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-AReviewofCyprusEconomy-WealthManagementProductsofChina

-Austerity,UnemploymentandGrowth

TheFortnightInBrief(29 thAprilto12thMay)

US:ARobustStockMarketandFallingUnemployment

UnemploymentrateintheU.S.droppedtoafour-yearlowof7.5%asnon-farmpayrollsexpandedby165,000,beatingexpectationsof140,000jobs.PayrollfiguresforFebruaryandMarchwerealsorevisedupwardsto332,000and138,000respectively.TheFederalReserveisexpectedtomaintainits$85billion

monthlyassetpurchase,andiswillingtoscaleupordownthepaceastheeconomicoutlookevolves.ThepositivejobsreportsentindexesreachingrecordhighswiththeDowclosingabovethe15,000markforthefirsttimeonMay7,andtheS&P500rallyingforitsthirdweekstraight.Thedollaralsostrengthenedagainstallits16majorpeers,while10-yeartreasuryyieldsreacheditshighestinsixweeks.

AsiaPacific:SupportforJapansEasing

IndustrialoutputinIndiagrew2.5%inMarchcomparedtoa0.5%growththepriormonth.ThisgrowthratecomesaftertheIndiancentralbankeasedinterestratestoreviveitsslowingeconomywhichhassufferedinitsbattleagainst

inflationandadropinexports.TheG7financeministersandcentralbankershavereiteratedtheirstancetonottargetexchangerates.Thisstatement,whilenotexplicitlydirected,isaimedatJapan.Japanhasaggressivelysteppedupmonetarystimulus.Thishascauseda15%slideagainsttheUSDanda13%againsttheEURsincethestartoftheyear.

EU:TheTransatlanticTradeandInvestmentPartnership(TTIP)

EuropeanUnion(EU)officialsmentionedlastweekthehugeeconomicpotentialofaproposedfreetradepactwiththeUnitedStates(U.S.),theTransatlanticTradeandInvestmentPartnership(TTIP),whichhasbeensaidtobeagamechanger.

ThetwosidesareexpectedtobegintalksonthepactinJulyandhopetofinishinonetotwoyears.Ifsuccessful,thefinalagreementwouldcoverhalftheworld'seconomicoutputandaboutathirdofglobaltrade.However,negotiationsare

expectedtobetough,withEUlawmakersalreadybackingFrenchdemandstoexemptculturalandaudiovisualservices,whichwouldbeabigdisappointmentforU.S.filmandtelevisioncompanies.MembersoftheU.S.CongressalsowantthepacttotacklelongtimebarrierstoU.S.farmproducts,potentiallyrequiringmany

EuropeancountriestoovercometheiraversiontoimportingU.S.geneticallymodifiedcrops.

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Copyright 2012 SMU Economics Intelligence Club2

AReviewofCyprusEconomy

ByEugeneOng,SingaporeManagementUniversity

Asinvestorscontinuetodebatetheaccuracyandlifespanofthenewnormal(aphenomenon

coinedbyWilliamGrossofPIMCO),newsoftheCypriotgovernmentseekingaidseemedtohavetiltedtheoddsinfavourofitsexistenceandthatitwouldremainaroundforsometime

tocome.

Figure1:GDPgrowthofvariousEuropeannations(Source:Eurostat)

UnlikeGreecewhoseproblemsstemmedfromitsailingeconomyandagovernmentindeficit,

Cyprushadpromisinggrowthprospects.EvenatthepeakoftheEurozonecrisis,Cyprus

managedtochurnoutrelativelyhealthyeconomicdata.Intheyearsbetween2004and2009,

CyprusGDPgrowthconsistentlyoutperformedtheEuropeanUnion(27nations),beating

evenGermany(Figure1below).Additionally,theCypriotswereadequatelyemployed,

achievingunemploymentfiguresthatwereconsistentlylowerthantheaverageofthe

Eurozonesandintandemwiththeothermajoreconomiesinthepastdecadepriorto2012

(Figure2).

