(CNN) - The IMF says global growth in 2013 will be an uphill climb but projects growth to reach 3.5% with emerging markets providing much of that boost. We’re already seeing signs of this through the scope of corporate earnings. In January, corporate earnings drove stock markets up, thanks in large part to emerging markets. GE’s fourth quarter revenues rose 4% beating expectations. GE cited China and other emerging economies as the driver for them. Apple reported record quarterly profits. CEO Tim Cook said in an earlier interview with Xinhua News Agency, “China is currently our second largest market. I believe it will become our first.”
While it’s not new that emerging markets are giving much-needed horsepower against the headwinds of the US and the Eurozone, it is interesting to note that countries like China, Indonesia and India still hold a wealth of untapped potential for investors. Younghao Pu, UBS chief investment officer for Asia Pacific, points out that emerging markets account for 50% of global GDP, but only 20% of stock market capitalization. That means there’s a lot of potential to grow. He believes Tier 1 Chinese cities like Beijing and Shanghai are saturated, mature markets where growth is decelerating.
“In China, multinationals need to penetrate into Tier 2 or Tier 3 cities like Chengdu and Xian where the growth rate is stronger,” Pu says. “Different companies are using agencies and I don’t think that model is building up the potential there in those cities.”
One reason for under-investing appears to be multi-layered. The business advisory group, Economist Corporate Network, recently surveyed 500 corporate clients about the current business climate in Asia. The majority of responses were from Western multinationals. According to the survey results, the companies found “murky” investment climates in certain regions, regulations that swung from unpredictable to protectionist and difficulty in finding reliable local employees.
Hans Paul Burkner, chairman of Boston Consulting Group, takes a much more optimistic approach and looks at emerging markets from the inside looking out. He recently spoke with CNN about what he calls “global challengers,” companies from emerging markets that are growing quickly. These are companies like Malaysia’s Air Asia, China’s Alibaba Group and Brazil’s building products company Tigre.
"They are fast growth, high ambition…and acquiring business models in North America, Europe and Japan. You should not be afraid because it’s not that they are coming in, sucking out all the technology and walking home. They want to really build a position (globally.)”
London (CNN) - Fresh from the frying pan and about to leap into the fire, former Barclays boss Bob Diamond faces a UK parliamentary committee today to answer questions on a rate fixing scandal that cost his bank $450 million and Diamond his job.
Diamond resigned yesterday - alongside COO Jerry del Messier – saying “the external pressure placed on Barclays has reached a level that risks damaging the franchise.”
A memo published by Diamond ahead of his testimony today appears to point the finger at senior central bankers and politicians, suggesting Barclays was encouraged to lower the rate known colloquially as ‘LIBOR.’
David Ruffley, a Conservative member of parliament for Bury St Edmunds, is one of 13 lawmakers from a cross-party panel which will grill Diamond later today.
World Business Today spoke to Ruffley about the questions lawmakers want answers to. FULL POST
(CNN) - If recent history is anything to go by, the number 7 has good reason to be feared in the European bond markets.
Once yields on Greek, Irish and Portuguese 10-year notes hit that unlucky figure, they didn’t come back down - pricing three eurozone members out of the markets in quick succession and into bailout limbo.
Though it may be arbitrary, 7 could soon become the cut off point for a new two-tier common currency; an area where peripheral members pay the high price for low growth and lack of reform, whilst the more buoyant economies of the north enjoy record-low borrowing rates.
That is unless someone can convince the German Chancellor that so called jointly-issued “eurobonds” really are the panacea. FULL POST
London (CNN) - You may never look at your aunt’s old armchair quite the same way and, once you’ve read this, grandpa’s grandfather clock may seem worth keeping after all.
Why? Because some of the world’s most coveted customers are literally crazy about your historical heirlooms.
A burgeoning middle class in China is flocking to London to stock up on English antiques that are fetching a veritable fortune back home.
London (CNN) – After days of public outrage, Royal Bank of Scotland CEO Stephen Hester has agreed to waive his near £1 million ($1.5 million) bonus.
Fellow bankers say we should applaud his magnanimity. They point out that Hester isn’t the villain who drove the company to the brink; on the contrary he’s the hero, who took on the challenge of trying to save it. Besides, they say, he is paid far less than his peers.
Meanwhile, the average earner is incensed that a largely taxpayer-owned entity could even contemplate such a generous sum - one which comes on top of Hester’s already £1.2 million salary.
London (CNN) – It’s Friday and many of you out there may already have gone home for the weekend. Some of you may be reading this on your smart phone or handheld computer.
But here are some questions for you: Should checking such devices for work correspondence count towards your overtime? And is it affecting your productivity when you are in the office?
A law introduced recently in Brazil says workers who check their smart phones after hours because of their job are entitled to extra pay.
After years of issuing staff with company Blackberrys, the tide is shifting in Europe too.
Brussels (CNN) – Here in Brussels Europe's heads of government talked their way through lunches, dinners and various press conferences at the weekend as they moved closer to finalizing a 'grand plan' to end the eurozone's sovereign debt crisis.
Despite hours of hard talk, the outcome was decidedly soft, with politicians promising that progress had been made and details remaining sketchy at best.
Leaders of the union's 27 countries are trying to hammer out a plan to restore fiscal order among the 17 of its member states that share the euro as their common currency-collectively known as the eurozone.
London (CNN) – You know things are bad when an email like this lands in your inbox:
Subject: is it time for a quick catch up?
Before the world expires…
The message takes on a new meaning when you realise it’s from the former head of one of the UK’s larger financial services companies.
As the eurozone crisis rages seemingly without end and big banks are being bailed out again, many are bracing themselves for a return of the pronounced recession that characterized the end of the last decade.
But is there evidence to support such a claim?
Economists at Deutsche Bank have done much of the number crunching for us. In a comprehensive presentation sent to clients this week, the lender’s research team put forward some sobering predictions.
London (CNN) – At the height of the credit crunch the Franco-Belgian bank Dexia became one of the first eurozone banks to be bailed out. Three years on, it may need another helping hand.
This is largely thanks to some $21 billion worth of sovereign bonds Dexia holds on its books: debt issued by Greece, Italy and other peripheral eurozone countries, whose obligations are becoming riskier by the day as the region’s financial crisis intensifies.
Dexia posted its biggest loss ever in the second quarter, coming in at a whopping $5.5 billion after the bank wrote down the value of its Greek holdings. The result: the company’s stock has plunged 50% in the past six months. Newspapers including the Financial Times say Dexia’s management is considering setting up a ‘bad bank’ to unburden itself of the risk.
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