Current Investors Research Articles

The Market Structure of the Ghanaian Insurance Market

The insurance industry offers the Ghanaian economy a prospect to assemble enormous native savings for long-term, indigenous currency investment and provides an opportunity to generate employment. Insurance enhances the confidence of households, including the amassing of long-term savings against the loss of wage earners and sinking their reliance on community welfare provisions. This paper uses both SCP Paradigm and a quantitative research method; and aims to elucidate the existing procedures of measuring market structures and demonstrate the use of these measures for the selected industry. Using market share, concentration ratios, and Herfindahl-Hirschman index it was revealed in this research that a few large firms continue to dictate the market. Nonetheless, there are no monopolistic inclinations in the Ghanaian insurance market and firms are at liberty to compete with each other for market shares. This paper concludes that, the Ghanaian Insurance industry has undergone a structural change from 2014 to 2016.

Small-Field Approach Holds Promise for Operators in Southeast Asia

This article, written by Special Publications Editor Adam Wilson, contains highlights of paper SPE 186434, “Small Is Beautiful: Why Small Fields Are the Next Big Thing in Southeast Asia and How to Capitalize on Them,” by Arnold Volkenborn, Andrew Lea-Cox, SPE, and Bo Sun, Accenture Strategy Energy, prepared for the 2017 SPE/IATMI Asia Pacific Oil and Gas Conference and Exhibition, Bali, Indonesia, 17–19 October. The paper has not been peer reviewed. This paper shows how a new approach to small fields could unlock more than twice the net present value (NPV) of larger conventional fields in Southeast Asia at a similar level of capital expenditure (CAPEX). Capturing this value, though, will require a fundamental change in the operating models of operators in the region. The small-field approach focuses on margin maximization instead of recovery and productivity maximization. Introduction Southeast Asia has attracted sizeable foreign interest in recent years after weathering the global financial crisis while establishing strong manufacturing bases, expanding domestic infrastructure, and stabilizing financial markets. These developments fueled economies and continued to push energy demand higher. However, Southeast Asia is facing its own challenges. Oil and gas companies in the region have been tasked with meeting domestic demand through local petroleum resources since the 1990s. Although companies have continued to discover new fields, efforts were insufficient to meet the growing demand, causing Southeast Asia to become a net importer in the early 2000s. Moreover, the industry has accepted a new oil price norm approximately 60% lower than June 2014 levels. As some early signs of recovery emerge, another disruption is on the horizon: Because of a combination of technological and socio economic factors, demand for oil is expected to peak as early as 2030. Concurrently, on the supply side, assets such as shale and nonhydrocarbon sources (e.g., solar and wind) are eating increasingly into oil’s share of the energy market. These factors are forcing exploration and production (E&P) companies to cut capital and operational spending significantly and refocus their portfolios on core areas of advantage. Investors now are wary of locking up capital in long-cycle megaprojects. Given the smaller size of discoveries, the need for decreased spending, and the demand for shorter-cycle projects, significant market opportunities exist for any player who can make a small-field business model work. Potential of Small Fields The future of Southeast Asia is in small fields, defined here as fields with less than 100 million BOE of reserves. First, the region is scattered with such discoveries and prospects. Second, and more importantly, a small-field approach addresses the current investor preference for high-margin, short-cycle projects. While technically difficult, small fields have great potential in terms of unlocking barrels to fill domestic demand and producing higher returns for capital-constrained companies. Extent of Small Fields in Southeast Asia. The average size of discoveries in Southeast Asia has decreased to approximately 35 million BOE in the last 5 years, compared with two to three times that in the 1970s–1990s.

Structuring an Inverse Dual Currency Investment

Structuring an Inverse Dual Currency Investment

Uncovered Interest Rate Parity, Carry Trade, and Country Equity Return Differentials

This paper applies a mixed effect model to investigate the relationship between international equity returns and forward discount sorted currency returns from three base currencies (i. e., US dollar, euro, and pound sterling). Empirical results using the portfolio approach show that high-interest rate currencies co-move positively while low-interest rate currencies co-move negatively, suggesting that foreign equity excess returns can help to explain investment in currency markets, providing a partial resolution to the uncovered interest parity conundrum. Furthermore, we show that global equity market returns, volatility, and liquidity correlate well with currency returns.

