Stimulus spending and other emergency measures have set the stage for global economic recovery, but nations must push ahead with free trade and investment to ensure growth, President Barack Obama and fellow Asia-Pacific leaders said Sunday.
Obama and 20 other leaders, meeting in Singapore for the annual Asia-Pacific Economic Cooperation forum, rejected protectionism and agreed to develop long-term strategies that take into account the diverse needs of economies in a region stretching from Chile to China [Source].
From the ruins of the credit crunch, a new financial order will emerge. Its shape is not yet known, but is already hotly debated. Will there be a new model for investment banking? The socialisation of risk? A return to Keynesianism? What role will hedge funds and private equity play? And government and regulators?
In this series of exclusive video interviews, Lionel Barber, editor of the Financial Times, talks to some of the chief protagonists – bankers, policymakers, financiers – and asks them to explain not just what happened, but also how they think finance will adapt to the post-crash world.
Facebook, the popular social network, has found a deep-pocketed friend in Russia.
Digital Sky Technologies, an Internet investment company based in Moscow, said Tuesday it has invested $200 million in Facebook in exchange for a 1.96 percent stake in the company, and would eventually offer to buy at least $100 million in Facebook’s common stock. Facebook said the deal values the entire company — which Facebook’s chief executive, Mark Zuckerberg, founded in his Harvard dorm room in 2004 — at $10 billion.
More details about the deal can be found here. A backgrounder on this story can be found here.
The globalisation of entrepreneurship is raising the competitive stakes for everyone, particularly in the rich world. Entrepreneurs can now come from almost anywhere, including once-closed economies such as India and China. And many of them can reach global markets from the day they open their doors, thanks to the falling cost of communications.
The world’s greatest producer of entrepreneurs continues to be America. The lights may have gone out on Wall Street, but Silicon Valley continues to burn bright. Entrepreneurship also flourishes in clusters. A third of American venture capital flows into two places, Silicon Valley and Boston, and two-thirds into just six places, New York, Los Angeles, San Diego and Austin as well as the Valley and Boston.
The information age is making it ever easier for ordinary people to start businesses and harder for incumbents to defend their territory. Back in 1960 the composition of the Fortune 500 was so stable that it took 20 years for a third of the constituent companies to change. Now it takes only four years. Source
Shortly after midday on January 20th, Barack Obama will sit for the first time at the desk where the buck stops. The American presidency is always the world’s hardest and most consequential job, but it seems particularly so this month. A global recession of a severity not seen for perhaps 80 years; a new war in the Middle East and old ones in Africa; missions very far from accomplished in Iraq and Afghanistan; a prickly Russia and a rising China.
These international challenges must jostle for the president’s attention alongside noisy domestic concerns like rocketing unemployment, the desperate need for a better health-care system, exploding deficits and failing cities. The burdens, surely, are too many for one man to bear.
Global economic meetings used to mean the G7 and then the G8. However, last weekend marked the emergence of a new phenomenon the G20. Which have set stage for the beginning of a better multilateral economic system.
It used to be a rich-country affair with Russia invited in during in the 1990s – but that was to tackle international political issues, not for the sake of a contribution to the economic discussions. However times have changed. A global economic problem needed a presence from developing country leaders.
This being said. In light of aforementioned, last weekend, Presidents and prime ministers from a score of rich and emerging economies descended on Washington, DC, ostensibly to remake the rules of global finance. They came to Washington, as countries hit by the developed world’s financial crisis and, in some cases, as countries that might be able to help fix it.
The G20 (more formally, the Group of Twenty Finance Ministers and Central Bank Governors), created after the emerging-market crises a decade ago, is not perfect for today’s problems. It excludes a big economy with an admired system of financial regulation (Spain) but includes a mid-sized country that has become irrelevant to global finance because of its own mismanagement (Argentina). Still, the G20 includes most of the key parts of the rich and emerging world, making it a better forum for global economic co-operation than the G7 group of rich countries, which has until now held the stage (Source: The Economist).
