News in brief

E&Y to integrate global firms

Ernst & Young is to integrate 87 national practices in Europe, the Middle East and Africa (EMEIA) into a single operational area. Similar integration will take place in Asia across 15 countries and territories. The new EMEIA area will bring together over 60,000 people, with a turnover in excess of $11bn. Subject to a confirmatory vote, the new EMEIA area will be effective from July 2008. The Asia area will comprise more than 20,000 people and a $1.2bn turnover.

Restricted audit choice boosts Big Four profits

Higher audit fees are directly linked to concentration in the audit market, according to research by the London School of Economics and sponsored by BDO Stoy Hayward. The collapse of Arthur Andersen was followed by a 2.4% increase in audit fees paid by UK listed companies, the research found. It also suggested that changing audit firms can reduce audit fees by about 5% to 7% in the short term. If the Big Four firms lost a 10% market share, UK listed and large private companies could expect to shave about 7% from their annual audit fees, the report concluded. Its findings were rejected by the Big Four.

China IPO deals resilient

China continues to perform strongly despite a global slowdown in initial public offering (IPO) activity, Ernst & Young reports. The firm says that strong Chinese companies such as Visa Inc, China Railway Construction Corp Ltd, and Reliance Power Ltd are still able to attract interest from investors. 'While the mature markets are experiencing a slowdown, the emerging markets are still thriving and will continue to drive global IPO activity, as long as they experience robust economic growth,' says E&Y. It notes that three of the top 10 IPOs in the first quarter of 2008 were Chinese. Globally, China (including Hong Kong) produced the highest number of deals (34), followed by Australia (30), Japan (22), Canada (20), Poland (17), and India (16).

HK - land of opportunity

Hong Kong is constantly reviewing its regulatory model to ensure it does not hamper financial innovation or stifle the development of its financial services industry, Secretary for Financial Services & The Treasury Professor K C Chan says. Speaking in Washington DC, US, Professor Chan said the Chinese mainland's high growth has resulted in quick and massive accumulation of wealth, which translated into a huge demand for high-end and sophisticated financial products not yet available there. Mainland firms are scouring for funds to expand their businesses, he added, with Hong Kong favoured as the first outlet.

Singapore to become top millionaire hub

A report by Barclay's Wealth forecast that Singapore will pull ahead of Hong Kong as home to the highest concentration of millionaires over the next decade. By 2017, Singapore's concentration of households with net wealth in excess of US$1m will reach 40.7% (compared with 26.4% in 2007), ahead of Hong Kong’s 39.4% (23.3%) and Switzerland's 28.1% (22.3%). Household wealth is measured using three components - financial holdings such as cash and other liquid assets, non‑financial holdings such as property, and an aggregate measure that combines the two.

Malaysia rerated

Standard & Poor's Equity Research recently raised its weighting on Malaysia to 'marketweight' from 'underweight', citing fair market values, improved domestic liquidity and more benign external market conditions. According to the agency, market consolidation over the past few months had improved the domestic picture and whetted potential appetite for the Malaysian market. In response, S&P has raised its year-end target for the Kuala Lumpur Composite Index to 1,400 points from 1,300 points. On 11 March 2008, S&P's Equity Research had downgraded Malaysia to 'underweight' because of market uncertainty following the March 2008 general elections.