Indian MNCs display their might - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Indian MNCs display their might

Mar 31, 2009

The force of emerging market multinationals
The global economy may be in tatters currently, but this is precisely why emerging market multinationals are gaining prominence on the global map, as highlighted by the Economist in an interesting article. First is obviously the cost advantage that emerging markets (including India) enjoy, especially in the current scenario when companies across the globe are looking at various ways to slash costs. The second is that emerging economies are in a relatively better shape. While the global growth has slowed, they have not slipped into recession like the developed world. This means that even if the export markets are floundering, emerging economies have their respective domestic markets to fall back upon. The third is that many multinationals of developed and rich countries are increasingly concerned about the situation ‘back home' due to the recession. As a result, they are not able to invest much to defend their market positions elsewhere, providing opportunities for disruptive new entrants. And that is not all. Given the liquidity crunch and the scramble to generate cash, developed world multinationals are actually selling off some of their business units, which gives emerging market multinationals the opportunity to snap some good businesses, technology or brands at attractive prices. Of course, there is the other side of the coin to be considered, which is that many of these emerging market multinationals have probably become over enthusiastic in their expansion plans and have loaded generous amounts of debt onto their books. But this issue cannot be isolated to them alone and many of the rich world companies are also finding themselves in a similar situation. Therefore, it cannot be denied that companies from the emerging markets, who are increasingly looking to take their standing in the global arena one notch up, are a force to reckon with in the future.

Rising powers challenge US role in IMF
The global economic meltdown has certainly raised a question mark over the standing of the US in world affairs. As if China asking for a change in reserve currency was not enough, emerging nations such as China and India believe that the crisis whose origins lie in the US, have diminished the latter's ability to set the agenda. And the agenda that they are referring to is the Obama administration's intention to make the strengthening of the IMF one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. In fact, as reported in the International Herald Tribune (IHT), these rising powers view the IMF as a place to begin staking their claim to a greater voice in global economic affairs.

The IMF, which looked like sinking into oblivion, was brought into the limelight once the global crisis erupted. In the past one year, it has made US$ 50 bn in loans to 13 countries. The US Treasury Secretary, Geithner, is looking to enhance IMF's lending capacity and has called for its financial resources to be expanded by US$ 500 bn. In this regard, the EU and Japan have pledged US$ 100 bn each and the US is also set to pledge a similar sum. China, however, is not to be easily persuaded and is taking this opportunity to make sure that emerging countries are given more say in matters pertaining to the IMF. The world order certainly seems to be changing, albeit gradually and China's stance has made it clear that the US no longer enjoys the clout that it once had.


Equitymaster requests your view! Post a comment on "Indian MNCs display their might". Click here!

  

More Views on News

Your Queries on the 8-Year Cycle Answered (Fast Profits Daily)

Sep 25, 2020

You've sent in your queries on my videos on the 8-year greed and fear cycle in the market. I'll answer them in this video.

It's When You Sell that Counts (Profit Hunter)

Sep 25, 2020

How I alerted readers to the impending crash last week.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

How to Save Money by Exiting Stocks Before They Fall podcast (Views On News)

Sep 24, 2020

A penny saved is a penny earned. It doesn't matter where you enter. All that matter is where you exit. Watch this video to identify an opportune time to exit your investments and book profits.

ICICI Prudential ESG Fund: Aims for Sustainability (Outside View)

Sep 24, 2020

PersonalFN briefly explains the newly launched fund : ICICI Prudential ESG Fund.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Sep 25, 2020 (Close)

MARKET STATS