Barriers How Much Attention Should Investors Pay to Country Groupings Such As the Brics? Page 12
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Securities & INVESTMENT APRIL 2012 REthe members’ magazine of the VIEW chartered institute for securities & investment cisi.org/s&ir Border barriers How much attention should investors pay to country groupings such as the BRICs? page 12 Mission possible? Why regulators are struggling to reform the rating agencies, p16 Turning the tables Changing trends in outsourcing are good news for the UK, p20 CISI.indb 1 26/03/2012 12:22 CISI.indb 2 26/03/2012 12:22 Securities & Investment april 2012 RE VIEW Editor Louise Reip Commissioning Editor Hugo Cox 6 Senior Designer 12 Pip Atkinson Art Director Steven Gibbon Publisher David Poulton Production Director John Faulkner Managing Director Claire Oldfield Chief Executive Martin MacConnol Advertising Sales Yanina Stachura +44 20 7010 0945 [email protected] Cover illustration Clara Terne for Agency Rush Published on behalf of the 16 Chartered Institute for Securities & Investment by Wardour, 5th Floor, Drury House 34–43 Russell Street Yan Ling Angela Lua, London WC2B 5HA a double winner at Telephone: +44 20 7010 0999 this year’s CISI Fax: +44 20 7010 0900 Annual Awards www.wardour.co.uk ISSN: 1357-7069 Communications Editor, Chartered Institute for Securities & Investment Contents Richard Mitchell 8 Eastcheap, London EC3M 1AE Features Members’ features Regulars Telephone: +44 20 7645 0749 12 blurring the boundaries 22 cpd: recognising 5 city view Email: [email protected] Dan Barnes examines the standards Both the numbers and Editorial panel many and varied categories for Gary Wright describes anecdotal evidence hint at a Nick Seaward, Supervision Services emerging markets – and why the benefits of legal global economic recovery Chartered FCSI, Chairman Partnership Suren Chellappah FCSI Sanford C Bernstein portfolio managers should not entity identifiers Moorad Choudhry FCSI Royal Bank of Scotland take them at face value Simon Culhane, Chartered Institute for 6 upfront Chartered FCSI Securities & Investment 24 keeping mum News and views from Scott Dobbie FCSI(Hon) Deutsche Bank 16 the credit conundrum This month’s Grey Matters Mike Gould FCSI Russell Investments members of the CISI, Victoria Hoskins, Barclays Wealth It is widely accepted that the dilemma considers when including our regular back Chartered FCSI credit-rating industry needs to blow the whistle Peter Land, Chartered FCSI Brewin Dolphin story by Clay ‘Mudlark’ Harris Gregor Logan MCSI reform, but the solution Paul Loughlin, Rathbone Investment is eluding regulators. 26 need to read Chartered MCSI Management 11 first person Hugo Cox reports Catch up with this Robert Merrifield FCSI Legal & General Christopher Adams asks Richard Mitchell Chartered Institute for month’s essential reading Securities & Investment whether doubts should be Frank Reardon, JM Finn 20 coming home cast on predictions for China’s Chartered FCSI Dan Barnes looks into how 27 diary Patricia Robertson, Westport Global continued ascendancy Chartered FCSI shifting trends in outsourcing CISI events and new Jeremy Robinson, Charles Stanley member admissions Chartered FCSI will benefit the UK – but not Hamish Rowan-Hamilton TheCityUK its capital 18 profile: puranam Markus Ruetimann FCSI Schroder Investment 30 people: community spirit h ravikumar Management Nimrod Schwarzmann FCSI RBS Global Markets John Garbutt FCSI explains The Executive Chairman Arjuna Sittampalam, Sage & Hermes his role as a Justice of the of SKS, the leading Indian Chartered MCSI Nigel Sydenham, BPP Professional Education Peace and Alderman in the microfinance firm, talks Chartered MCSI City of London to Hugo Cox Alan Yarrow, Chartered Institute for Chartered FCSI(Hon) Securities & Investment Average audited circulation: 17,886 for period July 2010 – June 2011 © The Chartered Institute for Securities & Investment (CISI). All rights reserved. Reproduction in whole or part prohibited without prior permission of the CISI. The CISI and Wardour accept no responsibility for the views expressed by contributors to the Securities & Investment Review; or for unsolicited manuscripts, photographs or illustrations; or for errors in articles or advertisements in the Securities & Investment Review. The views expressed in the Securities & Investment Review are not necessarily those held by the CISI or its members. 