South Asia Investor Review

The three words that stand out in the popular Silicon Valley lexicon are "Risk", "Disrupt" and "Change". Almost all high-tech aficionados love to talk about entrepreneurs taking "risks" to "disrupt" the existing technologies, products, markets and systems to bring about fundamental "change" in how we live, work and play. The search giant Google is often cited as epitomizing risk-taking, disruption and change. Some serious observers and writers are now taking this discussion a step further into the realm of violent insurgent groups such as the Hezbollah and the Taliban and how they are becoming a powerful disruptive force for geopolitical change. Author Joshua Cooper Ramo, in his book "Age of Unthinkable" talks about how Hezbollah has become a powerful disruptive force in the Middle East. In a recent commentary , Ramo says, "...in my dealings with Hezbollah over the years as a journalist, I had found myself fa...

Not unlike Albert Einstein whose equation E=MC2 made possible the creation of physical weapons of mass destruction, Chinese mathematician David X. Li could go down in history as the man who enabled the development of financial weapons of mass destruction on Wall Street. Li's Gaussian copula models for the pricing of collateralized debt obligations (CDOs)are being blamed for the catastrophic losses leading to the global financial collapse . In addition to underlying bonds, bond investors also invest in pools of hundreds or even thousands of mortgages. The sums involved are mind boggling: Americans now owe more than $11 trillion on their homes, according to Wired Magazine . But mortgage pools are not as simple as most bonds. There's no guaranteed interest rate, since the amount of money homeowners collectively pay back every month is a function of how many have refinanced and how many have defaulted. There's certainly no fixed maturity date: Money shows up in irregular chun...

Pakistan, along with PTT Aromatics & Refining Pcl, a unit of Thailand's largest energy company, is expected to join Markit's iTraxx Asia ex-Japan Index of credit-default swaps, after demand to trade on the contracts rose, reports Bloomberg.com. Pakistan, whose credit-default swaps have more than doubled since October because of growing political uncertainty and tension between rival parties, is slated to join the benchmark and the 20- member sub-index for non investment-grade governments and companies. Credit-default swaps are an indicator of the cost of bond insurance that varies with the risk of bond default. Credit default swaps are usually bought by bond holders from credit insurance companies like Ambac, FGIC, and MBIA. These insurers reimburse bondholders in case the bond issuing companies or governments default. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year. This is the first ...