Major Investors Research Articles

The Path of Investor-State Disputes: From Compensation Commissions to Arbitral Institutions

The protection of aliens under international law has progressed from the alien being a ‘clanless’ individual or outlaw completely at the mercy of the local lord, with no entitlement to the peace and protection of the locality in the earliest times to the modern, sophisticated investor–State dispute settlement mechanisms. It was only after the end of the Cold War, when foreign investments grew dramatically and hundreds of major investor–State disputes emerged, that interest in investor–State disputes sharpened. This essay demonstrates that several fundamental changes in the legal landscape have occurred since the constitution of the early compensation commissions of the eighteenth century leading to the modern system of resolution of investor-State disputes. First, a growing number of multinational enterprises operating globally have become major actors on the international public law plain, in areas that in the past were reserved only for States. Second, international organizations and other non-State actors have dramatically strengthened their influence with efficient international arbitration institutions dominating the system of investor-State dispute resolution after the end of the Cold War. The methods for resolving investor-State disputes have evolved primarily along the lines of creating specialised institutionalised forms. While early commissioners relied on their subjective understanding of justice and fairness, today the expectation is applying agreed set of rules (‘‘precept imposed from outside’’ using Hersch Lauterpacht’s language), so that failure to do so may result in annulment of the award. The evolution of various methods of international dispute settlement and the emergence of new methods, such as international investment courts, does not necessarily mean that the older forms of dispute resolution will die like the dinosaurs. They will continue to function, albeit with modifications and will inform the future models of international dispute settlement. Two recently published books represent the most sophisticated attempts to address the complex questions of the evolution of investor–State arbitration from a historical perspective. In The Evolution of International Arbitration: Judicialization, Governance, Legitimacy, Alec Sweet and Florian Grisel (hereinafter Sweet & Grisel) argue that a consolidation of arbitration power has occurred over the past century, and although the structure of authority in international arbitration remains nonhierarchical and pluralist, the regime has gradually acquired the properties of stable legal system. International Investment Law and History is a volume edited by University of Glasgow professor Christian Tams, University of Amsterdam professor Stephan Schill and University of Frankfurt professor Rainer Hofmann that includes contributions from academics discussing a broad variety of issues. Part II of this essay examines the evolution of investor–State dispute settlement mechanisms from compensation commissions dominated by sovereigns to current legal institutions. Part III traces the evolution of approaches to those who resolve the disputes and appointment mechanisms, which changed from political appointees to legal experts. Part IV shows that when it comes to the applicable law, it has evolved from almost unlimited discretion of adjudicators based on fairness and equity to formal external sources of law. Each part of this review essay starts with an overview of the relevant sections of both volumes and ends with my analysis of a large number of historical documents to give a more comprehensive understanding of the historical evolution of international investment law.

Harmful diversification: Evidence from alternative investments

Alternative assets have become as important as equities and fixed income in the portfolios of major investors, and so their diversification properties are also important. However, adding five alternative assets (real estate, commodities, hedge funds, emerging markets and private equity) to equity and bond portfolios is shown to be harmful for US investors. We use 19 portfolio models, in conjunction with dummy variable regression, to demonstrate this harm over the 1997–2015 period. This finding is robust to different estimation periods, risk aversion levels, and the use of two regimes. Harmful diversification into alternatives is not primarily due to transactions costs or non-normality, but to estimation risk. This is larger for alternative assets, particularly during the credit crisis which accounts for the harmful diversification of real estate, private equity and emerging markets. Diversification into commodities, and to a lesser extent hedge funds, remains harmful even when the credit crisis is excluded.

