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    Former Goldman Sachs executive Bruce Mendelsohn has joined Perella Weinberg Partners as a partner in its advisory business, where he will lead the company's restructuring practice.read more...

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    Hedge funds began the new year by slashing bullish bets on U.S. crude oil to the lowest level since 2010, according to new data released by the CFTC on Friday.read more...

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    Despite a difficult environment for many of its peers, the European Equity Opportunity Fund at Polygon Global Partners gained 10.3% in 2015.read more...

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    Ray Dalio’s flagship Bridgewater All Weather hedge fund fell by approximately 7% in 2015, its second annual loss in three years. read more...

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    Save time with the keyword-searchable GAAP 2016 CD-ROM!read more...

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      Wiley GAAP 2016: Interpretation and Application of Generally Accepted Accounting Principles Book/CD-ROM Set is a thorough study of all US GAAP set forth in the pronouncements of the FASB (Financial Accounting Standards Board) and its predecessors. This useful guide also contains AICPA Accounting Standards Executive Committee (AcSEC) Statements of Position. All pronouncements are explained with relevant terminology and practice-oriented real-world Read More...

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  • 01/08/16--22:38: New UK GAAP Supplement 2016
  • New UK GAAP Supplement 2016 complements our existing publication, EY's New UK GAAP 2015 and provides a comprehensive guide to the changes made to the new UK accounting standards since August 2014, particularly:read more...

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    As the formal inauguration of the Pakistan Stock Exchange Limited (PSX) draws near, the LSE's TREC Holders were formally inducted into PSX thereby enabling them to start trading as PSX TREC Holders on the eve of the launch of PSX on 11th of January, 2016. read more...

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  • 01/09/16--10:37: US market portrait final
  • US large cap market returns. read more...

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    I had a long  post on country risk in July 2015, as part of series of posts on the topic. At the time of the post, the Chinese market was in the midst of a meltdown, emerging markets were in turmoil and exchange rates were on the move. It is six months later, and nothing seems to have changed, but I think that the core lesson is worth reemphasizing. In a world of multinational businesses and global investors, there is no place to hide from country risk. Country Risk MeasurementI will not bore you by repeating much of what I said in my earlier post on how I view country risk in valuation, but it is built on two presumptions. First, a company's risk exposure is based on where it does business, not where it is incorporated or headquartered. Thus, Coca Cola and Nestle may be incorporated in developed markets (US and Switzerland) but derive a significant portion of their revenues from emerging markets and are thus exposed to risk in those markets. By the same token, Embraer is a Brazilian company that derives a substantial portion of its revenues in developed markets. Second, the risk of investing in equities varies across the world, resulting in higher equity risk premiums in some markets than others.  To estimate these risk premiums, I follow a four-step process:My paper on equity risk premiumsAs an example, let's assume that I want to estimate the equity risk premium for operating in India in January 2016. I start with the implied equity risk premium for the S&P in January 2016, which I estimated to be 6.12% in my first data post a few days ago. I use a rounded down estimate of 6% as my mature market premium for the start of 2016.As a second step, I look up the local currency sovereign rating for India from Moody's and arrive at a Baa3 rating; the typical default spread for a Baa3 rated country at the start of 2016 was 2.44%.  I check this estimate against the sovereign CDS spread for India, which was 2.11% on January 1, 2016. I use the ratings-based spread of 2.44% as the default spread for India, though I would not raise too much of a fight, if you insisted on using the CDS spread.In the third step, I try to estimate how much riskier equities are than government bonds in emerging markets by using proxies for each one: the S&P Emerging BMI Index (an index of emerging market equities) for stocks, and the S&P Emerging Market Public (government and quasi government) bond index yield. The standard deviation in the former is 17.36% and the coefficient of variation in the latter is 12.91% and the ratio of the former to the latter is 1.34. Multiplying this ratio by the default spread in step 2 yields a country risk premium for India of 3.28%. (CRP for India = 2.44% * 1.34 = 3.28%)In the fourth step, I add the country risk premium to the implied premium of 6% that I estimated in step 1 to arrive at an equity risk premium for India of 9.28%.Is this number an estimate? Of course! Would you get a different number if you used the CDS spread as your measure of default risk and different indices for emerging market equities and bonds? The answer is yes. It is for this reason that the spreadsheet that I create for equity risk premiums allows you to replace my defaults with yours for any or all of these variables. Before you exhaust yourself in this effort, I would suggest that small differences in this number will not make or break your valuation. So, make your best estimates and move on!Country Risk Update - January 2016Using the approach described for India, I compute equity risk premiums for the 130 countries with a Moody's sovereign rating. For about fourteen more, with no Moody's rating for the country, I was able to find a sovereign rating on S&P that I convert to a Moody's rating and estimate an ERP. Finally, there are about 20 countries, loosely categorized as frontier markets, for which there is no rating or CDS spread; these include the hot spots of the world such as Syria and Iraq. For these, I use the only measure of country risk that I can find, a composite risk score from Political Risk Services (PRS) and use that score to compute an equity risk premium; I create a look up table using the countries that have both PRS scores and ERP to make these judgments. Desperation move? Perhaps, but if you can find a better way of doing it, I would be glad to follow your lead. The resulting equity risk premiums by country are available in the spreadsheet that I referenced earlier but are also in the map below (which adds nothing in terms of content but looks much better):via chartsbin.comCountry Pricing Update - January 2016In my July 2016 updates, I also included one on how stocks are priced around the world, using multiples (PE, PBV, EV/Sales, EV/EBITDA, EV/Invested Capital). While that post has a more extensive explanation of why stocks should trade at different multiples around the world, I have updated the multiples, by country, in this spreadsheet. As you peruse these numbers, keep in mind that the number of companies that I have in data set is very small for some countries and the multiples can therefore yield strange values. To prevent outliers from hijacking my estimation, I also compute the multiple using aggregated values; thus, the PE ratio for China is computed by adding the market capitalizations of all companies listed in the market and dividing by the aggregated net income of these companies. via chartsbin.comMuch as I would like to read more into this picture (especially about cheap and expensive markets), these country numbers are more a first step in the investment process than a last one. Bottom lineI think that we are far too casual in our treatment of country risk, estimating equity risk premiums on auto pilot for countries and attaching these premiums to companies based on where they are incorporated, rather than where they do business. If there is a lesson from the last week's implosion in the Chinese market, it is that the emerging market growth story that so many developed market companies have pushed for the last two decades has a dark side, and that dark side takes the form of higher risk. It is easy to forget this intuitive concept in the good times, but the market lulls us into complacency before shocking us. DatasetsEquity Risk Premiums - By CountryPricing Multiples - By CountryData Update PostsJanuary 2016 Data Update 1: The US Equity Market January 2016 Data Update 2: Interest Rates and Exchange Rates - Currencies January 2016 Data Update 3: Country RiskJanuary 2016 Data Update 4: Costs of Equity and CapitalJanuary 2016 Data Update 5: Investment Returns and ProfitabilityJanuary 2016 Data Update 6: Capital StructureJanuary 2016 Data Update 7: Dividend PolicyJanuary 2016 Data Update 8: Pricing and ValuationPast Blog Posts on Interest Rates and CurrenciesValuing Country Risk - Pictures of Global RiskPricing Country Risk - Pictures of Global Risk

