Chile : An Engine Of Global Growth

PESTLE ANALYSIS1.Wiggleworth,R.Egypt bleat outlook on debt,09/02/11,ft.com2.Stubbs,J,Investor strategy,13/04/07,ft.com3.Ho,S at all,incomplete transfer phenomena,international marketing reviw vol.5.4.Bevis,G,VAT RISE TO 20%,22/06/10.thisismoney.co.uk5.14/09/10,UK inflation rate,bbc.co.uk6.Gardiner,K,at all, Emerging market fear,09/02/11,ft.com.7.Wolf,M,a STRATEGY FOR GROWTH,10/023/11.FT.COM8.Cohen,N,Price inflation hit,15/02/11,ft.com.9.

Since the great depression, the global economy has been facing a number of ups and downs. With the markets being built rapidly and crashing down in the other instant, elements that actually make up the skeleton of the international economy seems to have correlated variables. These variables seems to have been correlated with each other in numerous combinations and their correlation is what makes the market fluctuate. The volatility of the global market becomes more apparent in times of recession when the correlation between variables like stocks, bonds, US dollar, Euro, gold and oil becomes more apparent. Therefore, it is of paramount importance that these correlated variables should be studied with a very keen eye. Since the link between currencies, commodities, stocks an bonds runs very deep, change in any one of them seems to have a profound impact on the rest hence changing the face of the market.

The United States involvement with Latin American was critic for the economic development of both parties. Throughout history the United States invested mostly economically with these third world countries. For instance In the Dominican Republic, Cuba, and Haiti, officials had to obtain U.S consent before borrowing foreign capital. Another example is the relations of the United States with Cuba, the US investments helped locked the country into a risky one-crop economy subject to fluctuating world sugar prices.

Chile has become a market-oriented economy characterized by high levels of foreign trade, strong financial institutions and sound policy that have given it the strongest sovereign rating in South America. Over the last decade, FDI has represented an annual average of over 6 percent of Chile’s GDP. Exports of goods and services accounted for approximately one-third of GDP, with commodities making up three-quarters of total exports. Copper provides 19% of government revenues. The mining sector attracts 50.1 % of implemented FDI under DL600, followed by services (26.6 %); electricity, gas and water (10.9 %); manufacturing (7.9 %); construction (2.4 %); transportation and communications (1.7 %); and agriculture and fishing (0.5 %). According to

One of our clients is considering a potential investment in a particular South American Country (Country X). An investment is to be made only if the expected return is greater than the inherent risk. The market rewards an investor for willing to take risk, and thus it is important to understand the risks underlying. In the case of investing in the equity of Country X, the required return is the reward investor demand for exposure to:

Many countries have struggled to adapt to the changes that accompany globalization. Some countries have succeeded where others have failed, but the transitions have been bumpy for all the countries that have attempted to engage the global market. One example is Chile. As explained by Milton Friedman in Episode Two of Commanding Heights: The Battle for the World Economy, Chile “…was the first case in which you had a movement toward communism which was replaced by a movement toward the free markets.” Chile has been a success story, and an example for other countries, but that doesn’t mean that it hasn’t faced setbacks along the way.

Latin America is filled with environmental, agricultural and culturally rich countries but unfortunately it is also the place where the majority of the countries have high levels of poverty and social inequalities. Latin America is the place where we find many natural wonders like the Amazon rainforest, the Andes, the Iguazu Falls and many other natural resources. However, the economic situation is one of the poorest in the world. According to the article, The Politics of Economic adjustment policy in Argentina, Brazil, and Mexico: Experiences in the 1980’s and challenges for the future, and in, Latin American countries underwent the worst economic recession during the 1980’s. The distribution of incomes after the 1940’s was a radical change because there was a huge gap between poverty level and the elite members of society. After that point in history it has continued the same way up until contemporary times. The considerable difference in the income inequality and the high poverty rates is what interested me and in particularly during the 70’s and 80’s, which is known as “la decada perdida” or the lost decade. The lost decade was a time of economic austerity in many countries in Latin America and this is why I became interested in this topic. As a result, I interviewed my grandfather, Jose Gomez, who lived in Mexico during those harsh times of crisis that were affecting many Latin American countries during the 1970’s and 1980’s.

From the point of view of economy freedom, Chile’s score is 78.7 (2014 Index of Economic Freedom Chile, 2014). This makes Chile’s economy the 7th free economy in the index of 2014. The total ranking is a bit lower than previous year. There is a change, to be more precise it’s a positive change in the investing figures of Chile. Chile is considered at a very high position with regards to its economic freedom in Southern and the Central parts of America. Chile’s economy has been constantly considered as one of the most freely run economies in its 20 year old history of index. It has also been successful in achieving economic freedom, which is highly impressive at 70. There are 10 economic freedom concepts, out of which three have been successful in gaining a score of 20 points or above since 1995.

