Mark Mobius, manager of Templeton Asset Management Ltd., says he has continued buying stocks in Brazil, Russia, India and China (BRIC) over the last 30 days, and considers the drop in the market a correction, in what he believes is an ongoing bull market.
Mobius said about BRICs, “Despite the fact that a lot of people think that we are entering into a bear market, we don’t believe so. This is a correction in an ongoing bull market.”
From its April 15 high, the MSCI Emerging Markets Index has plunged 14 percent, the reason many have been running from them.
The European sovereign debt crisis and the challenge China faces with inflation has driven down the emerging markets, and other markets as well, which has in turn cut demand for raw materials, which is what these countries have a huge exposure to.
Showing posts with label Emerging Markets. Show all posts
Showing posts with label Emerging Markets. Show all posts
Friday, May 28, 2010
Tuesday, July 7, 2009
Panasonic Growth In BRIC Countries
Panasonic Growth in BRIC Nations and Vietnam
Japan's Panasonic Corp announced it is looking for double-digit sales growth this fiscal year in the five major emerging markets it focuses on, including BRIC nations China and India, despite an estimated 10 percent fall in overall revenues.
"In our strategic markets of the BRIC nations and Vietnam, we aim for 13 percent growth by expanding our targets to people in the middle-income bracket," Panasonic President Fumio Ohtsubo told an annual shareholders' meeting on Thursday.
BRIC stands for the high-growth emerging markets of Brazil, Russia, India and China.
Panasonic was able to generate a small 2 percent sales growth to 420 billion yen ($4.4 billion) in the five countries in the fiscal year that ended on March 31, while it suffered a 14 percent fall in overall sales and an 86 percent plunge in operating profit as the global downturn dampened demand.
"It is extremely regrettable that we reported a sharp drop in sales and profit. As a person who is in charge of management, I sincerely apologise," Ohtsubo said.
"We are determined to meet shareholders' expectations by achieving stronger growth than competitors' when the economy recovers in the next business year onwards," he said.
Panasonic, which offers Viera flat TVs and Lumix digital cameras, vies with Sony Corp for the position as the world's largest consumer electronics maker.
Besides the BRIC nations and Vietnam, Panasonic has identified such countries as Mexico, Indonesia, Nigeria and Turkey as markets with strong growth potential and is preparing to increase its presence in those countries, Ohtsubo said.
He said its refrigerators and washing machines made a strong debut in Europe, where they were introduced in March, with unit sales exceeding its own targets by 21 percent in April and May. Shares in Panasonic, the world's largest plasma TV maker ahead of Samsung Electronics Co and LG Electronics were up 1.7 percent at 1,312 yen by late afternoon, underperforming the Nikkei average, which rose 2.7 percent.
Panasonic Growth in BRIC Nations and Vietnam
Japan's Panasonic Corp announced it is looking for double-digit sales growth this fiscal year in the five major emerging markets it focuses on, including BRIC nations China and India, despite an estimated 10 percent fall in overall revenues.
"In our strategic markets of the BRIC nations and Vietnam, we aim for 13 percent growth by expanding our targets to people in the middle-income bracket," Panasonic President Fumio Ohtsubo told an annual shareholders' meeting on Thursday.
BRIC stands for the high-growth emerging markets of Brazil, Russia, India and China.
Panasonic was able to generate a small 2 percent sales growth to 420 billion yen ($4.4 billion) in the five countries in the fiscal year that ended on March 31, while it suffered a 14 percent fall in overall sales and an 86 percent plunge in operating profit as the global downturn dampened demand.
"It is extremely regrettable that we reported a sharp drop in sales and profit. As a person who is in charge of management, I sincerely apologise," Ohtsubo said.
"We are determined to meet shareholders' expectations by achieving stronger growth than competitors' when the economy recovers in the next business year onwards," he said.
Panasonic, which offers Viera flat TVs and Lumix digital cameras, vies with Sony Corp for the position as the world's largest consumer electronics maker.
Besides the BRIC nations and Vietnam, Panasonic has identified such countries as Mexico, Indonesia, Nigeria and Turkey as markets with strong growth potential and is preparing to increase its presence in those countries, Ohtsubo said.
He said its refrigerators and washing machines made a strong debut in Europe, where they were introduced in March, with unit sales exceeding its own targets by 21 percent in April and May. Shares in Panasonic, the world's largest plasma TV maker ahead of Samsung Electronics Co and LG Electronics were up 1.7 percent at 1,312 yen by late afternoon, underperforming the Nikkei average, which rose 2.7 percent.
