Global Finance

Welcome to the Future

One year ago, as people looked ahead to 2009, the financial world was a bleak place. A year later, as they step gingerly into 2010 -- and celebrate the dawn of a new decade -- the picture looks very different. The gloom of early 2009 has lifted, to be replaced by cautious optimism. There is still a long way to go before the financial challenges facing the world are resolved, but with the changes that have already taken place -- and the lessons learned from the recent turmoil -- the future loo...

Volcker Chides Bankers for Resisting Reforms

The legendary Paul Volcker, the 6-feet 7-inches tall former chairman of the Federal Reserve who slew the inflation dragon in the early 1980s, is not afraid to speak his mind. He told a conference of senior bankers in Sussex, England, last month that they should not be so worried that new regulation to prevent future financial crises will stifle innovation. Volcker, who is now chairman of Pres Barack Obama's Economic Recovery Advisory Board, advocates separating the business of banking from th...

Eu Takes Gloomy View On Growth

With the most serious global recession since the 1930s slowly coming to an end, European policymakers are now focusing on the post-crisis landscape. However, the biggest concern is not so much what 2010 serves up but what happens later. Baroness Vadera, former adviser to UK prime minister Gordon Brown and now adviser to the Group of 20 presidency, has spoken candidly about her fears of what happens when global fiscal stimuli are withdrawn at the end of 2010. Another concern is Europe's aging ...

Anti-Corruption Drive Goes Awry

Tens of thousands of protestors took to the streets in cities across Indonesia on December 9 to urge the government to do more to fight corruption. Indonesia's president Susilo Bambang Yudhoyono, who was reelected last summer on an anti-corruption platform, proclaimed a "jihad" on corruption on December 8, but some of his closest advisers, including his vice president and his finance minister stand at the center of one of the country's biggest controversies. Indonesia ranked 111th last year o...

Global Finance Charity Partner Extends Healthcare Reach

In the two years since Global Finance accompanied Amrit Davaa's medical team on its first mission to the Manjushree Orphanage in northeast India, the charity has been building on its early success. Already, the charity has set up a fully functional temporary clinic stocked with $100,000 worth of medical supplies, drugs and a year's supply of hemp protein powder for the children. Global Finance continues to support Amrit Davaa's efforts, raising awareness and support for the fight against hung...

Crisis Takes Toll On Mexico's Ratings

Analysts had for months warned of an impending Mexico downgrade. When it finally came, it did so in the form of a one-two punch. In November Fitch cut the country's rating from BBB+ to BBB. In December Standard & Poor's followed suit. Rationales for both downgrades pointed to recent tax hikes, which the ratings agencies say are insufficient to ease Mexico's fiscal pressures. With uncertainty over the downgrades now in the past and Mexico still in investment-grade territory, analysts expec...

Europe Lags Behind in Ipo Market Recovery

The withdrawal of toll road and airports firm Hochtief Concessions' E1 billion IPO -- a deal described weeks earlier as a sure-fire hit -- and a smaller deal from Danish renewables company Scan Energy raised concerns that investors may not be ready for the predicted cascade of new floats in 2010. Meanwhile, after a long dry spell, private-equity-backed companies are betting on in IPO exit route. Firms such as Blackstone and BC Partners have already announced their intention to float dozens of...

Copenhagen Conference Reveals Deep Rifts Over Climate Change

In mid-December political leaders, environmental scientists, NGOs and lobbyists converged on Copenhagen to try to hammer out a global agreement on climate change. While some expected the conference to be dominated by the concerns of richer Western nations, the influence of the Group of 77 was readily apparent. The final impact of Copenhagen is unlikely to be clear for some time. However, it will be remembered as a landmark summit, given the number of political leaders who attended and the fac...

Africa

This year's FIFA Soccer World Cup in South Africa will inject nearly $7.5 billion into the nation's economy, according to a study by the auditing firm of Grant Thornton. Meanwhile, the Congress of South African Trade Unions, the nation's largest labor organization, is calling on the government to eliminate inflation targeting and peg the rand to the US dollar at a fixed rate, in the hopes of kick-starting an economic recovery and helping to reduce unemployment, which stands at around 25%.

China

China's real estate market continued to heat up in November with housing prices in 70 large and medium-size cities rising 5.7% year on year, up from a 3.9% year-on-year increase in October. The government may be reluctant to take additional steps to cool the market, though, as real estate investment drives demand for construction-related industries. The automobile industry has soaked up some of the country's excess supply with China producing 1.39 million automobiles in November, an increase ...

Middle East

The repercussions from the debt-standstill by investment company Dubai World will be felt for months, if not years, to come. At the very least, the financial crisis that has rocked world markets and the more recent default debacles in the Gulf could spark a long-needed wave of bank mergers, as financial institutions seek to cope with the stricter capital-adequacy requirements imposed by the UAE central bank. Elsewhere in the region, Jordan's King Abdullah appointed Samir al-Rifai, a former ai...

Brazil

Banco do Brasil, controlled by the federal government, may seek up to $4.4 billion in primary and secondary share offerings during the first half of the year, according to a Deutsche Bank report. Expectations of higher base interest rates and economic growth are helping Brazilian banks reach a "sweet spot," according to Goldman Sachs. A widespread blackout in November has sparked discussions over Brazil's deficient energy infrastructure, after some 60 million residents in 18 of the country's ...

Russia

The long-anticipated IPO of Russian aluminum producer Rusal was delayed until the first half of 2010 after the Hong Kong stock exchange declined to approve the controversial issue. The Russian government is eager to maintain the status quo surrounding the company and to head off possible layoffs that might result from the launch of bankruptcy proceedings. Meanwhile, in early December Pres Dmitry Medvedev formally signed into law the 2010 federal budget, which sharply increases spending on soc...

