Global Trends Blog

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Tags
    Tags Displays a list of tags that has been used in the blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Team Blogs
    Team Blogs Find your favorite team blogs here.
  • Login
Subscribe to this list via RSS Blog posts tagged in Capital

Welcome to our guest blogger Jorge Yui. Jorge is a digital media expert, linguist, entrepreneur, and global banking systems specialist. He has over 25 years of strategy, business consulting, and senior program management experience across Europe, Asia and Latin America at Credit Suisse, Deutsche Bank, Julius Baer, Temenos, and IBM. He studied Computer Linguistics at Zurich University. See Jorge’s blog at jorgeyui.wordpress.com or email him at This email address is being protected from spambots. You need JavaScript enabled to view it.

Here's Jorge's view on the WhatsApp deal and what it means for banking.

...
Hits: 1780
0

Do you ever think about the size and impact of the corporation you, your friends, family members or neighbors work for? If you do, the size might amaze you. Thinking this way offers a whole new perspective on global markets as the revenues of some of the world’s largest corporations are far bigger than the GDPs of many countries.

We are pleased to have just released our annual research on the world’s largest economic entities, Corporate Clout 2013, which reveals that, in 2012, 40 of the world’s 100 largest economic entities (countries and corporations combined) are public corporations. This is the same percentage as in 2011 but down 2% since 2010 (42%).  If you look at the top 150 economic entities in 2012, the proportion of corporations is 58%, slightly down from 2011 (58.7%) but at the same level as in 2010 (58%).

...
Hits: 2843
0

Is the potential of distributed energy on your radar yet?  If it isn’t, it probably should be.  Energy transforms economies and lives, so it should demand the attention of politicians, thought leaders, industry and, hopefully, the consumer.  And it does, but not necessarily with an eye to the future.  The potential of distributed energy hasn’t really been recognized yet.  The question is why?

Distributed energy (also known as distributed generation) is electricity generated from small-scale power generation technologies, which when combined with load management and energy storage improve the amount, quality and reliability of electricity supplies.  Typically, such technologies focus on renewable sources. Most importantly, however, because distributed generation projects are small in scale and more numerous, they move supply closer to the consumer thereby lowering environmental impacts and improving security of supply.  It also avoids the enormous cost of energy wastage which – if we could figure out how – could cut your bills in half!  For example, in 2009 about 58% of energy generated was wasted. (Source: Good Infographics)

...
Hits: 6425
0

The headlines have been full of numbers recently, particularly as we have just passed a milestone where the 7 billionth person has now joined the world’s population (give or take a few million and a few months either way).  So let’s start there in terms of looking at some important numbers that will impact the world in the next decades.

1.  7 billion: The world’s (estimated) population at the end of 2011

...
Hits: 13889
0

Posted by on in MyBlog

The eyes of the world remain on the violence in Libya and the ongoing unrest across North Africa and the Middle East, with oil prices reacting to the potential disruptions to a critical resource.  Further south, the countries that offer some of the world’s richest reserves of minerals are also undergoing fundamental changes, BRIC-style. As the world enters a period of potential resource scarcity, the scramble is on to secure future supplies of critical raw materials.  Africa has plenty to offer (as an FT graphic shows): Oil, timber, coal, copper, bauxite, gold, diamonds, uranium, gas and more. And despite significant economic and social development improvements in the last decade, many economies on the continent still suffer poverty, skills deficits and high levels of unemployment – making the context right for wealthier nations to come in and help boost African development, often in exchange for resources.  As China, India and increasingly Brazil compete to seize the opportunities, a phrase originally used by Warren Buffett in 2003 to describe the US trade deficit comes to mind, “colonized by purchase rather than conquest.” Is this a risk for African nations (and potentially other resource-rich countries)?  What are the implications?

A February report on Brazil’s investment in Africa by Reuters highlights the fact that in sheer financial terms and companies on the ground, China leads the pack by a long way in the scramble for Africa’s resources.  In 2010 China’s trade with Africa reached US$107 billion (source: IMF) versus US$32 billion between Africa and India, which has also been boosting its position in recent years.   This puts Brazil, with US$20 billion in trade in 2010, in third place, with Russia trailing a distant fourth among the BRIC with just US$3.5 billion of trade with Africa.  China too dominates in terms of overall investments in Africa. South African consultancy Frontier Advisory quoted in the Reuters report suggests that by 2007, cumulative Chinese foreign direct investment (FDI) in Africa had reached US$13.5 billion, or 14% of all Chinese FDI. In contrast Brazilian FDI in Africa between 2001 and 2008 is estimated at US$1.12 billion.  This is not surprising – China has a much weaker overall resource position than Brazil, plus much deeper coffers in terms of foreign exchange reserves to underpin its investments. Since 2000, China has established a series of resource-backed deals, with strong government support and financing, in which African nations handed over oil, bauxite, iron ore and copper and cobalt in exchange for dams, power plants and other infrastructure projects worth billions of dollars.  The aim: Secure future access to resources to power China’s continued rapid economic expansion.  On the back of these investments, some 2,000 Chinese firms are now operating in Africa, building infrastructure and helping to fuel the renewed economic growth of the continent.