Figure2:Unemploymentrates(Source:Eurostat)

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HavingprovenitsresiliencetotheEurozonecrisis,whywouldCyprusseekemergencyfunds

fromtheEuropeanStabilityMechanism(ESM)1?OneofthegreatestissuewastheCypriot

bankingsectorsexposuretoGreekdebt.AconsolidationofreportspublishedbyTheWall

StreetJournalonMarch272013seemtosuggestthatCyprusmajorbanksLaikiBankand

theBankofCyprus,hadtakenonmassivebetsontheGreekdebts.Atatimewherealmost

everyotherbankinEuropewastryingtoreducetheirexposure,theCypriotbanksdidjustthe

opposite.Theirexposureonthejunksovereigndebt2swelledbyatleast1billionwithina

shortspanofninemonthsin2010.WhenthesebankswereforcedtotakeahaircutinOctober

2012,lossesamountingtoapproximately4.3billion(60.1%oftheCypriotgovernments

2012revenue)werewipedoutfromtheirbankingsystem(Figure3).

Figure3:CypriotbanksexposuretoGreekdebtsandtheirlosses(Source:European

BankingAuthority(holdings),individualbanks(losses)andTheWallStreetJournal)

Asitsmajorbankswereabouttobebleddry,thegovernmentofCyprusattemptedtoprovide

thebankswithemergencyfundingthroughtheirownpocketsinanefforttolimitcontagion.

However,thegovernmentsoonrealizedthatthebankingsectorwastoolargetoorescue.

ConstantinosStephanou,SeniorFinancialEconomistfromtheWorldBankestimatedthatthe

totalassetsheldbyCyprusmajorbanksweremorethanseventimesthatofitsGDPin2010

(2011).Asaresult,thegovernmenthadnochoicebuttoturntotheESM.

WhennewsfirstbrokeaboutCyprusrequestforabailout,itwasassumedthattheywould

receivesimilartreatmentsastheirpredecessorswhohavesuccessfullyreceivedtheiraid

packagessimplyagreetosomeausteritymeasures(suchascutsinsocialbenefits,pensionsandtaxincrements)inexchangeforthefunds.Atleastthatwaswhatwasonthetableduring

thediscussionsbetweentheCypriotgovernmentandtheTroika(theEuropeanCommission,

theIMFandtheECB)inthemonthsfollowingtheaidrequest.On16March2013,theTroika

agreedtoprovidea10billionaidonlyifCyprusagreedtoraiditsbanksdeposits(impose

leviesof6.75%ondepositsbelow100,000and9.9%ondepositsexceeding100,000),

effectivelyhavingtoraisemorethanhalfoftheaidamount(5.8billion).

TopreventbankrunspriortotheapprovalfromtheCypriotgovernment,withdrawal

restrictionswereimposednationwide,suggestingthelikelihoodofthegovernmentagreeing

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totheterms.ThenegotiationsregardingthebanklevieswentonbetweentheTroikaandthe

Cypriotgovernment,asitscitizensremainedconcernedabouttheirdeposits.Shouldthe

negotiationsconcludewithanapprovaltolevythebanksdeposits,itmaypavethewayfor

theTroikatoforceotherailingnationstoraidtheirowndepositsbeforeprovidingrelief

funds.Thepossibilityofthishappeningmaysparkaeuro-widebankrunandthesubsequent

collapseofseveraleconomiesoncethereistheslightesthintoftroubleinthebankingsector

ornewsoffurtherhaircuts3.

Thenegotiationsconcludedon25March2013andalthoughadirectlevyacrossallaccounts

wasnotinthedeal,uninsureddepositslargerthan100,000werenotspared(depositswith

less100,000werestillguaranteed).TheagreementalsoforcedCyprusailingsecond-largest

bank,LaikiBankintoclosurewithcompletewrite-offsfromshareholdersaswellasimposing

lossesonbondholders.SomeoftheadditionaltermsincludesellingofCyprusgoldreserves

(toraiseapproximately400million)andprivatizationdeals(toraiseapproximately1.4

billion).Includingtheemergencyfundsof10billion,Cyprusisexpectedtoraise23billion

intotal(TheGuardian,2013).

