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. 1, January

10.8% and Climbing: US Pension Funds Continue to Step Up Investing Abroad
Any way you slice it, US corporate pension funds continue to steadily increase their allocation to international securities markets, despite their underperformance compared with domestic markets in recent years. And the end is not yet in sight. According...
A Privatized PNB Is Set for Growth
The newly privatized Philippine National Bank is building on its dominant position in the nation's banking industry. Philippine National Bank (PNB) is emerging from a period of profound restructuring, which culminated with the final stage of its privatization...
Argentina: Economic Overview
Under President Carlos Menem, Argentina has undertaken a profound economic restructuring that includes the convertibility plan-comprising a quasi currency board that has provided the pillar of stability, removal of many taxes, an increase in tax collection,...
A Russian 'Too Big to Topple'
Russian bankers don't have to get in bed with Kremlin officials to flourish. That lesson is amply demonstrated by Vladimir Viktorovich Vinogradov. As head of Inkombank, Russia's largest private commercial bank, Vinogradov regularly criticizes the cozy...
A Working Model for Securitization Risk, Courtest of St Paul Re
Ever since Hurricane Andrew devastated the Florida coast in 1992, US property insurers have dreaded the possibility that a far worse catastrophe may one day wipe out a great deal of their capital. Subsequent efforts to tap US capital markets, however,...
Bangko Sentral Foresees Growth
The Philippine Central Bank restored financial stability that helped put the Philippines on a fast-growth track. The Philippine economy, sidelined over the past decade while other Asian countries spurted ahead, is finally hitting its stride and expanding...
Brazil: Economic Overview
President Fernando Henrique Cardoso has led Brazil through two years of its most successful stabilization program in decades, lending credence to the frequently cited adage that "Brazil is the country of the future." While substantial headway has been...
Can It Get Any Better?
Is the world just lucky, or what? As our Benchmarks section details, the world's financial markets had another good year in 1996 after a spectacular ride the year before. The US equities and bond markets were a mighty influence in the global statistics,...
Chile: Economic Overview
Chile's economy has expanded continuously for 13 years, averaging more than 6% growth a year. Now, under the leadership of President Eduardo Frei, Chile has joined the Mercosur trade bloc, which should boost its economy even more. Growth over the recent...
China: Economic Overview
Despite the political tensions and fiscal austerity measures that followed the 1989 Tiananmen Square incident, the People's Republic of China has since become the second-largest recipient of foreign direct investment in the world, after the United States....
Colombia's Unique Stability Attracts Foreign Investors
An unfolding privatization scheme and new oil finds support a positive long-term view of Colombia's investment environment It has long been Colombia's vaunted economic stability-that is, compared with the rest of Latin Americathat has won it kudos, a...
Colomia: Economic Overview
Colombia has long been seen as an example of steady, if not broadly liberalized, economic development.Yet the government of President Ernesto Samper Pizano has been plagued by both accusations of bribery and continued terrorism, slowing the progress...
Czech Republic: Economic Overview
ECONOMIC OVERVIEW The Czech Republic is considered by many analysts to be the most economically advanced and politically stable of the emerging European countries. Still, the government faces the challenge of reducing its high inflation rate, relative...
Emerging Market Convertible of the Month: Altos Hornos De Mexico
International investors still suffer from the Tequila effect-the skepticism about Latin American securities that set in after Mexico's peso crisis. Altos Hornos de Mexico, the largest Mexican steel company, learned this dismal fact last summer and fall,...
European Securitization of the Month: Britain's Craegmoor Group
In ordinary securitizations, a company sets aside a particular batch of income-producing financial assets and issues bonds against them. Last month Britain's Craegmoor Group went one better: It raised 80 million ($135.5 million) by securitizing all its...
Euro Puzzlers for the Finance Director
The radically differing EMU scenarios all require quite different long-term financing strategies-and actions now. With countdown just two years away, Europe's companies, led by a small group of multinationals, are beginning to react to what has been...
Foreign Direct Investment Fuels Global Growth
Companies invested $100 billion in operations in emerging economies in 1995, compared with $22 billion in new portfolio equity investments. FDI is the largest item in all net private capital flows to developing countries. One of the clearest signs of...
