Brazil faces stagnation risk in 2017

2017 ◽  
Keyword(s):  
Government Spending ◽  
Pension Reform ◽  
Investment Decisions ◽  
Fiscal Crisis ◽  
New Wave ◽  
Short Term ◽  
Business Investment ◽  
Content Type ◽  
The Government

Subject The risk that the Brazilian economy will stagnate, rather than recover, this year. Significance The recent passage of legislation freezing government spending and the ambitious pension reform currently under discussion in Congress are the flagship policies of the government of President Michel Temer. Both seek to defuse Brazil’s fiscal time bomb in the long term. However, they offer little support to immediate expansion in an economy that not only has been in recession since the second quarter of 2014 but is also locked in a low-growth trap will few apparent short-term escape routes. Impacts Popular dissatisfaction may trigger a new wave of demonstrations, further weakening the government. As long as the fiscal crisis persists, the government’s ability to stimulate the economy will be limited. Political risk will be a crucial factor in business investment decisions in Brazil.

Does salience matter in investment decision?

Kybernetes ◽  
2019 ◽  
Vol 48 (8) ◽  
pp. 1894-1912
Author(s):  
Samra Chaudary
Keyword(s):  
Investment Decision ◽  
Investment Decisions ◽  
Equation Modeling ◽  
Individual Investors ◽  
Short Term ◽  
Content Type ◽  
Multigroup Analysis ◽  
Money Managers ◽  
The Impact

Purpose The paper takes a behavioral approach by making use of the prospect theory to unveil the impact of salience on short-term and long-term investment decisions. This paper aims to investigate the group differences for two types of investors’ groups, i.e. individual investors and professional investors. Design/methodology/approach The study uses partial least square-based structural equation modeling technique, measurement invariance test and multigroup analysis test on a unique data set of 277 active equity traders which included professional money managers and individual investors. Findings Results showed that salience has a significant positive impact on both short-term and long-term investment decisions. The impact was almost 1.5 times higher for long-term investment decision as compared to short-term decision. Furthermore, multigroup analysis revealed that the two groups (individual investors and professional investors) were statistically significantly different from each other. Research limitations/implications The study has implications for financial regulators, money managers and individual investors as it was found that individual investors suffer more with salience heuristic and may end up with sub-optimal portfolios due to inefficient diversification. Thus, investors should be cautious in fully relying on salience and avoid such bias to improve investment returns. Practical implications The study concludes with a discussion of policy and regulatory implications on how to minimize salience bias to achieve optimum and diversified portfolios. Originality/value The study has significantly contributed to the growing body of applied behavioral research in the discipline of finance.

Epidemic may shake Chad's government

2020 ◽  
Keyword(s):  
Economic Impact ◽  
Death Rate ◽  
Oil Prices ◽  
New Wave ◽  
Short Term ◽  
Bottom Up ◽  
Content Type ◽  
The Government ◽  
The Impact ◽  
Mission Operation

Subject COVID-19 impact on Chad. Significance Chad has a relatively low number of confirmed COVID-19 cases but appears quite vulnerable to the impact of the pandemic, especially the economic impact. The country’s highly rural and youthful demography may help to slow the spread and keep the death rate low. Yet low oil prices, a return to recession and a new wave of sector-specific protests could pose major challenges for the government. Impacts Chad's epidemic appears unlikely to affect France’s Sahel counterterrorism mission Operation Barkhane, headquartered in Chad. A bottom-up revolution appears unlikely, and no major rebel challengers appear poised to take advantage of COVID-19 and associated crises. President Idriss Deby's government appears unlikely to fall in the short term -- French backing will continue to ensure his survival.

South Africa's Mboweni will aid Ramaphosa reform push

2018 ◽  
Keyword(s):  
South African ◽  
Credit Rating ◽  
Short Term ◽  
Content Type ◽  
Rating Agencies ◽  
Reserve Bank ◽  
Freedom Fighters ◽  
Left And Right ◽  
The Government

Significance A former South African Reserve Bank (SARB) governor and minister of labour, Mboweni faces a crucial first few weeks in his new post as the government attempts to placate rating agencies and engineer an economic turnaround. Mboweni’s initial moves may be determined by Moody’s credit rating review expected today. Impacts In the short term, Mboweni’s appointment will be a boost for Ramaphosa’s bid for fiscal consolidation and growth. In the medium-to-long term, Mboweni will likely prove a more polarising figure inside the ANC than Nene. Allegations linking the Economic Freedom Fighters with a major banking scandal could give Mboweni and the ANC an early political 'win'. Mboweni's previous social media utterances could be further exploited by opponents, both left and right, in the months ahead.