Withthecrisispartiallyresolved,alleyesareontheramificationsthatsuchadealwillhaveon

otherailingnations.Althoughconcernsthatsuchagreementsmaybereplicatedinother

peripheralnationsarelegitimate,thechancesofthemrecurringareratherremote.Toback

thisclaim,itiscrucialtoexplorethereasonsforthedifferencesbetweenthisaidandtheother

earlierbailouts.

RecallearlierparagraphsthatincludedadiscussiononthesizeofCyprusbankingsystem.

Giventheperceptionofslackmonetaryregulationsandasataxhaven,Cyprushadattracted

largevolumesofforeigndepositsandinvestments.SpeculationsarerifeabouthowthemajorityoftheseforeigndepositsinCyprusoriginatefromRussia.Infact,theIMFestimates

that34percentofallRussianoutwardinvestmentsheadtoCyprusinabidtoevadetax,

launderproceedsfromillegalactivitiesandevenprotecttheiraccountsfromstate

confiscationsorembezzlements(TheNewYorkTimes,2013).Asshowninfigure4,the

corporatetaxratesinCyprushaveremainedfirmat10percentbetween2006and2012,less

thanhalfoftheRussiangovernment'sstakeintheircorporatesearnings.Inthesameperiod,

Cypruscapitalandfinancialaccountsrecordedforeigninvestmentsanddepositsintherange

of1billiontoslightlylessthan3billion.Thescenariopaintedinfigure4seemsto

corroborateclaimsofhowCyprusmanagedtoattractsomuchforeigndeposits.

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Figure4:VariouscorporatetaxratesandCypruscapitalandfinancialaccounts

(Source:KPMG(taxrates),Eurostat(capitalandfinancialaccounts))

ThemassiveliquidityinitsfinancialsystemmadeiteasyforthemajorbanksinCyprustotake

massivebetsontheriskierGreekdebts,inhopesofhigherreturns.Thiswashowtheirbanks

managedtogainsuchhugeexposurestoGreekdebts,whichinturnresultedinmajorlosses

thatforceditsgovernmenttoseekaid.Ifthegovernmentwerenotabletoplugtheholesinits

bankingsystem,thebankswouldthennotbeabletohonouralldeposits.Understandably,

internationallenders,especiallytheGermans,werereluctanttosimplyprovidefundsto

indirectlyrescueforeigndepositsofquestionablesources.Nothavingdonesowouldonly

encouragebankingmoralhazardwheredepositorswithillegalintentionswouldalwaysbe

assuredoftheirdeposits.Sinceamajorityofdepositsthatwereabove100,000belongedto

theRussians(TheNewYorkTimes,2013),theTroikawouldbeabletohitmostoftheillegal

depositshardbyraidingbetween60percentto80percentofthevalueofthosedeposits.

InunderstandingtheuniquenessoftheCyprusbankingsector(nofurtherredflagsinother

EUnationswereraisedpost-Cypruscrisis),itisforeseeablethattheTroikawouldnotbe

haphazardlyforcinganotherbail-insituationonotherailingeconomies.

1EuropeanStabilityMechanismApermanentfirewallfortheeurozonetosafeguardandprovideinstantaccesstofinancialassistanceprogramsformemberstatesoftheeurozoneinfinancialdifficulty,

withamaximumlendingcapacityof500billion.

2JunkSovereignDebtSovereigndebtratedbelowBBB-.Thesebondspayhigheryieldstocompensateforahigherriskofdefault.

3HaircutApercentagethatissubtractedfromthemarketvalueofanassetthatisbeingusedascollateral.