The increasing importance of UK healthcare property as an alternate property sector

PurposeAmongst the alternate property sectors, healthcare property has recently become an important property sector for major investors such as pension funds in the global property landscape; particularly in the UK, and being driven by the ageing population demographics. The purpose of this paper is to assess the significance, risk-adjusted performance and portfolio diversification benefits of UK healthcare property in a UK property and mixed-asset portfolio over 2007–2016. Both healthcare property and listed healthcare property channels are assessed. Drivers and risk factors for the on-going development of the healthcare property sector are also identified.Design/methodology/approachUsing annual total returns, the risk-adjusted performance and portfolio diversification benefits of UK healthcare property over 2007–2016 is assessed. An asset allocation diagram is used to assess the role of both healthcare property channels in a UK property portfolio and in a UK mixed-asset portfolio.FindingsBoth UK healthcare property and listed healthcare property delivered superior risk-adjusted returns compared to UK property, stocks and listed property over 2007–2016, with portfolio diversification benefits in the fuller mixed-asset portfolio context, but not in a narrower property portfolio context. Importantly, this sees both UK healthcare property channels as strongly contributing to the UK property and mixed-asset portfolios across the entire portfolio risk spectrum and validating the property industry perspective of healthcare property being low risk and providing diversification benefits in a mixed-asset portfolio. However, this was not to the loss or substitution of traditional direct property exposure.Practical implicationsHealthcare property is an alternate property sector that has become increasingly important in recent years. The results highlight the important role of both healthcare property channels in a UK property portfolio and in a UK mixed-asset portfolio. The strong risk-adjusted performance of both UK healthcare property compared to UK property, stocks and listed property sees both UK healthcare property channels contributing to the mixed-asset portfolio across the entire portfolio risk spectrum. This is particularly important, as many investors (e.g. pension funds) now see healthcare property as an important property sector in their overall portfolio; particularly with the ageing population dynamics in most countries. The importance of both healthcare property channels sees healthcare property exposure accessible to both small investors and large investors.Originality/valueThis paper is the first published empirical research analysis of the risk-adjusted performance of UK healthcare property, and the role of healthcare property in a UK property portfolio and in a UK mixed-asset portfolio. This research enables empirically validated, more informed and practical property investment decision-making regarding the strategic role of both healthcare property and listed healthcare property in a portfolio.

Czynniki determinujące zmiany na rynku kryptowalut

Motywacja: Obecnie na rynku kryptowalut zachodzą istotne zmiany, których odzwierciedleniem są wahania kapitalizacji całego rynku, jak również poszczególnych kryptowalut. W literaturze przedmiotu brakuje opisu tych przemian z wyodrębnieniem czynników, które je wywołują. Korzyści z likwidacji istniejącej luki poznawczej były głównym motywem wyboru tematyki niniejszego artykułu.
 Cel: Celem artykułu jest wyszczególnienie czynników, które wpływały zarówno pozytywne, jak i negatywne na wartość kapitalizacji rynku kryptowalut, tj. korektę rynku, która miała miejsce pod koniec maja 2017 roku, hossę, którą odnotowano w drugiej połowie listopada 2017 roku oraz kryzys z połowy stycznia 2018 roku.
 Materiały i metody: W celu określenia dynamiki zmian, porównywano kapitalizację, zarówno poszczególnych kryptowalut, jak i całego rynku. Dane odnośnie kapitalizacji rynku oraz cen poszczególnych walut cyfrowych pochodzą z portalu CoinMarketCap. Analizie poddano następujące kryptowaluty: Bitcoin, Ethereum oraz Ripple. Ich wybór wynika z faktu, że zmiany ich ceny mają największe znaczenie dla kapitalizacji całego rynku. Zakres czasowy artykułu obejmuje okres od 20.04.2017 roku do 20.04.2018 roku. Wybór ten podyktowany był wzrostem popularności kryptowalut, ich pojawieniem się w świadomości wielu nowych odbiorców za pośrednictwem mass mediów oraz zwiększeniem intensywności działań rządów mających na celu wprowadzenie kolejnych regulacji rynku.
 Wyniki: Rynek kryptowalut, z uwagi na swoją niezależność od jakiejkolwiek gospodarki narodowej, nie jest uzależniony od nastrojów inwestycyjnych na giełdach poszczególnych państw. Jako główne przyczyny zmian cen wyodrębniono natomiast takie czynniki, jak: regulacje, obostrzenia podatkowe, akceptacja płatności kryptowalutami, opinie ekspertów, intensywność przekazu medialnego oraz indywidualne decyzje większych inwestorów.

