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FINANCIALS
Are Hedge Funds like Man Group
still worth investing in?
Faisal Samih
The recent market volatility has seen a great
rush away from asset managers and hedge
funds toward safer assets such as US
Treasury Bills. Hedge funds like Man Group
are no longer judged to be the market
geniuses as once thought. Investors that
once thought hedge funds would profit from
such volatility via algorithmic trading have
shockingly seen the value of their
investments drop. Given the slow motion
meltdown currently occurring within the EU
we should investigate how Man Group will
perform and do massive quantities of selling
present new opportunities for investors?
The hedge fund industry has been damaged
during this recent bout of volatility. The
world‟s largest listed hedge fund, Man Group
has seen its share price half in just two
months. Man once traded at its intrinsic
value of £2.40 but now trades at a shade
above £1.20. Though there was strong
support at £1.50, the previous all-time low in
2009, it dropped further. This cataclysmic
loss was due mainly to the Eurozone debt
crisis which resulted in a suppressed investor
appetite. The ensuing panic has resulted in
Man‟s „Assets Under Management‟ (AUM)
dropping from $71 billion to $64.5 billion.
Most of the withdrawals were taken out of
the GLG Fund, a recent addition to Man that
has underperformed lately. The purchase of
GLG last year has added a certain degree of
diversification risk and the underperformance
of GLG has increased reliance on the AHL
fund to bring in fees. The AHL fund is a
computer driven fund that now accounts for
$25 billion AUM delivering a staggering 80%
of profits. Such over-reliance in AHL has
damaged Man Group. This was evidenced
when shares rallied in early October and AHL
lost as a result of short positions
subsequently resulting in shares dropping
5.1%.
There also seems to have been a great deal
of short trading on Man that seems to have
exacerbated the fall due to the drop in AUM.
On September 28th alone 2% of Man Group
shares were borrowed by short sellers. This
is highly significant given that the total share
issue for Man Group is 1.85 billion shares
and resultantly a high volume of shorts
pushed the share price down further. This
short trading may in part be due to
speculation that Man Group made a poor
investment in MF Global. This speculation
largely stems form the fact that the fund
used to be a subsidiary of MF before
becoming independent. Such miscalculations
would not be without precedent given that
Man Group invested Madoff‟s Ponzi schemes.
However, the fund has reassured investors
that that it has no counter-party exposure to
MF Global and that the two are separate.
The volatility in the financial sector has
resulted in hedge funds losing on average
4.11% in August. Man however, has managed
to make pre-tax gain of $154 million for the
first 6 months of 2011 and has also delivered
a dividend of 9.5 cents a share. The fund
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remains in a position of strength with a cash
reserve of $1 billion. Recently it was unveiled
that $150 million of this reserve would be
utilised through a share buy back scheme on
November 3. This was later followed by
several director purchases of shares which
hint that perhaps the leaders of Man realise
that it is undervalued and offers strong
potential. The shares seem to be trading at a
massive discount to their value. A small drop
in AUM and a change in market conditions do
not seem to justify such a sharp drop. This is
particularly evident given that Man traded
around 150 at the height of the credit crisis
in 2009 and now at a time when market
conditions are not as bleak, profits are being
delivered and a strong reserve held the
current share price is lower. This seems
indicative of a panic sell off. In fact, the fund
is now trading at an all time low. An increase
in share price seems inevitable because the
AUM have stabilised around $65 billion and
an increase of AUM seems inevitable as Man
continues to produce growth.
To conclude, Man Group should be viewed as
a worthy investment given that it is trading at
half its intrinsic value; despite the fact that
fundamentals have seen little change since it
was trading above £2.50. The share price
could certainly recover to this level if market
conditions improve and AUM recover. Not
only has it outperformed many hedge funds
in a financially turbulent environment, it has
also been taking in hefty profits and
managed to maintain an attractive dividend.
In fact the dividend yield at the current price
(if next years dividends remain the same) will
be a respectable 10%. High dividend yields
like this are rarely found and reason enough
for some growth investors to invest. If, as
predicted, the share price increases there will
be a corresponding increase in dividend yield
enabling yields in excess of that stated.
However, in part due to the GLG fund, there
is a significant diversification risk that has
recently underpinned the fund‟s
underperformance. This subsequently places
a reliance on the AHL fund to raise fees. GLG
principally only takes long positions on
equities and when market conditions
improve, it may be able to project some
profit which would potentially mitigate this
diversification risk.
ENERGY
Changes in the Alternative
Energy Companies
Aulia Beg
Contrary to popular belief that alternative
energy companies are highly beneficial, they
are facing great difficulties during the current
crisis in the western world. This mainly stems
from the change in the political framework
and the market‟s view of this industry.
The change in the political framework shows
how alternative energy companies would be
given little room for growth and
opportunities. One example would include
the Kyoto Protocol, which has been
abandoned by a major key player such as
Canada. This has been highly detrimental as
the Protocol was a key proponent of the
renewable energy sector.
The Eurozone crisis is another threat as it
weakens EU politicians support for renewable
energy. There is a push to curb subsidies for
green growth projects. This is expected to
slow volumes greatly from at least 65%
annual over five years to 2016 (FT, 2011).
Other initiatives to push for green jobs have
been undermined. One recent case would
include the collapse of Solyndra which was
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backed by $535m of federal loan under the
Obama administration.
Secondly, market sentiment has not had a
favorable view on this industry. The S&P
Global Clean Energy Index is four-fifths
below its 2007 high. The alternative energy
industry has received great attention to help
address the major economies dependence on
oil resources and the need to acquire
alternatives. This has lead to great growth
potential and harbored fierce competition,
price warnings and tighter financing.
Solar Flair (Thomson Reuters)
This is one example of fierce competition,
which has fueled a great deal of price drops
for solar panel energy due to massive cost-
competitiveness. This is due to overcapacity
and low-cost Chinese production. This
further accelerates price warnings. For
example U.S. based Evergreen Solar filed for
bankruptcy only less than three months ago.
Clearly, the industry is hardly thriving: the
MAC Solar Energy index has lost over a third
of its value in six months.
So the question is what will be the
implications? Does this mean with great
failures in this industry that time is now ripe
for more consolidation? Does this mean we
should look at General Electric and Vestas to
acquire other smaller firms? Or should we
look at who is profiting from the downfall of
the alternative energy industry in Europe and
the US.
As it appears that there is fierce competition
for this industry this means the ones with the
greatest advantage are the firms that
obviously provide the least amount of costs.
