The objective of this project is to analyze the financial system and economic situation of a foreign country in order to be able to make proper investment decisions. Choose a country apart from the U.S. and Turkey (and international students should choose country other than their home countries). Collect all relevant financial and economic information on the country. All groups will have to turn in written reports on their analysis.
Think of yourself as a financial adviser working for an international mutual fund trying to get institutional investors and/or wealthy money managers to invest in foreign countries or the CFO of a multinational firm that needs to make investment abroad. (In other words you need to consider both foreign direct investment opportunities and portfolio investment opportunities.) You need to consider all the advantages and disadvantages to investing in this country. You should remember that your audience is very likely to have no prior knowledge of the economic or political situations in the country, but have a good understanding of the workings of international financial markets. The information you include should be comprehensive in terms of risks included, potential of the capital markets, historical developments, certain legal or administrative hurdles unique to that country. Be sure to pay attention to some of the information below. Some or all of these might be present in one country. You do not need to include everything (these are definitely NOT the subtitles for your papers), these are just some major points to consider in researching your countries.
· Preliminary Information: Location, geography, size, population, currency…etc
· Strength of the economy: GDP, GDP per capita, inflation, exchange rate, trade deficits, budget deficits….etc, any trends in these variables; is this economy improving or deteriorating? Why? Any major economic of financial crises recently?
· Financial markets: Are there strong financial markets in the country? Existence, depth and strength of capital markets; the financial structure in the country: bank-based or capital markets based; any existence or importance of black markets…etc Anything that might be of unique importance to foreign investors in that country.
· Government involvement in financial markets and the economy in general: Major foreign debt; IMF programs; inflation targeting….etc. Are there any state owned enterprises, privatization programs? Any government intervention in foreign exchange markets, money markets…etc Is the central bank or monetary economy independent?
· Any international trade treaties or groups affecting the economy of the country? (e.g. European Union, NAFTA, IMF)
· Some economic history may be necessary to show your audience how developed the financial systems in the country are, what the major economic milestones have been. (e.g for European countries European Union created major changes, for Argentina, Chile, and other South American Countries IMF programs and reforms are important, for Eastern European Countries period after the breakdown of the Berlin wall….etc)
· Assess the country risks and political risks involved: Military coups, political instability, financial, economic, currency crises, and how they have been managed
· Assess the currency and translation risks
Finally come up with an investment advice: Would you recommend investments in this country? Why or Why not? Analyze portfolio investments and FDI separately, would you recommend one or not the other? What should the investor be aware of when they make the investment decisions? Do you see any potential problems or improvements in the country’s future?
The organization of the paper should be like an analysis report. Make sure it is well-organized, clear and to-the point. Do not write separate sections and attach them together. Make sure there is a clear flow to your paper. The best approach is to gather all the information, decide on your investment advice, and the write the other sections. Papers should include an executive summary, table of contents, clear definition of investment potentials and risks along with the body of the analysis. Make sure you properly cite all the resources you use. The rest of the organization is at the discretion of the groups, but remember that the presentation of your work is a reflection of the importance you put on that work.
Some potential resources:
· Economist Intelligence Unit Country Reports
· CIA’s world fact book: http://www.cia.gov/cia/publications/factbook/index.html
· OECD: www.sourceoecd.org
· The Central Banks and monetary authorities of your respective countries
· The statistical institute of the country
the theme is Korea
Sample/Simple Outline of International Finance Project
– Overview of the Country
1 – Overview of Financial and Economic situation
2- – Overview of political, economical or other significant risks
3- – Analysis of the country as a potential location for FDI. Why? Why not? Potential risks? Other important factors to note.
4- – Analysis of the country as a potential for portfolio investment. Why? Why not? Potential risks? Other important factors to note.
5- – Conclusion
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Other notes:
make sure you cite all outside sources you use. Citation methodology (APA/MLA) not important, but making sure to cite other people’s work is very important.
Make sure you back up your analysis with research.
I have done the part 1 and 2, so just do part 3 4 5
