原 » UBS

What is an “emerging market” anyway?

原尼 — Tue, 07 Jul 2009 17:21:38 +0000

India is one. So is China. And likewise Brazil. Sure, we use the term to describe the economies of all these countries, but what is an “emerging market” anyway?

Though a loose definition, countries are considered to be “emerging” when their economies undergo a rapid succession of developments and reforms. They have more modern governments and are more industrialized than developing countries, but aren’t yet considered developed – placing them in a state of transition. These are countries – big or small – which have short operating histories in global financial markets but, because of increasing industrial growth, have “emerged” onto the global scene. They are also said to be “labor rich and capital poor”, implying relatively cheap labor costs and hence are attractive to manufacturers and developers, who, if they decide to invest in areas like infrastructure and machinery, create the potential for significant economic growth.

Such countries account for 80 percent of the global population and approximately 20 percent of the world’s economies. These include India, China, Mexico and Brazil, among others in Latin America, South-East Asia, the Middle East, Africa and Eastern Europe. Numerous terms have been thrown around to describe the largest developing countries, such as BRIC, which stands for Brazil, Russia, India and China.

As they become flooded with foreign investors, emerging market countries see increased opportunity, with rising employment and production levels, increased national income and, eventually, a lessening of the gap between their own country and the developed world.

Foreign investors tend to view emerging markets as an opportunity too – one for expanding and diversifying their investment portfolios. Because there’s always the chance that the development of an emerging economy will slow or reverse (due to circumstances such as civil war, nationalization or other government changes), they are risky investments. And with risky investments come high rewards – if investors bid on the right market.

It’s a double-edged sword for an emerging market country to open its doors to the rest of the world. On the one hand, it brings them closer to the developed world. Yet, on the other, it exposes them not only these new work ethics, but to new cultures as well, which can change the very fabric of the emerging country’s society.

雜記20090627

原尼 — Sat, 27 Jun 2009 20:39:04 +0000

很久沒有写杂记了。来了UBS快一个月了，发现IT实际上是很简单的活，IT的project management就更简单了。相较之下还是我在啤酒厂的工作挑战性更加大，一方面是因为我在AB待了7个多月，人家把我当个正式员工对待。在这里只有2个月，人家还是把你当实习生，待遇不一样。我总归感觉假如把UBS整个IT部门砍掉，都是没有问题的。

每天上班的时候都要穿过华尔街，走到世贸大厦（的遗址），然后坐联通纽约和新泽西之间的PATH。因为世贸中心仍旧是一个大坑，唯一通向PATH车站的是一条羊肠小道，顿时让我想起了300里的“hot gate”：成千上万的穿着西装的人们从新泽西涌向纽约。只有一小部分人像我是反方向走的，每天要逆着人流往前挤。有一天早上还被一个NYPD（警察）逮住，说是要抽样搜包，发现我包里有两瓶水，顿时起了疑心，把我当作是恐怖分子。看了又看那哥们跟我说：try to keep yourself hydrated, will ya? （尽量不要让你身体缺水）

我还是比较喜欢办公室里的view的，一眼望出去就是曼哈顿的金融中心，尽管那两栋标志性建筑已经不见了，但整个金融中心看出去还是密密麻麻，好不壮观。而且这边的空气更好，住起来更舒服，房租价格却不菲，在全美房价不景气的情况下这里的房价5年里已经番了四番。

上图就是我的办公大楼

=========================================

那天在给一个刚刚被lay off的同事举办farewell party的时候DJ突然把音乐切掉了，然后指向大屏幕，大屏幕是FOX News，巨大的breaking news: Michael Jackson has passed away。然后DJ就开始大放Thriller，之后的三天，我走到哪里，不管是哪个店，到处都在放MJ的音乐。iTunes的在线音乐商店里十大top albums里有六个都是michael生前的album。想想真是可笑：MJ啊MJ，你生前大家都在骂你是变态，强奸幼年儿童。你一死全世界都开始悼念你，没人再提及你是不是pedafile了。

今天早上看纽约时报上还说MJ生前欠债的统计已经是四亿美元，这个数字还在增加，看来他欠的债跟美国政府欠的债一样复杂，纠结。

=========================================

更多high line照片：

What is “deleveraging” anyway?