India

India's government is forging ahead with its privatization program and has asked various ministries for a list of companies that could be considered for disinvestment -- either by raising fresh capital or by liquidating a portion of the government's stake. Meanwhile, Indian businesses may no longer suffer from a capital shortage, but they may face worsening electricity capacity constraints. A protest by farmers over land acquisitions -- as well as bureaucratic delays -- may slow down the deve...

M&a Wave Could Lift Asian Markets in 2010

Auto Sales Revival Puts New Shine On Platinum

Banco Do Brasil Establishes Otc-Traded Dr Program

Shifting Sands

As the century's second decade dawns, Global Finance takes a long, hard look at the prospects for the world's corporations, banks, regulators and governments in a world that looks very different than it did at the turn of the millennium. Given the scale of its influence on the banking world, one of the most important developments that will define the next decade will be the explosion in availability of information. The financial industry is enduring sweeping change in response to the financia...

Global Leaders in Waiting

It is clear to almost everyone that the center of economic gravity will continue to shift from the US and Western Europe to Asia and Latin America during the next decade -- and well beyond. To nobody's surprise, given their size and rapid growth rates, China and India are driving this dramatic change and will be the main beneficiaries, followed by Brazil, Mexico and other rapidly developing countries. China has an estimated 100 million to 130 million people earning less than $1.25 a day, the ...

A Wide Open World

The frequency with which people communicate electronically continues to grow at lightning speed, as do the channels through which they communicate and connect with their business and financial partners. As companies learn new ways to interact with their customers, this creates both new opportunities and new headaches. However, all of this interaction also creates opportunity -- for highly tailored selling, product cross-selling and sophisticated pricing modeling. As cloud computing matures, i...

Decline and Fall

One of the rocks on which the global economy has been founded since World War II is a strong US dollar. As a projection of the US' political, military and financial might, it has been all-powerful for more than half a century. As a means of exchange for goods and services the world over, including all commodities and much international trade, it has seemed unassailable. Now, that dominance is coming to an end for financial, economic and political reasons. One of the main ingredients among the...

When Two Worlds Collide

The importance of Islamic finance is expected to grow rapidly over the coming decade, but while Islamic banks may have attracted more assets than conventional banks in 2009, in terms of total assets its overall contribution is still relatively tiny. With an annual growth rate of 15% to 20%, Islamic financing assets are expected to reach $1 trillion this year. There is also increased interest in Islamic financing from traditional financial centers such as London, while France is making fiscal ...

Building Boom

The world's infrastructure will change dramatically in the decade ahead as a result of trends already in place, such as industrialization and rapid urban migration, as well as the need to reduce carbon emissions to head off an environmental disaster. An infrastructure-spending boom will be focused on emerging markets, especially those in Asia, where an expanding middle class is demanding a rising standard of living. According to a 2009 CC/LA Infrastructure report, estimated annual global infr...

Tomorrow's Battleground for Banks

Banks are on the back foot as regulators bid to outdo each other in the severity of their clampdown on disclosure and banking governance. Banks are now required to find a regulatory formula to fend off intervention and criticism. While regulators would certainly like the banking system to reflect their exhortations, the reality is that economic events will bear down more forcefully on banks than the longwinded process of restructuring the banking system in one of the many ways that have been ...

Credit Where It's Due

While a credit debacle, led by the US subprime meltdown, unleashed the global economic downturn in 2007, it appears a gradual increase in credit availability is contributing to a global recovery, albeit a painfully slow one. However, with much of the outcome the result of massive government interventions and stimulus efforts, analysts must now consider what the global credit markets will look like once government programs begin to wind down this year. While developed nations are seeking recor...

The Need for Speed

The best banks in the foreign exchange market performed well throughout the financial crisis, keeping the market open and helping clients to cope with the challenging environment. The best foreign exchange banks -- those that major corporations should consider first to handle their needs -- are safe, reliable and efficient. They are the banks that put the interests of their customers first and do not cut and run when the going gets tough. Global Finance selected the best bank for foreign exch...

After the Maelstrom

Foreign Exchange Prime Brokerage Adapts to Changed Landscape in Post-Crisis World

Before the global financial crisis hit, prime brokerage had become one of the fastest-growing products in the foreign exchange market. The service enables hedge funds and other customers to view and trade on the best prices available in the market from a number of major FX banks through a single platform and to take positions on a leveraged basis while keeping their accounts at a single institution. Demand for FX prime brokerage is increasing once again, as foreign exchange continues to devel...

Emerging Markets Take Ipo Lead Role

Companies based in China and Brazil led a global rebound in initial public offerings in the second half of 2009, and emerging markets are likely to continue to lead the IPO parade in 2010, analysts say. Asia and South America together accounted for 72% of the total IPO value in the first 11 months of 2009. The North American region had a 38% decline in the value of IPOs, to $16.6 billion in the first 11 months of 2009. European IPOs accounted for only 10% of total new issues, valued at $3 bil...

Hunt for Yield to Continue in 2010

Investors will continue to seek higher returns than will be available on treasury notes and bonds in 2010, providing good demand for corporate debt as the US credit markets return to normal, analysts say. The demand for corporate debt is likely to benefit from the lack of more attractive alternatives amid slow US and European growth, historically low yields and a heavy supply of government bonds, according to fixed-income strategists in New York and London at UK-based Barclays Capital. High-g...