Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Reuters – HSBC Holdings Plc, Europe’s biggest bank, is to unveil plans to enter into the European exchange traded fund (ETF) market with its first launch, the Financial Times said on Monday.
”We believe our future is linked to indexation and ETFs and not just active management,” Farley Thomas, global head of wholesale distribution at HSBC Global Asset Management, told the newspaper.
The Australian – The move wades the US into a fierce battle between the UK and other parts of Europe over how tough regulation should be. Some nations, led by Germany and France, are calling for wholesale regulation of financial services in the wake of last fall’s crisis, but the UK says that overly stringent rules would damage its large financial sector and close off US and other funds to European investors.
The US and UK are lining up to change the European Union’s proposed Alternative Investment Funds Directive, a sweeping bid to overhaul regulation of hedge funds, private equity and other alternative investment funds.
Globe and Mail – Paris, so far, has emerged as the most serious challenger. But Mr. Sarkozy may be his own worst enemy on this file. The reason: He and his German allies are wholesale supporters of the European Union effort to rein in the hedge funds even though the funds can take little blame for the financial disaster.
If Mr. Sarkozy gets his way, the funds, which are a huge business in London, won’t jump on the Eurostar and re-emerge in Paris. They will leave the EU entirely for Switzerland (not an EU member; some funds have already moved there) or any of the financially ambitious Middle East and Asian cities – Abu Dhabi, Singapore, Shanghai – which are dangling gold and pearls before the big-name fund managers.
Bloomberg – Hedge funds and other investors who short-sell shares in Britain’s financial companies must continue to disclose their trades, the U.K.’s financial regulator said.
A reporting requirement put in place by the Financial Services Authority in January will continue until new short- selling rules come into place, the agency said in a statement today. The requirement had been due to lapse on June 30. The new set of rules is expected to come into force in 2010.
“Keeping the disclosure requirements will continue to enhance transparency and limit the potential for market abuse, while details of a long-term regime for short-selling are being drawn up,” said Sally Dewar, the FSA’s managing director of wholesale and markets.
West Palm Beach (HedgeCo.net) – Recently launched Codiam Fund, which invests in pre-cut colored diamonds, has reported an increase of 9% in the fund’s net asset value over the first three months of trading.
"We launched the fund in difficult market conditions, confident that our experience and expertise would enable us to identify and purchase rare coloured diamonds that would grow in value for our investors, and the increase to our net asset value has proved this to be true," says Codiam managing director Philip Baldwin, who co-founded the business with Mahyar Makhzani.
The fund managers believe the colored diamonds offer a hedge against market and political crises, as they have not decreased in price on a wholesale level in 35 years, consistently outperforming other diamond categories, with their value increasing on average between ten and 15% a year.
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Asia Times Online – During the end of the 1970s into the 1980s, British Conservative prime minister Margaret Thatcher and the City of London financial interests who backed her introduced wholesale measures of privatization, state budget cuts, moves against labor and deregulation of the financial markets.
They did so in parallel with similar moves in the US initiated by advisers around Reagan. The claim was that hard medicine was needed to curb inflation and that the bloated state bureaucracy was a central problem.
Reuters – The government is considering injecting as much as 10 billion pounds into Northern Rock to use the nationalised bank to ramp up mortgage lending, the Daily Telegraph reported.
The Treasury has yet to make a final decision on the plan, which may also see the bank hiring new staff, the newspaper reported in its Friday edition.
Spokesmen for the Treasury and Northern Rock, which is due to unveil a new business plan in the next few weeks, could not immediately be reached for comment.
Northern Rock became the first British casualty of the credit crunch in September 2007 when the bank, heavily dependent on wholesale markets for its funding, revealed that it had been forced to seek emergency support from the Bank of England.
The bank was nationalised in early 2008 after attempts to find a private sector buyer fell through.
Bloomberg – It has been a year of record misery: the largest bankruptcy, bank failure and Ponzi scheme in U.S. history; $720 billion in writedowns and losses by financial institutions; $30.1 trillion in market valuation wiped out.
The biggest loss and the hardest thing to recover, though, may be something that can’t be precisely measured — confidence in the markets and the firms that rely on them.
“The wholesale funding model lost its credibility,” said David Hendler, senior analyst at New York-based CreditSights Inc. “That started the semi-nationalization of funding in the financial markets. It’s a real chink in the armor of capitalism as supposedly the best process for allocating capital. The government is now deciding who gets access to capital.”
