News and Analysis: 7-11 June 10 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 11 June 10:

Strikes put China on spot over labor unrest: A rash of strikes at Chinese factories highlights growing restiveness among migrant workers, an unsettling development for foreign manufacturers and a privileged communist leadership now far removed from its roots in labor movements a century ago. Taiwanese and Japanese cos. incl Honda Motor have been scrambling to defuse labor disputes that have paralyzed production and sometimes erupted into violent clashes bet. workers and state-backed union officials, AP (courtesy Mainichi Daily/ Japan), 11 June 10

Playing Field: And the World Cup champion is...--Back in '06, our research team made waves when it not only correctly picked Italy to win that yr's World Cup, but also correctly picked 50% of the semi-finalists, 75% of the final 8, and 81% of the final 16. This yr, our team has once again looked into its crystal ball, publishing a special edition investor’s guide containing its predictions for the World Cup. Brazil has the best chance to win, w/ Germany and Italy also likely to go far. However, Spain - favored by many - could exit before the semi-final stage. The event also provides a good occasion to take a look at the African economy, UBS, May '10

C-Suite/ Boardroom: Deficiency of institutions is a characteristic of an emerging market - Khanna: Such are the vagaries of emerging markets that many multinational cos. have repeatedly bitten dust at their doorsteps. And it's that very conundrum that Harvard's Tarun Khanna has tried to unravel in his latest book. Along w/ co-author Krishna Palepu, the prof contends that deficiency of institutions (capital market participants, market researchers, legal regulations, etc) is a characteristic of an emerging market. And while the 'institutional voids' can be major roadblocks, they also present an opportunity - if the MNCs and domestic cos. play their cards right, Economic Times/ India, Apr '10 (Khanna and Palepu: Winning in Emerging Markets ['10])

Posted on Thu, 10 June 10:

M El-Erian and M Spence: Can emerging markets save the world economy?--Over the past 2 yrs, industrial nations have experienced bouts of severe financial instability. Currently, they are wrestling w/ widening sovereign-debt problems and high unemployment. Yet emerging economies, once considered much more vulnerable, have been remarkably resilient. With growth returning to pre-'08 breakout levels, the performance of China, India, and Brazil is an important engine of expansion for today's global economy. So, it is important to know whether this breakout growth phase is sustainable, say CEO/ co-CIO of Pimco and Nobel Laureate ('01), Proj Syndicate (courtesy Brunei Times), 10 June 10

Playing Field: The World Cup and Economics--Welcome to the 2010 book on the World Cup and Economics, our 4th since the '98 finals in Paris. As always, we present this as a fun piece, your companion to the competition. Once more, in addition to the work of our prodigious economists around the world, we have contributions from some very famous guests. And, as usual, we also tentatively suggest the likely semi-finalists - always a highly contentious move. These are England, Argentina, Brazil and Spain, Goldman Sachs, May '10

Posted on Wed, 9 June 10:

Aquino proclaimed Philippines' 15th pres: Benigno 'Noynoy' Aquino was proclaimed the next pres amid joyous celebrations on Wed, but he struck a somber tone as he warned that the impoverished nation was in crisis. He will officially become this SEAsian nation's 15th pres on 30 June. His father, Benigno 'Ninoy' Aquino, was shot dead in '83 at Manila airport as he returned from US exile to lead the democracy movement vs Marcos. His mother, Corazon 'Cory' Aquino, took over from her slain husband and led the 'People Power' revolution that toppled Marcos in '86. She then served as pres for 6 yrs, an admin that is viewed by Filipinos as one of the least corrupt in Philippine history, News Agencies (courtesy Gulf News/ U Arab Emirates), 9 June 10 (Decisiveness of vote may favor Philippines' credit fundamentals, Moody's, May '10) [courtesy ryt9/ Thai]

