By Neil Chatterjee
    The U.S. has promised it will hunt down tax evaders.
    And it seems tax evaders are on the run.
    DBS bank, based in the growing offshore financial centre of
Singapore, told Reuters it had been approached by U.S. citizens
asking for its private banking services. But when told they would
have to sign U.S. tax declaration forms, the potential clients
disappeared.  
    Swiss banks also approached DBS on the hope they could
offload troublesome U.S. clients to a location that so far has
not been reached by the strong arms of Washington or Brussels.
    DBS said no thanks. In fact many private banks and boutique
advisors now seem to be avoiding U.S. clients.
    Will this spread to other nationalities, as governments
invest in tax spies and tax havens invest in white paint?
    Is this the end of offshore private private banking?

This month’s Reuters global asset allocation survey shows that investors have cut back on buying equities after an almost non-stop rally since March.

According to a survey of 49 leading investors in the United States, Britain, continental Europe and Japan, investors now hold an average of 54.9 percent of their portfolios in equities.

This is the lowest level since February and below the long-term average of 59.3 percent.

For more graphics click here and here.

Investor sentiment goes through various phases in an economic cycle -- from optimism, euphoria to panic and depression, back to hope and optimism.

James Thomson, investment manager of Rathbones global opportunities fund, discusses the current stage of investor morale.

Reuters has taken its monthly snapshot of the investment choices of leading fund management houses across the world. At the end of July, the picture painted was one of investors embracing risk and shutting down their safest holdings.

Equity holdings as a percentage of a typical balanced portfolio were at their highest since the end of August last year, just a couple of weeks before Lehman Brothers collapsed. Here is what has been happening to equity holdings this year: 

At the same time, cash holdings have been cut back drastically. They are now at a level last seen in May 2007.  Here’s what that looks like:

Bonds offers a more mixed picture, but the latest month still shows a retreat that would be typical of roaring risk appetite:

Now the big question. Does all this add up to the start of a meaningful, long-term bull market? Or is it just overly optimistic exuberance?

By Jason Benham

Glitzy Dubai's property market is in trouble, there's no doubt about that. Just take a look at the hundreds of motionless cranes, unfinished projects and the expats who are leaving in droves as they lose their jobs.

And prices and rents which soared during a six-year boom have crashed since late last year. According to one resident who recently moved in the City, it now costs 150,000 dirhams to rent a three-bedroom flat on the Palm, a man-made island off the coast of the emirate, around the same it would have cost to rent a one-bedroom appartment there a year ago.

It's not just the global downturn thats the concern for Dubai's once-booming property market, but also the lack of transparency and need for greater regulation. And that's what's going to keep the western investor from splashing the cash.

Investors looking at Dubai's real estate sector are a different breed. They are no longer looking to snap up properties in the hope of making a quick buck. They are more conservative with a longer term outlook.

"RERA (the Real Estate Regulatory Authority) has been trying to introduce regulation to minimise the impact of speculative investors," said Andrew White, head of Middle East operations at UK-based investor Kenmore property Group.

"But some have said this is like shutting the stable door after the horse has bolted because the downturn has more or less wiped these out anyway." So, a little too late perhaps ? And what about the recently announced planned merger of Emaar Properties, builder of the world's tallest tower, with
three other local property firms?

Well, so far no one really knows. Simply put, there has been little in the way of information about this.

"If you look at Emaar and the potential merger, there is little financial clarity on how this will proceed and that is going to worry investors," said Bobby Sarkar, analyst at Al Mal Capital. "The U.S. and European markets have high levels of clarity in terms of regulation, but that isn't the case here."
 
There is no doubt however that the government is trying to improve regulation and transparency. Several wins for the property market over the last year include the introduction of a monthly rental index and new laws for property maintenance, not to forget the continuing effort to crack down on corruption.

But there is a long way to go and more is needed for Dubai to come close to rivalling mature markets such as the UK and U.S. which offer the longer-term investor the transparency they crave.

The S&P 500 index is approaching 1,000, Nasdaq is nearing 2,000, the Nikkei is above 10,000 and Dow could surpass 10,000 soon.

