Chicago, IL – October 19, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Cognizant (CTSH), UBS AG (UBS), Infosys Technologies Ltd (INFY), Repsol YPF S.A. (REP) and Eni S.p.A. (E).

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Here are highlights from Friday’s AnalystBlog:

Cognizant Buys UBS ISC

Cognizant (CTSH) recently announced a definitive agreement to acquire UBS India Service Centre Private Limited for about $75 million. Based in India, UBS ISC is a captive service provider to UBS AG (UBS) and currently employs 2,000 associates.

Headquartered in Zurich and Basel, Switzerland, UBS AG is a global firm providing services to private, corporate and institutional clients. New Jersey-based Cognizant is a leading provider of consulting, technology and business process outsourcing (BPO) services.

The transaction is expected to close by the end of 2009. As part of the transaction, UBS and Cognizant have entered into a multi-year service agreement under which Cognizant will provide a range of business process outsourcing (BPO), knowledge process outsourcing (KPO), IT, and remote infrastructure management services to UBS divisions around the globe. Cognizant aims to help these divisions to reduce time-to-market, expand service delivery, and improve productivity, operational efficiency and quality.

UBS is a leader in wealth management, investment banking, asset management, research and remote IT infrastructure management. Management at Cognizant believes that this acquisition will help Cognizant strengthen its business and knowledge process capabilities, deepen its financial services domain knowledge, and improve its capabilities to provide integrated services across consulting, technology, and outsourcing.

Cognizant continues to outperform its peers and remains a leader in IT services. Compared to its competitors Tata Consultancy Services Ltd and Infosys Technologies Ltd (INFY), CTSH is setting a more robust tone going forward.

Repsol Confirms Gas in Venezuela

Following the test on recently found gas resource in the shallow waters of the Gulf of Venezuela, Repsol YPF S.A. (REP) confirmed reserves of between 5.6 trillion and 7.8 trillion cubic feet of gas. With an estimated area of 33 square kilometers, it is the country’s largest discovery.

Repsol (32.5% interest) partners with Italy's Eni S.p.A. (E – 32.5%) and Venezuela's state-owned oil company Petroleos de Venezuela SA (35%) for future production on this resource.

While Venezuela aims to increase natural gas output to overcome the current deficit, Repsol wants to boost oil and gas production through new discoveries off the coasts of Brazil and Venezuela after four years of declining output.

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Earlier this year, as reported on IndexUniverse.com, ETF Securities made filings to the SEC to launch ETFs tracking gold, silver, platinum and palladium, called the ETFS Gold, Silver, Platinum and Palladium Trusts, respectively. The platinum and palladium funds will be the first of their type available in the US market.

On 2 July the ETFS Gold Trust filed with the SEC to issue up to US$1 billion in ETFS Physical Swiss Gold Shares. The custodian will be JP Morgan Chase Bank NA, who will, in turn, select a sub-custodian in Zurich to hold the trust’s allocated gold.

The existing physically-backed gold trackers run by ETF Securities in Europe, Gold Bullion Securities (LSE: GBS.L) and ETFS Physical Gold (LSE: PHAU.L), both have HSBC Bank USA as their custodian. HSBC was named as the custodian in the original US registration for the ETFS Gold Trust.

In recent months gold ETFs run by Swiss banks ZKB and Julius Baer have gained market share amongst bullion trackers, with many observers citing the location of the funds’ gold custody in Switzerland as a key selling point.

The ETFS Physical Swiss Gold shares will trade on NYSE ARCA under the symbol “SGOL”. The management fees to be levied on the shares have not yet been determined, a spokesman for ETF Securities said.

ETF Securities’ new filing comes at a time of intensifying competition in the gold tracker market. Last week Source, the London-based issuer of exchange-traded products, launched the Source Physical Gold ETC, whose management charge, at 0.29% per annum, undercuts competing products by at least 10 basis points.

The US-based SPDR Gold Trust (NYSEArca: GLD) remains the largest gold exchange-traded product in the world by some margin, with over US$33 billion under management.

