March 6, 2008
March 6, 2008
MPs have rejected proposals to hold a UK-wide referendum on whether to ratify the EU’s Lisbon Treaty. The House of Commons turned down the Conservative proposal by 311 votes to 248 – a margin of 63.
The result means Parliament itself will decide whether to ratify the treaty, signed by EU leaders last December.
Thirteen Lib Dem MPs rebelled against the party’s orders to abstain on the referendum vote, with three frontbench spokesmen resigning their posts.
MPs rejected the Conservative amendment to the EU (Amendment) Bill, but 29 Labour MPs supported it. Three Tories defied their party leadership.
All EU parliaments must ratify the treaty before it can come into force. The only country which has committed to a referendum is Ireland.
We hope that in this case the Lords will hold the government to their manifesto commitment
William Hague, Conservatives
The three main UK political parties promised a public vote on the EU Constitution in their 2005 general election manifestos.
But the constitution was rejected by the French and Dutch electorates later that year. The Lisbon Treaty was drawn up to replace it.
The government and the Lib Dems say the treaty does not have constitutional implications, so a referendum on it is not needed.
The government says most changes are minor and procedural and it has secured “opt-outs” where necessary.
But the Conservatives, some Labour and Lib Dem MPs and the UK Independence Party among others, say that it is effectively the constitution under a different name – so there should be a referendum.
Shadow foreign secretary William Hague said: “This treaty will now go to the House of Lords.
“It is convention that the House of Lords does not stand in the way of manifesto commitments. We hope that in this case the Lords will hold the government to their manifesto commitment.
“The Liberal Democrats’ position will once again be pivotal. We will see if they follow their three-line whip in the Commons to abstain.”
The Lib Dem leadership, which instead wants a referendum on whether the UK should stay within the EU, ordered its MPs to abstain in the Tory-led debate.
But 13 refused to do so, instead voting for a referendum on the treaty.
Scottish affairs spokesman Alistair Carmichael, countryside spokesman Tim Farron and justice spokesman David Heath resigned from the Lib Dem frontbench team.
MPs have been debating the different elements of the treaty over the past month.
October 4, 2007
Choose Your Language Of Preference Below
The $64 billion question remains as to how Zambia can attract western investors … we at the Zambian Chronicle (in July this year) once detailed that as a nation, the country had serious competitors and we needed to get into these competitors’ pysche as well as those of the would-be investors’ to succeed.
In an article posted in the Washington Post, Tomoel Murakami Tse shades more light on what western investors are looking for before they can make our enterprise a destination for their investment dollars … thanks a trillion
For Further Reading Click Here … http://zambianchronicle.com/2007/07/26/116/
By Tomoeh Murakami Tse
Washington Post Staff Writer
Forget the emerging markets of China, Brazil, India and Russia. If you’re looking for that extra kick in your investment portfolio, you’ll have to venture to Latvia, Bangladesh, Namibia and Ivory Coast, according to a small but growing number of mutual fund managers exploring the front line of stock investing known as frontier markets.
In the past several years, many investors who put their money into emerging markets enjoyed annual returns of more than 30 percent, attracting capital from Japanese housewives and American pensioners.
Bangladesh’s market rose 60 percent in the past year. The head of the exchange says its value will double next year, lifted by IPOs for state and private firms. (By David Greedy — Bloomberg News)
But as investments in Chinese retail companies and Indian tech firms become more mainstream, and as more analysts caution that such outsize gains are not sustainable, money managers are asking: Where next?
“A lot of hidden gems are no longer hidden,” said Hugh Hunter, head of global emerging markets at WestLB Mellon Asset Management. “Clearly, frontier markets are the next tier. . . . We have no option but to go forward in this area.”
So don’t be surprised if you start seeing unfamiliar stocks from far-flung places on statements from your emerging markets fund manager.
Aside from the need to keep looking for new investment opportunities, Hunter and others say, economic growth and development of the capital markets have turned some frontier markets into appealing, long-term investments for those with a healthy appetite for risk. Money managers view the frontier economies much as they did the emerging markets of a decade ago. They are hopping on airplanes to visit countries where as few as a half-dozen companies are listed on the local stock exchanges.
A handful of mutual fund firms, including Franklin Templeton and Baltimore-based T. Rowe Price, already offer individual investors exposure to the frontier markets via emerging market mutual funds. This month, T. Rowe launched the Africa & Middle East Fund, with investments in Kenya and Lebanon, among other places. As markets develop, T. Rowe said, the fund could potentially invest in Algeria, Botswana, Ghana, Kuwait, Mauritius, Namibia, Tunisia and Zimbabwe.
“We’ve seen a number of factors come together,” said Joseph Rohm, an analyst for the fund. “Africa is enjoying strong GDP growth. Inflation has halved over the last five years. . . . We’ve seen governments spend heavily on power, electricity, roads. For the first time ever in the continent’s history, that’s really happening.”The fund’s largest holdings include United Bank, the largest lender in Nigeria, which recently implemented reforms in the banking sector. The bank is expanding operations outside the country, T. Rowe noted.