Does underconfidence matter in short-term and long-term investment decisions? Evidence from an emerging market

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maqsood Ahmad
Keyword(s):  
Decision Making ◽  
Stock Exchange ◽  
Emerging Market ◽  
Investment Decision ◽  
Investment Decisions ◽  
Investment Strategies ◽  
Short Term ◽  
Content Type ◽  
Investment Decision Making

PurposeThe purpose of this article is to clarify the mechanism by which underconfidence heuristic-driven bias influences the short-term and long-term investment decisions of individual investors, actively trading on the Pakistan Stock Exchange.Design/methodology/approachInvestors' underconfidence has been measured using a questionnaire, comprising numerous items, including indicators of short-term and long-term investment decision. In order to establish the influence of underconfidence on the investment decisions in both the short and long run, a 5-point Likert scale questionnaire has been used to collect data from the sample of 203 investors. The collected data were analyzed using SPSS and AMOS graphics software. Hypotheses were tested using structural equation modeling technique.FindingsThis article provides further empirical insights into the relationship between heuristic-driven biases and investment decision-making in the short and long run. The results suggest that underconfidence bias has a markedly negative influence on the short-term and long-term decisions made by investors in developing markets. It means that heuristic-driven biases can impair the quality of both short-term and long-term investment decisions.Practical implicationsThis article encourages investors to avoid relying on cognitive heuristics, namely, underconfidence or their feelings when making short-term and long-term investment strategies. It provides awareness and understanding of heuristic-driven biases in investment management, which could be very useful for finance practitioners' such as investor who plays at the stock exchange, a portfolio manager, a financial strategist/advisor in an investment firm, a financial planner, an investment banker, a trader/broker at the stock exchange or a financial analyst. But most importantly, the term also includes all those persons who manage corporate entities and are responsible for making its financial management strategies. They can improve the quality of their decision-making by recognizing their behavioral biases and errors of judgment, to which we are all prone, resulting in more appropriate investment strategies.Originality/valueThe current study is the first to focus on links between underconfidence bias and short-term and long-term investment decision-making. This article enhanced the understanding of the role that heuristic-driven bias plays in the investment management and more importantly, it went some way toward enhancing understanding of behavioral aspects and their influence on the investment decision-making in an emerging market. It also adds to the literature in the area of behavioral finance specifically the role of heuristics in investment strategies; this field is in its initial stage, even in developed countries, while, in developing countries, little work has been done.

Diversification effect of ship investment funds in South Korea

2019 ◽  
Vol 23 (1) ◽  
pp. 62-74 ◽  
Author(s):  
Jae-Boong Lee ◽  
Su-Han Woo ◽  
Jeong Seok Song ◽  
Byeongchan Seong ◽  
Keun-Sik Park
Keyword(s):  
Stock Prices ◽  
Correlation Coefficients ◽  
Investment Fund ◽  
Short Term ◽  
Investment Funds ◽  
Policy Makers ◽  
Content Type ◽  
Cointegration Tests ◽  
The Government

Purpose The purpose of this paper is to examine the diversification effect of the Korean Ship Investment Fund (KSF) under Markowitz portfolio theory by analyzing short-term and long-term relationships with stocks and bonds. Design/methodology/approach For this purpose, unit root, correlation and cointegration tests are performed. Monthly data from 2004 to 2015 for stocks, bonds and KSFs are obtained for this study. Findings The correlation coefficients indicate that KSFs are uncorrelated with stocks and negatively correlated with bonds, and no long-term equilibrium relationships exist with all three variables by the Johansen and Engle-Granger cointegration tests. Research limitations/implications This paper makes contribution to the literature as follows: first, whereas the previous literature investigated diversification effect of ship investment using freight indices or freight rates which are not able to represent returns from ship investment, this study is the first study to use actual stock prices of the KSFs to the authors’ best knowledge; and second, diversification effect of ship investment represented by KSFs is empirically verified in the both short term and long term. Practical implications Policy-makers and managers of shipping companies can have sound ground that the KSFs are alternative and attractive assets to investors. It is also shown that the KSFs have potential to improve risk and return structure of investors on their own regardless of existence of incentives. Therefore, decisions of policy-makers can be made free from expectations for stronger incentives provided by the government. In addition, those countries that do not have such a ship investment platform may consider introducing a similar ship investment fund in order to revitalize the capital markets of the country. Originality/value This study holds its significance in investigating diversification properties of the KSFs for the first time in Korea since the KSFs were introduced.

