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GLOBAL LEADERSHIP IN THE FINANCIAL MARKETPLACE

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Title: GLOBAL LEADERSHIP IN THE FINANCIAL MARKETPLACE Author: wparke Last modified by: Eric Created Date: 6/18/2010 10:58:04 AM Document presentation format – PowerPoint PPT presentation

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Title: GLOBAL LEADERSHIP IN THE FINANCIAL MARKETPLACE


1
Emerging Market Economies Does this
classification still make sense? Panel 4
Developing Economies World Federation of Exchanges
Paulo Oliveira Jr. Chief Business Development
Officer
2
Emerging Markets AWorld Bank definition and the
conventional wisdom to be challenged
  • The World Bank classifies member economies
    according to gross national income (GNI) per
    capita
  • Low Income Emerging Markets USD 975 or less
  • Lower Middle Income Emerging Markets USD 976-USD
    3,855
  • Upper Middle Income Emerging Markets USD
    3,856-USD 11,905
  • Developed Economies USD 11,906 or more

However, the concept became popular to designate
nations in a TRANSITION PROCESS or IN A CATCHING
UP PATH
3
Emerging Economies have attained a relevant
position among the top markets
  • Emerging Markets have attracted attention because
    of their dynamic growth, therefore developing a
    leading role in the global economy
  • The BRICs are among the top ten economies in the
    world

INTERNATIONAL RESERVES OF SELECTED COUNTRIES IN
2009 In USD billion
GDP OF SELECTED COUNTRIES IN 2008 In USD billion
Developed Countries
Emerging Markets
Source IMF and ECB (Jul09 and Aug09)
Source IMF
4
Emerging Markets growth has reshaped geopolitics
on a global basis
  • The so-called emerging markets are leading the
    recent recovery
  • These economies established a new benchmark for
    global economic development, leveraging their
    strength on the international arena

GDP PROJECTION Developed Economies
GDP PROJECTION Emerging Economies
Source IMF
5
Return in Emerging Markets reflects investors
confidence in the potential of such economies
  • MSCI Index represents economic performance and
    market expectations from the most sophisticated
    investors in the world

MSCI INDEX PERFORMANCE IN 2009
Developed Countries
Emerging Markets
Source MSCI Data as of 28th September 09 Note
South Korea is classified as a Emerging Economy
by MSCI
6
Liquidity depth of emerging capital markets is
advancing within the G-20 economies
MARKET CAPITALIZATION AND GDP OF SELECTED
COUNTRIES IN THE END OF 2008
Spain
Note Snapshot of the end of 2008 reveals the
full impact of the global financial crisis. In
December 2007 Brazil Capitalization was over 80
of GDP and in June 2009 is around 60. Source
Goldman Sachs Research Report
7
Emerging Markets sustainable achievements are
undisputable and globally recognized
Is such classification still applicable and
reasonable? The Brazil repositioning case as a
crisis aftermath
ARGENTINA, BRAZIL, CHINA, INDIA, INDONESIA,
MEXICO, RUSSIA, SAUDI ARABIA, SINGAPORE, SOUTH
AFRICA AND TURKEY ARE ALL G-20 MEMBERS
8
Brazil remarkable resilience during the crisis
anticipates a huge potential for growth
BRAZILIAN INTERNATIONAL RESERVES
NET TOTAL EXTERNAL DEBT TO GDP ()
USD billion
PUBLIC SECTOR NET DEBT TO GDP ()
TOTAL CREDIT OPERATIONS TO GDP ()
Source Central Bank of Brazil
9
Brazilian excellent fundamentals attract
liquidity available after crisis deleveraging
  • International investors have kept their
    confidence even under extreme scenarios
  • Reliable and vibrant markets have sustained a
    steady flow of foreign investments

NET FOREIGN INVESTMENTS IN THE BRAZILIAN STOCK
MARKET IN 2009 USD million
FOREIGN INVESTOR PARTICIPATION IN THE BRAZILIAN
STOCK MARKET 2007-2009 USD million
16 billion in 2009
Up to September 18th
Source BMFBOVESPA
10
New capital flows reinvigorate the Brazilian
Exchange role in financing development
  • Regulation, transparency and improved corporate
    governance have reinforced the Exchange as a
    promoter of economic development
  • Raising capital in the Exchange became
    fashionable and profitable

IPO CAPITAL RAISED BY SHARES ISSUES IN 2009 in
USD billion
TOTAL CAPITAL RAISED BY SHARES ISSUES IN 2009 in
USD billion
Source WFE Note Up to August
Source WFE Note Up to August
11
Emerging markets an elusive concept that has to
be revisited by market practitioners
  • The financial crisis has provided evidence that
  • Some emerging countries have built advanced
    regulation and effective financial
    infrastructures that withstand volatile markets
    more efficiently
  • Some emerging markets have developed original
    risk management solutions and transparency rules
    that better cope with financial institutions
    leveraging
  • Some emerging economies have created
    comprehensive corporate governance rules that
    promote disclosure more widely
  • New possibilities for developing capital markets
    are rising
  • New models for economic development are shaping
  • Old fashioned capitalism analytical framework is
    being challenged
  • Not every country needs to follow the path of
    more mature and developed economies
  • In a multipolar world the name of the game is
    full and open dialogue, not only East ?West, but
    also North?South
  • There are plenty of lessons to be learned and
    experiences to be shared

12
Emerging Market Economies Does this
classification still make sense?
Paulo Oliveira Jr. CEO of BRAiN Brazil
Investments and Business poliveira_at_brainbrasil.org
www.brainbrasil.org T 55 11 3032 1016
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