finc 340 / ints 307 emerging financial markets
Spring
I. GENERAL INFORMATION
Instructor: Marshall Langer
Office hours: By appointment (convenient times: TR 1:00-2:30pm and after 5:00pm)
Telephone: +39 347.1763096
Email: MLanger@Earthlink.net
Background: Wall Street; corporate management, overseas assignments. Wharton MBA.
II. COURSE INFORMATION
1. Course Description. In this course students learn to analyze business potential in emerging markets. In that pursuit students study various factors driving emerging market economies. Political, economic, social, and legal frameworks, among others, are studied and discussed. Emphasis is on the impact of the financial sector on economic development, performance, and crises. Additional topics include financial intermediation, privatization, portfolio management, and globalization of labor markets. Lecture, reading, and case study probe geopolitical, macroeconomic, and market trends, so that students learn to forecast the effect and understand the global impact of large scale forces.- Learn tools to draft memoranda, insightfully read reports, and present findings attractively.
- Trade effectively (evaluate opportunity and execute transactions) in emerging market securities.
- Hone sensitivity skills required to succeed in multinational environments.
III. LEARNING ACTIVITIES
1. Active student participation in seminar-style class lecture. Classes are highly interactive. Instructor prompts students for response to questions posed and solicits his/her thoughts on issues discussed. Format is probing and direct. Additionally, instructor provides concrete, real-world examples to illustrate concepts. Lecture format reinforces by example appropriate methods for asking questions, gaining relevant insights, and making appropriate recommendation. (Contributes to LO A, B, D)
2. In class presentation and discussion of readings (by professor and students). Textbook and other assigned readings (assigned according to the schedule in section VIII of this syllabus) present relevant topics, which are covered more depthfully in class lecture. In class discussion of readings, instructor highlights most relevant reading topics, showing by example how to present data in a stimulating way, consistent with achieving course objectives. (Contributes to LO A, B, C)
3. Case Study and/or Article Presentation. Case studies and articles are used to further illustrate real-world examples of subject topics. For all assigned cases/articles, students should be prepared to answer questions about the case/article and be able to illustrate its subtler aspects. For select cases/articles an individual presentation is required. In class discussion of case studies/articles serves to highlight analytical methods, indicating specifically, ways to discern the most relevant focal points. (Contributes to LO A, B, C)
4. Term Project. Develop emerging market entry strategy for home country based product or service or source and explain a potentially good (risk adjusted) emerging market investment. (Contributes to LO A, B, C, D)
IV. ASSESSMENT
40% Final exam
5% Case study and/or article assignment/presentation
15% Quizzes and class participation
5% Term project
1. Exams. Exams will be composed of essay questions that test your ability to apply concepts discussed through the exam date. (Measures LO A, B, C)
2. Case/Article Analyses and Presentation. All cases/articles should be prepared for class. For select cases/articles students will be selected to make a presentation. Your grade for the presentation will reflect much new insight you teach the class (rather than repeat the facts). Use section VII of this syllabus as a further guide for all written submissions. (Measures LO A, B, C, D)
3. Quizzes. Short, in-class quizzes will test your comprehension of course materials to date. (Measures LO A, B, C)
4. Class Participation. You will be graded on the quality of, and demonstrated insight of, your in-class comments, including comments related to answers to assigned problems. (Measures LO A, B, C, D)
5. Term project. Each student will be required to make a short presentation on his/her term project. (Measures LO A, B, C, D)
6. Attendance. Attendance is mandatory, however a student may miss up to 3 classes without penalty or explanation. Absences of more than 3 must be approved by the instructor. More than 3 unapproved absences will result in a reduction of your course grade.
7. Grading Scale.
A 93-100 A- 90-92 B+ 87-89 B 83-86 B- 80-82 C+ 77-79 | C 73-76 C- 70-72 D+ 67-69 D 60-66 F below 60 |
V. REQUIRED COURSE MATERIALS
1. Reading material:
Code | Title |
The following text must be purchased by students: | |
EM | Hooke, Emerging Markets, A Practical Guide, Wiley, 2001 |
Excerpts from the following texts will be distributed by the professor (the readings will be posted on the course website), and are assigned per section IX of the syllabus: | |
KR | Krugman, Obstfeld, International Economics: Theory and Policy, Seventh Edition, Pearson, 2006 |
IF | Madura, International Financial Management, 7th Edition, Thomson South-Western, 2003
|
All other handouts, per section IX, will be provided by the instructor (posted on the course website).