Earlier this month, Oclaro, Inc (OCLR) held a conference call to discuss its business going forward. Oclaro was formed by a merger of Bookham and Avanex in end-April. The company also updated on the integration of the merger. Management stated that the company is now a tier I company along with JDS Uniphase (JDSU), Opnext (OPXT) and Finisar (FNSR) in telecom, components and modules markets. The company aims at becoming a major force in the fiber optics industry. The integration of Bookham and Avanex is not experiencing any customer disruption and the company is on course to achieving operating synergies in the September quarter. The broad product set is aimed at metro and long haul markets.

Oclaro also announced a barter agreement with NewPort Corporation wherein the latter will acquire the NewFocus business of Oclaro's Advanced Photonics Solutions division in exchange for the Newport Spectra Physics high power laser diodes business. Oclaro will also receive $3 million in cash proceeds. Management expects to use the amount to fund a substantial portion of transaction and integration costs. The transaction will enable Oclaro to expand its High Power Laser Diode portfolio and management expects the resultant portfolio to yield potential gross margins in the range of 40% along with a 30% improvement in the UK and Zurich wafer fab utilization.

The agreement also includes a four year agreement whereby, Oclaro will be the sole source supplier of diodes to Newport Spectra Physics for a one year period and expects to be allotted more orders in the next three years. Both businesses do not seem to have any customer overlap. Oclaro expects the acquisition to be seamless for it and Newport customers. Management currently estimates the transaction to be neutral to the adjusted EBITDA (excluding transition costs) in fiscal 2010 and accretive in 2011 to the tune of $6 million - $8 million.

Currently, it is too early to comment on how the company will shape up in the long run. Management is looking at alternatives to strengthen its product portfolio but the direction is yet not clear. Both Bookham and Avanex were relatively small and hence the merger appears to make business sense, compared to both companies running stand alone operations in the overcrowded component space. The optical industry has been severely affected by the downturn in the economy and hence fundamentals remain challenging for the companies. We maintain a HOLD rating on the stock.

UBS (UBS) shares opened higher on Tuesday after the troubled Swiss bank said it would lay off about 8% of employees at its wealth management group in Asia Pacific to cut costs.

Zurich-based UBS already has plans to slash about 11,000 investment banking jobs to bring its total staff down to about 75,000 this year. The latest cut of 240 jobs represents about 3% of the bank's total Asia-Pacific workforce. These include 100 redundancies in Singapore.

After his appointment last February, Chief Executive Oswald Gruebel had indicated that he would not shy away from laying off employees to lower costs. UBS has amassed more than $50 billion in write-downs and taken aid from the Swiss government to combat the global economic downturn. As the recession deepens, the banking giant might shed jobs in other parts of the world soon.

Shares of UBS were up more than 4% to $11.34 in morning trade on the New York Stock Exchange.

This from Taipan Daily:

Take a look at this long-term gold futures chart.

Stepping out to a longer-term chart is a bit like seeing the world from a higher altitude. As you head further out, the drama begins to recede. (From a far enough distance, the world is little more than a pale blue dot – as Carl Sagan liked to point out.)

So, too, with gold. There has been a lot of yellow…

Silver was an entirely different animal, with a mind all its own. It took off right from the Globex open in the Far East on Tuesday. Its top was in at the Hong Kong open…which is 8:30 a.m. over there. Then, it too, was taken down…particularly at the Comex open. But then it rallied smartly, and the price had to be restrained a couple of…

"The Kazakh government is ready to step in,'' Kazakhstan's Prime Minister Karim Masimov said this morning in a telephone interview with Bloomberg "The Kazakh banking system with the support of the government and central bank will fulfill all obligations to international investors.....We have our own specific plan to survive without any external support....I don't think we need support from the International Monetary Fund or overseas.''

