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Report from WEF Davos 2009 - Presentation by Alec Hogg, Moneyweb

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Report from WEF Davos 2009 - Presentation by Alec Hogg, Moneyweb

  1. WORLD ECONOMIC FORUMWORLD ECONOMIC FORUM FOUNDED BY PROFFOUNDED BY PROF KLAUS SCHWAB IN 1971KLAUS SCHWAB IN 1971 ““Committed to improving the stateCommitted to improving the state of the world”of the world” • Research: 69 Global AgendaResearch: 69 Global Agenda Councils, four meetings a yearCouncils, four meetings a year • Davos has record of settingDavos has record of setting year’s global economic agendayear’s global economic agenda • 2009 Meetings: new records2009 Meetings: new records - 1 400 C1 400 CEOEO/Chairmen/Chairmen - 41 Heads of Govt41 Heads of Govt
  3. WORLD ECONOMYTODAYWORLD ECONOMYTODAY STEPHEN ROACH:STEPHEN ROACH:  Worst since WW2Worst since WW2  Will contract in 2009Will contract in 2009  Demand side: US consumerDemand side: US consumer  Supply side: Chinese producerSupply side: Chinese producer  Decoupling is a mythDecoupling is a myth
  4. WHERE WE ARE (1)WHERE WE ARE (1) NOURIEL “DR DOOM” ROUBININOURIEL “DR DOOM” ROUBINI:: • ““I was vindicated by anI was vindicated by an economic disaster”economic disaster” • WWorst is yet to comeorst is yet to come • Banks must write off $3,6 tnBanks must write off $3,6 tn (only $1,1tn so far)(only $1,1tn so far) • Real threat of another GreatReal threat of another Great Depression like the 1930sDepression like the 1930s
  5. WHERE WE ARE (2)WHERE WE ARE (2) RUPERT MURDOCH:RUPERT MURDOCH: • Past 12 months over $50tn inPast 12 months over $50tn in savings has disappearedsavings has disappeared • Getting worse; asset valuesGetting worse; asset values still fallingstill falling • Western World been living wayWestern World been living way beyond its means - “on abeyond its means - “on a binge”binge”
  6. WHY WE’RE HERE - 1WHY WE’RE HERE - 1 GEORGE SOROS:GEORGE SOROS: • Sept 15: Lehman bankruptcy,Sept 15: Lehman bankruptcy, US economy fell off cliffUS economy fell off cliff • US economy now on “artificialUS economy now on “artificial life support”life support” • Banking system collapsed likeBanking system collapsed like 1930s1930s • Bad bank loans $1,5tn; totalBad bank loans $1,5tn; total mkt cap $1tnmkt cap $1tn • Efficient market hypothesisEfficient market hypothesis destroyeddestroyed
  7. WWHY WE’RE HEREHY WE’RE HERE –– 22 MIND HASTWO BEHAVIOURAL SYSTEMS:MIND HASTWO BEHAVIOURAL SYSTEMS:  SYSTEM ONE – Impulsive;SYSTEM ONE – Impulsive;  SYSTEMTWO – Reasoning, calculatingSYSTEMTWO – Reasoning, calculating  US Financial Crisis: A transition to System-One behaviour whenUS Financial Crisis: A transition to System-One behaviour when people lost trustpeople lost trust  The way to avoid fear and anxiety is trustThe way to avoid fear and anxiety is trust  Obama has trust for now – can he keep it?Obama has trust for now – can he keep it?
  8. TTHE OBAMA FACTORHE OBAMA FACTOR VALERIE JARRETT:VALERIE JARRETT: Her boss Barack Obama calls onHer boss Barack Obama calls on other leaders to “seize gladly”other leaders to “seize gladly” - Global collaboration dutiesGlobal collaboration duties - ““Embrace new era ofEmbrace new era of responsible finance”responsible finance” - The return to values ofThe return to values of honesty, hard work, courage,honesty, hard work, courage, fair play, tolerance and loyaltyfair play, tolerance and loyalty
  9. NEW WORLD ORDER?NEW WORLD ORDER?  G20 not G8G20 not G8 –– end of theend of the Washington ConsensusWashington Consensus  US dominance has peaked,US dominance has peaked, power shiftedpower shifted  New spirit of globalNew spirit of global collaborationcollaboration  Return to a value-basedReturn to a value-based society now top prioritysociety now top priority  Crisis presents anCrisis presents an opportunity to addressopportunity to address structural imbalancesstructural imbalances
  10. TEST ONETEST ONE –– LONDONLONDON TOPPING AGENDA AT APRIL G20TOPPING AGENDA AT APRIL G20 MEETINGMEETING • Resuscitate Doha Round ofResuscitate Doha Round of trade talkstrade talks • Prevent protectionism, “BuyPrevent protectionism, “Buy American”American” • Collective effort to tackleCollective effort to tackle recessionrecession • Agree to bolster IMF, WorldAgree to bolster IMF, World BankBank
  11. TESTTWO - COPENHAGENTESTTWO - COPENHAGEN DECEMBER’S GLOBAL WARMINGDECEMBER’S GLOBAL WARMING AGENDAAGENDA - Obama’s US coming to theObama’s US coming to the table at lasttable at last - Launch of effective carbonLaunch of effective carbon credit trading marketscredit trading markets - Fresh water scarcity on theFresh water scarcity on the agenda, becoming top priorityagenda, becoming top priority
  12. THE CHINESE MESSAGETHE CHINESE MESSAGE WEN JIABAOWEN JIABAO • China’s economicChina’s economic fundamentals not changedfundamentals not changed • Big stimulus package,Big stimulus package, confident 8% GDP growthconfident 8% GDP growth • Urges “Push for new worldUrges “Push for new world economic order that is just,economic order that is just, equitable, sound and stable.”equitable, sound and stable.”