Fundamental Analysis of Securities Issuer

Subject/Topic The object of study is the fundamental analysis of the Issuer’s securities. The subject of the research is to study possibility and necessity of introducing new directions and indicators for the fundamental analysis of the securities Issuer, in particular, credit institutions. Goals/objectives. The main purpose of the study is the analysis of new phenomena in the banking sector and identifying new indicators for the adequate analysis and their inclusion in sections of the fundamental analysis of the Issuer and of the investor securities. Methodology. The research methodology is the review of the existing situation in the Russian banking sector and new regulations and standards necessary for the calculation of new indicators of the credit organization as the Issuer and the investor securities. Conclusions and Relevance. Fundamental analysis of Russian credit organizations as issuers, major investors, and players in the organized securities market shall take into account ongoing changes in the external environment and legislation that will allow timely introduce new indicators of banking activities. In the article the basic directions and ways of development of certain new quantitative and qualitative indicators of fundamental analysis and their application in the Russian reality. Special attention is paid to indicators that are significantly changing in the future, 2019, with the introduction of new International financial reporting standard No. 9.

Risk in Government’s Estimate for Toll Road: Based on Investors’ Perspective

The government’s estimate for toll road concession award, as a comparator for investors’ bids, has been criticized by investors, as it does not fully include the proper cost of risks. Thus, there is a need to develop a more equitable estimate that considers the risks, both at the project and at the business/corporate level. The study was mainly supported by qualitative data on the probability of occurrences and impact assessment of risks, acquired through interviews with major investors. Probability Impact Matrices were used to identify risks categorized as “high risks.” Findings have indicated that the high and dominant risks are: i) Route/traffic management (lower traffic volume due to changing routes); ii) Overloading (poorly imposing the limitations of heavy vehicles); and iii) Inadequate/inaccurate data in feasibility study documents. Recommendation on the mitigation plan for these risks has been corroborated by both parties, the government, and the investors. Parts of the risk are proposed to be incorporated into the government’s estimate, while other risks should be adequately addressed in specific contract clauses for Indonesia’s PPP scheme.

St. Louis & Empire: 250 Years of Imperial Quest & Urban Crisis by Henry W. Berger

Reviewed by: St. Louis & Empire: 250 Years of Imperial Quest & Urban Crisis by Henry W. Berger John Reda Henry W. Berger, St. Louis & Empire: 250 Years of Imperial Quest & Urban Crisis. Carbondale: Southern Illinois University Press, 2015. 353 pp. $39.50. With a book that either defies or transcends categorization, Henry W. Berger gives us a history of St. Louis from the perspective of its imperial aspirations as expressed through two hundred and fifty years of commercial initiatives. In "shifting and relocating the focus of foreign relations history from the traditional confines of nation-state formation," Berger does an admirable job of using St. Louis to demonstrate the domestic foundations [End Page 58] of foreign policy while also evaluating the effect of international relations on a particular metropolitan area (1). He does so in service to two broad arguments: the first being that a succession of St. Louis's business and political elites possessed enduring confidence that their imperial endeavors would be of benefit not only to themselves but to the city and its environs; and the second being that those initiatives ultimately constituted a benign neglect of domestic affairs that resulted in great harm to the city and its people. In the final analysis, "Empire and community were profoundly discordant" (3). Moving quickly through the early decades of St. Louis history as an eighteenth- and early nineteenth-century fur trade entrepôt and gateway to the West, Berger chooses Thomas Hart Benton as the first of several St. Louis elites whose careers he sketches from an imperial perspective. In the 1820s–1830s Benton rode a wave of populist support for efforts to carry the US flag into the trans-Mississippi West before crashing in the 1840s on the rocks of sectional differences involving the expansion of slavery in lands acquired following the Mexican-American War. Benton's dream of a transcontinental railroad moving west from St. Louis would never be realized and the east-west imperial ambitions of St. Louis's leadership would be reoriented to a north-south axis following the Civil War. During the 1870s increased agricultural output and falling domestic prices drove a push by St. Louis business interests to open markets to the south—to Mexico and the Caribbean—as a chance to return to prosperity. Henry Clay Pierce became a key figure in trade between St. Louis and Mexico and eventually became a major investor in Mexican railroads. When Mexico entered a protracted Revolutionary period Pierce found himself, along with other American imperialists, in the middle of a complex situation that culminated in the nationalizing of many Mexican businesses—at great loss to US investors. Berger moves into the twentieth century and traces the opportunities presented for St. Louis elites to hitch a ride on American imperial initiatives surrounding the opening of the Panama Canal and followed closely by World War I. Shoes (Brown Shoe Company) and beer (Anheuser-Busch) produced in the St. Louis metropolitan area were soon being sold around the world, but with particular success in the newly opened China market thanks to the leadership of entrepreneurs such as Leonidas Dyer and Arthur Bostwick. In World War I pharmaceutical companies such as the Mallinckrodt Chemical Works and the Monsanto Chemical Company make great [End Page 59] inroads in markets stretching from Europe to Asia while St. Louis politician David R. Francis became the United States ambassador to Russia—just in time for the Russian Revolution. St. Louis was particularly hard hit by the Great Depression but by the early 1940s St. Louis business and political elites such as Charles J. Hardy, Arthur Holly Compton, and Stuart Symington parlayed alliances and relationships with the Roosevelt administration into lucrative war supply contracts that made St. Louis a major player in the emerging military-industrial-academic complex. Berger explains, however, how the success of such industrial giants such as the McDonnell Aircraft Corporation, "postponed and disguised the deterioration of the industrial central core of St. Louis" (199). The city's population peaked at about 850,000 in 1950 but by then was already a shrinking portion of the wider metropolitan area. In the second half of the twentieth century corporate giants such as Anheuser...

