Monthly Archives: July 2012

Emerging Market Stock Indexes and Exchange Rate Changes in Q2

 

 

Advansa International follows exchange rates and stock market indexes for several emerging and frontier markets. Exchange rates and stock indexes are recorded on the last trading day of the week. The tables below show changes from the last trading day of the last full week of the quarter for several key markets in Africa, Latin America, and the Caribbean.

 

 STOCK MARKET INDEX TRACKER 2ND QUARTER 2012

AFRICA

COUNTRY

2ND QUARTER PCT CHANGE

GHANA-Local Currency

-0.13%

GHANA-US$

-8.63%

KENYA-Local Currency

10.01%

KENYA-US$

8.59%

NIGERIA-Local Currency

4.59%

NIGERIA-US$

1.48%

SOUTH AFRICA-Local Currency

0.46%

SOUTH AFRICA-US$

-5.70%

WEST AFR. BOURSE-Local Currency

-2.87%

WEST AFR. BOURSE-US$

-7.58%

MSCI AFRICA-Local Currency

-0.26%

MSCI AFRICA-US$

-5.94%

MSCI EMERGING MARKETS-Local Currency

-6.41%

MSCI EMERGING MARKETS-US$

-10.00%

Sources: Stock exchangewebsites, Financial Times, Advansa International data

 

 

2ND QUARTER 2012 EXCHANGE RATE TRACKER

AFRICA

COUNTRY

2ND QTR PCT CHG

YTD JUNE PCT CHANGE

CFA AREA*

-4.70%

-2.24%

GHANA

-8.49%

-15.60%

KENYA

-1.42%

1.01%

NIGERIA

-3.10%

0.28%

SOUTH AFRICA

-6.16%

-1.29%

TANZANIA

1.34%

0.64%

UGANDA

1.82%

0.20%

Sources: Financial Times, Advansa International data

*Includes Benin , Burkina Faso , Cameroon, Central African Republic, Chad, Congo (Brazzaville), Cote D’ivoire, Equatorial Guinea, Gabon, Guinea Bissau. Mali, Niger, , Senegal , and Togo.

 

 

 STOCK MARKET INDEX TRACKER 2ND QUARTER 2012

LATIN AMERICA/CARIBBEAN

COUNTRY

2ND QUARTER PCT CHANGE

ARGENTINA MERVAL-Local Currency

-19.28%

ARGENTINA MERVAL-US$

-22.49%

BRAZIL BOVESPA-Local Currency

-15.74%

BRAZIL BOVESPA-US$

-25.36%

COLUMBIA IGBC-Local Currency

-10.78%

COLUMBIA IGBC-US$

-10.14%

JAMAICA MAIN INDEX-Local Currency

-4.36%

JAMAICA MAIN INDEX-US$

5.84%

MEXICO-Local Currency

1.72%

MEXICO-US$

-2.87%

MSCI LATIN AMERICA-Local Currency

-7.55%

MSCI LATIN AMERICA-US$

-14.27%

MSCI EMERGING MARKETS-Local Currency

-6.41%

MSCI EMERGING MARKETS-US$

-10.00%

Sources: Stock exchangewebsites, Financial Times, Advansa International data

 

 

 

2ND QUARTER 2012 EXCHANGE RATE CHANGE

LATIN AMERICA/CARIBBEAN

COUNTRY

2ND QTR PCT CHG

YTD JUNE PCT CHANGE

ARGENTINA

-3.21%

-4.86%

BRAZIL

-9.62%

-7.59%

CHILE

-2.82%

3.41%

COLOMBIA

0.64%

8.61%

COSTA RICA

2.04%

2.77%

JAMAICA

-1.48%

-2.28%

MEXICO

-4.58%

3.94%

PERU

0.09%

1.20%

TRINIDAD & TOBAGO

-0.10%

-0.12%

Sources: Financial Times, Advansa International data

 

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Is Sustainability Accounting Sustainable in Emerging Markets?

 

The call for companies to incorporate environmental impacts in their accounting and reporting—often referred to as sustainability accounting is growing louder. One strong indicator in the aftermath of the recent Rio Plus 20 conference is the agreement by 86 CEOs to develop natural capital accounting. 50 countries including the United States have agreed to place a value on services provided by nature.

 

Natural Capital Defined

In GreenBiz.com, Jennifer Morris, Executive Vice President of the Ecosystem Finance and Markets Division of Conservation International gives this definition of natural capital: “Natural capital is the limited stock of natural resources left on Earth that we vitally depend on for our prosperity, security, health and cultural traditions.” Included are forms of natural capital we consume such as food and water and also, what Morris calls “nature’s renewable ecosystem services such as pollination and water purification.”

