For the first time, transnational corporations from emerging market (EM) countries spent more on foreign acquisitions last year than companies from developed market (DM) countries, according to a study by the United Nations Conference on Trade and Development.
Led by some record breaking acquisitions by Chinese and Russian companies, EM transnational corporations (TNCs) accounted for 56 per cent of total cross-border transactions in 2013, the study found. In total the value of cross-border M&A deals – from EM and DM sources – rose 5 per cent in 2013 to $349bn. Read more
It was quite the wake-up for attendees at the WEF debate on Chinese-American-European cooperation. After a “well meant advice” of Harvard Professor Joseph Nye about Chinese policies in the South China sea, Wang Jianlin, China’s richest man, had had enough.
“I’m not happy with the professor’s comments,” he said. “This is an economic debate. Not a political one. This is not polite.” In this initial and later reaction, he revealed a few interesting things about his strategy and temper – and made it seem as though influential Chinese are misunderstood by the outside world. Read more
Asian fund passport plans, to borrow the old cliché, are like London buses: you wait ages for one and then three come at once.
Wednesday’s announcement between the regulatory bodies of Singapore, Malaysia and Thailand to create a system for cross-border distribution of mutual funds was the third in the region this year. Read more
India has succumbed to pressure from governments, multinationals and industry bodies abroad to review its policy of boosting locally-made electronics.
It’s good news for international business. But what are the consequences for the Indian economy if demand for electronic products is increasingly served by imports? Read more
The proposed investment by Abu Dhabi’s state carrier, Etihad Airways, into the Indian airline, Jet Airways, has faced several roadblocks.
First, the problem was regulatory approvals. And now there are political rumblings. India’s not going to woo many foreign partners if this is how it treats wealthy investors. Read more
Shares in Jet Airways dipped more than 12 per cent on Monday morning on Friday’s decision by India’s Foreign Investment Promotion Board (FIPB) to defer approving Etihad Airways’ plan to buy a stake in the Indian airline.
They recovered later in the day to close up 1.3 per cent to Rs476.5 afte investors realised the delay was just that – a temporary glitch – and wouldn’t stop the deal going ahead. No problem, then? Read more
With the rupee under the cosh, a faltering economy and slowing equity markets, India could do with propping up foreign direct investment.
Step forward the Securities and Exchange Board of India (Sebi), the market regulator. In an attempt to increase foreign portfolio investment into the country, a committee at Sebi has recommended several measures to make it easier for investors to send money into the country. Read more
The Bank of Japan’s huge monetary expansion programme has raised fears of a flood of Japanese hot money among emerging markets policymakers.
But hold on, says Citigroup in a report. If flows are correctly managed, their effects could be positive: Japanese investment should make it easier for EMs to finance external and fiscal deficits and so allow faster domestic spending growth. Far from destabilising EMs, says Citi, the BoJ could help them rebalance away from exports and in favour of consumption.
It all sounds a bit optimistic. But let’s take a look at Citi’s logic. Read more
There has been a sharp improvement in Turkey’s current account deficit – often cited as the biggest single point of concern for investors.
But in an FT video (below the break), Timothy Ash, head of emerging markets research ex-Africa at Standard Bank, explains to deputy emerging markets editor Jonathan Wheatley that the recent improvement is a one-off event and that funding for the deficit remains precarious. Read more
In September, the Indian government announced a spurt of policy initiatives greeted by commentators as a return to the reformist zeal shown in the early days of prime minister Mohamed Singh’s eight years in power. This “big bang”, designed to re-ignite economic growth, was also expected to reawaken interest in Indian equities among foreign investors. But investor interest in some Indian companies actually plateaued after the package was announced, according to new research.
How should equity investors respond? Read more
Watch out for the Fed tightening. That’s the message from the Institute of International Finance, the bankers’ club, to investors ploughing funds into emerging markets.
Speaking in Switzerland on his way to the World Economic Forum in Davos, IIF managing director Charles Dallara warned that investors had “underanticipated” sudden turns in monetary policy in the past – and might do so again. He said: “Are we adequately risk aware? Are we adequately risk sensitive?… I am not at all sure that we are.” Read more
Coming to India
There will be haggling for every last Daim bar and the meatballs will be doused in chutney. There will be queues of people complaining that their furniture has arrived unassembled. And a whole new professional class will emerge – the DIY-wallas.
After months of discussions, on its second attempt, Ikea has received approval from India’s foreign investment board to open fully-stocked stores in the country. Read more
The future of central and eastern Europe (CEE) rests on decisions being made beyond its borders, as a special report in Friday’s FT warns. The region relies on the eurozone for trade and investment.
But investors are recognising the fact that countries in CEE dealt with their fiscal problems especially quickly. Credit default swap spreads in Poland, the Czech Republic and Slovakia are converging with those in the core eurozone and deleveraging in CEE is more limited than in some west European markets. Read more
Hold steady – the risk / reward balance is tipping. The Brics are now being termed “safe haven” markets and grouped with the UK, US and Germany.
For some time emerging markets have attracted multinational companies with the promise of higher returns. This draw used to come with higher risk – but the perception of that risk is now shifting. Read more
The greater the uncertainty, the more diligence is due. Yet, private equity companies believe the detective work they do before investing in the lesser-known environment of emerging markets isn’t good enough. A more integrated approach to due diligence is required in these regions than in developed markets.
That’s the conclusion of a survey of 50 private equity firms, which highlighted the extra risks in EMs: corruption, bribery, fraud, the power of the government and an unpredictable regulatory environment. Read more