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- Product code: 14797
- ISBN: 0273661043,
ISBN13: 9780273661047,
272 pages, paperback
Published by FT Prentice Hall on 2002
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Description of The City |
The landscape of our financial system is dominated by institutional investment. The funds move markets when they act, and corporate empires can rise, fall or change hands on the tide of institutional opinion and the flow of equity. Today, in many ways, these institutions are the City, such is their influence over the whole financial process. They are at the heart of the expectation machine; the Capital of capital. These all-powerful financial players cast a long shadow over the worlds of investment, corporate and venture finance, and yet City outsiders - from private investors to company directors - many of whose expectations and fortunes are tied to the flow of equity, know little about them. They may glimpse parts of the process through the, frequently distorted, lens of the press; they may find their activities and fortunes affected by the movements of institutional players, but rarely do they understand the subtle and complex relationships that drive behaviour of the City. It is remarkable, in view of the power wielded by the big investment institutions, how little has been written about them, especially from an analytical rather than anecdotal standpoint.The financial world, and the business world it drives, need a better understanding of the City and the behaviour of equity - the "visible" part of what the City does.
In The City; Inside the Great Expectations Machine , Investment Analyst Tony Golding takes you inside the equity market and explains its structure, dynamics and behaviour. An easy-to-read, comprehensive analysis of the big investment institutions who dominate the stock market, with key insights into their impact on the City, industry and the private investor. This book will explain how the institutions achieved their ascendancy, acquire their funds, invest those funds and significantly influence other City activities and the corporate world in the process. The book will trace the flow of funds through the City and offer valuable insights into how fund managers behave, what drives their performance, the pressures they are under and the effects of their actions on the investment and corporate worlds. The behaviour of the investment institutions - pension funds, insurance companies, unit trusts, investment trusts - touches, in one way or another, the great majority of those living in the UK.To an extent that few outside the City appreciate, they dominate the London stock market, both in terms of ownership and activity.
This text examines the way these institutions work, how fund managers invest and the implications of their investment behaviour. Institutional investors own 75 per cent of the shares quoted in the UK. In no other major economy - including the USA, where the institutional control is a much more modest 55 per cent - do the investment instituions exert such a grip on the corporate sector. It is not uncommon for large and medium-sized British companies to have 80 or 90 per cent institutional ownership. Share-prices are determined by the fund managers working in a small number of large institutions. The nostalgic idea that price setting in the stock market is the result of a multitude of individual decisions is, this text argues, a dangerous illusion. The book provides information about the investment institutions around which the stock market revolves, arguing that their perceptions and their actions determine the level of share-prices and much else besides, such as the success or failure of a takeover bid.It asks: what motivates fund managers and how do they make their decisions?;
How do companies communicate with their institutional shareholders, especially in regard to the task of managing expectations? What companies do fund managers like or dislike, and why? And to what extent do they rely on the investment analysts employed by the investment banks for information and advice?
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Reviews'A highly entertaining and particularly insightful read about what investment bankers, fund managers and investment analysts really do and what motivates them. To be highly recommended for all students of the City and an essential text for any MBA course in finance.'
- Richard Taffler, Professor of Accounting and Finance, Cranfield School of Management
'A thought-provoking read for policymakers and directors alike. Tony Golding gives a useful understanding of shareholder value, the drivers for fund managers, and consequent pressures for companies and directors from the institutional investors, leading to companies' need to manage expectations but also a reduced tenure for CEOs.'
- Sir John Egan, President, CBI
'In this eloquent and intelligent book, Tony Golding shows why institutions behave the way they do, and how a knowledge of their priorities can help you.'
- Shares
'Tony Golding has done us all a favour by lifting the lid on one of the best kept secrets around, which is how the City really works.'
- Jonathan Davis, Investment Columnist, The Independent
'Fascinating 'anatomy' of the City, explaining to private investors how fund managers reach their decisions.'
- Investors Chronicle
'I wish I'd read this book before we went public rather than after. Understanding the dynamics of the City and the interplay between the various parties is very important and this book explains these relationships very well.'
- Dr. Tony Milbourn, Managing Director, TTP Communications plc
'Tony Golding's book sets out clearly how institutional fund management in Britain is subject to many differing pressures and influences. As more and more individuals become involved in portfolio investing, either on their own behalf or as trustees of pension funds, this book will explain many things that are not obvious to the outsider.'
- Alastair Ross Goobey, former Chief Executive, Hermes Pensions Management
'Golding explains the ground rules with the clarity of an informed and observant insider, and few serious investors will not learn something from his book.'
- Financial News
'This book should be required reading for every pension fund trustee as well as chancellor Gordon Brown. Had it been published in time, the Treasury could have saved itself the expense of Mr Myners' first round of consultation. Now that it has been published, trustees can save themselves the cost and ideology of a National Association of Pension Funds training course.'