Panasonic Growth in BRIC Nations and Vietnam
Thursday, February 12, 2009
BRIC Countries Lead Global Equity Markets
While most countries around the globe struggle, including large western nations, the BRIC countries of Brazil, Russia, India and China are still enjoying significant, albeit slower growth, as the emerging markets countries still have consumers spending in them, in contrast to the overall domestic global business in other countries.
Consequently, the large emerging markets countries have outperformed most others in the equity markets, even though of the four, India has fallen by a slight 0.3 percent on the Bombay Stock Exchange, although it still ranks them in the top four of the 15 largest markets across the world.
As far as major stock markets, Brazil, Russia and China are the only ones growing above the 8 percent mark so far this year, while India has changed very little. Even though BRIC countries have slowed down in growth, they're still growing at rates far beyond their North American, European and Japanese counterparts.
Leading the equity growth is China, which has grown by 24 percent this year on the Shanghai composite index, while Russia via the Micex has surged 17 percent, and Brazil has performed at an 8.8 percent growth rate on the Bovespa.
This does show that domestically the consumers in the respective BRIC countries haven't stopped spending, as exports from China, Brazil and Russis have dropped significantly, let by the largest drop in China exports in 13 years, as demand for Europe and the United States has dried up. In the case of Brazil, they've struggle on both sides of the equation, as industrially they've fallen off in output the worst since 1992 in the fourth quarter, while commodity exports struggled in 2008, although it has started to rebound some.
Russia has been hit especially hard because of its reliance upon oil and its prices to shore up its economy, as it's one of the chief exports of the country. The Russian ruble has also experienced a downturn, falling by 16 percent against the U.S. dollar so far in 2009. That of course also increases the cost of financing for Russian companies.
For these reasons, even though domestic spending seems to have continued in these emerging markets countries, some think that it is still probably too early to start investing in BRIC markets until valuations have fallen to the point where it makes risk worth it. If the global recession last longer than expected, it could cause BRIC investors a lot of headaches and time as they wait to not only recoup their capital, but make money on it as well. Most are waiting for valuations to drop to the point where most or all the bad news is already priced into the emerging economies.
Even so, investors in BRIC emerging market countries need to position themselves for when the bull market starts up again, as when they do, those in early enough will enjoy great returns for years ahead.
There's no doubt China will lead the way out of the emerging countries equity slump, as there are already signs it's turning around and Chinese consumers are still saving and spending money, to the benefit of the country. That's in contrast to 2008, when the Shanghai index plunged by 65 percent, and was only trading at 13.2 times the reported profits. Just this week though, the Shanghai index had already climbed to 17.6 percent earngings, already up 32 percent from the lows of 2008. China watchers believe they're either at or close to the bottom. China is expected to come out of the economic slowdown far better than the majority, if not the very best.
Because the BRIC countries are growing both economically and population wise faster than developed countries, specifically China and India, we'll see them continue to outperform in growth for years to come.
Other BRIC emerging markets will enjoy growth as well, and are already starting to turn the corner in some areas of their economies.
Much of India's growth also stems from strong domestic spending, as growth for the year ending on March 31 is projected to expand by about 7.1 percent. That's much more than expectatons of only 0.5 percent from the IMF. The central bank of India also cut interest rates from 9 percent in October down to 5.5 percent as of today.
For Brazil's emerging economy, which relies so much on the exportation of commodities and natural resources, they've rebounded from the Bovespa index shedding 41 percent last year, whic dropped price/earnings ratios down to 7 as of October, to 9.6 today. The BRIC economy enjoyed a resurgence of some metals also, helping them to grow. Internal infrastructure spending also helped the economy grow.
For Russia, even though they've suffered from lost oil revenues, the steel companies have been doing well based on the assumption increased infrastructure spending will increase profits in the industry. The Russian ruble also had a nice jump recently, increasing by 2.5 percnet against the euro and the U.S. dollar. That's four days in a row the currency has risen, pushing investors to move out of foreign currencies as the Russian government defends the ruble.
So how can we invest in emerging and BRIc economies? Investing in BRIC markets can be through bonds in the emerging markets, emerging or BRIC funds, BRIC mutual funds, BRIC or emerging market ETFs, or many of the similar investments we already invest in in the countries we reside in.
For investors with a short term mentality, investing BRIC country investment vehicles is probably not a good idea, as there is much volatility at this time, and they must be entered with a long term outlook. BRIC funds and ETFs, along with the other investment instruments will outperform most if not all of their large competitors in general, but over the short term, just like in developed nations, it's risky to enter emerging markets with a short term time frame.