This is why we look towards the East that
provide cheap labour, but particularly to
China that has the capacity to set up a
renewable energy industry. It is widely known
that China is the world‟s biggest investor in
clean energy with $54.4 billion spent in
2010. Also its manufacturing capacity has
been growing rapidly thereby the world‟s
two-largest wind turbine manufacturers lie in
China. The main growth in China is driven by
its cheap labour, large home market and
support from local governments and state
banks.
Interestingly, although some companies in
the US find China‟s rise in renewables a
threat, they have managed to bring costs
down for renewable power generators. This
is highly beneficial as it makes then in line to
compete against coal or gas-fired plants
around the world. Clearly, the failure of some
alternative energy companies gives rise to
growth and new opportunities for other firms
such as in China. This is beneficial to the
wider-society as we now can have access to
cheaper sources of alternative energy and
relieve ourselves from our dependence on
oil.
RETAIL & CONSUMER
Retail Industry in India
Upasana Bhaumik
It is hard to find equilibrium in India, so
perhaps it is not surprising that finding
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consensus quickly seems to be nearly
impossible when it comes to policy which
affects the entire country. Economic
liberalisation from the 1990‟s helped
transform India into a force to be reckoned
with. Deregulation and privatization,
amongst other policies, have made India into
what it is today, so in first glance it seems
surprising that it was only in December 2011
that the government decided that in cities
with a population of more than one million,
foreign firms could own 51% of „multibrand‟
retailers. Primarily this meant that
supermarkets, controlled by the likes of
Walmart and Tesco, were now a possibility. A
few days later, the policy was stalled pending
further debate.
Supermarkets run by Indian firms exist with
full gusto in many cities. Many choose to
shop there for the convenience, cleanliness
and choice offered, in comparison to the
more common and traditional corner shops
which are found across India. These small
corner shops are the reason that there has
been so much opposition to the new policy –
fears that it would create mass
unemployment instead of curbing food
inflation. In India‟s $450 billion retail sector,
less than 10% of sales take place in a shop
resembling the stereotypical ones found in
developed countries. Allowing foreign firms
could change the scene in the retail industry
in India.
FDI in the retail sector in India might not
happen now, but it is bound to happen
sooner rather than later. It is common for a
developing country to slowly move away from
unorganised retail, and away from being as
dependent on agriculture as India is at the
moment. The changing demography of India,
the rapid progress made in the IT sector and
the ever growing influence of globalisation
were always bound to result in the
introduction of such seemingly dramatic
policies. India is now a global player and has
to keep up with other countries in order to
continue growing. The challenge is to ensure
that as much as possible is done to promote
growth, whilst making sure this is done
keeping in mind that the entire population
should prosper from the policies.
Problems in investment and growing inflation
(especially in food prices) have prompted the
speed in proposing this new policy. Previous
case studies show that organised retail,
coupled with effective supply chains, profit
farmers and reduce waste from harvests in
the long run. The technology and investment
required to do this can be provided by
foreign firms, and this way India does not
miss out on an opportunity. The policy could
also result in a more equitable distribution of
wealth across India, with more rural areas of
the country benefitting from growth than
they do at present.
Allowing foreign firms to help with a more
productive agricultural sector will not solve
all of India‟s problems, but it may well help –
if it works. It could create an atmosphere of
increased competition, hopefully resulting in
the utmost efficiency possible, and increased
prosperity in rural areas could result in
increased literacy rates. On the other hand,
the policy implementation may be ill
considered and rash, creating long term
unemployment for many with no special
skills and a livelihood entirely invested in
their small corner shop.
India is a land of opportunity and needs to
seize every opportunity which comes whilst
keeping the wellbeing of every citizen in
mind – it just needs to be done in a very
unique Indian way.
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HEALTHCARE
Pharmaceutical Companies in
Africa
Peter Smith
If there is one thing there is no shortage of in
Africa, it is disease, and as much as people
don't like to admit it, disease is big business!
HIV infection rates in countries such as
Swaziland exceed 25%, and a large
percentage of the population are hit my
malaria, various forms of hepatitis and of
course malnutrition.
It was promised at the G8 Summit in 2005
that access to antiretroviral treatments
(drugs to prevent HIV progressing to AIDS)
would be universal by 2010. The production
of such drugs is primarily controlled by the
FTSE 100 listed company, GlaxoSmithKline.
Due to the smaller size of the pharmaceutical
market in Africa, GSK and several other
pharmaceutical companies have been
skeptical to make an entrance. However
given the pledges of the G8, and pledges
from global financiers including Warren
Buffet and Bill Gates, such companies ought
to be increasing profits in the African
regions. I reasonable question might be why
other companies do not attempt to approach
the African pharmaceutical market. The
answer is the nature of global patent laws
which means that a few companies including
GlaxoSmithKline possess a monopoly of
several key drugs for Africa, in particular
antiretroviral treatments.
Recent research published by RNCOS predicts
a 22% increase in profits for the South
African pharmaceuticals industry. This must
have been partly inspired by the stepping
down of Thabo Mbeki as president of South
Africa, who actively denied the HIV/AIDS
concept and feared western pharmaceuticals
attempting to exploit his country for profit.
Pharmaceutical companies are clearly gaining
the message, with GlaxoSmithKline and
Pfizer forging a historic merger in 2009 to
combat AIDS, and GSK announcing its desire
to inject £60 million into HIV treatments for
Africa. The companies claim this to be part of
a 'not for profit scheme', but given their
reputation, this assumption may be naïve at
best. With any given larger market, the
companies have the ability to issue price cuts
(which may be as large as 33% for some
drugs), since they both access larger markets
and obtain humanitarian reputation for their
work. Such reputation is going to make
western governments much more likely to
engage further with the likes of
GlaxoSmithKline and Pfizer in the near
future.
Several pharmaceutical companies are lifting
patent rights whilst giving smaller firms
mandates to produce generic copies of
several drugs. This year GlaxoSmithKline has
experienced a 13% increase in profits from
the emerging markets, and a 7% fall across
Europe. Much of this is theoretical - GSK
made net earnings of 1.85 billion in 2010, of
which only 17.5 million came from LDC's (the
least developed countries). However, given
governmental and private pledges and the
abundance of disease with the continent, the
performance of pharmaceuticals in Africa
may be one to watch.
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TECHNOLOGY
The Blackberry Crumble
Daniel Gardiner
Research in Motion (RIM), the owner of the
Blackberry brand, was reeling from the
repercussions of a processor malfunction at
its UK base of operations in Slough on 10th
October which meant that the 70 million
Blackberry users across Europe and Africa,
and later certain parts of America, were
unable to send and receive emails.
