Economic stress drains CIS sovereign wealth funds

Significance Concern about the need to preserve one of the SWFs to support the pension system is probably a major reason behind the rejection. The Ministry of Economic Development had already approved part of the 1.3 trillion ruble (25 billion dollar) transfer to Rosneft from the National Welfare Fund. The intra-ministry dispute highlights how state firms are looking to SWFs for unconventional government financial support in the face of sanctions-driven stress on Moscow's budget and restricted access to international capital markets. Impacts SWFs are helping to offset the impact of low oil prices and regional turmoil. The anti-crisis effort is boosting spending on infrastructure. Weaker exchange rates will increase the value of resources in domestic currencies.

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tony McGough ◽  
Jim Berry

PurposeThe financial and economic turmoil that resulted from the Global Financial Crisis (GFC), included a marked increase in the volatility in real estate markets. Property asset prices were impacted by the real economy and market sentiment, particularly concerning the determination of risk. In an economic downturn, the perception of investment risk becomes increasingly important relative to overall total returns, and thus impacts on yields and performance of assets. In a recovery phase, and particularly within an environment of historically low government bonds, risk and return compete for importance. The aim of this paper is to assess the interrelationships and impacts on pricing between real estate risk, yield modelling outcomes and market sentiment in selective European city office markets.Design/methodology/approachThis paper specifically considers the modelling of commercial property pricing in relation to the appetite for risk in the financial markets. The paper expands on previous work by determining a specific measure of risk pricing in relationship to changing financial market sentiment. The methodology underpinning the research specifically examines the scope for using national and international risk pricing within specific real estate markets in Europe.FindingsThis paper addresses whether there is a difference between the impact of risk on the pricing of real estate in international versus regional cities in Europe. The analysis, therefore, determines which city centre office markets in Europe have been most impacted by globalisation including the magnitude on real estate prices and market volatility. The outcome of the paper provides important insights into how changes in risk preferences in the international capital markets have driven and continues to drive yield movements under different market conditions.Research limitations/implicationsThe paper considers the driving forces which have led to the volatile movements of yields, emanating from the GFC.Practical implicationsThis paper considers the property market effects on pricing of commercial real estate and the drivers in selected European cities.Originality/valueThe outcome of the paper provides important insights into how changes in risk preferences in the international capital markets have driven and continue to drive the yield movements in different real estate markets in Europe.


Subject Pemex downgrades Significance Ratings agency Fitch on June 6 downgraded the bonds issued by state-owned oil firm Pemex to BB+ from BBB-, pushing the rating into ‘speculative grade’ or ‘junk’ territory. The move came a day after Fitch downgraded the bonds of the federal government by one notch, to BBB from BBB+, citing the impact of Pemex’s financial prospects upon those of the government. Moody’s shifted its outlook for the government’s debt from stable to negative but maintained its A3 rating. Impacts The possibility of further downgrades will be a permanent shadow on the government’s economic actions at least until 2020. Any downgrading would have an impact on the borrowing costs of Mexican private sector companies in international capital markets. An abrupt fall in oil prices could be a death knell for Pemex, and would deal a significant blow to the exchequer.


2019 ◽  
Vol 11 (2) ◽  
pp. 162-176
Author(s):  
Thomas Duening

Purpose This paper is based on insights from philosophy of science, centered in Gilbert Ryle’s notion of “category mistakes”. A category mistake occurs in a science when scholars have been thinking of a phenomenon as of a certain sort, when it is really nothing of the kind. This paper aims to claim that regarding sustained enterprise innovation (SEI) as a strictly operational problem commits such a category mistake. Instead, SEI is an aspirational problem and thus requires scholars to examine it from that perspective as well. Design/methodology/approach This paper begins by explicating Ryle’s notion of a category mistake. It develops the suggestion that innovation scholars have made such a mistake by thinking of innovation as a strictly operational problem. In reality, it is as much an aspirational problem. The paper then builds on the metaphor made famous by Isaiah Berlin, distinguishing between hedgehogs and foxes. A hedgehog is a leader who copes with the non-predictive nature of innovation. The paper builds on the findings from positive psychology and virtue epistemology to highlight how humans can act rationally in the face of non-predictive outcomes. Four virtues of hedgehog leadership are proposed and defined. Findings The paper concludes that hedgehog leadership is necessary for sustained enterprise innovation. It also concludes that hedgehogs can act rationally in pursuit of non-predictive outcomes by practicing a set of governing virtues. Research limitations/implications Further research needs to be conducted to validate the proposed governing virtues, to illuminate the optimal hedgehog/fox balance within the enterprise, and to validate through longitudinal work the impact of hedgehogs on sustained enterprise innovation. Practical implications Based on the continuing interest in innovation expressed by enterprise leaders around the world, hedgehogs are in increasing demand. Fortunately, hedgehogs can be made (and self-made) via deliberate practice of the governing virtues. Aspiring and current hedgehogs can be confident that practicing these virtues and becoming increasingly adept at their application will promote and effect enterprise innovation. Originality/value Very little research has been conducted on the aspirational aspect of SEI. This is an insidious gap in the literature, as it affects scholars and practitioners alike. Scholars are trapped in the “normal science” paradigm that treats the innovation problem as if it can be solved through operational techniques. This paper contends that this ubiquitous category mistake has led scholars down a blind alley. Instead, it is important for scholars and practitioners alike to view SEI as an aspirational problem that requires vastly different research frameworks and practitioner prescriptions.