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Sources:

1.KPMG2.Eurostat3.EuropeanBankingAuthority4. TheWallStreetJournal

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WealthManagementProductsofChina

ByHenryChan,SingaporeManagementUniversity

OnOct122012,thenchairmanoftheBankofChinaandcurrentchairmanofChinaSecuritiesRegulatoryCommission,XiaoGangwroteinanauthoritativeEnglishnewspaper,theChinaDaily,onthepotentialdangersposedbyWealthManagementProducts(WMP)1tothefinancialsystemsstability.Hiswarningdrewpublicattentiontothepotentialsystemicproblemposedbythehugecreditexpansionintheaftermathofthe2008crisis.WhileChinawasthefirstmajorcountrytoembarkonastimulusprograminNovember2008,anditseconomyhasperformedaheadofthepacksince.ThehugecreditbuildupintheperiodresultedinaratioofcredittoGDPofmorethan190%in2012from130%in2007.Manyeconomistshaveexpressedalarmoverthesharpcreditexpansiondrawingparallelstoothercountriesthatpursuedasimilarmonetarypolicypriortothecrisis,andwarnedChinaofitsimpendingperil.

Figure1:GrowthofTSFandRMBloan(Source:CEIC,PBoC,BofAMerrilLynchGlobalResearch)

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Figure2:FiveCreditBubbles(Source:Fitch)

Xiao'sarticleidentifiedWMPsasa'Ponzischeme'2,andtheweakestlinkinthefinancialsystem.Alookatitwillhelpusunderstanditsdangerandwhethercurrentmeasurestocurbitwillbeeffective.Rapidcreditexpansionisoftenanecessarybutnotasufficientconditionforafinancialcrisis.Controllingtheweakestlinkinthesystemisoneofthemostimportantpreemptivemeasurestoavoidacrisis.

WMPshavebeenthemostpopularinvestmentsforChinesesaverslookingforhigherreturnsinrecentyears.Thesesecuritiesyieldonaveragearound1-3%morethanbankdepositsand

aresoldbybankstoretailinvestorsindenominationsofRMB50tnandmoreaslowriskinvestments.AsofendMarch2013,outstandingWMPstotaledRMB8tn.

WMPssharesomeofthecharacteristicsofboththeStructuredInvestmentVehicles(SIVs)andCollateralizedDebtObligations(CDOs);twoproductsthathavegainednotorietysincethe2008crisiswhenmajorUSbanksusedthemtokeeploansofftheirbalancesheet.Centraltothestructureisthepoolingofinvestorfunds.MoneyraisedfromthesaleofseveraldifferentWMPsisaggregatedintoageneralpool.Thegeneralpoolthenfundsavarietyofassets,investedacrosstheriskspectrum.

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Figure3:DeconstructingaWealthManagementProduct(BAML)

WMPsposeanumberofproblems.Itcreatedadurationmismatch,asshort-datedfundsareinvestedinlong-termassetssuchastrustproductsbehindrealestatedevelopment.ManyWMPsareopaqueastheoldSIVsandCDOs.Thedocumentationgiventoinvestorsisnotcompletewithrespecttotheassetmixbehindtheinstrument.SomeWMPsresembleblindtrustsinwhichsavershandoverthefundswithoutknowingexactlywhattheyareinvestedin.(AtypicalWMPinthiscasewilljuststatethatthefundwillinvestupto70%indebtandatleast30%inbondsandmoneymarketinstruments).MostoftheWMPscarryfineprintsthat

theinvestorbearsthefullriskandthebankissellingitonawithoutrecoursebasis.Theyieldpromisedtotheinvestorisonan"expected"basiswherethebankisnotobligedtomakewholeiftheactualyieldfallsbelowthe"expected"yieldatmaturity.

