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Home > Capital Markets Viewpoints

Capital Markets Viewpoints

Viewpoints

QFINANCE viewpoints provide you with the distilled thoughts of finance leaders and experts, outlining their current thinking on the crucial issues and challenges facing finance managers, entrepreneurs and business executives. The contributions are drawn from an array of practitioners and thinkers from the world of finance and business.

  • A Not So Cheerful Future for LBOs
    by Jon Moulton
    Jon Moulton is Managing Partner of UK-based private equity firm Alchemy Partners, which has invested £2 billion of equity and specializes in dealing with troubled companies. Alchemy also has a £300 million European special opportunities fund investing in distressed debt. Moulton previously worked with Citicorp Venture Capital (now called CVC Capital Partners) in New York and London, Permira, and Apax. He has been a director of five public...
  • Asia: Future Perspectives
    by Jim Rogers
    It is because in Asia they’re fresher at it and they haven’t yet had the chance to get corrupted and corroded. In China, they still call themselves Communists. They didn’t have a stock market 20 years ago, nor did Vietnam. Thirty years ago Mao Tse-tung was still running China; Indira Gandhi and Nehru were ruining India; East and West Pakistan had just had a big split; Vietnam had been destroyed by war. So, 30 years ago Asia was not in the game.
  • Basel III: Uncharted Territory
    by Sir Howard Davies
    This article was first published in Quantum magazine.If you believe the central bankers and regulators from the G20 countries who make up the Basel committee, now in conclave working out the final details of Basel III, it will be a prudent but well-judged package that judiciously balances conflicting objectives.The committee accepts that its main stipulation—requiring banks to hold higher reserves—will have some economic impact. The cost of...
  • Basel Rules OK?
    by Brian Caplen
    This article was first published in Quantum magazine.The latest Basel incarnation is, to the consternation of the banks, heading inexorably towards a more onerous rulebook, says Brian Caplen.
  • Blurring Boundaries: The Insurance Market
    by Marc Beckers
    This article was first published in Quantum magazine.With the insurance sector facing similar regulatory scrutiny to the banking sector, some commentators argue it is a question of mistaken identity. But, says Marc Beckers, the real challenge for insurers is to re-establish their identity and redefine their business model.
  • Bringing Trust Back to Wall Street
    by Bill Hambrecht
    Bill Hambrecht believes that Obama should steer clear of knee-jerk regulatory responses and instead restore transparency, fairness, and trust into the capital markets through solutions including forcing all derivatives trading onto regulated exchanges. Hambrecht, 73, has been in the securities business since 1958. He co-founded the San Francisco-based investment bank Hambrecht & Quist in 1968. Noted for its focus on the technology sector, H&Q...
  • Default Position
    by Aaron Brown
    This article was first published in Quantum magazine.Few CEOs or heads of government demonstrate wisdom and courage when investors start buying naked credit default swap (CDS) protection against their company’s or country’s default. They are likely to complain that it is “like buying fire insurance on a neighbor’s house.”Actually it’s not like buying insurance, which is bought on physical assets. Hedging is done against the mismanagement of...
  • Eurosystem Central Banks and the TARGET2 Debt Debate
    by John Whittaker
    John Whittaker is an economist at Lancaster University, specializing in monetary policy. After an earlier career in business, he obtained a doctorate in nuclear physics before joining the academic world in the 1980s. His research and teaching experience include money and banking, macroeconomics, and financial economics, and he has published papers on alternative monetary regimes and mathematical economics. His current interests are sovereign...
  • Forecasting the Credit Crunch and Future Market Prospects
    by Michael J. Panzner
    Michael J. Panzner is a 25-year veteran of the global stock, bond, and currency markets who has worked in New York and London for such leading companies as HSBC, Soros Funds, ABN Amro, Dresdner Bank, and J.P. Morgan Chase. He is the author of When Giants Fall: An Economic Roadmap for the End of the American Era (Wiley, 2009), Financial Armageddon: Protecting Your Future from Four Impending Catastrophes (Kaplan, 2007), and The New Laws of the...
  • Global Ambitions—China’s Big Banks
    by Sir John Stuttard
    This article was first published in Quantum magazine.September 2009 was a good month for China—and for its reputation as a global leader.At the United Nations Energy Summit in New York, President Hu Jintao told delegates that China will increase its efforts to improve energy efficiency and to curb the rise in CO2 emissions. He pledged to ensure that the increase in emissions would be less than the increase in economic growth and that China would...
  • Goodbye to Cash: Financial Innovation
    by Aaron Brown
    This article was first published in Quantum magazine.The financial sector operates with a speed and complexity inconceivable a generation ago and many regulators and politicians blame these changes for the recent global economic crisis. But ultimately they will create a more efficient and fairer system.
  • Investment Lessons from the Crash
