AUTOMOTIVE

ASIA: Politics and New Designs alter the face of the Asia Pacific Automotive markets.

The long term impact of the arrest and indictment of Hyundai Chairman Chung Mong Koo is yet to be determined. He has been accused of creating slush funds to pay politicians and officials for business favours. The groundbreaking for two new overseas plants subsidiary Kia's in the US and Hyundai' in the Czech Republic have already been postponed. However, work on the joint venture engine factory in China, Beijing Hyundai, started as scheduled on May 16.

Mahindra & Mahindra, a leading Indian vehicle manufacturer, reported a 23% rise in net sales to Rs83.26bn for the year ended 31 March 2006. The company will launch the Logan, in association with Renault, in the first half of 2007.

Honda have announced that they are developing an entirely new compact car to be targeted primarily at the Indian market. Tata, General Motors, Fiat and Toyota are also developing new models for this sector which accounts for 75% of the Indian market.

The Chinese government, concerned about over capacity in the automotive industry, is reported to now require companies to prove that consumer demand justifies additional investment before giving approval

FINANCIAL SERVICES

EUROPE: Insurance markets grow in Central and Eastern Europe, as social welfare is transferred into private hands

Markets for life, disability and health insurance products are growing quickly in Central and Eastern Europe, as more responsibility for social welfare is transferred into private hands.

Accession to the EU of eight eastern and central European countries has contributed to the removal of the political, regulatory and cultural obstacles to cross border mergers in the financial services industry. Additionally conversion to IFRS reporting will help to introduce a level of transparency that has not historically existed. Consequently it is safe to suggest that central and eastern European financial services companies will continue to be affected by the growth in consolidation, driven by cross border mergers, in the sector. Between 1996 and 2004 the share of financial assets in central and eastern Europe owned by foreign banks tripled to 66%.

In Russia there is considerable un met demand for retail banking services. Until 2003, for example, there was no legal framework governing the securing of loans against property. There is now considerable scope for large and rapid growth in the provision of mortgage lending. There are endemic problems in operating in the Russian market but overseas institutions may have one advantage by virtue of their foreignness, there is a saying in Moscow that ''only foreigners will trust a Russian, other Russians don't.''