"Emerging markets are no longer the darlings"
At the conclusion of the World Economic Forum, the overriding message is that poor performance among the globe's emerging markets has investors running scared, with money moving back into established economies. Ironically, this is reflective of superyacht industry activity, where there has been relatively little exploration of markets beyond traditional bastions.…
The 2014 Davos World Economic Forum has concluded with the robustness of emerging economies brought into question. Whilst, according to the Wall Street Journal’s Thorold Barker, “economic issues have moved aside for political issues” this year, of greater pertinence for global industry is the movement of money out of emerging markets and back into developed economies.
This reversal of investor confidence could be considered a sign of encouragement for stakeholders in the superyacht industry, which has been notably slow to take significant steps into emerging markets. And it seems as though the industry's prudence may be justified as, “Historically the big banks have always been positioning themselves to move to Asia but now the calculus is changing. If you think that 56 per cent of investment banking revenues are generated from North America, it makes more sense for companies to be scrapping for a share of this. And if the US economy were to grow at 4.5 per cent this year, which is not unthinkable, it would equal a Turkey [sized growth] every 13 months”, said Gren Manuel, editor of Financial News.
Gerard Baker, Editor in Chief of Dow Jones & Company, went further by saying 2014 signals a “rebalancing of the global order”. Whilst developed economies have strengthened, he said, emerging economies are now struggling. The US is seeing its strongest growth in eight years, whilst “CEOs have identified Spain as a place where things are happening”, said the Wall Street Journal’s Brussels bureau’s Stephen Fidler. Although Fidler did qualify this ‘developed economy’ smugness by identifying neighbouring France and Italy as “the two countries of most concern”. And equally, amid the emerging market pessimism, “the surprise star of Davos has been Mexico”, according to Wall Street Journal business editor, Dennis Berman with its tangible examples of government reforms leading to progress and growth.
But for Barker, the vulnerability of the much-lauded emerging economies, and the threats this will pose to investors, is of primary concern as the year begins in earnest. “It is fascinating that the issues facing the world have changed so [radically] in the last 12 months”, Butler said. “Confidence in the global economy has improved dramatically. But the emerging markets are no longer the [world’s] darlings. People are worried and they are beginning to shift their money back into developed economies.”
This reversal of investor confidence could be considered a sign of encouragement for stakeholders in the superyacht industry, which has been notably slow to take significant steps into emerging markets. And it seems as though the industry's prudence may be justified as, “Historically the big banks have always been positioning themselves to move to Asia but now the calculus is changing. If you think that 56 per cent of investment banking revenues are generated from North America, it makes more sense for companies to be scrapping for a share of this. And if the US economy were to grow at 4.5 per cent this year, which is not unthinkable, it would equal a Turkey [sized growth] every 13 months”, said Gren Manuel, editor of Financial News.
Gerard Baker, Editor in Chief of Dow Jones & Company, went further by saying 2014 signals a “rebalancing of the global order”. Whilst developed economies have strengthened, he said, emerging economies are now struggling. The US is seeing its strongest growth in eight years, whilst “CEOs have identified Spain as a place where things are happening”, said the Wall Street Journal’s Brussels bureau’s Stephen Fidler. Although Fidler did qualify this ‘developed economy’ smugness by identifying neighbouring France and Italy as “the two countries of most concern”. And equally, amid the emerging market pessimism, “the surprise star of Davos has been Mexico”, according to Wall Street Journal business editor, Dennis Berman with its tangible examples of government reforms leading to progress and growth.
But for Barker, the vulnerability of the much-lauded emerging economies, and the threats this will pose to investors, is of primary concern as the year begins in earnest. “It is fascinating that the issues facing the world have changed so [radically] in the last 12 months”, Butler said. “Confidence in the global economy has improved dramatically. But the emerging markets are no longer the [world’s] darlings. People are worried and they are beginning to shift their money back into developed economies.”
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