International Finance, a premier business media services provider, started its journey in 2013 with the aim of recognising industry talents, leadership skills, industry net worth and capabilities on an international platform.

In 2014, it made headlines by launching its maiden flagship programme in London. The industrious research and development team of International Finance helped the latter to recognise the best corporate talents and reward them on the strength of their applications and past accomplishments.

For nominations, International Finance gives priority to C-Level executives and senior management representatives in the fields of finance, banking, asset management, brokerage, insurance, energy, oil & gas, logistics and utilities from the Middle East, Asia, Europe and Africa.

Some of the past winners of the International Finance Awards include Saudi Telecom Company, Sharjah Asset Management, Oman Oil Corporation for Exploration and Production, Emirates NBD Egypt, BIDV, OCBC Bank, Barwa Bank, Saudi Enaya and Kuwait Aviation Services Company.

While in 2016, Southeast Asia became the second venue for International Finance Awards, by 2018, the number of dignitaries attending these ceremonies touched the 400 mark. The recognitions motivated the corporates to become industry leaders and take their ventures into a growth path through International Finance networking.

Our vision foresees a future where passion meets excellence. With conviction from the team of International Finance, “We are just getting started.” To all the business talents out there, this is the chance to grace your name on the International Finance Awards’ winner board.

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In the previous week, about RM10.9 million of Malaysian equities were sold by overseas investors while last week’s transaction was the biggest weekly foreign net influx in 32 weeks.

Although the atmosphere was glum last Monday as overseas investors sold off RM27.3 million net of domestic equities, the tide turned favourably on Wednesday as offshore funds worth RM41.4 million net poured into the Malaysian stock exchange, amid the backdrop of the US-China trade deal.

The development occurred in spite of the fact that there won’t be any reversals on the prevailing rates imposed on China. The MIDF added that overseas net purchase increased to touch RM57.7 million net following the signing of the trade deal between the US and China.

According to the trade agreement, the US wants China to come down heavily on Chinese organisations that have stealthily infringed on American technology and business confidential data. China, on its part, seeks to splurge $200 billion to offset its trade discrepancies with the United States.

MIDF further said that offshore net purchase activity rose to RM257.2 million on Friday, the biggest in a day since late May 2019. It went on to say that China’s GDP growth allayed the fears which investors had over Malaysia’s monetary stability.

Indicating that January 2020 has witnessed an overseas net influx of RM491.1 million on a month-to-date basis, MIDF concluded by saying that Malaysia has the second least overseas net influx as compared with the other three Asean markets after Indonesia while Thailand and Philippines have witnessed overseas net outflow.

The post Overseas investors purchase RM321 million in Malaysian equities appeared first on International Finance.

According to Bloomberg, 15 of the 23 Russian members of the MSCI Index delivered total returns exceeding the expected average of 14 percent in 2019. Since the annexation of Crimea 2014, the Russian Trading System (RTS) Index surpassed the 1,400 level for the first time in June. The RTS Index has increased 46 percent since January 1 till December 25, 2019. Russian stocks outclassed their developed world and emerging market peers by quite some distance.

In comparison, the Dow, the Nasdaq and the S&P have seen new record highs in 2019 but with lower returns.  The S&P 500 showed an annual gain of 27.9 percent as of December last week. Meanwhile, the Nasdaq returned 14.2 percent on average and the Dow was up more than 21.5 percent over the same period.

Even China’s stock market rose 33 percent this year, suggesting it is one of the best performing stock markets in the world. China’s market rose so much in 2019 because of high investor interest in its technology companies and relatively cheap value compared to other emerging markets.  As for India, the sensex recorded a 13.7 percent growth as of December 17, 2019.

Why Russian stocks outperformed emerging markets peers

Russian investment firm TKB Investment Partners’ consensus view is that Russian equities offer strong value investment case and opportunities for increasing growth. “The trend, which started about five years ago will continue, should the global jitters and Russia sanctions topic to subside. We still trade at significant discounts to emerging market peers like Brazil, China, India and South Africa and have plenty of room to make a hefty catch up. The RTS Index reflects more than 50 percent discount to the MSCI Emerging Markets Index on FY19e P/E basis,” a spokesperson at TKB Investment Partners tells International Finance. Undervalued Russian stocks became one of the cheapest in the world — available at half the value of its emerging market peers.

The one factor that helped RTS Index outperform peers in Europe, the US and BRICS markets is the measure undertaken by the Central Bank of Russia in terms of stabilising the ruble and financial markets and de-escalation of conflict rhetoric.

“Russian market is historically very cyclical but it took RTS index about five years to restore its USD value (1,500 points) from the pre-Ukraine crisis. The strong balance sheets, high FCF yields, buybacks and solid dividend payments compared to international peers have also supported the Russian stocks in 2019,” Boris Krasnojenov, Head of Research, Senior Metals and Mining Analyst, Alfa-Bank, said in an interview with International Finance.

Another reason for its outperformance is that large capitalisation companies materially increased dividend payouts. This is especially true for companies in which the Russian government is the majority shareholder, such as Sberbank and Gazprom. Russia’s dividend yields were more than seven percent in 2019, which is twice the MSCI Emerging Markets Index dividend yield of 3.2 percent. In fact, the 44 percent return on MSCI Index includes income which came from dividend payments.

