The Great Debate UK

from Funds Hub:

Risk Management: Did fund managers learn their lesson?

By Detlef Glow, Head of EMEA Research at Lipper. The views expressed are his own.

In the last decade investors and fund managers faced two major crises in the stock markets, the popping of the technology bubble in 2001 and financial crisis starting in 2006.

Portfolio managers suffered average losses of about 50 percent in the wake of both crises, leading investors to question what their fund managers learned.

A Lipper and Avana Invest study on the maximum drawdown of actively managed funds found that those fund managers must have introduced new risk management tools after the bust of the technology bubble. Still, they failed to meet investor expectations on managing risk.

from Business Traveller:

Thailand in July?

Thailand goes to the polls on July 3 and no one can predict the precise outcome of the country’s divisive political battle. How carefully should business travellers tread, pre- and post-election?

Since populist former prime minister Thaksin Shinawatra was deposed in a military coup in September 2006, the world has watched Thailand and its capital Bangkok – a long-stable travel and business hub – grapple with political and civil conflict.

from Business Traveller:

In to Africa: Travel security

(This is the second part of a column on business travel to Africa. To read the first part, click here)

Securing Africa
It is hard to generalise the security situation in Sub-Saharan Africa. Tim Willis of Travel Security Services (TSS) points to the criminality concerns in Nairobi, Freetown and Johannesburg, separatist activity in Nigeria and various political situations in others. For many, going to the continent for the first time, fear of the unknown will be the pressing factor. The key is to keep abreast of current situation in countries where events such as elections can have a significant bearing on the security situation.

from Breakingviews:

Four reasons to hedge against Japanese equities

What was a contrarian view right after Japan's earthquake has become consensus: confidence in a V-shaped recovery has powered a 10 percent rally in Japanese stocks since March 15. That outlook still appears likely, but questions surround the speed and strength of the recovery. Investors should hedge against the risk that politics, power shortages, and nuclear troubles prompt investors to turn tail.

Amid a drumbeat of cautiously optimistic forecasts, foreign investors pumped almost $12 billion into Japanese stocks, a surge that helped stoke an unwanted spike in the yen. Even Warren Buffett joined the chorus of support for Japanese equities. The rally also turned up some reconstruction darlings such as generator-maker Denyo <6517.T>, which has climbed 44 percent since March 15; water purification company Nihon Trim <6788.T>, up 48 percent; and lighting company Iwasaki <6924.T>, up 58 percent. 

To spend, or not to spend?

-Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.-

There is really only one question on the agenda at the G8 and G20 meetings in Toronto and in policy circles throughout Europe and North America: to cut government spending and risk recession; or to keep on spending, risking a return to inflation, or more likely to stagflation – inflation with stagnant economic activity?

We need risk-ready leaders

-Geoff Trickey is managing director of The Psychological Consultancy. The opinions expressed are his own.-

France is being rocked by its biggest financial scandal as Societe Generale is standing against ‘rogue trader’ Jerome Kerviel who is accused of gambling away nearly five billion euros. The core tenet of the argument comes down to risk. That as an employee Jerome was “encouraged” by his bosses to take risks while his bosses accuses him of taking “inhuman” risks.

Managing catastrophic risks and climate change

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Graciela Chichilnisky-Graciela Chichilnisky is the Architect of the Carbon Market of the Kyoto Protocol and the author of ‘Saving Kyoto‘, New Holland Publishers, UK, 2009.  Chichilnisky is a Professor of Mathematics and Economics at Columbia University in New York, Director of Columbia Consortium for Risk Management and Managing Director of Global Thermostat Inc. The opinions expressed are her own.-

We live surrounded by uncertainty. Tsunamis, the eruption of super- volcanoes, violent floods and storms, asteroid impacts that eliminate entire species as the dinosaurs that went extinct 60 millions years ago, the recent 8.8 earthquake in Chile, not to mention the global financial crisis.  Some disasters are worse than others, but they all have one thing in common. They are catastrophic risks.    This means risks that occur very rarely – but when they happen they have truly major consequences.

Development of the risk trade

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JaneFoley.JPG

- Jane Foley is research director at Forex.com. The opinions expressed are her own.-

A willingness to differentiate between risk on a country or at a regional level is an important part of the repair process in financial markets.

from Global Investing:

What worries the BRICs

Some fascinating data about the growing power of emerging markets, particularly the BRICs, was on display at the OECD's annual investment conference in Paris this week. Not the least of it came from MIGA, the World Bank's Multilateral Investment Guarantee Agency, which tries to help protect foreign direct investors from various forms of political risk.

MIGA has mainly focused on encouraging investment into developing countries, but a lot of its latest work is about investment from emerging economies.

from MacroScope:

Step aside capitalism, how about leverageism

Our recent post on the End of Capitalism triggered much interest and comment.  There were plenty of diverse views, as one would expect. But one thread that came out was that what we are now seeing is not true capitalism (nor, of course, is it old-style communism). Ok, but what is it?

Anthony Conforti suggested in a comment that we need a name for what is happening,:

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