...
Hits: 13487
0

The Wall Street Journal has set tech and investment banking pulses racing today with an article suggesting that Twitter may be a prime takeover target.  Although reported talks with Facebook and Google have been “low-level” and don’t seem to be going anywhere fast, the article has well and truly put Twitter on the block at an estimated valuation of US$8 to 10 billion. Round numbers are so much easier when we are talking tech-based financial excitement, don’t you think? So let’s make it easy and stay with the 10 figure.  Based on the report, that’s 222 times reported 2010 revenues of US$45 million or 100 times estimated 2011 revenues of US$100 million.   And the reason it made a loss in 2010 is that it was investing in growth, both of data centers and employees. With 175 million users worldwide (more than the WSJ and New York Time and growing) plus new advertising revenues (and growing too), it sounds like a good deal, right?

Last time I had these sorts of conversations was about ten years ago.  That’s when various friends and family were comparing notes about the Caribbean islands they were thinking about retiring to.  We don’t live on a Caribbean island today, neither do they.  So why are we back in bubble-land? (By the way since my last post on bubble or no bubble reports of secondary trading of Facebook suggest it is valued at more than Amazon now. Meanwhile the Huffington Post is being acquired by AOL for US$315 million.) There is no financial calculation that can make sense of these estimated valuations and yet venture-capital firm Andreessen Horowitz (of Andreessen/Netscape fame) said it bought more than US$80 million of Twitter shares through exchanges for private-company stock.  They have been there and done that, so why are they along for the ride?

...
Hits: 6566
0

This week’s summit in Washington between Hu Jintao and Barack Obama was carefully choreographed to put the emerging relationship between China and the US into a positive frame.  With recent figures putting China’s GDP growth at 10.3% for 2010 and some commentators suggesting China could become the world’s biggest economy even as soon as the next decade, it is clear that the two biggest global economic powers are moving into a different phase of their relationship. Even as China is growing and assuming a greater role on the world stage, the US is starting to recognize that its own “glory days” as the world’s leading military, technology, education, and consumer power (to name just a few) are declining. Its status as international power broker has been damaged by wars in Iraq and Afghanistan, failure to lead on global issues such as climate change, and domestic economic challenges.  So how do the two leaders collaborate to compete, when there are clearly trade, currency, technology, human rights and potentially military tensions on the agenda?  Can they achieve a win-win rather than a win-lose relationship?

On the surface this looks tough.  President Hu has meetings today with Congress and powerful US business leaders, many of whom are hostile over trade and currency tensions, accusing China of keeping the yuan artificially low to aid exports, hurting American businesses by under-cutting them at home and making US exports to China more expensive.  Competition between the two countries appears to be well and truly alive in this area – even if Obama stresses the US$ 45 billion in new business deals, including a US$19 billion deal for 200 Boeing airplanes, that he says will help create 235,000 U.S. jobs. This is in addition to the half-million U.S. jobs already generated by the US annual exports to China which are estimated at US$100 billion. Add in the fact that China is moving up the food chain in terms of its technology skills – it’s no longer just a mass producer of plastic low-cost goods but an emerging high tech powerhouse with massive investments in future-focused technologies such as clean tech and capable of building its own stealth fighter. And it has the education system to deliver more where this came from: “With China’s debut in international standardized testing, students in Shanghai have surprised experts by outscoring their counterparts in dozens of other countries, in reading as well as in math and science,” according to the New York Times just over a week ago.

...
Hits: 5643
0

Posted by on in MyBlog

When Muhammed Yunus, winner of the 2006 Nobel peace prize jointly with Grameen Bank "for their efforts to create economic and social development from below," pioneered microcredit to help those in poverty improve their lives, it wasn’t meant to end up like this.  In an opinion piece in the New York Times entitled “Sacrificing microcredit for megaprofits,” Yunus sounds deeply saddened that the almost impossible challenges he and Grameen Bank have overcome are being derailed by increasing commercialization of microcredit.  In India there have been large-scale problems of borrowers defaulting on microloans, closely linked to an increasing number of suicides amongst the poorest who have no ability to settle their debts, devastating families and communities. Yunus himself is also under pressure, particularly in his home country of Bangladesh, where there have been sharp attacks on him personally as well as on Grameen. What’s gone wrong? What’s the way forward?  As businesses step up to the challenge of integrating social responsibility into their business models, how do we avoid making a killing in the completely wrong sense of the phrase?

