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Bloomberg Markets Magazine

Bloomberg Markets Magazine October/November 2017

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Bloomberg Finance LP
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in this issue

2 min

Strength in numbers has been Martin Gilbert’s watchword since he started Aberdeen Asset Management Plc in the 1980s. It also explains why Aberdeen joined forces with Standard Life Plc earlier this year as active money managers maneuvered to stay afloat in tough times. Sarah Jones, who covers asset management for Bloomberg News in London, charts Gilbert’s canny knack for survival in “The Scotsman Who Can’t Stop—Won’t Stop—Making Deals” (page 58). “Gilbert doesn’t like being called a dealmaker,” Jones says, “but even after doing more than 40 of them, he doesn’t look like he’s going to be hanging up his boots anytime soon.” Alvin Giang and Jing Sun, who’ve each contributed to the magazine in the past, teamed up in this issue to write about flows in China’s fixed income and equities…

4 min
will new rules make etfs unstoppable?

Fund flows Making ETFs more accessible Passive investments, already eating away at active managers’ assets, are getting another boost. That effect is on the radar of companies such as BlackRock Inc., which has $5.7 trillion in assets. “We’re seeing regulatory changes change the ETF environment,” Chief Executive Officer Laurence Fink said on a July 17 earnings call. “We do believe we’re seeing accelerated flows because of MiFID II, because of the movement toward the fiduciary rule in the United States.” Three rules will make exchange-traded funds more accessible to new types of investors. In the U.S., the fiduciary duty and new insurance guidelines will enable retirement savers and insurers to raise their exposure to ETFs. In Europe, the Markets in Financial Instruments Directive II is expected to increase flows from retail investors. Changes may…

7 min
can democracy stage a comeback at stock exchanges?

SCAN STOCK MARKETS around the world, and you’d be forgiven for thinking democracy was under attack. The principle of one share, one vote has been around since companies started selling shares to the public in the early 17th century. Today its recurring nemesis—dual-class shares, which grant different classes of owners different voting rights—is back, big time. And exchanges that have shunned dual-class share listings are wrestling with an age-old dilemma: Should we or shouldn’t we? For exchanges, the appeal of such listings is plain enough. Competitive pressures among stock markets are intense. Plus, there are some big technology listings on the horizon, including Dropbox and Mobvoi, an Alphabet-backed Chinese artificial intelligence startup. So Hong Kong, London, and Singapore are weighing whether, like some of their competitors in New York and elsewhere,…

6 min
building a new new york

NEW YORK IS A CITY of icons, and nowhere is its iconography more apparent than at the nexus of real estate and Wall Street That extends to the city’s personalities, especially in the world of money. So it makes sense that Stephen Ross and Jeff Blau, the impresarios of the Hudson Yards project taking shape on Manhattan’s West Side, turned to an iconic figure—someone already established in a totemic tower elsewhere in the city—to tip Hudson Yards into the zeitgeist. That someone is Henry Kravis, co-founder and co-chief executive officer of the private equity giant KKR & Co. In a reminder of how New York can feel a lot like a small town, Kravis was at his son-in-law’s birthday party when he ran into Blau, CEO of real estate developer Related Cos.…

4 min
finding opportunities in cross-currency basis

JAPANESE ASSET MANAGERS looking for higher yields over the past couple of years have scooped up U.S. assets and synthetically converted them into yen-denominated cash flows In fact, they did it so well—dominating the market for cross-currency swaps, which are needed to switch dollars for yen—that they compressed the yield pickup for Japanese buyers down to almost zero in mid-2016. After a brief recovery through the end of last year, they again, in the space of six months, pushed the basis to a level at which the net yield pickup was cut from 1 percent to half that. Negative and extraordinarily low rates in Japan and Europe are creating persistent dislocations in bond and foreign exchange markets. Who can take advantage of such asymmetries? An international bond fund run by Pacific Investment…

8 min
would you buy 7 percent bonds from this guy?

LUIS CAPUTO IS GETTING frustrated with the bond market. He’s guarded about it—he has to be. After all, he’s the finance minister of Argentina, the biggest bond issuer in the developing world, which means he’s constantly hitting up investors for cash. But the tension comes out deep into an hourlong interview in his Buenos Aires office. Why is it, the former Wall Street banker wants to know, that the investing community doesn’t appreciate all that the country has achieved? Eighteen months have passed since Argentina shed its status as an international pariah mired in bond default litigation. There was the elimination of currency controls, the stabilization of the peso, the revival of the mortgage market, the reduction of the budget deficit. Sure, investors have given some measure of respect to the government—after…