Ranked as the ninth largest country in the world by size, it is also the world's largest landlocked country, with a territory of some 2,727,300 km² (which is greater than the whole of Western Europe). It is bordered by Russia, Kyrgyzstan, Turkmenistan, Uzbekistan and China. On the other hand, and despite its enormous size, Kazakhstan has a comparatively small population. No one actually has an exact idea of the actual size of the Kazakhstan population (not to mention the thorny issue of just how many foreign migrants live and work there), but the US Census Bureau International Database list the current population of Kazakhstan as 16.763 million, while sources drawing their data from the United Nations (like the IMF which I have relied on for the chart below) give a 2008 estimate of 15.135 million. In any event the current population level, after falling in the early 1990s as ethnic Russians left, has now stabilised, and is virtually stationary. This virtually stagnant population constitutes, as we will see, a significant problem for a country with such a massive resource base, and such enormous economic and development potential as Kazakhstan would seem to have.

Record Oil Revenue Boom

Kazakhstan is the biggest energy producer in Central Asia and the country's $100 billion economy has in fact grown at an average of 10 percent a year rate since 2000 (see chart below), in particular as the price of oil has surged. This rapid GDP growth produced a rapid increase in per capita income as well as national creditworthiness, and these in turn sparked in their wake a substantial construction boom. Indeed it has precisely been the bursting of this boom in the autumn of 2007 - on the back of the seize-up in global wholesale money markets which followed August's financial turmoil in the USA - which lies at the heart of Kazakhstan's current growth slowdown. Kazakhstan's economy expanded at a 'mere' 5.3 percent rate in the first quarter of 2008, half the pace achieved in the same period a year earlier, following a dramatic curtailment in bank lending, and if Kazakhstan is still able, despite all the problems we will see below, to maintain some sort of growth momentum at this point it is undoubtedly the result of the oil and other commodity resources which the country has at its disposal, and indeed as part of its initial response to the present crisis the country increased crude production by an annual 6.3 percent in the first four months of the year, according to official government data.




Now one of the most curious details about the present slowdown in Kazakhstan, has been the fact that at the very same time as the economy started to lose velocity the central bank found itself busy struggling to curb an inflation rate which was steadily shooting onwards and upwards towards the outer stratosphere, as revenue from record oil prices pushed up domestic demand, and the resulting construction and consumption boom drove up wages far beyond normal "productivity-gain" rates of increase (remember, there are not THAT many people in the country, and much of the population is rural and unskilled in relation to the needs of a modern technological and services economy). In fact inflation hit year-on-year rates of increase approaching 20% in the autumn of last year (see chart below), although it had dropped by to an annual 18.2% by September.




So, as well as containing the property bust, the Kazakh authorities have also had to conduct an inflation fight (more details below). So far from lowering rates like the US Federal Reserve has been able to do, Karakhstan's central bank was forced to raise the key interest rate to 11 percent in December 2007, at a time when annual inflation was riding at almost 19 percent, the highest for the country in over eight years. The refinancing rate was then maintained at the 11% level until it was finally lowered to 10.5% at the last central bank meeting in July.



Not Just Energy - Vast Resource Potential

The fact that Kazakhstan's industrial output growth has lost a lot of momentum in 2008 as the slowdown in the building industry provoked a slump in cement and other materials production should not take our minds too far away from the fact that the underlying potential in Kazakhstan is enormous. In fact while industrial output growth was reduced to an annual 3.8 percent growth rate in the January-June period, it was at least still growing.

The low point seems to have been hit back in January, when cement production which, not surprisingly, was among the hardest hit sectors, was down 26 percent year on year, the sharpest January fall in five years, as growth in the construction industry stalled, brought to a halt by the fact that the Kazakh banks, who had been struggling to borrow from abroad following the collapse of the U.S. subprime mortgage market, virtually stopped lending to homebuyers and builders.

Copper and rolled-iron output also declined an annual 13 percent in January while output from oil refineries and manufacturing industry decreased an annual 2.9 percent as the problems rolled in. Thus there is evidence of a very sharp shock initially hitting the local economy. On the other hand, since the country is resource rich and the given that first half of 2008 saw a very significant global commodities boom, there were other economic sectors to fall back on, and mining production was up 6 percent from a year earlier in the first quarter, bolstered by an increase in natural gas and coal output, which climbed 15 percent and 11 percent respectively. At the same time crude oil production went up by an annual 5.4 percent.

