Indian MNCs display their might - Views on News from Equitymaster

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

  • MyStocks


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

Top 5 Recent IPO Developments You Should Know (Views On News)

May 12, 2021

So far in 2021, IPOs in India have raised nearly US$ 3 bn, the best start to the year since 2018.

How Did Mindtree Perform in Q4FY21? (Company Info)

Apr 20, 2021

Here's the rundown on the company's latest quarterly results.

Top Pick for Next Decade podcast (Views On News)

May 13, 2021

Rahul Shah on his favoured pick for the next decade.

Is Intraday Trading For You? (Fast Profits Daily)

May 13, 2021

Do you think you have what it takes to be an intraday trader? Find out in this video.

Beware! Not Every EV Stock Will Be a Tesla (Profit Hunter)

May 13, 2021

Analyse the business models of EV stocks before investing in them.

More Views on News

Most Popular

The Next Smallcap Winners (Profit Hunter)

Apr 30, 2021

Price is the only due diligence one might require to buy this business.

Time to Buy Smallcaps? (Fast Profits Daily)

Apr 30, 2021

In this video, I'll show you why I favour smallcaps over the Nifty.

Are the Stock Markets Deaf to Covid Agony? (Profit Hunter)

May 6, 2021

Why are markets discounting the economic impact of Covid?

My Secret to Find Breakthrough Stocks (Fast Profits Daily)

May 7, 2021

I've used this trading technique for many years with great success. I'm sharing it with you today.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


May 12, 2021 (Close)