emerging market economies: does this classification still make sense?

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Emerging Market Economies: Does this classification still make sense? Panel 4 – Developing Economies World Federation of Exchanges. Paulo Oliveira Jr. Chief Business Development Officer. Emerging Markets: AWorld Bank definition and the conventional wisdom to be challenged. - PowerPoint PPT Presentation


  • Emerging Market Economies: Does this classification still make sense?

    Panel 4 Developing EconomiesWorld Federation of Exchanges

    Paulo Oliveira Jr.Chief Business Development Officer

  • Emerging Markets: AWorld Bank definition and the conventional wisdom to be challenged 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 moreThe World Bank classifies member economies according to gross national income (GNI) per capitaHowever, the concept became popular to designate nations in a TRANSITION PROCESS or IN A CATCHING UP PATH

  • Emerging Economies have attained a relevant position among the top marketsSource: IMF and ECB (Jul09 and Aug09)Emerging Markets have attracted attention because of their dynamic growth, therefore developing a leading role in the global economyThe BRICs are among the top ten economies in the worldSource: IMFEmerging MarketsDeveloped CountriesGDP OF SELECTED COUNTRIES IN 2008In USD billionINTERNATIONAL RESERVES OF SELECTED COUNTRIES IN 2009In USD billion

  • The so-called emerging markets are leading the recent recoveryThese economies established a new benchmark for global economic development, leveraging their strength on the international arenaGDP PROJECTION Developed EconomiesGDP PROJECTIONEmerging EconomiesEmerging Markets growth has reshaped geopolitics on a global basisSource: IMF

  • Emerging MarketsDeveloped CountriesReturn in Emerging Markets reflects investors confidence in the potential of such economiesMSCI INDEX PERFORMANCE IN 2009Source: MSCIData as of 28th September 09Note: South Korea is classified as a Emerging Economy by MSCIMSCI Index represents economic performance and market expectations from the most sophisticated investors in the world

  • 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 ReportSpainLiquidity depth of emerging capital markets is advancing within the G-20 economies MARKET CAPITALIZATION AND GDP OF SELECTED COUNTRIES IN THE END OF 2008

  • Emerging Markets sustainable achievements are undisputable and globally recognizedIs such classification still applicable and reasonable? The Brazil repositioning case as a crisis aftermathARGENTINA, BRAZIL, CHINA, INDIA, INDONESIA, MEXICO, RUSSIA, SAUDI ARABIA, SINGAPORE, SOUTH AFRICA AND TURKEY ARE ALL G-20 MEMBERS

  • BRAZILIAN INTERNATIONAL RESERVESNET TOTAL EXTERNAL DEBT TO GDP (%)PUBLIC SECTOR NET DEBT TO GDP (%)TOTAL CREDIT OPERATIONS TO GDP (%)Brazil remarkable resilience during the crisis anticipates a huge potential for growth USD billionSource: Central Bank of Brazil

  • NET FOREIGN INVESTMENTS IN THE BRAZILIAN STOCK MARKET IN 2009USD million*Up to September 18thFOREIGN INVESTOR PARTICIPATION IN THE BRAZILIAN STOCK MARKET 2007-2009USD millionBrazilian excellent fundamentals attract liquidity available after crisis deleveraging16 billion in 2009International investors have kept their confidence even under extreme scenariosReliable and vibrant markets have sustained a steady flow of foreign investments Source: BM&FBOVESPA

  • IPO CAPITAL RAISED BY SHARES ISSUES IN 2009in USD billionTOTAL CAPITAL RAISED BY SHARES ISSUES IN 2009in USD billionSource: WFENote: Up to AugustSource: WFENote: Up to AugustRegulation, transparency and improved corporate governance have reinforced the Exchange as a promoter of economic developmentRaising capital in the Exchange became fashionable and profitable

    New capital flows reinvigorate the Brazilian Exchange role in financing development

  • Emerging markets : an elusive concept that has to be revisited by market practitionersThe financial crisis has provided evidence that :Some emerging countries have built advanced regulation and effective financial infrastructures that withstand volatile markets more efficientlySome emerging markets have developed original risk management solutions and transparency rules that better cope with financial institutions leveragingSome emerging economies have created comprehensive corporate governance rules that promote disclosure more widelyNew possibilities for developing capital markets are risingNew models for economic development are shapingOld fashioned capitalism analytical framework is being challengedNot every country needs to follow the path of more mature and developed economiesIn a multipolar world the name of the game is full and open dialogue, not only East West, but also NorthSouthThere are plenty of lessons to be learned and experiences to be shared

  • Emerging Market Economies: Does this classification still make sense?

    Paulo Oliveira Jr.CEO of BRAiN Brazil Investments and Businesspoliveira@brainbrasil.orgwww.brainbrasil.orgT: 55 11 3032 1016



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