There is no precise definition of what constitutes a frontier market vs. an emerging market. Some investors, for example, consider Israel and Korea to be developed markets, while others do not.
In general, frontier markets are smaller — fewer companies, fewer investors, less trading. There’s also less regulation, information on companies and transparency. The markets are considered to be in the nascent stages of development and even riskier than emerging markets, which, of course, are riskier than developed markets like the United States.
Think of it this way: While a money manager invested in an emerging market might worry about bubbles created by unsophisticated domestic investors, his or her counterpart in a frontier market might be concerned about a lack of local investors.
About 540 stocks are traded across 22 frontier markets, with a total market capitalization of $165 billion, according to an April report by Acadian Asset Management. By comparison, the market cap of just one Russian oil company, Lukoil, is about $70 billion, and more than 800 companies are listed on the Shanghai Stock Exchange, one of two exchanges in China.
Despite its size, a frontier market can reward investors handsomely. In the past three years, the Ukrainian stock market has returned 700 percent. It has risen about 160 percent in the past year, while the market in Slovenia gained 110 percent. Botswana returned about 90 percent, and Bangladesh advanced 60 percent. But not all are winners. The Jamaican exchange is down 4 percent this year, though it gained 150 percent in 2003 and 2004 combined.
The S&P/IFC Global Frontier Markets index, which covers the stock markets of 22 countries, gained 49 percent in the year ended Aug. 31. That compares with 16 percent for the Standard & Poor’s 500-stock index during the same period.
But numerous potential downfalls exist in frontier markets. One big concern is the lack of “liquidity,” or the ability to buy and sell stocks quickly. Hunter of WestLB Mellon said it recently took him close to a month to get out of a single position in a frontier market in Europe.
There is also the risk of wild fluctuations in foreign-exchange rates, which can unexpectedly lower the value of investments. The value of the peso in Argentina, for example, plummeted five years ago when the government was forced to devalue the currency during the largest foreign debt default in history.
Money managers have to ask themselves fundamental questions. “What are the rules that allow me to get in and out quickly?” said Alka Banerjee, vice president of global index management for Standard & Poor’s. “Is there a derivatives market which allows me to hedge my exposure? These are the kinds of infrastructure that a stock market needs for it to become basically more accessible to any global investor.”
One benefit investors should consider, noted Rohm of T. Rowe, is the frontier markets’ low correlation to developed markets, offering diversification to individual portfolios.
Many emerging markets fell during the turmoil sparked by U.S. mortgage and credit markets this summer. Not so frontier markets. One reason is that they often deal only in equities and bonds and don’t have derivatives markets. Many of the exotic securities backed by subprime mortgages, the catalyst for the credit crisis, are traded in derivatives markets. “They have no exposure to these sort of instruments,” Rohm said.
On the other hand, many frontier-market economies are dependent on commodities. While raw materials and oil have high prices now, volatile commodity prices and a reliance on commodity exports have been a source of risk for developing countries. But some frontier countries are widening the base of their economies.
Debt relief from the World Bank has freed up African governments to spend their money on infrastructure, said Rohm, a native of South Africa who has traveled extensively across the continent. The emergence of the middle-class consumer has created opportunities for consumer-oriented companies.
“It’s very visible,” said Rohm, who recently returned from a trip to Nigeria, Ghana, Kenya, Uganda and Zambia. Before, “you wouldn’t have seen people walking around with mobile phones. There are a lot of new cars on the road. You see new roads being built. You see new factories being built . . . managements are very happy to meet with investors. They’re producing regular financial statements, which allows us to do due diligence on these companies. ”
We have edited the above article to highlight important issue relative to an investor’s pysche … thanks a trillion
September 19, 2007
Former U.S. Federal Reserve chairman Alan Greenspan said it is possible that the euro could replace the U.S. dollar as the reserve currency of choice.
According to an advance copy of an interview to be published in Thursday’s edition of the German magazine Stern, Greenspan said that the dollar is still slightly ahead in its use as a reserve currency, but added that “it doesn’t have all that much of an advantage” anymore.
The euro has been soaring against the U.S. currency in recent weeks, hitting all-time high of $1.3927 last week as the dollar has fallen on turbulent market conditions stemming from the ongoing U.S. subprime crisis. The Fed meets this week and is expected to lower its benchmark interest rate from the current 5.25 percent.
Greenspan said that at the end of 2006, some 25 percent of all currency reserves held by central banks were held in euros, compared to 66 percent for the U.S. dollar.
In terms of being used as a payment for cross-border transactions, the euro is trailing the dollar only slightly with 39 percent to 43 percent.
Greenspan said the European Central Bank has become “a serious factor in the global economy.”
He said the increased usage of the euro as a reserve currency has led to a lowering of interest rates in the euro zone, which has “without any doubt contributed to the current economic growth.”
© 2007 Associated Press. All Rights Reserved.
By press time of the article above, the US Federal Reserve had not yet announced its intentions to cut benchmark rates by half a percentage point.
As of the time of this posting the rate stood at 4.75% bringing new surge in the markets around the world with the Dow Jones gaining over 300 points in one day … thanks a trillion.
Brainwave R Mumba, Sr.
Market Reaction Around The World …