The body in charge of assigning the world’s Internet users their online addresses on Friday said it had agreed to allow the use of any of the world’s scripts, no longer just the Latin alphabet.
The Internet Corporation for Assigned Names and Numbers (ICANN), which approved the change at a meeting in Seoul, said in a statement it could lead to a dramatic rise in the number of Internet users.
“This is only the first step, but it is an incredibly big one and an historic move toward the internationalization of the Internet,” ICANN’s President and CEO Rod Beckstrom was quoted as saying.
“We have just made the Internet much more accessible to millions of people in regions such as Asia, the Middle East and Russia.”
The program will be rolled out in stages, starting November 16.
Initially, it will allow internationalized domain names (IDNs) using scripts such as Chinese, Korean or Arabic for the country code designators at the end of an address name.
Eventually, the use of IDNs will be expanded to all types of Internet address names.
ICANN was set up in 1998 and operated under the aegis of the U.S. Commerce Department. It decides what names can be added to the Internet’s top level domains (TLDs) such as .com as well as country designations.
Last month, the U.S. government agreed to changes that in effect meant ICANN would no longer report solely to the United States.
So much for the supply-and-demand dynamic. Once again, the most important equation for the commodities markets these days is the value of the dollar.
AP
Yes, the Asian-led world economic recovery has something to do with the price strength, and, yes, China is a huge consumer of all types of commodities, but like during the boom of two years ago, the US currency is a key consideration.
“But if the dollar keeps weakening,” says Gavin Maguire, Director of Research at EHedger, “nearly all commodities will favor the upside.”
The influence of the dollar is so great because all commodities are priced in the US currency, and today most dollars are consumed and held in countries outside of the U.S.
“With our government continuing to provide cheap money to the market place to help finance the recovery, commodities are going to outperform other asset classes going forward,” says Adam Klopfenstein, senior market strategist at Lind-Waldock, a division of MF Global.
That said, the biggest risk factor for commodities over the next few months is the reallocation of money back into the dollar. If there is a major correction in the stock market, investors will look for safety in the dollar, and that would be a caveat for the whole complex.
“Without that big switch in sentiment, the trends that we have seen over the six months will continue to play themselves out going forward,” says Klopfenstein.
Given this backdrop, here are some commodities that will be strong this winter and some others that will be vulnerable, particularly if there is a pullback in the equity market.
Gold: Still No. 1
With gold at record highs, it’s hard to believe that it will go any higher. Oh well.
“But gold is particularly affected by the weakness of the dollar because it has always been viewed as a safe haven for catastrophes and depreciation of currencies,” says Bill Gary, president of Commodity Information Systems Inc.
And, if the global economy continues to do well, we will still see even more people want to put their money into gold.
In the emerging markets, for example, banking systems are less developed than in the U.S., so people tend to buy more physical gold. The central banks themselves are starting to buy gold to diversify some of their reserves.
Other factors that should increase demand in the fourth quarter are the Chinese New Year and the Indian wedding season. Gold is a very popular gift and jewelry item in the two countries.
Sugar: Raising Cane
Stack of sugar cane sticks
Sugar is one of the few commodities whose short supply would drive its price higher, regardless of the dollar situation.
The lack of rain in India, one of the largest sugar suppliers, has been a bullish force. If that situation does not improve in the coming months, it will be even more so.
There are also questions about whether Brazil is going to continue to make ethanol with the sugar that it produces, or start selling more of it on the open market.
“A lot of people want to see more information out of Brazil,” says Klopfenstein.
Crude Oil: As The World Turns
The defacto boss of the commodities sector, oil, is a prime example of the boost the weak dollar is giving commodity prices. Inventories are large, and demand is hardly spectacular. Though he says we will likely have some violent swings on both sides, Klopfenstein projects that crude will try to test $100 a barrel over the next six or seven months.
Asian demand is also a significant factor. A few years ago, Asia started to outpace Europe and by 2012, some predict it will also outpace the U.S. on a per-day basis.
“Oil has the potential to keep climbing if there is a rebound in global industrial activity, like more cars in India and China,” Maguire says.
Corn: Food-Fuel Factor
Though it is early in the season to talk about grains, the most positive market in the complex is corn. Because it is a feed source for humans and livestock, demand will stay pretty stable in the near term. That stability should lead to future demand.
