The risks of investing in the real estate markets of the asian region

The Asian region has become a focus of attention for investors in recent years. Due to the strong economic performance of the region, the higher expected returns in the area compared with Europe and the USA and the additional diversification benefits investment in the region would offer. Nonetheless many investors have doubts about the prudence of investing in such areas. In particular it may be felt that the expected returns offered in the countries of the Asian region are not sufficient to compensate investors for the increased risks of investing in such markets. These risks can be categorised into under four headings: investment risk, currency risk, political risk, and institutional risk. This paper analyses each of these risks in turn to see if they are sufficiently large to deter real estate investment in the region in general or in a particular country.

Developing “Best Practices” for bankers’ pay in line with Basel III

This paper proposes hybrid capital securities as a significant part of senior bank executive incentive compensation in light of Basel III, a new global regulatory standard on bank capital adequacy and liquidity agreed by the members of the Basel Committee on Banking Supervision. The committee developed Basel III in a response to the deficiencies in financial regulation brought about by the global financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The hybrid bank capital securities we propose for bank executives’ compensation are preferred shares and subordinated debt that the June 2004 Basel II regulatory framework recognised as other admissible forms of capital. The past two decades have witnessed dramatic increase in performance-related pay in the banking industry. Stakeholders such as shareholders, debtholders and regulators criticise traditional cash and equity-based compensation for encouraging bank executives’ excessive risk taking and short-termism, which has resulted in the failure of risk management in high profile banks during the global financial crisis. Paying compensation in the form of hybrid bank capital securities may align the interests of executives with those of stakeholders and help banks regain their reputation for prudence after years of aggressive risk-taking. Additionally, banks are desperately seeking to raise capital in order to bolster balance sheets damaged by the ongoing credit crisis. Tapping their own senior employees with large incentive compensation packages may be a viable additional source of capital that is politically acceptable in times of large-scale bailouts of the financial sector and economically wise as it aligns the interests of the executives with the need for a stable financial system.

Sparta and the English Republic

In 1659-60, James Harrington and Henry Stubbe, two republican authors, engaged in a bad-tempered pamphlet debate about the constitution of classical Sparta. This took place in the context of political collapse after the fall of the Cromwellian Protectorate, as republicans desperately attempted to devise safeguards which could prevent the return of monarchy. Questions of constitutional form were not always at the forefront of 1650s English republicanism, but Harrington’s ideal constitution of ‘Oceana’ brought these questions to the fore in 1659’s discussions. Sparta formed a key plank of the ‘ancient prudence’ which supported Harrington’s theory, and like Stubbe he drew on Nicolaus Cragius’ De Republica Lacedaemoniorum (1593) for evidence, and was attracted to some of the more apparently ‘aristocratic’ elements of the Spartan constitution. However, classical texts and modern scholarly authority, such as Cragius’, were not the only ingredients in the English version of the ‘classical republican’ tradition; sixteenth- and seventeenth-century political thinkers and current exigencies also shaped Harrington and Stubbe’s arguments. Both Harrington and Stubbe ended up challenging the scholarly and ancient consensus that Sparta was an aristocracy or mixed polity, Harrington reinterpreting it to assimilate it to ‘democracy’, and Stubbe attempting to rehabilitate a model of benign ‘oligarchy’.