RIM‟s email technology relies upon a
centralized private network to push emails to
individual Blackberries; when the Slough hub
malfunctioned, this caused a build-up of
unsent messages which compounded the
problem and caused “The Blackberry
Crumble” as it quickly became known, to
spread to America. Despite a lot of popular
unrest, the problem was fully resolved in the
following couple of days, and on 17th
October, Mike Lazaridis, co-CEO of RIM
promised Blackberry users affected by the
problem would receive $100 (approximately
£62) in free Blackberry apps.
RIM Share Price, 26th Sep – 24th Oct (ft.com)
Markets were not too quick to judge this as a
fatal malfunction that would seriously
damage the long-term prospects of RIM and
the Blackberry brand, despite the share price
of RIM losing 1.40 points or 5.76% of its
value during the week which began on the
10th October. This depreciation could be seen
more of a quick speculative slide more than
anything, but The Blackberry Crumble has
opened up questions about the long term
profitability of RIM and the competitive
structure of its markets.
RIM Share Price, Oct 2010 – Oct 2011(ft.com)
The above graph illustrates the one-year
share price performance of RIM which shows
that the events of 10th October may have just
been a short acceleration in what is looking
to be a long-term downward trend of RIM‟s
share price. Over the past year the price of
RIM shares has fallen by 54.24%. This
movement is possibly a reflection of RIM‟s
falling competitiveness and investors losing
the confidence to take long positions in the
firm. It is certainly a reflection of falling
profitability; between April and June 2010,
Blackberrys alone accounted for about 20% of
all smartphone sales but only 12% in the
same period this year, as pointed out by the
research firm Gartner. It seems that the
events of 10th October are not the only
worries for RIM with regards to Blackberry:
competition is a key long-term struggle.
This was highlighted by the fact that The
Blackberry Crumble coincided with the launch
of the new iPhone 4S. Sales were predicted to
be between 2-4 million units on the first
weekend and actually exceeded the upper
limit. Despite the shortfalls with the 4S such
as few technological improvements and
difficulty in upgrading software and
recognising voice commands, there is an
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increasing sympathy in the business
community to the iPhone over the Blackberry
because the latter may have lost one of the
main selling points from which it derives its
popularity in businesses – reliability.
Apple Share Price, 26th Sep - 24th Oct (ft.com)
Not only that but Apple‟s iPhones – and for
that matter, Google‟s/HTC‟s Android
smartphones - are more appealing to the
mass market which does not rely on sending
extensive streams of emails every day from
their handset. iPhones and Androids are
much better suited to media content than the
Blackberry, and despite the Blackberry having
around 40,000 apps, this is only a fraction of
those available for iPhones and Androids.
This aspect is crucial given that the
smartphone market is particularly relatable
to the Schumpeterian model of creative
destruction whereby older products are
constantly being replaced by newer, more
innovative ones, and failure to innovate
rapidly drives a firm out of the market. This
is possibly what we see with RIM‟s yearly
share-price performance above – it may be
stagnating whilst Apple and Google/HTC are
innovating.
Having said that, the future prospects for
RIM, as far as innovation is concerned, may
actually be looking up. At the end of October,
RIM reached a contract with MasterCard to
allow it to use PayPass, which employs Near
Field Communication (NFC) technology, in
the Bold 9900 and Curve 9360. NFC
technology allows these phone users to have
access to PayPass which is a mechanism
whereby the user can make contactless
payments in stores which use PayPass
technology – the number of which is
growing. Using NFC technology is something
which HTC has tapped into experimentally
but not so much Apple, so maybe rather than
being pushed out by creative destruction,
RIM is in fact about to help fuel the spiral.
France Telecom-Orange has said that RIM
beginning to use PayPass – not yet used by
either of RIM‟s main competitors - in some of
its handsets has the potential to revolutionise
the smartphone market, and therefore should
be something for Apple and Google/HTC to
be wary of, especially since many analysts
have proclaimed non-contact payments to be
the future of mobile commerce. Even if the
technology will be in your debit card, too, a
debit card is one thing less to always
remember for wherever you go.
If, however, we take a look at RIM‟s
macroeconomic figures in isolation, things
do not currently look good. This year
Samsung sold the most smartphones in the
third quarter, and Canalys analyst Tim
Shepherd noted that: “RIM's market share has
fallen below 10% for the first time and the
current outlook for it in the U.S. is certainly
bleak [so] RIM must deliver a competitive,
high-end 4G smartphone in early 2012 [to
remain competitive]”. In terms of US market
share, RIM fell from 24% to 9% between
third-quarter 2010 and 2011, although this
might be offset by growing demand in other
parts of the world, particularly within EMEA,
from a young generation attracted by its free
instant messaging service.
For RIM, then, it seems there is a mixed
business outlook for the future. Certainly, at
the current time, the sales figures and
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market position are not enviable.
Contrariwise, RIM has some innovative
products in its pipeline for the coming year,
and this, combined with growing market
demand from alternative social groups, may
help to reverse the contraction which it has
been suffering for well over a year; though
Apple and Google/HTC are not going to stay
still so RIM has heavy competition ahead.
The future is bright, the future is
ARM!
Ben Black
Whilst it is fair to say that macro conditions
are less than favourable for the demand of
high value consumables, there is one
Cambridge based company that is
increasingly getting its fingers into all pies
within the technological sector. That
company is ARM Holdings.
In 2010, ARM partners shipped over six
billion ARM Powered chips. Its designs are
used in more than 95% of the world's mobile
phones and are increasingly designed into a
wide range of other digital electronic
products. A glance over the recent Q3
figures just shows the increase in the
demand for ARM architecture with 14
existing semiconductor companies buying
their first processor licenses out of a total of
28 licenses signed in the quarter. Indicators
such as this are showing a huge
technological shift that the industry is
undergoing.
Recently, Hewlett Packard(HP) showcased
servers for the first time using ARM chips.
They are just one of many companies‟
trialling micro servers, which focus on
extremely low power consumption rather
than high processing speeds (After all,
power, heat dissipation and the resulting
huge air conditioning costs is exactly why
Facebook is building a data centre on the
Arctic circle.). HP showcase is particularly
significant given they currently have 30%
market share in servers, and is Intel's number
one customer. This alone could be the start
of a massive multi-year shift for the
computing industry to move from
performance led (Intel's leadership) to power
led (ARM's DNA) architectures. Adding
further weight to the case is Microsoft, some
42% share of the server market, who is a
primary license of the new ARM 64-bit
ARMv8 architecture. To put this into a
valuation perspective, the server market is a
c5.6bn a year market, nearly 14 times larger
than ARM's total annual sales.