The Implementation of the Comfortable Investment Environment on the Basis of the Effectiveness Assessment of the Corporation

Abstract The issues of formation of corporate control and management have always been at the center of studies by both theorists and representatives of the real sector of economy, which is due to the importance of the corporate sector for the national economy. But on the other hand, the constant interest in the topic is fueled by the contradictions and dualism in theoretical works. The article is proposed as a review paper devoted to the research problems of the efficiency of the corporation's capital concentration, based on the discussion of these problems, the authors plan to develop a universal system of criterion indicators for a comprehensive assessment of the corporation's development results. Since it is impossible to separate the economic and institutional aspects of concentration, the interests of owners and investors in modern conditions, the formation of a universal evaluation system will make comparable the efficiency assessment of corporations of different scales, form of ownership, ownership structure and will answer one of the most important questions about the existence of an objective limit of expediency of further capital concentration. It is new that as the main result of the criterion for managing the capital concentration, the authors suggest harmonization of relations between investors, and in this connection an attempt is made to identify and analyze the contradictions arising between the interests of minority and majority investors in connection with the use of financial resources of corporations. The authors also hope to develop recommendations for the efficiency assessment of capital concentration from the point of view of the minority investor and use the available methods, as well as suggest a number of measures to smooth out the revealed contradictions. The most significant result of the implementation of this method should be an increase in the investment attractiveness of corporations as a result of the formation of the more comfortable investment environment.

Harmful Diversification: Evidence from Alternative Investments

Alternative assets have become as important as equities and fixed income in the portfolios of major investors, and so their diversification properties are also important. However, adding five alternative assets (real estate, commodities, hedge funds, emerging markets and private equity) to equity and bond portfolios is shown to be harmful for US investors. We use 19 portfolio models, in conjunction with dummy variable regression, to demonstrate this harm over the 1997-2015 period. This finding is robust to different estimation periods, risk aversion levels, and the use of two regimes. Harmful diversification into alternatives is not primarily due to transactions costs or non-normality, but to estimation risk. This is larger for alternative assets, particularly during the credit crisis which accounts for the harmful diversification of real estate, private equity and emerging markets. Diversification into commodities, and to a lesser extent hedge funds, remains harmful even when the credit crisis is excluded.

SPAIN AND LATIN AMERICA: IMPERIAL TRADITION AND CONTEMPORANEITY

The Spanish version of the evolution of the Empire differed from “classic” British: here there was a prolonged rupture of economic and political ties with the mother country. But now Spain and Latin American countries are developing cooperation in several directions. Spain is one of the major foreign investors for this region.

