page director: Brian D.Butler

contributors:   

if you are interested in contributing see here

 

Global Stock Exchanges International Finance Issues: ETF's - Exchange Traded Funds  The BRIC ETF Play Brazil Russia India China How to get started Researching BRIC ETFs The BRIC Oven Investing Internationally Risks Culture Risk Management tools Programs:

 

 

Global Stock Exchanges

 

• List of global stock exchanges

 

International Finance Issues:

 

• Microfinance
• Currency
• Carry Trade

 

 

ETF's - Exchange Traded Funds 

 

see our discussion on ETF

 

ETFs are index funds that trade on exchanges the same way that stocks do. An ETF can make buying into hundreds of companies as easy as buying stock in one company. This simplicity means a lot when you're thinking about buying foreign investments. (To learn more about ETF investing, visit the TheStreet.com's ETF Center.)

 

ETFs have a lot more access to foreign stocks than most individual investors do. Since many companies abroad only trade on their home exchanges, they're somewhat out of reach (see "How Do I Invest Overseas?"). ETFs, though, can purchase stock in companies abroad, and then be purchased themselves here at home. Also, all of the legal wrangling (such as taxes, tariffs and local investment regulations) is taken care of by the ETF.

 

 

ETFs also provide an additional layer of protection, because they're managed by professional fund managers who have experience with international investments. Since financial regulations can be iffy in emerging markets, American investors tend to welcome the expert oversight

 

The BRIC ETF Play

 

You can barely turn on CNBC without hearing about one of the BRIC countries. Politics and international economic policy have driven a lot of media interest, which has certainly helped make appeal of BRIC investing much more mainstream of late. And that appeal is warranted. For example, Claymore's BRIC ETF (EEB - Cramer's Take - Stockpickr) has returned 60% since last September, almost four times what the always popular S&P 500 ETF (SPY - Cramer's Take - Stockpickr - Rating) has brought in.

 

Additionally, many investors have turned to BRIC ETFs as a way of hedging (protecting themselves) against a declining U.S. dollar.

 

Brazil

 

ETF's Brazil

 

Brazil: This country is probably the least discussed of the pack. While the other BRIC members have been in the crosshairs of popular media pundits, Brazil's economy has been quietly plugging away. Since March, the Dow Jones Brazil Index has brought in 26%.

 

Brazil has the largest economy in Latin America, an area whose regional funds have been crushing the competition ("Top ETFs Have a Latin Flavor"). Brazil's investors are dancing the samba all the way to the bank.

 

 

 

Russia

 

Russia: The Russian economy has taken its share of bumps and bruises (or merciless beatings, depending on your viewpoint) since the fall of the Soviet Union in late 1991. In 1998, the Russian economy collapsed after the devaluation of the ruble. This led to an interesting situation for investors: A massive market move to get out of Russian investments pushed their market values well below what they were worth.

 

 

 

Today, investors have been reaping the benefits as Russia's vast resources (particularly in commodities) have grown the economy substantially over the past several years. With immense oil reserves and high gas prices (that make me cringe on a daily basis), Russia is in an enviable position for the foreseeable future. Remember, though, that Russia's checkered past puts it at a higher risk level than some of its BRIC peers.

 

India

 

India: If you've ever had to call tech support, you've probably got an idea of just how far India has come as a service economy. The country's low-earning yet highly educated population has proved to be a real asset for America's outsourcing needs, and a burgeoning middle class full of entrepreneurial-minded Indians has been the result.

 

While typically known for its manufacturing (mainly textiles), India's ascension to a service-based economy is helping Indian funds deliver annualized returns well into the double digits (see "'BRIC' ETF Investing: Getting Started in India").

 

China

 

China: Of the four BRIC countries, China would have to be the biggest "it" investment right now. As the Chinese economy becomes more and more open, lots of solid investment opportunities are coming about. As with the other countries in the group, much of China's economic growth can be attributed to a new middle class that is helping the country to become more self-sufficient and less reliant on the Western consumer. Even so, manufacturing exports remain a mainstay of the Chinese economy (see "'BRIC' ETF Investing: Getting Started in China").

 

As a group, Chinese stocks are enjoying a bull run. Since January, the Dow Jones Shanghai Index has returned over 115%. Enough said.

 

How to get started

 

While each of these countries have American depository receipts (ADRs) that trade here in the U.S., an ETF is far and away the simplest way to buy into BRIC.

 

Typically, the way to invest in BRIC is by buying an "emerging-markets ETF" that focuses on a region of the BRIC foursome that you're interested in. This way, if you're big on China but less bullish about Russia, you can focus mainly on ETFs whose portfolios are weighted more heavily in that direction. For a look at some funds as well as their BRIC breakdowns, check out "The BRIC is Back."