Maguire expects corn prices to weaken 15 -20 percent up to December then rebound around the new year because of the U.S. harvest cycle.
“If you fast forward six months, corn will be at a price higher than today, but in the interim you can buy it for a cheaper price. Farmers will look at other crops if they don’t see corn prices above $4, which will decrease supply and raise prices in the longer term,” Klopfenstein points out.
Natural Gas: Bloated Feeling
If there is a pullback in equities and a rally in the dollar, the commodities that will get hit the hardest are going to be the ones that had the least amount of upside in the first place, says Klopfenstein.
Though natural gas has lagged, it is starting to move higher due to seasonal factors. If this winter is not colder than expected in the northern part of the U.S., than prices will start heading lower because of significant inventory.
Soybeans, which have been one of the strongest commodities for the past six to eight months due to a drought in Argentina, have the potential to turn into one of the weaker commodities in the agricultural realm.
With a record amount of crop expected out of South America in the early part of 2010, adding to a likely record-size U.S. crop, the market is anticipating at least 30 million more tons of soybeans than last year, says Maguire. Though there are many uses for the soybean, and Chinese demand will remain hefty, production will be much larger than demand.
Wheat: Amber Wave
Wheat also looks like it will be an underperformer for the opening months of 2010. In 2008, wheat prices sky-rocketed because of two consecutive droughts in Australia and growing problems in other regions. That period of price strength sent out strong production signals and the result has been a surge in production. which flooded the market.
Aluminum may lag quite a bit compared to the rest of the sector. Though metals are tied to industrial growth, there will be a meaningful jump in aluminum demand only when there is a discernible increase in aircraft manufacturing or new building construction, says Maguire.
“People are actually still cutting back on that side of things,” he says. Aluminum is tied to macro level industrial expansion, while copper is used in everything from alarm clocks to air conditioners.
Like aluminum, lumber is used in new construction, and has not been an attractive market lately. Lumber prices right now are at their lowest since the mid 1980.
Though no one in the U.S. will break ground in the winter months, building will eventually pick up again, and lumber is always going to be a crucial ingredient, says Maguire. If you want to buy something at historically cheap levels that plays a crucial role in any kind of global industrial recovery, lumber is one of those things.
Cocoa: Too Hot?
There have been questions about the size of the crop in the Ivory Coast, and whether cocoa is overdone on the upside.
“It is a discretionary item, and it is a lot easier for the end consumer to pass on, as opposed to beans or corn which are food staples,” says Klopfenstein. If the equity market reverses and the dollar gains strength, this will be a market that will fall pretty hard, he adds.
“You can get ETFs through most brokers, but they are generally for a relatively sophisticated investor,” says Matthew Samelson, principal at Woodbine Associates.
A commodity future is an agreement to buy or sell a given commodity at specific price on a specific delivery date. It is advantageous because it is a pure play on price behavior, and because you can access them 24 hours a day.
“When used with appropriate risk management strategies like stops or options, an individual investor not only has the opportunity to catch upside but protect yourself against the downside,” says Klopfenstein. The bad news with futures is that you can get yourself in to trouble with leverage.
Like other mutual funds, commodity funds give investors the option of adding diversified commodities to their portfolio and limit the risk associated with the commodities market. A lot of them you can invest as little as five or ten thousand dollars in so it doesn’t take a lot of money to invest in those.
Oppenheimer, PIMCO, Goldman Sachs and Deutsche Bank, for example, all offer commodity mutual funds. If you don’t want to talk to you broker ten times a day, you might be better off with a commodity fund.
The bottom line—find what works for you. And, if you’re serious about putting commodities in your life, with the expected rally in the market, there is no time like the present.
Listed telecoms operator, Safaricom, has integrated its M-Pesa money transfer service and data platform to enable users book and pay for their domestic air, road and rail travel through their data-enabled mobile phones.
The company has signed partnerships with local airlines — East African, Air Kenya and Aircraft Leasing Services (ALS), the Rift Valley Railways and bus companies such as Akamba, Crown bus and Busways to offer this service.
Speaking during the launch of the service, Mr Michael Joseph, Safaricom chief executive officer, said the new service would enable the firm’s subscribers obtain day-to-day services in an efficient, cost-effective and secure manner.