It should not be forgotten who the real gem
in ARM‟s customer crown is, which is of
course Apple has indicated for some time
now that it doesn‟t want to support 2
operating systems (OSX and iOS) long term,
and wants everything to morph into the iOS
system. This has never been possible before
given the system requirements for Macs
which need 64bit architecture. This doesn't
happen overnight but checks suggest Apple
has signed a core ARM license for this 64-bit
ARMv8, which means in the future every
Macbook, Mac, iPad, iTV, iPhone, AppleTV
and whatever else is in the pipe for them will
seamlessly integrate with the cloud and all be
based around ARM architecture. At this point
it is worth noting ARM‟s history; it was
founded back in 1990 as a spin off from
Acorn and Apple.
More news relating to ARM came in the form
of an announcement recently made by the
new CEO of Advanced Micro Devices
Inc.(AMD) who stated plans to cut 10% of its
workforce across all divisions. Of more
significance is the decision to reinvest the
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cost savings on new growth initiatives of low
power processors and cloud computing. It
shouldn‟t take too much thought to think of
who the beneficiaries of this could be. The
company recently hired a new Chief
Technology Officer, Mark Papermaster, who
used to work at Apple and IBM. So in other
words, he has extensive knowledge of the
ARM and MIPS based technologies rather
than x86(the primary processor offered by
AMD). It is, in my view, highly likely that AMD
will move to a multi architecture approach
perhaps in the form of combining its GPU
with ARM‟s CPU cores, the way Nvidia
successfully has. Also, with AMD's mix
geared towards desktop PCs and servers, it
makes sense to embrace the ARM
architecture as Microsoft, 42% share in server
market, is a primary licensee of the server
focused ARMv8architecture. In addition its
worth recalling HP's decision to use low
power servers using ARM chips as HP
happens to be AMD's largest customer too.
All things considered, I feel the prospects,
both long and short term, all stack up to give
a very compelling story here. With the
evidence above there are clearly signs of a
huge shift in technology for the industry and
ARM is, in the majority of cases, behind
much of implementation of this shift,
benefiting across the board and I feel in an
excellent position for the future growth.
ARM Holdings, Dec 2008-Dec 2011 (ft.com)
EMERGING MARKETS
Mongolia‟s Economic Growth
Prospects
Rupreet Sandhu
When someone mentions Mongolia, a thriving
economy is not always what first comes to
mind. Nevertheless, over the past decade,
Mongolian Equities have seen an astounding
10,000% return. Additionally, Mongolian
equity markets in 2010 dwarfed the returns
of the MSCI EM (index tracking emerging
markets performance) and the S&P 500, and
therefore investors are starting to pay more
attention to Mongolia. However, to what
extent is Mongolia to develop, and what
factors may prevent Mongolia from reaching
its full potential.
Mongolia‟s main advantage is it has 82
elements from the periodic table in
abundance. Cash and Commodities are the
main ingredients for economic progress, for
which Mongolia has no shortage. It is one of
the most mineral rich countries in the world
which is currently driving growth. Because of
the copious reserves, Foreign Direct
Investment (FDI) has increased by 176% in
2010 and now stands at USD1.57 billion. FDI
correlates with the influx of foreign technical
expertise which is providing Mongolia with a
world class workforce.
There is also a continuous investment in
Human Capital, with the Cambridge
Assessment being in talks to restructure the
Mongol Education system to raise education
standards. Saying such, Mongolia currently
has a literacy rate of 97.3% ranking above the
likes of Greece. This coupled with a young,
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thirsty for success population, makes
Mongolia‟s future prospects even more
promising.
Moreover, Mongolia could be the next
Switzerland. People tend to be sceptical
about Russian and Chinese goods. Being a
haven for cashmere and a country where all
clothes made are organic and cruelty free,
Mongolia could tap into the upper end of the
market and be the Switzerland of Asia. This
could further European demand, and again
result in more FDI.
On the contrary, there could be a Dutch
Disease resource boom which may prevent
Mongolia from developing. The Dutch
Disease explains the apparent relationship
between an increase in exploitation of
natural resources and a decline in
the manufacturing sector. This means
Mongolia‟s increase in revenues from natural
resources, will make Mongolia‟s currency
stronger compared to that of other nations.
Therefore, Mongolian exports will become
more expensive, making the manufacturing
sector less competitive.
The resource curse also implies that
countries with copious natural resources tend
to have less economic growth and worse
development outcomes compared to nations
with less. This may be because of volatility of
revenues from the natural resource sector
due to exposure to global commodity market
swings.
A major concern is whether Human capital
can actually keep up with economic growth.
There is arguably not only a shortage of
Human Capital to keep up with growth, but
also a shortage of people in general.
Mongolia‟s population is only 2.7 million,
spread around a country 1,566,500 sq. Km.
It must also be noted the severe winter
conditions have a significant impact on the
Mongolian infrastructure. Harsh winters
result in pavements cracking, pipes freezing
and a pollution trap! This means that there is
a continuous need to reinvest in the
destroyed infrastructure which takes up
resources and money.
Overall, Mongolia still has some of the most
promising growth prospects in the world. In
a world of finite resources, a country so rich
in non-renewable resources will inevitably
develop. Although there may be a human
capital inadequacy in the short run, in the
medium term, multinationals, such as Rio
Tinto will bring in their own employees if
there ever was a human capital inadequacy.
The “natural resource curse” seems to be
nonsensical recently, with gold and copper
hitting record highs. In the long run, the FDI
and infrastructure developments
multinationals bring into the country will
allow sustained prosperity, and continuous
development.
FIXED INCOME
European Debt Crisis
Ivan Rangelov
In the period 2000-2008 it was perfectly
acceptable for European countries to run
significant budget deficits, which surprisingly
did not pose a major concern to investors.
The turmoil in the European debt markets in
the past two years however signalises the
investors have woken up. Greece triggered
market uncertainty in the bond market,
which followed by higher bond rates for
Ireland and Portugal. But considering the
deep economic integration within the EU, it is
to no one‟s surprise that the crisis which
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started in the periphery is now approaching
the heart of the EU.
Spain was the first larger economy to endure
issues with its bonds even though its debt
level is significantly lower than the likes of
Greece and Italy- only 60.1% of GDP.
Nevertheless the high unemployment and
sluggish economic growth raised concerns
among investors and the yields for Spanish
10-year-bonds have been above the 6% line.
