Week in review: everybody’s in Davos
Somehow the news seemed slow this week, perhaps owing to the fact all the world’s good and great are hobnobbing in Davos. Nonetheless, some newly installed bank CEO’s decided the potential negative impact on their image was too big and decided not to attend. One not-so-new CEO who is prominently present is Vikram Pandit, who is co-chairing this year’s edition. He ensured he would have a talking point by writing an op-ed for the FT the week before calling for more transparency in bank’s risk management, which was well received overall.
In other words, a good week to catch up on some background topics. The Banker has a great overview of the impact new regulations will have on the banking industry. It looks at the changes required in capital and liquidity, and more importantly how the business model of the banks will be affected, hitting upon the major emerging theme for 2012.
From a pure finance point of view, more and more people are starting to call into question the “efficient markets” hypothesis. What seems to be gaining credence on the other hand is trying to predict sentiment by analysing social media. This seems to have predictive power for stock movements. It will be interesting to see whether these trends combine and lead to new valuation models used in banks. And lastly, more evidence of another major theme of the moment, the rise of China: at the Big 4 accounting firms, headcount in China is about to overtake headcount in the UK.