Challenges in financing public sector low-carbon initiatives: lessons from private finance for a school district in British Columbia, Canada

ABSTRACTGovernments are major investors in climate change mitigation, but aversion to public indebtedness has led to reliance on private finance to deliver public assets. Compounding this challenge, financing through Energy Service Contracts is ruled out by accounting rules. With public and traditional private funding avenues closed, government departments have sought contracts that do not disclose the full cost of borrowing, such as the Public–Private Partnership (PPP) described in this case study. We unpack the utility contract filed with the provincial regulator to show that circumventing budgetary constraints cost the Delta School Board (DSB) 8.75% per annum on borrowed private funds while public finance would have cost 4%pa. All levels of the public sector are keen to play their role in climate mitigation. Climate policy is about not passing our burden of unbridled fossil fuel use and greenhouse gas emissions to future generations. If we do not exempt public sector capital investments for decarbonization from deficit regulations, we risk passing an unnecessary economic burden to future generations.Key policy insightsTransition to a low-carbon economy requires public sector investments that exceed budget deficit regulations and political aversion in many jurisdictions;Private–Public Partnerships are currently viewed as the solution to this self-imposed fiscal constraint;PPPs without clear performance targets or contractual templates will expose less experienced public sector investors to high costs and emissions above expectations.

Vulnerable yet relevant: the two dimensions of climate-related financial disclosure

Market-based solutions to climate change are widely advocated by financial actors and policy makers in order to foster a smooth transition to a low-carbon economy. A first important limiting factor to this approach is widely recognized to be the imperfect information on investors’ portfolios’ exposure to climate-related risks. While better disclosure of climate-relevant information is often recommended as a remedy, the current lack of concise and comparable measures of portfolios’ exposure to climate risk fails to provide major investors with the full incentives to reallocate their portfolios. A second limiting factor arises from the fact that in the context of the low-carbon transition, it is not clear how to measure the market share of participants because many economic sectors produce greenhouse gases (GHG) emissions or induce them along the supply chain. The lack of common and concise measures of the relevant market share hampers the ability of policy makers to ensure fair competition policies and the ability of major investors to assess the effects of their own and their competitors’ portfolio reallocation. To address these two gaps, we propose two novel and complementary indices: (i) the “GHG exposure,” capturing the exposure of single investors’ portfolios to climate transition risks, and (ii) “GHG holding,” capturing the market share of each financial actor weighted by its contribution to GHG emissions. We illustrate the use of the indices on a dataset of portfolios of equity holdings and loans in the Euro-Area, and we discuss the policy implications for the low-carbon transition.

Chinese land grabs in Brazil? Sinophobia and foreign investments in Brazilian soybean agribusiness

ABSTRACTChinese companies were singled out among major investors seeking farmland in Brazil, but my own and other emerging research reveals that China still lags far behind investors from the Global North, and there is evidence that the differences between them are far less significant than was presumed. Why then have Chinese agribusinesses been singled out, even as the size and amount of their investments in Brazil – particularly when compared with those form the US, EU, Argentina, and Japan – are in fact relatively small? Who are the actors in Brazil that have contributed to this apparent sinophobia, and who has challenged it? Who benefits? And how have Chinese investments themselves been affected by this disproportionate negative attention? I argue that challenges to national and food sovereignty arise, ultimately, from the transnational soybean production system regardless of the national character of any particular companies or their cross-border relations.

Comment on “Local Government Debt and Firm Leverage: Evidence from China”

