base, build their profile and provide an additional fund raising venue.

Another area of co-operation is joint marketing and promotion. Both exchanges plan to commence a series of marketing seminars to profile the sectors in both regions in the coming months. SGX and Oslo Børs will enhance the co-operation framework by exploring opportunities in introducing new sectors, providing regulatory updates,monitoring and governance matters.

Minister Lim Hwee Hua said, “I congratulate SGX and Oslo Børs on the signing of this MOU. The MOU will enhance the attractiveness of the two exchanges as destinations for listings by shipping, offshore and energy companies, as well as those in other sectors.This will in turn reinforce the standing of Singapore and Norway as international maritime and financial centres. This collaboration will also boost Singapore’s efforts to position itself as a leading shipping and maritime hub in Asia.

”Mr Hsieh Fu Hua, CEO of SGX added, “We are very pleased to co-operate with the OsloBørs. This co-operation complements our Asian gateway strategy. Companies from Asia and Europe in the energy, offshore and shipping sectors will be better profiled and benefit from the larger investor pool. Investors on both our bourses will also have a greater selection of investment choices.

”Mrs Bente A Landsnes, CEO of Oslo Børs ASA said, “A co-operation between SGX and Oslo Børs supports the fact that both Singapore and Norway has long, and to a great extent, similar traditions when it comes to shipping and energy-related industries. At OsloBørs we are proud to join this exciting co-operation, and we have great expectations on behalf of the companies that choose to list their shares on both exchanges.”

Source: Bob’s guide, 09.07.2009
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Deutsche Bank securities JV with Shanxi Securities gets China approval

July 9, 2009 — finetik

The license allows Zhong De Securities to underwrite A-shares and domestic Chinese bond issues.

Deutsche Bank announced yesterday that its joint securities venture with Shanxi Securities has received a business license from the Chinese regulators, meaning it is now free to launch investment banking services targeted at the domestic Chinese market. The license was granted about six months to the day after the two firms got the approval to set up the JV and makes Deutsche the fifth international bank to gain access to China’s equity and bond markets after CLSA, Goldman Sachs, UBS and Credit Suisse.

In accordance with the prevailing Chinese regulations, Deutsche owns 33.3% of the Beijing-based JV — named Zhong De Securities — while Shanxi Securities owns the remaining 66.7%. The business license allows Zhong De to underwrite and sponsor Chinese A-share issues, as well as government and corporate bonds, but not to conduct brokerage operations. It is believed that the new firm will initially focus on large-scale equity issues, but in the longer term it is likely that Zhong De will want to take advantage of Deutsche’s expertise in the international bond markets and get more involved in China’s rapidly growing corporate bond market as well.

Stock broking is one of the most profitable areas of the securities business in China, but new regulations issued in December 2007 stipulate that Sino-foreign securities JVs will have to wait five years after their establishment to obtain an A-share brokerage license.

Deutsche Bank’s head of China corporate finance, Charles Wang, has been appointed CEO of the JV, while Shanxi Securities’ president, Wei Hou, will become chairman. Wang is an experienced investment banker who has been with Deutsche bank for three years. Before that he spent 12 years with Merrill Lynch. During his career he has focused primarily on equity and advisory, which reinforces the suggestion that Zhong De’s initial focus will be on A-shares.

Deutsche will nominate three members to Zhong De’s nine-person board of directors, including Wang and one independent director. Shanxi Securities will nominate the other six, which will include the chairman and two independent directors.

While current Chinese regulations caps the investment by foreign banks in a Sino-foreign securities JV at 33% and direct stakes in a securities firm at 20%, the international banks are all striving to get as much management influence as possible. While abiding by the ownership rules, Goldman Sachs and UBS both have effective operational control over their China businesses. However, both these firms received a special dispensation because they got involved in securities firms that were distressed and it is widely believed that Beijing will not allow more similar set-ups under the existing regulations.

Deutsche Bank didn’t comment on the level of management influence it expects to have, but a source said that as CEO Wang will be responsible for appointing most of Zhong De’s senior managers. Meanwhile, Shanxi Securities will appoint the chairman of the supervisory board.

“Zhong De Securities combines unique strengths from both of its shareholders,” Wang said in a written statement. “We have the personnel, experience, infrastructure and ambition to become a leading firm within China’s domestic financial services market.”

