India’s recent rapid growth masks the fact that it still lags far behind China in terms of its economic development. Its catch-up potential remains huge, and its growth could be even faster. By Diana Choyleva and Maya Bhandari.

The expulsion of Citigroup Private Bank from Japan in 2004 was merely the most dramatic of a string of failures among foreign firms that have too often misread the attitudes of investors and regulators. Now, as Japan’s economic recovery creates new millionaires and wealthy baby boomers prepare to retire, several foreign firms are trying again to crack this difficult but lucrative market. Lawrence White went to Tokyo to ask their CEOs what it takes to succeed in private banking in Japan.

Europe’s economies are split in two: the surpluses of the centre and the north, versus the deficits of the UK, France, and the Mediterranean and accession countries. As the imbalances become exacerbated, Charles Dumas asks if there is a get-out clause for the continent’s likely downswing.

ATS operators sunk by Icebergs in Europe turn to America and Asia. ITG, which launched its crossing centre in Canada as recently as the fourth quarter of 2005, has already seen its market share rise to 4.1% of the volume of the dominant Toronto Exchange, TSX.

UK-based bond dealers breath sigh of relief as regulator turns back from proposals set out eight months ago.

Two major state companies will be partly privatized and up to 10 private companies are expected to undertake initial public offerings in Colombia next year.

As a result of the overwhelming demand, the stock soared 40% when it debuted on the ZSE in early December, hitting K2,400 within minutes of starting trading.

“Hedge funds have trailed equities on a relative basis in 2006 because of the unusually consistent strength in the equity markets”

Asia’s nascent market in structured growth capital is hard to define and even harder to resist. Fat margins and tied clients are bringing more entrants and might engender greater risks.

The International Finance Corporation (IFC), the private sector arm of the World Bank, has issued its first local currency bond offering in sub-Saharan Africa. The XOF22 billion ($44.6million), five-year bond was placed in the eight West African Economic and Monetary Union member nations. IFC vice-president Nina Shapiro said: “IFC expects to follow this bond issue with structured products developed in partnership with local financial institutions.” BNP Paribas is leading the issue.

Has anyone seen this man?

Mizuho Securities is building its structured credit and debt capital markets business.

CapitaLand Limited, Singapore’s leading property group and already the sponsor of four Singapore-listed real estate investment trusts, including the recent mainland China Reit, CapitaRetail China Trust, added to its portfolio in December with the IPO of a fifth Reit and its first to be listed abroad.

The acceptance by Qantas’s board of an A$11.1 billion (US$8.7 billion) bid for the Australian airline cements private equity’s place in the country’s mainstream, despite a growing sense of unease among the public and some thorny remarks from senior bankers.

London-based exchange launches derivatives on LSE-listed Russian stocks.

“Retail demand in Brazil is getting used to the idea that the very high level of real interest rates will not be available in the near future.”

The gathering momentum in the hybrid securities market has been given another boost by the first issuance of such a structure by an Argentine bank under the country’s tier 1 capital regulations.

M&A and capital expenditure needs likely to drive more deals.

Bespoke structures expected in 2007 to fund acquisitions.

Bank Zenit issued the first collateralized debt obligation backed by a portfolio of Russian corporate debt last month. The Red Square transaction is a two-year synthetic CDO, denominated in roubles with 40 local credits. It is one of a handful of emerging market CDO transactions, and what makes it significant is that the underlying portfolio consists of local-currency debt.

Investment bankers in Japan are confident that a hybrid securities market will be established this year, despite fears that the lack of a sizeable standout deal thus far is contributing to investor and issuer caution about the structure. The sector was extremely active in the US as 2006 came to a close, with overwhelming levels of investor demand for deals from Axa and Washington Mutual, and bankers in Japan say that treasurers and CFOs there are looking closely at how their counterparts in the US use the instruments to fund acquisitions and improve capital structure.

Sterling market opened in the Middle East and CIS.

18,000,000,000 the dollar volume of ECM deals that was expected to be executed in December 2006 in the EMEA region, according to Dealogic. $244 billion was raised in the first 11 months of the year, up 9% on full-year 2005, making the amount of money raised in ECM deals in 2006 the highest on record.

Alongside the announcement that it was raising its key interest rates by 25 basis points last month, the European Central Bank released the latest set of growth and inflation forecasts prepared jointly by the staff of the ECB and the euro area national central banks. ECB president Jean-Claude Trichet is always at pains to emphasize that these “projections” – which are shown as ranges, rather than point estimates, to reflect the uncertainties associated with past forecasting errors – are published on the responsibility of the staff and are not formally endorsed by the ECB’s executive board or its governing council.

Southeastern Europe is experiencing a retail lending boom. Although this credit expansion is helping the region’s economies to grow, there is concern that it is putting pressure on banking systems. Sudip Roy explores the dimensions of that risk and weighs up what the authorities are doing to mitigate it.

Volume and profits in the FX market have grown more consistently than in any other part of the financial markets. New entrants and existing users still cannot resist the promise of diversification and excess return.

Rising intra-regional trade and investment are helping to underpin the economic fortunes of the states that formerly constituted Yugoslavia. Guy Norton takes a look at three examples of a stock exchange, a fund manager and private equity.

In spite of all the takeover talk among major global exchanges, and the heavy consolidation in eastern Europe’s banking sector, not everyone believes that acquisitions are the only way to expand business in the region. Florian Neuhof talks to Heinrich Schaller, joint CEO of the Wiener Börse, who outlines his vision of cooperation with the developing regional exchanges.

What’s bad news for the hard-pressed bean counters at financial institutions across Europe trying to curb the exorbitant expenses claims of their equity capital market teams promises to be good news for AirAstana, the leading Kazakh airline that’s one of the candidates for a stock market listing in 2007.

Corporate treasury bears the brunt of regulatory and technological change, and those changes are accelerating. At the same time, demands for performance increase, and it’s the banks who have to deliver.