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Six months into a credit crunch there are few signs of an improving outlook for non-government bond markets. It is a signal equity investors would do well to heed.

Best-managed LATAM companies: High standards are the exception

Best-managed LATAM companies: High standards are the exception

Amid all the bad news surrounding the world’s best-known banks, one institution can hold its head high after its latest results.

Lebanon still has no president, and now its public debt has been downgraded.

The financial services sector in the former Yugoslav Republic of Macedonia looks set to remain a magnet for foreign direct investment thanks to growing economic and political stability.

Central and eastern Europe is by no means immune to financial woes, strong economic growth levels notwithstanding.

Companies are beginning to look to their neighbours for investment flows.

Foreign banks continue to eye expansion opportunities in Kazakhstan, despite the cloudier outlook for the central Asian republic’s financial sector. South Korea’s Kookmin Bank is in talks with Bank CenterCredit, the sixth-largest Kazakh bank, with a view to taking at least a 30% stake. UniCredit is looking to finalize its $2.2 billion purchase of ATF Bank, Kazakhstan’s number four player. But the Italian bank has become embroiled in a legal dispute with US hedge fund QVT Financial, which has accused it of abusing minority investors’ rights. Finally, a Russian investment bank is reported to have built a 10% to 15% stake in the country’s largest bank, Kazkommertsbank, on behalf of an unknown party, prompting further takeover speculation.

February 11 was supposed to be so much fun for Anil Ambani. The billionaire younger son of the late Indian industrialist Dhirubhai had just floated his latest investment vehicle on the Mumbai stock exchange. Reliance Power’s stock sale was a cracker: sold in less than 60 seconds, its mid-January roadshow was a whopping 73 times subscribed, sucking huge chunks of liquidity from the system. Investors scrambled to buy paper linked to India’s latest infrastructure play – a company so shiny new that its valuation is based on a dozen huge power plants that won’t come online until 2012. Yet Ambani’s party, held at his plush Mumbai residence, turned out to be more wake than celebration. In the few weeks since Reliance Power’s roadshow, India’s markets tanked. The local benchmark Sensex index lost more than 20% in the five weeks to February 12. Several infrastructure-related IPOs were also pulled in early February, including Indo-Dubai real estate joint venture Emaar MGF, whose initial stock sale was slightly less than 90% subscribed when it was pulled.

The downward curve on Reliance Power’s post-launch stock price chart (see India: Reliance Power unplugged by inconstant investors, Euromoney, March 2008) wasn’t the only graphic shocker in India last month. In a single week in early February, three Indian corporates – Wockhardt Hospitals, real estate firm Emaar MGF and SVEC Constructions – pulled their IPOs. The lack of demand for their paper among every class of investor was stunning. Emaar’s $1.64 billion stock sale performed best but was subscribed just 0.83 times. Investors were even more Scrooge-like with SVEC’s tiny $10 million sale, which was only a quarter covered. But pity poor Wockhardt, whose $165 million was subscribed a pitiful 0.15 times on the institutional investor side, and just 6.44% among qualified institutional buyers.

Julius Baer plans to undertake an IPO of its US asset management business later this year, aiming to raise $1 billion. According to filings with the SEC, the US arm also intends to launch hedge fund and private equity vehicles. Its private equity funds will focus on central and eastern Europe.