Zhong De gets the go-ahead just as China is re-opening its A-share IPO market, which was suspended in September in light of the financial market turmoil, which saw both Chinese and international equity markets tumble. In late June, Guilin Sanjin Pharmaceutical became the first company to receive approval for an initial public offering after the sharp rise in Chinese share prices this year had indicated that the market would be able to absorb new issues. However, the regulators have been allowing smaller companies to go public first, no doubt to test the waters. Guilin Sanjin, a manufacturer of traditional Chinese medicine, sold Rmb910.8 million ($133 million) worth of shares, or 44% more than it initially planned, after the offering ended up heavily oversubscribed. The deal was arranged by China Merchants Securities.

According to media reports, another three companies have also received approval for A-share IPOs so far, including Hong Kong-listed Sichuan Expressway.

Deutsche Bank is the second international bank to get approval for a Sino-foreign securities JV since a moratorium on such JVs was lifted in May 2007 and since the new regulations were announced in December 2007. A JV between Credit Suisse and Founder Securities received its final business license in January this year and has been underwriting a few corporate bond issues since then.

Goldman Sachs and UBS were both allowed to set up businesses in China before the new rules took effect, in 2006 and 2007 respectively, but chose different routes to do so — Goldman through a joint venture with Gao Hua Securities and UBS through its direct 20% stake in Beijing Securities.

Meanwhile, CLSA has a JV with Hunan-based Fortune Securities under the name of China Euro Securities (CESL), which was set up in 2003 under regulations that were introduced as a result of China’s entry into the World Trade Organisation in 2002. Pursuant to the five-year rule, CESL was granted a brokerage license for the Yangtze River Delta area in June last year in addition to its underwriting license and the firm is now focusing primarily on the brokerage business.

The only other international investment bank to have direct exposure to China’s domestic market is Morgan Stanley, which set up the very first JV (China International Capital Corp) together with China Construction Bank in 1995. This “pilot” programme turned out to be a one-off at the time though and no further approvals were granted until after China’s WTO entry. Today, Morgan Stanley has no management input into the JV, but receives revenues in proportion to its 33% stake.

Morgan Stanley signed a memorandum of understanding with Huaxin Securities in early 2008 to establish a JV where it would be more actively involved, but this is still awaiting regulatory approval. Another firm waiting for approvals is Citi, which signed a MoU for a securities JV with Zhongyuan Securities around the same time in early 2008.

For Deutsche Bank, this license means that it is now able to offer all of its core global businesses in China as well. The German bank has made significant investments in China over the past 18 months and currently has a 30% stake in Harvest Asset Management and a 13.7% stake in Hua Xia Bank. It also has a derivatives license and is locally incorporated in Beijing, which means it can roll out a branch network should it decide to do so.

Shanxi Securities was founded in 1988 among the first group of securities firms to be set up in China. According to a statement in January, when the approval for the JV was received, it has more than 53 branches in Shanxi province and other major cities, including Beijing, Shanghai and Shenzhen. At that time, it had 800 employees.

Read original article here

Source: FinanceAsia.com, 08.07.2009 By Anette Jönsson

Posted in Asia, Banking, China, Financial Services, News, Wealth Management. Tags: , , , , , , , , . 2 Comments »

New Views on the Hedge Fund Industry – State Street Study June 2009

July 9, 2009 — finetik

The global financial crisis is bringing about an evolution in hedge funds that will render  significant changes to the industry. Record investment losses and investor withdrawals  have cut assets under management by more than one-quarter, consolidation is under  way, and both investors and regulators are calling for greater transparency.

Download: Hedge Fund Study – State Street -June 2009

Two major trends that will have far-reaching impacts are emerging: a migration among the maturing hedge fund industry to third-party administration, custody and specialized services, and the most comprehensive reconsideration of financial regulations in a generation.

According to State Street’s annual hedge fund study conducted in October 2008, 84 percent of institutional investors surveyed expect more frequent disclosure of  hedge fund positions, while 49 percent anticipate more frequent reporting.
Before the dust from the crisis settles, it will be important for all of the stakeholders in this market to understand the ramifications of these trends and to participate in shaping the new structure of this changing industry.
Though forever altered by current market conditions, hedge funds will retain their critical and proven role in institutional investors’ financial portfolios.