The BRIC countries and markets of Brazil, Russia, India and China will make fortunes for investors in the years ahead, and those that are patient and in it for the long term, along with doing their homework, will be wildly successful and profiable as emerging markets and emerging economies lead the way economically over the next couple decades.
Consequently, the large emerging markets countries have outperformed most others in the equity markets, even though of the four, India has fallen by a slight 0.3 percent on the Bombay Stock Exchange, although it still ranks them in the top four of the 15 largest markets across the world.
As far as major stock markets, Brazil, Russia and China are the only ones growing above the 8 percent mark so far this year, while India has changed very little. Even though BRIC countries have slowed down in growth, they're still growing at rates far beyond their North American, European and Japanese counterparts.
Leading the equity growth is China, which has grown by 24 percent this year on the Shanghai composite index, while Russia via the Micex has surged 17 percent, and Brazil has performed at an 8.8 percent growth rate on the Bovespa.
This does show that domestically the consumers in the respective BRIC countries haven't stopped spending, as exports from China, Brazil and Russis have dropped significantly, let by the largest drop in China exports in 13 years, as demand for Europe and the United States has dried up. In the case of Brazil, they've struggle on both sides of the equation, as industrially they've fallen off in output the worst since 1992 in the fourth quarter, while commodity exports struggled in 2008, although it has started to rebound some.
Russia has been hit especially hard because of its reliance upon oil and its prices to shore up its economy, as it's one of the chief exports of the country. The Russian ruble has also experienced a downturn, falling by 16 percent against the U.S. dollar so far in 2009. That of course also increases the cost of financing for Russian companies.
For these reasons, even though domestic spending seems to have continued in these emerging markets countries, some think that it is still probably too early to start investing in BRIC markets until valuations have fallen to the point where it makes risk worth it. If the global recession last longer than expected, it could cause BRIC investors a lot of headaches and time as they wait to not only recoup their capital, but make money on it as well. Most are waiting for valuations to drop to the point where most or all the bad news is already priced into the emerging economies.
Even so, investors in BRIC emerging market countries need to position themselves for when the bull market starts up again, as when they do, those in early enough will enjoy great returns for years ahead.
There's no doubt China will lead the way out of the emerging countries equity slump, as there are already signs it's turning around and Chinese consumers are still saving and spending money, to the benefit of the country. That's in contrast to 2008, when the Shanghai index plunged by 65 percent, and was only trading at 13.2 times the reported profits. Just this week though, the Shanghai index had already climbed to 17.6 percent earngings, already up 32 percent from the lows of 2008. China watchers believe they're either at or close to the bottom. China is expected to come out of the economic slowdown far better than the majority, if not the very best.
Because the BRIC countries are growing both economically and population wise faster than developed countries, specifically China and India, we'll see them continue to outperform in growth for years to come.
Other BRIC emerging markets will enjoy growth as well, and are already starting to turn the corner in some areas of their economies.
Much of India's growth also stems from strong domestic spending, as growth for the year ending on March 31 is projected to expand by about 7.1 percent. That's much more than expectatons of only 0.5 percent from the IMF. The central bank of India also cut interest rates from 9 percent in October down to 5.5 percent as of today.
For Brazil's emerging economy, which relies so much on the exportation of commodities and natural resources, they've rebounded from the Bovespa index shedding 41 percent last year, whic dropped price/earnings ratios down to 7 as of October, to 9.6 today. The BRIC economy enjoyed a resurgence of some metals also, helping them to grow. Internal infrastructure spending also helped the economy grow.
For Russia, even though they've suffered from lost oil revenues, the steel companies have been doing well based on the assumption increased infrastructure spending will increase profits in the industry. The Russian ruble also had a nice jump recently, increasing by 2.5 percnet against the euro and the U.S. dollar. That's four days in a row the currency has risen, pushing investors to move out of foreign currencies as the Russian government defends the ruble.
So how can we invest in emerging and BRIc economies? Investing in BRIC markets can be through bonds in the emerging markets, emerging or BRIC funds, BRIC mutual funds, BRIC or emerging market ETFs, or many of the similar investments we already invest in in the countries we reside in.
For investors with a short term mentality, investing BRIC country investment vehicles is probably not a good idea, as there is much volatility at this time, and they must be entered with a long term outlook. BRIC funds and ETFs, along with the other investment instruments will outperform most if not all of their large competitors in general, but over the short term, just like in developed nations, it's risky to enter emerging markets with a short term time frame.