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    Securities Commission Malaysia (SC) and the Oxford Centre for Islamic Studies (OCIS) have opened nominations for the fifth Visiting Fellowship at OCIS under the Scholar in Residence (SIR) Programme in Islamic Finance, for the academic year commencing October 2016.read more...

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    Supermarket chain Asda predicts another year of "intense pressure" for the struggling sector as the global economy remains "turbulent".

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    A record £66m National Lottery jackpot is to be shared between two ticket holders who each matched the six winning numbers, Camelot says.

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    London Underground drivers considering three days of strike action in row over all-night services, BBC understands

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    The total value of shares traded for the week ending 07 January 2016 amounted to SAR 24.12 billion, decreasing by 9.46% over the previous week; while total stock market capitalization reached SAR 1,422.32 billion at the end of this period, decreasing by 9.93% over the previous week. The total value of shares purchased by "Saudi Investors" during this period amounted to SAR 22.85 billion representing 94.72% of total buying activity, and sales of SAR 22.69 billion representing 94.07% of total selling activity. Total ownership of "Saudi Investors" stood at 92.97% of total market capitalization as of 07 January 2016, representing an increase of 0.05% from the previous week. The total value of shares purchased by "GCC Investors" during this period amounted to SAR 0.492 billion representing 2.04% of total buying activity, and sales of SAR 0.533 billion representing 2.21% of total selling activity. Total ownership of "GCC Investors" stood at 2.51% of total market capitalization as of 07 January 2016, representing a decrease of 0.01% from the previous week. The total value of shares purchased by "Foreign Investors" during this period amounted to SAR 0.780 billion representing 3.23% of total buying activity, and sales of SAR 0.896 billion representing 3.72% of total selling activity. Total ownership of "Foreign Investors" stood at 4.52% of total market capitalization as of 07 January 2016, representing a decrease of 0.05% from the previous week.To view the detailed Weekly Stock Market Ownership and Trading Activity Report please Click Here .

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    The friends who run New York's favourite street markets

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    The Community Union expects to meet bosses from Tata Steel this week amid reports of hundreds of potential job losses at the company's Port Talbot plant.

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    Millions of current account customers are being advised to consider their options, following an increase in fees, and changes in interest rates.

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    Insurance claims for damage caused by the floods so far this winter will reach £1.3bn, the Association of British Insurers says.

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    Millions of people may be planning their retirement based on wrong information thanks to government "bungling", MPs warn.

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