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10 biggest threats to global economy
Date : 07-10-2014
Description : Is the IMF right to think there is only a 1pc chance of a global recession over the next year? In its latest World Economic Outlook, the International Monetary Fund (IMF) puts the chances of growth in global output falling below the recession threshold of 2pc next year at just one in a hundred. Is this too sanguine a view? Global recessions are quite rare events, so if you had to put money on it, you?d go with the IMF. Even when one part of the world is in recession, it is more than likely that others will be growing quite strongly, leading to aggregate growth overall. Yet right now, the world economy is all over the place. Some advanced economies - notably the US and the UK - are rebounding quite strongly, others are sinking yet further into the mire, and almost everywhere, estimates of potential future growth are being revised down. A year ago, the IMF confidently predicted that by now, a mild recovery would have taken hold in the eurozone. These hopes have been dashed, many would say predictably so. In Japan too, Abenomics is already disappointing the high expectations vested in them. It is also a very mixed picture in emerging markets; some are still going up, others - such as Brazil - have ground to a halt. The overarching story, however, is one of slowdown. Related Articles Britain cements position at top of G7 growth league as eurozone stutters 07 Oct 2014 Put all this altogether and you have what Christine Lagarde, the IMF?s managing director, has termed ?the new mediocrity?, a somewhat trite soundbite, perhaps, but one that describes the becalmed overall nature of the global economy quite well. The IMF is nearly always wrong to some degree in its forecasting, sometimes spectacularly so, as occurred with the financial crisis. Even a becalmed global economy is better than a shipwrecked one, so it is worth asking what could come along to disrupt the IMF prognosis of ongoing mediocrity? With help from the latest WEO, which details some of these risks, here are what I think of as the top ten threats. 1. Geo-political risk is at its highest since the Iraqi war, and many would argue, much more dangerous, with Russia apparently determined to re-establish its old Soviet borders whatever the economic costs and to relations with the West. Always chaotic, the Middle East has descended into an apparent inferno with severely negative economic consequences for much of the region, never mind the consequences of Western nations getting bogged down in another costly war. Pro-democracy protests in Hong Kong meanwhile threaten an ugly denouement. 2. Both the situation in Ukraine and the Middle East pose a severe threat to oil and gas production, which could cause fuel prices to spike, further adding to deflationary pressures in the West. This might, admittedly, seem the least of our worries at the moment, with oil prices in apparent free fall on fears of reduced demand and oversupply. Falling prices might reasonably be thought of as a boon, except that they also tend to be indicative of something more sinister - a fast slowing global economy. 3. A hard landing in China seems to me to be pretty much hard baked into the system already. This is what the IMF has to say about it. ?Real estate investment has been an important engine of growth in China, and it will be challenging to allow the imbalances in the market? including signs of overvaluation in large cities and oversupply in many smaller cities?to correct while preventing an excessively sharp slowdown?. To this should be added the observation that a great many other industries depend on China?s real estate boom, from construction to steel and household appliances. Credit booms of a similar order of magnitude elsewhere have historically nearly always led to sharp corrections. It is naive to think that China, because it is a command economy, can somehow avoid such an outcome. Admittedly, it can more easily write off, or otherwise monetise, the debt overhang than would be possible in the West, but the idea that this can be done without consequences is for the birds. Investors remain far too sanguine about this threat. 4. Normalisation of monetary policy in the Anglo-Saxon economies could prove highly disruptive to financial markets, grown drunk on years of ultra-easy money. Quantitative easing is due to end in the US either this month or next, with an interest rate rise likely to follow towards the middle of next year. Britain is likely to embark on interest rate rises sooner still. Nobody thinks rates will rise very far, yet in any tightening cycle, markets have a habit of taking things into their own hands . The risks of a disorderly unwind remain quite high, despite all the warnings markets have had of tighter money to come. Higher rates and less easy credit will also have adverse consequences for still stretched household balance sheets. 5. The existential threat to Europe?s single currency has been removed, but it has left the Continent in a stat
Alibaba 'world's biggest public stock offering'
Date : 28-09-2014
