Sovereign Wealth Funds And Global Finance

Since the early 2000s, SWFs from emerging countries like Kuwait, Abu Dhabi, Singapore, China have stopped communicating with the financial sector and the general public with the aim to build an good image among investor and be reliable. Indeed, their rise was alternately seen as a form of threat to the national sovereignty of the host country, due to the lack of transparency and their alleged ambitions to invest in strategic sectors, and as a favorable element international financial stability and an important financing industrialized economies. In total, a consensus seemed to exist to recognize the positive role of these funds.

Until recently when an unexpected event came to trouble: the fund of Abu Dhabi International Petroleum Investment Company (IPIC) has withdrawn capital Barclays Bank selling on June 2 about 11% of the capital of the 16.3% stake. This operation was a surprising, since it was only made seven months before and the fund became the largest shareholder of the British bank, has allowed him to realize a profit of 1.7 billion Euros. At the same time, the action Barclays lost up to 16% during the session. Trying to get some height and to understand the implication of this new element of sovereign wealth funds and global finance as a whole. Few years back. Before the start of the subprime crisis, SWFs have managed to forge an image of stable investors, favoring a long-term horizon and supports conventional investments such as stocks, bonds or hybrid (i.e. convertible bonds). They also seemed to have no requirement to return excess capital.


Traditionally, they carefully avoided all equity investors and majority remained "passive", i.e. the investor not claiming a seat on the board and do not exercise their voting rights. Their public mandate was simply to pay the financial markets of resources from surplus reserves of oil and gas revenues, and even fiscal surpluses. Their assets under management in 2007 were estimated at more than 3000 billion, which are double the financial assets held by hedge funds or hedge funds. The combination of this long-term horizon, these financial ambitions measured, and the passivity of this important financial capacity tended to SWFs investors 'ideal' for the proper functioning of the financial sector. With the onset of the financial crisis, SWFs action took on a new dimension. Their stakes in Western banks have been hailed as rescue actions the global financial system, allowing some observers assert that "sovereign wealth funds play a fundamentally stabilizer in the international financial system and this fact is clearly verified in the current liquidity crisis ".

In total, between summer 2007 and end of 2008, the amount of equity in banks was about a hundred billion. For comparison, the amounts incurred by SWFs in Western financial institutions were valued at about two billion dollars in 2006. It was so relevant and legitimate to ask whether these new commitments, which differed widely patterns found previously, were more an expression of opportunistic strategies that will contribute to saving the international banking system. The episode Barclays has given a strong argument to critics of SWFs. Should this mean to generalize and draw a vitriolic portrait of all these funds, whatever they are? It is simply to make the obvious, funds, sovereign or not, is first of all investors. And like many traditional investors in times of crisis, some have high risks in search of high returns in the short term. Note, however, that the investments of SWFs, like the pronouncements of Warren Buffet or Albert Frère, are perceived as a buy signal from the other operators on the market, automatically assigning goodwill significant target values. By these new practices, SWFs could encourage other players in the market looking for a short-term profitability to do the same and thus unwittingly contribute to the volatility of stock prices.


Since the early 2000s, SWFs from emerging countries like Kuwait, Abu Dhabi, Singapore, China have stopped communicating with the financial sector and the general public with the aim to build an good image among investor and  be reliable.

Indeed, their rise was alternately seen as a form of threat to the national sovereignty of the host country, due to the lack of transparency and their alleged ambitions to invest in strategic sectors, and as a favorable element international financial stability and an important financing industrialized economies. In total, a consensus seemed to exist to recognize the positive role of these funds ... Until recently when an unexpected event came to trouble: the fund of Abu Dhabi International Petroleum Investment Company (IPIC) has withdrawn capital Barclays Bank selling on June 2 about 11% of the capital of the 16.3% stake. This operation was a surprising, since it was only made seven months before and the fund became the largest shareholder of the British bank, has allowed him to realize a profit of 1.7 billion Euros. At the same time, the action Barclays lost up to 16% during the session. Trying to get some height and to understand the implication of this new element of sovereign wealth funds and global finance as a whole.

Few years back. Before the start of the subprime crisis, SWFs have managed to forge an image of stable investors, favoring a long-term horizon and supports conventional investments such as stocks, bonds or hybrid (i.e. convertible bonds). They also seemed to have no requirement to return excess capital. Traditionally, they carefully avoided all equity investors and majority remained "passive", i.e. the investor not claiming a seat on the board and do not exercise their voting rights. Their public mandate was simply to pay the financial markets of resources from surplus reserves of oil and gas revenues, and even fiscal surpluses. Their assets under management in 2007 were estimated at more than 3000 billion, which are double the financial assets held by hedge funds or hedge funds. The combination of this long-term horizon, these financial ambitions measured, and the passivity of this important financial capacity tended to SWFs investors 'ideal' for the proper functioning of the financial sector.