Figure4:WMPIssuance(WIND,NomuraGlobalEconomics)

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ThestructureofWMPsclearlyposedasystemicrisktothefinancialsystemandChinasBankingRegulatoryCommissionunveilednewrulestoregulatebanks'saleofWMPsonMarch28.Thesenewmeasuresbanthepracticeof"fundpools"andcapabank'snon-

standard(notpubliclytraded)creditinvestmentsat35%ofitsoutstandingWMPsand4%ofitsassets.Themostimportantpartoftheruleisthebanningof"fundpools."ThisnewmeasurewillsignificantlyincreasethetransparencyoftheproductandfacilitatebankingregulatorstoassistintheconversionofWMPloantoothermoresecuredcredittypeatmaturity.AttheendofMarch,outstandingbankWMPsstoodaroundRMB8tnwithnon-standardcreditinvestmentsatabout44%ofoutstandingbankWMPs.Bankswillhavea10-monthgraceperiodtocuttheratioofnon-standard-credit-investmentWMPfrom44%to35%,atimesufficientforbankstoworkouttheproblemsandmovingtheWMPstotheirbalancesheet.

ThenewrulesdivideinvestmentinWMPsintostandard(publiclytraded)andnon-standard(notpubliclytraded)withtwostrongimplications.First,itsignalstheofficialsanctionofChina'smoneymarketfunds(MMF)whichwillberunbythedominantcommercialbanks-asignificantmoveindevelopingChina'scapitalmarket.Second,thenewPBRCrulesalsoofficiallyrecognizetheexistenceofoff-balance-sheetassets3,andsetaclearruleoncappingthesizeofoff-balance-sheetprivateplacementdebt.ThedifferencebetweenbankloansandprivateplacementdebtinChinaisthatdepositorsarefullyprotectedfromanyloandefaults,whilebuyersofWMPs,atleastintheory,takeonthefullriskthemselves.

OnemonthintotheimplementationofthenewrulesonWMPs,somecasesofdefaulthavebeenreportedbuthavebeenworkedoutwithnoothercasesofmajordefaults.ThefullimplementationoftheCBRCregulationeliminatestheriskbehindWMPsasthebanktakesontheserisksintotheirbalancesheetasmaturityapproaches.Thenext10monthswillbecriticalinthemonitoringoftheChinesebankingsystemsfinancialhealthasbanksreducetheirnon-standardWMPsto35%oftotalWMPsor4%oftotalasset.ExcessWMPsmustbeeitherconvertedtostandardtypeorbewrittenintotheirbooksasloan.

ItisgenerallyexpectedthatWMPswillnotcauseasystemicproblemtotheChinesebankingsectoratthemoment.However,Chinaisfacingamyriadofproblemsinitsmovetoescapefromthemiddleincometrap.Itisthelargesttradingcountryintheworldtodayandthehealthofitseconomywillaffectmanyofitstradingpartners.Chinaseconomicwatchwillremainarelevanttopicforalongtimetocome.

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TSF(totalsocialfinancing)isthesametotalofthecreditextendedbyfinancialsectortothe

economy,itincludebankloan,trustloan,bonds,insurancecompanyloan.

Sources:

1.BankofAmericaMerrillLynch2.WIND3.NomuraGlobalEconomics4.Fitch5.CEIC6.PBoC

1WealthManagementProductsApackagedinvestmentproductwhichistheresultoffinancial/investmentadvice,accounting/taxservices,andlegal/estateplanning.

2PonziSchemeAfraudulentinvestmentoperationthatpaysreturnstoitsinvestorsfromtheirownmoneyorthemoneypaidbysubsequentinvestors,ratherthanfromprofitearnedbytheindividualororganizationrunningtheoperation.

3Off-BalanceSheetAssetsAnassetordebtorfinancingactivitynotonthecompany'sbalancesheet.

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Austerity,UnemploymentandGrowth:ADifficult

ChallengeforEurope

ByMyatThiha,SingaporeManagementUniversity

Unemploymenthasalwaysbeenimportantforcountriesduetoitsabilitytobringsocialandeconomicdisastersandslowdownthepursuitofdevelopmentandgrowth.Today,manycountries,especiallytheonesintheEurozone,aresufferingfromacuteunemploymentwhilecombatingdeterioratingeconomicconditions.UnemploymentinUSappearstoberecovering,albeitslowerthatinatypicalrecovery.ThisstarklycontrastswithunemploymentintheEuropeancountrieswhichhasbeencoveredextensivelybythemediaandismuchmoreacuteamongstyouth.