Foreign Investors Stick with Mexico
Direct investment in Mexico has remained in the $7-$8 billion per year range throught Mexico's economic readjustment period. We short-erm prospects made dramatic headlines in 1995 during the economic crisis, another story about a longer-term relationship...
Full Steam Ahead
Last year's political battle around the privatization of the secondary petrochemical plant is over. Investors are expected to line up for the auctions of Mexico's petrochemical complexes as privatization of the sector proceeds. Last year was not a blowout...
Getting Scarce: Year 2000 Problem Solvers
THE BEST-KNOWN VENDORS LIKELY WILL BE SEWN UP BY MIDYEAR. With less than three years to go, the number of vendors that can recode information processing systems so that they won't implode at the start of the 21st century are dwindling at an alarming...
Global M&A Deal of the Month: Hoechst/Clariant
The deal that Germany's Hoechst cut last month to sell its specialty chemical operation to Switzerland's Clariant is being hailed by analysts as "extraordinarily imaginative." Pushed by Jurgen Dormann, Hoechst's reforming chairman and its former chief...
Greece: Economic Overview
Under the leadership of Prime Minister Costas Simitis, Greece is struggling to balance its needs for improved infrastructure and capital imports against an EU-endorsed fiscal austerity program aimed at reducing the budget deficit, debt, and inflation....
How Companies Fare in a Really Liberated Economy
New Zealand's radical, 12-year experiment in transforming its economy is paying big dividends. After years of recession and painful restructuring on all levels, the economy appears on track to keep growing for a surprisingly long time. The government...
Hungary: Economic Overview
Hungary has carved out a clear leadership position in Eastern Europe as a center for international trade and investment. Between 1989 and 1995 Hungary attracted more than $12.8 billion in foreign direct investment, fuly half of all such investment in...
Hungary for Growth
Sporting new investment grades and enjoying more foreign direct investment than any other country in Eastern Europe, Hungary is hoping 1997 will bring another important indicator: growth. Hungary could be this year's most attractive East European investment...
India: Economic Overview
India's new government, led by H.D. Deva Gowda, is faced with the formidable challenge of reducing the fiscal deficit, while maintaining a growth rate high enough to create jobs for the labor force in a population of some 950 million. Although growth...
Indonesia: Economic Overview
The Indonesian government has managed to maintain a high 7% growth rate over the past five years, broadening the industrial and agricultural base of the economy and increasing both imports and exports, while maintaining a positive trade balance. Liberalization...
Investing in Hungary
A welcoming attitude toward foreign investment, well-made law, and the government's need to service heavy debts have combined ta make Hungary the foreign direct investment capital of Eastern Europe. At a recent Global Finance roundtable in Budapest,...
Jordan: Economic Overview
While the government of Jordan is working to meet International Monetary Fund fiscal targets, expectations for GDP growth are still in the healthy range of 6%, which should permit continued development of the economy. As the government continues its...
Keeping Inflation under Control
The government tightened money supply in 1996 to beat back a threat to its stabilization programs. The 1996 yearend report from Bangko Sentral ng Pilipinas (BSP) shows that the country was able to sustain an accelerating GNP growth rate, driven mainly...
Letters
ASIAN SPIN-OFF I wish to clarify the remarks attributed to me in the article entitled "The Asian Spin on Spin-Offs" in your November 1996 edition of Global Finance. The article states, as my observation, ". . . now seems a good time for Hongkong companies...
Life Sciences Finance Rises to a Fever Pitch
Life sciences financing looks to be headed for another action-packed year. Bankers expect heavy activity in the biotechnology, medical device, and drug delivery sectors. For life sciences chief financial officers and investment bankers alike, a literary...
Metrobank Hits $1-Billion Mark
Metropolitan Bank and Trust Company is the first Philippine bank to reach $1-billion in capitalization. Metropolitan Bank and Trust Company (Metrobank) posted capital funds of just over $1 billion at the end of June 1996,making it the first Philippine...
Mexico: Economic Overview
Under the leadership of President Ernesto Zedillo, Mexico has successfully dealt with the short-term liquidity problems caused by the late 1994 devaluation of the peso, which eroded more than 50% in value against the US dollar.Tight fiscal policies are...
Mexico Opens to More Competition
I am grateful to the editors of The Global Finance Guide to Direct Investing in Emerging Markets for giving me the opportunity to introduce this publication. Over the past few years the performance of economies in Latin America has been erratic. However,...