Financial and Qualitative Determinants of Voluntary Environmental/sustainability Reporting in the Canadian Mining Sector

The ever increasing attention given to the environmental threats facing the planet have permeated almost all areas of human endeavor. Accounting and corporate reporting has not been immune to this effect and is a key area of interest. Much of the environmental damage and the public costs associated with its clean-up is a result of commercial activity. Captured under the headings of social responsibility accounting, environmental accounting, integrated reporting or sustainability accounting, there are only limited mechanisms in accounting standards that directly address environmental issues and the associated costs and benefits. The majority of reporting mechanisms over the last three decades are largely voluntary so companies can choose whether or not to provide this type of information to users of financial statements. The existing literature in this area has focused on how these disclosures (voluntary or otherwise) have affected user decision making, primarily investors and creditors, and shareholder value.
 What factors lead to a decision to do voluntary reporting with respect to environmental issues? This research focusses on the Canadian mining sector (exclusive of oil and gas) and examines the financial and qualitative characteristics of companies and their respective reporting methods to build a generic profile of a company that would most likely to provide such voluntary reporting. Analysis of annual reports and the associated audited financial statements of companies in the sector will provide the raw data to build this generic profile.
 We can infer that companies that are inclined to report on environmental issues, beyond their regulatory responsibilities, are likely to be better environmental stewards. Understanding the financial and qualitative characteristics and having a profile can aid in regulatory decision making and provide potential and current investors an additional analytical tool for assessing corporate social responsibility with regard to environmental and sustainability issues.

THE YIELD OF THE CARRY TRADE STRATEGY

The article analyzes the carry trade strategy in which, according to common definition, traders borrow a currency that has a low-interest rate and use the funds to buy a different currency that is paying a higher interest rate. The aim of this work is to form the optimal strategies and carry trade portfolio. The task of our study was to study the interdependence between the yield of the carry trade strategy and the USA stock market on the basis of a mathematical approach and offer a portfolio of currencies with the highest historical yield over the past five years. The author used the model of relative risk aversion. We analyzed data on exchange rates, forward premium and real exchange rates for the Eurozone, as well as for countries of the Organization for Economic Cooperation and Development (OECD) such as Australia, Brazil, China, Japan, New Zealand, Russia, Switzerland, the United Kingdom and the United States of America. Carry trade’s yield is not tied to standard risk factors. Popular funding currency — the yen has experienced a strong jump of volatility as a result of the 2008–2009 crisis. A possible explanation for this reversal is investors’ appetite for risk. The author concluded that the most common carry trade strategies in the period from 2009 to 2014 were formed on the basis of two financing currencies (Japanese yen and the US dollar) and three investment currencies (Australian dollar, New Zealand dollar and Chinese yuan). After 2014, the US dollar ceases to be the funding currency, giving way to the Euro. The optimal carry trade strategy is borrowing in the currencies of developed countries (EUR, JPY) and investing in the currencies of energy producing countries (RUB, BRL). There is a negative relationship between the volume of transactions based on the carry trade strategy and the yield of shares in the financing country. There is also a significant link between the yield of the carry trade strategy and the profitability of the USA stock market.

The term structure of exchange rate predictability: Commonality, scapegoat, and disagreement

In this paper, we study the exchange rate predictability across a range of investment horizons by proposing a generalized (term structure) model to capture the dynamics between the risk premium component of exchange rates and a broad set of variables meanwhile handle both parameter and model uncertainty. We also demonstrate the projections of common predictable information over the term structure, and existence of time-varying term-structural effect and model disagreement effect of exchange rate predictors in FX trading, which in turn validates the practical use of our model. We then utilize the time-variation in the probability weighting to identify the scapegoat drivers of customer order flows. We further comprehensively evaluate both statistical and economic significance of the model allowing for a full spectrum of currency investment management, and find that the model generates substantial performance fees of 6.5% per annum.