Germany‟s 10-year-bonds for example have
yields slightly above 2%.
Italy happened to be the next major
European country to endure the pressure of
the markets. Its significantly large deficit
(120% of GDP) and yet slower than the
average for Europe economic growth over the
past decade did not seem to be very
reassuring for investors. This led to the
higher yields demanded for Italian bonds and
on November 8 they crossed the 7%
psychological barrier for the 10-year-
government bonds. Greece, Ireland and
Portugal had to seek bailouts after crossing
this line but this option would be too
expensive for Italy. The government, under
the threat of being unable to meet its
payments at the current yield, pushed for
austerity measures. This seemed to have
somewhat eased the markets and on
November 11 the yields fell sharply to 6.7%.
They continued to hover around the 7% line
for the rest of the month.
Belgium came next on the list with a
significantly large debt (100% of GDP) and a
budget deficit of 5% in 2010. Standard and
Poor‟s degraded its rating from AA+ to AA
and this caused 10-year-bond yields to
surge to 5.66%. This forced the government
to tighten fiscal policy in order to restore
investors‟ confidence, which sharply
decreased bond yields to 4.66%.
Thus country by country sovereign debt
issues have reached the centre of the
Eurozone. And if two years ago some
expressed extreme views of Greece leaving
the Eurozone, today this solution would not
be viable as most European countries seem
to struggle with their debts. Thus it is not a
single country is threatened, but the stability
of the whole monetary union and possibly
the future of the EU.
European leaders have understood the
significance of the situation and are in the
process of preparing adequate measures to
tackle the unrest in the markets. They appear
to have agreed on a deal, the details of which
are still under further discussion. Even
though it would be officially disclosed at the
European Summit on December 9, the
outlines are somewhat clear and include
three major solutions. Among these would be
a stricter and unified fiscal discipline within
each Eurozone member, with a number of
sanctions for not abiding to it. Another
measure would be to increase the funding of
the European Financial Stability Facility in
order to build a firewall against spreading
contagion among other countries.
Furthermore, the troubled economies would
be required to enhance their austerity
measures, decrease their budget deficits with
the goal of eventually restoring investor
confidence. These long term solutions do not
seem to be acceptable for all parties. French
PM Nicolas Sarkozy expressed his desire for
immediate intervention by the ECB to ease
the bond in the short term. Mario Draghi
(head of ECB) however argues the bond
markets tend to react on the long term
expectations and therefore immediate
actions by the ECB might not be required.
13
Even though the markets have reacted
positively on the news of the three pillar
package, the situation is still far from settled.
Many remain sceptical of the usefulness of
the current solutions provided by the
European leaders. Nevertheless, all parties
have recognised a fundamental- the coming
months could potentially be detrimental for
the future of the Eurozone.
FOREX
Rupee, Rupee, Rupee
Jordan Rankin
With all the attention that has been given to
the Euro-zone crisis over the past few weeks,
especially with the EU summit in Brussels in
October, it has been easy to overlook what
has been going on in other parts of the
world. One country which may be able to
sympathise with the situation of some EU
countries is India, which has been suffering
from slowing growth, a currency which is
setting record lows against the dollar and
also struggling to halt high levels of inflation.
In the last month the rupee has depreciated
by over 6% compared with the US dollar, and
it has fallen by 18% against the dollar since
the start of August. These high levels of
depreciation have resulted in the rupee
hitting a new record low of R52.73 to the
dollar. This is leaving one of Asia‟s biggest
economies with one of its weakest
currencies.
Problems for the rupee have been coming
from many sources; with both slowing
growth and high inflation, India‟s central
bank has a difficult balancing act to manage
in terms of monetary policy and at what level
the interest rate is set. GDP growth has fallen
below 7% in India and has helped contribute
to the economy growing at its slowest rate
for over two years. Although 7% may seem
like a high level of growth when compared to
the0.5% growth achieved by the UK in the last
quarter, for an emerging economy which had
previously been aiming at GDP growth levels
of over 9% it is a significant and worrying fall.
India also has the highest levels of inflation
of any big emerging economy - edging
towards 10% - and has been relying on
monetary policy to try and tackle the issue,
increasing lending rates more than a dozen
times since March 2010.
With the economy clearly struggling to get a
grip on inflation, investors have been fleeing
the rupee in favour of the safety provided by
currencies like the US dollar. This quick sale
of rupees has obviously also contributed to
the depreciation experienced over the past
months, and has given the Indian central
bank a further headache; in order to protect
the exchange rate (so as not to suffer when it
comes to importing oil or food priced in $US)
a higher interest rate would be required, but
this would then cause issues as it is likely to
further hinder the already struggling GDP
growth of the economy. China is seen by
some as the model to be followed for the big
emerging markets, its success in controlling
inflation gives investors the confidence to
put money in to the economy, something
which India and the rupee would benefit from
now.
The Indian government and the Reserve Bank
of India face a period of difficult decisions in
order to try and get the economy back under
control and pointing in the right direction
again. It is expected that there will be some
intervention by the RBI soon to try and stop
the free fall which the rupee appears to be
suffering from. As with any intervention
though, there are already worries that the
14
action taken won‟t be of the level required,
and also that because of the economic
situation in the wider world, the rupee will
continue to fall until at least the end of the
year even with intervention.
How did currencies move along
with the tumultuous economy over
the second half of 2011?
Xiaotong Hong
With the overwhelming European debt crisis,
the euro is experiencing the largest ups and
downs over the last decade. Heated debates
among economists and politicians made
newspaper headlines almost daily.
Continuous fears and doubts of the solutions
to the European debt crisis and the unstable
financial systems dampened investor
confidence. When posting an eye on the
world‟s largest economy – the United States
has also experienced a difficult period when
President Obama arduously attempted to
restore citizen confidence for the country‟s
prospects after debts were downgraded.
Therefore it is necessary to examine how
fundamental economic related events affect
the relative strength of currencies, which
reflects the power of economy. In this essay,
three months-August, September and
October, over the second half of the year are
examined, when tremendous economic
fluctuations were seen.
The Eurozone debt crisis is the major
downward pressure on the value of the Euro,
while the value of pound sterling is also
relatively affected. The debts situation in
Greece, Italy, Ireland and the peripheries are
still a great concern by European policy
makers and investors. Bailout funds for
Greece were urgently needed for the survival
of euro. The value of Euro/USD has
continuously declined over the months,
which placed European countries in a
detrimental position. Unemployment and
economic growth related figures did not give
positive prospects on the economic
development of Europe. Investors and
consumers lacked confidence in the
European economy. However, a striking
turning point happened at the beginning of
October when European Summit
compromised to recapitalize European banks
and restructure their banking systems.