Multiple Choice: Client/server Enterprise Software Isn't Quite the One-Player Game It Was
For large companies with client/server networks, having an enterprise-wide system is increasingly the name of the game, and until recently there appeared to be one supreme way of playing it, with SAP's R13 system. Now, it seems, there are some real alternatives....
Nigeria
Faced with a slowing economy in nonoil sectors, President Sani Abacha has slowly continued with his liberalization program, begun in 1995, to attract more foreign investment and to rebuild international trade. Petroleum is the controlling industry in...
Normalization Finally Takes Hold in Brazil
The Brazil of 1996-97 looks so dramatically different than the country looked in the past that foreign investors have come running. Foreign direct investment was up 20% last year. For the first time in years, the difficulties confronting investors in...
Peru: Economic Overview
Peru achieved a major milestone in its financial restructuring when government representatives and the country's foreign bank advisers, led by Citibank, signed an agreement to refinance $4.4 billion of mediumand long-term debt in late November 1996....
Philippines: Economic Overview
Through continuing reforms in investment and taxation, President Fidel Ramos is helping the Philippines remain a highly attractive site for new foreign investment.The success of the administration's economic plan is mirrored by such high-visibility investment...
Poland: Economic Overview
For several years Poland has paid the price of fiscal reform. Now led by former communist Alexander Kwasniewski, it is expanding its economy rapidly with large injections of foreign investment. Despite the perennial division of political parties and...
Portugal: Economic Overview
Since joining the European Community in 1986, Portugal has pursued structural reform designed to diminish the role of the state in the economy. Full or partial privatization of more than 100 state-owned companies since 1989 has reduced the weight of...
Roundtable: Betting on Emerging Markets
Multinationals are investing more than $100 billion a year in plants and projects in emerging markets. Senior private and public sector representatives discussed the direct investment issues and trends in Washington, D.C., with Ernest McCrary, Global...
Russia: Economic Overview
Russia still suffers frequent near-crises as the government continues its adaptation to Western economic standards.The questionable health of President Boris Yeltsin, reelected in June 1996, has added to the power struggles between conservative and more...
South Africa
South Africa has achieved a globally recognized milestone in its efforts to become an open and diversified economy, once again attracting the high levels of foreign investment that character ized the nation prior to its struggle to end apartheid. Setting...
South America's Emerging Energy Titan
Quietly but steadily, Colombia has been transforming itself over the past few years into one of the major energy countries in the entire Western Hemisphere. As an oil producer, it boasts some of the most significant new finds anywhere in the past 20...
South Korea: Economic Overview
South Korea has emerged as a prominent economic power in Asia, with some of the world's strongest and most aggressive multinationals, or chaebol, extending the country's economic reach around the globe. But faced with a slowdown after decades of economic...
Taiwan: Economic Overview
Taiwan has set an ambitious goal of becoming a key Asian regional center for finance and other international services, and for the production of information technology products. To achieve this goal, the government is accelerating its liberalization...
Thailand: Economic Overview
The economic history of Thailand is entering a new chapter under the leadership of Prime Minister Chavalit Yongchaiyudh, elected in November 1996. After Thailand was cited by the World Bank as having the world's fastest-growing economy between 1985 and...
The Outstanding Asian Growth Story
Investment bank analysts say the Philppine stock market still has room to grow, led by property companies that will meet demand for residential and commercial space. The Philippines is "the outstanding secular growth story in Asia," according to the...
Turkey: Economic Overview
Turkey's government is faced with a longstanding problem of controlling high deficit spending and high inflation, which has limited the growth of the economy. Deficit spending through August 1996 amounted to some $9 billion. Given low savings rates in...
Venezuela: Economic Overview
ECONOMIC OVERVIEW Venezuelan President Rafael Caldera in April 1996 announced a series of fiscal and monetary reforms calculated to restore economic growth. Major measures implemented include increasing the price of gasoline fivefold; eliminating foreign...
Zimbabwe: Economic Overview
ECONOMIC OVERVIEW Led by President Robert Mugabe, Zimbabwe is a politically stable and socially peaceful country that has increasingly attracted the attention of the international investment community, thanks in part to a wealth of mineral resources....