Preferred flight
Subscribers will be required to log on to www.safaricom.com from their mobile phones, select their preferred flight or travel, enter their names and mobile number; upon which they will get a booking reference and instructions on how to pay through M-Pesa.
Once they make payments, they will receive a confirmation SMS with their booking details.
“Customers incur huge costs compounded with the inefficiency associated with having to commute and carry cash to pay for such services. They can now get these services wherever they are,” he said.
Mr Joseph said that although the service, whose pilot started in July, was for domestic airlines only, the company is working to include airlines with international flights.
The symbolism of Beijing dispatching its second top leader for celebrations with the reclusive North Korean leader Kim Jong-il almost at the same time as Washington was deciding to break a tradition by refusing the Dalai Lama a meeting with the US President, has not been lost on observers keen to glimpse ever more signs of China’s rise.
It is the first time in 18 years that the Dalai Lama has not been awarded his meeting with the US President – undoubtedly a powerful symbolic precedent,” said a commentary in the ‘Nanfang Daily’.
It is all due to China’s rising role in global affairs,” the commentary went further.
“The world needs China more and more and the United States — if it wants to exercise its leverage — needs China too. Compared to this, Dalai Lama’s begging around the world seems much less important.”
Observers say US President Barack Obama needs to secure China’s support on a range of critical international issues, including resolving North Korea’s nuclear threat.
Travelling to Beijing in November for his first state visit to the communist state, he is said to have preferred postponing meeting Tibet’s exiled spiritual leader until after his talks with Chinese President Hu Jintao.
Beijing has long decried the Dalai Lama’s tours of world capitals, promoting Tibet’s independence cause.
Ironically, as much as the United States was seen kowtowing to Beijing in this sensitive time ahead of Obama’s China visit, Beijing had been depicted as standing by its long-term friend and daring to defy international opinion.
The day after China stirred sentiments with its impressive show of military power at the 60th anniversary of the founding of the communist republic, Chinese premier Wen Jiabao flew to Pyongyang to meet North Korean leader Kim Jong-il.
He attended lavish celebrations of the 60th anniversary of the establishment of diplomatic ties between the two countries.
His visit was full of symbolic activities, underscoring the long friendship between the two neighbours, once close ideological allies.
Wen paid tribute to the Chinese soldiers killed in the Korean War at a cemetery east of Pyongyang, rekindling memories of the conflict with the United States, which saw China going to extraordinary lengths to back its communist neighbour.
Chinese web users generated scores of postings supporting Wen’s visit to the North.
“It must be a huge encouragement for North Korea that, when the whole world is isolating them, our premier is there to give them hope,” said one comment on the popular Internet forum ‘Tianya’.
What is more, Wen Jiabao promised the North’s reclusive leader aid and further political support in the international arena.
North Korea launched a series of missiles and conducted an underground nuclear test earlier this year, drawing sanctions by the United Nations.
A UN Security Council resolution has banned support to the North except for humanitarian purposes.
Nevertheless, during his meeting with Kim Jong-il, Wen was reported to have agreed to assume the costs of a new bridge to be constructed over the Yalu River, which divides China and North Korea.
The two sides have also reportedly reached agreements on cooperating in education and tourism, with China providing grants worth an estimated 200 million US dollars.
The leaders of South Korea and Japan have expressed concerns that the aid promised by China may violate the existing UN sanctions.
On Friday President Lee Myung-bak and Prime Minister Yukio Hatoyama said international sanctions against North Korea should remain in place until “specific action” had been taken over its nuclear programme.
Both leaders were in Beijing over the weekend for meetings with the Chinese premier.
North Korea’s aid featured prominently at their summit. President Lee told reporters the countries had agreed on the “need for a fundamental and comprehensive solution” to the nuclear issue.
The two leaders have agreed to offer North Korea a one-off package of aid in exchange for denuclearisation, instead of the step-by-step measures that have been followed since the denuclearisation talks began back in 2003.
North Korea pulled out of the talks in April. During Wen Jiabao’s visit to Pyongyang earlier this month, Pyongyang indicated that it might return to multi-party talks on the nuclear issue, but added it wanted direct negotiations with the US first.
The six-party talks include delegates from the two Koreas, China, the United States, Russia and Japan.
As the North’s biggest trading partner and staunch political ally, China is seen as a key player in bringing Pyongyang back to the negotiating table.