The BRIC countries and markets of Brazil, Russia, India and China will make fortunes for investors in the years ahead, and those that are patient and in it for the long term, along with doing their homework, will be wildly successful and profiable as emerging markets and emerging economies lead the way economically over the next couple decades.
Sunday, January 11, 2009
Dr. Alexander Mirtchev Warns Against the Mid and Long-Term Repercussions of Unbalanced and Even Mindless State Intervention in Emerging Markets' Fina
Emerging Markets Expert Assesses the Implications for Government Intervention in the Banking System
Sunday January 11, 2009, 4:14 pm EST
WASHINGTON, DC--(MARKET WIRE)--Jan 11, 2009 -- Alexander Mirtchev, Washington-based economic strategist and expert, reviewed the actions of governments in the emerging markets in support of the beleaguered financial sector and their potential effects with Mergermarket, the partner publication of the Financial Times.
Dr. Mirtchev explained that governments had little choice in taking urgent measures to the financial crisis. "With the crisis looming, it was not possible to stick to ideological positions or specific doctrines -- you do not consider the price of the carpet you are using to put out the fire in your house," said Mirtchev. However, he believes that it is high time to look beyond the immediate short-term pressures, and devise a broader policy response that would address the long-term needs to encourage productivity, competitiveness and growth. He is of the view that, when devising such strategies, governments have to take into account the truly global nature of today's financial system. "The world financial system has evolved to the point where no economy functions as a closed circuit. Economic interaction in a specific market cannot be considered a zero-sum game." In the case of emerging markets such as India, China, Mexico, Indonesia and others, "participation and integration in the global financial system makes sense," in particular with a view to the productivity and growth-generating role that these markets have in the world economy.
He considers that in the short-term direct government support and recapitalization can help banks and institutions continue their function as the mechanism that pumps capital throughout the global economy, and it seems already unavoidable. However, the key is, at the end of the day, to face the reality of the newly emerging global financial system of the XXI century, not to try and "put the genie back in the bottle" by returning to the model of the 1990s, and jumpstart the new, inclusive financial order that could accelerate the recovery and sustain growth.
Some emerging market governments have introduced "special enforcement and monitoring bodies to supervise the use of the funding by the banks, to ensure that the funds are spent exactly for the purposes required by the government, i.e. alleviation of the fallout from the credit crunch on businesses and the population." In particular, his view is that "the banks' shareholders and management will have to share the responsibility and the burden -- there should be no rewards for failure." In the case of Kazakhstan, he noted that "the State refrained from direct nationalization of the banks; rather the government is only offering to buy stakes in banks leaving them with the choice to accept or decline additional capital infusion in return for equity stakes."
Government financial packages to "ensure the stability of the financial system by propping up the banks for the duration of the crisis will need to be complemented with comprehensive strategies to support growth," Dr. Mirtchev told Mergermarket. "The financial sector's malaise cannot be realistically resolved just on the basis of government funding. The market and private investors would need to be engaged."
At the same time, Dr. Mirtchev argues that a number of the rapidly developing economies have better chances of pulling out of the crisis than some of the mature economies. He said that "due to numerous factors, emerging markets are much easier to micro-manage. With the right political vision and will, they should be able to move past the short-term tactics to the long-term necessity of modernization, productivity and competitiveness." He notes that unlike for example U.S. and Japan, many of the emerging markets enjoy the recent hard-won experience of successful privatizations. Therefore, their governments know quite well when and how to exit the companies. He considers that emerging markets would also be better served by preserving their openness to the global economy. "They know that being part of the international financial system exposes them to global shocks. However, they should not forget that this same openness brought them ten years of booming foreign direct investments that generated an unprecedented level of economic growth," Mirtchev indicated.
Dr. Mirtchev is President of Krull Corp., a Washington-based consultancy. He is also an independent director of Samruk-Kazyna National Welfare Fund of Kazakhstan, and serves as senior economic adviser to the country's Prime Minister.
To read the entire interview with Dr. Mirtchev in Mergermarket, visit http://www.mergermarket.com/.
About Krull Corporation:
Krull Corporation is a Washington, D.C.-based advisory and project management firm with expertise in dealing with economic growth, industrial expansion and restructuring issues. Founded by Dr. Alexander Mirtchev in 1992, Krull Corporation capitalizes on his extensive professional experience in market developments and reforms and focuses primarily on emerging and transitional economies. Over the years, the firm has provided its clients with outstanding strategic guidance and professional services in various areas. Combining a unique blend of global reach and understanding of local markets, Krull is able to consistently produce high quality results and returns.