原尼 — Wed, 10 Jun 2009 14:30:56 +0000

You will be familiar with the term “deleveraging”, but do you have any idea what it actually means? If someone asked you to define it, could you?

Well, even if you can’t, you’re not alone in not fully understanding the meaning of all the financial terms currently in circulation. To help, Compass is launching a new series to explain frequently misunderstood investment terms. From time to time, we’ll take a financial term and demystify its meaning.

So, back to deleveraging. What is it?

Simply put, deleveraging is the unwinding of debt. In the business world, companies seeking to grow often take on large amounts of debt, or leverage, enabling them to spend more in order to achieve that growth. But debt is risky business. If the risk becomes too great for the company to bear or the growth attempt fails and the company cannot repay its debts – something which could be disastrous for its reputation - it’s stuck in a pretty sticky situation. Where is that money going to come from?

The answer is deleveraging – winding down debt by selling it off or by selling off some of the company’s unattractive assets at a hugely discounted price to raise the money. It is always the garish sweaters which feature heavily in the end of season clothes sales. But some bargain hunters will buy them in the end if the discount is deep enough. This is what companies hope to achieve. They may not make as much as they had expected to, but at least they’ll make something, as long as they can find the right buyers.

Which leads to the next problem. Deleveraging is frequently seen by investors as a red flag, a signal that perhaps they shouldn’t put their money into that company but rather take it elsewhere. But where? This is where the world finds itself today, but this time it is households and financial entities who are in debt, all trying to recoup their losses by deleveraging, but in doing so, looking less and less attractive to investors and creditors. And the result? A lot of desperate sellers but hardly any buyers – a situation which can lead to decline in activity across the economy, more commonly known as a recession. But we’ll cover that next time.

What is a “recession” anyway?

原尼 — Wed, 10 Jun 2009 14:29:11 +0000

Ah the “R” word. Gracing front pages, blogs, shop windows and “75% Off!” flyers everywhere. But what exactly is a recession and what causes one? Unfortunately, the answer to that is a relatively contentious one and different economists will probably tell you different things. One thing is for certain though; recessions are a natural part of the economic life cycle. They have happened before and will certainly happen again.

According to the widespread technical definition, a recession is a period of reduced economic activity, or negative growth, which lasts for at least two quarters. It is usually marked by a rise in unemployment, reductions in retail sales and a slowing of demand for big purchases like houses and cars. Simply put, it is a contraction – a bit like breathing. In order to have life you have to breathe, to expand and contract. In the same way, in order for the economy to have life, money has to expand and contract too. While recessions are clearly unpleasant, they do tend to spring clean and reboot the economy, and this makes for a healthy economic environment over the long run.

A wide variety of things are often linked to recessions, from inflation and interest rate changes, to wars or financial crises. It is thought that the main cause of the recession the world is currently experiencing was kicked off by the “credit crisis” that erupted in 2007 and has still not been stabilized.

Roll back a couple of years and life was good. Business was booming and people were spending; but, it was a false prosperity, as they were spending more than they actually had and borrowing more than they could actually afford.

In early 2007, banks in the US – the world’s largest housing market – found that they were confronting the so-called subprime crisis, due, in part, to their leniency in who they gave credit to. In the line with the old adage, “what goes up must comes down,” after the boom levelled off house prices started to fall. All of a sudden, these bank-owned “assets” were worth far less than the debt borrowed to buy them in the first place – which of course still needed to be repaid – and banks found themselves having to write down huge losses. As these losses mounted they in turn led to frozen banking functions and failing banks, and what followed is the worst financial crisis the world has seen since the 1930s; and it wasn’t long before the crisis spread to the economy and businesses started to fail too.