Crucially, European countries took
corporative action to solve the euro- zone
debts problems. The relative value of Euro
over US Dollar seemed to retrieve to 1.40
levels.
EUR/USD Jun 2011-Dec 2011 (ft.com)
When looking at the US economy, the whole
period of July was overwhelmed by
uncertainty about US debt ceiling.
Democratic and Republican party had long
debates on whether to raise the debt ceiling.
Just 10 hours before the deadline on 2nd of
August, President Obama signed the bill
which raised the debt ceiling from $14.3tn to
$16.7tn. This caused a sharp fall in the
relative value of the US dollar relative to
other currencies. Another contributing factor
to US uncertainty was the rating agency,
Moody‟s, downgrading US credit to Aa and
scored a negative outlook in American‟s
economic growth. In terms of the
employment situation in the US, stagnated
unemployment made restoring confidence in
economic recovery more difficult, with
unemployment at over 9% over the second
15
and third quarter of 2011. From the graph of
Swiss Franc /US Dollar, we can clearly see
that the value of US Dollar fell continuously
over August, when a pessimistic atmosphere
hung over the stock markets all over the US
and the rest of the world. When examining
the nonfarm payroll data, one of the most
influential economic indicators in reflecting
the prospect of business expansion in the
US, the figures did not meet previous
predictions. This placed further pressure on
the value of US Dollar over other relatively
strong currencies, such as the Swiss Franc,
Japanese Yen and New Zealand Dollar.
Consequently, the data since the second half
of the year has not produced positive figures.
Nevertheless, when President Obama urged
Congress to pass the employment plan and
increase taxes, investor confidence in the US
increased. In the given graph, it shows the
value of a sharp rise the relative value of US
Dollar over Swiss Franc and other major
currencies.
CHF/USD Dec 2010- Dec 2011 (ft.com)
The world economy shows dynamic
developing trends over 2011, with the rise of
the East and the relative decline of the West,
places significant pressures on Western
politicians and economists. There are a
number of important questions to ask: There
remain a number of important questions to
ask. Namely, how to sustain economic
growth and increase employment? How to
maintain investors‟ confidence in the
financial markets? And crucially, how are
debt levels going to be reduced? These
questions remain of critical concern to
European and US policymakers.
Currency devaluation and does it
work
Joey Cuthbertson
In the aftermath of the Japanese earthquake,
G7 countries came together in an act of
“currency diplomacy” to devaluate the Yen,
which before the earth quake was worth
82.93 yen to the dollar. Three days after the
earthquake the yen had soared in value,
closing on the 16th of March at 79.151 to the
dollar.
For a country devastated by an earthquake
and a tsunami, the appreciating yen would
fatally stifle any attempt to rebuild its export
driven economy, with big brand names like
Toyota, Sony and Panasonic reliant on cheap
yen to drive foreign sales. This caused the
Bank of Japan to deprecate the Yen and
provide Japanese exporters with some respite
and a much needed price competitive edge.
However the effect of this initial action was
short lived, with the Central Bank being
forced to intervene 3 times since then, the
latest of which was on 31st of October.
Japan however had very little traditional
monetary policy tools available. Interest rates
were already at a historical low of 0.25% in
order to prevent deflation and stimulate
economic growth in the light of the global
credit crunch; further reduction of interest
rates would have had a minimal effect on the
Yen‟s value if the interest rate was cut to 0%.
The Bank of Japan, with the help of the G7,
would need to intervene directly in the
foreign exchange market, selling billions of
Yen in a coordinated act.
16
USD/JPY Jan 2011-Dec2011 (ft.com)
Nevertheless, there has been historical
precedent for successful acts of multi-lateral
intervention into the FOREX market. In 1985
at the Plaza hotel in New York it was agreed
to depreciate the dollar against the yen in
order to reduce the growing USA trade deficit
(the opposite from the current scenario). At
the cost of USD 10 billion the dollar value
declined 51% over two years against the Yen
and then the Deutsche mark. The success of
this was largely credit to the organized and
pre-planned nature of the action. However
the act had an unintended consequence of
creating an incentive for Japan to have an
expansionary fiscal policy, leading to the
80‟s asset bubble, which resulted in the so
called lost decade for Japan. Arguably this
act can be credited for the structural
weakness in the Japanese economy and the
historically low interest rates even before the
global credit crunch.
The effect of the 2011 intervention can be
seen in the chart. Whilst in the short term the
yen did depreciate as planed back to pre-
earthquake highs of 85 yen to the dollar,
unlike previous intervention in the market
this effect was short lived. The rapid increase
of yen in the market would of course have
this effect, however without prolonged
selling the sheer volume of demand would
make the market‟s return back to 80 yen to
the dollar within 3 months inevitable. Whilst
the 3 month respite would have helped
Japanese exports, it was not the Plaza Accord
of 1985 effect that they were looking for.
However there is one variable which differs
from the Plaza accord that no amount of BOJ
intervention can alter. The success of the
Plaza Accord can be accredited to the buying
of structurally sound funding currency at the
time (Pound Sterling, Swiss Franc, Deutsche
Mark, Yen and US Dollar) and the selling of
the US dollar to cause it to depreciate.
However with questions currently being
raised about the future of the Euro, inherent
budget deficits of the USA, the UK and Euro
nations, the market is unwilling to move
away from the relative safe haven of the Yen
and Swiss Franc (which is expected to be
devaluated as well), hence the 2011
interventions have had their long time effect
stifled by current macro economic
conditions. Thus any amount of BOJ
intervention will have very little effect on the
long term trend of Yen appreciation. In
today‟s FOREX market intervention to
depreciate a major currency will not produce
the desired effect in the long run.
COMMODITIES
An overview of the newly volatile
gold market Q3
Tomas Kiskis
Gold prices have witnessed a steady climb for
over the past decade. The only precedent to
current levels is that of January 1980, when
the precious metal peaked at $850 per
ounce. Given the purchasing power of the
dollar, inflation-adjusted gold prices in 1980
surpassed well over the $2000 mark; heights
that we have almost breached over the past
months. However, in 1980, the price of gold
feel as fast as it rose and levelled out to start
a sideways trend up until 2006 when it broke
17
the $600 mark at the peak of the US housing
bubble. Prices have subsequently risen
dramatically till the end of May 2011, closing
at $1535 per troy ounce and fluctuating
around the $1500 mark till the end of June.