Contact:
Contact:
George Atallah
Qorvis Communications
202-680-0238
Sunday January 11, 2009, 4:14 pm EST
WASHINGTON, DC--(MARKET WIRE)--Jan 11, 2009 -- Alexander Mirtchev, Washington-based economic strategist and expert, reviewed the actions of governments in the emerging markets in support of the beleaguered financial sector and their potential effects with Mergermarket, the partner publication of the Financial Times.
Dr. Mirtchev explained that governments had little choice in taking urgent measures to the financial crisis. "With the crisis looming, it was not possible to stick to ideological positions or specific doctrines -- you do not consider the price of the carpet you are using to put out the fire in your house," said Mirtchev. However, he believes that it is high time to look beyond the immediate short-term pressures, and devise a broader policy response that would address the long-term needs to encourage productivity, competitiveness and growth. He is of the view that, when devising such strategies, governments have to take into account the truly global nature of today's financial system. "The world financial system has evolved to the point where no economy functions as a closed circuit. Economic interaction in a specific market cannot be considered a zero-sum game." In the case of emerging markets such as India, China, Mexico, Indonesia and others, "participation and integration in the global financial system makes sense," in particular with a view to the productivity and growth-generating role that these markets have in the world economy.
He considers that in the short-term direct government support and recapitalization can help banks and institutions continue their function as the mechanism that pumps capital throughout the global economy, and it seems already unavoidable. However, the key is, at the end of the day, to face the reality of the newly emerging global financial system of the XXI century, not to try and "put the genie back in the bottle" by returning to the model of the 1990s, and jumpstart the new, inclusive financial order that could accelerate the recovery and sustain growth.
Some emerging market governments have introduced "special enforcement and monitoring bodies to supervise the use of the funding by the banks, to ensure that the funds are spent exactly for the purposes required by the government, i.e. alleviation of the fallout from the credit crunch on businesses and the population." In particular, his view is that "the banks' shareholders and management will have to share the responsibility and the burden -- there should be no rewards for failure." In the case of Kazakhstan, he noted that "the State refrained from direct nationalization of the banks; rather the government is only offering to buy stakes in banks leaving them with the choice to accept or decline additional capital infusion in return for equity stakes."
Government financial packages to "ensure the stability of the financial system by propping up the banks for the duration of the crisis will need to be complemented with comprehensive strategies to support growth," Dr. Mirtchev told Mergermarket. "The financial sector's malaise cannot be realistically resolved just on the basis of government funding. The market and private investors would need to be engaged."
At the same time, Dr. Mirtchev argues that a number of the rapidly developing economies have better chances of pulling out of the crisis than some of the mature economies. He said that "due to numerous factors, emerging markets are much easier to micro-manage. With the right political vision and will, they should be able to move past the short-term tactics to the long-term necessity of modernization, productivity and competitiveness." He notes that unlike for example U.S. and Japan, many of the emerging markets enjoy the recent hard-won experience of successful privatizations. Therefore, their governments know quite well when and how to exit the companies. He considers that emerging markets would also be better served by preserving their openness to the global economy. "They know that being part of the international financial system exposes them to global shocks. However, they should not forget that this same openness brought them ten years of booming foreign direct investments that generated an unprecedented level of economic growth," Mirtchev indicated.
Dr. Mirtchev is President of Krull Corp., a Washington-based consultancy. He is also an independent director of Samruk-Kazyna National Welfare Fund of Kazakhstan, and serves as senior economic adviser to the country's Prime Minister.
To read the entire interview with Dr. Mirtchev in Mergermarket, visit http://www.mergermarket.com/.
About Krull Corporation:
Krull Corporation is a Washington, D.C.-based advisory and project management firm with expertise in dealing with economic growth, industrial expansion and restructuring issues. Founded by Dr. Alexander Mirtchev in 1992, Krull Corporation capitalizes on his extensive professional experience in market developments and reforms and focuses primarily on emerging and transitional economies. Over the years, the firm has provided its clients with outstanding strategic guidance and professional services in various areas. Combining a unique blend of global reach and understanding of local markets, Krull is able to consistently produce high quality results and returns.
Contact:
Contact:
George Atallah
Qorvis Communications
202-680-0238
Saturday, January 3, 2009
Emerging Economies to Defy Financial Meltdown, According to Oxford Economics Report
Developed nations across the world might have been into recession, but emerging market economies, including India, will continue to grow though with clear signs of a slowdown, says a report.
According to the report by global economic research firm Oxford Economics, "The BRIC economies would continue to grow, but there would be a clear downturn. China is now forecast to grow by about 7 per cent in 2009, its lowest since 1990, and India is seen slowing to about 5 per cent."