- Pensions Management
'Tony Golding's book leads the intelligent non-City reader through the complicated field of investment banking and fund management with style, and displays a very clear understanding of the forces that have led to the rapid changes that are taking place. It should be essential reading for anyone wanting to know what goes on in the City today.'
- Jim Cox, former Head of UK Equity Strategy, Schroder Investment Management
'Tony Golding, a former investment banker, his insightful book on the City.'
- Martin Dickson, columnist, Financial Times
'This book is a thoughtful explanation of how the City's key sectors - fund management, the sell-side, corporate finance, listed companies - operate and interrelate. It is not a salute to the City.'
- Alastair Blair, columnist, Investors Chronicle
'Tony Golding's book is a clear and valuable guide to the issues that we at BG Group face in a de-merger situation subject to the full glare of City scrutiny, particularly in regard to what institutional fund managers actually want and how best to handle their perceptions and expectations. Anyone in a quoted company - or contemplating a flotation - who needs or wants to know how the City really operates will benefit from the insights that it offers.'
- Martin Houston, Vice President, Strategy and Portfolio Development, BG Group plc
'Within Tony Golding's lucid account of the workings of the City, I found, as the non-executive director of a 'SmallCap company', his explanation of the neglect of smaller companies (except when their sector is regarded as fashionable) by fund managers convincing and depressing. It must raise the question about the long-term consequences on the Stock Market itself of starving such companies of follow-up funding through the markets.'
- Sir Ivor Cohen, Director, Deltron Electronics plc (quoted electronic components distributor)
'Offers some rare and welcome straight talking from someone who has first-hand experience of how the City really operates; on the motivations and rewards which bind the participants together; on how they play their part in the relentless search for performance and wealth creation. If you want to know how the City really works then this is the book for you!'
- Les Cullen, former Finance Director of Prudential plc and Inchcape plc
| Contents of The City |
1. From Then To Now: How The Tail Came To Wag The Dog
Is the City still 'the City'?
Compartments and connections
Making the grade in international financial services
Never underestimate the power of history
The key role of the outsider
How the Euromarkets saved the City
The remarkable rise of the investment institutions
How the Street swept over the City
International equities and the Anglo-Saxon effect
2. The Big Decision: How Institutional Investors Handle Assets And Expectations
Selecting from the asset agenda
For some, bonds are beautiful
No bonds for the Brits
The excitement of equities
Equities go up because institutions buy them
The Holy Grail of low risk, high reward
Trust me, I'm an analyst!
Inside the Great Expectation Machine
3. Defining Words: Your Guide To The Confusing Terminology Of CitySpeak
How CitySpeak absorbed StreetSpeak
The abuse of liquidity and other stories
A journey from sector to sympathy
Why investment banks and investment banking are the same but different
Equity capital markets - riding the rollercoaster
Make my day with M & A
The battle of the bulge
4. Institutional Flows and Institutional Power: How Source Signifies Behaviour
The rise and rise of the institutions
All change in pensions
Rather surprisingly, for a long time British pension funds kept their balance
An American runaway called 401(k)
When life does not mean life
The appeal of the collective
Overseas investors learn to love London
5. Investment Management: The Art And Practice of Relativity
Who are the investors?
Concentrate, concentrate, concentrate
Why benchmarks are the fund manager's burden
Getting business - the consultant as gatekeeper
Introducing the wonderful economics of fund management
The perils of index mesmerization
6. Institutional Attitudes: Why Fund Managers Behave As They Do
It has all got much more nerdy
What turns fund managers on - and off?
Promises, promises
The art of managing shareholder expectations
The emergence of the New Industrial Compact
Why the Inexorable Logic of fund management means that small is no longer beautiful
Can we solve the small company dilemma?
7. Conveying the Corporate Message: How Investment Analysts Lost the Communications High Ground And Turned Themselves Into Promoters
Stockbroking in the new millennium
How fund managers view research
The analysis of analysis
The eternal triangle of the analyst, the journalist and the corporation
8. Final Thoughts: Like It Is
CitySpeak - a two-minute glossary
Bibliography and websites
Index
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About Tony Golding |
Tony Golding After graduating from Cambridge anbd the University of Sussex, where he gained a doctorate in industrial economics, Tony spent several years with an international electronics company. He entered the City in 1974 and spent 24 years there, starting as an investment analyst with a small, research-based firm of stockbrokers. In 1978 he joined Flemings, the London-based investment bank, becoming a director and head of research in the asset management division. Before the Big Bang in 1986 he took responsibility for setting up the research and sales functions in Fleming's newly extablished securities operation. In 1989 he moved over to investment banking, where he specialized in the generation and marketing of acquisition and equity-financing ideas in several industry sectors, both in the UK and internationally. He left in 1998 to write this book. Many people in the City can lay claim to an in-depth knowledge of one or other of institutional investment or securities or investment banking, but very few have first-hand experience of working at director level in all three. In writing this book, Tony has drawn extensively on the all-round perspective that his varied career has given him.
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