Insider outlook
Each issue, Corporate Finance enlists the help of three financial experts to consider five pressing concerns. This issue looks at the bigger picture, and the future of global finance...
Do you see the formation of the BRIC economies as a threat or a benefit?
Ahmed Al Khan, Head of Investment Banking, Global Banking Corporation
The BRIC nations loom large on the radar of most analysts. Emerging economies create growth not only within their own markets but also act as a catalyst offering lucrative opportunities for others. In that aspect the investment canvas is truly global with accelerating opportunities. In order to leverage on such opportunities, it is important to assess all aspects of the economy’s growth and ensure due diligence.
Mark-Oliver Baumgarten, Attorney, Staiger, Schwald & Partner AG
The BRIC economies show robust growth, which makes them increasingly attractive. This is particularly true for the Swiss industrial and financial sector. For Switzerland, as one of the most globalised countries, I believe that there are more benefits than threats. On the other hand in certain industrial sectors the Swiss labour market could be affected.
Jan Birgerson, Country Managing Partner, Ernst & Young, Sweden
I think it all depends on how you react. The Swedish economy has been very responsive - we have a highly educated, service minded workforce that has embraced the challenge of new industries like IT and telecoms. And Sweden has welcomed workers from BRIC countries such as India as a valuable addition to the workforce.
Many say that it is possible to recognise a turnaround in an economic slowdown by signs at street level. Have you seen anything to suggest this has started to happen?
Ahmed Al Khan, Head of Investment Banking, Global Banking Corporation
One strong indicator is consumer behaviour with the change in purchasing power. Low income people shifting to middle income level and middle income people shifting to high income level fuel luxury markets and this is reflected in all other sectors like real estate, hospitality, banking etc. The street level signs in the region are therefore very positive and are eye openers to great opportunities for the imaginative investor.
Mark-Oliver Baumgarten, Attorney, Staiger, Schwald & Partner AG
To date, the Swiss economy has not so much been affected by the subprime and credit crisis, albeit some financial institutions are hit. The Federal Department of Finance has recently reported a tax revenue surplus of €2.5bn for 2007.
Jan Birgerson, Country Managing Partner, Ernst & Young, Sweden
Not really - retail spending remains strong in Sweden. And economic activity remains strong across our client base, reflected in a continuing demand for all our services.
How do you think the economy has changed over the last 18 months?
Ahmed Al Khan, Head of Investment Banking, Global Banking Corporation
Organisations are growing fast, small companies have become corporate, family owned businesses have transformed themselves to listed companies. Local companies have become global. There is a huge increase in trading volumes and purchasing power. Stock markets have ballooned. Budget allocations have gone up. Another noticeable change is that unlike in the past where a recession in one major country would have a vast effect on other countries, the high level of liquidity in the gulf markets have spurred an investment boom.
Mark-Oliver Baumgarten, Attorney, Staiger, Schwald & Partner AG
Globalisation and competition among players have increased. Asian countries become more and more important and offer a wide variety of opportunities. Also the competition among countries increases as to regulation, taxation, infrastructure or energy to just name a few key points.
Jan Birgerson, Country Managing Partner, Ernst & Young, Sweden
So far Sweden has been relatively unaffected by the credit crunch. In fact regional banks have been able to get involved in deals that previously would have gone to the global players. And the Swedish government's continuing privatisation program is providing stimulus.
Has your confidence in any particular market dropped of late?
Ahmed Al Khan, Head of Investment Banking, Global Banking Corporation
Strong regulatory norms and the Basel II protocol have helped make some markets emerge as more lucrative. It is not just where we invest that matters but more importantly how we invest it. We live in a global economy and therefore no region is insulated against changing market dynamics. Given this rationale, there has been no change in my approach and certainly no loss of confidence in any particular market.
Mark-Oliver Baumgarten, Attorney, Staiger, Schwald & Partner AG
The Swiss economy overall has been flexible enough to cope with many major situations of the recent past. The US market appears to lose attractiveness concerning capital markets and inbound investments.
Jan Birgerson, Country Managing Partner, Ernst & Young, Sweden
Well it's a roller-coaster ride on all markets at the moment. Of the largest markets the future for the UK seems one of the most uncertain at the moment.
With hindsight, if this time last year World Finance had given you €10,000 to invest. What would you have invested in and why?
Ahmed Al Khan, Head of Investment Banking, Global Banking Corporation
If this time last year I had €10,000 to invest, I would definitely break it up into four quarters, spreading my investments over different industries from real estate to energy. Each small investment would also be in a geographically different but lucrative region and industry in order to gain the best returns on investment.
Mark-Oliver Baumgarten, Attorney, Staiger, Schwald & Partner AG
I would have invested the amount in a conservative manner with a long-term horizon.
Jan Birgerson, Country Managing Partner, Ernst & Young, Sweden
Oil - a one word answer that needs no explanation.