 

 

Researching BRIC ETFs

 

It's a good idea to look into the ins and outs of your potential BRIC ETF investment a little more carefully than you would a domestic ETF. That's because investing in a BRIC index carries with it some unique risks.

 

With BRIC investing, the political climate is of particular significance. While this is true of most foreign investments, countries like China are in an elevated position on the world stage. While this global attention can be a bad thing, it has seemingly been more beneficial of late.

 

BRIC ETFs aren't fundamentally different from any other exchange-traded fund. You'll still want to take the time to analyze the investment information available to make sure that a given BRIC ETF makes sense for your portfolio. (To learn more about what to look for when you research an ETF, visit the TheStreet.com's ETF Center.)

 

 

 

The BRIC Oven

 

BRIC ETFs are definitely hot right now, and they don't show any signs of cooling down. Investors are pouncing on the opportunity to expand their portfolios with the world's big four growth economies all wrapped up in the simple package that an ETF provides.

 

While those potential returns come with added risk, if recent history is any indicator of where these markets are going, the future looks pretty bright for BRIC ETFs.

 

 

more: www.thestreet.com

 

 

 

Investing Internationally

FDI - direct investment in factories, infrastructure (more permanent type of investment).

 

Finance rates affect strategy (discussed in facilitator session). Hurdle rate ROI should be higher than cost of capital. In Japan, hurdle rate for investments is lower because of low cost of capital. Borrow at 1-3%, so ROI might be as low as 5%. In USA, cant do projects at that price (might need 10%). So, US companies need a faster return, and a higher NPV. For the time being, the JPN capital is more patient and can go after lower returns.

 

 

 

International portfolio investment:

 

Consider this scenario:

 

You live in Houston. You work for Enron. You invest in nothing but Enron stock. When Enron went bankrupt, you were not only out of a job, but also your savings were wiped out, and there wasn't anyone around who wanted to buy your house.

 

Or what about this one:

 

You live in New Orleans. You work in New Orleans. You invest in nothing but New Orleans-related companies such as Whitney Holding (Nasdaq: WTNY), Entergy, or Harrah's Entertainment. Thankfully, the region and many of its businesses are bouncing back, but in the wake of Hurricane Katrina, you could have found yourself out of a house and a job and seen your investment accounts significantly down.

 

Enron, New Orleans ... the United States?

Simply put, when every part of your financial well-being is tied to one place, you increase the risk of disaster. So if you own a home in the United States and earn your living from an American corporation, take that into account when deciding how much foreign exposure you need in your portfolio.

 

You might even find yourself approaching Siegel's magic number of 40%.

 

three questions...Of the five top makers of steel, electronics and consumer appliances, how many are based in the United States? Since 1993, how many years was the U.S. stock market the world's top performer? Last year, how many of the top 15 best-performing stock funds were U.S. funds? Would it surprise you to hear that the answer in all three cases is "NONE." Well it shouldn't.

 

Risks

 

Exchange rates can move against us, governments can destabilize or grow less favorable, economies occasionally falter and reporting requirements rarely live up to rigorous U.S. standards.

 

And that's on top of the ordinary company risk associated with stock investing. Anybody who tells you these investment risks can be eliminated outright is either lying or delusional. Either way, they are not to be trusted.

 

That's why you need to be even more diligent when buying international stocks (and one of the reasons they can be so profitable). And that's all the more reason you don't want to go it alone when building out your international allocation. see http://www.fool.com/ (global gains newsletter for more info)

 

Culture

 

 

When interacting across cultures, it is important to keep an open mind to other possibilities so that your mind doesn't become set in only one way of seeing things. With the diversity found in the world workplace, there are often opportunities to view a project, idea or proposal from a different point of view.

 

 

 

 

 

 

 

 

 

 

 

 

STRUCTURED TRADE FINANCE

 

For exporters who requires short- or medium-term financing to support export sales

Issues to consider: of foreign credit exposure and export financing,

 

Financing Programs for Your Company

Export Working Capital Guarantee Program

International Receivables Secured Funding Program

Export Receivables Purchase Program

Financing Programs for Your Overseas Buyer

Buyer Financing for Capital Goods and Services

Buyer Financing for Agricultural Products

 

Risk Management tools

 

currency hedging

Receivables reconcilliation

guarantees from EXIM bank

Credit Insurance

 

 

Programs:

 

Overseas Private Investment Corporation (OPIC)

Credit Commodity Corporation (CCC)

The Private Export Funding Corporation (PEFCO)

The World Bank

Agency for International Development (AID)

International Development Bank (IDB)

Export Insurance Corporation (EIC)

American International Group (AIG)

Click here for easy access to U.S. government and international financial agencies

 

Exim Bank†

U.S. Small Business Administration†

PEFCO†

OPIC†

CCC†