2. Course website:
https://www.mydrive.ch/en (username and password are both efmsp09)
3. Course videos (to be shown in class) are available at:
http://www.pbs.org/wgbh/commandingheights/shared/minitextlo/vid_jeffreysachs.html
VI. SUGGESTED OPTIONAL READINGS
1. Books.
- Peter J. Montiel, Macroeconomics in Emerging Markets, Cambridge University Press, 2002
- Luis E. Periero, Valuation of Companies in Emerging Markets, Wiley, 2002
- Mark Mobius, Mobius on Emerging Markets, Prentice Hall, 1996
- Jaime Sabal, Financial Decisions in Emerging Markets, Oxford University Press, 2002
- Debraj Ray, Development Economics, Princeton University Press, 1998
- Napoleon Hill, Think and Grow Rich, St. Martin’s Press, 2001
- Diamond, Guns, Germs, and Steel: The Fates of Human Societies, Norton, 2005
- Mariner Books, 2007
2. Internet Sites.
- http://www.brint.com for business research in information and technology
- http://stats.bls.gov for U.S. Bureau of Labor Statistics
- http://www.emergingmarkets.org for related publications
- http://www.emerging-markets.com global utilities research online
- http://www.emergingmarketsgroup.com for emerging markets consultancy
- http://www.transparency.org/policy_research/surveys_indices/cpi/2005 for data on corruption.
- http://www.doingbusiness.org/ for Doing Business Survey which provides cost estimates
3. Periodicals. Business Week, Harvard Business Review, The Economist.
VII. PRESENTATION OF WRITTEN SUBMISSIONS
1. Layout. 1 inch margins on all sides; single spacing between lines, double spacing between paragraphs; font size 12; no name on paper; no cover page; page # in footer, on lower right on all pages except page 1.2. Last 4 #’s of Social Security #. In footer, on lower left on all pages (for any group project, separate participant’s SS#’s with a semicolon).
VIII. ACADEMIC INTEGRITY STATEMENT
"Plagiarism, a serious form of academic dishonesty, is the appropriation of ideas, language, or work of another without sufficient public acknowledgment that the material is not one's own. It involves deliberate taking and use of specific words and ideas of others without proper acknowledgment of the sources. Among other forms of academic dishonesty are: distributing or communicating examination materials prior to a scheduled exam without the consent of the instructor, providing information to or obtaining information from another student during an exam; bringing non-allowed materials to an exam for clandestine use; attempting to change answers after an exam has been submitted; and falsifying medical or other reasons to petition for excused absences. Plagiarism or dishonest examination behavior will result minimally in the instructor assigning the grade of "F" for the assignment. In addition, all instances of academic dishonesty will be reported to the Rome Center's associate dean for academic affairs, who may constitute a hearing board to consider the imposition of additional sanctions, including a recommendation of expulsion, depending on the seriousness of the misconduct."
IX. CLASS SCHEDULE
Please note: You are not required to make a written submission unless instructed to do so where assignment is indicated below. Reading should be completed prior to class.
# |
Date | Instruction / Activity |
Topic | Reading Assignment (Read for class) |
BACKGROUND ON EMERGING MARKETS | ||||
1 | R 01/15 | Lecture | Course introduction. | EM: C1 EM: C15 (to p265) |
Describing Emerging Markets | ||||
2 | T 01/20 | Lecture | Emerging markets history and unique characteristics. Poverty (role of NGO’s). | EM: C2 (p15-p26) (p38-p40) |
3 | R 01/22 | Lecture
- - - - - - - - - - Video | Politics and corruption. Financial markets and monetary systems. Analyzing information sources: newspapers, charts, tables. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J. Sachs video | EM: C2 (p26-p37)
- - - - - - - - - - - - - - -- |
Business Climate in Emerging Markets | ||||
4 | T 01/27 | Lecture
- - - - - - - - - - Video | Opportunities. Legal and physical infrastructure. Private property rights. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J. Sachs video | EM: C3 (p41-p56)
- - - - - - - - - - - - - - -- |
5 | R 01/29 | Review | Summary review of topics, and exercise. | -- |
MACROECONOMIC FACTORS AFFECTING EMERGING MARKETS | ||||
6 | T 02/03 | Lecture | Macroeconomic considerations | KR: C22 (p606-p629) |
7 | R 02/05 | Lecture
- - - - - - - - - - Article | Comparative advantage.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Global Flow of Funds | KR: C3 (p25-p26) (p33-p43) - - - - - - - - - - - - - - Handout |
8 | T 02/10 | Lecture | Tariffs, subsidies and quotas. | KR: C8 (p176-p191) |
9 | R 02/12 | Film - - - - - - - - - - Article | Life and Debt (Jamaica credit crisis). - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Risks of Sovereign Lending: Lessons from History | -- - - - - - - - - - - - - - - Handout |
BUSINESS BEHAVIORS IN EMERGING MARKETS | ||||
Multinational Business Behavior in Emerging Markets | ||||
10 | T 02/17 | Lecture