3 CISI.indb 3 26/03/2012 12:22 CISI.indb 4 26/03/2012 12:22 city view cisi opinion Four years after the crisis, there are signs that economies are looking up – at home and abroad Reasons to be cheerful “april is the cruellest month,” wrote the delicate balance between debt Lloyds banker (and poet) TS Eliot, 90 years reduction and injecting cash to keep ago. But does spring this year bring us reasons demand buoyant. British to be cheerful? In alphabetical economist Ian Harwood, of Redburn, is order – as is appropriate when considering the equally positive. The chances of a near-term best ideas – in the month running up to the UK American recession, he reckons, are pretty Chancellor’s Budget: Citigroup predicted that much zero – bar the unpredictable impact of the FTSE 100 could double in value over the a large-scale shock such as a war with Iran. wealthier pockets of the Middle East have never next decade, fuelling a boom in mergers and Across the world in Asia, optimism felt more empowered – or energetic. Their new- acquisitions; Jupiter reported net inflows of reigns. In markets on China’s eastern seaboard found optimism might just become infectious. £700m into its funds (“We think that there has in particular, Lehman’s demise – still an open The British can be relied on to been a bit of a firming of the tone in February wound in the old world – is as distant in local spot a cloud near the most gleamingly silver and March ... it is a change in trend to the memory as Barings’ self-destruction last lining. But even as we enter Eliot’s “cruellest positive,” Chief Executive Edward Bonham century is in London. China’s supposedly new month”, the signs are promising. In the real Carter told the Financial Times); Manpower, the 7.5% target growth rate caused much hand- economy, two other pieces of news cheered up recruitment firm, identified, from a survey of in mid-March. Nissan announced that it would more than 2,000 businesses, a new willingness be investing £125m and creating 2,000 new jobs by UK employers to hire; and Rathbone saw a The banks are recovering, at its north-east England plant, to build its new 30% rise in pre-tax profits, driven by its highly small hatchback. Sunderland was chosen over successful wealth-management business. and the UK retains Nissan’s plant in Chennai (formerly known There is also anecdotal evidence of as Madras) because of the UK factory’s strong an upturn. David Wighton, in The Times, writes world-leading companies productivity record. Tesco – Britain’s largest that London’s taxi drivers, those traditional fonts in aerospace, defence, private-sector employer – announced plans to of economic wisdom, have reported more people hire 20,000 more staff over the next two years. asking for receipts – a suggestion, perhaps, that pharmaceuticals and Brits have focused for decades on “the squeeze on expenses is loosening” and less- their country’s perceived strengths in financial austere times lie ahead. high-end cars and other services, so the thumping taken by the financial world in recent years has knocked Global positivity wringing when the outgoing government made the stuffing out of many people’s optimism. Beyond the London cabbie circuit, the US, the announcement in March. But it is consistent But the banks are recovering and the country the world’s dominant economy, shows signs with the 2011–15 five-year plan. No economy has retains world-leading companies in a number of of robust economic recovery – its labour ever expanded at rates approaching 10% forever. non-service sectors, notably aerospace, defence, market has generated more than 200,000 new Growing at 7.5% is still good by any standards. pharmaceuticals and high-end cars. A country jobs each month since December. Ray Dalio, In the Middle East, Iran is a major that can sell ever-growing numbers of Bentleys, who last year overtook George Soros as the worry. Added to that, the overdue reform BMWs, Jaguars, Land Rovers, Lotuses, world’s most successful hedge fund manager, process by conservative regimes will take time McLarens and Rolls-Royces to the wealthy of describes America’s economy as “the most to creak into action and the humanitarian the BRIC countries and the Gulf should allow beautiful deleveraging yet seen”. His take is crisis in Syria is a disgrace. But there is much itself some springtime optimism, and share that the policy-makers have managed well the underlying good news. Young people in the some of that with its global partners. 5 CISI.indb 5 26/03/2012 12:22 News and views from the CISI Upfront qualifications Principal event sponsor Yan Ling Maria William Morgan Jamal Abdel Sheila Tina Robert Benjamin Angela Lua Mathew Blomfield Lavanchy Jabbar McIntyre Robinson Bramham Hasan Annual awards have an international flavour The global reach of the CISI was highlighted at Operations Certificate (IOC) from more than Jordan (International Certificate in Investment its biggest-ever Annual Awards, where more 5,700 candidates who gained the qualification. Management) and Mark Elliott ACSI, Director than 100 top exam performers were recognised. The other joint overall winner for the IOC, of Operations, QInvest, Qatar (Advanced Global Of prizewinners honoured at a ceremony at formerly known as the Investment Administration Securities Operations). UK regional winners London’s Mansion House, 15 were from outside Qualification, wasScott Sutherland, Embedded included Sheila McIntyre, Director, Corporate the UK, including four from India and three from Risk Manager – Markets, National Australia Bank, Banking, Clydesdale Bank, Aberdeen. She was Singapore. For the first time there were award London. Angela said: “The IOC has helped me to joint winner of the Overall Certificate in Corporate recipients from Australia and Jordan.