emerging markets finalpresentation

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Emerging Markets Why they matter History and definitions

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Page 1: Emerging markets finalpresentation

Emerging MarketsWhy they matter

History and definitions

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Emerging MarketsWhy they matter

Characteristics

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Emerging MarketsWhy they matter

The Global Realignment

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Emerging MarketsWhy they matter

Business and trade

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Emerging MarketsWhy they matter

History and definitions

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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

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The World Bank

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Definition of an Emerging markets

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Where are these Emerging Markets?

developed emerging

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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.

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Emerging Markets - 45

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Emerging Markets – Top 45Brazil

Hungary

Mexico

Poland

South Africa

Taiwan

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Emerging MarketsArgentina Malaysia

Chile Morocco

China Pakistan

Columbia Peru

Czech Republic Philippines

Egypt Russia

India Thailand

Indonesia Turkey

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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

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Emerging MarketsWhy they matter

Characteristics

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Emerging Markets Population

developed emerging

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The land area!

developed emerging

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Politics and Governments

Democracy in Russia ?

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ART. 32 OF CONSTITUTION SAYS MAJOR MINISTERS REPORT TO THE PRESIDENT NOT TO THE PM
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5.5 trilli

on $ in re

serve

s

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PIGS?

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Young workforceA young and well educated workforce

Leapfrogging Ahead

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ART. 32 OF CONSTITUTION SAYS MAJOR MINISTERS REPORT TO THE PRESIDENT NOT TO THE PM
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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

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Emerging MarketsWhy they matter

The Global Realignment

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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

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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.

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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.

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The creation of more than two billion new consumers

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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

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Emerging Markets Gaining in Political Influence

In 2009, the G20 permanently replaced G8 as the main economic council of wealthy nations

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Emerging MarketsWhy they matter

Business and trade

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Who cares about Emerging Markets?

Strong economic growth disposable income

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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.

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GLOBALIZATIONGlobalization is by many seen as inevitable & controversial

Some win Some Lose

Fear for diluting of local cultures

Reaction such as protectionism pop up

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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.

                              

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Google versus China

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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

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DO YOU SEE THEM AS AN OPPURTUNITY OR

AS A THREAT ?

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Emerging Markets Gaining in Political Influence

Get to know them

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Protests against Globalisation and Institutions