World Economic News
Top U.K. Hedge Fund Probed by Financial Services Authority
GLG Partners and one of its top traders, Phillipe Jabre, are under investigation by the Financial Services Authority, concerning three trades in convertible bonds ("debt which usually converts into shares at a future date" according to the Daily Telegraph Oct. 27), issued by Vivendi Universal of France, telecom company Alcatel, and Japanese conglomerate Sumitomo Mitsui Financial Group.
The investigation is believed to center on whether Jabre improperly used insider information to short the companies' shares. The Telegraph notes that arbitrage firms like GLG make money by short-selling companies' shares while buying into convertible issues, and that these traders "seek to spot businesses that are in need of capital and likely to issue convertibles." GLG, which manages $1.8 billion, "is one of the biggest in the sector and has the power to move share prices." Regulators in Spain and France have also begun investigations.
The British Financial Services Administration (FSA) had called in GLG, as one of 30 top hedge funds which were warned that their practices were dangerously close to violating laws against insider trading.
Asian Development Bank Head Attacks Floating Exchange Rates
"Even small exchange-rate misalignments can disturb trade and investment flows and create trade friction," Asian Development Bank President Haruhiko Kuroda said in a Manila (Philippines) speech Oct. 26. Asia has "an enormous disparity in income levels, living standards, and ... is still home to almost two-thirds of the world's poor.... This is simply unacceptable," he said.
Kuroda, however, drew the mistaken conclusion that "Asia's long-term objective should be monetary union with a single currency," the so-called "Asian Currency Unit." He called for "regional economic integration."
Kuroda did note that Europe's surrender of sovereignty and enforcement of austerity has not worked. "Asia could experiment with a model of regional economic integration with minimum political compromises across countries," he added. "Unlike in Europe, there may be much more we can do in Asia. Asia should therefore draw important lessons from Europe, but carve out its own model of economic integration."
Brazil Hoof-and-Mouth Disease Outbreak Threatens Beef Supplies Worldwide
Forty-three nations have now partly or totally suspended imports of Brazilian beef, due to the outbreak of hoof-and-mouth disease first reported in the state of Mato Grosso do Sul, near the Paraguayan border, it was reported Oct. 20-21. Some countries are refusing imports only from Matto Grosso do Sul, while others won't buy beef from anywhere in Brazil.
In the context of a generalized breakdown of sanitation and health-care infrastructure for human as well as animal populations, the Brazilian outbreak has serious implications for the country and the region. On Oct. 20, the Southern Cone Permanent Veterinarian Committee met in emergency session in Montevideo to discuss how to deal with the new outbreak, against the backdrop of growing concern over an avian flu pandemic.
Brazil has the world's largest cattle herd190 million headand exports 23% of all the beef marketed in the world.