    by Jeremy Beckwith
    Jeremy Beckwith joined Kleinwort Benson in April 2003 as chief investment officer and is responsible for all aspects of the investment process and investment performance of discretionary portfolios. He introduced multi-asset class investing to Kleinwort Benson and is regularly invited on to Bloomberg TV to give his views on markets and economics.Prior to this, he was a managing director and head of EAFE Equities (non-US equities for American...
  • Keeping Money in the Bank
    by Brian Caplen
    This article was first published in Quantum magazine.Making banks safe is easy. Regulators just have to insist that they are loaded high with capital and prevented from lending to anyone more risky than a triple A-rated sovereign. That way no bank will collapse ever again.But safe banks are also dysfunctional. A successful banking system is one that mediates between short-term lenders (depositors) and long-term borrowers (companies, governments,...
  • New Dollar Area: The Makings of the Mess
    by Brian Reading
    They called it “Bretton Woods 2.” A better name would have been the “new dollar area” (NDA), especially when the November 2008 G20 summit to fix the global financial architecture was labeled by the media as Bretton Woods 2. It is an informal, fixed, or semi-fixed exchange rate regime centered on the dollar. Whatever it is called, it did much to cause the world financial crisis. While the two are intimately linked, they are rarely discussed...
  • Only White Swans on the Road to Revulsion
    by James Montier
    James Montier, an expert in behavioral finance, argues that investors would have a greater chance of spotting the formation of bubbles if they could only brush up on their history and have a greater awareness of human psychology. Co-head of global strategy at Société Générale, Montier has been described as an “enfant terrible” by Frankfurter Allgemeine Zeitung, an “iconoclast” by the Financial Times, a “maverick” by the Sunday Times and “a...
  • Prophet of Instability
    by David Smith
    This article was first published in Quantum magazine.When, in December 2008, Bernie Madoff confessed to his sons that there was “absolutely nothing” left in his massive investment fund and that it had been “one big lie” and “a giant Ponzi scheme” from the start, the thoughts of many people turned to previous scandals revealed by a sudden change in the financial weather.In Madoff’s case, the exposure of the scandal was attributed to the sudden...
  • Reforming the mega banks – or “what happened after the tsunami”
    by Benoît Lallemand
    According to the financial lobby, the banking sector has suffered a tsunami of reform. It has faced new rules on capital, liquidity, bank resolution and even a cap on bonuses. If there is any more regulation, we are told, the sector may sink below the waves. If this is true, then the European Commission’s recent proposal on bank structure reform should be blocked or watered down.1Finance Watch does not see it this way. This is not because we...
  • Renewing Capitalism
    by Matthew Bishop
    Matthew Bishop is the US Business Editor and New York Bureau Chief of The Economist. He was previously the magazine’s London-based Business Editor. His latest book, The Road from Ruin: How to Renew Capitalism and Put America Back on Top, with Michael Green, was published by Crown in February 2010. Philanthrocapitalism, his previous book (also with Green) on the global revolution under way in philanthropy, has been described as the definitive...
  • Risk Management at a Crossroads
    by Maureen J. Miskovic
    Maureen J. Miskovic believes that in the post-crash period risk managers of banks and financial institutions are going to step out of the back office and into front-line roles. Miskovic has been Executive Vice-President and Chief Risk Officer at Boston-based State Street since April 2008. In this capacity, she oversees a global team of more than 250 multidisciplinary enterprise risk professionals.Miskovic, born in the United Kingdom, is also a...
  • Shariah Law—Bringing a New Ethical Dimension to Banking
    by Amjid Ali
    Amjid Ali, senior manager, HSBC Amanah Global, believes that shariah finance is broadening its appeal and reach—both among Muslims and non-Muslims—as a result of the banking and financial crisis. Recognized as one of the most influential Muslims in the UK by the Muslim Power 100 Awards, Ali has 22 years of branch banking experience with Midland Bank and HSBC in the UK. In September 2003 he joined HSBC Amanah UK as senior business development...
  • Solutions to the Current Crisis
    by Jean-Claude Trichet
    Jean-Claude Trichet is an Inspecteur géné des Finances and Ingénieur civil des Mines. Between 1978 and 1998 he held numerous positions from Head of International Affairs and Director of the Treasury, to Governor of the Banque de France and Alternate Governor of the International Monetary Fund and the World Bank. He was also Chairman of the Monetary Policy Council of the Banque de France, a member of the Council of the European Monetary...
  • Staying in the Dark about Derivatives Will Bring Economic Collapse
    by Hernando de Soto
    Hernando de Soto is president of the Institute for Liberty and Democracy (ILD)—headquartered in Lima, Peru—considered by The Economist as one of the two most important think tanks in the world. Currently, he is focused on designing and implementing capital formation programs to empower the poor in Africa, Asia, Latin America, the Middle East, and former Soviet nations. He also co-chaired the Commission on Legal Empowerment of the Poor, and...
