From India to Brazil, emerging markets can shore up global economy

South Korea and Brazil are among those with further cuts likely on the horizon, while others like China and Thailand are proceeding more cautiously on further easing

Emerging-economy central banks from India to Brazil still enjoy the firepower to shore up the global economy as their peers from developed markets take to the sidelines. While policy makers at the Federal Reserve and European Central Bank are seemingly set to keep interest rates on hold, many of their developing nation counterparts have room to cut further. That should help support the world economy amid its weakest expansion in a decade.

“In most cases, emerging markets are now in the comfortable position to be able to cushion an economic downturn with monetary easing,” Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt, said in a report this month. “This easing of monetary policy is likely to give a lift to EM economies, and this would also be positive for developed countries.”

Faster Growth

That outlook was underscored this week by Morgan Stanley economists, who predicted emerging markets will grow 4.4% next year, more than three times the 1.3% rate anticipated in the Group of 10 economies.

After 20 of the 32 central banks monitored by the bank eased policy in 2019, its economists forecast 13 will do so in 2020 with the cuts concentrated in emerging markets helping to reduce the global weighted average policy rate to a seven-year low by March. India, Brazil, Indonesia and Turkey can all strike if they need to…

Saudi Aramco set to pay up to $450 million in fees to IPO advisers

Investment bankers from around the world have been pitching for years to win a coveted role on Aramco’s IPO

Advisers working on Saudi Aramco’s mammoth share sale may split a fee pool of as much as $450 million, according to people with knowledge of the matter, making it one of the biggest IPO pay outs globally.

The oil giant is set to pay between $350 million and $450 million to a group of more than 20 banks working on its initial public offering, the people said, asking not to be identified because the information is private. The payment would represent a fee of about 1 per cent on the $40 billion Aramco is seeking to raise — relatively low compared to other markets. J PMorgan Chase & Co. and Morgan Stanley are expected to be paid the most, the people said. The final amount paid to banks will depend on how much Aramco raises, they said. A representative for Aramco declined to comment….

Falling Short

Even though Saudi Aramco’s would be one of the biggest fee pools for investment banks, it would still fall short of the $535 million Softbank Group Corp. paid when it raised $21 billion by selling shares in its Japanese telecommunications business last year.

Still, perhaps bankers shouldn’t complain too much. When Saudi Arabia’s National Commercial Bank raised $6 billion in its 2014 IPO, advisers including HSBC and Gulf International Bank were paid just 0.1 per cent of the offering value.,,,