C-Suite/ Boardroom: Raghuram Rajan--Do bankers need a social conscience?: Bankers must be heaving a sigh of relief as the shenanigans of the offshore drilling industry have pushed them to the edge of the radar screen of those targeting corporate greed. But it is unlikely their respite will be for long. How do we instill more social values in the industry? Or is banker greed mostly good?, asks author of Fault Lines ('10)/ fmr IMF chief economist, Univ Chicago, May '10 [pdf] (Princeton U Pr)

S Beck, W Deelder and R Miller: Franchising in emerging markets--What's working, what's not, and why: In the last few yrs, the intl community has begun to promote franchising as the potential 'next big thing' in devt. As in mature economies, franchise biz in frontier markets are designed for replication, require less experienced entrepreneurial talent to manage a proven biz format, and provide biz-learning opportunities within a defined support structure. But is this promise being realized?, ask Templeton Found. senior fellow and Dalberg Glob Devt Advisors consultants, [MIT] Innovations (courtesy Templeton), Dec-Feb '10 [pdf]

Posted on Tue, 8 June 10:

Coffers: John Prestbo--Give developing-world stocks a spin: Emerging markets have sounded a siren's song for many investors, and will likely lure many more. But do people know what they are getting into? On the chance that the only thing investors know about emerging markets is their sometimes-astounding performances, the goal here is to offer some context and perspective. Naturally, indexes help tell the story, says Dow Jones Indexes exec dir/ editor, MarketWatch, 4 June 10

C-Suite/ Boardroom: The African challengers--Global competitors emerge from the overlooked continent: 40 African companies have been rapidly expanding, competing in the world economy, and highlighting the vitality of a continent whose econ accomplishments rarely receive attention, acc to a new report. Most of the cos. are based in SAfrica (w/ 18), Egypt (w/ 7), and Morocco (w/ 6). The 9 remaining players come from Algeria, Angola, Nigeria, Togo, and Tunisia. There are many more noteworthy African cos., but we focus here on those w/ global ambitions, Boston Consult. Group, 2 June 10

Posted on Mon, 7 June 10:

Notice from the Publisher: In case some of you are wondering why we did not post last Fri, 4 June, it was due to a disruption in our workflow, similar to what we already reported to our visitors last Jan, and just as deserving of censure, EmergingFrontier Markets.com, 7 June 10

G20 clash over recovery risks 'sub-potential' growth: In a sign of tension among the world’s econ policy chiefs, at a meeting of Group of 20 finance ministers in Busan, SKorea, 4-5 June, US Treas Secy Geithner flagged concern that other nations are turning to cheaper currencies and fiscal restraint, leaving their rebounds reliant on foreign rather than domestic buyers for strength. And a European and US proposal to tax banks globally to cover the cost of bailouts was defeated, Bloomberg, 7 June 10

Kenneth Rogoff: Controlling slips and spills--As the damaged BP oil well continues to spew millions of gallons of crude into the Gulf, the immediate challenge is how to mitigate an ever-magnifying environmental catastrophe. The deeper challenge, however, is regulating complex technologies. The speed of innovation is outstripping regulators' capacity to deal w/ risks, much less anticipate them. The parallels bet. the oil spill and the recent financial crisis are all too painfully similar: the promise of innovation, unfathomable complexity, and lack of transparency (scientists estimate that we know little about oceans' depths), says Harvard prof/ fmr IMF chief economist, Proj Syndicate (courtesy Businessworld/ India), 5 June 10

Playing Field: FIFA World Cup (WC) visitors will stay longer and spend more--Although the projected no. of WC visitors is 373,000, down from a forecast in '07 of 483,000, it is expected that many of the visitors will stay longer and spend more, acc to updated projections on the econ impact of the FIFA event [pdf]. Net additional econ impact in '10 is 0.54% of GDP (comprised of an est. 0.48% from net additional foreign tourism and 0.06% FIFA spending). This is significant, since S Africa's GDP growth this yr is estimated at 2.0-2.5%, of which 0.5% is accounted for by a single event, Grant Thornton, 21 Apr 10 (Prize or penalty, Finance & Devt, Mar-May '10)

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