Welcome to the world of milestone mania, where investors give emphasis on nice round numbers.

U.S.-based wealth management firm Fisher Investments give a few thoughts on the milestones and the danger of having blind faith in them.

In ancient Rome, Emperor Augustus placed a pillar in the centre of the Forum, marking the starting point for a system of roads. The roads were marked every mile, or the distance covered in 1,000 paces (mille is Latin for 1,000), by a stone. These milestones became important markers to travellers, helping them sense the distance between two points and determine how far they travelled in relation to Rome.

“In investing, however, milestones are simply misleading. What do markets know of milestones—of beginnings, distance, and endpoints? Nothing—numerical milestones are meaningless to markets and have no historical forecasting power whatsoever,” Fisher says.
“If markets start creeping toward those higher, round numbers, don’t be surprised if technical analysis enthusiasts appear out of the woodwork, attributing vital significance to those levels—claiming reaching or not reaching those markers will show how markets will do going forward. This is faulty reasoning—ignore.”

The old adage - there is no better time to go back to school than during a recession - seems to ring true for real estate investments as well.

With recession-wary workers and rising international interest driving up university applications, student home operators in the UK are enjoying near 100 percent occupancies, with rents predicted to go up 10 percent this year.

In contrast, other property classes in the UK such as offices, shopping malls and factories have seen values plunge a startling 45 percent since mid-2007. And the recession means rents are forecast to fall as much as 15 percent this year as landlords face the rising threat of tenant defaults.

As I wrote earlier, investors such as pension funds that were burnt by traditional commercial assets are now turning to the student accommodation market for the projected growth and steady returns other parts of the market aren’t delivering.

Students pack up their dorm room after graduating from university in the city of Xian, Shaanxi Province July 3, 2004. REUTERS/China Photos WC/FA

Student homes specialists King Sturge estimates that average rents jumped 7 to 10 percent annually in the last five years and can go up 10 percent this year, although it sees the yearly increase moderating to 5-7 percent for the next few years with new entrants to the market.

Branded student housing can be very pricey and the best stuff are a far cry from crowded, slum-like dorms that some of the world’s students have to put up with: high-end versions in London that offer en-suite bathrooms, flat-screen TVs and laundry services cost up to 300 pounds a week.

With the belt-tightening that comes with a recession, parents may groan about the higher costs of student housing for their university-bound offspring.

But operators expect there will be those who are still willing stump up the cash, if only to ensure their children make it for classes.

“First year students usually can’t find housemates to rent with, and there is no guarantee the flat will be near to school,” says Gabriel Behr of the University Partnerships Programme, a student homes operator owned by funds under Barclays Private Equity, which is developing over 700 new rooms for King’s College London.

“Are parents willing to stick their kids somewhere five miles away from class?” he asked me.

Got a company to set up? Better go for a simpler name.

That is what psychologists at Princeton University found in a  survey when they studied data from two major U.S. stock exchanges on initial public offerings.

They found that people are more likely to purchase newly offered stocks that have easily pronounced names than those that do not. After the IPO, investing $1,000 in companies that have easy-to-pronounce names generated $333 more than investing in the 10 hardest to pronounce companies.

In one case, an initial investment of $1,000 yielded a profit of $112 more after one day of trading for a basket of fluently named shares than for a basket of “disfluently” named shares.

“These results imply that simple, cognitive approaches to modeling human behavior sometimes outperform more typical, complex alternatives,” the survey said.

The survey said the effect extends to the ease with which the stock’s ticker code, generally a few letters long, can be pronounced — indicating that, all else being equal, a stock with the symbol BAL should outperform one with the symbol BDL in the first few days of trading.

By Barani Krishnan

A decade ago, Malaysia's former deputy prime minister Anwar Ibrahim was on trial for sodomy and corruption in a trial that exposed the seamy side of Malaysian justice and the anxieties of a young country grappling with a crushing financial crisis and civil unrest.

Anwar is Malaysia's best known political figure, courted in the U.S. and Europe and probably the only man who can topple the government that has led this Southeast Asian country for the past 51 years.