According to the TKB spokesperson, “The Central Bank of Russia’s decision to cut rate four times during the year, from 7.75 percent to 6.5 percent, coupled with a strong value case for the Russian equity market,” have subsequently led to the stock boom. That in turn made the Russian market’s dividend yield among the highest in the world at 6.7 percent, compared to just 2 percent on the S&P 500, a tracker for the biggest US-listed companies. But there were other factors that can be attributed to soaring Russian equities than just a high dividend yield.

To investors, the fact that the escalating trade war between Beijing and Washington is more intense than Russia-US face off has made the Russian stock market rather attractive. The fear of sanctions has reduced. ‘Rebound in oil prices in 2019 and no fresh EU or US sanctions,’ uplifted Russian stocks as the best global value pick for the year, Michael Guo, professor in finance at Durham University Business School tells International Finance.

Will Russian stocks remain the best value picks for 2020?

What was clear is that increasing global risk appetite and search for higher-paying assets on the back of interest rate cuts have unleashed a tidal wave in Russia’s stock market. That hugely benefits stocks that are perceived riskier and have low liquidity levels — pointing to the fact that even a measly increase in demand might raise share prices. In the base case scenario, an average of 12 percent in sustainable free cash flow yield is expected for the market over the next two years.

But in Guo’s view, “It is highly unlikely that Russian stocks will remain the best global value picks going into 2020.” This is only because the risks far outweigh the opportunities. On the geopolitical front, the uncertainty surrounding oil prices and the US-China trade war is expected to affect the Russian stock market.

Also, the sanctions regime is limiting Russia’s evolvement and has cut two percentage points off its growth as the Ministry of Finance and Central Bank of Russia has developed a hostile approach to reinforce economic safety. “Recent news about German officials finding ‘sufficient indicators’ that suggest Russia ordered the killing of Chechen rebel in Berlin, could raise fresh sanctions from the EU, which is yet another risk that could spoil the party,” Guo says.

Americans dominate Russian free float

Interestingly, North American investors accounted for more than half of the Russian free float, observed Moscow Exchange, while their representation in the European markets was only 26 percent.

“According to an article in IR Magazine, as of end of June, the US institutional investors held $43.9 billion in Russian stocks from $35.3 billion at the close of 2018. The UK and Scandinavia upped their holdings to $16.5 billion and $8.1 billion respectively,” Guo says. “It is the US institutional investors that are driving the recovery in the Russian stock market.”

The US fund managers like Allianz invested billions of dollars of American investment capital into Russia’s publicly traded companies, leading to a 58 percent increase in US investment since 2015. The RTS Index has a market capitalisation of nearly $170 billion.

“On one hand foreign investors have more than 50 percent share in Russian free float. It is unlikely that material move on the market can happen without their contribution, the TKB spokesperson says. “On the other hand, since the beginning of 2019 there was around $3.6 billion net outflow from the Russian market from foreign investment funds, according to EPFR Global data presented by Financial Times.” Many global emerging markets funds with five-star ratings from Morningstar are overweight on Russia. “It is likely that this position had a positive contribution to these funds’ excess return in 2019,” he adds.

Krasnojenov points out that despite the bitter dispute between Russia and the US on global affairs — it is European investors who lost their market share while UK investors merely kept their niche. “So, given those proportions in the free float of the Russian stocks, we would assume that money managers from the US will benefit the most. The share of foreign investors in the total trading volumes on the Moscow Exchange remains around 50 percent. The high quality Russian blue-chip stocks find strong demand across overseas investors,” he explains.

Economic warning signs for investors

Russia has earned a BBB investment grade rating from Fitch, like India and China. Its spending is controlled unlike Brazil and has a Finnish-style National Wealth Fund of $124.14 billion, which was seven percent of Russian GDP at the start of 2019.  “The World Bank predicts that Russian economy is set to see a growth in GDP in 2020. The current forecast indicates increase from 1.2 percent in 2019 to 1.6 percent in 2020 and to 1.8 percent in 2021,” Guo says.

Whatever the current optimism, investors are perplexed about high returns from paid out dividends in many Russian companies without the stock price moving at all. The Finance Ministry insisted that all state-owned enterprises should pay out 50 percent of their income as dividends to benefit investors. While most managements resisted the pressure, Gazprom agreed to increase dividends by 10 roubles per share, which was further hiked to 16.6 roubles per share.

After that, its total payout under international accounting standards increased from 7.5 percent of net profit to 27 percent. This has forced investors to question whether the new higher dividends will be permanent or not. Krasnojenov calls volatility of the Russian stock market the “number one enemy to the portfolio investors” for two reasons. First, “The free float is dominated by the hedge fund managers who actively trade in pairs, such as Russia vs Turkey, or Lukoil vs Sasol.” Secondly, he said “The Russian stocks are exposed to commodity price swings. We have to recognise that the oil price dynamics remains essential catalyst for the Russian equity universe.”

The economics of Russian stocks are changing. Guo adds that timing is crucial while investing in Russian stocks as the index is extremely volatile, considering how the volatility index, on average, was 31.25 in 2016, 21.63 in 2017, 24.53 in 2018, and 20.71 in 2019.