Apart from oil and gas Kazakhstan has a huge array of potential resource reserves just waiting to be tapped. Among these there is copper. London-listed Kazakhmys accounts for the bulk of Kazakh copper output - and this was down 17.5 percent year-on-year in January-April. Industrial output in Karaganda region, home to Kazakhmys and Arcelor Mittal mines and smelters, declined 5.5 percent year-on-year in January-April.

Kazakhmys reported that their first-quarter output fell 9.9 percent on "severe winter weather'' and repairs at its Balkhash smelter. Production of finished copper plates, or cathodes, from the company's ore fell to 75,500 metric tons, from 83,800 tons a year earlier. These drops in output are, of course not entirely associated with the credit crunch, but they do give an idea of the challenging and volatile environment in which the mining and extraction industries work in Kazakhstan. Realistically speaking it seems quite likely that output in these sectors will return to more normal levels during the second-half of 2008, having alreadt rebounding significantly from the low point reached in the first-quarter.

On the other hand industrial output in capital Astana and commercial hub Almaty, where most construction activities are based, was down 13.2 percent and 8.6 percent, respectively, in January-April, and this activity may well take much longer to recover.

Kazakhstan has also had to cut its 2008 oil production forecast to 67.6 million tonnes (1.35 million barrels per day) from a previous estimate of 70 million tonnes citing maintenance works and transport bottlenecks. The country is able to produce a lot of oil, but it does have a large problem getting that oil to the places where people want it. Three major pipeline routes - the Atyrau-Samara and Caspian Pipeline Consortium (CPC) links to Russia, and the Atasu-Alashankou pipeline to China - carry Kazakh crude off towards its end destinations, but none of these are proving sufficient to the demands on them.

"It is impossible to transport crude out of Kazakhstan without some difficulties," Senior Associate Klara Nurgaziyeva from law firm Dewey & LeBoeuf told an oil and gas conference last week in the Kazakh financial capital Almaty.

In a smoke-filled bar in the Kazakh financial capital Almaty, the laughter of Scottish ex-pats is loud and boisterous. More than three thousand miles (5,491 km) separate the Scottish Highlands and the Central Asian steppe, but a mutual interest in oil and gas has created a surprising alliance. Residents estimate that around 400 Scots live in ex-Soviet Kazakhstan, a resource-rich country roughly the size of western Europe.

Most come from Aberdeen, Britain's northeastern oil hub, and they bring with them their technical expertise."We're going to try attract Kazakhs to Aberdeen over the next few years and look at initiatives, and create further investment in Scotland from Kazakhstan," Lord Provost Peter Stephen of the Aberdeen City Council told an energy conference last week in Almaty. He said over 100 companies from in and around Aberdeen are active in Kazakhstan, and the Scottish oil town even has a Kazakh consulate to serve the hundreds of Kazakhs who go to Scotland to train up for the oil business. The Kazakh-British technical university, set up by a group of Scottish universities seven years ago, occupies a grandiose columned building in the centre of leafy Almaty, which housed parliament before the capital was moved to Astana.

Prices for residential property soared 30.2 percent in 2007, reaching a record average mid-year high of 161,300 tenge ($1,338) per square meter, up from 123,900 tenge in 2006, according to the Astana-based state statistics agency. In the financial capital, Almaty, the average price was 345,200 tenge.

The drop in prices from these peaks and the sudden drying up of credit has caused numerous problems for would.be buyers, and Bank TuranAlem, Kazakhstan's second-biggest bank by assets, received $81.2 million last December from the state emergency investment program simply to finance the completion of unfinished construction projects.

The most recent government bailout of the construction sector was announced during the summer - just two weeks before the celebrations of Nazarbayev's 68th birthday and the 10th anniversary of the founding of the new capital Astana on July 6 - following the announcement by a group representing people who had purchased apartments in the unfinished buildings that they were planning a protest march to be held in Astana bang in the middle of the official festivities.

The Industry and Trade Ministry have said that there were 939 residential buildings, with 45,130 apartments pre-paid by homebuyers, under construction as of last January. Minister Edil Mamytbekov said in July that the cases of 4,558 homebuyers in 18 buildings "remain problematic'' because of conduct for which the builders in question had been "charged with crimes.'' The Kazakh Prosecutor General's Office said 123 construction companies that received 104 billion tenge ($865 million) in pre-payments from homebuyers were behind schedule or haven't even begun work on new apartment buildings.

