frank jurgen richter - gstaad, 20 september v2
TRANSCRIPT
Global Power Shift Implications for Investors
Dr. Frank-Jürgen Richter
Chairman
Horasis: The Global Visions Community
Citywire Switzerland, Gstaad, 20 September 2012
Copyright Horasis 2012
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The current state of the world
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… is quite gloomy
terrorism war economic crisis
Is the economic crisis here to stay?
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Warren Buffett: The recession is going to get worse. I don't
want to hold out false hopes that -- by some magic bullet --
that things will turn around in a couple months.
The Fall of Europe
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Angela Merkel: We are challenged ….
…. in our governance
The human reaction is fear
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… resulting in
anti-globalization protectionism clash of civilizations
Global Power Shift
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Rise of the BRICs Social Drift ‘Japanization’
Dreaming with BRICs
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Source: Goldman Sachs (2003): Dreaming With BRICs: The Path to 2050
BRICs:
• Brazil
• Russia
• India
• China
China: astonishing facts
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•
• biggest user of broadband
• second biggest user of energy
• no1 producer of motherboards
• China Mobile: largest TelCo
• Chongqing: world's largest city
• 1 mill. engineer grads per year
BRICs bashing is
… fashionable
• 7-8% GDP growth in China / India
• 4-5% GDP growth in Russia / Brazil
• Competition for natural resources
• Low cost manufacturing
• BRIC companies highly innovative/competitive
• Differing value systems / political systems
• ‘a new great game’
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Washington vs Beijing consensus
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China and other emerging markets begin to dominate the
global agenda
Europe: China’s Euro-Disneyland?
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BRICs and China
• India is top IT-outsourcing destination
• Russia is a large provider of oil and gaz
• Brazil is a main source for commodities
• China’s economic exchange with the other BRICs is increasing
• BRICs-Summit: China seems to take the lead
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BRICs: Opportunities
outweigh risks
• strong fundamentals
• Innovation / intellectual property
• improved corporate governance
• Long-term financing / stable stock exchanges
• Social welfare
• Willingness to work hard
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Growth forever?
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• Are BRICs contagion free from a
global slowdown?
• Can China shift to domestic consumption?
• How can BRIC-firms embrace socially
responsible and environmentally friendly
globalization strategies?
• What is the BRIC’s impact on global growth?
• What is the BRIC’s role in this post crisis
economic order?
Are BRICs decoupling?
no…. BRICs’ growth is stuttering
• China: lowering exports, leadership change
• India: political paralysis
• Russia: dependency on oil/gas exports, mass
protests
• Brazil: a Latin American laggard
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Beyond the BRICs
• South Africa now part of BRICS
• ´The next Eleven’
• Africa: the new frontier markets
• Globalization is uplifting developing countries into emerging/frontier markets status
• The borderline between OECD-countries and developing countries is blurring
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‘Reverse globalization’
• New North-South / West-East conflict
• Industrialized countries are losing ground
• ‘Japanization’ (lost decade) of Europe/the US
• Outsourcing as new paradigm
• Protectionism and economic nationalism
• BRICs rising to global eminence
• BRICs as alternative?
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Is the G20 delivering?
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The promise: ‘talk and smile’ The reality:
inclusiveness G0/G2 - ruderless world
Making sense of a G0/G2 world
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Framework for investors: The past
• Anglo-Saxon model: short-term profit taking
• free market libertarianism
• little government intervention
• ‘money matters’
• Washington Consensus
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Framework for investors: The present and future
• Asian model: based on long-term benefits
• State as important actor
• Stakeholder value instead of shareholder value
• ‘Society matters’
• financing of sustainable projects
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Global Risks
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… investments … growing risks
hazardous threats
turbulances
systemic disruption
How shall investors deal with
(reverse) globalization?
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• balancing global developments with local roots
• perceiving globalization as opportunity, not threat
• moving pro-actively into emerging markets
• building virtual organizations
• speed is king
Ideas for investors
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• BRIC-domiciled firms in general
• BRIC-firms internationalizing through M&A
• European/US firms with strong BRIC-presence
• European/US firms having BRIC-shareholders
• don’t forget: there are excellent firms based in
OECD-countries, despite economic gloom there
Winning the future!
… with China / the BRICs
• Hope for the best - expect the worst
• Ride on the Chinese dragon
• Embrace technology
• ‘Chinanize’ your investments
• The future is not gloomy!
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