But observers warn that the United States might not be that keen to hold direct talks with Kim Jong-il.
Li Kaisheng, international relations expert at Xiangtan University in Hunan province, said the bilateral talks clash with the US’s hidden intention of keeping a rising China in check.
Rebalancing growth
“As soon as the United States establishes official ties with North Korea, it will have to face the challenge of terminating the cold war arrangements on the peninsula and withdrawing its troops — which it doesn’t want to do,” Li wrote in his column posted on www.sina.com.
After winning the Nobel Peace prize Friday for his peace-making efforts and promises to build a world free of nuclear weapons, US President Obama is under even greater pressure to deliver on high expectations about his administration.
Activists have already called on Obama to push for the protection of human rights defenders worldwide.
Human Rights Watch, the New York-based international rights group, said Obama should push for a vigorous public discussion of Tibet during his Beijing visit.
“As a Nobel laureate, President Obama has a special responsibility to speak up for activists jailed and persecuted for promoting human rights,” said Kenneth Roth, executive director of Human Rights Watch.
Meanwhile, as the United States talks about rebalancing global growth, China sees a covert agenda of trade protectionism.
And while Beijing seems to agree that there is a price to pay for its new ascent as a global power, it bristles at suggestions that it needs to let its export powerhouse fade from prominence by allowing its currency, the yuan, to appreciate faster.
Recent high-profile meetings of the Group of 20 in Pittsburgh and the weekend annual gatherings of the World Bank and the International Monetary Fund (IMF) in Istanbul have provided a stage for cross talking between the United States and China, illustrating how far apart their agendas about helping shore up the world economy’s recovery remain.
True, the Pittsburgh summit in late September produced a pledge by both rich countries and fast-growing powerhouses to rethink their economic policies, and reduce imbalances between big exporting nations such as China and Japan and debt-laden countries like the United States, which has long been the leading global consumer.
But US President Barack Obama’s calls on China to reduce its dependence on exports by promoting more consumer spending have caused experts here to see hidden agendas.
“Washington is talking about decoupling and rebalancing the global economy but the true nature of these pursuits is the United States’s scramble for markets,” Chen Fengying, an expert on world economic issues with the China Institute of Contemporary International Relations, a think tank that advises the government, told the ‘China Times’ weekly publication.
Chinese experts believe that Obama’s eyes are set on making exports the new economic engine for the faltering US economy, and his pronouncements about addressing global imbalances aim to arrest further expansion of China’s export powerhouse.
Broad government support for Chinese exporters, along with stimulus spending and record bank lending, has been among the factors that drove the country’s economy to expand at an annualised rate of 14 per cent in the second quarter of the year.
By contrast, the US economy shrank at an annual rate of 1 per cent during that period.
Beijing has intervened heavily in currency markets to keep the value of its currency down, thus providing its exports with a competitive edge in the current weakened economic climate.
China’s liberal support for its exporters has led to frictions with its trade partners, particularly with the United States.
Trade row
A full-blown trade row erupted between the two countries in September after Beijing accused Washington of “rampant protectionism” for imposing heavy duties on imported Chinese tyres and threatened action against imports of US poultry and vehicles.
In signing the order subjecting Chinese tyre imports to 35 per cent duty on top of the existing 4 per cent, Obama sided with America’s trade unions, which have complained that a “surge” in imports of Chinese-made tyres had caused 7,000 job losses among US factory workers.
China’s minister of commerce Chen Deming told the media that Obama’s decision was sending “the wrong signal to the world” at a time when Washington and Beijing should be cooperating with each other to deal with the worst economic and financial crisis in decades.
China has glowed in the global consensus that the economic crisis had accelerated its emergence as an established centre of power.
In Pittsburgh the group of rich industrialised countries agreed that decisions on global economic issues in the future will have to include important players among emerging economies like China and India.
Speaking from Istanbul where the World Bank and the IMF held their annual meetings over the weekend, World Bank president Robert Zoellick said the crisis had brought the curtain down on the unipolar world that followed the collapse of communism 20 years ago.
In the future, he said “there will certainly be a larger role for the emerging powers, there will be multipolar sources of growth.”
