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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (25093)	11/12/2007 2:49:10 AM
From: elmatador	Respond to of 217808

broader trend in new flows, new actors and new partnerships that is transforming capital markets. In short: decoupling. Forget Iraq! The caravan has passed this place and moved elsewhere. Fo a watch, pair of blue jeans, and full plate of food an Africa can produce a lot!!! Now if you add a mobile phone, then... A role for new actors in the global economy By Richard Gnodde Published: November 11 2007 17:53 \| Last updated: November 11 2007 17:53 The recent announcement of the Industrial and Commercial Bank of China ’s $5.5bn investment in 20 per cent of Standard Bank of South Africa was a milestone for Africa, and for China. The largest-ever overseas investment by a Chinese company, it is also the largest foreign direct investment in Africa. Just as remarkable is the fact that this was a major transaction between two emerging markets institutions, reflecting a broader trend in new flows, new actors and new partnerships that is transforming capital markets. For the past five years we have seen a strong period of global growth and wealth creation driven by the opening of new markets, financial innovation, favourable credit conditions and disciplined corporate management. Perhaps more striking has been the breadth of this growth – across geographies, asset classes and industries. We have one global economy, but it is increasingly powered by multiple engines, with multiple sources of demand and liquidity. The new flows go beyond the increased investment in emerging markets to include investments from those markets into mature economies, and cross-border investments between emerging economies. Since 1990, cross-border capital flows have grown more than 10 per cent annually. Over that period, capital inflows to emerging markets have grown twice as fast as inflows to developed countries. Investment flowing to developing countries now accounts for nearly half of world total FDI inflows, compared with only 20 per cent in 1990. Even excluding China, the share doubled to 32 per cent. New actors – be they private equity, hedge funds, sovereign wealth funds, or state-controlled entities – are playing a critical role in driving these new flows. While there is a broad understanding of the role and practices of private equity and hedge funds, there is more uncertainty about the intentions and capabilities of the state-linked funds and companies. One concern is whether the sovereign wealth funds will want to take controlling stakes in some of these large companies, rather than remain passive minority investors. Another surrounds the transparency of their strategies, practices and investments. Still another is whether political considerations will affect investment decisions – whether, in other words, they will act as a sovereign or as a fund. While I am confident these concerns can be addressed through increased openness and transparency, sound practices and risk management, it is not evident that there will be a convergence in the character of these funds along a western model, as some are calling for. If anything, there is growing evidence of an emerging plurality of market models around the world, reflected in part by the variety of investment vehicles. Russians, Chinese and certain Gulf states – to mention a few examples – are each practising capitalism in their own distinct way, none of which is identical to the way it is practised in the west. As those models appear to deliver growth and stability, they are less likely to be adapted to a purely western model. A protectionist response that seeks to restrict investments by these new actors in the global economy, or subject their activities to cumbersome vetting processes, is clearly not the right response. Given the common interest on all sides in maintaining open investment regimes and free trade to sustain global growth, a dialogue involving both governments and the new actors could go a long way towards dispelling myths and creating real transparency. This emergence of new flows and new actors from new models of capitalism reflects a natural diversity of social and economic practices that is in no way incompatible with the process of globalisation. This new ecosystem of global capital is not only generating great opportunities for established investors from both developed and developing countries; it is also, in the case of Africa’s attraction for Chinese and Russian investors, presenting an opportunity for the continent to share in the benefits of globalisation. This is not to say that the risks or challenges of investing in emerging markets have disappeared. Nor is it to diminish the importance of maintaining reciprocity of access to markets, and a sound regulatory and legal framework to provide confidence in the rule of law. It is to suggest that the next stage of globalisation will likely require the global economy to accommodate a greater diversity of market models if we are to take full advantage of the new flows, new actors and new partnerships that will drive global growth in the future. The author is co-chief executive officer of Goldman Sachs International