Carry Trade Returns and Segmented Risk Pricing

The returns to carry trades are controversially discussed as there seems to be no unifying risk-based explanation of currency returns and stock returns. This paper addresses carry trade returns from a risk pricing perspective and examines if these returns can be connected to persistent cross-country differences of risk aversion. Therefore, I analyze a data set of individual carry trade currencies. Based on a GMM estimation, I find significantly large and persistent cross-country differences of risk aversion in the interest rate market compared to the implied risk aversion in the stock market. In this context, investment currencies are more sensitive to U.S. consumption risk while funding currencies provide a hedge. However, this also implies that there is no unifying SDF and consequently, both the interest rate market and the stock market appear to be segmented in risk pricing for carry trade countries.

Income smoothing and market performance: empirical study on manufacturing companies listed in Indonesia stock exchange

In the age of modern accounting, the era where income information is viewed to be no longer the main information that investor seeks, income smoothing is proven to be still existing. This study aims to find why income smoothing (IS) still exists in Indonesia Stock Exchange (IDX) by analyzing its effect on the market performance (MP). The study divides MP into three perspectives: market response is representing current investor; market risk (MR) is representing potential investor; and market value (MV) is representing the management. Purposive sampling method is applied in this study and 65 companies are examined throughout 2011–2013.Using three models to analyze each of the relation, the results shows that IS only significantly affects the MP of companies in the aspect of market response, while the other aspects, MR and MV, yield insignificant results.

Do Precious and Industrial Metals Act as Hedges and Safe Havens for Currency Portfolios?

This study explores whether metals act as hedges and safe havens for currency investing portfolios. Three widely used currency investment strategies: carry, momentum and value are adopted. The empirical results argue that gold and silver do exhibit hedge and safe haven properties for all three strategies. Silver works as a strong hedge during extreme market conditions. However, these hedge and safe haven properties became weaker after the year 2000. We also find that industrial metals do not work as either hedges or safe havens for carry portfolios.

Do precious and industrial metals act as hedges and safe havens for currency portfolios?

This study explores whether metals act as hedges and safe havens for currency investing portfolios. Three widely used currency investment strategies: carry, momentum and value are adopted. The empirical results argue that gold and silver do exhibit hedge and safe haven properties for all three strategies. Silver works as a strong hedge during extreme market conditions. However, these hedge and safe haven properties became weaker after the year 2000. We also find that industrial metals do not work as either hedges or safe havens for carry portfolios.

Taking back Control or Empowering Big Business? New Risks to the Welfare State in the post-Brexit Competition for Investment

AbstractCapitalist economies depend on private business investment, and all governments in similar states compete to induce businesses to invest through various policy interventions. In so doing, they compete with other governments to retain current investors and to encourage new ones from elsewhere. The implications for policy-making and, by extension, citizens, are huge. The pressure on governments to capture new investment has an impact on taxation policies, workplace regulations, legal protections, public infrastructure and social policies. However, not all governments compete for investment in the same way at the same time, and not all businesses are attracted by the same inducements offered by states, highlighting the possibility that public policies shape investment strategies, just as investment strategies also shape public policies. It is its development of relatively unique and aggressive strategies to capture new investment that places the UK in a vulnerable position post-Brexit. It has successfully attracted mobile corporations to its shores, in part because it has offered a particularly favourable gateway into Europe for foreign capital. This raises questions about how the country will seek to compete for capital investment in future. This paper examines these questions with reference to both theoretical and empirical evidence.