Growth rate of 5-7 per cent looks significant amid the present scenario when the world GDP is expected to remain very weak in 2010, posting growth of just 0-1 per cent after the decline of 0.4 per cent in 2009, Oxford Economics said.
However, significant decline in major economies across the world, would have an adverse impact on the emerging markets, with even China and India suffering further slowdown as the world trade failed to recover, the report said, adding that "all of the major developed economies would post growth of little better than zero in 2010".
"Despite the aggressive monetary and fiscal easing, the U.S., the Eurozone, Japan and the U.K. are all now seen contracting by around 2 per cent in 2009," the report said.
These declines would certainly add to the threat of deflation, quite possibly prompting an even more aggressive monetary and fiscal policy response, Oxford Economics said and added that this in turn would add significantly to the chances of a period of higher inflation from 2011-12.
However, inflation is considered to be the traditional escape route from excessive debt and would guard against a repeat of the 1930's depression, the report added.
The slowdown in emerging market economies is largely because trade finance has dried up, capital inflows are dwindling and rolling over short-term debt has becomes more difficult.
The emerging countries, already being hit hardest because of slower world trade, are those that have been heavily dependent on exports for growth, such as South Korea, Taiwan and Hungary. The BRIC economies should be less affected given their stronger growth in domestic demand, but even China and India have relaxed policy quite aggressively in order to support their flagging economies.
Besides, the strong U.S. dollar has reversed corporate hedging strategies at the same time as investors are dumping emerging market assets. This has led to much higher emerging market spreads and, in an increasing number of cases, the need for emergency IMF funding, the report said.
The global financial situation remains fragile and there are still risks as stock markets remain volatile and house prices are still in decline in many countries, so the slide into recession will continue, Oxford Economics said.
As the major developed economies are all expected to contract next year and aggregate growth in the emerging markets slowing, the world GDP is seen shrinking 0.4 per cent in 2009, the first drop since the Second World War, the report said.
Meanwhile, the slowdown in world economies and lower commodity prices would result in a rapid decline in inflation.
As oil price is down around 70 per cent from their peak in July last year, inflation in the major economies would continue to fall steeply this year, reinforcing the prospect of further interest rate cuts in the U.K., the Eurozone and in many emerging markets, the report said.
"In the short term, the threat of deflation is now a serious one," it said.
According to the report by global economic research firm Oxford Economics, "The BRIC economies would continue to grow, but there would be a clear downturn. China is now forecast to grow by about 7 per cent in 2009, its lowest since 1990, and India is seen slowing to about 5 per cent."
Growth rate of 5-7 per cent looks significant amid the present scenario when the world GDP is expected to remain very weak in 2010, posting growth of just 0-1 per cent after the decline of 0.4 per cent in 2009, Oxford Economics said.
However, significant decline in major economies across the world, would have an adverse impact on the emerging markets, with even China and India suffering further slowdown as the world trade failed to recover, the report said, adding that "all of the major developed economies would post growth of little better than zero in 2010".
"Despite the aggressive monetary and fiscal easing, the U.S., the Eurozone, Japan and the U.K. are all now seen contracting by around 2 per cent in 2009," the report said.
These declines would certainly add to the threat of deflation, quite possibly prompting an even more aggressive monetary and fiscal policy response, Oxford Economics said and added that this in turn would add significantly to the chances of a period of higher inflation from 2011-12.
However, inflation is considered to be the traditional escape route from excessive debt and would guard against a repeat of the 1930's depression, the report added.
The slowdown in emerging market economies is largely because trade finance has dried up, capital inflows are dwindling and rolling over short-term debt has becomes more difficult.
The emerging countries, already being hit hardest because of slower world trade, are those that have been heavily dependent on exports for growth, such as South Korea, Taiwan and Hungary. The BRIC economies should be less affected given their stronger growth in domestic demand, but even China and India have relaxed policy quite aggressively in order to support their flagging economies.
Besides, the strong U.S. dollar has reversed corporate hedging strategies at the same time as investors are dumping emerging market assets. This has led to much higher emerging market spreads and, in an increasing number of cases, the need for emergency IMF funding, the report said.
The global financial situation remains fragile and there are still risks as stock markets remain volatile and house prices are still in decline in many countries, so the slide into recession will continue, Oxford Economics said.
As the major developed economies are all expected to contract next year and aggregate growth in the emerging markets slowing, the world GDP is seen shrinking 0.4 per cent in 2009, the first drop since the Second World War, the report said.