OPEC is gearing up for more cuts in 2020, however. Russia is yet to agree to further cuts. “With non-OPEC countries set to add to the oil supply in 2020, there is always the risk of further fall in oil prices, which could be damaging to Russian Stocks. With increasing uncertainty around oil prices and the threat of fresh EU sanctions looming, the level of volatility is not expected to go down anytime soon.” As well as taking into account the alliance between Russia and China, “delay in the anticipated US-China deal might impact the Russian markets,” Guo adds.

Although the trade war might potentially undermine the demand for export companies and squeeze their margins, consumer sectors and those companies benefitting from local demand should get moving rapidly in 2020. “We also recommend to pick companies which have solid dividend policy for investors including Gazprom, Lukoil, Nornickel and integrated Russia steel majors like Novolipetsk Steel and Severstal,” Krasnojenov says.

The TKB spokesperson in fact, stresses that, “it is better to pick stocks rather than sectors on the Russian equity market.” In his view, the “difference between stock performance within one sector can be tens or even hundreds of percentage points over several years. It is useful to select a good stock picker.” That said, for investors who are seeking an opinion on sectors can consider companies in oil and telecommunications. Even the metal and mining sector has performed well with marginal negative returns of 0.04 percent. More recently, Russia has started exporting natural gas to China through an 1,800 mile pipeline called the Power of Siberia headed by Gazprom, and therefore, the oil sector continues to look promising.

Defining the next big prospect

What brings optimism right now is that “Russian corporates have gone through a massive deleveraging process that obviously supports equity value growth,” Krasnojenov explains. But the deteriorating geopolitical conditions are weighing on investor sentiment — creating uncertainty around 2020. That is why a cautious approach is necessary while investing in Russian stocks in the long-term. “However, if everything goes as planned RTS Index will touch the 2,500 level of 2008 in the next five years,” Krasnojenov says.

The post Are Russian stocks the best value picks for 2020? appeared first on International Finance.

Recently, the CBK has played a watchdog role to protect consumers from fraud, unfair levies another practices, while preventing unfair competition among banks. Additionally, the CBK has tried to avoid the dominance of the bigger banks over smaller ones as well as to prevent the type of mismanagement that hassled to the collapse of a number of Kenyan banks in the past.

Over the past few years, the country has seen waves of bank failure and collapse. The first wave happened between 1984 and 1989, before the Kenya Banking Act was constituted. Nine banks including Union Bank, Estate Finance Bank, Rural Credit and Finance, and Nationwide Finance, among others, collapsed causing losses of millions of shillings to customers.

While the second wave happened between 1993 and 1995 when 19 more banks collapsed, the third came to the fore in 1998 when six banks, Bullion Bank, Fortune Finance, Trust Bank, City Finance Bank, Prudential Bank and Reliance Bank also collapsed causing customers losses of millions of shillings.

In June 2015, the then Dubai Bank collapsed taking along with it 1.7 billion shillings in customer deposits. On August 14,^, 2015 the Kenya Deposit Insurance Corporation (KDIC) took over as its receiver manager through CBK intervention. On August 20, the KDIC was again appointed by CBK as liquidator of the bank. In October of the same year, the Imperial Bank started wobbling and was put under the KDIC management by CBK, placing a cloud of uncertainty over 58 billion shillings of customer deposits.

Corruption is a serious socio-economic challenge in the country, both at national and devolved government’s levels. Cash diverted from socio-economic and other empowerment projects or even from the bank accounts of government institutions have been laundered through other banks and financial institutions. The CBK Governor Peter Njoroge introduced a new rule a few months ago that requires any person depositing or withdrawing more than one million shillings in cash to provide a written explanation or justification with regards to the source of the money and its intended use.  This rule, among others, is also intended to prevent money laundering which has become a serious challenge to the financial system in the country.

Kenya happens to be a transit route for drug traffickers and people who deal in game hunting and poaching. Such people often make huge cash transactions and have in the past used banks and financial institutions as a conduit for their payments while escaping scrutiny. The new rule targets such people.

The DTB Bank of Kenya is under scrutiny following its failure to question and stop the withdrawal of millions of shillings from accounts that were linked to people who are also key suspects in the January 15 terror attack at the Dustin Hotel in Nairobi.

Financial fraud has become a bane, especially immobile financial transactions. Today it is common for citizens to receive calls or messages from unscrupulous people who pretend to be agents of the bona fide mobile telephone services providers and seek the personal details of customers including personal identification numbers (PIN) which they later use to pilfer cash from the victims’ accounts. Following the rise of such incidents, the government, the mobile operators, and the banks and financial institutions that offer mobile money services are working together to design rules and regulations that can curb such malpractices.

Unfair competition and the domination of some big banks and financial institutions over small banks have necessitated rules that can ensure fair play. The demand for more consumers’ protection created the need for on-going regulation of the sector. The capping of interest rates at four points above the CBK’s monetary policy committee (MPC) level in 2017, for instance was touted as a measure to stop banks and related financial institutions from charging too high interest rates that could harm consumers. This has, however, proved to be counterproductive with banks and financial institutions preferring to reduce the quantum of consumer loans disbursed while investing in other vehicles that ensure higher returns.