  • Taming Tomorrow’s App World: Market Regulation
    by Walter H. White, Jr
    This article was first published in Quantum magazine.The challenges for those seeking controls on international markets have already multiplied due to the rapid development of technology. As apps and tablets transcend jurisdictions and make geography irrelevant, regulation will become increasingly problematic.
  • Testing Times: Global Banking Regulation
    by Brian Caplen
    This article was first published in Quantum magazine.In the past regulators came under fire for allowing the banks too much rope, but now—with new regulatory bodies springing up—the worry is that politicians will exploit a deeper involvement in banking regulation to impress voters.
  • The Case for Separation of Islamic Banks’ Transaction and Investment Functions
    by Volker Nienhaus
    This article was first published in Quantum magazine.During the recent global economic crisis, some argued that the financial industry would have been significantly more stable and resilient if all its institutions had followed the principles and laws governing Islamic banking.A case can certainly be made that there are strong prudential advantages in a system which prohibits riba (interest), gharar (uncertainty), and maysir (gambling), as well...
  • The Corporate Bond Markets in 2012 and Beyond
    by Shahzada Omar Saeed
    Shahzada Omar Saeed has an MBA in financial management and is head of the high-yield team at Swisscanto Asset Management, where he is responsible for overseeing investments of US$1 billion. He is lead manager for the Swisscanto (CH) Institutional Bond Fund—Global High Yield I and the Swisscanto (LU) Bond Invest Short Duration Global High Yield fund. Under his leadership, Swisscanto has experienced exponential growth of greater than 300%, along...
  • The Distorted System: Iceland’s Lessons Yet To Be Learned
    by Anat Admati, Gudrun Johnsen
    “The truth is incontrovertible. Panic may resent it, ignorance may deride it, malice may distort it, but, there it is.” Winston ChurchillIn October 2008, 97% of the Icelandic banking sector collapsed in a matter of three days. The triggering event was the fall of Lehman Brothers, with the subsequent collapse of interbank lending, the fall in asset prices, and the evaporation of trust among financial market participants. Focusing on this trigger...
  • The Financial Crisis and the World’s Poor
    by Muhammad Yunus
    Professor Muhammad Yunus is the founder and Managing Director of Grameen Bank which provides micro-credit to millions of poor people in Bangladesh. In 2006 he was awarded the Nobel Peace Prize.Yunus pioneered microcredit, the innovative banking program that provides the poor—mainly women—with small loans they use to launch businesses and lift their families out of poverty. Yunus’s vision is the total eradication of poverty from the world. This...
  • The Liquidity Factor
    by Brandon Davies
    This article was first published in Quantum magazine.Shariah banks and financial markets have been affected by the international financial crisis, but, according to a recent International Monetary Fund study, they have proved more resilient and less unstable than their conventional competitors.This means that they are also well placed to take advantage of any economic upturn, particularly as the Basel III reforms are highlighting structural...
  • The Problem with Derivatives, Quants, and Risk Management Today
    by Paul Wilmott
    Paul Wilmott is a financial consultant, specializing in derivatives, risk management and quantitative finance. He has worked with many leading US and European financial institutions. Paul studied mathematics at St Catherine’s College, Oxford, where he also received his DPhil. He founded the Diploma in Mathematical Finance at Oxford University and the journal Applied Mathematical Finance. He is the author of Paul Wilmott Introduces Quantitative...
  • The Unintended Consequences of Globalization
    by Paul Wharton
    As chief investment strategist for Deutsche Bank Private Wealth Management UK, Paul Wharton is responsible for economic and market strategy and the income-oriented portfolios within the bank’s UK onshore discretionary portfolio service. He serves on both the UK and the global investment committees of Deutsche Bank Private Wealth Management. A passionate student of economic history, he has more than 20 years’ experience of investment markets and...
  • US Monetary Policy And Its Impact On China and Emerging Economies
    by Simon Derrick
    The financial world is going through an interesting and volatile period.1 Not only are we seeing economic power moving eastward with the rise of China and Asian economies, the United States is looking to transition away from extraordinary monetary policies as its economy improves, while the central banks in Japan and the United Kingdom press on with quantitative easing. The predominant force that perturbed global markets through the first...
  • What Models Do We Need for Risk Management?
    by Riccardo Rebonato
    “All models are wrong, but some models are useful.” AnonQuantitative models have come under intense scrutiny in the wake of the recent, and still unfolding, financial crisis. And justly so, as the way models have been used in these turbulent times has left a lot to be desired. Much of the criticism, however, has been misplaced, and, often, not even reasonably well-informed. The conspiracy theorists, for instance, who see in the blind acceptance...

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