Understandably, banks suddenly got a lot stricter with who they gave credit to, meaning fewer people could buy houses and prices began to fall even further. The high energy prices which characterized 2007 and early 2008 weren’t helping either, reducing disposable incomes which were already growing smaller as businesses were closing or scaling back. Things were getting expensive, there was a total collapse in confidence and banks had stopped lending to each other, too. Finally, after the US investment bank Lehman Brothers failed in September 2008, the banking system was vulnerable to a total collapse, credit dried up, and the global economy experienced a sudden contraction that was the sharpest downturn for over 75 years. And with that, we found ourselves plunged into a deep recession.

Now, the question on everyone’s minds is when will it all end? According to some UBS economists, the slow climb towards normality could begin towards the end of this year, with a slightly stronger economy being seen midway through next year.

Many now hope that bailouts, government spending, and improvements in the banking industry will eventually cause banks to give out more credit under less strict terms. But ‘eventually’ may take a long time and governments will have to find a solution to the problem of the trillions of dollars of bad assets that banks are sitting on before we can all take a big breath and watch the economy expand once more.

What is a “hedge fund” anyway?

原尼 — Wed, 10 Jun 2009 14:25:47 +0000

With the markets in their current unpredictable state, hedge funds, in particular, have recently been thrown into the limelight, receiving more publicity than they usually do – most likely a little unsettling for this notoriously secretive bunch. Perhaps that’s why, though we recognize the term, few of us actually know what a hedge fund is or does.

To understand what a hedge fund is, let’s first take a look at what it’s not: a typical mutual fund. While these types of funds can generally only buy and sell stocks and bonds, a hedge fund can do a lot more. They typically have far more freedom when it comes to what they can invest in and how they do it, as the majority remain largely unregulated by any official body – for the moment at least. Investing in a hedge fund, therefore, can lead to a whole lot more money because they can use more varied and aggressive strategies.

The primary aim of most hedge funds is to reduce your investment’s risk and volatility – or the amount of uncertainty about a change in the value of whatever you’re investing in – while attempting to preserve or make money no matter what state the market is in.

There are two basic reasons for investing in a hedge fund: to seek higher returns and/or to seek diversification for your investment portfolio. If you have a wide range of investment options, and one doesn’t work out, at least you have a variety of others, so the impact on your financial return – the amount you make or lose – is somewhat minimized.

It’s for this reason that hedge funds are so lucrative – and yet so secretive. Come up with the winning strategy and you make a lot of money. Let someone figure it out and, by copying you, they’ll cause you to lose your unique selling point to investors, as well as your unique grip on the market.

What is a “dark pool” anyway?

原尼 — Wed, 10 Jun 2009 14:24:15 +0000

Last week we announced the expansion of the UBS Price Improvement Network (UBS PIN) to Australia, providing clients there with access to off-exchange, non-displayed – or “dark pool” – liquidity for the first time. It’s a kind of liquidity we’ve already made available in the US, Europe and, most recently, Hong Kong – but what exactly is a “dark pool” anyway?

Essentially, a dark pool is a network of order flow collected together in a single venue for the purpose of crossing orders against each other without a visible quote or order book. Crossing occurs when two orders execute against each other, without a public quotation, off the Exchange. By keeping their order non-displayed, or “dark”, the client has less chance of information leakage and/or market impact, a reaction to visibility that “moves the price” away from you. Though sometimes viewed as controversial because of its rather menacing connotation, “dark” became a popular term for this kind of liquidity since it quickly conveyed the idea that these orders were not visible.

For example, suppose you wanted to acquire a large position in Acme Anvil Company. You send a “buy” order for 100,000 shares. The moment your large order hits the market what will sellers of Acme do? They will raise the price before sending more sell orders to the exchange – and by the time your order fully executes, your price paid for Acme ends up being significantly higher.