Mismanagement is another issue that can spur further regulation of the sector in 2019.Many Savings and Credit Co-operative Organizations (popularly known as SACCOs and whichhaveattracted14 million investors, especially from the SME and related informal sectors, are currently reported to be facing management challenges. Three SACCOs in the country: Ekeza, Mwalimu Co-operative, and Stima Investment Co-operative are currently under investigation for not meeting their customer needs by providing loans in time or for not facilitating acquisition of properties as stipulated by their original mandate. The issue can only be untangled by bringing clarity to the grey area in the role that the Saccos Societies Regulatory Authority (SASRA) plays at the national level and the role played by Saccos regulatory bodies at the county level, which leaves many Saccos in the counties unregulated.

The post Why the Kenyan banking and finance sector is likely to see further regulations­­ in 2019 appeared first on International Finance.

This certainly wasn’t wrong but it took ten years longer than everyone envisaged and no one had heard of Facebook, Amazon, Netflix or Google at that time. However, the ‘rumour’ or ‘travelling’ phase was the period from 1995 to 2000 when markets went ballistic and anything vaguely related to dotcom went stratospheric.

When the millennium finally arrived, the bubble burst shortly afterward and much of the profit that had been made in the travelling phase disappeared when the reality arrived. Investors suddenly realised that everyone had been caught up in the hype and in reality most of the forecasts for earnings were profitless. Those that bought the rumour and speculation but sold the story on arrival were very wise, banked their profit and saw it for what it was—a bubble!

This phenomenon is a part of human nature and the inherent greed and fear of the investor. Anxious to make as much money as possible and not miss out when others are profiting, but also anxious not to lose money, especially when news headlines are reporting the sell-off as many start to panic. It also goes a long way to explaining why markets often appear blind to the reality of when a positive development arrives—this is because all the good news is already priced in.  Many an investor gets to the party late, not realising that the markets have been there for weeks—any upside is limited and a hangover is about to set in.

However, the opposite can also apply. When markets appear to be anticipating a doomsday scenario and sentiment feels extremely bearish, there is a point of maximum negativity where some investors capitulate and manage to sell at the bottom of the market cycle. An example of this is Christmas Eve just gone by, when a multitude of negative stories appeared to combine into an environment of extreme weakness, not helped by thin holiday markets or an overwhelming sense of desperation fed by the political turmoil.

Since that point, markets have rallied with the MSCI World Index rising by 14.5 percent year to date at the time of writing (April 182019). The FTSE-100 Index which also managed to hit a low on Christmas Eve, dragged down by the US market, has also rallied by 10.4 percent year to date despite all the Brexit noise (April 18 2019). If anything, since the market lows, the intensity surrounding Trump’s actions and his tariff negotiations with China and the approaching Brexit cliff-hanger has become much worse, but the markets have been rising.

This is travelling and arriving in reverse. The travelling period is the gradual realisation that the bad news that caused the previous low is fully priced in and all it takes is any glimpse of a ray of light for the gloom to lift.

This is exactly what we have witnessed. Donald Trump desperately needs some good political news as his opponents start to stir ahead of the next Presidential race. He has taken the heat out of the March 1 Chinese tariff deadline by announcing an extension if a deal isn’t done by then. This implies there is a deal on the table and the much feared second phase of tariffs will be avoided. As Trump is obsessed with his standing in the media and judges his performance by the stock market, he realises that this will be seen as a political coup.

Sentiment has also been lifted by the Federal Reserve reducing the degree of planned rate rises it has scheduled this year in light of softening economic growth. The anticipation of the negative news caused the market low and, as we approach the reality, the worst outcome (which has so far failed to materialise) was priced in three months ago with investors seeing returns of up to 12 percent till March.

Human nature defines the greed and fear characteristics of the markets. Over-expectation of the upsides and downsides leads to opportunity for the active and brave investor. It is often said that time in the market is more important than timing the market.  However, at times, extreme swings provide opportunity to boost the long-term returns that reward the patient investor.

Brexit is another case in point. The UK equity market was composed as the UK approach the March 29 deadline without a deal. While it would be understandable that most would have lost interest and just wanted some sort of resolution, it was rather more sophisticated than that. As many in Parliament lamented about the removal of ‘no-deal’, the reality is that Theresa May needed that option on the table during the negotiations, because it kept the pressure on Brussels as the German car industry, to name just one affected industry, predicted catastrophe.

With regard to Brexit, the market sees two scenarios. First, a backstop fudge which delivers a majority in Parliament with the alternative being ‘no-deal’ or more likely, an extension to kick the can down the road to seek more time for a backstop fudge.  Either way, we get a deal but remember, this is only a deal for the withdrawal agreement before we start the actual trade negotiations.

Trade negotiations are interesting. Liam Fox, the UK’s International Trade Secretary, is having a hard time with regard to the number of deals he hasn’t done.  Once we do successfully pass a deal(assuming we do) it would appear that we will then use the transition period to strike trade deals with all our trading partners, based on our current trading arrangements under the EU.  It appears to us that even if the EU says we can’t have our cake and eat it by trading with the EU on the same terms as previously. However, if we are able to replicate at least the same trading arrangements with the rest of the world as we currently have in place with the EU, then as far as that goes, we will be eating our cake too. The issue lies with the EU itself and whether they choose to impose tariffs where they don’t currently exist.

