Stock markets around the world staged a recovery in 2009 since March, when most of them hit their lows for the year. It was a year in which governments and central banks around the world took extraordinary measures to get their economies growing.
US share prices also performed well. Despite a drop of about 1% of all Wall Street indexes during the last trading hour on New Year’s Eve, the broad-based S&P 500 index was up nearly 25%, the strongest performance since 2003, while the Dow Jones gained 20%. The technology-driven Nasdaq index doubled those gains, rallying 45%. [Source 1] [Source 2]
Russia’s default in 1997 and the stock market devalued rapidly. Browder (founder of Hermitage investment fund) lost, by his estimate, 90% of his money during this time that he had invested in Russia. More onerous, was the wholesale “stealing” by the Russian oligarchs.
Rather than put up with this, Browder met with company employees to hear first-hand about the scams that were going on within the companies. Watch the story yourself at the bottom of this post (7min). For a complete coverage of Browder’s speech at Standford GSB click here.
Browder started with $25 million in 1996, achieving almost tenfold gains in 18 months and then raised $1billion from new investors. At one stage the pot totalled $4 billion and Hermitage became Russia’s biggest foreign portfolio investor.
However, Mr Browder offended someone with great power – he insists that he still does not know who – and in November 2005 was refused re-entry into Russia. Since then Browder is one of the biggest enemies of the Russian state. [Source 1] [Source 2].
A recent side-by-side comparison of the U.S. and Chinese economies produced a startling result: There were $34.8 billion of initial public offerings in China this year and only $13.7 billion in the U.S.
With numbers like that, is it any surprise that Western fund managers are scrambling to get a bite of the immensely profitable Chinese market for new companies? As the New York Times reported, U.S.-based Blackstone Group has formed a partnership with Shanghai’s municipal government to raise a $732 million private equity fund.
What’s different this time is that Blackstone’s fund is denominated in the Chinese currency, which is officially called the renminbi. Blackstone’s idea is to take advantage of capital from China’s increasingly wealthy institutional and private investors. The fund will then use the investments to buy companies and take them public, earning a hopefully large profit along the way. There is plenty of interest in the Chinese market for new companies—Carlyle Group announced this week that it had invested $60 million in three Chinese growth companies. So there is no shortage of domestic companies ripe for turnaround [Source].
A few weeks ago, Stephen A. Schwarzman, the chairman of the Blackstone Group, the world’s biggest private equity firm, signed a joint venture here with Shanghai’s municipal government, creating the first Blackstone fund denominated entirely in Chinese currency.
The $732 million fund was the latest example of two trends: global private equity firms seeking to raise capital from increasingly wealthy Chinese individuals and institutions, and the growing international stature of the Chinese currency, formally known as the renminbi.
According to Zero2IPO, a Beijing-based research firm, more than 190 funds denominated in renminbi have been established in the last two and a half years with a combined total of more than $30 billion. In the past, investments in Chinese companies were largely done through offshore holding companies in tax havens like the Cayman Islands.
Chinese private equity funds are emerging in big cities as China promulgates new regulations aimed at creating a homegrown private equity industry, one that Beijing hopes will strengthen the country’s capital markets and fuel private sector growth in an economy overly dependent on government investment [Source].
Former Merrill Lynch CEO John Thain offers his opinions as to what caused the crisis, what can be done to prevent it from happening again, and when it will be over — not just for the financial industry but also for Main Street. This lecture consist out of three videos, which include Thain’s remarks to the audience, questions from the three-member panel and, finally, questions from the audience.
A brash new generation of traders is making a fortune by remaking financial markets. An outgrowth of Chicago’s derivatives markets, they go by wonky names like Global Electronic Trading Co., Tradebot and Infinium. Personnel include mathematicians, engineers and gamers. They bet their own capital on sophisticated software algorithms that spit out thousands of orders a second. Big Wall Street brokerages and hedge funds pursue similar strategies.
E.g. from the get-go the strategy was to trade fast, furiously and electronically. Getco’s first point of attack was futures, which went electronic early. Tierney and Schuler programmed their computers, and the people manning them, to offer quotes and execute trades more quickly than rivals. Then, when the market moves, to do it again. By posting bids and offers for the same securities simultaneously, they are able to scoop up a spread of a tenth or a hundredth of a penny per share thousands of times a day while limiting the capital at risk. What Getco gives up by capping its risk it makes up for in volume. The company currently trades an estimated 1.5 billion shares a day with 220 employees and offices in Chicago, New York, London and Singapore.
The global credit crunch has cost governments more than $10 trillion, the International Monetary Fund (IMF) says. The IMF says that rich countries have provided $9.2tn in government support for the financial sector, while emerging economies spent $1.6 tn. Read more.
From the ruins of the credit crunch, a new financial order will emerge. Its shape is not yet known, but is already hotly debated. Will there be a new model for investment banking? The socialisation of risk? A return to Keynesianism? What role will hedge funds and private equity play? And government and regulators?
In this series of exclusive video interviews, Lionel Barber, editor of the Financial Times, talks to some of the chief protagonists – bankers, policymakers, financiers – and asks them to explain not just what happened, but also how they think finance will adapt to the post-crash world.
The global financial gloom is at the top of the agenda as political heavyweights, big thinkers and, yes, even some powerful financial types roll into Davos, Switzerland, for this year’s World Economic Forum.
DealBook, The Times and the International Herald Tribune are covering the conference, which formally kicks off on Wednesday, on the Davos Diary blog. Check DealBook’s website for coverage of who’s there and what they are saying on the ground. Davos 2009 Diary.
Wanna see how the recession has affected GDP, house prices, rates and inflation. BBC published an analysis on stock markets and government rescues here (Global Downturn). In light of this the Financial Times has published a special report on how to fight a global downturn here (Managing in a Downturn).
Russia’s default in 1997 and the stock market devalued rapidly. Browder (founder of Hermitage investment fund) lost, by his estimate, 90% of his money during this time that he had invested in Russia. More onerous, was the wholesale “stealing” by the Russian oligarchs. 
A recent side-by-side comparison of the U.S. and Chinese economies produced a startling result: There were $34.8 billion of initial public offerings in China this year and only $13.7 billion in the U.S.
A few weeks ago, Stephen A. Schwarzman, the chairman of the 
The global credit crunch has cost governments more than $10 trillion, the International Monetary Fund 
The global financial gloom is at the top of the agenda as political heavyweights, big thinkers and, yes, even some powerful financial types roll into Davos, Switzerland, for this year’s World Economic Forum.
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