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The discussion in part one of this Learning Curve (DW, 2/2) has shown that it is possible to obtain a significant terminal de-correlation amongst rates even in the presence of perfect instantaneous correlation.

CHINA APPROVED 18 more companies to add to its 'B' share market this week in a long awaited move to attract more foreign investors and show Beijing's commitment to the market. Many of the companies cleared for listing were supposed to issue shares last year, but were delayed when volatility in the region depressed prices on the Shanghai and Shenzhen exchanges.

THE HONG Kong market reacted poorly this week to a block trade of Cosco International shares arranged by ABN AMRO to pay for an asset injection from parent Cosco (Hong Kong) Group. A total of 100m shares came to the market from the parent company which then subscribed to 270.45m new shares in Cosco International increasing its stake to 61%.

TAIWAN LOOKS set to break the new issue inertia in Asia in the coming weeks as issuers attempt to place a number of convertible bonds and other issues. Said one banker: "The attitude in Taiwan is pretty optimistic. The Asian crisis hasn't happened for most of these guys -- they're lining up to say 'give me the money'."

* Merrill Lynch this week announced plans to set up a nationwide retail broking network in Japan, in the clearest move yet to take on domestic competition after the country's Big Bang financial revolution. Merrill said it will hire around 2,000 former employees of collapsed brokerage, Yamaichi, in a move which will triple the bank's headcount in Japan.

SALOMON Smith Barney bought NatWest Group's Australian and New Zealand securities and investment banking businesses this week, demonstrating the cotinuing lure of Australasian investment banking. The A$130m ($88m) sale follows, among others, ABN AMRO's purchase of Barclays' Australian investment banking unit BZW for $177m in December 1997 and Merrill Lynch's 1996 acquisition of McIntosh Securities.

THE REPUBLIC of the Philippines this week became the first southeast Asian sovereign borrower to access the international debt markets in 1998 when it launched $750m of pass through notes via ING Barings. While other sovereigns in the region wait to complete debt negotiations and for a semblance of stability to return to the markets before launching bond issues, the Banco Sentral ng Pilipinas revived a structure it had used successfully in the past to raise three times the amount that it had initially intended.

AUSTRALIA'S third largest free-to-air television station's float vehicle, Ten Network Holdings, has set a price for a 182.8m share float that will raise A$366m by the end of March. The Macquarie led deal was priced yesterday (Thursday) at A$2, above its original indicative range of A$1.60 to A$1.80. The company's roadshow starts on February 18 and the pub-

AUSTRALIAN state-controlled telecommunication company Telstra Corp plans to refinance a large chunk of its A$3bn of revolving credit facilities from later this year. While market sources speculated the company plans to issue up to A$1.8bn ($1.2bn) in bonds, a company official said the amount is still undecided.

AS FOREIGN investors propelled the Nikkei past the 17,000 level again this week, non-life insurer Mitsui Marine & Fire Insurance's secondary offering felt the impact with its capital raising finishing more than five times oversubscribed. Last month offshore investments on the Nikkei 225 hit a 10-year record as domestic investors sat aside. As a result Mitsui's lead manager, Nomura, chose to place the majority of the triple-A rated company's 60.9m shares offshore.

CREDIT Suisse First Boston is thought unlikely to have replaced BZW as co-arranger with Morgan StanleyDean Witter and Jardine Fleming in India's $590m GAIL issue despite acquiring the team which originally secured the mandate. Memoranda passed to other

NOMURA was hit by another blow to its Japanese underwriting franchise today (Friday) when it emerged that the Ministry of Finance was effectively banning it from participating in the underwriting of Japanese government guaranteed issuers. The Mof has no right to bar the bank directly from any syndicate, but it has said that it will withdraw the government guarantee from any issue which had Nomura in the syndicate.