Assets of "careless construction companies,'' including buildings and vehicles, have been seized to compensate lost investments of homebuyers and the government, according to the Prosecutor General's Office. Criminal investigations have been opened into eight companies. A total of 285 companies are building 407 residential projects in Kazakhstan and have received 231 billion tenge in pre-payments from more than 50,000 individuals and companies, prosecutors said. Of 200 ``problem'' projects delayed by at least six months, 110 are located in the capital Astana and 42 in Almaty.

The July rumpus was provoked by the fact that at the start of the summer the Kazakh government had spent only 51 billion tenge to complete stalled residential projects, a fraction of the bailouts promised by Prime Minister Karim Masimov in the autumn of 2007, according to data made public by the Ministry of Industry and Trade on June 23. The government had said on Nov. 14 2007 that it would spend $1 billion by the end of 2007 and another $3 billion in 2008 to "provide economic stability and growth'' by supporting the real estate market and small and medium-sized businesses. Following publication of this data, and some international press coverage, Masimov said that his original emergency investment program was in the process of being expanded, and his government announced plans to spend 17.2 billion tenge to complete residential projects in Astana.

President Nursultan Nazarbayev instructed the state to step in and finish projects, ``which have no source of financing,'' to ``help to reduce social tension,'' according to Edil Mamytbekov, a deputy minister of industry and trade, on June 20. President Nursultan Nazarbayev also said it was necessary to take ``tough measures against careless builders". As a result the Almaty mayors office announced on July 26 that another 46.4 billion tenge had been allocated to support residential projects in Almaty. The state had already invested 22.4 billion tenge and was going to spend the remaining 24 billion tenge by year's end, according to the announcement.

In April, however, the government had announced that the state development holding Kazyna would distribute 59 billion tenge to commercial banks during 2007 to finish 131 buildings in Almaty. Sergei Kuyanov, spokesman for Almaty Mayor Akhmetzhan Yesimov, declined to comment on the discrepancy between the numbers when question by journalists in July.

Whatever the complications of the present situation and the ins-and-outs of putting the construction and banking problems straight, we should not lose sight of the fact that Kazakhstan has, large financial resources which will surely help it weather the current situation. Official foreign currency assets totaled $46 billion in early June, comprising NBK reserves of $21 billion and oil fund (NFRK) assets of $25 billion. Commercial banks also have foreign assets of which about $3.5 billion are thought to be liquid. Total foreign assets broadly match foreign liabilities when the intracompany debt of the oil sector is excluded, while liquid foreign currency assets comfortably cover potential short-term foreign currency drains.


Favourable Demographics But Migrants Needed, And With Them Modern Citizenship Rights


The chart you will find below is known as a “heat chart”. It depicts the ongoing changes in Kazakhstan's age structure. Each dot represents the number of people in any given age group at any given point in time. A dark red dot represents the largest concentration of people, by age, in a particular year while deep blue dots show the lowest concentrations. A single dark red dot is the equivalent of almost 406,000 people while each deep blue dot represents nearly 23,000 people.


In the upper left-hand corner of the chart the bright reds and yellow areas depicts the population boom that started in the mid 1970s and lasted until the late 1990s. The remnants of that boom extend downward from left to right across the chart. The band also narrows as this population segment ages. This is simply a reflection of the reduction in the total numbers in the population bulge cohorts as out-migration has taken its toll.

Many ethnic Germans and Russians, for example, left Kazakhstan during the years following the end of the Cold War. In the lower left-hand side of the chart there is a preponderance of dark blue dots, indicating a relatively small number of people over the age of 60 years. Over time these dark blue dots are replaced by light blues and greens, a pattern reflecting a gradual but steady increase in the number of elderly people.

