Cost of capital brings competitive advantage. And cost of capital is related to trust, or risk. India has a current account deficit — it is importing more than it exports — so it needs to borrow money to fund the imports.
Category archives: Political/Economic
Gap to close stores in US, open in China
GAP has announced that it will close 21% of its 889 US stores over the next two years, and triple its number of outlets in China by the end of 2012.
Global fears and fortunes truly linked
Even China’s strong internal growth can only partially compensate for the negative impact of the West’s economic and debt crises. In the 12 months to September, exports grew by ‘only’ 17% (down from 25% in the year to August). In the same period, imports grew by ‘just’ 21% (compared with 30% in the year to …
Cooperation between emerging market bourses
Globalisation of the world’s money markets has taken a big step forward as stock exchanges in Brazil, Hong Kong, Russia, India, South Africa announced they will cross-list each others’ stock index futures and contracts for index options.
Burma releases political prisoners
Burma’s government has freed numerous dissidents signalling a desire for reform. http://www.ft.com/cms/s/0/9e7affae-f493-11e0-a286-00144feab49a.html
The unintended consequences of QE
Quantitative Easing was intended to kick-start the economy by tackling the credit crunch, making new credit available in the US and Europe. What actually happened was that the financial institutions preferred to place the money where they could get a bigger return — emerging markets — with the result that not only did the intended …
Global salaries are equalising
But the change is coming slowly. http://www.ft.com/cms/s/0/3aa54f1a-f3fe-11e0-b221-00144feab49a.html
British Government lacks a strategy
Strategy means choosing what not to do, but the UK government is committed to “ambitious goals on pretty much everything.” “That’s not a strategy: it is an all you can eat buffet.” “Britain’s governments should set long term goals.” http://www.ft.com/cms/s/0/0fedc67a-f3ff-11e0-b221-00144feab49a.html
Renminbi begins its rise against the dollar
For the record, the renminbi rose 0.6 percent against the dollar today, the largest rise since 2005. Chinese authorities are believed to have engineered the rise in response to growing criticism from the US, where critics believe it is undervalued by as much as 40%.
Iron ore prices hold
Large institutional investors believe that iron ore prices are unlikely to drop, even if the world enters a double-dip recession. The London Metals Index is down just over 20% this year, but iron ore has fallen less than one percent. In part, this is because the market in iron ore derivatives is relatively young (just over …