Meanwhile, the slowdown in world economies and lower commodity prices would result in a rapid decline in inflation.
As oil price is down around 70 per cent from their peak in July last year, inflation in the major economies would continue to fall steeply this year, reinforcing the prospect of further interest rate cuts in the U.K., the Eurozone and in many emerging markets, the report said.
"In the short term, the threat of deflation is now a serious one," it said.
Emerging-Market Stocks Sink in 2008, May Rebound on BRICs Rally
Emerging-market stocks fell the most ever last year and investors are looking for Brazil, Russia, India and China to lead a reversal in 2009.
The global economic slowdown and slump in commodity prices sent the MSCI Emerging Markets Index tumbling 54 percent in 2008, compared with a 38 percent drop in the Standard & Poor’s 500 Index and a 42 percent loss in the MSCI World Index. Developing- nation stocks are trading near their cheapest levels in a decade.
Read more on 2009 BRIC rally
The global economic slowdown and slump in commodity prices sent the MSCI Emerging Markets Index tumbling 54 percent in 2008, compared with a 38 percent drop in the Standard & Poor’s 500 Index and a 42 percent loss in the MSCI World Index. Developing- nation stocks are trading near their cheapest levels in a decade.
Read more on 2009 BRIC rally
Monday, December 22, 2008
Proctor & Gamble Expanding in BRIC Nations During Economic Slowdown
Procter & Gamble have chalked out quite an aggressive plan for emerging markets, we caught up with Procter & Gamble's global COO Bob McDonald at the IT conference in Chennai and he said they are going to use this time of recession to enter the Brazil, Russia, India, and China (BRIC) nations in a big way.
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Ernst & Young's Says BRIC Economies will Account for 40 Percent of Global Growth from 2009 - 2020
Brazil, Russia, India and China (Bric) will account for 40 percent of worldwide growth from 2009 - 2020, in spite of the difficult economic situation they face, said Ernst & Young's Item Club.
Adrian Cooper, a senior economic advisor to Item Club said, "Whilst it is not inevitable that the global growth dynamics of the past decade will continue indefinitely, the strong domestic momentum in the large emerging economies, the productivity gains from their continued integration into the global economy and benefits from improved macro and micro economic policies will mean that the next decade sees an impressive rate of expansion."
Production categories that will be especially strong in growth the countries will be chemicals, which will account for 38 percent of world production; vehicles, accounting for 30 percent of production; and electronics coming in at 28 percent of global production. China will account for the most growth in those sectors.
Another big factor will be the growth of global cash reserves, which at this time stands at 77 percent being held by the four countries, amounting to $7 trillion.
Sovereign wealth funds alone are projected to grow to $15 trillion by 2013, and that takes into account oil prices of $60 a barrel.
Base metals are also going to be a huge growth area for the BRICs, with predictions coming in at about 65 percent of global production by 2020.
Adrian Cooper, a senior economic advisor to Item Club said, "Whilst it is not inevitable that the global growth dynamics of the past decade will continue indefinitely, the strong domestic momentum in the large emerging economies, the productivity gains from their continued integration into the global economy and benefits from improved macro and micro economic policies will mean that the next decade sees an impressive rate of expansion."
Production categories that will be especially strong in growth the countries will be chemicals, which will account for 38 percent of world production; vehicles, accounting for 30 percent of production; and electronics coming in at 28 percent of global production. China will account for the most growth in those sectors.
Another big factor will be the growth of global cash reserves, which at this time stands at 77 percent being held by the four countries, amounting to $7 trillion.
Sovereign wealth funds alone are projected to grow to $15 trillion by 2013, and that takes into account oil prices of $60 a barrel.
Base metals are also going to be a huge growth area for the BRICs, with predictions coming in at about 65 percent of global production by 2020.
Sunday, December 7, 2008
Russia and India Sign Agreement to Work Closer Together Economically
In an attempt to work closer together after years of cool relations, Russia and India signed a pact concerning economic trade and cooperation.
A major deal involved building of nuclear reactors by Russia for India to use for energy.
“The signing of the agreement on civil nuclear cooperation with Russia marks a new milestone in the history of our cooperation in the field of nuclear energy,” Indian Prime Minister Manmohan Singh said in New Delhi after talks with Russian President Dmitry Medvedev.
The two countries have a goal of increasing trade to about $10 billion by 2010, while working on improving relations that have been strained since the collapse of the Soviet Union.
In reference to military related items, the two countries signed deals for the sale of 80 helicopters to India, worth over $1 billion according to the state arms selling agent and CEO of Rosoboronexport, Anatoly Isaikin.