A recapitulation and highlights of the G20 meeting can be found here:
- BBC News: G20 summit: In quotes
- BBC News: G20 declaration: Full text
Bloomberg has written up a report on South Korea’s ambition to build up world class financial institutions and capabilities.
In 1999, Kim Jung Yul sat at a table negotiating the sale of Korea First Bank to San Francisco-based Newbridge Capital LLC as it sought cash to stay afloat during the Asian financial crisis. Nine years later, he’s scouting for a Korean buyer for a U.S. bank.
“This is the chance of a lifetime for Korean companies to enter the U.S. market,” said Kim, who was an official at state- run Korea Deposit Insurance Corp. when it sold a controlling stake in Korea First Bank to Newbridge. “We were naive back then,” Kim said. “We paid a high price to learn from the crisis, and it’s time to put what we’ve learned to use.’”
The pressure to lift the share price is building. But CEO Jeff Immelt’s options are limited. After a historic first-quarter fumble (earnings miss of 7Cents below expectations) GE met targets for Q2 FY2009. But the market didn’t reward GE. The battered stock price rose just 2Cents on the day’s news, to US$27,66. Since the beginning of the year it’s down 25%, compared with a 15% drop in the S&P 500-stock index.
Now, GE’s CEO Immelt is fighting to revive faith in the sprawling US$173 billion conglomerate, even as forces are working against him. The credit crisis and GE’s April 11 earnings miss have put him under tougher scrutiny than at any time in his seven-year tenure as CEO. Investors are questioning the size and complexity of the company, and want him to move faster to shed assets.
Immelt is acutely aware of the pressure, even as he continues to build GE for the long term. He has overhauled the business portfolio, buying US$88 billion of assets in high-tech growth areas like alternative energy and bioscience while dumping more than US$55 billion of less attractive plays such as GE Plastics. With respect to the need for a better diversified income ratio. Immelt says “asset disposals and the boom in infrastructure should bring the ratio back to about 60% industrial and 40% financial by 2010″ (now half the net).
Immelt says he doesn’t plan to change his strategy—other than raising his cost—cutting targets by $1 billion to $3 billion for this year. While he may not like the economic climate, he’s confident that the shares will ultimately reward solid execution. In the meantime, he’s doing what he can to help GE thrive. “Everybody would like to see the stock price higher,” he says, “me at the front of the list.
* Slideshow: GE’s Generals (Overview of General Electric’s five legendary CEO’s over the past 50 years.)
* Slideshow: GE’s Sprawling Empire (Overview of General Electric’s (GE) business segments)
To date foreign Telecom players like SK Telecom (S-Korea), Telefonica (Spain), and Vodafone (UK) have been limited to minority stakes of under 7% in Chinese telecom operators.
However brighter times for foreign telecom operators may lie ahead! Owing to the ongoing Chinese telecom industry restructuring (consolidation wave) and a planned infrastructure revamp (issuing of 3G Network licenses). As Chinese Telcos are not primarily looking to attract more capital the latter can provide opportunities for foreign players. Respectively for foreign telecom operators that are already engaged in 3G networks in their home markets.
Foreign telecom operators have the technology and experience their Chinese counterparts lack.
“We should attract more foreign investment when we roll out 3G and use other people’s money to build the networks,” says Beijing University of Posts & Telecommunications professor Lu Tingjie (source).
Is all the negative publicity around China over the last few months truly justified? If you look above the surface the answer may be yes. However much change in happing in China below the surface as well. For example China is increasingly opening up to international media: BBC website ‘unblocked in China’.
Although this great initiative there is still a long way to go for complete freedom of speech in China: Stories China’s media could not write. Nevertheless, generation Y in China seems to have much more in common with generation Y in the West as initially thought by most Westerners: China and its Talent, and Modern China.
From a macroeconomic perspective China is well positioned to live upon its potential somewhere within a decade and half a century. Thus somewhere between the medium run (>1decade) and the long run (>half a century) source.
On the medium run the supply side (technology advancement, capital usage, labour force skill fullness) matters more then the demand side (consumer confidence, interest rates).Taking in account the aforementioned, the future seems to be bright cos of the entrepreneurial spirit of China’s generation Y: China’s young entrepreneurs.
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