2020 ◽  
Vol 47 (5) ◽  
pp. 1137-1154
Author(s):  
Syed Hasanat Shah ◽  
Hafsa Hasnat ◽  
Delpachitra Sarath

PurposePakistan suffered with the menace of terrorism for long and become a front line state in the “War on Terror”. Terrorism shattered Pakistan economy and rendered her external sector vulnerable to instability and uncertainties.Design/methodology/approachTherefore, using system generalized method of moment (GMM), this paper investigates the impact of foreign direct investment (FDI) on exports, imports and trade deficit in the face of unabated terrorism in Pakistan.FindingsThe findings of the paper suggest that as terrorism in Pakistan increased, FDI contribution to Pakistan exports decreased while FDI contribution to Pakistan imports significantly increased. Terrorism also disrupted the chain of local production and increased Pakistan reliance on imports. Thus terrorism widened Pakistan trade deficit of Pakistan and expose Pakistan to external imbalances.Originality/valueDespite rise in organized acts of terrorism and its adverse impact on various departments of economy, hardly any study bothers to check its impact on trade and investment nexus. This is the first study of its nature that looks deep down to understand how terrorism affects the relation of major economic variables.


Policy Papers ◽  
2008 ◽  
Vol 2008 (8) ◽  
Author(s):  

Sovereign Wealth Funds (SWFs) are becoming increasingly important in the international monetary and financial system, attracting growing attention. SWFs are government-owned investment funds, set up for a variety of macroeconomic purposes. They are commonly funded by the transfer of foreign exchange assets that are invested long term, overseas. SWFs are not new, and some of the longer-established funds—for example those of Kuwait, Abu Dhabi, and Singapore—have existed for decades. However, high oil prices, financial globalization, and sustained, large global imbalances have resulted in the rapid accumulation of foreign assets particularly by oil exporters and several Asian countries. As a result, the number and size of SWFs are rising fast and their presence in international capital markets is becoming more prominent.


Significance Debt markets have failed to pressure Argentina to end the impasse with holdouts, with the government arguing that it could not offer them new terms without offering similar concessions to holders of restructured debt. With elections scheduled for October, the current government is likely to kick the problem to its successor, leaving Argentina facing continued litigation in US and UK courts. Impacts The Central Bank has effectively managed drawdowns of dollar reserves, helping the government to maintain its hard line against holdouts. While this policy persists, the country will remain locked out of international capital markets. The severe shortage of dollars will continue, and will continue to dampen growth prospects until resolved.


Subject Russia's economic outlook. Significance According to Russia's Central Bank, at the end of June, Russia's gold and foreign exchange reserves totalled 362 billion dollars. The current recession in Russia is not turning into the dramatic downturn that some had forecast. However, a different concern is being raised by Russian leaders: a fear of stagnation in the longer term. They do not use that term in its usual meaning of zero growth; the concern is rather that Russia will fail to keep pace with the rest of the world and it will grow more slowly than the global economy as a whole. The prospect of a sluggish economy concerns both the leadership and the population. Impacts It will be difficult for Russia to fulfil the military reform programme without lowering other spending as finances remain tight. Public unrest over economic conditions is likely; whether this translates into protests against Putin himself depends on his durability. The Reserve Fund and the National Welfare Fund will be drawn down to support the budget and domestic investment.


Subject African debt burdens Significance Sub-Saharan African (SSA) countries that face soaring debt-servicing obligations (Angola, Nigeria) have no option but to reduce borrowing or risk squeezing further urgent public investments. Other countries face additional constraints from approaching deadlines for meeting fiscal limits mandated by their respective economic communities (West African Economic and Monetary Union, WAEMU). A final group of countries that have fallen into debt distress and/or default (Republic of the Congo, Mozambique) are under pressure to restore creditworthiness and re-establish access to international capital markets. Impacts Falling domestic interest rates and lower local borrowing costs could slow demand for external debt. Prospects for reviving stalled debt restructuring negotiations in Mozambique are slim before the 2019 general election. Use of the proceeds of Nigeria's recent Eurobonds may be impacted by electoral factors at the expense of more productive investments.


Significance After releasing 1 billion dollars in April, the IMF is urging Ukraine to implement land and pension reforms to make it eligible for further lending tranches. The government is finding it hard to pursue controversial changes opposed by many voters and taken up as causes by the political opposition. Gontareva's resignation reflects a lack of government support and is a setback for the reformist camp. Impacts The 'economic war' emerging alongside armed conflict in the east will dent prospects for growth and reform. Failure to secure further IMF financing could accelerate the planned return to international capital markets, perhaps in the third quarter. Attempts to push through reforms such as land sales may lead to increased political strife but not a full-blown political crisis.


Significance Despite its promotion of an innovation ecosystem to attract start-ups, Abu Dhabi has overall made little progress in addressing the impact of the clean-energy transition on long-term demand for fossil fuels. As COVID-19 hits private consumption hard, Dubai is promoting expatriate-friendly labour market and legal reforms, with an eye to the troubled real estate sector. Impacts Abu Dhabi’s sovereign wealth funds will increase their exposure to the overseas oil derivatives industry. Dubai will shift attention to taming oversupply in the flagging property market, and developers will be under increased scrutiny. Ambitious oil production targets will increase tensions with Saudi Arabia; a medium-term OPEC exit is possible. Abu Dhabi will prioritise high-profile space and nuclear projects that generate soft power and boost innovation.


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