Poland's pension reform may undermine public finances

2016 ◽  
Keyword(s):  
Pension Reform ◽  
Private Investment ◽  
Short Term ◽  
Investment Activity ◽  
Government Bonds ◽  
Content Type ◽  
Public Finances ◽  
Market Growth ◽  
To Receive

Significance The zloty resumed a depreciating trend on July 4, following the announcement of radical pension reform by Development Minister Mateusz Morawiecki. A combination of investor unease over the new proposals and jittery equity markets following the UK's referendum vote to leave the EU ('Brexit'), which has pushed up yields on long-term government bonds, will weigh on Polish business sentiment and fixed investment in the second half of 2016. Impacts Poland's capital market is likely to receive a setback in the short term, with fewer listings on WIG20, as some pension funds leave Poland. Locally owned investment vehicles will gradually come to play a greater role. Labour market growth and rising domestic demand will help offset investor jitters or sluggish private investment activity later in 2016. While pension reform will provide a short-term boost to public finances, public debt will rise after 2017, absent any fiscal consolidation.

Costa Rica’s pandemic response faces political hurdles

2020 ◽  
Keyword(s):  
Informal Sector ◽  
Low Income ◽  
Financial Assistance ◽  
Short Term ◽  
Content Type ◽  
Tourism Sector ◽  
Pandemic Response ◽  
The Government ◽  
The Imf

Significance In August, it asked the IMF for a USD1.75bn credit under the Extended Fund Facility. This will come on top of the USD504mn approved by the IMF for emergency financial assistance in May. Costa Rica's problems stem from a combination of long-term weaknesses and the short-term impacts of the COVID-19 pandemic. Impacts The tourism sector will be slow to recover, further hurting the economy and the fiscal position. Insufficient support for the informal sector will leave much of the country’s workforce struggling. Poverty will probably increase as the government struggles to expand social programmes to protect low-income households.

Greek coalition will play politics at debt talks

2016 ◽  
Keyword(s):  
Debt Relief ◽  
Short Term ◽  
Trade Off ◽  
Content Type ◽  
High Interest ◽  
Political Position ◽  
The Government ◽  
Opinion Polls ◽  
Staff Level

Significance The government, with half an eye on a snap election, is determined not to accede to prolonged austerity without the trade-off of significant debt relief. Timing is all. The coalition partners are faring badly in opinion polls but do not face high-interest debt repayments before mid-2017, allowing them to prolong negotiations while they try to improve their political position. Impacts The government and Greece’s creditors are deeply divided over how long primary surpluses must be maintained and how to use them. Greece has been given limited short-term debt relief through adjustments to repayment conditions. There are no commitments regarding medium- or long-term measures and no haircut on the country’s mountainous aggregate debt. The IMF will rejoin the bailout once there is a staff-level agreement but insists that the numbers must add up.

Dutch elections will likely reduce government’s power

2019 ◽  
Keyword(s):  
Prime Minister ◽  
Pension Reform ◽  
Public Support ◽  
Cost Of Living ◽  
Short Term ◽  
Content Type ◽  
Defence Spending ◽  
Political Impact ◽  
The Government ◽  
Upper Chamber

Significance The results are expected to show reduced public support for Prime Minister Mark Rutte’s four-party coalition, in response to dissatisfaction with the rising cost of living, coalition infighting about immigration, the climate agenda and the breakdown of pension reform negotiations. Impacts The gun attack in Utrecht yesterday will not have a significant political impact in the short term. The government will come under increasing pressure to abolish costly defence spending plans, such as on additional F-35 jets. There will be renewed calls to have the upper chamber elected directly instead of through provincial assemblies.

scholarly journals Distributive Politics, Nature of Government Spending and Economic Growth in a Low Income Democracy

2011 ◽  
Vol 16 (30) ◽  
pp. 31-49
Author(s):  
Joydeb Sasmal ◽  
Keyword(s):  
Economic Growth ◽  
Low Income ◽  
Government Spending ◽  
Public Expenditure ◽  
Low Income Countries ◽  
Short Term ◽  
Tax Rate ◽  
Behavioral Parameters ◽  
The Government

In this paper we analyze how the government in a democratic setup of the developing world manipulates the fiscal instruments to maximize its political gain so that it can retain power. The government and the voters in low income countries are generally selfish and myopic in the sense that the electorates prefer to get direct and immediate benefits from the government while the government, in turn, tries to seek majority support in the election, by adopting short term and distributive policies instead of going for long term growth. Using the theoretical structure of the existing literature, and making modifications therein, this study demonstrates that the optimal tax rate, public expenditure shares and growth rate are determined in terms of technological and behavioral parameters. The simulation results show that if political gain from distributive policies is high, the government will allocate a greater share of the fund for distributive purposes adversely affecting economic growth.

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