  13. THE RUSSIAN MESSAGETHE RUSSIAN MESSAGE VLADIMIR PUTINVLADIMIR PUTIN • Russia doesn’t need help fromRussia doesn’t need help from the West, thank youthe West, thank you • Avoid trade barriers, StateAvoid trade barriers, State interventionsinterventions • Asset measurements, ratingsAsset measurements, ratings system must be revampedsystem must be revamped • US Dollar cannot be the onlyUS Dollar cannot be the only reserve currency in futurereserve currency in future • Integrity, hard work,Integrity, hard work, responsibility lead to successresponsibility lead to success
  14. THE INDIAN MESSAGETHE INDIAN MESSAGE ANAND MAHINDRAANAND MAHINDRA • India is less exposed thanIndia is less exposed than most; only 20% GDP is exportsmost; only 20% GDP is exports • 65% of Indians happy65% of Indians happy –– goodgood Monsoons mean good cropsMonsoons mean good crops • In same boat as others: “IndiaIn same boat as others: “India can paddle faster than most”can paddle faster than most” • India’s strong economicIndia’s strong economic growth of 8% to continuegrowth of 8% to continue
  15. MESSAGE FROM BUSINESSMESSAGE FROM BUSINESS  State involvement throughState involvement through bailouts must be temporarybailouts must be temporary  Financial regulations must beFinancial regulations must be strengthened globallystrengthened globally  Calls for retribution forCalls for retribution for peddlers of toxic productspeddlers of toxic products  Want a return to the era whenWant a return to the era when “my word is my bond”“my word is my bond”  Urge Governments not to loseUrge Governments not to lose sight of capitalism’s benefitssight of capitalism’s benefits
  16. OPPORTUNITIES IN GLOOMOPPORTUNITIES IN GLOOM TOP SECTORSTOP SECTORS –– SHIMON PERES (ISRAEL)SHIMON PERES (ISRAEL) - Alternative energy and freshAlternative energy and fresh waterwater - SStem cell researchtem cell research - Teaching and educationTeaching and education - SecuritySecurity
  17. MORE OPPORTUNITIESMORE OPPORTUNITIES TOP SECTORS:TOP SECTORS: HAN SEUNG-SOO (KOREA)HAN SEUNG-SOO (KOREA) - Renewable energy innovationsRenewable energy innovations and the saving of energyand the saving of energy - Convergence (“fusion” ofConvergence (“fusion” of media through broadband)media through broadband) - High value service industriesHigh value service industries including medical sectorincluding medical sector
  18. BEST INVESTMENTS NOWBEST INVESTMENTS NOW  Emerging Market GovtEmerging Market Govt securitiessecurities  Corporate bondsCorporate bonds –– risk hasrisk has overshotovershot  Infrastructure playsInfrastructure plays –– construction sectorconstruction sector  Corporate restructuringCorporate restructuring businesses about to boombusinesses about to boom  Alternative energy, includingAlternative energy, including ways to reduce wastageways to reduce wastage
  19. TECHNOLOGYTECHNOLOGY  MEGA-TRENDS:MEGA-TRENDS: - Smart phones ruleSmart phones rule - Mobile FacebookMobile Facebook - Twitter catching onTwitter catching on - Youtube replacingTVYoutube replacingTV - Cloud computingCloud computing - DemocratisationDemocratisation - TransparencyTransparency
  20. VALUES MAKING COMEBACKVALUES MAKING COMEBACK BEN ZANDERBEN ZANDER - ““Leadership is process ofLeadership is process of moving people from downwardmoving people from downward spiral to the art of possibility”spiral to the art of possibility” DESMOND TUTU “Essence of being human is a person is a person through other persons. You and I are created for togetherness.”
  21. FINAL WORDSFINAL WORDS……………… ““The harsh winter will be gone and spring isThe harsh winter will be gone and spring is around the corner. Let us strengthenaround the corner. Let us strengthen confidence and work closely together toconfidence and work closely together to bring about a new round of worldbring about a new round of world economic growth.”economic growth.” –– WEN JIABAO, Premier of China, leader ofWEN JIABAO, Premier of China, leader of one quarter of humanityone quarter of humanity