The UK is a big market and a big importer of European goods. If German cars suddenly become 10% more expensive as with many other car imports into the EU, we doubt that the German car industry is going to take that sitting down. The same goes for French wine, Italian fashion, Dutch flowers, or Spanish fruit. We could at last start to see some of the bargaining power that we don’t appear to have enjoyed while negotiating with the EU colossus over the withdrawal agreement. The UK is the fifth largest economy in the world and is currently experiencing stronger economic growth than both Germany and Italy, despite all the Brexit disruption.

Imagining an investment world without having to think about Brexit seems distinctly more positive than where we are today.  An investment world without the overhang of Trump’s tariffs on China also seems rosy. Although his negotiations with North Korea have faltered, he can still advertise the fact that he is talking with Kim Jong Un rather than grandstanding about missiles and red buttons. He can also not be accused of caving in to achieve a political coup at home.

We hesitate to compare Trump and May, but both show a single-minded determination to pursue what they believe to be right for their country. Both are probably the most criticised leaders within the G20 and both have huge challenges to overcome. Most importantly, both are most definitely up for the fight and us mere mortals can only stand back and admire how an individual can put themselves through so much pain in pursuit of a goal in which they steadfastly believe. Both are driven by ego and power, but both also appear to have a sense of responsibility to leave their country in a better place once their era has passed. Perhaps this is what the markets are sensing. Despite the struggles and uncertainty along the way, we will soon experience a better economic environment with greater certainty and more prosperity for our nations.

The post A counter-intuitive take on the stock market is relevant amid Brexit and the Trump trade war appeared first on International Finance.

As is often the case, the truth does not lie at one extreme or the other, but requires a more careful consideration of influencing factors and market trends.

Prime central London property prices

UK investors are always fascinated with property prices, and each month different estate agents release their own data to show how markets across the country are faring.

According to new research from Lon Res, prime central London property prices fell by approximately four percent last year. It would be easy to link this trend to Brexit, but this is likely not the case. In fact, figures released by HMRC at the start of this year actually showed that there was a 50% increase in the number of homes sold for over £10 million between 2017 and 2018.

In reality, property prices at the top end of the market have been impacted far more by George Osborne’s stamp duty hike in December 2014––the market has taken some time to recalibrate to this tax reform.

Ultimately, taking a short-term view of property prices presents certain difficulties. The property market is seasonal, which means there are inevitably monthly and quarterly variations. Moreover, anyone purchasing a property as an investment (or even as their primary residence) is typically looking for capital gains over a number of years, which therefore requires a more long-term perspective.

And of course this is why London property has established itself as such a popular asset among both domestic and international buyers. In the two decades between 1998 and 2018, the average selling price of a London property rose from approximately £120,000 to £700,000, an increase of 500%.

Regardless of Brexit uncertainty and the shift in the market following the aforementioned stamp duty changes, the predictions by market experts remain positive. Savills, for example, is predicting price growth in the PCL market of 12.4 percent between now and 2023.

Demand remains strong

The reason why many forecasts are charting long-term growth for PCL property prices is that demand is still strong.

Indeed,figures from real estate firm Knight Frank show that there was a 5 percent rise in the number of new prospective buyers during 2018 in the PCL market. And interest from overseas is undoubtedly playing a major role in this regard.

The long-term strength of London real estate coupled with the weakening value of the pound––it has fallen by approximately 15% against the value of the dollar and euro since the EU referendum in June 2016––continues to whet the appetite of international buyers. Underlining this point, Hamptons International research found that foreign investors bought 57% of homes in central London locations during the second half of 2018, and now account for a higher proportion of prime property buyers than they have in the past six years.

Brexit, it would seem, is doing little to deter foreign investors from considering PCL for their next property purchase.

The desirability of the capital

Cutting through the noise and speculation, the strength and stability of the PCL property market should not be underestimated. And headlines about the impact of Brexit or price crashes must be taken with a rather bigpinch of salt.

Even during the past two decades, when house prices in the capital increased by 500% on average, there were still months, quarters, or even years when the market slowed or dipped. But the appeal of London remains a constant.The city boasts world-leading universities, a plethora of cultural sites, huge professional opportunities, amazing bars and restaurants, and beautiful properties in all manner of styles.

This is why it is important not to fall into the trap of believing one extreme narrative or another.Instead, one should see the bigger picture when looking at the prime central London property market, appreciating the strengths it has to offer and its historical performance as an asset class.

The post Historical performance of prime central London property prices over rule Brexit fears appeared first on International Finance.

With the rapid growth of the Internet and with cross-border e-commerce transactions, customers have come to expect a simple, instant multichannel experience, wherever they are making their purchases from.

Schemes are looking at ways to innovate, diversify and at the same time, strengthen their core payment rails. The Earthport acquisition strengthened Visa’s position in the digital currency ecosystem while MasterCard accelerated its move into ACH-based (Automated Clearing House) real-time payments. The Earthport and Vocalink acquisitions have shown the importance of having a globally connected ecosystem and the value placed on such deal by payment providers.

So, there is a certain curiosity as to why these innovative fintech companies allow themselves to be acquired rather than scaling up.