The strong budget position in Kazakhstan has provided scope for the government to use fiscal policy to support the economy as growth has slowed. We believe that the increase in spending in the recent supplementary budget is appropriate, and that the automatic fiscal stabilizers should be allowed to work, with any revenue shortfalls due to a weakening economy being accommodated in the near future rather than offset with expenditure cuts to meet budget targets. Going forward, the government's recently announced three-year budget plan maps out a transparent path for fiscal policy over the medium-term. We believe, however, that it is important that the government not commit to further large increases in public sector wages and pensions in future years given uncertainties about budget revenues—particularly from the oil sector—and the stage of the macroeconomic cycle in two or three years time.

Kazakhstan has large financial resources to help it weather the current situation, and medium-term economic prospects remain favorable. Official foreign currency assets, comprising central bank (NBK) reserves and oil fund (NFRK) assets, reached $48 billion at end-September, well above the mid-2007 level. The current account balance has strengthened significantly this year, and oil production is set to increase substantially in the years ahead.

As at the time of the Article IV consultation discussions in April, we believe that in the short-term policies should remain focused on managing risks to the outlook and setting the stage for the resumption of strong and sustained growth. Since our last visit, the authorities have continued to skillfully handle the difficulties the economy has faced, and we welcome the policy steps that are being taken in the monetary, fiscal, and supervisory areas to strengthen the resilience of the Kazakhstani economy. Nevertheless, considerable challenges remain, and these have been heightened by the renewed bout of global financial market volatility.

Paul Tustain says it was government action -- slashing interest rates -- that caused the crisis. Now they tell us slashing rates further and nationalizing banks is the way to 'fix' the economy.

This 'fix' will and lead to a protracted period of underperforming stocks and bonds... and create the perfect conditions for a bull market in gold.

This from Whiskey & Gunpowder:

It seems almost everyone — from both the right and the left of the political spectrum — agrees that the world needs more government intervention in the form of bailouts and increasing regulation. We’re getting it, too.

Yet once we have grasped that the underlying cause of this disaster was credit creation by government itself, we should perhaps be a bit wary of putting governments ever more in charge.

Governments operate a cheap credit policy in order to defer pain, stay popular, and get re-elected. The U.S., British, Australian, Russian and now pan-European bank rescues are intended to create and promote a higher volume of cheaper and easier credit than the market really wants. They aim to supply yet more of the wretched stuff which got us here in the first place.

Is that really so wise?

If we allow governments to control finance through regulation, we give them extraordinary power over the direction of the economy. Because they can (and will) deny finance to some projects and grant it to other, more politically appropriate ones. Such government control has repeatedly shown itself to be much worse than our imperfect marketplace at handling the power of economic direction — both in this case, where their efforts at economic stimulation are the root cause of the fiasco, as well as in recent history, particularly with communism.

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The new rush of bailouts, and their associated tighter regulation, pushes us further towards the socialized “command” we thought the world had abandoned in 1989. That is bad — and there is a better way to rapidly re-configure our economies in the right way:

More than ever we need to trust the market. Let interest rates rise (without government interference) and allow the market to kill off those institutions whose functioning depends on limitless supplies of cheap credit.

Yes, there would be pain, but it would right a long list of wrongs. It would make houses affordable for younger working people. It would make saving worthwhile again. It would make borrowing less attractive. It would increase the use of equity in the financing of enterprises, and significantly decrease their use of debt, making all of them much safer in future downturns.

Each of these moves in the right direction are, sadly, the moves which yet another dose of rescue money will now suppress. This won’t be understood by our politicians, however, so we will get yet more patched-up bailouts — and lots more regulation besides.

Did you notice? While the United States, Britain, the Netherlands and Australia were banning short selling on their local stock markets, the Chinese were relaxing restrictions on it. This is enormously telling. Asians — suppressed by the command economy for decades — aspire to a world of free enterprise. Unlike us they are now prepared to accept the costly consequences of those repeated errors which the free enterprise system allows people to make.

When we finally wake up under the yoke of our new, improved and over-sized government regulators, we will have lost the privilege of benefiting from free and highly profitable financial centers. It’s the turn of Hong Kong, Mumbai, Shanghai, and Singapore.

Oh well — it was nice while it lasted. And from an avowedly selfish point of view, I think it is almost certain that these tax-funded bailouts will be good for me personally, because they will be good news for BullionVault.