Description : Alibaba 'world's biggest public stock offering' Chinese inteet giant Alibaba has raised $25bn (?15bn) in its share flotation, according to US media, making it the largest initial public offering (IPO) in history. On Friday, investor demand led the stock to make its debut at $92.70, more than 38% above its $68 initial price. Alibaba's bankers then chose to buy additional shares, reports say. That means the firm has surpassed the record $22.1bn China's Agricultural Bank raised in 2010. At the end of trading on Friday, Alibaba had smashed several records - with trading volume in the first minutes beating that of Twitter's stock sale - but there was still some speculation about the overall size of the share sale. Alibaba is now worth more $223bn - more than Facebook, Amazon and eBay. As part of the terms of its stock offering, Alibaba's bankers were entitled to buy an additional 48 million shares, in addition to what had been offered to outside investors. Most analysts indicated that if Alibaba's shares had fallen below the initial price, the bankers would probably choose not to purchase additional shares. However, after Alibaba's shares debuted at $92.70 on Friday - significantly above their initial offering price of $68 - that tued out not to be the case. In early US trading on Monday Alibaba's shares were down 4% at $90.04. Source: BBC
Oracle Boss Steps Down
Date : 19-09-2014
Description : Oracle boss Larry Ellison is stepping aside as chief executive after 37 years at the helm of the software giant. Mr Ellison, estimated to be the world's fifth wealthiest man, becomes chairman and chief technology officer, remaining an influential presence at the company. Mark Hurd and Safra Catz have been named as successors, and become co-chief executives. Mr Ellison, 70, co-founded what would become Oracle with Bob Miner and Ed Oates in 1977. In a statement, Oracle board president Michael Boskin said: "Larry has made it very clear that he wants to keep working full time and focus his energy on product engineering, technology development and strategy. "Safra and Mark are exceptional executives who have repeatedly demonstrated their ability to lead, manage and grow the company. The directors are thrilled that the best senior executive team in the industry will continue to move the company forward into a bright future." Ms Catz will run the manufacturing, legal and finance operations at Oracle, while Mr Hurd will be in charge of the sales, service and business units. The software and hardware engineering teams will continue to report to Mr Ellison. Source: BBC
Insurance Contributes 1.4% to GDP
Date : 16-09-2014
Description : Simon Davor, Deputy Commissioner at the National Insurance Commission (NIC), has disclosed that the insurance sector contributed only 1.4 percent to the Gross Domestic Product (GDP) in 2013. According to him, the figure was not encouraging; adding that in South Africa the sector contributed 15.2 percent to South Africa?s GDP last year. Speaking at a press briefing in Accra yesterday, he said about 5 percent of the Ghanaian population have access to insurance, stating that only 1.7 million Ghanaians have insurance policy to protect their lives and property. In view of that, he said the Commission plans to embark on sensitization programme, which will help educate the public on the need to obtain insurance policies. Mr Davor said currently all the insurance policies available now are concentrated in the former sector, explaining that ?the informer sector is completely neglected and targeted market products must be developed for the sector.? ?As at now, we have about 80 different products which are being offered by seven insurance companies. Now we are developing product for everybody; the formal and the informal, the rich and the poor.? Mr. Davor said the Commission was focusing on enforcing the compulsory insurance fire policy for private commercial properties. He said Section 183 & 184 of the Insurance Act states clearly that every private commercial property should have an insurance policy. Mr. Davor however said the violation of the law had resulted in the collapse of buildings recently. He said the Commission had formed a taskforce, who will soon be deployed to inspect private commercial properties, stating that those found culpable will be dealt with according to the law. He said currently there are about 80 life insurance companies in the country and 26 non-life insurance policy insurance companies in the country which offer varied products which will meet the needs of the customers. Mr. Davor called on Ghanaians to patronize these insurance products to secure their future. He urged the public to lodge complaints with the Commission or Ghana Insurance Association for redress. ?We want the public to have confidence in the insurance sector. Without the confidence, the sector can?t achieve much,? Mr Davor said.
Databank Funds Yield Up
Date : 24-08-2014
Description : Databank Asset Management Services Limited witnessed strong performance and growth in the 2013 operational year with all four funds Epack, MFund, BFund and Ark Fund posting impressive returns on investments and an increase in assets under management. Long-term collective investment fund, Epack recorded 84 percent returns on investments and grew its assets under management from GHC54.3 million in 2012 to GHC95.6 million, while the Balanced Fund (BFund) returned 53.8 percent on investment.