The movie we worked on is “Let’s make money” which was made in 2008. The movie analyses the various financial markets in various part of the world especially the developing countries. The movie setting cut across from Asia to Europe. At the beginning, the director films how an Mark Mobius, executive chairman of Templeton Asset Company maintains his office in Singapore as foreign companies pay low taxes (sometimes even no tax) which is how Singapore attracts investors to set up their companies here for talent pool in Singapore and developed infrastructure. Various emerging markets problems that were caused by their financial markets were mentioned.
Another movie review: Eagle Eye
The movie shows how the African suffers from the commodity price volatility changes to the Africa commodity market. The Africans cried in movie claiming that they are relatively poor even if they had worked hard to sell the cotton to the America. The land that produces the cotton is also depleting resulting in the decrease of cotton volume and lesser productions to sell. The result is due to the continuously of harvesting throughout the years in Africa for cotton. India facing other problems such as low earnings to support their living as their government does not put the social welfare in concern as compare to investors. The taxes they collected are given to the investors as grants. Liberalisation and privatization by the US were further elaborated by the several economists, including Hermann Scheer, member of German Bundestag. Several crises such as the crisis back in 1970 that the Washington has faced and the recent Spanish property bubble were explained by the financial analysts which the US have done to overcome the crisis where they do not have enough gold and created the market into a dollar market. The Spanish property bubble began as the share price of the dominant property firm, Astroc fell, causing many firms failure as well. Many vacant properties were built as capital investment though it plunged in 2008 and no regulation has been reprimand which several consequences of the property bubble were mentioned. We also can get to know the scary truth from Mr. John Perkins who is a former economic hit man further explains why the World Bank had arrange loans for the developing country and behind this transaction; there is a main purpose which is hides behind. He claims that he had helped US companies to obtain natural resources relatively cheap from the World Bank. World Bank will choose projects that benefit a few rich and powerful people in the country so that they will agree to the deal but not necessary benefit the general population. And when the population is unable to repay the loan, the World Bank will get them to agree to deliver their natural resources to repay their loans. This method usually works, but there are also world leaders do not want to accept huge loans such as Omar Torrijos of Panama which the US will use force to make them accept the deal by sending in assassins and troops.
The 3 verbatim would be “”the best time to buy is when there’s blood on the street” and I add to that saying “even if it’s your own” because usually there’s war, revolution, political problems, economic problems, prices of stock goes down and those people at bought at the bottom had made a lot of money.”, “The bank and our money is already a part of the cycle of the global money market. Increasing profits, sinking wages” and “Profits for a few individuals, Losses for everybody”
There are plenty of moral lesson to be learnt from this movie since it shows us quite a number of problems that have been caused from the financial market. We came to realise that people or even countries should never be exploited for the profit of certain individuals or even other countries. We learn the morale lesson that borrowing of money would makes one poorer but careful investment could makes one wealthy. We also learn that the purpose of the financial market is not to make us wealthy but it is to make us wiser.
We will rate the movie 7/10 because the movie shows the realistic of globalisation and the people affected by it. In our daily life, we are unaware of the impact that financial markets have induce into our social welfare. From this movie, investors and economists open up to us about the social welfare of certain countries that have been greatly affected by various markets and investment and it also explain to us how certain markets in various countries work as different countries have different operating style. Reason why we did not give 10/10 is because there are certain scenes in the movie that we are very uncertain in believing it and several things are not clearly explain and at the same time, certain portions of the explanation are not easy to be understand by general people as they used lots of business terms that some terms can only be understand by people who work in the business industries or financial market.
Asian Dollar Market
First the movie takes place in Singapore, and then move on to India financial markets, then to USA and many other countries. Now we will look at Singapore as an Asian Dollar market in the report. Singapore is successful in attracting foreign investors because Singapore government promotes the Asian Dollar market as a favourable geographic location time zone which also allows Singapore to trade with Hong Kong, Tokyo and etc. With Singapore high degree of political, economic and social stability and a sophisticated and sound banking system made Singapore an international financial market.
In 1970, Singapore government made a bold decision by introducing the market. Regulations were made in 1972, ACUs were free from obligation of the statutory liquidity requirements and 10% tax rate was granted on their income and obtained by a concession. And in 1983, all Asian Currency Unit (ACU) income derived from the syndicated offshore loans were exempted from tax and tax concessions were offered to attract professional fund managers to base their operations in Singapore. Also, offshore investment income of non-resident funds managed by ACUs was exempted from Singapore tax and the fund managers’ income is taxed at the concessionary 10% rate. The regulations made by the ADM are that bank operations in Singapore had their transaction records in Domestic Banking Unit and Asian Currency Unit. Asian Currency Units are primarily funded from interbank market while Domestic Banking Unit is retail deposits. Banks which want to operate Asian Currency Unit will need approval from MAS and this arrangement was designed in 1970s to promote foreign currency business in the Asian Dollar market and thus developed Singapore as a regional financial hub. Companies sold their securities because it is easily converted to cash. Overtime their cash inflows increased due to interest earned from the matured bonds.