Gold Price USD (goldprice.org)
July – let us get this rally started
Fuelled by ever-growing concerns about the
piling debt crisis of the US and Europe, prices
have since started hitting new records in July
2011 with the S&P 500 index and gold
starting to diverge. 2011 has seen credit
rating downgrades by Moody‟s and rising
concerns in the Eurozone, especially PIIGS
(Portugal, Ireland, Italy, Greece and Spain)
with a “likely” Greek default according to
former Federal Reserve chairman Alan
Greenspan. Coupled with an increase in
demand from the world‟s largest gold
consumer, India, it is no surprise that we
experienced a gold buying spree. It was only
at the start of July that there was some relief
with the Greek parliament passing budget
cuts that granted access to bail-out funds.
The result was a rise in Euro-dollar prices,
pushing down gold prices. But the release of
the disastrous US labour report with
employment growing by a mere 18,000
payrolls in June – prices began revving up
again. This was despite the ECB raising
interest rates up to 1.5%. Later that month,
Federal Reserve chairman Ben Bernanke told
Congress that the unemployment rate (then
around 9.2% in the US) would diminish only
at a slow rate. Adding Moody‟s downgrading
of the US to Aa rating, this has created
further pressure on raising the debt ceiling,
fuelling gold price growth. Taking into
account these events, it became unlikely gold
prices would decline apart from witnessing
corrections and profit-taking spurts with the
precious commodity finishing the month at a
price over $1600. This was despite a last
second life-raft by Harry Reid (US Senate
Majority Leader) approving the raising of the
US debt ceiling, forcing gold to drop
marginally in the face of an overall slowing
US economy with GDP reports not up to
expectations.
Gold Price USD 6 month view (goldprice.org)
August: „$ 1900? No problem.‟
During August the increases in gold price
continued despite conflicting news with the
House of Representatives finally officially
raising the US debt limit. With S&P
downgrading the credit rating of the US to
AA+, China becoming a gold net buyer
upping their reserves by as much as 800,000
ounces of gold, levelling out the playing field
with panic coming out on top and increasing
gold prices further. Further into the month
gold prices kept climbing despite CME
Group‟s (an exchange operator) increased
margins on gold trading by 22%. The
increased margins slowed down gold‟s heavy
trading, but cut only some of its gains with
weekly volatility numbers exceeding $ 70 and
landing a weekly average price of $ 1750. In
the long run, with the help of stock markets
18
crashing, the bullion indeed became the
„BULL‟-ion with the overall picture not
changing in Europe and the US providing
another disappointing labour employment
report and a possible third Quantitative
Easing programme, according to economists
from leading American investment banks.
Throughout week 3, the gold markets
experienced price swings going towards the
3-figure zone, breaking the $ 1800 mark and
finishing the week with gold prices
marginally over $ 1850. On 23 August the
spot gold price reached its record of over $
1910 on the very same speculation that QE3
will be launched by the Fed, accompanied by
the uncertainty regarding deficit reduction,
dollar weakness and worsening of the
Eurozone crisis. The result was one of the
steepest increases in gold history surpassing
the $ 1900 mark just a week after trading
above $ 1800. On the very same day gold
prices plunged to $ 1830, which many saw as
another buying opportunity seeing it as a
simple correction due to investors wanting to
bank profits from the price increase, which
was the single largest one-day decline in
year 2011 (-3.7%). On August 25, after CME
increased margins on gold trading for the
second time in two weeks, the price of gold
fell down to meet the $ 1700 mark because
of heavy liquidation of COMEX gold futures
and profit-taking. This meant that the price
of gold sank over 10% in 3 days just to later
bounce back to $ 1770. Thiswas said to have
been the consequence of a weak weekly
employment report with prices finishing the
week over $ 1825 due to ever-reviving
rumours of an upcoming QE3. The fourth
week of August let fluctuations of gold price
escalate even further with weekly volatility
exceeding $ 130. With volatility levels hardly
imaginable for a precious metal commodity
market, gold has been on its way to climb the
ladder in the long-run and seems to be
willing to stay high until positive signals are
seen in cutting some of the sovereign debt
problems.
September: „Up and down‟
Coming in to September gold prices have
escalated with enormous speeds as the US
labour employment report showed
disappointing results once again, driving the
stock and gold markets in opposing
directions. It is said the slowed down growth
of PMI (Purchasing Managers Index) could
have revived the possibility a new round of
QE. September from the start did not let
volatility levels drop much, keeping the
weekly price swings at about $ 85. On 5
September the price of gold rallied to peak at
$1902 just fractions away from the nominal
record of $ 1911 set just a fortnight ago with
chaos in the currency market, setting records
across all major currencies. On 6 September
another all-time high was reached with gold
priced over $ 1920 and then plunging to $
1860 the next trading session. This proved
to be a phenomena as the Swiss National
Bank‟s (SNB) currency intervention caused
mass selling in the gold market when it
should have done the opposite. The selling
spurt was probably due to traders that lost
from the 9% negative franc move against the
euro wanting to cover the losses by selling
gold. In the very same trading session gold
went up back to $1900 and then down to low
$1860s. The explanation – fluctuations were
probably caused by bargain hunters, who
started a buying whenever the price dropped
to 1860s. Mixed signals with the liquidity
programme which the ECB, Fed and other
central banks will provide loans to banks in
Europe contrasted with an increase in the
inflation rate, news that there will be no Q3
caused the gold market to change directions
several times during the sessions. September
saw an overall negative trend, resulting in
19
finishing the penultimate week at $1640 and
the month at $1622 with a high weekly
decline of -7.8%.
Beyond Quarter 2 (Q2)
During October the very same story repeated
itself. Prices fluctuated until mid-October
and then shot up from $ 1636 all the way to
$ 1747 when the leaders of the EU agreed on
making 50% cuts on Greek debt and to
increase the European rescue fund by 56%
and US GDP growing by 2.5% in Q3, 2011.
Prices went from then on to fluctuate in huge
volatility levels with support at about $ 1720
and resistance at $ 1800.
Gold price USD 60 day view (goldprice.org)
The aftermath of the 2008 financial
meltdown
It is thought by many that gold prices will
surely surpass the $2000 mark in the
upcoming year; some mention figures much
higher than $ 3000. Many state gold to be in
a bubble, but I personally believe otherwise
as gold is regarded as the safe haven – in
other words – as the ultimate currency to
which everyone turns when there is a
systematic failure in the financial world. I see
gold as the measure of the strength of
currencies, similar to the example of gold
prices in 1980, when at that time a bullion of
gold could have bought you the same
product it could buy today, implying that the
USD had more power at the time, but not
gold having less value at present. I am
inclined to believe that the current scenario
in the gold market shows not how deep in
„bubble territory‟ the commodity is, but how
much the fiat currencies have weakened in
comparison to gold value that has remained.
