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Aspiring Lawyers - Interviews & Vacation Schemes
Commercial Awareness Discussion
Commercial Awareness Update- December 2018
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<blockquote data-quote="Sara Moon" data-source="post: 5665" data-attributes="member: 525"><p><strong>3. <u>Emerging Markets</u> (by Sara)</strong></p><p></p><p><u>The Story</u></p><p></p><p>On 25th November, Morgan Stanley upgraded stocks in emerging markets from “underweight” to “overweight” for 2019. In simple terms, “underweight” suggests that the stock is predicted to underperform the market while “overweight” suggests that the stock is likely to outperform the market.</p><p></p><p>2018 has been a gloomy year for many emerging markets. Turkey and Argentina suffered from currency crisis, strengthening US dollar hurt emerging economies with large amounts of foreign debt, and soaring oil prices were fatal to energy importers. Also, rising bond yields in the US encouraged many investors to withdraw from emerging markets and invest in the US. The MSCI Emerging Markets Index, an index that measures equity market performance in 24 emerging markets, has fallen about 16% this year.</p><p></p><p>However, prospects of emerging markets seem to be positive with many of the countries showing recovery. Turkey’s lira gained over 25% since August, when it reached a record low, and the currencies of Argentina, Brazil, Russia and South Africa, which all hit bottom in September, showed rise since. In addition to this, Morgan Stanley predicted that given that the strengthening of the US dollar is likely to end next year, weaker US greenback will help the better performance of emerging markets by making oil purchases and debt servicing cheaper.</p><p></p><p>Although it is true that emerging markets are showing signs of changed direction of the economic performance, caution is needed in concluding that emerging markets will prosper in the upcoming year. Inflation in some of the countries—such as Argentina and Turkey—over the year led to slowdowns in economic activities. Also, upcoming elections in countries like Indonesia and India may cause volatility in the market and diminish benefits that could be gained through weaker US dollar.</p><p></p><p><u>Impact on Businesses and Law Firms</u></p><p><u></u></p><p>Emerging markets provide lots of opportunities for law firms’ business expansion. Although many leading law firms have wide international networks, those networks are largely based in Western economies; according to the Lawyer Monthly, among partners at Top 20 firms based outside of the UK, only 20% of them were based outside of Europe and North America. Therefore, signs of recovery and economic potential of emerging markets mean law firms must more heavily invest in those markets by opening up new offices. With the possibility of investors moving back to emerging markets and businesses expanding to those recovering economies, law firm’s investment in those markets will allow them to take charge of many profitable deals.</p><p></p><p>Analysing the impact on law firms with a slightly different perspective, expanding to emerging markets involve establishing a new firm, which requires adhering to unique regulatory requirements of each country. Therefore, lawyers will get involved in researching and analysing issues surrounding regulatory frameworks of establishing a new branch, contractual agreements with clients, employment of domestic staff and tax rules of the emerging country in question.</p></blockquote><p></p>
[QUOTE="Sara Moon, post: 5665, member: 525"] [B]3. [U]Emerging Markets[/U] (by Sara)[/B] [U]The Story[/U] On 25th November, Morgan Stanley upgraded stocks in emerging markets from “underweight” to “overweight” for 2019. In simple terms, “underweight” suggests that the stock is predicted to underperform the market while “overweight” suggests that the stock is likely to outperform the market. 2018 has been a gloomy year for many emerging markets. Turkey and Argentina suffered from currency crisis, strengthening US dollar hurt emerging economies with large amounts of foreign debt, and soaring oil prices were fatal to energy importers. Also, rising bond yields in the US encouraged many investors to withdraw from emerging markets and invest in the US. The MSCI Emerging Markets Index, an index that measures equity market performance in 24 emerging markets, has fallen about 16% this year. However, prospects of emerging markets seem to be positive with many of the countries showing recovery. Turkey’s lira gained over 25% since August, when it reached a record low, and the currencies of Argentina, Brazil, Russia and South Africa, which all hit bottom in September, showed rise since. In addition to this, Morgan Stanley predicted that given that the strengthening of the US dollar is likely to end next year, weaker US greenback will help the better performance of emerging markets by making oil purchases and debt servicing cheaper. Although it is true that emerging markets are showing signs of changed direction of the economic performance, caution is needed in concluding that emerging markets will prosper in the upcoming year. Inflation in some of the countries—such as Argentina and Turkey—over the year led to slowdowns in economic activities. Also, upcoming elections in countries like Indonesia and India may cause volatility in the market and diminish benefits that could be gained through weaker US dollar. [U]Impact on Businesses and Law Firms [/U] Emerging markets provide lots of opportunities for law firms’ business expansion. Although many leading law firms have wide international networks, those networks are largely based in Western economies; according to the Lawyer Monthly, among partners at Top 20 firms based outside of the UK, only 20% of them were based outside of Europe and North America. Therefore, signs of recovery and economic potential of emerging markets mean law firms must more heavily invest in those markets by opening up new offices. With the possibility of investors moving back to emerging markets and businesses expanding to those recovering economies, law firm’s investment in those markets will allow them to take charge of many profitable deals. Analysing the impact on law firms with a slightly different perspective, expanding to emerging markets involve establishing a new firm, which requires adhering to unique regulatory requirements of each country. Therefore, lawyers will get involved in researching and analysing issues surrounding regulatory frameworks of establishing a new branch, contractual agreements with clients, employment of domestic staff and tax rules of the emerging country in question. [/QUOTE]
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Commercial Awareness Update- December 2018
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