Green Certification, Credit Rating, and Mainland Chinese Green Bonds in Hong Kong

This chapter discusses green certification and credit rating on Mainland Chinese green bonds in Hong Kong. These green bonds are mostly denominated in USD, distributed to global investors, and issued with international practices of green certification and credit rating. Using qualitative analysis and case study method, the chapter finds four external reviewers sharply different in their assessment framework although they attempt to assess degree of compliance of a bond issuance or a bond issuer with some international green standards. All the three global credit rating agencies claim their incorporation of green assessment into their credit rating process. However, the chapter finds no clear evidence on such claim from their credit rating comments on selected bond issuers.

Effects of GST on Automobile Dealers Industry

India has applied for GST for their taxation system which has already been applied by more than 160 Nations worldwide. GST has changed India’s perception in front of policy makers of other countries, global investors including big automobile companies. The growth of automobile sector has clear correlation with the policy reforms as it affects domestic demand pattern as well as trade balance. The automobile industry in India is the most booming industry from last many years. India has become the fourth substantial automobile market in 2019 with increasing sales by 8.3% to 3.99 million units. It was the seventh substantial automobile manufacturer in 2018. The government of India has also known the importance of automobile industry. India has imposed a flare of hope by determined growth targets, supported by many of vital undertaking such as Digital India and the make in India campaigns. There are many changes made ensuring simplicity in the GST tax system. The purpose of the study is to understand the impact of these changes by Automobile Manufacturers (OEMs). Keywords: GST, Taxation, Commercial vehicle, automobile manufacturer.

Globalization of capital, erosion of economic policy sovereignty, and the lessons from John Maynard Keynes

This article observes that current macroeconomic policy modeling, centered on domestic agents or agencies, fails to recognize the role that global investors play in determining the space for effective domestic macroeconomic policies, and argues that these actors must be brought to the center of macro analysis if one wants to understand how policies work in the global financial context. The article describes the key features of global investors, discusses their power to determine the prices at which public-sector liabilities (money and debt) trade in the international markets, and considers how this power affects the effectiveness of macroeconomic policies by national governments. As a result, no government is truly sovereign in a globalized world, and every government is subject to an intertemporal budget constraint (IBC), although, of course, not all governments are born equal and not all IBCs are equally binding: government IBCs are elastic, endogenous to global investor decisions, and yet ineluctable. The article concludes that choosing the correct country policy stance in today's financial global context would benefit from revisiting some of the key policy lessons that John Maynard Keynes left with us, considering his deep knowledge of global financial markets and how they affect country economies.

THE INTERDEPENDENCY OF UNCERTAINTIES IN ASEAN + 3 AND G6 ECONOMIES

In this paper, we empirically examine the interdependency of uncertainties among ASEAN +3 countries as well as between these countries and the G6 countries. We collect the uncertainty data from the new World Uncertainty Index (WUI) database. The WUI captures uncertainty related to economic and political events in a country. We show that ASEAN + 3 countries as a group are weakly interdependent, in terms of the long-run relationships of uncertainties within the group. We demonstrate that, in the absence of outside influence, i.e., uncertainty shocks emanating from the G6, the [Formula: see text] and ASEAN countries are two independent group of countries with the former having its own dynamics and the latter neither affecting nor being affected by the former. We further demonstrate that outside influence strongly affects China but not the other [Formula: see text] and ASEAN countries. These findings survive robustness checks and suggest that the ASEAN + 3, as a region, may provide long-term diversification benefits to global investors and that the strengthening of the ASEAN + 3 regional cooperation framework may further buttress confidence in this region.

Protectionism through legislative layering: Implications for auditors and investors

Protectionism is on the rise. Although it tends to be associated with tariffs on imports, governments are increasingly applying other mechanisms to influence international business. Import substitution initiatives have been used to replace purchases from foreign producers with local alternatives. Russia implemented import substitution through legislative layering where layers of regulation created requirements targeting different industries and companies. Following sanctions imposed in 2014 on Russia, the government responded with additional import substitution efforts. We are interested in effects of such measures on the Big 4, global professional service firms, and the choice of auditors by partially privatized enterprises (PPEs). PPEs have more complex multilevel agency problems because it is less clear who is in charge. We find that companies with state ownership were more likely to switch away from the Big 4, and this was more pronounced for companies in strategic industries. It also contributed to companies switching from the Big 4 to the next tier of audit firms. After 2015, PPEs were less likely to receive a modified audit opinion on IFRS audits. However, auditor changes did not occur at the cross-listed enterprises that are under enhanced monitoring from global investors and foreign stock exchanges.

THE JOURNEY SO FAR AND THE ROADMAP AHEAD

Dear Reader, Current Covid times are introspection times, too. When the Human Genome Project was initiated in 1990, for determining the basic pairs that make up DNA and for identifying and mapping the entire genes of the human genome, the hue and cry made by the Indian NGOs kept India out of the project, at lease officially. Approximately, 20 research institutions globally, including some from China and Russia later, participated during the 13 years of the project, which concluded in 2003. The participating countries and institutions made major contributions and consequently became beneficiaries of great progress and major strides in genomic research. While China was already participating from 1990 and Russia joined in 2000, India realised the need and importance of moving into this field at the turn of the millennium. The 100K Pathogen Genome Project launched in 2012 in USA and the 100,000 Genomes Project, also of late 2012, by UK carried forward the genome project initiatives. The countries who took early initiatives were immensely benefited through major breakthroughs. For good (or bad?), China outpaced India in genomic research and was rewarded immensely through funding from major global investors. What about India? Better late than never. The DBT in India initiated the Genome India Project in January, 2020 with the aim of collecting a moderate 10,000 human genetic samples from across India to build a reference genome. Fortunately, the vociferous NGO lobbies have probably realised their folly in opposing the genome project participation by India in the 1990s and the Indian project of 2020 will hopefully progress.