Following the same reasoning I am forced to
believe that gold prices shall increase with no
„roof‟ to come until sovereign debt problems
on both shores of the Atlantic are at least
partially resolved with these problems being
kick-started by the originate-to-distribute of
sub-prime loans „culture‟ within the
investment banking industry that lead to
CDOs (collateralized debt obligations) being
traded as AAA rating government bonds, by
some cleverly insured using credit default
swaps to protect the pockets of banks.
Did Speculation cause the surge
in oil prices?
Rav Sandhu
Oil is a necessity for all nations and
consumers. Economic theory suggests either
an increase in demand, or a reduction in
supply result in the increase in price.
However this may not be the case, due to the
way in which the price of oil has almost
tripled in the 3 years from 2005 to $147 in
July of 2008. The increased sophistication
and deregulation of the futures market
seems to have considerable bearing upon
such a steep rise in the price of oil.
From 2005 onwards, oil supplies stopped
growing and began to fluctuate between 73
million and 74 million barrels per day
through 2010. Following the stagnation in
growth of oil supplies, the world economy
continued to grow until the end of 2007
when it fell into recession. Due to such a
steep recession, production and demand of
20
oil collapsed. The price then increased even
as overall global economic recovery remained
sluggish. A swift recovery in the Far East,
resulted in a robust demand for oil even as
the West remained weak.
From 2006 to the first quarter of 2008 there
was an increase in global demand for oil and
it grew by 2.2 million barrels per day and
even exceeded the supply. The effect on the
oil market was that the price supposedly
doubled. From Q1 2008, global demand for
oil fell by 2.1 million barrels per day till Q4 of
2008, whilst oil prices continued to rocket,
suggesting that it was neither a factor of
supply or demand, which helped the price of
oil to keep surging but speculation. OPEC
believes that record fuel prices are not due to
supply and demand, but are due to „rampant
speculation‟, and has used this belief as an
excuse not to raise production by the
amounts demanded by the West.
Some analysts consider that oil prices
reached such monumental highs because of
speculation about oil futures. The belief that
oil supply is lower than it actually is and the
belief that future oil supply will be just as
low, has resulted in traders inflating the
prices of oil futures. When oil futures are
traded, the institutions that buy the oil, for
instance refiners, aim to buy oil at the lowest
price possible, as that will result in increased
profitability in both the long and short run.
If it is perceived that oil prices will rise in the
future (due to the prices of oil futures being
higher than current prices of oil), oil buyers
have an incentive to create additional
reserves and inventories of oil at lower prices
today; which then drives up demand for
crude in the present, and consequently
forces up the price of oil in the present.
Therefore this results in high prices for oil
futures and consequently leads to high prices
for oil in the present.
When prices of oil closed at record highs for
five consecutive days from May 5th 2008, a
House of Representatives committee
announced an investigation regarding the
role of hedge funds and investment banks in
pushing up prices. In June 2008, the U.S.
commodities futures regulator announced
new regulation requiring daily large trader
reports, and „position and accountability
limits for foreign crude contracts traded in
the U.S.‟
Price increases and fluctuations in oil have an
impact on the global economy and can be
potentially detrimental. The volatility in price
over the past decade, to record highs in July
2008 of $147, have benefitted many in the
financial sector, but has been detrimental to
consumers and firms. Increased regulation of
the futures market should be instigated in
order to prevent this happening again, as it
drives up global inflation significantly,
increasing costs for firms and consumers.
21
M&A Deals Overview:
Milen Kisov
Undoubtedly, the most interesting deal of this month is Virgin
Money‟s tаking over nationalised Bank Northern Rock. The deal
marks the end for one of the most notorious names in British high
street banking. Sir Richard Branson agreed on a price of £900m. It
includes £747m in cash, £150m in debt and further £130m
depending of the future development of the business. The deal has
caused a lot of arguments in the financial world. Some argue the
timing of the deal is not right given the markets are „in turmoil‟.
Furthermore, the government has made a loss of up to £500m as it
supported the bank with £1.4m worth of equity in 2010. Chancellor
George Osborne said the deal in his opinion was „value for money‟,
claiming it was the best of what they were offered.
Asian M&A market is growing significantly more than its European
and US counterparts. The overall value of the deals until mid
November was $567 bn. According to Citigroup some markets are
going to be almost as strong as they were in 2007. Analysts say that
the Asia‟s faster recovery is due to the better performance of local
economies and more stability across them. Financing is easier
because of the low interest rates and deals between different
countries are fostered by the local currencies which show admirable
stability. Some of the deals this year have been the $2.4bn
acquisition of Digital Telecommunications by Philippine Long
Distance Telephone, the $3.6bn purchase of controlling interest in
Frac Tech Holdings of the US by Temasek, the Singapore state
investment agency and the sale of 25% of RHB Capital to Aabar
Investments of Abu Dhabi for $1.9bn.
The saga with AT&T‟s deal for buying Deutsche Telekom‟s T-Mobile
USA is about to continue for unclear period of time. The most
profitable telecom in the USA was convinced there would not be a
regulatory problem with the deal. It even agreed to pay a break up
fee of $3bn in cash with another $3bn-$4bn in other assets.
However, on the 31 of August the US justice department filed an
antitrust suit to block the deal on the basis that it would make AT&T
the market leader in the USA. Today the chances of the deal still
being made are very little. Some analysts say they are as little as
20%. In spite of the difficulties, the two telecoms still expect the deal
to happen and do not have „Plan B‟. T-Mobile USA have made losses
in spite of the growing telecommunications industry. Deutsche
telecom announced it does not plan to invest any more in the US
market.
Executive
Committee
2010/2011:
President:
Frank Williams
Vice President:
Matt Ovenden
Treasurer:
Lawrence Binitie
Secretary:
Sian Whitehead
Chief Market Report Editor:
Ivan Rangelov
Market Report Editors:
Aulia Beg
Upasana Bhaumik
Jordan Rankin
External Relations Officer:
Viraj Chotai
Gabriel Adebiyi
Publicity Officers:
Florian Jaksch
Hector Sanchez
Social Officers:
Angela Musoke
Jasmine Bhasin
Events Officers:
Aman Brar
Sergei Petunov
Operational Officers:
Milen Kisov
Lee Flood
22