 

If the news coming out or Rio Plus 20 is indicative then we can draw certain conclusions about the origins of this movement:

  • The call for environmental accounting comes primarily from the environmental movement rather than from the accounting profession. The Natural Capital Declaration was convened by the UN Environmental Program along with the Global Canopy Program and the Center for Sustainability Studies. Conspicuously absent from the list are the IFRS Foundation and its standard setting arm the IASB. Neither natural capital nor anything related to sustainability accounting are subjects of research or standard setting activities by the organization.
  • There are many for-profit companies supporting environmental accounting. They include a number of European companies and some US signatories such as Pax World Management and Calvert Investments known to be highly mission driven and tend to stand out for their commitment to corporate social responsibility.

 

What is the value of sustainability accounting? What does it tell us about the health and viability of a company? In what way does it help managers in their strategic and operational decision making? How does it help investors evaluate the bankability of a given company or project?

 

Although the usefulness of sustainability accounting for managing the health of a single company is questionable, issues of sustainability can have an effect on the firm’s bottom line and companies have taken notice. The 2 Degrees Network for example is a portal supported by several prominent companies to promote sustainability in the supply chain.

 

Furthermore, sustainability accounting can be useful to governments, and multilateral organizations as lines between policy decisions impacting economies and the environment become increasingly blurred. Such decisions can have huge impacts on infrastructure projects and large and small commercial ventures in emerging market and frontier market countries.

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Rio +20, Business and the Developing World

Judging by the dialogue on the #Rioplus20 feed on Twitter, much of the public and many environmentalists were disappointed by the lack of bold decisions coming out of the conference. Some memorable tweets:

#Greenpeace, frustrated with #Rioplus20, declares war to make sanctuary in the Arctic”

“Rio+20 outcome document weakened by human rights opponents” [Amnesty International]

 

Governments and international organizations on the other hand tended to put a positive spin on the same event. Statements from the UN Secretary General’s website declare “It has been a successful conference.” “It will guide us…to a sustainable path.”

 

Having given the Rio Plus 20’s final document a quick read I find that it contains a lot of boilerplate platitudes and references to every prior global development and environmental conference of the last 30 years. The document also included sections on the role of finance and commerce as engines of development and sustainable economic growth.

 

A significant block of private sector entities, and business support organizations appear ready and willing to play a positive role in adopting pro-environment business practices. The US Overseas Private Investment Corp announced its US-Africa Clean Energy Finance Initiative designed to help finance green business ventures in Africa.

 

Among the commitments and actions agreed upon by private sector corporations, small and medium-scale enterprises,

  • Microsoft has committed to going carbon neutral and will be rolling out an internal carbon fee that will apply to business operations in over 100 countries.
  • Italian energy company Eni has earmarked approximately $5 billion to achieve its gas flaring and carbon intensity reduction goals
  • The Renault-Nissan Alliance has committed approximately $5 billion to commercialize affordable zero-emission vehicles.
  • Among the commitments and actions agreed upon by financial institutions, donors and development banks, the Bank of America has set a ten year $50 billion environmental business goal, while the World Bank Group has committed to doubling the leverage of its energy portfolio by mobilizing private, donor and public contributions to World Bank-supported projects, as well as supportive policies to expand energy access, renewable energy and energy efficiency.

Greenbiz.com provided several examples of the business perspective on Rio Plus 20. Norine Kennedy of the United States Council for International Business noted that the record number of businesspeople at the conference were looking for the UN to devise better metrics and indicators of progress on sustainability. She also points ot that the conference fell short in including economic approaches to environmental policy and did not take advantage of connections with the G20 conversation in Mexico occurring at about the same time.

 

Meanwhile, the private sector took the following positions at the conference:

  • 45 CEOs called on governments to increase the price of water and committed to improve water-management practices.
  • More than 25 companies from the insurance industry, worth over $5 trillion in total assets and representing over 10 percent of world premium volume, joined to promote a set of Principles for Sustainable Insurance that aim to provide insurance tools for risk management in support of environmental, social and economic sustainability. 

 

 

 

What will be the impact on business in emerging economies in the developing world? The answer depends on countries’ economic priorities, their politics, and their ability and willingness to influence how business is done in their countries. Several countries have initiated programs to make their economies more environmentally sustainable. Among the commitments and actions agreed upon by Governments, Ghana, one of the first countries to partner with the initiative, has developed a national energy action plan to support capacity-development and innovative financing mechanisms. Countries initiating or completing similar assessments include Bangladesh, Kenya, Mozambique, Nepal, Tajikistan, Uruguay and Vietnam. Meanwhile, Brazil, the host country for Rio+20, has committed to investing a further $4.3 billion to achieve universal energy access at a national level by 2014.

 

While one suspects the implementation of these commitments will vary considerably, They indicate a that issues of climate change carbon reduction, and energy efficiency have the attention of governments in the emerging markets and will influence the way business is done for the foreseeable future.

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