With the onset of the financial crisis, SWFs action took on a new dimension. Their stakes in Western banks have been hailed as rescue actions the global financial system, allowing some observers assert that "sovereign wealth funds play a fundamentally stabilizer in the international financial system and this fact is clearly verified in the current liquidity crisis ". In total, between summer 2007 and end of 2008, the amount of equity in banks was about a hundred billion. For comparison, the amounts incurred by SWFs in Western financial institutions were valued at about two billion dollars in 2006.
It was so relevant and legitimate to ask whether these new commitments, which differed widely patterns found previously, were more an expression of opportunistic strategies that will contribute to saving the international banking system.

The episode Barclays has given a strong argument to critics of SWFs. Should this mean to generalize and draw a vitriolic portrait of all these funds, whatever they are? It is simply to make the obvious, funds, sovereign or not, is first of all investors. And like many traditional investors in times of crisis, some have high risks in search of high returns in the short term.
Note, however, that the investments of SWFs, like the pronouncements of Warren Buffet or Albert Frère, are perceived as a buy signal from the other operators on the market, automatically assigning goodwill significant target values. By these new practices, SWFs could encourage other players in the market looking for a short-term profitability to do the same and thus unwittingly contribute to the volatility of stock prices.

Know The Basics of Forex Trading Part.II

There are three types of investors in the forex:

The first kind is of International companies, which protect against the variation in the currency that could affect their financial stability.

 I wish to site one example for it: Let us imagine French wine producer exports bottles of wines worth 100 Euros of each to the US retailer. Assume at the time of delivery of the wine 100 Euros are worth 130 US dollars. There for this is the price the US retailer is going to offer for each bottle of wine. At the end of the sale the retailer pays the money in dollars but the producer is in need of Euros. Therefore the dollars has to be converted into Euros. Let us compare if 130$ is equal to 100Euros and 130$ is equal to 80 Euros. For the second one the French producer has made a very bad deal and to safeguard the exporter against this risk, it has to pay a premium and purchase an option contract changes on financial markets. And it gets the right payment at the rate agreed at the time of contract so that the producer will get 100 Euros against 130 $.

 Banks are the second category of investors. They will carry out speculative or hedging.

Using the example above, the bank will cover the French producer by selling an option contract currency and pocket the premium paid. It can therefore gain or lose (if the Euro / Dollar has depreciated, that is to say, if my $ 130 is worth more than 80 Euros for example then the bank will have to pay 20 Euros per bottle producer from its pocket.

 The last one is the individuals who for more than a decade are actively involving in the Forex trading. You can see lot of online sites and brokers offer small investors an opportunity to access this market. To get involved through them you have to invest a minimum amount which is reasonable and a computer with fast internet connection and they provide you online assistance and training to get started.

 Main advantage of this market is its timing. This large amplitude of schedule allows the small investors to carry out their transaction at any time at their convenient even at the odd hours of the night. The Forex trading is easy to monitor since they are generally conducted on few major currencies like Japanese Yen, The US dollars, Swiss franc, The Euro and the British Pounds. However there are few more currencies that can be negotiated. The high liquidity of the market allows a large volume of transactions. The forex can be invested as derivatives as CFD through leverage can lift 400 times of the cash invested by the investor. Be careful with CFD investments because losses may also result from such large leverage which may even exceed your initial deposit. Therefore much care must be taken in this type of investment. Another very important one is the transaction costs. Transaction costs are much lesser than any other markets.

Know The Basics of Forex Trading Part.I

Forex is the short form of “Foreign Exchange” currency market. Forex is the second largest financial market in the world by of transactions apart from interest rate. Most of us hear a lot about Forex but it remains unclear to many hence I am trying to make them understand about it in this article and I am trying to portray the Forex trading and operations in a simplified manner.

 Forex is the financial market where currencies are exchanged at exchange at variable rates. The investor can simultaneously buy one currency and selling the other.

 Most often, the exchange rate of one currency is in relation to other is due to the financial or economic conditions of the both countries and the Recent announcements of the countries relative to another. Specifically, investors are betting on a currency if a country or region has a high growth rate for example, or if the interest rates set by central banks are high. This is logical because these two scenarios are indicators of economic health of the country or region.

 If the demand for a particular currency is more then it appreciates more in the market. The interest for a particular currency among the investors are have several reasons, typically the investor wants to preserve their capital (For example, the investor sell dollar and buy the Swiss franc which is a stable currency) and or to make a profit by selling foreign exchange (by selling the currency, which appreciates over time).

 In the same vein, when a currency is sold massively, it depreciates. Besides, we can cite a happening in September 1992the genius of George Soros, who sold short for 10 billion pounds. This striking force has forced the Bank of England to devalue the pound by about 15%. Thus, George Soros was able to buy sterling at a lower price (earned1.1 billion profits). It has been known as the man who broke the Bank of England.

