First, let’s start with the news:
- Here’s a nice recap of what’s going on with Nigeria’s NSIA and ECA.
- Qatar continues to flex its muscles with Glencore over the proposed Xstrata deal.
- Here’s a nice ranking of the investment appeal of 15 frontier markets. And the winner is... Iraq.
- What does Qatar’s SWF own in London? A lot of stuff.
Second, here’s an interesting essay for you to read poolside:
In keeping with our theme this week of investment beliefs (see my Matrix-inspired post and my Wellcome Trust post), I wanted to share a nice new article by Katharina Pistor entitled, “On the Theoretical Foundations for Regulating Financial Markets”. Pistor offers a useful critique of the theoretical beliefs the seem to guide the regulation of financial markets. She also offers a perspective on how different theories would result in different regulatory interventions. Even if you’re a staunch believer of EMH, it’s still worth a read. Here’s the abstract:
“How we think about financial markets determines how we regulate them. Since the 1970s modern finance theory has shaped how we think about and regulate financial markets. It is based on the notion that markets are or can be made (more) efficient. Financial markets have been deregulated when they were thought to achieve efficient outcomes on their own; and regulation was designed to lend crutches to them when it appeared that they needed support. While modern finance theory has suffered some setbacks in the aftermath of the global crisis, defenders hold that improving market efficiency should still be the overriding concern for regulation. This essay raises the question whether this is indeed the case. What if other factors besides information costs affect the vulnerability of markets to crises? Two factors have been identified in the literature: Imperfect Knowledge and the Liquidity Constraint. This essay introduces the relevant theories that focus on these factors and discusses their regulatory implications.”
Have a nice weekend!
