Major world equity markets rose 3.8% during the third quarter, while emerging markets fell 1.1% in U.S. dollar terms, according to Morgan Stanley Capital International.
The MSCI Europe Australasia Far East Index reached a new monthly high of 703.8 in September, up 2.8% for the month. The previous monthly high of 701.7 had been reached in July.
For the quarter, Sweden was the top-ranked market, rising 18.1% in U.S. dollar terms.
Other strong gainers were Finland, up 13.4%, and Australia, up 9.9%. In local currency terms, however, Japan returned 21.2%, which was offset by a -13.9% currency loss. In U.S. dollar terms, the Japanese stock market rose only 4.3%. The weakest major markets in U.S. dollar terms were Austria, -6.8%; Malaysia, -5.6% and France, -4.4%.
Israeli stocks listed in New York continued to top the pack of emerging markets stocks, rising 21% in the quarter. That was followed by Brazil, up 14.1%, and Korea, 9.8%. But the dollar's rise caused emerging markets overall to decline. The worst performers in U.S. dollar terms were Turkey, -21.4%; Colombia, -16.6%; and Chile, -15%.
LONDON - HSBC Asset Management has created a new position for overseeing the firm's risk management.
Neil Brown, formerly a consultant to HSBC, has been named head of risk management. In that role, he will monitor areas that could cause losses to the money manager, including market exposure, credit risk and operational risk. For example, he will scrutinize such diverse issues as how far portfolio managers deviate from their benchmarks, counterparty risks and HSBC's current efforts to switch to electronic communications with custodians. He also will examine whether derivatives contracts "are what we think they are," he said.
Mr. Brown said creation of his post germinated last year, before the Barings crisis broke. At that time, he was providing independent consulting to HSBC on derivatives and risk management as head of Notewell Associates, London. In his new role, he reports directly to HSBC Asset management's group finance directory, Kevin Gregory.
Mr. Brown noted other money managers sometimes have the equivalent of risk managers, but they tend to report directly to the investment side. HSBC Asset Management has more than $30 billion in assets under management.
Exchanges on Continent are gaining on London
GREENWICH, Conn. - Continental stock exchanges are catching up with the London Stock Exchange, according to the latest report on British and European equity brokerage by Greenwich Associates.
In fact, according to the report, approximately half of continental institutions do not execute any continental share trades on the London exchange.
Institutions surveyed by Greenwich Associates transacted only 11% of their Nordic share orders through London, and less than 10% of all other European share transactions, down considerably from the previous year's survey.
DUBLIN - Custom House Asset Management, an administrator for mutual funds, is setting up an independent marketing subsidiary, Custom House Associates.
Custom House Associates plans to offer a one-stop shop for mutual funds needing distribution and administration. Now, Custom House Asset administers 22 specialist funds.
The new entity is a joint venture with Belesta Asset Management, Zurich.
LONDON - Confederation Pensions Investment Management has launched a long-term gilt fund to meet the needs of increasingly mature U.K. pension funds. The pooled fund also is designed to provide diversification. The movement in the unit price is supposed to mirror investments in annuities.
Confederation Pensions is the pension investment arm of Sun Life of Canada.
MADRID - Meff Renta Fija, Spain's futures and options exchange, will sell Spanish interest-rate futures and options contracts directly to U.S. investors starting this month.
The U.S. Commodity Futures Trading Commission gave the exchange approval to sell contracts directly to U.S. investors. Exchanges in France, the United Kingdom, Canada, Singapore, Australia and Japan already enjoy this exemption.
Meff offers six different interest-rate contracts: for three- and 10-year bonds and four for short-term rates.
LONDON - State Street Bank and Trust Co. has unveiled a short-term, multicurrency investment vehicle, known as MCIV, for non-U.S. investors.
The product enables non-U.S. investors to take advantage of higher yields available from U.S. money market funds. U.S. money market instruments also offer high liquidity, while non-U.S. instruments often lack liquidity and depth. Bank deposits, the other chief alternative, offer lower yields and have varying credit quality.
MCIV permits investors to choose from a host of U.S. dollar-denominated money market funds. Assets are swapped back into the home currency, assuring liquidity in the base currency. Through a choice of funds, the product also offers diversification to investors, said Erika C. K. Arevuo, vice president, global cash management, in State Street's London operation.
TORONTO - Wright Investors' Service has added Nigel Stephens Counsel Inc., Toronto, to its list of distribution outlets for its Luxembourg-based SICAV umbrella fund.
The umbrella fund offers 12 country-specific and regional equity subfunds. Amit S. Khandwala, vice president for Luxembourg EquiFund Wright National Equity Funds, said there is a market niche for country-specific mutual funds in Canada.
Wright EquiFund, which has $22 million under management, has distribution agreements with major financial institutions, including Banque Indosuez, Wardley James Capel, Mees Pierson, and Yamaichi Capital.
LONDON - Portman Asset Management, a wholly owned subsidiary of The United Bank of Kuwait, has launched the PAM Money Market Funds. The new funds will be marketed to institutional investors in the Middle East.
U.S. institutions expect a big increase in their overseas investments during the next 12 months, especially in Europe.
A Broadgate Consultants survey of portfolio managers showed 78% of respondents expect to substantially increase their non-U.S. equity holdings; none plans to scale back.
Respondents typically preferred European countries as the destination for their increased foreign allocations.
Among these countries, France was the most favored country, followed by Spain, the Netherlands and Italy.
About half of the respondents said 10% to 25% of their investment portfolios were composed of emerging markets stocks, approximately the same weighting as last year.
Nearly a quarter of the responding institutions said they have increased their commitment to emerging markets since last year, the report said.