Fintechs glass ceiling

In order to successfully scale in the payments industry, one needs to have substantial networks and deep pockets to build and fund the business—given the time it takes to achieve this. And while these companies may have impressive technology, creating a global ecosystem fast enough to be profitable in a timeframe to keep traditional investors happy isn’t a reality. MasterCard and Visa’s ecosystems effectively started in the 1950’s and early 60’s, and it’s taken them around 70 years to get to where they are today.

The fintech industry has been around for less than 10 years, but investors can have unrealistic expectations around how quickly an ecosystem can be built. Let’s not forget that banks are notoriously slow to move and implement change: it takes many years for volumes to grow enough before an ecosystem can be fully established in the market.

The demand for globally connected ecosystems

There are a lot of global businesses that want to deal with providers who can handle their entire payment requirements to help with the growth.

It’s not effective to deal with a partner that can only help in one market. There is now a growing trend to have one partner consolidate global payment providers into a single integration point—as well as provide the flexibility to build perfect the system. This provides access to local acquirers, offering solutions better suited to local markets which reduce costs of processing and dramatically boost conversion rates. Businesses are then ready to accept payments from the moment of integration and face no payments related barriers to fast, sustainable growth.

Selling too early?

Looking at the VC market in the US: it’s more mature and a lot of tech companies have been born on the West Coast. But they also benefit from the presence of seasoned VC companies that are not afraid to back them. For example, Uber had a $50-60 billion valuation before the business had even entered into the market. The company has now been told by banks that it could be worth $120 billion when it goes public this year, although ultimately it will be the investors who will decide the company’s valuation.

However, the UK market is very different. As soon as a company gets to unicorn status, or a £1 billion valuation, everyone wants to buy it. Achieving a unicorn status out of London means: if your company is backed by a bigger firm, it is possible to become a £10-£20 billion player in the next five to 10 years.

For founders, it’s hard to resist a deal, after having gone through the ebbs and flows of getting to £1 billion. This means the effort that’s required to get it to the next stage will be less amenable; so a lot of investors will decide to sell or move on.

The next 12 months

As we move toward an increasingly cashless society and more banks disappear from the High Street, we’ll undoubtedly see more acquisitions with the traditional players looking toward the fintech industry for inspiration and innovation. So, the big companies will be asking themselves: Does the value proposition bring something over and above what we can offer? Does the business bring something new and innovative that can be sold to existing customers?

While some could argue it’s a shame that all these innovative companies are being acquired, it’s really a win-win situation for customers and businesses. For fintech businesses the opportunity is enormous: to create an innovative solution that improves customer experience, and big players like Visa, MasterCard, Paypal or Google have no choice but to pay out in the face of pressure from rapidly advancing customer expectations.

The post Is the UK fintech market sold off too early? appeared first on International Finance.

Today, more investors are looking to the Eurozone for their business ventures. But which industries are thriving in different countries?

Spain: A Focus On Fashion

More UK fashion companies are making the shift overseas to Spain — take going out dresses retailer QUIZ for example, who have recently opened up in Madrid. Spain is possibly one of the biggest hotspots for tourism and this is one of the main drives for retail sales. Euromonitor International found that Spain’s employment rate dropped to a low of 17% in 2017, which has had a positive impact on fashion sales as more people have shown a willingness to spend more on clothes.

For the industry itself, an annual growth of 11% is expected to arise between 2018 and 2022 — taking the market value up to $6.728m. Francesc Maristany, former president of Catalan Cluster of Fashion, commented: “Some people come for the luxury tourism and realise there are smaller brands with great products and excellent branding, and become drawn to them.” This shows that there has never been a better time than now to expand into Spain.

France: A Focus On Artificial Intelligence

Did you know that Paris has passed London as the most lucrative market in Europe for foreign investors? Although you may be making investments at home, it’s crucial to start looking at shifting your finances into opportunities in France.

The introduction of artificial intelligence is thriving in France, with companies and governments making use of it. Emmanuel Macron, the French President, has launched an initiative that will position the country as a leader in the field. Through this scheme, €1,5 billion will be invested in AI projects and start-ups. Is this something that your business could benefit from?

Germany: A Focus On Biotechnology

Foreign investment is at an all-time in Germany, so it would be foolish not to look into the country. So much so, that a total of 1,063 investment projects were launched in the country over the past 12 months. Within the same time frame, 7,785 jobs were created in Germany by external European companies — highlighting the number of opportunities across the country that must be taken advantage of.

The country is exceeding well in research and development, too. Germany prides itself on constant innovation and is known to have the most biotechnology firms on the continent, which has had a positive impact on employment across the nation.

Portugal: A Focus On Real Estate

Titled the most peaceful country in Europe, Portugal is thriving in real estate investments and general trade. However, it must be noted that the country’s Golden Visa Scheme has encouraged more foreign investments in property, as residency comes with an array of benefits, including education, healthcare, social security, tax concessions, and more.

Did you know that the gross rental yields in the country are one of the highest in the continent? 5% to 14% is realistic for the right property. Have you considered setting aside investments and obtaining a visa to a foreign country to obtain great financial benefits? Now might be the time!

The Netherlands: A Focus On Creative Industries (Advertising, TV, Music, and Gaming)

It’s believed that The Netherlands is one of the most innovative countries in the world. As a result, it is home to some of the leading creative brands. Amsterdam, in particular, is a hotspot for creativity. Its metropolitan area offers world-class infrastructures and Europe’s fastest broadband speeds – essential qualities for this sector.