ThefirstquarteremploymentdatashowsthatinSpainandFrance,twoofthebiggesteconomiesinEurope,unemploymenthasrisentothenewhighs.OtherEuropeancountriessuchasNetherlandsandSwedenarealsosufferinganincreaseinunemploymentduetothetepideconomicgrowth.Theweaknessinunemploymentwasnotanovernightphenomenon.Asevidencedfromthegraphbelow,thedramaticincreaseinunemploymentinthesecountriesdatesbacktothefinancialcrisisin2007.

Figure1:UnemploymentrateinEUmembers(Source:Guardian,UK)

Austerity1inEurope

AusteritymeasuresarewidelyregardedastheprimaryreasonforthecontinualincreaseinunemploymentintheEurozonecountries.Forinstance,Greecefacednootheroptionsbuttoemployvariousausteritymeasuresorfacedefault.Theeffectsofausterityhaveveryadverselyaffectedemploymentandgrowthinthecountry.Asaresultofembracingdiscipline,theyouthunemploymentrateinGreecehit64%whiletheunemploymentrateinSpainroseto27.2%.InFrance,therearemorethan2.5millionregisteredunemployedjobseekers.

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EffectsofUnemployment

AccordingtoOkunsruleofthumb,thestaggeringlyhighunemploymentratecanresultinahugelossonlaborresources,whichnegativelyaffectstheoutputandeconomysefficiency.Asunemploymentincreases,thereisareductioninthemultipliereffect2causedbythemoneycirculationofemployees.Higherunemploymentalsoreducesthepurchasingpowerofthepublic,andisfollowedbyaloweroutputfromtheweakeningeconomiesandthedeclineof

taxrevenuetothegovernments,leadingtoaviciousdownwardcycle.

Anothernegativeimpactofunemploymentisitstendencytoleadtosocialunrestiftheunemploymentratesareveryhighforaprolongedperiodoftime.Anti-austerityprotestshavehappenedregularlyacrossEuropesincetheonsetoftheausteritymeasureswhichhaveseemedtobeself-defeatinginnature.

Moreover,highyouthunemploymentinEuropeancountriescanpotentiallyleadtoapermanentlossofalargelaborresourceastheunemployedpersonsdropoutfromthelaborforceearlyintheircareers.Intimesofeconomicrecovery,thislackofanemployablelaborforcecansignificantlyslowdownthepaceofrecoveryorevenleadthecountriesintoa

furtherrecession.

TheDilemmaofAusterityandGrowth

SincetheausteritymeasuresaretheprimaryreasonforunemploymentinEurope,whethertheausteritymeasuresshouldbeeasedinordertoreduceunemploymentisahotlydebatedtopictoday.Currently,unemploymentratesaresohighthatIMFhasrecentlyurgedthesecountriestoeasethebelt-tighteningfiscalconsolidationpoliciesinordertoimprovetheglobaleconomicrecoveryrate.Somecountries,suchasFranceandPortugal,haveintroducedstimulusprogramstoresuscitatetheireconomy,reducingthepaceoffiscalconsolidation3.

However,therearealsoargumentsagainstcuttingbackonausterity.ThereisnofreelunchindelayingthefiscalconsolidationsincetheincreasedgovernmentspendingwouldresultinanevenlargerfiscalgapintheseEuropeancountries.Moreover,theeffectsofdeficitspendingonunemploymentarehighlyuncertain.EmpiricalexperiencefromSpainshowsfewpositiveeffectsonunemploymentsinceitsoverhauloflaborlawslastyearwhichsoughttogivemorehiringflexibilitytocompanies.WhilesomeEuropeancountriesstillhavethechoicetoslowdownfiscalconsolidation,theyneedtobeawareoftheriskofarecessionaryspiral.