The concept of neoliberalism has brought many changes both in the world of politics and economy throughout the world, as well as in Chile. Neoliberalism has transformed Chile both politically and economically or even made Chile one of the luckiest victims of neoliberalism. In this essay, the writer will try to explain comprehensively about what is neoliberalism is and how it practices or policy shape the nature of domestic and global politics, especially Chile under Augusto Pinochet in 1973. Neoliberalism or “modern Liberalism” (Walzenbach, 2016, p. 88) is the idea that society should be shaped by the free market and that the economy should be deregulated and privatized. Thus, it is project that the state must reduce its role and keep it to a bare minimum (only to create and preserve the economic institutional framework) as well as more embrace the freedom of the individual to choose and decide (Friedman, 1962).

Invesco can establish a new branch in a new market and then either inject cash or capital from their various funds. However, an investment in emerging market countries carries greater risks compared to more developed counties, for example many of the assets in these countries can be less liquid. The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues (Invesco, 2013). Therefore, there are both increased risks as well as opportunity in many of the emerging markets that Invesco is operating in.

In order to answer the posited questions, first it is cited some similarities between Chile and the US banking industry, and then how it evolved to this point after several financial crises. Secondly, it is examined potential implicit guaranties of Chile’s TBTF banks. In that sense, it is analyzed the concentration and interconnection in Chile. Then, it is analyzed those expected financial benefits that flow to the TBTF banks. Specifically, two of the likely financial benefits. Primarily, the over the counter (OTC) derivatives, and then repurchases agreements in the banking industry, especially in events of default, insolvency, and bankruptcy. Thirdly and lastly, it is stated some remedies that I can propose to solve these issues, including the Subsidy Reserve Act, as adapted for the Chilean banking industry, among others.

EXCHANGE RATE CHARTS: Over the last few years, Guatemala 's currency has appreciated with respect to the USD. Guatemala has lost some of its competitive advantage, but since the USD is still significantly higher than GTQ, the currency will not impact trade between US and Guatemala as much. Since the GTQ has appreciated with respect to the USD, this means that imports from the US to Guatemala will be cheaper, therefore improving their imports. However, because it costs more USD to purchase GTQ, the US may choose to import less from Guatemala, therefore their appreciating currency will hurt Guatemala’s exports. Although the currency exchange between the USD and GTQ had its ups and downs throughout the years, it is currently the same exchange rate as exactly 5 years ago (1 USD : 7.68 GTQ).

Through this year April, the USD weakened, and was the possibility that political policy of trade restriction on some countries; investors anticipated forecast that the Fed increase the interest rate from 1% to 1.25% on June. The Trust’s NAV of portfolio return is -0.9%, and the benchmark return is -1.4%. The portfolio is outperformed the benchmark on April when stock selection is the main driver. Stock selection in U.S. is helped for the positive return from the most impact performance of Balfour Beatty, Senior, Howden Joinery Group and Tyman among the top contributors. (Strategy, Fund, 2017). The rising inflation will support equities for the continued economic growth in U.S.. emerging markets debt rising since the beginning of 2017. Class F-2 shares may not reach the the prediction as result in the future period, so the share prices and returns is uncertain that investors may lose in this point, especially for the short-term investors. The EM is doing well in Asian market. EM still remains uncertain risk. A lot of the dollar-denominated debt becomes difficult to service. (Edwards, 2017). But EM local currency bonds may looks very attractive and a good choice to investors for the steeper EM yield curves and positive real rates in the condition of slowly rising interest rate in U.S. (Emerging Markets Debt, 2017). People should stay still and wait for a correction to buy stock

Investing in emerging markets offer tempting advantages to investors. The volatile economies of countries considered to be in this category have a potential for extraordinary returns. A caveat to investors considering opportunities in emerging markets are the presence of unstable governments, the chance of nationalization, poor property rights protection, and large swings in prices. Emerging markets are far from a sure thing. But, despite high individual risk, emerging markets can reduce portfolio risk. The volatile economies of these countries have such low correlations compared to the domestic market that they actually provide the greatest degree of diversification.

Since the average standard deviation of the developed markets is around 0.6% compared with the 0.71% in the devolving markets, it indicates that the Risk and VaR value in the developed markets (1.5%) is less than the developing countries (1.71%). Hence, VaR showed that investing in US and Swiss markets have the lowest currency risk in the developed markets, and investing in Pero and Mexico have the lowest one in