In the first of a regular series of columns, John Arrowsmith casts light on what at first sight appears to have been a sudden volte-face on interest rates by the European Central Bank.

As Latin American economies look forward to another year of robust growth, remittance flows continue to outpace expectations. With payments by expatriates worth a record $45 billion last year and increasing at more than 10% a year, it is little surprise that banks now want a piece of the action. Latin American and US banks are not only eyeing services to rival traditional wire services to bring in extra revenues, but also see money flows as a way to develop portfolios aimed at the small-scale Latin American customer, offering loans and mortgages.

by John Ferry

594,900,000,000 The global dollar value of equity capital raised in 2005. The figure is up 4% from 2004 and is the highest since 2000.

Happy New Year to the Tokyo Stock Exchange. The exchange needs all the good wishes it can get after getting off to a bad start this year. On January 18 the market was forced to close early when trading exceeded its troubled computer system’s daily capacity.

Peru’s retail banking market is almost unrecognizable from a decade ago. In the mid-1990s, when less than 15% of economically active Peruvians had a bank account, 26 banks were jockeying for business in a depressed local market, some with highly inadvisable lending policies.

Like so many other aspects of Japan’s financial system, its pensions schemes are paying for the sins of the past and struggling to pay for the future. Existing reforms do not go far enough, says Chris Leahy, and flirt dangerously with the country’s future prosperity.

Several emerging market countries have discovered that oil is a bane not a blessing, destroying domestic development. The current crop of oil champions may have stabilization funds, but Theodore Kim explains how things can still go wrong.

Peter Weinberg, former head of European investment banking at Goldman Sachs, will join former Morgan Stanley star banker Joseph Perella in his as yet unnamed investment banking boutique. Perella left Morgan Stanley last April during the battle over the leadership of the firm and soon after was sole adviser to MBNA on its $35.8 billion sale to Bank of America.

According to data from research company HFR, the number of hedge funds going bust is rising rapidly. In 2005 to the end of the third quarter an estimated 484 funds went into liquidation, 81.8% more than in the whole of 2004.

It seems that some banks will pull out all the stops to feature prominently in Euromoney’s influential FX poll. Word filters through of gifts being sent out and clients being lavished with entertainment. The managing director of one prominent bank was so eager to start the lobbying process that he emailed Euromoney asking: “Fri 5pm: should I unleash hell? Is the site ready? Let the games commence...” Just exactly which games he was about to unleash in hell is unclear, but one of his disgruntled clients has complained of being hassled, almost non-stop, to vote. “I told all the banks I’d fill it [the poll] in when I was ready, not before,” he moaned.

As gold has traded up to 25-year highs, the Canadian dollar has weakened, despite the products’ strong long-term correlation. Does this mean that the relationship has broken down?

Foreign hedge fund managers registering with the SEC might be caught out by a NASD ruling on IPOs, say lawyers. Foreign managers investing in US or non-US IPOs are subject to the US securities regulator’s ‘new issue’ ruling if those managers use a US broker/dealer.

Those banks distributing goodies in the hope of influencing the poll (against the rules, we hasten to add) might do well to remember that clients are often an ungrateful bunch. Apparently, one Japanese client of a UK clearing bank complained about the iPod Shuffles it received for Christmas. It was not the fact that iPods are made by one of its competitors that caused the problem. No, it was the fact that the Shuffle is at the bottom of the iPod range.

The growing number of FX transactions being settled through CLS Bank is strong evidence that the market is still expanding.

The biggest LBO club deals of 2005 will soon be surpassed.

SAB Miller, the world’s third-largest brewer, announced in January its intention to establish a brewery in Vietnam through a 50:50 joint venture with Vinamilk, Vietnam’s leading dairy products company. The $45 million venture will be based near Ho Chi Minh City and will make use of Vinamilk’s extensive distribution network. The aim is to develop a Vietnamese beer brand that will be supported by a premium SAB Miller brand.

Few financial issues in Asia are debated as hotly as the state of China’s banking system and the billions continually poured into mainland lenders by foreign financial institutions and lenders as the banking market is slowly opened up.