FiNETIK Recommends:

London Mayor: Hedge Fund might leave London for Singapore, SGP Hedge Fund, 09,07,2009

London Mayor Boris Johnson attacks EU’s plans to regulate hedge funds, FT 08.07.2009

Source: State Street, June 2009

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China: the risk of Selling Foreign Exchange Derivatives Under Contro

July 9, 2009 — finetik

The People’s Bank of China, the central bank, recently made an investigation on derivatives operation of six domestic commercial lenders.

They included Industrial and Commercial Bank of China (ICBC, SHSE: 601398, and SEHK: 1398), Agricultural Bank of China (ABC), Bank of China (BoC, SEHK: 3988 and SHSE: 601988), China Construction Bank (CCB, SHSE: 601939, and SEHK: 0939), Bank of Communications (BoCom, SEHK: 3328 and SHSE: 601328) and China Development Bank (CDB). Such investigation actually has been made by the China Banking Regulatory Commission (CBRC), the top Chinese banking regulator, and the conclusion it reached is that the risk for commercial banks to sell foreign exchange derivatives is under control, revealed an insider.

Currently, foreign exchange derivatives sold in the country include foreign exchange option, foreign currency swap, foreign exchange interest swap and etc. The floating losses commercial banks suffer from selling such products has dropped to different extents thanks to rebound of the global market and importance they attached to downsizing such business. Statistics show that such business’ notional principal amounts of the nation’s Big Four state-owned commercial banks
, including ICBC, ABC, BoC and CCB, each has slid abut 50 percent since the fourth quarter of last year.

In addition, they lowered the proportion of complicated structural products in succession. Complicated structural products are always designed by foreign banks and faire value accounting of those products is also provided by them. They have become two big obstacles on the way of the growth of their Chinese partners’ derivatives business.

In order to reduce risk, Chinese companies have no choice but to buy foreign exchange derivatives. The pricing right is tightly controlled by foreign banks despite that the products are sold by their Chinese partners. As a result, a considerable part of the profit those Chinese banks gained from the business is taken by foreign banks.

Foreign banks know little about Chinese companies, so they prefer to sell products to the latter via Chinese banks. Those Chinese banks have to loan money to buyers of such products provided that loss takes place. Under such environment, those Chinese banks will be under rising credit risk. And the best way for them to solve the problem is to ask buyers of such products to pay deposits, added the insider with Trading Markets

Source: Singapore Hedge Fund, 08.07.2009

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Private banks under pressure to Change Business Models

July 9, 2009 — finetik

Private banks that don’t focus on profitable segments won’t make it, says Scorpio Partnership.

Amid the losses suffered by individuals, corporations and institutions from the global financial crisis has emerged the opportunity for private banks to step into the spotlight and highlight their strengths. Private banks, after all, are associated with financial advisory services and what was sorely lacking during the buying frenzy in capital markets in the run-up to the financial crisis was precisely that: advice. Too many investors were chasing the momentum, and sales-driven money managers were all too happy to take in the excess liquidity. The rest, as they say, is history.

A report by Scorpio Partnership, a London-based strategist and high-net-worth consumer issues research firm, shows that the private banking industry managed to pull through in relative terms in 2008. However, the industry is facing a very difficult 12 months ahead if it fails to adjust business models, according to Scorpio Partnership’s Global Private Banking KPI Benchmark 2009 report.

“2009-2010 will be a moment of truth for the global private banking model,” says Sebastian Dovey, managing partner of Scorpio Partnership. “Asset levels have declined by a median of -15.7% and cost-to-income ratios have risen by 13.7% which places a huge strain on the models of many competitors.”

The way to survive post crisis is through an “intelligent focus on profitable segments and efficiency drives”, Dovey says, adding that the traditional management tendency for “slash and burn” in such conditions will be much more damaging in the long-term.

“This is a time for vision and leadership,” Dovey says. “Our view is firms must now use traditional consumer tools in branding and advertising to reclaim confidence and new business.”

Global wealth managers now have around $14.5 trillion in assets under management (AUM), a decline of 16.7% from the previous year, according to the report.

Apart from slashing assets, the global financial crisis also affected the roster of the top private banking institutions in AUM. M&A activity, particularly in the US, influenced the top 10, with Bank of America (BoA) now becoming the world’s largest wealth manager, according to the report. The core of BoA’s asset base remains inside the US, however. UBS, meanwhile, remains in second spot and is effectively still the largest non-US international wealth manager.