- - - - - - - - - - Case Study | Multinational corporations operating in emerging markets. Marketing strategies in emerging markets. Taxation and expropriation issues. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - We Marketing Group | EM: C4 (p57-p70)
- - - - - - - - - - - - - - Case #: HKU734 (p2-p8) |
11 | R 02/19 | Lecture
- - - - - - - - - - Case Study | Merger and acquisition activity. Partnerships and JV’s. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Andre Volkoff Malaysia | EM: C4 (p70-p79)
- - - - - - - - - - - - - - Case#: 97M001 |
Specific Emerging Market Risks | ||||
12 | T 02/24 | Lecture
- - - - - - - - - - Article | Negative considerations for foreign firms operating in emerging markets. Specific business, political and legal risks. Contract enforcement. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Salomon Smith Barney: Reasons for Global Investing | EM: C6 (p93-p103)
- - - - - - - - - - - - - - Handout |
13 | R 02/26 | Lecture
- - - - - - - - - - Article - - - - - - - - - - Video | Security risks. Currency risks. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Who Sank, or Swam, in Choppy Currents of a World Cash Ocean - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J. Sachs video | EM: C6 (p104-p125) IF: C4 (p111-p114) - - - - - - - - - - - - - - Handout - - - - - - - - - - - - - - -- |
14 | T 03/03 | Exam | Midterm exam. | -- |
15 | R 03/05 | Activity | Midterm exam review. | -- |
-- | T 03/10 | No Class | -- | -- |
-- | R 03/12 | No Class | -- | -- |
# |
Date | Instruction / Activity |
Topic | Reading Assignment (Read for class) |
EMERGING MARKET FINANCE | ||||
Risk Assessment | ||||
16 | T 03/17 | Lecture | Risk assessment and valuation tools for emerging market investing. Financial modeling; sensitivity analysis. Pricing risks. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Financial statement analysis. | Handouts |
Portfolio Diversification Strategy | ||||
17 | R 03/19 | Lecture
- - - - - - - - - - Article | Markets and financial systems. Portfolio management theory. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Assessing Emerging Market Currency Risk | EM: C7 (p127-p148)
- - - - - - - - - - - - - - Handout |
Investment Vehicles | ||||
18 | T 03/24 | Lecture
- - - - - - - - - - Article | Securities. Documentation. Credit analysis, valuation and investing: equities. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Morgan Stanley Emerging Markets Fund, Inc. | EM: C7 (p148-p157) Handout
- - - - - - - - - - - - - - Handout |
19 | R 03/26 | Lecture
- - - - - - - - - - Article | Credit analysis, valuation and investing: bonds. Gov’t, corporate Junk (EM and non-EM) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Government intervention in foreign exchange (money) markets. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sovereign debt | EM: Chapter 9
- - - - - - - - - - - - - - KR: C17 (p449-p460) - - - - - - - - - - - - - - Handout (p1-p16) |
20 | T 03/31 | Lecture - - - - - - - - - - Article | Credit analysis, valuation and investing: derivatives. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A Convergence Trade Through a Swap Format | Handouts |
21 | R 04/02 | Lecture
- - - - - - - - - - Video | Practical approaches to valuation: cash flow analysis. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Exotic approaches to valuation: term structure; spreads, volatility. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J. Sachs video | EM: C8 - - - - - - - - - - - - - - -- |
Trading | ||||
22 | T 04/07 | Lecture - - - - - - - - - - Article | Trading strategies in emerging market securities. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Martin Siegel: Report on Asian Trip | Handout |
Restructuring and Negotiation | ||||
23 | R 04/09 | Lecture | Restructuring. Negotiating. | EM: C10 |
REGION SPECIFIC CONSIDERATIONS | ||||
24 | T 04/14 | Lecture
- - - - - - - - - - Article - - - - - - - - - - Video | Country analysis (and risk assessment)
See: http://www.istat.it/dati/catalogo/20070517_00/Italy2007Ing.pdf - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Cultural norms (Hofstede’s cultural assessment)
Regional and cultural differences in business - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Local Memoirs of a Global Manager - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J. Sachs video | Website
- - - - - - - - - - - - - - Handouts
- - - - - - - - - - - - - - -- |
25 | R 04/16 | Lecture
- - - - - - - - - - Articles - - - - - - - - - - Video | Latin America Asia Eastern Europe Africa - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Country-specific current events. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - J. Sachs video | EM: C11 EM: C12 EM: C13 EM: C14 - - - - - - - - - - - - - - Handouts - - - - - - - - - - - - - - -- |
26 | T 04/ 21 | Lecture | Future prospects for emerging markets. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - EM finance careers. | EM: C15 (p265-p267) - - - - - - - - - - - - - - -- |
PRESENTATIONS | ||||
27 | R 04/ 23 | Presentations | Project presentations. | -- |
28 | T 04/28 3:00pm | Exam | Final Exam. | -- |
