Leon’s Musings – lights out – double up – passing the baton

Lights out

The tide will turn at some stage but at present both buy and sell-sides continue to struggle. Brokers are complaining about the ‘pathetic’ volumes and some buy-side firms are considering shuttering up. I was talking to one hedge fund owner the other day and he has seen his FUM drop from $2 billion at the peak down to $200 million today and having taken as many costs out of the business as possible the next decision will be whether to turn out the lights or not.

Double up

With investors actively searching for safe havens as the Eurozone turmoil continues it seems that one new home for their cash is Asian bonds. Asian companies ex-Japan issued $5.76 billion in bonds in international markets in January 12 which is the third largest monthly total for the past three years. Probably not a bad idea as investors will not only capture Asian economic growth but also any $US dollar upside from their linked currencies.

Passing the baton

With investors pushing more money into the Asian region due to the current market turmoil, I’m wondering what effect it will have on the development of the financial markets in Asia and whether like industrial companies, Asian financial institutions will overtake their Western peers in a few years. While some may regard this as a given, probably more interesting is what model they’ll use, the so-called ‘casino capitalism’ of the West or a more government mandated model as with they’re doing with industrial production.