Almost 50% of investors think that the business climate in this country will improve significantly over the next three years, so researching early is essential. This is a positive sign, as last year, only 38% agreed. The capital city is known for its influential start-up scene, with a tech-savvy community and a diverse talent pool. To illustrate the love of creative start-up businesses, the opening of gaming companies alone increased by 42% between 2011 and 2016.

UK: A Focus On Digital

It’s no surprise that the digital scene in the UK occupies 27% of projects in Europe. As well as this, the sector seems to generate the largest number of projects in the country, which has led to an increase in employability with around 1.1m people in work.

The digital sector in the UK is growing quicker than the national economy and is improving regional areas. Because of this, the value of the industry was boosted to £184bn (2017) from £170bn, which was its estimated worth in 2016. Ignoring the opportunity to invest in the UK’s digital sector could be a big mistake.

Sweden: A Focus On Financial Technology (FinTech)

It’s known that Sweden is one of the biggest hot spots for foreign investment, especially around tech projects. This renowned status factored in the statistic that a large portion of its workforce are in tech-based jobs.

Stockholm is the second-most prolific tech hub in the world after Silicon Valley. This is a great achievement for the nation, as investment continues to grow. When it comes to emerging fintech trends, crowdfunding opportunities, mortgages and pensions are developing areas that are disrupting the industry positively.

Finland: A Focus On Clean Technology And Renewable Energy

It won’t be a surprise that Finland is the world’s greenest country and has a core focus on renewable energy. Because of this core focus, 38% of the nation’s energy is produced by renewables — which is only set to grow further with future investments and continued extensive research.

For venture capital investments, this country ranks quite high due to cleantech solutions. Because of its willingness to improve the climate of our planet, it is also home to Slush, which is one of the biggest technology-focused innovation conferences in the world.

Sources

https://www.businesslocationcenter.de/en/business-location/business-location/investing-in-germany/location-advantages-for-investors
https://www.ey.com/Publication/vwLUAssets/EY-Germany-attractiveness-survey-2017-summary/$FILE/ey-germany-attractiveness-survey-2017-summary.pdf
https://www.research-in-germany.org/en/research-landscape/research-organisations/companies-industrial-research.html

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I recognised a huge gap in the market. Most major research companies are busy researching mature technologies and ecosystems. In contrast, we focus on off-the-shelf, readily available research on next-generation high-growth use cases and technologies, which will impact the future revenues of companies.

Every company is looking to tap new opportunities before their competitors. Ecosystems are becoming fairly complex, extended and converged. There is currently no other source that provides deep-dive market analysis on such opportunities and/or all associated markets, other than MarketsandMarkets.

Our business model has transitioned since we launched in 2010, from the sales of individual research studies to complete annual engagements with companies. Our interactive, cloud-based market intelligence platform, Knowledge Store, works on the concept of “connected markets.” At the click of a button, it brings together known and unknown adjacency in terms of markets, technologies, ecosystems and revenue impact on businesses.It also provides an extended lens on revenue drivers that will impact the revenues of our customers as well as their clients and their clients’ clients.

Can you elaborate on MarketsandMarkets’ nature of work?

MarketsandMarkets provides annual engagements with companies through a combination of research studies (delivered through Knowledge Store),advisory services (access to all of our SMEs/analysts) and custom consulting services (reports developed with a high level of personalization).

Our clients can access our off-the-shelf research on any market/technology/use case to identify high-growth markets and their growth drivers. Clients can also access a deep-dive segmentation of each ecosystem and estimate what revenues can be expected from them.

We realize each client has specific needs, which may not be fully met by our syndicated research (multi-client) studies. Taking this into consideration, we decided to customize our research to match the specific needs of our clients at no additional cost.

Such customization proves handy in the backdrop of constant innovation and the blurring boundaries of ecosystems.Companies want to know what will impact their product development, prospects of tapping new markets and acquiring new targets, partnership models, customer acquisition and their position in the overall competitive landscape (within their industry and outside their industry).

While most companies provide pull-based advisory support, we provide integrated full-year engagement services combining both push and pull strategies wherein our client service team proactively maps companies’ key business objectives, key business initiatives and their quarterly goals/challenges and works proactively to provide insights ahead of their internal sources.

What type of research studies do you conduct?

We have off-the-shelf research on more than 30,000 markets and factors that have supported or hindered their growth. Our reports provide similar insights on a company-level, identifying top market players as well as what impacts their revenues (in terms of opportunities and threats).

What is the value proposition of your company in terms of its core focus and offerings to all your clients, including Fortune 2000 companies?

A large majority of Fortune 2000 companies rely on MarketsandMarkets for their revenue decisions when it comes to emerging technologies, use cases, markets, partnerships,new products and services. Our competitors cannot match the depth and breadth of our studies. They may provide about 150 magic quadrants a year while we provide research on more than 30,000 markets (technologies and use cases).

Our ongoing engagement provides proactive, personalized insights in terms of go-to-market strategies, sales battle cards, key positioning, detailed competitive market share trend analysis and life cycle management of products. Our client service team maps companies’ key priorities and initiatives and builds deliverables. In terms of pricing, we are relatively cost-effective in comparison with the Big Four of research and consulting.