 Unlike other markets, Forex operates 24 hours on all five days per week (from Sunday evening to Friday evening) in order to cover all time zones. Transactions are not made in a physical exchange, but virtually all transactions are made electronically.

Rules to follow before investing high dividends stocks

Buying stocks with high dividends is very much important for a long term benefit. A dividend is a share of the profits that the company pays to its shareholders. Our goal is to gradually build a portfolio of stocks with high dividends with a good performance for us. So, I do not position to seek a gain in the short term but to generate regular dividends over the long term.

 Why should we focus on this particular investment strategy? The reason behind this strategy is to make passive income each year, a yield higher than 3% of life insurance ... and enjoy the low cost of current actions. Selection of companies is paramount! You have to follow certain conditions that I validate whether they are eligible:

 Check whether dividends were paid for several years without interruption:

This is the first and foremost criterion to verify. The payment of dividends is much important usually it is decided one year prior. Therefore ensure that they were paid on a regular basis for many years.

 Check for whether the dividends are growing:

 The initial dividend is of course interesting, but its growth is even more interesting for us. In the long term, an action that has a yield of 3%, which increases each year by 10%, will quickly defeat an action that has a fixed return of 6%. This is the power of growing dividends, like compound interest, every year they bring back more passive income.
  
Analyze the financial data of the company: 

 Some questions should be ask about financial data of recent years: Is the revenue increases ?,If the profits increase, does especially where they come from? To find out, it is important to calculate the net operating income is the prime indicator to consider. Operating income takes into account the income and expenses related to the operation of the business while taking into account net financial expenses, financial income and extraordinary.

 For Example: if a company has a negative operating result and has a net positive, then it should be understood that the latter is obtained by the sale of an asset, for example a machine (exceptional items) or financial income (financial). The interest is whether the company can generate long-term benefits of its exploitation (healthy society) rather than non-recurring activities (sale of assets, financial products ...). Finally, it is worth checking the debt of the company. Too high debt will mean that a significant portion of the profits will be used to repay creditors. The remaining profit will perhaps not sufficient to ensure the payment of dividends.

 The dividend payout ratio should not be too high:

 This ratio is calculated as follows, total dividends divided by net income. It should not be too high for the company retains a portion of the profits to invest. The remaining investment capacity will enable its development. Ideally this ratio should be less than 50%, however in practice if it remains below 100%, while investment capacity remains available.

 Choose future business and diversify its portfolio:

 The important part of this step is always to target the long term. What are the growth sectors? Health, food, energy ... All that we cannot do without and which constitutes basic needs. We should not put all your eggs in one basket so diversification in these areas is needed. Once all these steps validated you can be confident in your savings plan and collect your dividends every year! I would try to make a selection of companies in a future article soon.

 I hope these tips will serve you, tell me what you think of this approach in the comments.

College students Learn How To Put Your Finance In Order!

      Are you a student going to college and who wants to get good knowledge and skills that will endorse you to have a good job at the end of your studies? Then this is the post meant for you. Put your studies apart for the time being and get some personal finance education here which wills surely going to help you particularly after your higher education.

    Other than European countries, every student is assisted by their parents by paying their room rent, college fees, food expenses and other miscellaneous expenses during their college days and the students learn nothing about managing their personal finances. There may be some exceptions, those who are working part time and study. At the end of the college days they enter into the world of work with full confidence and enthusiasm but without the right knowledge and right tool to manage their personal finance. Here are few tips to set right your personal finance in order. First and foremost one is making your budget. Make a budget for a year or a month and then break it up into smaller period of your convenience say weeks. Spare your good time for making an inventory of your expenses and revenues. If you are already having bank account, then open another bank account. The first account is for your financial reserve such as for receiving money from your parents, savings and contingency funds etc. Second one is for your expenses you can schedule your automatic payments of your regular payments. Keep the money in the second account to meet the minimum requirements of your expenses and don’t keep more. You have to invest and read personal finance books they may cost little but they will give you high returns in your future. This should be the first expense of your planning the future. With the guidance of those books plan different strategies and implement.

      Now this is the time to set your goals. According to the recent study by Harvard University, three percent of the people who set goals themselves and constantly working towards it has created ten times more wealth than the remaining ninety seven percent of the people. Hence plan and set your goals first. Keep yourself surrounded by right kind of successful people to understand the facts. Use the knowledge of others; be curious and attentive to know the success stories and experience of them. This knowledge will serve as a spring board that takes you near the success. Don’t hesitate to ask them directly the right information you needed for your success. The wealth is only attainable only through following strong financial principles. It requires commitment, willingness and persistence spend less than the earnings. But for the most of the people it is hard to follow. Spend less than you earn and invest that margin to generate alternative income and that marginal income will make your financial liabilities into financial independence. Here your financial education helps you to identify very smart and ideal investment that benefits us most. I assure you with rigor and perseverance you can achieve anything under the sky.