Russian President Dmitry Medvedev, said he hopes to extend the accord to 10 years, while working with India to develop and produce missiles and aircraft jointly.
Other partnerships would include working together on metals, space, machine building, pharmaceuticals, nuclear powered submarines, biotechnology and information technology.
A major deal involved building of nuclear reactors by Russia for India to use for energy.
“The signing of the agreement on civil nuclear cooperation with Russia marks a new milestone in the history of our cooperation in the field of nuclear energy,” Indian Prime Minister Manmohan Singh said in New Delhi after talks with Russian President Dmitry Medvedev.
The two countries have a goal of increasing trade to about $10 billion by 2010, while working on improving relations that have been strained since the collapse of the Soviet Union.
In reference to military related items, the two countries signed deals for the sale of 80 helicopters to India, worth over $1 billion according to the state arms selling agent and CEO of Rosoboronexport, Anatoly Isaikin.
Russian President Dmitry Medvedev, said he hopes to extend the accord to 10 years, while working with India to develop and produce missiles and aircraft jointly.
Other partnerships would include working together on metals, space, machine building, pharmaceuticals, nuclear powered submarines, biotechnology and information technology.
Monday, November 3, 2008
How is India Faring Among the BRIC Countries?
For now at least, it looks like India will outperform other BRIC countries, primarily because it relies less on imports than the rest, although Brazil is strong in that sense too.
Russia has of course been pummeled by the worldwide economic conditions, as its markets have lost 65 percent of their equity since July. China and Brazil or close, with China losing 40 percent and Brazil 38 percent of market value. Brazil has been hit hard because of their reliance on commodities.
India on the other hand, has only dropped by 27 percent since July, a testament to their focus on domestic consumption rather than exports.
"India imports about 85% of its oil requirements and hence, the drop in prices augurs well for the trade and current account deficits. On the other hand, we are one of the few economies driven by domestic consumption and investment , unlike other regional economies which are dependent on exports. This makes us relatively insulated to global slowdown," Sukumar Rajah, chief investment officer (Equity) of Franklin Templeton Investments India said.
Another key factor in retaining a fairly strong position in a difficult climate has been the fall in commodity and energy prices, which has eased inflation in the country. Earnings have also been stronger the expected, so a more positive attitude has been maintained in spite of the challenges.
India is hoping investors and financial institutions will take note of this, and they will have an interest in continuing to invest in the country.
The downside of course is when demand from emerging markets surges again, and prices of commodities go up, making the more insular business climate of India not as robust as its competitors. But for now, as far as BRIC countries and a number of their Asian neighbors, India has a much stronger economic position to work with.
Russia has of course been pummeled by the worldwide economic conditions, as its markets have lost 65 percent of their equity since July. China and Brazil or close, with China losing 40 percent and Brazil 38 percent of market value. Brazil has been hit hard because of their reliance on commodities.
India on the other hand, has only dropped by 27 percent since July, a testament to their focus on domestic consumption rather than exports.
"India imports about 85% of its oil requirements and hence, the drop in prices augurs well for the trade and current account deficits. On the other hand, we are one of the few economies driven by domestic consumption and investment , unlike other regional economies which are dependent on exports. This makes us relatively insulated to global slowdown," Sukumar Rajah, chief investment officer (Equity) of Franklin Templeton Investments India said.
Another key factor in retaining a fairly strong position in a difficult climate has been the fall in commodity and energy prices, which has eased inflation in the country. Earnings have also been stronger the expected, so a more positive attitude has been maintained in spite of the challenges.
India is hoping investors and financial institutions will take note of this, and they will have an interest in continuing to invest in the country.
The downside of course is when demand from emerging markets surges again, and prices of commodities go up, making the more insular business climate of India not as robust as its competitors. But for now, as far as BRIC countries and a number of their Asian neighbors, India has a much stronger economic position to work with.
Tuesday, October 14, 2008
Starting a Successful Business in the Challenging and Rewarding BRIC Countries
In the beginning of the launch of the BRIC blog network, which deals primarily with doing business in Brazil, Russia, India and China, we've started things off with the obvious: How to start a business in each country, and what the practical steps, time and money needed to get things up and running.
So depending on the country you're interested in, here's the articles and links to starting a business in these tremendous emerging markets.
Starting Business in Brazil
Starting a Business in Russia
Starting a Business in India
Starting a Business in China
a
So depending on the country you're interested in, here's the articles and links to starting a business in these tremendous emerging markets.
Starting Business in Brazil
Starting a Business in Russia
Starting a Business in India
Starting a Business in China
a
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