If, instead, you sent that Acme order to a dark pool, your interest in Acme would not have been visible, so your order might have anonymously matched with Acme sell orders at a much lower price.

In markets such as these, saving a fraction of a basis point on your trades over the course of time can mean the difference of millions, or tens of millions of dollars, pounds or euros to large investment managers. The effect on performance can be significant – which in turn has a direct impact on the ability of an investment manager to retain client assets.

Dark pools can be independent structures, an “alternative trading system”, (ATS – the US regulatory structure) or a “multilateral trading facility” (MTF – the European regulatory structure), providing trading executions that occur outside of the local exchange. There are also internal crossing networks that are broker-owned facilities, such as our own UBS PIN or Goldman Sachs SIGMA, which are designed to cross client flow with internal orders.

No matter the structure, though, trading anonymity is what “dark liquidity” is all about. It also explains why dark pool liquidity has become such a key factor in today’s equities environment. By making dark liquidity available to our clients, UBS is assisting them in protecting their orders from market impact, and potentially improving their price performance – which is the cornerstone of best execution.

What is “bankruptcy” anyway?

原尼 — Wed, 10 Jun 2009 14:23:15 +0000

We’ve all used the term before, and often – usually at the end of the month – we’ve reigned in our spending all in the name of being a tad “bankrupt”. It’s a lighthearted way of saying our pockets are a bit empty. For businesses however, there’s nothing lighthearted about the situation at all.

By definition, bankruptcy is a legal proceeding which liquidates a person or business that cannot pay its outstanding debts. All of the debtor’s assets are measured and evaluated, then used to repay a portion of the debt to relieve further liability. The process offers the individual or business a chance to start over by forgiving debts that cannot be paid, while offering creditors a chance to obtain at least some degree of repayment from available assets. Nevertheless, investors will receive a lower return on investment than initially expected – if anything at all – from a company that has filed for bankruptcy.

Take hypothetical company Pencils Inc. for example. Their sole role is manufacturing and supplying pencils. But one day, pencils fall out of fashion and everyone starts buying pens instead. As their pencil sales start to fall, Pencils Inc. find they’re not making enough money to stay afloat and being to fall into debt. Soon the company finds that they don’t have enough money to pay the company who supplies the lead for their pencils or the company who delivers their finished product to the various stationary stores who sell them. Even the landlord who rents their office space is banging down the door.

With no hope in sight, Pencils Inc. has to take drastic action, as they can’t afford to get even deeper into debt and need to pay off an angry bunch of creditors who are all owed money – including their investors. They file for bankruptcy and an administration company steps in, taking charge of Pencils Inc’s operations. The administrators then sell off all of the company’s assets, from their directors’ company cars to the pencil production equipment in their factories. The cash gained from the sell off is then paid to everybody who is owed money and the company is then either closed down or given a chance to restructure their business plan and start again - perhaps integrating pen production into their new model.

Although different countries have varying legislations and processes when it comes to bankruptcy and liquidation, in all cases, investors’ rights and opportunities change in the case of a bankruptcy filing. It’s just like holding a stock that has taken an unexpected dive – and investors must decide whether the reduced prospects of the company are worth holding onto.

拿到了她的Offer。

原尼 — Wed, 01 Apr 2009 05:42:29 +0000

打电话给妈妈：“妈，我进UBS了。” 我妈：“UPS？送快递的？跟Engineering有什么关系？” 我：“什么什么，我说的是瑞士银行”。妈：“噢…”

大门进对了，小门不咋地，不过还是没有沦落为扫垃圾的。部门是ITI(Information Technology Infrastructure)，估计就是人家电脑坏了，windows蓝屏，电源插座找不到的时候要我过去看一下之类的。

还有就是路途遥远，Again，我们这种小部门不是在曼哈顿那个吃chicken rice的地方，在新泽西的Weehawken。来回估计要三小时左右，很痛苦，真的需要有个车。

工资倒很generous，我到现在以来拿到的最高的工资。

We will see。