Global Finance

A monthly publication providing news and analysis of global market and economy. Focuses on corporate finance, capital markets, and more.

Articles from Vol. 11, No. 11, November

A Case for Globalism
Globalism's growth potential comes at a high price. It requires an immense ongoing investment in infrastructure and technology. The language and cultural barriers are considerable and the logistics nightmarish. We speak from experience: In just the last...
Accepting Their Awards
Four central bankers are lauded in Hongkong as the best in the world. At the joint IMF/World Bank annual meeting in Hongkong late in September, Global Finance held its first ceremony to hand out awards to some of the world's top central bankers. Specifically,...
A New Tool to Measure Performance
Perhaps it's activity-based costing (ABC). Or economic value added (EVA). Or yet another performance measurement. Whatever yardstick a company uses, calculating it once or twice a year can be done with a spreadsheet, although it is a laborious process....
Austrian Upheaval
It's a tale of power, politics, and suicide in a society still coming to terms with the loss of the old Austro-Hungarian empire. Blue-blood corporate leaders look on aghast as a new guard of nominal socialists march in to take positions that the well-bred...
A View from Washington
The brain truster in the Clinton administration who probably does the most thinking about the impact of globalization is Lawrence H. Summers, deputy secretary of the US treasury. A former Harvard economics professor, Summers, 43, is a strong advocate...
A Writing Staff of 50,000
Carl Burgen, Global Finance's founding editor, conceptualized this magazine along with publisher Joe Giarraputo in 1987 when the words "global finance" sounded as futuristic as flights to Jupiter. By the time Carl retired, with last month's lOth anniversary,...
Bailing out a Thai Bank
When Thailand lifted its 25% ceiling on foreign investment in Thai banks, it was a clear admission that the country desperately needed foreign capital to keep its financial system afloat. To stave off insolvency, not to mention resuming loans, the country's...
Borrowing
With two recent issues, GE Capital is readying for the future. The financial powerhouse is one of the first corporations to issue bonds in euro, not waiting until the common European currency goes into circulation on January 1 1999. Indeed, the American...
Brazil's Oldest Trading State Renews Its Mission
Pernambuco, the heart of the easternmost bulge of the South American continent into the Atlantic, is a state that thrived on international commerce for 300 years after it was first settled by the Portuguese in the 1520s. As the vibrant center of the...
Can Corporations Defuse the Globalization Time Bomb?
The markets demonstrated the dangers of financial linkage last month as stock markets fell in dramatic succession. But globalization of commerce is setting off harbingers of far more frightening dangers. No one denies the enormous benefits of globalization....
Derivatives Gang
Derivatives have gone mainstream. Consider this year's ward of the Nobel prize in economics to two men who developed the Black-Scholes option pricing model; the public protest by Hershey Foods and other highly respectable US corporations that the Financial...
Eurobenefits
The introduction of the single currency represents a great opportunity for all European companies. The euro promises a wide degree of monetary stability-something that constitutes, in both the medium and long term, the best guarantee for the development...
Executive Options about to Hit the Wall?
AS USE OF OPTIONS DILUTES SHAREHOLDINGS. INVESTORS ARE RETHINKING EQUITY COMPENSATION. It's a classic case of "be careful what you wish for." Institutional investors who argued that US executive pay should be tied to performance complained that managers...
Financial Software 2000
Financial technology executives discuss the coming of the euro, the continued impact of the Internet, and the evolution of financial applications. Global Finance's Howard Moore moderated. GLOBAL FINANCE: What are we likely to see in financial systems...
Getting There
Profits plummeting, Asia's San Miguel restructures at home and looks to investments abroad to pay off down the road. How do you get from here to there? That's the problem facing one of Asia's largest and oldest companies, beer and food producer San Miguel....
Globalization of Services Is Different
Some may question the concept of globalization, claiming that it only leads to overcapacity, overborrowing, and underemployment. Maybe that can be said about the manufacture of products and technologies, but it just doesn't apply to certain services....
Governance Goes Global
A half-dozen countries and stock markets over the past year have estab lished or updated best-practice codes concerning corporate governance. At least that many more have guidelines in various stages hovering in the wings. The most diligent-the United...
Guadalupe, a New Worldclass Beach Resort near Recife
Our most important natural resource in Pernambuco is nature itself," says Sergio Guerra, the state's secretary of industry, commerce, and tourism. "We don't have major mineral deposits and the like, but we have this magnificent coast, which gives us...