I believe we will now avoid the pain of a sharp correction. Instead we will get many years of miserable underperformance in shares, bonds and deposits — the classic backdrop to a strong bull market in Gold.

With no bailout, gold would probably rocket even faster than it has this week, and within a few months it would have fully appreciated. That would be time to exit gold and start buying bombed-out productive assets instead.

The speed of such an ascent in Gold Prices would be highly profitable for gold owners (including me), but it would probably prevent BullionVault from aggregating more than a few thousand new customers in total. My personal ambitions for the business would never be met.

~~~~~~~~~~~~~~~Special~~~~~~~~~~~~~~~

Two Words: Buying Opportunity

Gold is hovering around $900, and it looks poised to shoot straight up any minute.

There are a lot of ways to take advantage of this buying opportunity, but this one seems to be the best.

We urge you to get in on it before gold hits $1,000.

Click here to read more.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Instead, as all this bailout money seeps in, I anticipate some temporary relief for the stock market, followed by a long, slow, miserable slide in mainstream investment performance, accompanied by a steady rise in the value of Gold Bullion.

Every month, this on-going shift from paper to gold...from debt to hard assets...will cause a few thousand more people to join BullionVault, buying and selling solid gold bullion — safe and secure in their choice of Zurich, London or New York — at ever-higher live market prices.

So — entirely hypocritically — I believe one outcome is required, yet hope for another! Knowing governments won’t allow the incautious banks to fail, I can only look forward to helping more investors each day move a portion of their wealth into gold.

Source: Gold and the Flood of Cheap Government Money

SAR Launches Volatility FoFs

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Hedge Fund Marketing in Switzerland

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Guide to Hedge Funds in Switzerland

• This KPMG Article discusses the process of how to set up a hedge fund in Switzerland. Some of the topics been touched on are: Authorization requirement and process, Regulatory capital requirement, Restrictions on marketing issues, and fund’s operational structures.
• Marketing of Hedge Funds in Switzerland. Given legal and regulatory constraints, hedge funds in Switzerland may only be distributed by way of private placement, without any public offering. Therefore, this article will provide readers a overview of Swiss collective investment structure, its legal and regulatory frameworks, and address the on-going revision of the Swiss mutual fund legislation that is expected to create additional flexibility in offering this type of investment opportunity to the Swiss market.
• Switzerland is slowly becoming a player in the hedge fund market, but it can do more to attract investors, says René Bösch. In comparison with other countries, until recently Switzerland did not play a significant role in the hedge fund industry, except that the Swiss banks manage a huge asset basis that also seeks investments in hedge funds.
• Hedge funds the Swiss way: The elusive Swiss private bank UBP is one of the few financial institutions to have emerged unscathed from the global credit crunch. "Globes" talked to the bank's Israel representative Elchanan Harel.
• Asset managers are said to be attracted to the Alps by tax advantages, but the picture is obscured by fudge and indecision. The creation of a Geneva-based hedge fund business by private bank Lombard Oldier Darier Hentsch has rekindled the idea of hedge funds moving to Switzerland from London en masse
• Geneva’s cantonal finance minister, David Hiler, tells local business leaders for the first time that he wants to attract foreign-based hedge funds to the region. The move is part of wider thinking about ways of keeping multinational companies based in Switzerland following pressure from the European Union for changes to company taxation.
• Hedge funds are `crucial` in Switzerland’s financial market says Harcourt`s MP, country in 3rd European position but could move up to 2nd, Opalesque Exclusive: Less taxes for hedge fund managers would be beneficial for Switzerland, but it won`t happen just yet, Hedge funds add complexity to existing restructuring laws in Spain, SocGen A.M. posts 7.3 bln euros net outflows in Q1
• This article suggests that you could say that this summer's credit crunch was a chance to see the hedge fund emperors without their clothes. As banks around the world tightened access to money, on concern that borrowers' collateral was impaired by exposure to subprime loans, some of the highest-profile upsets were reported in the $1.7 trillion hedge fund industry.
