Brian Bollen's Blog

Shelter From The Storm

David Paine, head of real estate, Standard Life Investments

Weaker investor confidence over global growth has resulted in a hasty retreat from risky asset classes in recent weeks. However, such indiscriminate selling has also created opportunities for investors to exploit inconsistencies and uncover value.

One area that we continue to regard as an attractive component of a diversified, multi-asset portfolio is global real estate. Good quality commercial property is likely to remain resilient despite the global economic slowdown, which we expect to result in a period of weak growth rather than outright recession.

Real estate also benefits from a relatively secure and sustainable yield compared to other assets. In addition, the weight of money looking to invest in commercial real estate remains reasonably strong and we do not foresee this changing for higher quality ‘safe haven’ exposure.

On a fundamental basis, a modest recovery is materialising in most global real estate markets. This is consequently leading to improving tenant demand as occupier confidence and business investment increases.

DC Advisory In Spandex Ballet

DC Advisory Partners reports that it acted as the exclusive debt advisor to Gilde Buy Out Partners on the acquisition financing for the Spandex Group.

Spandex (despite the slightly suggestive name) is a leading supplier to the sign-making and display industry. The company specialises in marketing, sales, distribution and support of sign making and printing related systems and materials.

OCC At Standard Chartered

Standard Chartered has appointed Jeremy Bollington as the new regional head of origination and client coverage (OCC) for the Americas. Jeremy will be based in New York and report to Sean Wallace, group head of origination and client coverage, wholesale banking. The OCC group shapes the client-centric strategy of deepening client relationships across its key markets.

Nothing makes a man or a market as truly immortal as a massive speculative investment gone badly wrong…

Newedge - Blain's Morning Porridge - August 31 2011

By Bill Blain, senior director, special situations, Newedge

The ECB was apparently in buying Italian Government debt ahead of yesterday’s auction. Since the auction was hardly a screaming success, one has to ask why the whole market didn’t stage a massive dip? If the ECB has to buy up old bonds to ensure the success of new funding… who is the new buyer? We suspect there isn’t one…..

Meanwhile…. back at the ranch..

As we’ve always said, its all about banks – can they withstand the mounting pressures upon them? In the US it’s about dodgy mortgages, in Europe the latest wobbles are about dodgy accounting for govt debt – covered in yesterday’s porridge. But are there signs things are getting better? Have we overplayed our earlier worries/concerns about European bank funding?

Suddenly every bank is issuing Covered Bonds, with a deluge of new issues finding willing buyers - according to syndicate heads. In the secondary markets, we're seeing buyers scrabbling to buy the higher-yielding names, including covered bonds issued by Spanish, Italian and Irish issuers. While prices edge higher, even previous detractors of the sector have started to sniff around inquiring where bonds are currently priced.

Investor Confidence Down

The results of the latest State Street investor confidence index show investor confidence fell to 89.6 in August, down 12.9 points from July's revised reading of 102.5. The most significant decline was exhibited by North American investors, with confidence decreasing to 88.6, down 13.9 points from July's revised level of 102.5. Declines were more muted elsewhere with the European Index sliding 4.6 points to 90.5, down from July's revised reading of 95.1. Amongst Asian investors, confidence decreased 0.6 points from July's revised level of 95.8, to 95.2.

Turbulence To Provide PE Opps

Hans Markvoort, head  private equity investment solutions and general manager of Castle Private Equity, the SIX Swiss-listed fund of private equity funds, on how turbulent markets can provide good investment opportunities for the discerning private equity investor

“It is too early to tell whether the equity market declines and volatility since early August will have a lasting impact on private equity markets. In the next three to six months M&A activity will be an important theme for the Castle Private Equity portfolio.

“Some reduction in exits can be expected as the IPO window, used to support the exit of venture investments, appears to be partially closing. However, sales to trade buyers should continue due to the substantial cash reserves many corporations have built up over the past few years. In addition, private equity funds have financial and managerial capacity to allocate, as their current investments have reduced their risk profiles significantly in the past two years.

“Over the next one to two years, there are certain regions, for example Asia, and industries, such as technology, where we expect continued profit growth of our underlying companies. Turbulent markets can provide good investment opportunities for the discerning investor and Castle’s Private Equity investment capacity will be used to pursue such opportunities."

 

 

New PM For Japan But Little Change In Sight

Paul Chesson, head of Japanese equities at Invesco Perpetual, comments on Yoshihiko Noda becoming Japan’s new Prime Minister

“Former Finance Minister Yoshihiko Noda’s election as head of the Democratic Party of Japan (DPJ) and subsequent Diet approval as Prime Minister is unlikely to have a significant impact on the  equity market in our view.