In Conclusion
With the holiday season comes the annual dilemma of finding appropriate gifts for clients and colleagues. Rather than wade through catalogues or spend hours combing our favorite boutiques for compelling ideas, we went right to professional buyers at...
Letters
I have taken note of the central banker report cards, and I am, of course, very pleased with my grade. I will try to live up to your expectations and perform even better next year. Dr A.H.E.M. Wellink, President De Nederlandsche Bank Amsterdam Editor's...
Message from Miguel Arraes De Alencar
Governor of the State of Pernambuco The global economy is incessantly looking for new investment options, for new locations that are ideal for their endeavors. Some recent expectations have been frustrated, as in the case of Eastern Europe. Until recently,...
Pernambuco Aims for Globalization
Pernambuco is developing one of the great ports of the Southern Hemisphere, which will help make the state an increasingly important center of world commerce into the next century. A group of community leaders representing the public, private, and academic...
Pfandbrief Investor
The Pfandbrief market is thriving, as Germans and an increasing number of international investors have shown a fast growing appetite for these collateralized bonds since mid-1995. That was when the first jumbo issues of at least DM1 billion were launched,...
Piling into Brazil
With more than $1 trillion in revenues and 10 million employees, automaking still is the world's largest manufacturing industry-and it's becoming a case study in global overcapacity. As growth has slowed in their main markets in the United States, western...
Privatization at Hand for State Bank, Power Company
Privatization is moving ahead in Brazil at full speed in a number of industries, and Pernambuco is participating in this trend with plans to sell a state-owned bank and electrical energy distribution company. "The power distribution company, Celpe, is...
Prodepe Channels Industrial Investments into Pernambuco
One of the key agencies for channeling new investment projects into the state is the Pernambuco Economic Development Program (Prodepe). Of the $1.6 billion in investment made since 1995, half has been in the industrial sector-with fiscal incentives provided...
Promoting Industrial Diversification
Sugar has been the foundation of Pemambuco's economy for centuries and, only a decade ago, 42 large sugar refineries accounted for up to 15% of the state's gross domestic product. Today, that share has slipped to 5%, as 14 of the traditional sugar operations...
Pushing Maturities to 1,000 Years
Banking empires rarely survive longer than a century or two. The Knights Templars, Europe's great medieval banking network, managed to last 286 years. So what was the Luxembourg affiliate of Edmond Safra's Republic National Bank doing last month when...
Quiet Success
No one expected the Pfandbrief market, which is growing into one of Europe's largest and most secure bond markets, to be as successful outside of Germany as it has proven to be. Pfandbrief issuers met in Frankfurt to discuss these developments, with...
Taking Local Steps toward Globalization
Globalization gives the sense of a completed issue. However, we are still far from nearing any conclusion. Any attempt to globalize production must consider the market as part of the equation. In our opinion, this is not happening, and we fully agree...
Technical Specs for the Suape Super Port
The Industrial Port Complex of Suape is a maximum-priority project for the Northeast of Brazil. Close to Recife and its airport, highway, and rail infrastructure, the advantages of this port site were recognized more than 20 years ago, when the first...
The 12 Most Powerful Financial People on the Global Stage
Readers of our l0th anniversary issue last month are berating us for not ranking the 600 Most Powerful People in Finance according to how powerful they are. As we pointed out, power is tough to define, let alone measure. Some financial people are powerful...
The Case for REITs-And for Real Estate
REITs are more liquid, but real estate smooths out total return. Are REITs real estate or equities? Or, to put it another way, are REITs a complement to or a substitute for real estate investment? "That's a good question, but we don't have the answer...
The Globalization Time Bomb
The globalizing economy, though wondrously dynamic and wealth-creating, is heading toward some sort of calamitous reckoning, if things don't change. The core dilemma confronting the global system is that of companies creating surpluses. Surplus labor...
Tougher on Transfer Pricing
A recent Ernst & Young survey found that transfer pricing-the value assigned to intercompany transfers of goods and services-continues to be the number one tax issue for multinational corporations. It's also an increasingly important issue for governments,...
We All Can Win
Market globalization may be seen as part of a well-defined historical and political process. Its origins go back to the postwar liberalization of trade embodied in GATT, which in turn led to the establishment in 1995 of a permanent body in the form of...