AUM of the world’s top 10 private banks, according to Scorpio Partnership:

  • 1. Bank of America – $1,501 billion
  • 2. UBS – $1,393 billion
  • 3. Citi – $1,320 billion
  • 4. Wells Fargo – $1,000 billion
  • 5. Credit Suisse – $611 billion
  • 6. JP Morgan – $552 billion
  • 7. Morgan Stanley – $522 billion
  • 8. HSBC – $352 billion
  • 9. Deutsche Bank – $231 billion
  • 10. Goldman Sachs – $215 billion

The top 20 global private banks manage nearly $9.2 trillion of private client assets. That’s around 63% of the total global market and challenges the widely expressed view the global wealth industry is fragmented, according to the report.

The report shows that “market fragmentation as a characteristic of the industry is hugely overstated”, Dovey says. “Our goal has always been to demonstrate that market share — as measured by a percentage of assets managed relative to the total asset managed by all competition — is much more concentrated. This has significant consequences for evaluating the industry and businesses within it.”

Meanwhile, despite the fall in assets last year, the private banking industry as a whole added to its headcount. Overall, there was an uptick in new hires of 6% worldwide and the ratio of firms that were hiring in 2008 versus those that were shedding private banking staff was 4:1, the report says.

The report shows little evidence of a flight to quality through the worst of the crisis. Net new money results hint only that Swiss private banks may have seen a very marginal uptick in business, while some household names did not benefit at all.

It appears investors restructured portfolios among a number of different types of institutions when it was unclear which private banking institutions would emerge successfully from the banking crisis and which would fail.

The report points to five core strengths in the private banking model that enabled players of different types to perform well in difficult market conditions:

  • Ability to generate income from multiple sources rather than purely asset management
  • Wealth re-creation approach to business rather than exclusively wealth preservation
  • Ability to guide clients into high-quality specialist investments
  • Strength of brand and contemporary relevance to client requirements
  • Network leverage (either through branch systems or strong external partnerships) for new client access

“These five qualities are the future principles upon which the private banking industry can rebuild based on our analysis of business model performance,” says Catherine Tillotson, head of research at Scorpio Partnership. “The market champions will be those that concentrate on modernising the proposition using contemporary positioning tools to re-engage with the client and developing products and services that are committed to wealth re-creation. Institutions that opt to sit tight in 2009 and ride out the storm will sink.”

The Global Private Banking KPI Benchmark 2009 reviews the global wealth management industry. The annual report covers more than 248 private banking and wealth management firms.

Original article here

Source: AsianInvestor.net, 09.07.2009 by Rita Raagas De Ramos

Posted in Banking, Financial Services, Library, Risk Management, Wealth Management. Tags: , , , , . Leave a Comment »

VAM: Vietnam Monthly Market Analysis June 2009

July 9, 2009 — finetik

VAM Market Update – Vietnams GDP is estimated to have grown by 3.9% in 1H09, meaning in 2Q09 GDP growth rallied to 4.5% up from 3.1% in 1Q09. The resilient growth story continues to be driven by industrial production, renewed momentum in construction, and consumer driven categories. The data suggests the 4.5-5% GDP growth rate consensus prediction for Vietnam in 2009 is on track.

Monthly inflation was again positive in June up 0.55%, but on a YoY basis has dropped to just 3.94%. The trade deficit for 1H09 is estimated at US$2.1 bn, equalling 14.7% in the same period last year with export growth down 10.1% and import growth down 34.1%. Vietnam has received capital inflows of roughly US$8 bn in 1H09 from FDI and ODA disbursement and overseas remittances keeping the balance of payments in a healthy position for the time being.

However, FDI which is a major driver in the Vietnam growth story is slowing down, with commitments in 1H09 estimated at US$8.87 bn down 77.4% on year and also on pace to fall below 2007 levels.  The local USD/VND exchange rate remains virtually unchanged.

The VN-Index was up 8.9% in June to 448.29, but corrected strongly down 12.5% from a June 9th peak of 512.46.  In June, the average daily traded value on the VN-Index surpassed the US$100 ml mark reaching US$108.3 ml per day, roughly 12 times the average daily traded value in February 09.  In other market news, the much awaited and delayed launch of the UpCom market occurred on June 24th with 10 OTC companies listed for the trial run which will run through July. It is expected the market will bring greater liquidity and transparency to the OTC market in Vietnam.