However in 2008 economy crisis bought by the US which happens after the movie has shown, the Asian Dollar Market slowed down while trading in the foreign exchange market fell sharply. These changes plus the decline in fund management and stock broking activities led to the decline in financial services in Singapore.1 Singapore did not make any new regulations after the financial crisis happened after 2008. Instead, Singapore would only make after the global economic recovery. Mr Yoshihiro, the chairperson of the Finance and Economic Working group said this: “Financial regulation might kill the weak, fragile economic recovery. That’s what we are very afraid of.” 2 Thus, Singapore is scared that the economy would weaken if Singapore would to make anymore new regulations to the financial market. New regulations would probably make in the year 2011. 3
We think that the movie painted a realistic picture of how Singapore had attracted foreign investors. After the economic crisis, the fall of the US currency had weakened Singapore Asian dollar market since. However the rising of emerging market such as China and India made Singapore a favourable location for trading and investment for its favourable time zone and near location.
“Overall, financial developments in Singapore had only minor impact on the Asian Dollar Market.”4 show that the Asian dollar market had only little impact on Singapore financial market.
Emerging markets describe the process of activity of developing countries and many financial markets were involved with the emerging markets. In this market, their politic works according to the nation’s economic. The character in the movie acted as a role of a middleman in the emerging market to help investors invest their money in developing countries. Investors believe in investing money in these countries could help them make more money as emerging markets grow faster than developed markets and these markets are cheaper than developed markets. The factors they look into for investment are social and political system, openness, product markets, labour markets and capital markets. These factors are used to analyse before deciding whether a company should invest their money.
India is one of the emerging markets involved in several financial markets such as commodity, foreign exchange market and capital market. Capital market is important for India, where India, East India Company used to the dominance player in the Asia capital market providing money for long period when there’s a raise of short term funds in other markets. Its capital market is growing as more investor is investing in their market. India is getting more advanced compare to other emerging markets, because their capital market is recognized for being organized with their securities exchange and transactions.
Changes occur in capital market as more new regulations have been introduced due to the failure of the Lehman Brothers during September 2008, after the movie had been made. Various countries have their country authority to implement the rules. In the India capital market, the Securities and Exchange Board of India implement the regulations recently such as allow pricing the Qualified Institutional Placement (QIP) issues at two weeks closing prices instead of six months as they realise that many foreign investors invest their money via the QIP route.
In a capital market, it involves 3 types of players: investors, issuers and intermediaries. The players come from bankers, brokers, insurance executives to households. Household remains as the biggest category of players in the capital market and these individual investors invest for their different benefits such as saving for retirement or education for future children. Bankers and brokers being the intermediaries for investors, HSBC is one of the players as banker in capital market. It could be a company such as JR Morgan too. There are always changes in the players since the shares goes up and down, new players enter almost every day and we have some old players that exit the market everyday as well. Furthermore, due to the recent reform in capital market, this will attract more foreign players investing into insurance market where there will be an increase of insurance executives participating in the capital market.
Africa is involved in the commodity market in the movie. Since commodities are goods that are on demand, naturally it will be affected at a certain point of time because of some factors such as change in consumers’ taste causes a decline in demand, movement of securities and etc. Cotton price slowly decline in the mid 1990s, the price of cotton falls significantly by 54%. It fell drastically in 1997; the drastic fall affected many families’ expenses and their child’s education.
One major factor is the overproduction due to the deregulation of US cotton markets.
In 1995, the cotton fell as US removed the supply management program, which increase the economic activity production level and decrease in global prices. Even after removing this program, United State (US) did not introduce any program in helping to balance the supply and demand. In fact, they increase the subsidies for the farmers where these subsidies are pay directly to the farmers for compensation. The subsidies pressurize farmers to continue over-producing so that, despite their high cost of cotton production leading to a massive expansion in production levels, which reduced global prices. Rules are imposed by the World Trade Organization in the commodity market in order to help both producer and exporters in business, and aid the government in strengthening social affairs by meeting their objectives. However in the commodity contract, US stated agreement that goes against the WTO objectives such as to prevent higher standards of living in Africa as this will affect US in getting goods at lower price and from becoming the largest exporter.
Africa’s commodity market, liberalization and protectionism are practiced by the US. Free trade allows traders to carry out activity without Africa’s government interference. The US government intervene the market by the restrictions of supply and adjustments of price. These include subsidies, tariffs which had mentioned earlier in which they take these interventions to benefit themselves. Often, these interventions comes together with protectionism, where doctrine states the policies to restrain the trade between the states using methods like imposing tariffs on imported goods.
The regulators are currently trying to put up new regulations to tighten the commodities regulation as they discovered many traders actually uses the unregulated Over-The-Counter trading method, especially traders in energy commodity market that specialize in natural gases, oil and etc. Thus since the movie was made till now, new regulations have not been imposed but regulators are still looking into it.
The movie paints a realistic picture of how the Africans suffer from the commodity market crisis. Even though with the aid of the EU (European Union) to reduce the impact of Africans crisis, they still suffered problems where low price of cotton is unable to support them properly such as living expenses.