Post on 14-Nov-2014
description
transcript
Emerging MarketsWhy they matter
History and definitions
Emerging MarketsWhy they matter
Characteristics
Emerging MarketsWhy they matter
The Global Realignment
Emerging MarketsWhy they matter
Business and trade
Emerging MarketsWhy they matter
History and definitions
History of Emerging MarketsMDCs (more-developed countries) e.g. Canada, England, France, Netherlands Germany, USA
LDCs (less-developed countries) industrialized countries just entering world trade; most in Asia & Latin America
LLDCs (least-developed countries) industrially underdeveloped, agrarian, rural populations; little world trade; Most in Africa
United Nations
The World Bank
Definition of an Emerging markets
Where are these Emerging Markets?
developed emerging
How many emerging markets are there?
Depends who you ask?
MSCI (Morgan Stanley) identifies 52 Emerging Markets.
The Economist has 24 countries on their Emerging Markets list.
Dow-Jones has 35 countries on their Emerging Markets list.
Emerging Markets - 45
Emerging Markets – Top 45Brazil
Hungary
Mexico
Poland
South Africa
Taiwan
Emerging MarketsArgentina Malaysia
Chile Morocco
China Pakistan
Columbia Peru
Czech Republic Philippines
Egypt Russia
India Thailand
Indonesia Turkey
Emerging MarketsBahrain Mauritius
Bangladesh Nigeria
Botswana Oman
Bulgaria Qatar
Croatia Romania
Cyprus Serbia
Estonia Slovakia
Cote d’ Ivoire Slovenia
Jordan Sri Lanka
Kenya Tunisia
Lithuania Vietnam
Republic of Macedonia
Emerging MarketsWhy they matter
Characteristics
Emerging Markets Population
developed emerging
The land area!
developed emerging
Politics and Governments
Democracy in Russia ?
5.5 trilli
on $ in re
serve
s
PIGS?
Young workforceA young and well educated workforce
Leapfrogging Ahead
Emerging Markets PopulationCountry Populatio
n (mm)2010 GNI / capita (US$)
Country Population (mm)
2010 GNI / capita (US$)
Brazil 192 7,300 Indonesia 227 1,880
Hungary 10 12,810 Pakistan 166 950
Mexico 106 9,990 Russia 142 9,660
Poland 38 11,730 Thailand 67 3,670
South Africa
49 5,820 Turkey 74 9,020
South Korea
49 21,530 Bulgaria 8 5,490
Taiwan 23 16,442 Estonia 1 14,570
Argentina 40 7,190 Jordan 6 3,470
Chile 17 9,370 Nigeria 151 1,170
China 1,325 2,940 Saudi Arabia
25 17,870
Egypt 82 1,800 Ukraine 46 3,210
India 1,040 1,140 Vietnam 86 890
United States
304 47,930
Emerging MarketsWhy they matter
The Global Realignment
GDP in 2050
Gross Domestic Product [2007] Gross Domestic Product [2050]
Rank Country GDP (millions of
USD)
1 US 13,843,825
2 Japan 4,383,762
3 Germany 3,322,147
4 China 3,250,827
5 UK 2,772,570
6 France 2,560,255
7 Italy 2,104,666
8 Spain 1,438,959
9 Canada 1,432,140
10 Brazil 1,313,590
11 Russia 1,289,582
12 India 1,098,945
13 South
Korea 957,053
14 Australia 908,826
15 Mexico 893,365
Rank Country GDP (millions
of USD)
1 China 78,000,000
2 US 38,500,000
3 India 37,600,000
4 Brazil 11,300,000
5 Russia 9,340,000
6 Mexico 8,580,000
7 Indonesia 7,010,000
8 Japan 6,670,000
9 Germany 5,820,000
10 UK 5,020,000
11 France 4,640,000
12 Nigeria 4,590,000
13 South
Korea 4,080,000
14 Turkey 3,940,000
15 Vietnam 3,600,000
CANKUN FACTORY, XIAMEN CITY (R) coffeemakers / ironsBy 2030-2035, the combined GDP of emerging markets will overtake that of currently mature economies Goldman Sachs estimates that the four largest
emerging markets (known as BRICs – China, Brazil, India and Russia) will overtake the G7 (US, Japan, Germany, France, UK, Italy and Canada) by 2040.By 2027, it’s estimated that China’s economy will be the largest in the World. Currently number two after USA.By 2050, the emerging markets, in aggregate, will be nearly twice as large as the current developed economies.
CANKUN FACTORY, XIAMEN CITY (R) coffeemakers / irons
Emerging markets will account for 70% of world’s total growth in next 10 years and beyond.
Emerging markets will account for 70% of world’s total growth in next 10 years and beyond.
The creation of more than two billion new consumers
Realignment of Global Economies Samsung (Korea) – powerful global brand, effectively rivals Sony,
R&D budget larger than Intel Embraer (Brazil) – premier producer of regional jets CEMEX (Mexico) – largest cement company in US, second largest
in UK, third largest globally Gazprom (Russia) – oil reserves larger than all the oil majors
combined, principal supplier of gas to Europe Inbev (Brazil/Belgium) – CEO is Brazilian, world’s largest beer
company, Most computers made and designed in Taiwan and China. Most advice on how to fix computers comes from India. R&D centers – pharma companies India, GE health-care arm spent
$50 mm to build R&D center in India, Cisco spent over $1B on a 2nd global HQ in India, Microsoft’s R& D center in Beijing is its largest outside of US
New inventions in consumer electronics and wireless technology emanating from Asia.
Inventions and technology on the rise in emerging markets
Emerging Markets Gaining in Political Influence
In 2009, the G20 permanently replaced G8 as the main economic council of wealthy nations
Emerging MarketsWhy they matter
Business and trade
Who cares about Emerging Markets?
Strong economic growth disposable income
PG Currently operates in more than 100 countries
Americans and Europeans spend around 110 euro /year/capita on PG products vs. 12 euro globally.
In Mexico consumption is 20 euro/year/capita vs. less than 4 euro in China and less than 2 euro in India.
Goal is to get China and India consumption to Mexico’s level of consumption. If they do, that’s another 40 billion euro in sales.
GLOBALIZATIONGlobalization is by many seen as inevitable & controversial
Some win Some Lose
Fear for diluting of local cultures
Reaction such as protectionism pop up
ProtectionismThe US vs Brazil cotton war
US cotton farmers get gov’t subsidies.These subsidies are illegal, by WTO rules.Brazil filed complaint & won. US kept paying cotton farmers.
Now US pays Brazilian farmers too.
Google versus China
Other ObstaclesPolitical instabilityLegal frameworkRestrictions on foreign investmentInvestment – disclosure, ownership, minority
shareholder cultureVarying levels of corruption
Other Obstacles
Political instability and legal structure
Restrictions on foreign investment and ownership
Corruption
undervalued exchange rates
DO YOU SEE THEM AS AN OPPURTUNITY OR
AS A THREAT ?
Emerging Markets Gaining in Political Influence
Get to know them
Protests against Globalisation and Institutions