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Re: We hear a lot of talk about Globalization in the marketplace....
Chapman, Spira & Carson - Disscusion

From: Robert Spira
Date: 4/2/99
Time: 9:21:54 AM
Remote User:

Comments

The New York Stock Exchange does a lot of good work on the subject and we suggest that you take a look at the their site, NYSE.com. The reason for all this research into what is going to happen next is simply that American Marketplace and American Citizens are going to be trading increasingly more securities of other countries. We are going to accommodate that trading by keeping our markets open 24 hours a day. As the methodology for reporting earnings and sales becomes more transparent and the yardsticks by which company's performances are measured grow ever more similar, marketplaces will begin to look more and more alike. Access to the global funding is growing ever more critical and those that haven't done their homework are going to be left at the post.

Currency translations will become simpler and the euro, although it spells near-term disaster for Europe has at least a successful beginning.

Chairman Grasso of the NYSE gave a speech on the subject while in Davos, Switzerland not too long ago. The Emerging Global Investment Partnership

Remarks by Richard A. Grasso Chairman and Chief Executive Officer New York Stock Exchange, Inc.

World Economic Forum Davos, Switzerland January 31, 1999

Thank you, Mr. Chairman. It is a great honor for me to address the World Economic Forum at the side of President Mubarak, under whose leadership the Egyptian stock market has grown from a market capitalization of $3.8 billion at the end of 1993 to more than $22 billion at the end of 1998.

Mr. President, I just wish our performance in New York were as good. Listening to President Mubarak's comments, it is clear that Egypt is at the dawning moment of its entry into a contract with the global investment community … a contract that begins when government demonstrates a firm commitment to markets that encourages investor confidence.

Your progress, Mr. President, in such a short a time span serves as a model, particularly to those emerging markets that for the first time are experimenting with the opening of their economies to public capital and investor ownership.

For emerging and developed markets alike, openness and transparency are rewarded with the trust and participation of investors. That participation from around the world builds liquidity, not just in the global sense but in the domestic market, and serves as a foundation for privatization as well as a catalyst for growth.

Equity investors today have many choices … many opportunities for investment in both developed and emerging markets. To compete for that capital, emerging markets must provide not only growth opportunities, but also the capital-market infrastructures that are the basis of all investment -- the foundation of trust, openness and transparency upon which investors rely. Those emerging markets that adopt international standards and standards of best practice are rewarded by global investors for doing so.

Trust between markets and investors must be earned not only in times of strong economic performance, but also in times of adversity. Investors depend on the commitment of both governments and issuers to participate in free markets even in times of crisis. We have seen this lesson demonstrated time and again in the last two years as crises in emerging markets spread from one region of the world to another.

At one end of that spectrum was the response of Korea, which maintained its commitment to markets in the face of crisis, and earned the continuing participation of investors, leading to increased stability, and a return to normalcy. At the other end, there were countries that withdrew - countries that developed barriers and because of those barriers, we believe, their markets in the long run will be hurt.

The crises of the last two years have masked the fact that increasingly, emerging markets are entering into and adhering to this partnership with the global investment community. Viewed very narrowly through the lens of the NYSE, allow me to share some insights:

Companies from emerging markets today represent 37 percent of our non-U.S. issuers.

Emerging-market instruments last year accounted for more than half of the NYSE's new international listings. And we expect in the first half of this year approximately 30 new emerging-market issues will join our ranks.

Emerging markets and the investment community are now developing a true partnership. Companies from emerging markets that have tapped the international capital markets have found that by doing so, they have increased the scope of investor activity not just globally, but in their home countries as well.

As we look at the enormous opportunities ahead, consider that contrary to widespread belief, U.S. equity investors in 1998 actually increased their investment in emerging-market companies.

Consider, if you will, the gross dollar impact: Net purchases in emerging-market companies by U.S. investors nearly doubled in 1998 to $23 billion from only $12.5 billion a year earlier. Emerging markets are also seeking the larger benefits of equity capital as an economic tool. Equity balances the burdens of debt, provides the stability of long-term investment, offers cost-efficient access to capital, and democratizes economic participation across the breadth of a nation's people. Today, more than 70 million Americans are directly involved in the U.S. equities markets and 130 million are indirectly involved. Those numbers have nearly tripled in just the last two decades.

Increasingly, we are seeing developed and emerging markets working together to make markets more accessible for issuers and investors across borders. The strength of this partnership is critical for both emerging and developed markets, because it offers this reciprocal opportunity for growth and for service to the global investor and issuer community.

As we move forward, the lines on the map of international investing will gradually and, I believe, permanently disappear. Markets will no longer be defined by the traditions of the past, but by opportunity - opportunity driven by liquidity, transparency and the ability of investors to find user-friendly markets that will uphold the principles of the global investment contract.

Egypt has been a shining star in its own commitment to markets:

Under your leadership, Mr. President, an ambitious privatization program is bringing scores of companies into the capital markets and helping to build an equity culture in your great country.

At the same time, President Mubarak is pressing ahead with those economic reforms requisite to entry onto the world global marketplace: a regulatory system that is strong and transparent, an independent banking system that has the respect not just of the region but around the world. Those are initiatives that will stimulate confidence in the Egyptian markets and promote growth in the great economy of Egypt. Mr. President, we at the New York Stock Exchange are very proud to partner with you and your government as you go forward. We have seen enormous progress in a short time. The U.S. investment community is looking forward to the wonderful partnership with Egypt that I know lies ahead. As we listen to your vision expressed in your comments today, one can only be bullish on the future of Egypt. Thank you very much.


Last changed: March 17, 2000