How is MarketsandMarkets different from other research and advisory firms such as Information Services Group (ISG)?

We are the only company that provides revenue estimations of new ecosystems and identifies the impact of adjacent ecosystems/converged industries on revenue growth. We also provide information on the current competitive landscape.We have a competitive edge over the Big Four consulting firms because of our existing off-the-shelf research. Companies approach MarketsandMarkets before they reach out to any of these firms.

Also, later this year, we will be introducing a new, unique research platform that combines our proprietary analyst research and artificial intelligence, which will surely disrupt competitors like Gartner. Our mechanism is built to handle issues of bias, customer requirements and interactivity; with this, companies can improve their ratings. This platform will also predict ideal pairings between the buyer and seller sides.

How does your company help B2B clients seek new market opportunities and drive future revenue?

Existing revenue sources of companies are depleting, and new revenue sources (newer technologies, use cases, markets, partners, clients, value-added services and products) are expected to replace them. The introduction of new use cases and technologies has equalised the playing fields for legacy companies and startups.The key is to stay ahead of the curve. As a result, companies desire these insights now, if not sooner. They approach us, as we are ahead of our competitors by at least six months to a year.

Drop quote

New market entry is determined based on existing market opportunities that affect a company’s revenue expanse

Being the world’s largest research firm, how do you identify new market entries for growth?

This is a very interesting question. What is critical to market entry is to evaluate all the possible adjacent markets, technologies, use cases and partners which are likely to impact a company’s revenue in a new market. Other research firms cannot match our broad coverage on adjacent markets. As a result, companies decide to work with us, as the chances of missing out on important next-generation revenue opportunities due to unknown adjacencies are relatively less.

How do you also help clients with product strategies and releases?

We identify the potential use cases and applications for any product. We are probably the only firm, which helps companies to gauge what revenues they can expect from the product in each of the micro applications/markets. We provide information on “connected markets” and ecosystems for the product, proactively identifying opportunities and threats, positioning and gaps in the offerings. Our engagement goes to the extent of identifying key clients and their burning issues and gaps with existing products in the market.

What are the key challenges you faced while enabling your company to achieve 100% revenue growth over the last two years?

Growing was easy; we were researching critical topics that no one else had, and we provided free customizations. This was enough for us to grow 100%.

However, since our business model is now changing from transactional to annual engagement,our single biggest challenge is building a client partner team that services our pool of our existing 6,500 clients. Therefore, we are rapidly hiring client services associates. The role will be based out of client locations in most large cities across the U.S. with an initial 3-month training period in our Pune, India office. Out international training program enables employees to learn from some of the best minds in the world while gaining a global perspective on the connected market ecosystem.

What is the one thing you swear by as an entrepreneur?

One thing I swear by is growth,growth of my clients, and the growth of my employees. We cultivate our employees by empowering them to lead and make decisions on their own right from the get-go. We encourage the employees to think of the management team, myself and our chief operating officer, Shailendra Singh, as resources to use to achieve their goals.

We highly value continued learning of all our employees, both within the company and within their personal careers. MarketsandMarkets Academy (MMA) was started with this purpose. Training and advanced certification programs are available for employees at all levels of experience – on the research as well as the client services side. MMA’s vision is to be a hotbed of learning not only for our employees, but for our clients, as well.

We also believe in creating an environment that allows our employees to follow their passion. It is common in MarketsandMarkets to see analysts with years of experience in research switch to a business development role and vice versa if they so choose. We take pride in shaping the all-round development of our employees as citizens of the world.

What are your insights on retaining top talent?

We have a simple belief at MarketsandMarkets, “See dollars, show dollars.” If my analysts or sales team can create a tangible impact on the revenues of our clients, the same will be reflected in our business with these clients. We simply share the upside with our people.

We have launched a strategic growth program wherein each analyst is mapped to a few clients. If they bring tangible revenue impact to the businesses of these mapped clients – and if the same is measurable – we share the upside of our growing business with these clients.This brings our analysts unmatched growth in the industry, making it a win-win proposition.

Can you tell us more about the international training program for your employees? Why was it launched?

We launched MarketsandMarkets Academy, which train our employees on how to consume research and map it to clients’ businesses;this helps them ask the right questions to our clients.Our Academy Graduates bring high energy and unmatched zeal. We have married their growth to our clients’ growth.

What are the challenges and opportunities you identify with as an entrepreneur in this industry?

As a bootstrapped startup, our initial focus had been on growth. Now that we’re growing 100 percent year over year, we’ve consciously decided to focus more on establishing a healthy work culture and team building, which is key to sustenance and operational scale-up.

Your company received $56mn in growth equity led by FTV Capital. Can you tell us more about this?

We raised funds to acquire companies in this space. We are still evaluating target companies for the same. A portion of these funds shall be consumed for organic growth, which currently looks promising. We have diluted a minority stake to raise these funds.We chose FTV for their experience of working with Indian companies and networking support, which will be key to our growth.

What are your plans in the pipeline for 2018–19?

We intend to convert our transactional relationships with our existing 6,500 clients into annual subscription relationships along with engagement with a team of 120 client partners. We are hiring a CMO to position our brand more effectively and expanding our staff to handle growth efficiently. We aim to double our base of client partners every year till we reach our goal of 10,000 subscriptions.

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