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Bond returns have come closer to matching equity returns over the past 25 years, according to Deutsche Bank. European credit strategists Gary Jenkins and Jim Reid looked at more than a century’s worth of data from the US. They found that, over a 105-year sample, equities produced a real total annual return of 6.53%, compared with 1.42% for US Treasuries and 2.5% for corporate bonds. But since 1980, equities outperformed corporates by just 1.5 percentage points.

Until recently only multilaterals with a regional mandate, such as the ADB and IFC, have shown much interest in issuing bonds in Asian currencies. But KfW is planning a three-pronged attack on local-currency issuance in 2006. So are local markets about to take off?

Australia’s new-issue market heated up this month with the announcement of three large IPOs. Goodman Fielder, a leading Australian foods business, controlled by New Zealand entrepreneur Graeme Hart, intends to raise about A$2 billion ($1.48 billion) from a listing in Australia and New Zealand. Singapore Power’s holding company for its Australian electricity assets, SP AusNet, has also filed a prospectus for a simultaneous IPO in Australia and Singapore that is expected to raise approximately A$1.6 billion. Another electricity asset, Spark Infrastructure, filed in November for an IPO that aims to raise A$1.8 billion to fund the acquisition of minority interests in Australian power assets held by Hong Kong’s Cheung Kong Infrastructure.

Further proof that FX has gone mainstream comes with news that Rydex Investments has filed a registration statement with the SEC to launch a currency exchange-traded fund (ETF). When approved, the new ETF, which is based on the level of the euro against the dollar, will trade as a stock on the New York Stock Exchange.

Middle Eastern private investment and advisory firm Injazat Capital is launching a $100 million Islamic-compliant healthcare fund this month.

SovRisc is capital markets disintermediation and may transform the $50 billion export loan guarantee business.

Hidden issuers are using swaps rather than bonds

Recognition and protection of shareholders’ rights has rarely been a top priority for senior management of emerging-market corporates. The lack of any serious attention to shareholder rights in China is further hindered by an alphabet soup mix of shareholder classes – each with its own complex set of regulations. Although many emerging equity markets operate under foreign ownership restrictions and two-tiered share ownership structures, the Chinese system is perhaps the most elaborate. More important, proposals to attempt radical reform of the regulatory framework – such as the elimination of an entire class of shares – might hit foreign equity holders with an immediate loss, thus injecting into the market even more uncertainty about the near-term outlook for increased foreign participation. Here are some of the most commonly used market terms.

Tensions between Venezuela and Mexico are escalating following a war of words that began at last month’s Summit of the Americas trade meeting. Venezuela’s president Hugo Chávez called Mexico “an ally of the empire” and “a puppy of the United States” for backing George W Bush’s plan to create a region-wide free trade zone.

Hurricane Katrina blamed for extreme changes in cross-border flows.

There’s little to choose between the world’s two heavyweight institutional fund managers as they square up to fight for profitability. BGI and SSgA both have commendable records and both are now testing out new strategies.

Fast food chain McDonald’s has come under pressure from an activist hedge fund to restructure. Pershing Square Capital Management wants the company to spin off two-thirds of its restaurants and borrow $14.7 billion against its real estate to buy back shares. McDonald’s dismissed the idea as a “financial engineering exercise”.