Read full article and market statistics at VAM Monthly Newsletter – Jun 2009

Source: Vietnam Asset Management 08.07.2009

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Carbon trading increases in first half of 2009…however

July 8, 2009 — finetik

Trading volume is up, but it’s largely thanks to activity in Europe.

he headline news looks good: The global carbon market in the first half of 2009 grew by 124% in terms of volume and by a healthy 22% in terms of value, according to Point Carbon, a provider of market intelligence and advisory services for the energy and environmental markets.

The financial value of the global carbon market rose to €46 billion ($65 billion) in the first six months of the year.

However, one of the reasons for the increased trading is because the global financial crisis is prompting people to sell their surplus allowances.

“Prices are lower due to the economic slowdown but volumes are much higher as many depressed industry sectors in Europe have decided to trade their surplus carbon allowances illustrating how the economic slowdown is, in effect, increasing market activity in the carbon sector,” said Henrik Hasselknippe, global head of carbon analysis at Point Carbon Trading Analytics and Research.

The Kyoto Protocol on climate change, which entered into force in February 2005, resulted in the launch of the European Union’s Emissions Trading Scheme (EU ETS), which is the world’s first international emissions trading scheme. It works on a cap-and-trade basis, where the total allocation is set at the start of a trading period.

It is this scheme — the EU ETS — that remains the dominant market, generating some 75% of the total global carbon market volume in the first half of 2009, worth €39 billion, which is up 29% on the same period last year.

The next largest segment of the global carbon market, the Clean Development Market, which involves many projects out of Asia, generated €5.4 billion in volume, but that was down 28% compared with the same period last year. Volumes traded within the Primary Certified Emissions Reductions (CERs) market fell by 36% compared with the first half of 2008. CERs are project credits generated from emission reduction countries in developing countries.

“These reductions in volume and value reflect the fact that the economic downturn has seen future demand for (and supply of) these types of credits declining in favour of allowances which have already been issued. In addition, the project market appears uncertain given the lack of clear policy signals emerging from the current round of climate negotiations set to conclude in Copenhagen later this year,” noted Hasselknippe.

World leaders will meet in Copenhagen in December to discuss if and how they will continue the Kyoto Protocol. Read full article

Source: FinanceAsia, 08.07.2009 By Lara Wozniak

Posted in Asia, Energy & Environment, News. Tags: , , , , , , . 1 Comment »

China and Latin America; the new conquistadors – Update 1

July 7, 2009 — finetik

When Hugo Chávez first met Barack Obama at the Summit of the Americas in April, the Venezuelan leader could not resist pressing one of his favourite tracts into the US president’s hands. Eduardo Galeano’s Open Veins of Latin America: Five Centuries of the Pillage of a Continent, a staple of student radical literature, tells the story of a continent that has long seen itself as the victim of foreign exploitation. Mr Chávez, though, may have given the book to the wrong leader. It should have been given to the Chinese.

China’s links to the region are deepening fast. Indeed, if the mooted $15bn bid for Repsol YPF’s Argentine oil unit by China’s state-owned energy companies CNOOC and CNPC comes off, South America will also be the recipient of China’s largest outward investment to date. Bilateral trade with the region has risen 10-fold since 2000, reaching $143bn last year. China is now Brazil’s largest trade partner. It takes almost three-quarters of the iron ore produced by Vale, the world’s largest iron ore company. It has been a bigger buyer of Chilean copper than the US, and it is already a major investor in Venezuelan oil – even as Caracas has nationalised several western concerns.

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    Beijing formalised this heightened level of Latin attention last November. In a policy statement, it talked amicably of “win-win” strategies, and mutual political respect. Deeds followed words, with a renminbi currency swap extended to Argentina worth $10bn, a $1bn pledge to invest in an Ecuadorean hydroelectric plant and, in the Caribbean, loan packages to Jamaica and continued trade credits to Cuba. Meanwhile, Chinese light manufacturers eat their Latin American counterparts for lunch. A few years ago, the most oft-cited economic statistic in Mexico was that more sombreros were made in China than at home.

    Posted in Argentina, Asia, Brazil, Chile, China, Energy & Environment, Latin America, Mexico, News, Venezuela. Tags: , , , , , , , , , , , , . 1 Comment »

    Singapore’s private banks lacking back office automation in trade processing – study

    July 7, 2009 — finetik

    Research on the post-trade processing practices of private banks in Singapore has revealed that nearly 60% of private banks in the region lack back office automation in trade processing.

    The study was conducted by InsightAsia Banking & Finance Consulting, a division of InsightAsia Research Group, that specialises in the Asia Pacific region, and commissioned by Omgeo, the global standard for post-trade efficiency.