Country Risk

We construct new measures of country risk and sentiment as perceived by global investors and executives using textual analysis of the quarterly earnings calls of publicly listed firms around the world. Our quarterly measures cover 45 countries from 2002-2020. We use our measures to provide a novel characterization of country risk and to provide a harmonized definition of crises. We demonstrate that elevated perceptions of a country's riskiness are associated with significant falls in local asset prices and capital outflows, even after global financial conditions are controlled for. Increases in country risk are associated with reductions in firm-level investment and employment. We also show direct evidence of a novel type of contagion, where foreign risk is transmitted across borders through firm-level exposures. Exposed firms suffer falling market valuations and significantly retrench their hiring and investment in response to crises abroad. Finally, we provide direct evidence that heterogeneous currency loadings on global risk help explain the cross-country pattern of interest rates and currency risk premia.

Global integration of the Gulf cooperation council markets

PurposeThis paper investigates the global financial integration of the Gulf Cooperation Council markets, which is important for financial economists, global investors and policymakers.Design/methodology/approachThe first step is to estimate a benchmark one-factor model and multifactor models over the entire sample period to obtain the time-invariant global integration estimates for the Gulf Cooperation Council markets. Because the global integration of the Gulf Cooperation Council markets may be time varying, the second step is to use 24-month rolling regressions to estimate the time-varying integration estimates. To explicitly test for structural breaks in global integration, this study applies a supremum Wald test to endogenously search for structural breaks.FindingsEmpirically, consistent evidence suggests that the Gulf Cooperation Council markets are increasingly integrated with international equity markets at different levels of financial development and from different regions. However, compared to other emerging and frontier markets, the global integration of the Gulf Cooperation Council markets is still relatively low, suggesting that these markets still offer significant diversification benefits for global investors.Originality/valueThis study contributes to the literature by systematically investigating the global integration of the Gulf Cooperation Council markets with monthly data (to account for the gradual information diffusion in international equity markets) and a longer sample period (to more robustly identify the trend in the global integration).

Co-movements between Bitcoin and other asset classes in India

Purpose This study aims to analyze the dynamic relationship between the Bitcoin market and the conventional asset classes in India Design/methodology/approach This paper aims to cast light on the dynamic linkages between Bitcoin prices and other conventional asset classes in India by using the wavelet transform frameworks, which can allow us to analyze components of time series without losing the information. To do that, the techniques used with the data set include wavelet-based covariance, correlation, coherence spectrum, continuous power spectrum and Granger causality test. Findings The findings of the study suggest that interrelationships between Bitcoin and the key financial asset returns are statistically significant at low, medium and high frequencies. This study also finds the existence of the unidirectional connectedness between Bitcoin the other assets in India. Practical implications The outcome of the analysis calls for substantial policy implications for investors, portfolio management in India. This research on the existence of the interconnectedness between Bitcoin and other conventional asset classes in a specific country context, India can, therefore, make a significant contribution to the contemporary debate about the speculative nature of the cryptocurrencies. It casts light on whether Bitcoin provides any diversification and risk management benefits for Indian, as well as global investors. Originality/value To the best of the author’s knowledge, this is the first paper investigating the interrelatedness between Bitcoin and key conventional asset classes in India. This research makes methodological advancements by using the wavelet coherence transform. The findings provide empirical bases from which to deal with issues regarding hedging purposes and optimal portfolio allocation for an increasing number of investors in the Indian context. Therefore, the main contribution of this study to related literature in this field is significant.

Research on the Competitive Consequences of Common Ownership: A Methodological Critique

This article argues that the evidence presented in several critiques of Azar, Schmalz, and Tecu’s (AST) “airlines” paper does often not back the conclusion these studies draw. Specifically, widely circulated studies claiming that there are no anticompetitive effects of common ownership or that there is no evidence of it either do not attempt to refute AST’s findings of anticompetitive effects in the U.S. airlines industry or in fact confirm the evidence by AST and even dispel valid concerns about AST’s methodology. Focusing on Kennedy, O’Brien, Song, and Waehrer (KOSW), we note that their panel regressions using market-share-free indices of common ownership concentration confirm the positive correlation between common ownership concentration and price, which AST showed with a measure containing potentially endogenous market shares. We then examine the alternative empirical methods KOSW propose: (i) Their conclusion that estimates from a structural model show no evidence of anticompetitive effects is based on an estimation that discards 90% of the available data and therefore, at best, is only valid for that subsample; (ii) their structural model makes no economic sense because it produces a negative effect of route distance on marginal cost; and (iii) they construct an alternative version of the widely used BlackRock- Barclays Global Investors instrument that is arguably invalid. Even absent these methodological concerns, KOSW’s structural estimates are so noisy that they do not in fact reject the hypothesis that common ownership concentration has a positive effect on prices. A more recent structural paper by Park and Seo has shown these concerns to be well-founded: using a different and larger subsample of AST’s data and more standard estimation methods compared to KOSW, they estimate a positive effect of common ownership on prices, as well as a positive effect of route distance on cost. A lesson for future research—and readers of the literature—is to critically evaluate the conclusions drawn by studies in this field, including those that advertise themselves as providing evidence against the existence of anticompetitive effects of common ownership.