Mar 31, 2009|
Indian MNCs display their might
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.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 23, 2017
Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?
Aug 23, 2017
Nowhere was the darkness deeper than in the nation's capital. There, no light shone. No flicker of awareness...observation...learning...or reflection appeared.
Aug 22, 2017
It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.
Aug 22, 2017
Post demonetisation, a cut in bank savings deposits rates was in the offing.
More Views on News
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 16, 2017
The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407