cross border investment

It seems to be getting harder and harder to find a news story about the Middle East and North Africa (MENA) that doesn’t fall within the narrow narrative of disorder and political violence. From state collapse in Libya and the tragic conflict in Syria to the geopolitical flashpoint in Yemen, the headlines from the broader region make for bleak reading indeed.

These challenges are real and they are significant, but there is another story about the region that remains under-reported. It is a story of dynamism and entrepreneurship, and it’s one of how private capital is playing a critical role in creating new realities for the region and its people. Read more

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

India has tallied $12.5bn in foreign inflows so far this year, according to the Securities and Exchanges Board of India – more, at this point in the year, than any year but one of the last ten. That’s a rare bright spot.

But it raises a couple of important questions, addressed in recent analyst notes: when the economic picture is so bleak, why is that money pouring in? And who is doing the pouring?

The answer may just be that oldest of Indian pastimes: black moneyRead more

An advisory panel set up by Indian prime minister Manmohan Singh recommended on Saturday that a controversial set of tax avoidance laws be deferred until 2016, a move many thought would boost investor sentiment in Asia’s third-largest economy.

But Monday morning came, and the most the Bombay Stock Exchange’s benchmark Sensex had risen was around half a percentage point – because, analysts said, as nice as the postponement recommendation was, most investors had already assumed some sort of delay was in the offing. Read more

Foreign visitors, numbering up to a million during Euro 2012, appear to have been left with an overwhelmingly positive impression of tournament co-host Ukraine. But international financial institutions look likely to need more convincing before they re-ignite their once intimate relationship with the developing nation.

Ukraine’s largest financial investor, the EBRD, has committed €7.5bn to the country since 1992, invested across 294 projects, including badly needed pre-tournament upgrades of transport in host cities Kiev and Lviv. Yet both the EBRD and IMF are calling for major political and legal reform if they are once more to step up commitments. Read more

What a coincidence. Within a day of Indian prime minister Manmohan Singh taking up the finance portfolio on Wednesday,  and pledging to “revive the animal spirits of the country’s economy”, the finance ministry was doing just that.

Officials announced a decision that investors had long been hoping for: the revision of General Anti-Avoidance Rules that many had blamed for foreign fund managers pulling out of the country.

But it turned out that Singh was wasn’t responsible. And his apparent efforts to distance himself from the move don’t bode well for Indian economic reform. Read more