    Against a background of the growing importance of Singapore to the global private banking sector, Insight Asia surveyed a group of Singapore-based private banks regarding their post-trade processes. The study focused on a range of issues related to trade processing, including the effects of the recent financial crisis on the private banking sector and the current mechanisms that private banks are using to process trades.

    The study showed that nearly a third of private banks continue to manually carry out trade allocation and confirmation, rather than processing their trades electronically. Manual processes can make a firm more vulnerable to trade failure and create a more risk-prone environment because there is more room for error in comparing trade details.

    Many of the Singapore private bank executives surveyed highlighted the importance of having efficient and flexible banking and processing systems as a key area of development. There was general agreement that higher levels of automation in trade processing would result in a reduction in operational risk. In fact, of the executives interviewed from within private banks currently carrying out trade matching in Singapore, 59% said they either wanted to make improvements to their system or were in the process of doing so.

    “This study suggests that Singapore private banks are becoming increasingly aware of the benefits of introducing automation into their back-offices,” said James Drumm, Executive Director, Asia Pacific for Omgeo. “At present, many private banks operate in a manual environment, but there is a growing consensus that introducing more automated processes will significantly decrease their operational and systemic risk.”

    In addition to the findings on electronic trade processing, the study also found general agreement from the private bank executives interviewed that, while recent events in financial markets were unprecedented and posed some challenges to the sector, Asia, and in particular Singapore, remains a key element in their global expansion strategies.

    Another key finding of the research was that there was almost universal agreement among executives that the focus on counterparty risk has increased substantially over the last 12 months, and is likely to continue in the foreseeable future.

    “We conducted this study against the background of the global financial crisis,” Phillip King, Head, Banking & Finance Consulting for InsightAsia noted. “The impact of these events at a group level for many private banks is still ongoing; however the long term growth story in Asian wealth markets remains intact. The COOs and operations executives interviewed reveal that Singapore has a solid corps of seasoned and highly capable professionals in senior roles in its private banking sector. They are a strong collective asset to the ongoing development of Singapore as a private banking hub.”

    Source: Finextra, 06.07.2009

    Posted in Asia, Banking, Financial Services, News, Risk Management, Singapore, Wealth Management. Tags: , , , , , , . Leave a Comment »

    Islamic banks need to ‘revamp model’

    July 7, 2009 — finetik

    Islamic banks in the Gulf Arab region need to adopt a new business model and take on more customers to weather the economic downturn, Ernst & Young’s head of Islamic finance said.

    Islamic banks, many of which are investment houses, have been heavily exposed to the real estate market, which saw prices start to plummet at the end of last year.

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    Islamic finance: Sukuk market on trial as Islamic bonds default, Euromoney July 2009

    They channelled the wealth accumulated during the six year oil boom that ended in mid-2008 into regional real estate through private equity and asset management.

    “They relied heavily on selling investments and placements and that business model is being questioned,” Sameer Abdi, who is also a partner at Ernst & Young, said.

    The global liquidity constraints will force Islamic banks to look for new customers and sources of funding, including moving into corporate banking, trade finance and retail banking, Abdi said.

    Islamic banks cater to investors who do not want to earn or pay interest, viewed as usury under Islamic law.

    Some banks have already started to set up funds that enable retail customers to buy sukuk, or Islamic bonds, which in the past were mostly bought by regional banks and large Western financial institutions.

    However, analysts have said that it will not be easy for Islamic banks to reduce their heavy exposure to real estate, as they are too small to move into such areas as regional infrastructure and energy projects, which require large investments.

    Islamic and conventional banks in the region still have more of the financial crisis ahead of them, Abdi said. “The financial industry is not out of the woods in the Middle East at all, in fact we are still in the middle of our crisis,” he said.

    “It’s going to take some support from regulators and governments to actually come out of the crisis, and that may be six to nine months away, at least.”

    The restructuring of the debts held by troubled Saudi family groups Saad and Algosaibi could heavily impact many banks in the region.

    The United Arab Emirates alone face at least $3bn in potential losses from their exposure to the two groups, an Emirati newspaper reported on Thursday.

    Abdi also said corporate defaults of private sector companies in the region were very likely over the next six months.

    Source:Gulf times, Reuters/ Manama, 06.07.2009

    Posted in Financial Services, Islamic Finance, News. Tags: , , , , , . Leave a Comment »
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