Competition as a Discovery Procedure in the P ractice of Accounting

Even though they developed separately as two distinct disciplines, there is a complex relationship between accounting and econom-ics. For example: 1) accounting is a means that makes economic calculation possible; it provides the managers, the investors and lenders (current and potential), and the public in general with in-formation that aids them in assessing the profitability and the ap-propriate use of resources of a business. Although mainly histori-cal, accounting information allows them to form an expectation of future performance and hence it is useful for making economic decisions; 2) economics theorizes on the same ele-ments which ac-counting endeavors to measure; 3) the market for financial report-ing, i.e. for the financial statements and other information dis-closed periodically by companies, which is one of the products of an accounting system, is a market like that of any other good or ser-vice and it is therefore subject to the same economic analysis.
 Given this complex relation-ship, there are several paths an eco-nomic work on accounting could take.
 This author will approach his study first by acknowledging that accounting is an evolving institution, one of spontaneous forma-tion that has not yet reached, and probably will never reach, its fi-nal form. Although its form and practice has been subjected to regulation by dif-ferent governments and governmental agencies for centuries, in particular the market for fi-nancial reports of pub-lic companies, that fact does not change its spontaneous character. The author will also argue that competition is underutilized as a discovery procedure in accounting in general and in the prepara-tion of financial reports in particular. As a consequence of govern-ment intervention, better and less expensive ways of serving the consumers of financial reports have not yet been discovered under the current system.
 As an economist and practicing accountant, this author could be tempted to try to prescribe the form and substance of the finan-cial reports. Although admittedly economics could inform a lot about this, and the author does not deny the importance of those investigations for the marketplace of ideas, one of the main conclu-sions of this essay is that one of the tasks of competition is pre-cisely to discover the characteristics of the goods and services that best serve the consumers and hence, to discover the substance and form of the financial reports that best aid the users for their par-ticular ends.
 After this introduction, in the second part of this essay, the au-thor will summarize the conceptions that Friedrich A. Hayek de-veloped and that are relevant for his analysis. In the third part, an elaboration of accounting as a language is provided. In the fourth part, a brief summary of the history of accounting, since the spon-taneous emergence of the double entry bookkeeping system in me-dieval Europe until our times, will be presented, along with the origin and alleged justifications of government intervention in ac-counting. In the fifth part, the author will enumerate some of the problems presented by such intervention. In the sixth part, to con-clude this essay, a general prediction of a free market in accounting services will be presented.
 Financial reporting is a subset of accounting. Usually the same system fulfills several ends such as filling tax statements (tax ac-counting), tracking and allocation of cost elements to different products or services (cost accounting) and the preparation of fi-nancial reports for external users such as current and potential lenders and investors (financial accounting). In this work, the ar-guments are addressed in general to accounting and in particular to financial reporting. When names such as financial reporting, financial reports, financial accounting, external reporting and oth-ers similar are not explicitly mentioned, the arguments should be understood as applying to accounting in general.

Investor-centric strategies for Indian mutual fund industry: inferring from the behavior of individual investors

This research proposes a roadmap for investor-centric strategies to mutual fund firms in India for expanding their client base consists of current and potential investors. Based on the responses of 800 investors collected under a perception survey, using discriminant function analysis, the study works out the sustainable marketing mix variables that impel innovation in product design and distribution for Indian mutual fund industry. The study suggests the revision of prevailing investor strategies profiling with novel products of fewer risks, better governance and regulations, speedy and efficient grievance redressal and professionalism in investor services can impart market dynamism to mutual fund instruments in Indian context. However, the post-investment behavioral paralytics like disposition effect, cognitive dissonance and herd behavior are much critical in determining the strategic effects.

“New opportunities” and “Strong performance”: Evaluative adjectives in letters to shareholders and potential for pedagogically-downsized specialized corpora

This paper analyzes the use of evaluative adjectives within letters to the shareholders from the top 100 corporations from the 2016 Fortune 500 list. The letter represents an important promotional genre and is published annually to report financial performance while also projecting a vision for future success and continued growth. These influential messages detail and frame institutional vision and strategy as they attempt to maintain relationships with current investors while attracting new ones. This paper adopts Thompson and Hunston's term of evaluation and its definition as “the expression of the speaker or writer's attitude or stance towards, viewpoint on, or feelings about the entities or proposition” (2000, p. 5) as it investigates the semantic classes of evaluative adjectives present in the letters and their function within this ESP genre of interest. While there are many features that reflect and realize evaluation, adjectives are the focus of this inquiry because their overt evaluative quality makes them an accessible item to extract and analyze with basic corpus techniques which could be taught and applied within a classroom setting. This paper reports the use of evaluative adjectives while also displaying that little salient variation exists between a sub-corpus of only 10 letters and the full corpus collection. With little noticeable variation and numerous learning affordances, a pedagogically-downsized specialized corpus can be easily compiled, analyzed, and implemented in EBP and other ESP contexts.