Withthedilemmaofausterityandgrowth,Europeancountrieshaveonlyafewsolutionsthatmaybehardorevenimpossibletoimplement.ThemosteffectivesolutionconstitutesEUmemberscombiningtheirtotaldeficitsandengaginginuniformeconomicpolicies.This,

however,isveryunlikelytohappenduetopoliticalreasons.AnotherremedywouldbeforGermanytostimulateitseconomyandincreasetheconsumerdemandforgoodsimportedfromtheweakeconomiesinEurope.However,itisunlikelythatdemandofgoodsfromGermanywillbehighenoughtostimulatetheothereconomiesinEurope.

TheEuropeanmembersneedjugglethetwinproblemsofimprovingtheeconomyandreducingtheunemploymentrate.ThequestionofwhethereasingtheausteritymeasureswilleffectivelystimulatethegrowthofeconomiesintoavirtuouscyclehasyettobeansweredempiricallybytheEUmembers.

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Sources:

1.Europe'sUnemploymentProblemsWorsen,publishedbyWorldStreetJournal,byArtPatnaudeandWilliamHorobin

2.UnemploymentinEuropeisexpectedtoworsen,publishedbyNYTimes,byJamesKanter3.Guardian,UK

1AusterityPoliciesusedbygovernmentstoreducebudgetdeficitsduringadverseeconomicconditions.Thesepoliciescanincludespendingcuts,taxincreases,oramixtureofthetwo.

2MultiplierEffect

Aneffectinwhichanincreaseinspendingproducesanincreaseinnationalincomeandconsumptiongreaterthantheinitialamountspent.

3FiscalConsolidationAreductionintheunderlyingfiscaldeficit.

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TheS&P500isafree-floatcapitalization-weightedindexpublishedsince1957ofthepricesof500large-capcommonstocksactivelytradedin

theUnitedStates.IthasbeenwidelyregardedasagaugeforthelargecapUSequitiesmarket

TheMSCI Asiaex JapanIndex is a freefloat-adjustedmarket capitalization indexconsisting of10developedand emergingmarket country

indices:China,HongKong,India,Indonesia,Korea,Malaysia,Philippines,Singapore,Taiwan,andThailand.

The STOXXEurope 600 Index is regardedasa benchmark for European equity markets. It represents large, mid and small capitalization

companiesacross18 countriesof theEuropean region:Austria,Belgium,Denmark,Finland,France,Germany,Greece,Iceland,Ireland,Italy,

Luxembourg,theNetherlands,Norway,Portugal,Spain,Sweden,SwitzerlandandtheUnitedKingdom.

Correspondents:

VeraSoh(VicePresident,Publication)vera.soh.2011@economics.smu.edu.sgSingaporeManagementUniversitySingapore

NgJiaWei(VicePresident,Operations) [email protected] SingaporeManagementUniversitySingapore

SamuelOng(PublicationsDirector/Editor)samuel.ong.2010@business.smu.edu.sgSingaporeManagementUniversitySingapore

YingyuZeng(LiaisonOfficer)yingyu.zeng.2010@economics.smu.edu.sgSingaporeManagementUniversitySingapore

NgYongxiang(MarketingDeputy)

yx.ng.2011@accountancy.smu.edu.sgSingaporeManagementUniversitySingapore

DarrenGohXianYong(Editor)

darren.goh.2010@business.smu.edu.sgSingaporeManagementUniversitySingapore

EugeneOng(Writer)UndergraduateLeeKongChianSchoolofBusinessSingaporeManagementUniversityeugene.ong.2009@business.smu.edu.sg

MyatThiha(Writer)UndergraduateLeeKongChianSchoolofBusinessSingaporeManagementUniversitytkmyat.2010@business.smu.edu.s

HenryChanHingLee(Writer)PhDinBusiness(GeneralManagement)LeeKongChianSchoolofBusinessSingaporeManagementUniversity

[email protected]

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