What is the World Bank?

If you’re hoping to succeed in financial trading, there are several financial institutions you need to be familiar with. One of these is the World Bank. Saying this, what is the World Bank and what relevance does it have to financial trading?

The World Bank is a global financial institution that engages in the practice of providing loans to developing countries for capital programmes. These are programmes that involve upgrading the infrastructure of society or business.

These programmes are essential to aiding in the development of emerging economies. This ties in with the goal, that according to the World Banks official website, it has set for itself. This goal is to reduce poverty internationally.

Specifically the World Bank has a range of low-interest loans, interest free credit options and grants that they provide aid to emerging economies to tackle the issue of poverty. The types of programmes these cover are numerous and cover areas such as business, environment, gender equality, combating HIV/AIDS, education, economy and culture.

The World Bank itself is one of a number of financial and humanitarian institutions under the leadership and governance of the United Nations. This means that it sits above the business world and is staffed by representatives from member states. Member states also fund the World Bank; however it also receives its funding from other avenues, such as bond issuance's.

So why do you need to know about the World Bank when engaging in financial trading? The answer to this lies in the role the World Bank plays in aiding the economic developed of emerging markets.

The World Bank helps these countries grow. It provides the capital they need to develop, to strengthen their production capability etc. Logically then the activities of the World Bank can be used to determine which emerging economy is the one to watch. 

Say for example it provides funds to Mexico to grow its car manufacturing industry. Mexico’s car manufacturing industry is already growing, already one to watch. The news of extra funds may indicate you should pay more attention to it, as well as the companies involved. 

Consequently the activities of the World Bank can indicate which economies you don’t want to get involved in. Take Argentina. Ever since their 2002 economic crash they’ve struggled getting financial assistance from the World Bank. This is a further indicator to avoid Argentina at the moment if you wish to be successful in financial trading.

At the Academy of Financial Trading we realise that in order to be successful in financial trading you have to know about certain financial institutions. We seek to ensure that you are fully equipped with this knowledge, ready to use it to your advantage when you start trading.

LINKS TO INFO: http://www.worldbank.org/en/about/what-we-do, https://www.imf.org/external/np/exr/facts/imfwb.htm

What Do BRIC and MINT Mean in Financial Trading?

Have you ever heard the terms BRIC or more recently MINT countries? If you’re looking to get into the financial trading game, you just might need to know what they are and how they work. Why are they important?

BRIC Countries

So let’s start with the BRIC countries, since they’re the ones that have seen the most interest from those in the financial trading game over the past decade. The BRIC countries first came to the attention of the financial trading community in 2001; the term was coined by celebrated economist Jim O’Neill

BRIC is in fact an acronym for four countries. These countries are Brazil, Russia, India and of course China. So why did O’Neill decide to bring so much attention to these emerging economies back in 2011.

Because they were emerging. Back in 2001 these countries were all enjoying favourable (and similar) economic climates. At the time it indicated a global shift in economic power due to population growth, eligibility to work, economic strength and availability to natural resources.

These are the factors that provided them with room for economic growth. They had more materials and a growing population to turn these materials into products that westerners would want to buy in their droves.

They basically had more potential than the western G7 countries, which were seen as the most economically wealthy in the world, because they had more room to grow. The G7 countries had already been growing and had less potential room for more growth.

This is why they were and somewhat continue to be important to know about in financial trading. The next decade saw the BRIC countries (especially Chia) grow leaps and bounds economically. Today they occupy a significant place on the global economic stage and you have to watch what happens with these countries to truly capitalise in financial trading opportunities.

The economic power of these nations is now somewhat waning. They still have power, but a decade of unprecedented growth has now been confronted by the reality of growing your economy. It has consequences. China last year experienced its slowest rate of growth in 14 years and Russia and India have recently been plagued with financial issues.

MINT Countries

So now we turn our attention to the MINT countries. Again an acronym, the four countries in question are: Mexico, Indonesia, Nigeria and Turkey. These are the new emerging economic powers to watch as we enter the second half of the decade.

There are two reasons O’Neill has turned his attention to the MINT countries. Firstly, they all have a positive ratio of people eligible to work against people not working over the next two decades. More workers mean more products to export, fostering more opportunities meaning greater scope for growth.

However these countries are also often seen as strong contenders for economic growth because of their geographical location. Take Mexico. It has capitalized on emerging US interest in its capabilities but is also in a great position to take advantage of rising Latin American economic activity.

This is why the Academy of Financial Trading suggests that you be watching both the BRC and MINT countries right now. They have more potential than G7 nations and are likely to keep on expanding. There’s money to be made in these countries.

LINKS TO INFO: http://www.bbc.co.uk/news/magazine-25548060, http://www.telegraph.co.uk/finance/personalfinance/investing/10580108/How-to-invest-in-the-Mint-emerging-markets.html

Why is the US Stimulus Such A Big Deal for Financial Trading?

You cannot even open a financial newspaper these days without hearing about the withdrawal of the US stimulus package and what it means for emerging markets. This is why the Academy of Financial Trading wants to clear up just why the US stimulus is a big deal for online trading.

The US Stimulus Scheme is a monthly bond buying programme set in place by the US Federal Reserve; the US’ key organisation when it comes to national financial policy. The scheme was put in place in the wake of the 2008 global financial crisis, which hit the US particularly hard. It was designed to shore up their flailing economy.

However the US wasn’t the only country affected positively by the scheme. The nature of government bond buying, which is where governments borrow money from investors for projects and activities it needs to finance, meant that emerging economies were boosted to. This was because the scheme facilitated a greater flow of cash to said economies.

However we are not living in 2009 anymore. Last year saw several signs that indicate that the US economy is in recovery, US job creation was stronger than it’s been in a while, their housing market had finally started growing again etc.

This news prompted speculation that the stimulus would be withdrawn; after all what’s the point of borrowing money to fund government projects when you don’t need it? This had a very real effect on developing markets. Prices plummeted and currencies in countries such as Mexico, Brazil and India were all affected. This was only because of speculation and expectation.

Now the stimulus package has been somewhat withdrawn; the US has reduced the amount that it spends on bond buying on a monthly basis. Despite the gentle tapering back of the scheme, it will have a knock on effect on emerging markets and you need to know about it if you’re ever dealing with one of these markets.

It’s such a big deal because it affects how much money is coming into and going out of these countries. If there’s less money flowing means less to invest and less to spend. Less money means less growth, less opportunity. What you need to take away from this is that the withdrawal of the stimulus is something you need to know about if you hope to be successful at the moment in financial trading.

LINK TO INFO: http://www.investopedia.com/terms/b/bond.asp