Global Post: When the BRICs Crumble

From Global Post

A report on mining sector trends in 2012 by the international consultancy Deloitte summed it up as addressing the issue of “restless stakeholders.” Beyond communities, players include national and local governments, shareholders and non-governmental organizations. By taking extra steps to be good corporate citizens, multinational mining executives hope to buy insurance against nationalizations, excessive regulation, higher taxes, and protests that could hamstring operations.

Park your cash where you can get to it

“Historically, currency crises have occurred when Western investors lost faith in the developing markets,” said Karl K. Schamotta, senior market strategist, Western Union Business Solutions. “Capital flight destroyed currency values and toppled countries like dominoes. Today, many of these countries have imposed strict capital controls in an attempt to prevent this happening in the future. Businesses may find that funds are difficult to access in the event of a severe and unexpected downturn. Pooling funds in stable banking jurisdictions and highly liquid currencies can be a critical survival strategy.”

Prepare for shifts in the attitudes of fickle investors

“Companies have been punished for low levels of emerging market exposure, or rewarded for high levels for many years,” said Schamotta. “This is not a stable situation, so ensure that your company has investment and public relations strategies in place to recover from a rapid pivot in investor perceptions.”

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