Microcredit’s reason for being is to provide loans to low income clients, both individuals and micro-businesses, to help them move out of poverty (note: microcredit is part of microfinance which includes savings, fund transfers and more). People with little or no cash income or assets are not served by the traditional financial system – in our recent special report on Retail Banking we note that the “great unbanked” includes around 2.5 billion adults, more than half of the world’s adult population, who do not use (or have access to) any formal (or semi-formal) financial services.  Without access to financial services, including credit, many of these people are at the mercy of local loan sharks and do not necessarily have the means to help lift themselves out of poverty.

...
Hits: 6064
0

Posted by on in MyBlog

Look out for our January 2011 GT Briefing, which gives you a single source to find some of the more interesting and important trend forecasts and predictions for 2011. There’s so much out there – typing Trends for 2011 into Google on January 1st 2011 gave us around 46 million results – that we did this partly for our own sanity but also (hopefully) so others will find it useful.  Do let us know!  It’s an eclectic mix of forecasts, on topics including: Global trends/macro trends (including us of course!), consumer trends, economic trends, financial markets trends, technology trends, social media trends, mobile trends, design & fashion trends, health & wellness trends, retail trends, travel trends and marketing trends.  Sources range from the FT, Trendwatching.com and McKinsey to the IMF, Mashable, TripAdvisor and The Food Channel.  No doubt we have missed some (feel free to let us know) and there are still more coming out daily (of which a couple below), but all have offered us some food for thought as we look ahead. Here are just a few of the themes across the forecasts that we took away.

A two-track world for economic growth

...
Hits: 8625
0

Posted by on in MyBlog

Between them, the top UK high street banks received a staggering 11,000 customer complaints per day in the first half of 2010, according to figures which the banks were forced to publish (they probably weren’t volunteering). As many as 9 in 10 of these complaints were rejected, often without apology, despite the UK Financial Ombudsmen Service upholding around half of the complaints that were passed on to them, according to consumer finance site www.thisismoney.co.uk.  Last week, a poll of customer satisfaction with 75 of the UK’s top brands by consumer magazine Which? put online bank First Direct top in terms of customer service, but its larger high street rivals well down the list. Retailers John Lewis and Waitrose ranked second and third in the poll.  While these figures cover just one country, the poor customer service offered by leading retail banks is a more global issue, and one that is increasingly likely to impact banks’ future prospects – negatively.  In our recent special report, Who’s Looking After Your Money? The Democratization of Personal Finance, the emerging landscape of personal finance suggests that banks are potentially facing an ever greater challenge than the financial crisis – consumer choice.

No doubt there will be some heads shaking at this view (particularly among bankers) since, for example, the UK public appears to be more loyal to their current accounts than to their partners according to research from Santander.  Why would consumers start switching personal finance/banking providers in future?  And where would they go?

...
Hits: 20092
0

In my last blog post I said we would be watching the outcomes of the G20 Summit in Seoul with interest. Unfortunately there is little of interest to report in terms of decisions and actions, as frankly nothing meaningful was accomplished by the leaders of the world whose countries together produce around 85% of global GDP.  In fact, our view is that they all need an eye test, as clearly few were wearing their corrective glasses given the myopic focus on domestic interests rather than dealing with what are pressing global issues of economic imbalances and currency tensions amongst other “small” matters such as climate change, poverty and ongoing conflicts. If this lack of effectiveness continues, the world in 2020, to use another definition for the term, could be in poor shape.

What are the issues? First, the G20 was formed in crisis at the height of the financial collapse in 2008, when international co-operation was critical in the face of a global recession.  Now that the recession has eased in many G20 member countries, if not been replaced by a renewed period of growth in the case of many of the rapidly developing economies, the urgency for continued co-operation has lessened substantially.  In its place have been increasing concerns and efforts to keep domestic economies on the road to recovery.      

...
Hits: 4093
0

Heads of state and their entourages are heading to Seoul this week for the fifth G20 Summit on November 11-12, amidst rising tensions over the future of the world economy. The mood promises to be very different from last year’s Pittsburgh summit which saw leaders make an unprecedented commitment to work together to promote "strong, sustainable and balanced growth". Currency wars, protectionism and the reality (or not) of global co-operation will be sharply in focus in the next week, with potentially significant consequences in the longer-term.

Last year’s pledges to address global economic imbalances were made against a backdrop of worldwide recession.  Today, many countries are experiencing economic recovery and the focus has shifted from a global agenda to a more national one, as the continued fragile state of advanced economies in particular focuses politicians on domestic issues.  Unfortunately, these cannot be addressed in isolation as the world economy is interconnected. 

...
Hits: 4626
0

Posted by on in MyBlog

Just looking through the recent special reports on www.FT.com, there is an interesting set of articles about the future of financial services.  With new rules on the amount of capital banks need to hold (from Basel III), which is 3 times the previous requirement albeit delayed for several years, and new liquidity requirements, banks are certainly going to find the future more challenging.  Add in then the issue that:

"We believe that impetus towards co-ordination of financial sector reform has largely stalled and that the consensus among governments is that there is no consensus," say analysts at Nomura recently...

...
Hits: 2589
0