CNOOC finally closed a significant Nigerian oil deal in January.

Japan’s corporate sector has spent the past few years selling businesses off to pay down debts and restructure but there is gathering evidence of the emergence of a more acquisitive bent.

Lotte Shopping, a stores-to-cinemas group and one of the biggest retailers in Korea, launched its IPO in January as a dual listing in Korea and London, with Goldman Sachs and Nomura Securities as joint global coordinators and Daewoo Securities handling the domestic IPO. Although pricing will not be fixed until the end of January, the valuation, believed to be up to $3.8 billion, means this will be comfortably Korea’s largest IPO. In addition to the domestic and international listings, Nomura Securities will undertake a public offer without listing in Tokyo.

US carrier United Airlines has pledged the rights to some of its most valuable routes as collateral for a new loan that it hopes will take it out of Chapter 11 bankruptcy protection. As well as route rights between the US and London Heathrow and Japan, China, Hong Kong and Japan, it is also pledging $2.6 billion in aircraft and spare parts in a desperate bid to find collateral for the six-year $3 billion syndicated loan. United needs the new cash to pay off its debtor-in-possession financing. The company filed for bankruptcy in December 2002.

With India’s aviation sector already hopelessly overcrowded, consolidation started in January when Jet Airways India and Sahara Airlines announced an agreement for Jet to acquire Sahara. Although the deal is subject to a confidentiality agreement, the companies announced that the acquisition would be for cash based on an enterprise value of approximately $500 million for Sahara. Pending regulatory approval, both airlines will continue to operate independently. Despite the deal, overcapacity continues to plague the industry and more deals are likely.

SBI Capital Markets, the investment banking and project advisory arm of the State Bank of India , has agreed a strategic business alliance with Asian broker and investment bank CLSA to provide investment banking services in India . The two firms will work jointly on large equity capital market transactions, M&A and other advisory work as well as cooperate on research products. The alliance is for an initial period of two years but might be extended by mutual consent.

Asia Debt Management, a successful distressed debt fund manager based in Hong Kong, has teamed up with the Asian Development Bank to launch a $338 million closed-end fund targeting financially distressed companies that need rehabilitation. This is the second Maculus fund: the ADB also invested in Maculus I and this time has committed $45 million to the Maculus Fund II. The new fund will invest primarily in the capital structure (securities, loans, equity or other assets) of potentially viable, listed or unlisted companies, in financial distress due to excessive debt or unsustainable capital structures. The fund has a five-year life but might be extended for up to two consecutive one-year periods at Asia Debt Management’s option.

The Philippines’ capital markets have started 2006 positively. Capitalizing on the immediate strength of the peso, the Republic of the Philippines was Asia’s first sovereign to tap the market when it raised $2.1 billion from a $1.5 billion 25-year bond and a €500 million 10-year bond, one of the largest fund raisings from Asia for several years.

Venezuelans woke up on Christmas Day to find that Santa Claus had given them a brand-new toy: a Hugo Chávez action doll. In fact the doll was Venezuela’s best-selling toy this Christmas.

With negotiations for Turkey’s entry to the EU under way – albeit with a long lead-in time – completed privatizations, foreign direct investment and domestic deal-making are growing apace despite continuing bureaucratic hold-ups. David Judson reports.

At the end of December, a consortium of international investors led by Morgan Stanley Private Equity Asia purchased a 14.3% stake in Anhui Conch Cement Company Limited (ACCC) from its parent company for an undisclosed sum. ACCC, which is listed in Hong Kong and Shanghai, is the largest cement manufacturer in China and fifth in the world. Fuelled by China’s construction frenzy, ACCC’s cement sales in the first three quarters of 2005 increased 56% over the equivalent period in 2004. The Morgan Stanley investment consortium included the International Finance Corporation.

Claire Bright is suing HBOS for sex discrimination and wrongful dismissal. Cliff Pattenden, head of treasury at the UK bank, is cited in the suit in which Bright is claiming a whopping £11million ($19.6 million) compensation [see Hybrid capital: It all ends in tiers, November issue for background on Bright’s departure).