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The collapse of structured finance issuance has significant implications for the financing of assets such as mortgage loans but has also dramatically changed the nature of the traditional investment-grade bond business in America. Alex Chambers reports.

Kazakhstan looks set to be the CIS region’s biggest victim of the fallout from the problems in the US sub-prime mortgage market, with the country’s banks seen as the most vulnerable in the Commonwealth of Independent States to any reduction in global liquidity. In recent weeks, the country has been hit by ratings downgrades, whipsawing bond and equity prices, and pressure on the currency. Furthermore, the track record of the banking regulators – previously regarded as the best in the region – is now beginning to look tarnished.

Royal Bank of Canada has launched its €15 billion covered bond programme with a jumbo issue in the European covered bond market. The deal is Canada’s first ever covered bond.

The Cairo and Alexandria Stock Exchange (Case) has launched a new exchange for small and medium-sized enterprises. Case has established several new trading capabilities in the past two years, such as margin trading, online trading and short-selling. Case also plans to launch a derivatives exchange late next year. "We would like to see our derivatives market competing with other emerging markets," says Maged Shawky Sourial, chairman of Case since 2005.

If hedge funds have increased systemic risk, we need to find out by how much and whether the benefits outweigh the risks, says Andrew Lo and Amir Khandani’s paper on quants (see story on page 42). But registration is not the way forward. The authors back up proposals made by other academics that instead a monitoring board would make a good starting point. "By establishing a dedicated and experienced team of forensic accountants, lawyers, and financial engineers to monitor various aspects of systemic risk in the financial system, and by studying every financial blow-up and developing guidelines for improving our methods and models a capital markets safety board may be a more direct way to deal with the systemic risks of the hedge fund industry," concludes the paper. "A great idea," comments one manager, "but the banks will never allow it."

Evolvence Capital, a Dubai alternative investment company, is on track to raise $150 million for what it claims is the region’s first hedge fund when it closes to investment next month.

Economic growth, stability, market reform and liberalization have led to a Latin American investors into Chile, Colombia and Peru. Leticia Lozano reports.

Interest in emerging market high-yield debt is at an all-time high.

In October Venezuela’s president, Hugo Chávez, signed a number of new economic cooperation agreements in Havana with Raul Castro, the island’s temporary leader, in a move to reaffirm the countries’ anti-US alliance and strengthen their bilateral ties.

180,600,000,000 the dollar amount of equity capital raised in Bric countries (Brazil, Russia, India and China) so far this year. The total is up 137% on the same period in 2006 thanks to record volumes across all Bric markets.

Global liquidity is set to keep contracting and inflation will keep on increasing despite a growth slowdown. There is a serious risk of global recession in 2008.

Mifid came into effect on November 1 but the market had already been benefiting from the innovation it encourages. Peter Koh reports.