Fears of a full-fledged regional financial crisis across Eastern Europe have eased, calmed by a strong IMF presence, hefty external assistance to those in need, and a general improvement in global risk appetite. Nevertheless, the region is not out of the woods. The specter of a Latvian devaluation still looms, banking stress continues, and rising political risk in several countries with IMF programs is a concern.
The Good: Bright Spots Have Emerged
Risks may linger, but bright spots have emerged. The second quarter upturns (q/q) in France and Germany—key export markets and important sources of foreign capital for Central and Eastern Europe—are a positive sign, but the jury is still out on the strength of the recovery. Meanwhile, the improvement in global risk appetite cannot be underestimated. As the saying goes, “A rising tide lifts all boats.” For now, investor appetite for Eastern European sovereign debt has picked up compared to earlier this year, which has alleviated external financing risks.
The Improved: Contagion Effects from a Latvian Devaluation Likely To Be Limited
While devaluation is not imminent in Latvia, the risk that it will happen next year remains high. The potential for contagion into other CEE economies, however, is more limited now than it was this summer. Temporary ripples throughout the region’s currency and stock markets are likely in the event of devaluation, but the effects, for the most part, should not be lasting. Investors have had time to digest the risk and policymakers have had time to prepare. A recent IMF paper by Prakash Kannan and Fritzi Köhler-Geib shows that the degree of anticipation of a crisis is an important determinant of whether contagion occurs.
The risk of spillover effects is also limited by the fact that CEE economies have increasingly differentiated themselves from each other. Poland, for example, stands out as the only EU economy to have averted recession. Central European economies, like the Czech Republic and Poland, are widely seen as fundamentally healthy and should largely be insulated from long-term ill effects.
Nevertheless, RGE continues to believe that a Latvian devaluation could shake confidence in other currency pegs in the region. That means Estonia, Lithuania and Bulgaria, which all have fixed exchange rates to the euro, could experience the most severe aftershocks if Latvia abandons its peg.
The Bad: Banking Stresses Remain
Eastern European banking systems have come under stress as the number of non-performing loans (NPLs) on their balance sheets has spiked amid sharp economic contractions. The peak is not expected until early 2010, as NPLs typically lag the business cycle by several months. Deutsche Bank forecasts NPLs will jump to 5-10% of total loans in the CEE-3 (Czech Republic, Hungary, Poland), 15-25% in the Baltics, 15-20% in South East Europe and 30-45% in Ukraine.
Foreign-owned (primarily Western European) parent banks operate in the region via subsidiaries and account for 60% to 90% of total bank assets in most CEE countries, and the fear has been that rising NPLs could test these parent banks’ commitment to the region.
RGE expects parent banks to stay the course, but the possibility of a complete pullout (while highly unlikely) cannot be completely discarded. A week ago, Swedbank—a top Swedish bank and Latvia’s largest lender—raised the threat of withdrawing from Latvia if lawmakers there pushed through a controversial mortgage bill. “If this runs through we need to reconsider our operations in Latvia,” said Thomas Backteman, vice president of corporate communications for Swedbank, according to Reuters.
In recent months, foreign parent banks in some of the worst-hit economies—Hungary, Romania, Serbia—have collectively pledged to support their subsidiaries as needed, making a pullout highly unlikely. The bigger concern is further tightening of lending, which will cut into the region’s growth prospects and delay recovery.
The Ugly: Political Uncertainty Threatens IMF Programs
There is no doubt that IMF programs in some of the region’s most vulnerable economies—Bosnia, Hungary, Latvia, Romania, Serbia, Ukraine—have played an important role in calming fears of a regional financial crisis.
Even with IMF programs in place, however, these economies are not immune to crisis. Of particular concern are the difficulties these governments might face in meeting loan conditions as they try to balance electoral ambitions against economic realities. Will they adhere to their IMF programs? If they don’t, will the IMF keep lending anyway? There are no easy answers to these questions. If financing is halted, these countries could again be facing full-blown capital account crises.
Compared to practices during the Asian Crisis, the IMF has shown a newfound flexibility and leniency in dealing with program countries. The Fund dropped its request for land reform in Ukraine and approved wider budget deficit targets than originally agreed in Romania, Hungary, Latvia, Serbia and Ukraine. However, the lender’s flexibility is not boundless.