• Switzerland is the world's second largest market for funds of hedge funds, after the US, with most assets invested in offshore hedge funds.There are nearly 256 registered and supervised hedge funds in Switzerland approved for public distribution (up from 39 in 2001), with total assets of around US$9.4 billion in 2005 (compared with US$273.8 billion invested in all registered Swiss funds). Almost all these funds are structured as funds of hedge funds.
• Brevan Howard, one of London's biggest and most successful hedge funds, is considering moving its headquarters abroad, handing fresh impetus to sceptics of Britain's claim to be the world's leading global financial centre. The Pall Mall-based investment house, which manages $22bn of hedge fund assets and employs 250 people in London, has told the Financial Services Authority that uncertainty over taxation as well as the Government's attack on non-doms has caused enough concern among the partners to consider moving abroad.
• London’s Hedge Fund Managers Flee to Switzerland Over Tax Challenges. Dozens of London-based hedge fund managers are reportedly relocating to Switzerland to escape new tax rules affecting non-domiciled individuals residing in the UK. Many hedge fund managers have expressed alarm at the new tax rules and prepared to move their entire operation to Switzerland, with its favorable tax climate for wealthy investors, has emerged as the natural alternative for some managers.
• Switzerland hopes tax changes will win hedge funds from city. Private investors residing in Switzerland can earn tax-free gains from their hedge fund and private equity investments but the managers of those funds are stung if their own stakes, known as “carried interest”, are treated as income. Therefore, the way to attract more asset managers to Switzerland is to get the tax authorities to treat the carried interest as private capital.
• Zurich’s tax lure for hedge funds. Switzerland is mulling over plans for a special 10pc tax rate for hedge fund managers in a radical move to lure the booming industry away from London. The Swiss banking federation has proposed a 10pc tax on the elite managers, effectively cutting their marginal rate by 35 percentage point
• HSBC has enhanced its fund of hedge funds product range available in Switzerland, with the approval for distribution of the HSBC AdvantEdge range. The fund range, which provides investors with the option to build focused exposure to specific hedge fund strategies or geographic regions.
• Cayman Islands: Switzerland’s Cayman Connection. Switzerland is a particularly interesting jurisdiction when it comes to the alternative investments industry. Its legal and regulatory constraints largely prevent Swiss-based sponsors of FOHFs from setting up the fund within Switzerland. They therefore typically turn to the Cayman Islands as the jurisdiction to establish the fund vehicle, which will generally be a Cayman Islands company. Therefore, this article will explore the interaction between the two jurisdictions when it comes to funds of hedge funds.
• This article provides a brief overview of some regulations and constraints in conducting investment management services in Switzerland. It also give readers a overview of Switzerland’s banking and investment fund sectors.
• Swiss Banks call for relaxed immigration. Banker and fund managers in Switzerland are calling its government to relax its immigration laws enough to allow more skilled laborers from non-European Union countries to work in the banking industry. he banking industry today accounts for 6% of the country's jobs, 12% of GDP , and 16% of Swiss tax revenue.
• Swiss Financiers seek to tempt hedge funds. The Swiss finance sector has decided to increase pressure on the authorities to enact reforms that would help attract more hedge fund managers to Switzerland. The main focus of reform would be its tax and regulatory systems.
• This is an excellent comprehensive resource for anyone who is interested in exploring the business environment in Switzerland and its various laws and regulation.
• This article provides quantitative investigations into the potential for tax evasion by individuals in Switzerland’s offshore financial sectors. This article divides the huge Swiss financial sector into five parts: (1) on-balance-sheet bank business; (2) bank fiduciary deposits; (3) securities held in bank custody accounts; (4) insurance; and (5) investment funds (including mutual and hedge funds). It attempts to identify which of these assets are likely to be linked to tax evasion.
• Switzerland: Financial Sector Assessment Program – Factual Update – IOSCO Objectives and Principles of Securities Regulation. It presents a factual update of regulatory developments in the area of securities regulation and supervision in Switzerland and introduces some of regulations of its hedge fund industry.
• Switzerland: Searching an Edge On Hedge Funds. This article gives a brief overview of Switzerland’s hedge fund industry and its relevant laws and regulations. It also analyzes the future direction of the industry and how it stands against other financial powerhouses around the world, such as Britain and U.S.

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