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from India Insight:

Equity funds outperform in November; smaller shares rise

India’s diversified equity funds bucked the trend in the broader markets to eke out gains in November, as a strong performance by mid- and small-cap shares and sectors such as capital goods supported unit values.

Data from fund tracker Lipper, a Thomson Reuters company, showed that such funds rose only 0.21 percent on average in the month, but outperformed the 30-share BSE Sensex that fell 1.8 percent.

Mahesh Patil of Birla Sun Life Asset Management cited the outperformance of mid- and small-cap stocks as the “main reason” for positive returns generated by diversified equity funds in November.

“Clearly over a medium-term, I think there is some value in small- and mid- cap,” said Patil, the co-chief investment officer at the Birla fund house that manages assets of more than $12 billion.

from Breakingviews:

China’s bad debt could leave $500 bln equity hole

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s bad debts could blow a $500 billion hole in bank balance sheets. That’s roughly how much extra equity the eleven biggest lenders might need if 10 percent of their loans went sour, according to a Breakingviews calculator. Though the chairman of ICBC, China’s biggest lender, thinks dismal bank valuations are “unfair”, the malaise is well deserved.

from Edward Hadas:

A dangerous lie about debt

I have spent much of the last five years searching for financial villains. The 2008 crisis and the extremely slow subsequent economic recovery have exposed a deeply flawed system, and some people, groups or ideas must be responsible.

There are many obvious culprits: greedy bankers, undercapitalised banks, lax monetary policymakers, reckless governments, weak international institutions and imprudent lenders and borrowers. They’re all guilty, but some of the worst offenders are intellectual - the dangerous ideas that encouraged overconfidence during the credit bubble and ineffective policy in the aftermath. Financial theory is a big problem. In particular, I accuse the risk-free rate of return of being the devil’s work.

from Breakingviews:

Imagine a world without debt

I have a dream: a world without debt, and with much more equity. It’s not just that summer holidays are a good time for fantasising. The fifth anniversary of Lehman Brothers’ bankruptcy is a month away, and regulators have recently forced both Deutsche Bank and Barclays to issue more shares.

Some regulators’ beach thoughts may drift to the magic numbers of bank capital ratios. My approach is less technical and more philosophical. I wonder why the financial system relies so much on debt. Loans and bonds are poorly designed for their primary economic purpose - investment.

from Edward Hadas:

Imagine a world without debt

I have a dream: a world without debt, and with much more equity. It’s not just that summer holidays are a good time for fantasising. The fifth anniversary of Lehman Brothers’ bankruptcy is a month away, and regulators have recently forced both Deutsche Bank and Barclays to issue more shares.

Some regulators’ beach thoughts may drift to the magic numbers of bank capital ratios. My approach is less technical and more philosophical. I wonder why the financial system relies so much on debt. Loans and bonds are poorly designed for their primary economic purpose - investment.

from MacroScope:

Raskin’s warning: ‘Shouldn’t pretend’ Fed capital rules are a panacea

Post corrected to show Brooksley Born is a former head of the Commodity Futures Trading Commission (CFTC) not a former Fed board governor.

Underlying the Federal Reserve recent announcement on new capital rules was a general sense of “mission accomplished.” The U.S. central bank, also a key financial regulator, has finally implemented requirements that it says could help prevent a repeat of the 2008 banking meltdown by forcing Wall Street firms to rely less heavily on debt, thereby making them less vulnerable during times of stress.

from Breakingviews:

Apple’s bite out of market seeds IPO appetites

By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist the opinions expressed are his own.

 

By taking a big bite out of the American stock market, Apple is inadvertently seeding the appetite for equity. While the iPad maker’s recently supersized $50 billion buyback program may be unique in its scale as the largest of all time, it also typifies one of the big challenges facing investors seeking to deploy their money.

from Global Investing:

Rich investors betting on emerging equities

By Philip Baillie

Emerging equities may have significantly underperformed their richer peers so far this year (they are about 4 percent in the red compared with gains of more than 6 percent for their MSCI's index of developed stocks) , but almost a third of high net-worth individuals are betting on a rebound in coming months.

A survey of more than 1,000 high net-worth investors by J.P. Morgan Private Bank reveals that 28 percent of respondents expect emerging market equities to perform best in the next 12 months, outstripping the 24 per cent that bet their money on U.S. stocks.

from Breakingviews:

PICC seeks strength in numbers ahead of IPO

By Wei Gu

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The People’s Insurance Company of China is all about the power of big numbers. The insurer’s 17 investment banks have helped it sign up 17 “cornerstone” backers in advance of its $3.6 billion Hong Kong offering. Though they’re hardly big-name value investors, they improve the likelihood of getting the deal done.

from Global Investing:

Survival of the fattest?

Is there room only for the biggest, most aggressively-marketed funds in crisis-hit Europe?

Europe's ten best-selling funds have attracted nearly a third of net sales across bonds, equity and mixed assets so far this year, as the grey bars show in the following chart from Thomson Reuters' fund research firm Lipper.

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