So far, the spotlight has focused on Latvia’s government, which is struggling to cut spending and keep its currency peg. Latvia’s lack of adherence to loan program targets resulted in a delay in the IMF’s disbursement of a €0.2 billion loan tranche, originally due in March but not paid out until August. Ukraine is another problem country where authorities have failed to meet program targets—with January presidential elections looming, the government has stonewalled on targets of energy reform and raising household gas prices. In November, the IMF will decide whether to disburse a $3.8 billion tranche to Ukraine.
Romania has emerged as the latest hotspot and could put the IMF in a difficult position. The abrupt collapse of the government in October has left a political vacuum and raised fears over the country’s ability to adhere to its €20 billion loan agreement. The conclusion of the second review of the IMF program is scheduled for December and involves a €1.5 billion disbursement. Some analysts expect that payment to be delayed. The concern is that Romania’s uncertain political situation could affect the viability of the entire program.
“Tuesday's launch indicates that Safaricom has satisfied both British and Kenyan authorities that the service is not prone to money laundering and satisfies the know-your-customer rules which enable authorities to track transactions.”
Kenyans will from today be able to send and receive money to UK through Safaricom’s M-pesa in the company’s first commercial cross-border transfer service whose details will be announced later on Tuesday.
The move opens up the service —which has contributed to the slow decline in usage of more traditional money transfer solutions — to the lucrative remittances market and sets the stage for a new battle on the international front between local mobile operators.
Safaricom’s competitor in the market, Zain, just under a month ago, unveiled a service that allows subscribers to send or receive money anywhere in the world using the Zap platform.
Safaricom has been actively pursuing a link with its UK affiliate, Vodafone, to allow subscribers on its network to send virtual cash across borders since it launched the service over two years ago.
According to sources involved in trials for the service launched in 2008, the proposed rates for an M-pesa transaction between Kenya and Uganda are Sh480 (£4) for amounts between Sh0-18,000 and Sh720 (£6) for amounts between Sh18,120 and Sh30,000 (£151 – £250).
The rapid adoption and frequent use of M-pesa has translated to Safaricom emerging as the local market leader in mobile money transfers, mostly due to its low pricing model and the fact that it is available on the mobile phone.
M-pesa now has more than seven million users and boasts an agent network that exceeds the total number of bank branches in the country.
“By allowing money to flow electronically rather than physically, M-pesa lessens, and in some cases eliminates, many of the spatial and temporal barriers to money transfer. This releases money flows in Kenya and allows such flows to penetrate rural areas where cash is difficult to access,” said Olga Morawczynski, in a CGAP research note.
Another pillar in the product’s success has been the fact that users do not need a bank account to use the service, a fact that Safaricom chief executive, Michael Joseph, says has pushed the product to prominence.
The market will be keen to see if the product will have the same success in the international market, where money transfers are typically expensive and out of the reach of the unbanked population.
Analysts say the fact that international transfers is a new and untapped market, the entry of mobile providers could set the stage for price battles in the industry.
“Apart from the convenience factor, unless prices come down to comparable levels — or at least somewhat closer to the cost of sending money domestically — there is still a long way to go before the potential of international mobile money transfers can be realised,” said Sanket Mohapatra of the World Bank.
Mobile firms have turned to borderless mobile money transfers as the next frontier in the industry’s development in the last month, hoping to cash in on the lucrative remittances market.
The Central Bank of Kenya last month said remittances totalled $611 million in 2008, up from $573 million in 2007 and are set to continue rising this year.
More than half of remittances have come from North America and Europe in each of the past five years.
“Our survey shows a general downward trend in remittances flow between January and June 2009, and an upward trend in the next two months,” said Charles Gitari Koori, Director Research Department of the CBK.
In August remittances inflow increased by 11.1 per cent to $55 million from $50 million in July.
Tapping into this inflow is likely to provide mobile operators with a new source of income in an attempt to diversify products as revenues from traditional activities decline in line with a more competitive environment and economic conditions.
Safaricom’s latest move indicates it has surpassed yet another regulatory test.
Analysts say cross-border transactions are likely to refresh debate on how the movement of money is managed in the developed world, where regulatory issues have held back the launch of the service for over a year and a half.
By May of this year, Safaricom was still trying to get a formal go-ahead for the service from CBK, nearly two years after launching the trials.