There has been a great deal of discussion of China's four trillion yuan stimulus policy and the side effects it has caused: overcapacity, rising local government debt, and non-performing loans, even air pollution. What is less is clear are the mechanisms through which the stimulus policy has affected different types of firms, state-owned enterprises (SOEs) and non-state-owned enterprises, for example. Liang et al. (2017) find that local government debt in China has increased rapidly after the global financial crisis, and, at the same time, the leverage level of SOEs has climbed, while that of the non-SOEs has declined. They argue that this implies a correlation between local government debt and firm leverage. Because the local governments become major investors and their investments are mainly financed by borrowing in the financial markets, the local government debt has “crowed out” private lending, and, at the same time, “crowded in” SOE lending, thus causing a deterioration in the credit misallocation in China. According to standard macroeconomic theory, when a government increases borrowing to finance public spending, it will drive up interest rates. These higher interest rates are likely to discourage private sector lending and investment. Liang et al. provide a broader view of the “crowding out” effect. They identify two channels through which local government debt may affect firm level borrowing activities: one is the traditional financing cost channel through the credit market; and the other is a reallocation channel through government intervention. Liang et al. study these two channels and find that the second channel is more important. China has not fully liberalized her financial markets and interest rates are still not determined by market clearing. The government has close ties with the financial market and can influence the borrowing decision of market players in a very profound way. Liang et al. have not opened this “black box”, but their study can shed some light on what is happening in China and may stimulate more studies in this area. Liang et al.’s basic conclusions are convincing, but the real story may be more complicated than they suggest. First, the definitions of SOEs and non-SOEs are not always white and black. The Chinese government has a recent policy of encouraging the so-called “mixed economy”. What happened was mainly SOE investment in non-SOEs, and consequently, some of the non-SOEs are no longer classified as non-SOEs. This may affect the growth rate of SOE investment as well as non-SOE investment. Liang et al. also mention that large SOEs and local SOEs are quite different in many ways. Large SOEs can borrow nationally and are not constrained by local credit markets, while local SOEs are more dependent on local banks. But it is also true that at the local level, the behavior of SOEs are often quite similar to non-SOEs, because some of these local SOEs are competing with non-SOEs both in domestic and international markets, unlike the national SOEs which are often in monopolistic industries. Second, Liang et al. use Chengtou bonds as a proxy for local government debt. It is true that recently, the market for Chengtou bonds has developed rapidly, but the bulk of local government debts are in fact borrowings from banks. These local government borrowings are difficult to trace, and more prone to corruption and misallocation. The Chinese government has introduced new policies regulating Chengtou bonds, so the correlation of Chengtou bonds with overall local debt may have weakened. Third, we should be very careful in interpreting the policy implications of Liang et al.’s study. The rising SOEs leverage ratio and declining non-SOEs ratio clearly show that SOEs are less efficient, but there are also good reasons to believe that public investment may not necessarily “crowd out” private investment, especially after a financial tsunami. Maybe what matters is the type of public investment, and the way local governments chooses to finance their public investment. Even if local governments had not increased their debt levels, private investment would probably have remained sluggish, because of pessimistic market sentiment. If we agree that the recent decline of private investment is mainly caused by the recession, then policy makers should continue to use proactive fiscal policy, increase public investment, and, at the same time, find other ways to encourage private investment. For example, the government can liberalize some of the heavily regulated and tightly controlled service sectors.

Myopic PPPs: Risk allocation and hidden liabilities for taxpayers and users

Drawing on evidence from three case studies, we show how the State's Financial Liability has worked in assigning risk in large PPP contracts in Spain. Project failure and the concessionaires' bankruptcy have resulted in the government having to assume heavy financial obligations, which have ultimately been absorbed by taxpayers and users. In contrast, Spain's leading construction companies, which were also major investors in the concessionaires, have been able to minimize their risk. Myopic PPPs have been entered into based on the transference of liabilities to taxpayers and users, and the, consequent, minimization of risks for the main private investors.