Photo: Anwar Ibrahim, with a bruised eye, at court on Sept 30, 1998 during his his first trial. REUTERS/David Loh

Now the leader of the opposition, will go on trial next week again charged with sodomising a 23-year old male aide. The trial once again looks likely to provide gory evidence and bringing some unwanted attention from the world's media on this Southeast Asian country of 27 million people. It could also embarrass the government and draw international criticism.

Anwar vowed in a recent interview to fight what he says are trumped up charges.

The 14 months I spent covering the 1998 trials saw Anwar accused of sodomy with three men and having sex with a woman over a period of years. This case is simpler, there is just one accuser. All homosexual acts are illegal in this mainly Muslim country and sex outside marriage is illegal for Muslims.

The first trial was gruelling. Lines began as early as four in the morning as people tried to get into the court that could seat less than 200. Most of the spectators were ordinary people, but there was a sprinkling of dignitaries and businessmen who had known Anwar when he was in office.

There was a separate media queue and again a fight to get in line as dozens of reporters from local and international outlets jockeyed for space. Ringing the court were hundreds of riot police, backed by watercannon, waiting for trouble in a country where there were daily protests at the time, often involving tens of thousands of people.

Once inside the courtroom, things were equally unpredictable. Judge Augustine Paul, plucked from obscurity to oversee Malaysia's most important criminal trial, won national fame for his oft-repeated response of "not relevant" to evidence introduced by the defence team.

The evidence itself was often contradictory and often bizarre. Ummi Hafilda Ali, a star witness for the prosecution called Anwar a "dog" and prayed that he would contract AIDS. At one stage the prosecution paraded a mattress in and out of the courtroom, saying that semen stains showed Anwar had had sex with a man on it.

One day outside the court, a witch doctor cast a spell, for no apparent reason.

Anwar showed up sporting a black eye that he said had been inflicted on him in prison by the country's police chief. This time round he says that he was forced to strip and his sexual organs measured in a hospital.

The evidence to be presented by the prosecution this time looks likely to be just as sensational. The malaysianmirror web portal, backed by one of the government parties, said there will be 30 witnesses, a carpet and a video recording, as well as a DNA evidence brought into court.

Anwar's team, citing two medical reports, says there is no evidence that Saiful Bukhari Azlan was sodomised. Saiful meanwhile has sworn on the Koran that he was and wasn't best pleased when the charge against Anwar was changed to consensual sex.

One key actor in the whole drama is missing this time round. Former prime minister Mahathir Mohamad, who critics say used the 1998 trial to drive Anwar from office and to humiliate him, is no longer in power. That removes some of the sting.

Even so, incumbent premier Najib Razak attracts plenty of ire from the opposition. He has been forced to deny allegations from the opposition and opposition-supporting websites that he was involved in the lurid murder of a Mongolian model.

The country remains tense in the wake of the 2008 general election in which the government lost its customary two-thirds majority.

Can Anwar survive another trial? Without him, can the opposition prosper and have a real chance of winning at the ballot box  in elections due to be held by 2013. Can Najib survive as prime minister if Anwar remains free and can he implement economic reforms?

After a 40-percent gain, the rally in world stocks might be losing momentum.

For permabears who live on doom and gloom to make money this is just a blip which is going to end in tears.

David Tice, a 20-year veteran short seller who manages Federated Investors’ $1 billion short fund, says we are in for a secular bear market which is going to last for 10 years.

“I’ve never more been convinced than anything in my life that this is a suckers rally,” Tice says.

He says short funds — which borrow stocks to sell to buy at a lower price — are negatively correlated to stocks and risky assets, allowing investors to diversify their portfolio.

“An individual really has three legs to his financial stool — pay check/bonus, stocks, real estate. In 2008 all these legs to his financial stool declined,” he says.

“A short fund is negatively correlated. Therefore in a bad economic environment, when people run the risk of all three of those legs declining and are lucky enough to have a pot of liquidity, they should consider putting that to work to a negatively
correlated vehicle like a short fund.”

Experts say investors should choose short funds with stricter risk management than their long counterparts as their upside is limited — performance reaches its maximum when a stock price go to zero — while the downside, brught by a stock price going higher — can be infinite.