FMA Head of Enforcement, Belinda Moffat, said this is the first market manipulation case to be taken in New Zealand. “Market manipulation interferes with the integrity of New Zealand’s financial markets and harms the function of open, transparent and efficient capital markets,” said Ms Moffat. (Mondovisione)
Monthly Archives: July 2013
QuoteA First for New Zealand
Valuations, Liquidity and Transparency
[G]reater foreign participation in the equity market is only possible if investors become confident about the long-term sustainability of local businesses…. By reforming the structure of these businesses and accepting international business practices, these businesses may be able to win the confidence of global investors and witness greater flow of capital. (Arabian Gazette)
Morgan Stanley Capital International (MSCI) recently upgraded Qatar from frontier market to emerging market. While this is good news for Qatar and Qatari companies, it is interesting to note that in 2008, MSCI declined to elevate Qater to emerging market status due in part to shortcomings in market technology and mechanisms. Five years later, Qatar becomes an emerging market, but just as the wave of emerging market interest has started to recede. (See “Is the Emerging Market Boom Over?” in today’s Guardian newspaper.)
Want your market to be an attractive destination for foreign capital? Consider Qatar’s experience and think about making infrastructure and regulatory upgrades sooner rather than later.
The Siren Call of Synthetic Investments
[Dan Katz at Bank of America Merrill Lynch] began by explaining that there were a number of different synthetic products that can be used to access a variety of different emerging and frontier market countries.
[snip]
However, he stated that “it can be very difficult to access those [emerging and frontier market] countries” in a timely manner and also be costly to do so locally because of the need to have local accounts in India and qualified investor status in China, for example. “Or it may be from a tax perspective more expensive to invest locally as is the case with certain investors in Brazil,” he added.
Does your market put up significant barriers to entry by foreign capital in order to protect local interests? That may be counter-productive to growth in the long term. The fact is that non-local investors want to be in your market, and if they can’t do it directly, they will find ways to invest synthetically. If they do, it’s the local interests that ultimately lose out, because synthetic investments don’t have the local impacts – market quality, liquidity, listings desirability – that direct investments do. If you want to grow your market, consider eliminating those barriers to entry; as they say, a rising tide will lift all boats.
Read the original article here: http://tinyurl.com/ko2ln3j
Myanmar set for stock exchange
Hat tip to Emerging Frontiers Blog for this one.
Moving investors beyond “leaps of faith”
Investing in frontier markets carries plenty of dangers. Argentina’s government could decide to take over more private companies and leave investors with nothing. The war in Syria could spill into Lebanon and Jordan, upending their thriving markets. Cote d’Ivoire, Pakistan and many of the 37 frontier countries have had coups, wars and other turmoil over the past two decades.
“Buying into them has to be a long-term play,” says Jack Ablin, chief investment officer at BMO Private Bank. “You have to take some leaps of faith.” (Washington Post)
Smart money is moving into frontier markets. Market operators in these markets may not be able to eliminate all systemic risks for these investors, but there are meaningful steps that they can take to clarify their rules in order to minimize uncertainty and build trust with investors. Done right, these changes will mean that investments are not so much “leaps of faith” as they are “calculated risks”.
“Corporate Governance is a Profitable Venture…”
“She noted that strengthening the corporate governance would make it more credible and attract the needed investment to grow the economy, saying, “We are partnering with the exchange because they are dealing with companies driven by directors who are our members. Corporate governance is a profitable venture because when people believe in you, they will do business with you.”
– Chief (Mrs) Eniola Fadayomi, President of the Institute of Directors Nigeria, speaking about partnering with the Nigerian Stock Exchange to strengthen corporate governance
Best Practices and International Standards
What has enabled the financial services sector in South Africa to [fare] as well as it has over the years is that the FSB has been committed to adhering to best international standards applicable to the securities industry and other industries falling within its jurisdiction in the non-banking segment of the sector.
Capital Wants Regulatory Certainty
Welcome to the website of MarketReg Advisors.
As the financial markets around the world have grown more and more interconnected, those who have capital have seen an explosion in the number and variety of places where they can deploy that capital. It’s not news that smart investors are looking for opportunities and returns, nor is it news that they’re willing to consider investments in emerging and frontier markets that were previously inaccessible to them due to technological barriers. But it is an opportunity for market operators who understand how and why capital moves to move it to their markets instead of somebody else’s market.
As barriers to entry have fallen, capital has never been more far-ranging or moved as fast as it does today. But capital these days isn’t only fast and creative, it’s also smart. Investors in emerging markets want stability, predictability and transparency. They want to know how their capital will be received, traded, settled and safeguarded. They’re not afraid of taking economic risks, but they will avoid markets where they perceive that their money won’t be treated fairly in the face of local interests, or where the legal protections for investors are weak, or where there is not adequate transparency in financial, legal or accounting controls. Simply put, they want to know what the rules are, how they can change, and how they’ll be enforced.
MarketReg Advisors can help you strengthen your regulatory infrastructure to give investors – foreign and local – the reassurances they’re seeking. With over ten years experience in all aspects of regulating financial markets, MarketReg Advisors can help you identify areas for enhancing your regulatory presence, and help you design and implement regulatory structures that are attractive to foreign direct investment and capital inflows.
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