I have to admit that within the Global macro-economic environment I had never thought about the concept of investing in religion, but this is an investment opportunity that has huge implications on a global scale in the form of faith-based investing. One such example is the creation of Shariah-Complaint funds that has progressed within the Asian marketplace.

Shariah-Compliant funds are prohibited from investing in companies which derives income from the sales of alcohol, pork products, pornography, gambling, military equipment or weapons. They are funds that focus on adhering to Islam and providing those of Islamic faith an investment vehicle that aligns with their religious views.

Islamic laws may constrain investment opportunities, but Shariah-Compliant funds understand this constraint and tap into the global Islamic finance market. Malaysia has understood this opportunity and as a result has created robust Islamic fund management capabilities.

The following article provides insight into Malaysia’s participation in this market and Hong Kong’s goal to strengthen their Islamic finance platform. By placing a focus on Islamic finance products Hong Kong expects to enhance the attractiveness of the country to global investors and continue its stake as an international financial center.

http://www.international-adviser.com/news/asia/hong-kong-developing-islamic-fin-market

In the last class we spoke about how difficult and almost impossible it is to harmonize global rules. There are movements to standardize regulations, but none of them ever go smoothly as it seems that always one nation is not buying into the concept.

The European Union is the perfect example of how frustrating a process of bringing 28 different countries with each different political systems together into one monetary union. But despite the rather rough experience the EURO had, the EU however managed to be in the forefront of implementing Basel II and III – the financial regulations for capital and liquidity requirements. (The US is still lagging behind in this.)

a flavor of the challenge of establishing regional trade agreements, which we will discuss in our coming class this Saturday.  http://www.ft.com/intl/cms/s/0/924b9f80-f31a-11e3-a3f8-00144feabdc0.html#axzz351ib97Y8

An interesting example of anti-trust law s in a global world. deals are subject to the approval of all the anti-trust authorities involved, which often have different proprieties and different views of the appropriate level of competition.  in this article – an alliance among the world’s three largest shipping companies was approved by the EU and the US but blocked by China. subsequently, it cannot move forward.

http://www.ft.com/intl/cms/s/0/a9a188be-f60f-11e3-83d3-00144feabdc0.html#axzz351ib97Y8

among other things, the story of GE bid for France Alstrom illustrates the objection of countries for foreign companies acquiring domestic companies. We have spoken several times about the interest of countries in attracting foreign companies, and the Prudential project shows how hard they compete for attracting this investment. This, however, is only one side of the story. the GE/Alstrom saga illustrates the other side of it.

we will discuss these issues in length in our last class.

http://www.ft.com/intl/cms/s/0/deca15dc-f485-11e3-bf6e-00144feabdc0.html?siteedition=intl#slide0

Last Tuesday was primary day for Virginia’s Congressional District 7. By now, we have all heard that Rep. Eric Cantor (the Speaker of the House) was handily defeated by an economics professor, David Brat. Could a primary election in Virginia  have any impact on international  business? Believe it or not it does and the impact could be huge.  You are probably wondering, how can this be?

As an example, on the following day The Boeing Company (“Boeing’) lost approximately $3.7 billion in market capitalization (the share price went from $137.25 to $132.19). This loss in value was attributed solely to Rep. Cantor’s defeat. How can the defeat of a single representative, in a primary contest,  be a catalyst for this drop in Boeings stock price? It is believed that Boeing will lose $10 billion in sales. How can that be?Have you heard of the Export-Import Bank? I had not before I read this article.

Rep. Cantor was in favor of reauthorizing the charter for the  Export-Import Bank. What they do, amongst various activities, is help the sales of American goods by guaranteeing loans to overseas customers and providing working capital to manufacturing companies here in the USA. The Export-Import Bank works with multinational corporations such as Boeing and General Electric, as well as, smaller companies selling American goods overseas. The loss of Rep. Cantor dims the outlook that Congress will agree to the reauthorization of the charter.

If this government agency falls victim to Congressional inaction it very well may hurt domestic companies large and small. These companies will have a more difficult time selling products to foreign customers. This will directly affect the bottom lines of companies relying on the assistance of the Export-Import Bank and these companies may end up reducing their domestic labor force due to this inaction.

David

We talked about grey (or black) economy on Saturday, and also about how one can evade taxes by setting money aside in Swiss banks. There is not better example of this than then number of Indians doing this. Every major transaction in India has to involve “under the table” exchange, and most of the dealings are done in cash (to avoid taxes). Indian GDP is about 4.5 trillion, but by one estimate if all of this cash transactions are counted, the GDP of India will be twice its value. For a country of 1 billion, where infrastructure is at the minimum, losing about $1 trillion in taxes every year due to the black money transactions is crippling.

But the starkest difference was seen when it was known that Indians have about $2 trillions parked in Swiss havens alone ! Getting this money is not easy, even forcing the Swiss authorities to release the names of the bank account holders has been extremely difficult, and shows the kind of difficulties we have when dealing with problems across borders. The new government in power has vowed to bring the money back, and it will be seen how much of that will actually happen.

At one point it was said that 40% of the worlds poor lived in India. But these revelations just show us that its a poor country made up of rich people.

Article: http://www.bloomberg.com/news/2014-06-08/hidden-assets-seen-worth-2-trillion-targeted-by-india.html

– Amey Bordikar

http://www.screendaily.com/features/features/incentives-survive-global-cutbacks/5019917.article

Dear All,

here is an interesting article illustrating how an apparel company is taking advantage of differences in economic environments across countries (recall the discussion we had yesterday at the end of the class about seeing opportunities in challenges and taking advantages of differences – here is one example).

It also illustrates the breakup of the value added chain and the emergence of the vertically integrated enterprise that we discussed – in relation to Edi’s blog comment on his experience in Bloomingdale and with reference to Amazon’s Kindle case.

and lastly it is an illustration of the ‘made in…’ effect and determination. What will a ‘made in Maynmar’ mean for for Gap’s sales?

I invite your thoughts and comments on these issues and others thoughts that come to your mind as you read the article.

http://online.wsj.com/articles/apparel-retailer-gap-forges-ahead-in-myanmar-1402091240?mod=djem_jiewr_IB_domainid

http://www.investing.com/news/economy-news/isis-made-millions-before-the-mosul-bank-robbery-289621