Today’s launch indicates the firm has satisfied both British and Kenyan authorities that the service is not prone to money laundering and satisfies the know-your-customer-rules which enable authorities to track transactions.
In an earlier interview with Business Daily, Pauline Vaughan, the M-pesa Product Manager, said trial participants in UK were able to send money to Kenyan phone numbers via a web interface; thereafter being able to collect their cash from about 10 outlets.
Safaricom’s is a different model than that employed by Zain, which has opted to leverage banking relationships to create a borderless mobile money transfer solution.
Launched in late September, Zain’s service allows users to receive money from anywhere in the world directly to their mobile handsets as well as send funds directly to their bank accounts.
To roll out the service, Zain is relying heavily on the banking industry, through its partnership with Standard Chartered and Citigroup, which processes transactions using existing relationships with banks all over the world.
In order to operate the new service, Zain pools funds in an account held at Standard Chartered under the name Zap Trust Company.
It is into this account that any deposits or withdrawals between banks are made before the Zap system forwards the virtual money to a Zain subscriber on their Zap accounts.
“The product brings together the security of traditional banking infrastructure with the convenience of the mobile phone,” said George Held, the Products and Innovation Director at Zain Group.
Zain is still working out regulatory issues such as how much can be transferred through the service, which is active within East Africa, on a country-to-country basis.
Look to invest in hot growth spots in Asia such as China’s oil refiners and wind power firms, as the region’s economy will see a stronger recovery compared to the rest of the world, said Philip Niem, head of Asia discretionary portfolio management at Barclays Wealth.
“Interest rates are going to stay lower for a relatively long period of time so global investors will be looking to invest in growth areas. And Asia does stand out which should make it a relative out-performer, compared to other equity markets around the world,” he explained on CNBC Asia Pacific’s “Protect Your Wealth”.
Niem said China’s oil refiners and wind power firms are part of the long-term structural theme on the mainland, saying that China’s appetite for resources to oil its growth engine is raising the emphasis on wind as an alternative form of clean energy.
“We think that companies leading this field should make good investments, particularly as the sector has been corrected by 20 percent or so recently, due to some comments about over-capacity within the industry,” he said.
South Korean ship builders rank high on Niem’s buy-list as safe bets as well. Niem believes they will benefit from growth in global trade and energy demand in the recovery story.
“The big Korean ship builders are also experts at providing drill ships for the offshore oil industry and also the LNG industry. We do see a pick up in these areas with the increasing demand for energy, clean energy, in the form of LNG from the Asian economies,” he said.
Niem also sees significant potential in financial assets in India, saying he is bullish in the long-term on that sector.
“We think that as the Indian economy grows, the financial sector will grow even faster. We like the state-owned banks, because we think that they are safer than the private sector banks…and they (have) better valuation.”
Think emerging markets and everybody immediately focuses on China. Yes, it’s a massive opportunity to be sure, but China is not alone in providing investment opportunities for forward thinking investors. There are others.
Malaysia, Indonesia and Thailand
In Asia, the changing political landscape in Malaysia has set the table for potentially strong foreign investment (likely a positive development for the Malaysian economy). Indonesia, with huge natural resources, shows great promise as a rising economic power. Thailand, despite political unrest, is attractively priced though instability does make this a higher risk strategy.
New leadership in India promises reforms that could spur growth. South Korea has shown strength as of late as consumers appear to be recovering from a pause in spending. Other tiger economies will benefit from future explosive China growth and these investment opportunities should not be overlooked.
Don’t forget about Latin America. There is huge growth in the Brazilian economy as commodities increase in global importance. Natural resources demand will have positive effects not only for Brazil but also surrounding economies. Other countries in Latin America are candidates for investment as well as the entire region begins to gather economic momentum.
Explore!
As these economies grow, consumers will have more purchasing power driving further internal consumption expansion. This is the recipe for increases in equity returns. Tread carefully when investing in emerging economies; the volatility can be high. But with valuations similar to more established developed markets and growth rates far greater, it does appear to be an attractively priced asset.
Consider moving in gradually and across economies as you increase your exposure to these future economic powerhouses. Hang in there when the short term swings turn against you and add to your position if volatility takes prices down; the right time horizon and perspective is critical.
Lastly, watch carefully the economic statistics to see if your thesis is playing out. Adjust as needed and be proactive. This is the way to successfully invest in the global landscape.