“As Finance Minister, Mr Noda worked closely with the Bank of Japan. This included recent intervention in currency markets to help weaken the yen. While Mr Noda is fiscally conservative, arguing in favour of tax rises to help pay for reconstruction efforts and to reduce Japan’s significant sovereign debt, we believe he is unlikely to advocate plans radically different to those suggested under previous Prime Minister Kan.

BNP Paribas Securities Services In Asian Corporate Trust Boost

BNP Paribas Securities Services (BNP Paribas) has today (August 30) outlined a major expansion plan for its corporate trust service (CTS) in the Asia Pacific, enabling a full range of services from conventional debt to both structured and unstructured debt.

The bank says it has invested heavily in its Asia Pacific CTS business including the appointment of Ben Lumley-Smith as regional client development manager for debt markets based in Hong Kong.

It adds that the initiative has already made an immediate impact in the form of a significant recent debt issuance transaction undertaken on behalf of Bank of China International.

TASE's Newest Member – Barclays Bank

The Tel Aviv Stock Exchange (TASE) has approved the application of Barclays Bank PLC for TASE membership.

TASE goes on to say that the inclusion of Barclays, which received the Bank of Israel's approval to operate in Israel as a foreign bank, brings the number of foreign TASE members to six.

It reminds readers that Barclays is a wholly-owned subsidiary of Barclays PLC and is traded on both the London Stock Exchange and the New York Stock Exchange. The bank's long-term debt credit rating is AA- according to S&P's rating scale, Aa3 according to Moody's and AA- according to Fitch.

The accession to TASE constitutes an additional platform through which Barclays can expand activity in Israel. While headquartered in the U.K., Barclays operates worldwide with vast activity in retail and investment banking. The group maintains branches and representative offices in 50 countries around the globe.

ERC Does The Intercontinental

If you don't already have your invitation to the next ICMA European Repo Council (ERC) meeting, it is being hosted by BNY Mellon in Paris on Wednesday, 14 September from 10.00 - 12.30 at the InterContinental Hotel - Le Grand Paris, 2 Rue Scribe.

The ERC promises that it will be followed by lunch and a BNY Mellon Thought Leadership discussion on the future of Central Counterparties and the increasing demand for collateral. But don't let that put you off. Paris can be great fun at this time of year, and it could be worth doing a bit of penance in a windowless, airless, crepuscular room in return for a day or two of high jinks.

Rooney, Flatley in Hong Kong Move

Netik, a provider of financial data creation, management and distribution services and solutions, has opened a Hong Kong office to complement its existing commercial centres in New York and London.

It points to research from Ovum to show that investment banks are increasing their IT spending at a faster rate in Asia-Pacific as the region's economies grow in their importance on the global stage. Much of the investment in all regions and lines of business will be made in risk management systems and reporting systems that allow financial markets companies to provide greater transparency and comply with new industry regulations such as Basel III.

Private Equity Faces Transparency For Funds Demand

With sluggish returns projected for many asset classes, institutional investors are turning to private equity as a source of alpha. But those investors expect greater transparency, reporting and risk management from managers according to a global survey report by SEI, working with Greenwich Associates. The survey report, The Logic of Fund Flows, points to a need for private equity managers to demonstrate better reporting and risk-management measures to retain and gain assets among an increasingly demanding institutional investor base. 

The survey, of more than 400 institutional investors, consultants, and fund managers, revealed that while more than a quarter of those surveyed (26%) plan to increase their private equity allocations over the next 12 months, investors and consultants differ on their investment objectives when it comes to private equity.

Nothing is certain but uncertainty itself.…

Newedge - Blain's Morning Porridge - August 30 2011

By Bill Blain, senior director, special situations, Newedge

Summer is over. September looks likely to be an 'interesting' month. Sentiment remains fervid, markets are jumpy after August's dramatic ructions and it won't take much to trigger further volatility and slippage. None of the event drivers like Europe or banks look solved. While Hurricane Irene proved a damp squib, the storm clouds around markets have the potential of making the next few months even more miserable.

Or will September see markets regain their poise, a sense of direction and much needed stability? There are reasons to be cheerful: recent US numbers suggest August's panic about double dipping into recession may have been overplayed. Bank of America breathed a sigh of relief on its capital position. Stock markets got through Monday higher. Trichet's acknowledgement the market’s uncertainty is at the crux of the crisis facing Europe, and that it needs to be addressed can only be a good thing. (Diagnosing the problem is critical to treating it!) He also played down European rate hike threats as European growth slows. (Or has it stalled?)

Novem: The Final Solution

DC Advisory Partners proudly reports from Frankfurt/Main that it acted as sole financial adviser to DZ Bank and ING Bank (together, the Structuring Banks) on the sale of Novem Beteiligungs GmbH out of trusteeship to funds managed by Bregal Capital LLP. The Structuring Banks led the discussions on behalf of the senior lender syndicate.