The securitization of residential rental revenue streams in Europe

PurposeThe purpose of this paper is to analyze the securitization of rental streams, a new investment and finance product introduced in the USA in 2013 that enables fundraising from large residential portfolios owned by major investment funds and investment banking. The securities are made up of non-performance loans as well as real estate portfolios of financial entities.Design/methodology/approachAn academic analysis of the European securitization market is performed, as well as a broad overview of the state of the art of the rental housing market and investment property market. Moreover, a market study of Real Estate Owned (hereinafter, REOs) and Real Estate Debts is carried out to determine both the present framework and future trends. Various financial entities and real estate management companies are examined through interviews and data collection to assess the reality of distressed assets and residential portfolios owned by major investors. It introduced the Broker’s Price Opinion concept, de loan-to-value concept and the London Interbank Offered Rate.FindingsREO-to-rental securitization is a step forward toward the democratization of finance through the globalization of the residential market, improving risk sharing for major and retail investors. The securitization of rental streams in Europe has not taken off, despite several issuances in the USA since 2013 with significant success where first tranches obtained a credit qualification of triple-A from the majority of the main rating agencies.Originality/valueAt the end of 2013, a global investment firm launched an innovative finance and investment vehicle that securitized the cash flows originating from leased residential properties. That issue resulted in considerable success and in the development of a new alternative and innovative financing source for real estate activity. Taking into account that housing is a primary need of our society, there is a strong motivation for improving the residential market, and thus, REO-to-rental securitization could help take a step forward in making the housing market more efficient.

Investment Commonality across Insurance Companies: Fire Sale Risk and Corporate Yield Spreads

Insurance companies often follow highly correlated investment strategies. As major investors in corporate bonds, their investment commonalities subject investors to fire-sale risk when regulatory restrictions prompt widespread divestment of a bond following a rating downgrade. Reflective of fire-sale risk, clustering of insurance companies in a bond has significant explanatory power for yield spreads, controlling for liquidity, credit risk and other factors. The effect of fire-sale risk on bond yield spreads is more evident for bonds held to a greater extent by capital-constrained insurance companies, those with ratings closer to NAIC risk-categories with larger capital requirements, and during the financial crisis.

Perceptions and practices of investment: China’s hydropower investments in Vietnam and Myanmar

ABSTRACTChina is a major investor in hydropower in mainland Southeast Asia. These investments have triggered substantial public concern, with anti-Chinese attitudes intensifying across the region. Yet, Chinese involvement varies across the region. We examine the “practices and perceptions” of Chinese hydropower investment in Vietnam and Myanmar, attending to the framing of dominant explanations of these investments. We caution against reinforcing xenophobic narratives about China, and urge scholars to consider what these narratives obscure. Our concern is that exceptionalising the role of Chinese investors overlooks foundational issues regarding local participation and environmental governance.

Public Attitudes toward an Emerging China in Latin America

In the past two decades, China has substantially increased its economic presence in Latin America. The impressive rate of economic growth in China has resulted in a voracious appetite for Latin American commodities and energy sources. China has also become a major investor in the region, and has loaned billions of dollars to Latin American countries. This paper evaluates how aware Latin American citizens are of this increased economic presence of China, and also studies citizens’ attitudes toward the rising influence of China in Latin America. Public attitudes toward the Chinese economic and political model, and evaluations of the Chinese popular culture are also presented and discussed. The evidence suggests that the image of China is improving in Latin America as a result of its new economic role in the region. However, Chinese soft power faces several limitations in the region. The Chinese political and economic models, and the Chinese popular culture are still not very attractive in Latin America.

Vulnerable Yet Relevant: The Two Dimensions of Climate-Related Financial Disclosure

Market-based solutions to climate change are widely advocated by financial actors and policy-makers in order to foster a smooth transition to a low-carbon economy. A first important limiting factor to this approach is widely recognized to be the imperfect information on investors’ portfolios’ exposure to climate related risks. While better disclosure of climate-relevant information is often recommended as a remedy, the current lack of concise and comparable measures of portfolios’ exposure to climate risk fails to provide major investors with the full incentives to reallocate their portfolio. A second limiting factor arises from the fact that in the context of low-carbon transition, it is not clear how to measure the market share of participants because many economic sectors produce greenhouse gases (GHG) emissions or induce them along the supply chain. The lack of common and concise measures of the relevant market share hampers the ability of policy makers to ensure fair competition policies and the ability of major investors to assess the effects of their own and their competitors’ portfolio reallocation. To address these two gaps, we propose two novel and complementary indices: (i) the “GHG exposure”, capturing the exposure of single investors’ portfolios to climate transition risks; and (ii) “GHG holding”, capturing the market share of each financial actor weighted by its contribution to GHG emissions. We illustrate the use of the indices on a dataset of portfolios of equity holdings and loans in the Euro-Area, and we discuss the policy implications for the low-carbon transition.