Macro Uncertainty and Currency Premia

We study empirically the relation between currency excess returns and macro uncertainty, measured as forecast dispersion, on a wide set of economic indicators. We find that investment currencies deliver low returns whereas funding currencies offer a hedge when current account uncertainty is unexpectedly high. In contrast, uncertainty over other economic indicators displays a weak relation with the cross-section of currency returns. Moreover, an increase in current account uncertainty is associated with positive (negative) expected excess returns on investment (funding) currencies. This mechanism is consistent with the recent advances in exchange rate theory based on capital flows in imperfect financial markets.

Currency Crowdedness Generated by Global Bond Funds

The focus of this article is the management style of global bond funds and their exposure to currencies. The author finds strong evidence that, in the short-term, global bond funds rely heavily on beta strategies and thus generate crowded trades in currency investing. As a result, global fixed-income funds add to the previously detected crowdedness in pure currency investing. There is empirical indication that the currency beta exposure has increased over the years. <b>TOPICS:</b>Fixed income and structured finance, currency

The Profitability of Using Chinese Yuan in Carry Trade

Carry trade is considered to be the most popular foreign exchange speculation strategy. Carry traders take advantage of interest rate differential to make profit. It has been well documented that this strategy is very rewarding. This paper examines the profitability of using the Chinese yuan as investment currency against the two most popular funding currencies, the Japanese yen and the Swiss franc in carry trade. The results obtained from this paper showed that the use of Chinese yuan produced positive returns.

Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya

The main source of income for Savings and Credit Co-operative Societies in Kenya is from interest received from issue of loans to its members. However the issuance of loans has been faced with a lot of challenges as a result of default on repayment of principal loan and interest when they fall due. In the event that this trend is not checked it could lead to collapse of Savings and Credit Co-operative Societies movement and hence have a negative impact on the financial sector. The main objective of the study was to determine the effect of loan portfolio characteristics on the level of Non-Performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County. The study was conducted on Deposit Taking Savings and Credit Co-operative Societies in Kirinyaga County, Kenya. The researcher used both descriptive and causal research design. The Deposit Taking Savings and Credit Co-operative Societies registered by Savings and Credit Co-operative Societies Regulatory Authority for the period 2011-2014 in Kirinyaga County were six and hence a census was conducted. The researcher used secondary data which was obtained from published Savings and Credit Co-operative Societies Annual Financial Statements and Reports and from Savings and Credit Co-operative Societies Supervision Annual Reports for the period 2011-2014 with data collection checklist being used as the instrument for data collection of the models. The findings of the study would be helpful to current and potential investors, regulatory bodies and would add important information to the existing body of literature. The study recommended that Savings and Credit Co-operative Societies should diversify their loan portfolio by advancing loan of different products, consider adjusting loans repayment period appropriately, should not concentrate much on making decisions on interest rates adjustment, ensure that the ratio of Loan to Shareholder equity is high so that they can have a strong asset base thus win public confidence and should consider advancing loans of different amounts since borrowers vary in their credit worthiness.

FORMING OF MODEL OF FINANCIAL SAFETY OF CORPORATION AS BASIS OF INVESTMENT ATTRACTIVENESS OF REGION

The problem of operational service enterprises in the commercial Bank has got a special urgency. In difficult conditions of a rigid competition, banks are trying to keep the advantages to save in the money markets. Therefore, modern credit institution is ready to offer its actual and potential customers the most favorable and attractive conditions for payment operations, credit operations and operations on attraction in deposits or currency conversion. Relations of credit organisations with clients is very diverse: traditional cash management services, credit services, cash payments, operating the service on plastic cards, operations with currency conversion, Deposit and investment services. Recently become popular operational services of Depository activities. The ability to attract customers makes the commercial banks to actively expand consulting services. From the selected Bank of the provided services depends largely on the success of the enterprise, its profitability and prosperity.