Headquartered in Vorbach, Germany, Novem is described as a global manufacturer of high-quality decorative trim for vehicle interiors. It is the world leader for decorative wood interior components and employs around 3,900 staff across eight production sites in Europe, NAFTA and China.

Novem was acquired by Barclays Private Equity in 2008. In June 2009, following a significant downturn in the automotive sector, the shares in Novem were transferred to a trustee as part of a financial restructuring.

Global Macro For Best Returns In 2012

Hedge fund managers predict global macro strategies will deliver the best returns in 2012 and they continue to see Brazil, China and India as the most rewarding regions for investing, according to a GAIM survey of 185 members of the hedge fund industry.

Asked to identify reasons that a global recovery might be derailed next year, respondents cited a range of worries. The eurozone crisis, global monetary policy uncertainty and the US deficit top the list. 

“The results reflect the array of macro-headwinds driving markets right now,” commented Amanda Rodrigues-Cheung, GAIM Event Director. Top economists, hedge funds and policy makers will be addressing all these issues at the GAIM GMA event this autumn in New York City.

Standard Chartered In Client Access Boost

Standard Chartered reports that it has appointed Gautam Jain as the new global head of client access for transaction banking. Gautam will be based in Singapore and will be a member of the bank’s transaction banking leadership team, reporting to Karen Fawcett, group head of transaction banking, wholesale banking.

Monopoly Method: Music To A Dinosaur's Ears

The Monopoly Method by Greg McCall is a breath of fresh air. Sub-titled An Insider’s Guide to Navigating Wall Street and Becoming a Better Investor, it contains not a mention of algorithms or high-frequency trading or quants.

Rather, it is full of fundamental, recognisable words and phrases that will be familiar to the dinosaurs of the international investment world (ie. anyone born after about 1985). Philosophy. Discipline. Process. Fundamental analysis. Revenues. Margins. Earnings. Days Sales Outstanding.

Music to this particular dinosaur's ears, these recall the content of the Principles of Investment module of the exams that I needed to pass to become an Associate of the Institute of Bankers in July 1983.

Looking For Sex And Violence? Read Le Morte D'Arthur

Have you ever read Le Morte D'Arthur? Sir Thomas Mallory makes Quentin Tarantino look like the Tooth Fairy.

UK-Swiss Tax Agreement FAQs: All You Need To Know, From McGrigors

The UK-Swiss tax agreement ends decades of guaranteed anonymity for UK residents holding Swiss bank accounts, say McGrigors, the leading commercial and tax law firm.  McGrigors point out that under the new agreement, the Swiss authorities will have to provide information on up to 500 named individuals per year. 

The new power represents a major advance on previous arrangements whereby Swiss banks were only obliged to disclose information where HMRC could provide both the name of the account holder and the account number.

Jason Collins, tax partner at McGrigors says: “The details are scant at the moment, but the new power potentially means that HMRC could send a list of names across and ask for details of any bank accounts in Switzerland the people on the list hold.” 

“Because of the limit of 500 requests per year, HMRC will be selective in how they use this power. They are likely to target specific wealthy individuals or families that are of particular interest to them.”

McGrigors say that holders of Swiss bank accounts must now consider the most appropriate method for meeting their tax liabilities.

Jason Collins adds: “People need to do computations under both the Swiss deal and the Liechtenstein Disclosure Facility and see which would be better for them.”

FAQs

On Wednesday the UK Government announced that it had reached a landmark agreement with the Swiss Government over taxation of undeclared Swiss bank accounts. Phil Berwick, a director in the Tax team at law firm McGrigors, answers the questions looming large for those exposed to the new tax.

The UK and Swiss Governments have agreed a deal on Swiss bank accounts. Do I need to be concerned?

If you have offshore capital in Switzerland which you have not declared to HMRC, then yes. This is a significant change and is part of sustained and energetic efforts by the UK exchequer to crack down on offshore tax evasion. We expect, based on how HMRC are already acting, that anyone who does not participate may face prosecution if HMRC discovers the existence of Swiss assets later. 

What are the main features of the agreement?

Immediate Downturn Dodged, Growth To Falter Again 2012

Keith Wade, chief economist at Schroders, gives his outlook for the world economy 

Global growth almost ground to a halt in the second quarter as activity in the US and Europe faltered whilst Japan remained in recession. Financial markets are extrapolating economic weakness into the second half of the year and beyond. We have cut our global growth forecasts as a result.

Despite market concerns, we are not forecasting a double dip recession. We expect growth to firm in the second half of the year as the disruption from Japan fades and the squeeze on spending from inflation lessens following the decline in commodity prices. The main risk to growth is that companies postpone spending decisions due to a loss of confidence. I our view the pre-conditions for a recession are not in place (in the sense that the private sector has strong cash flow and have little need to sharply retrench). The risk today comes from the public sector which has taken the strain of the financial crisis.

Economic Strategy Viewpoint Aug 2011.doc (620KB)