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Tue 16 Apr 2019 / Global

Belt and Road delivers crucial capital

China's Belt and Road initiative provides access to capital for connected emerging markets that have not had the necessary investment grade ratings to tap international bond markets. Infrastructure, the core of Belt and Road funding, is and has been the engine of growth for most economies. But these emerging markets have never had the opportunity to attract offshore investors who require ratings dictated by their corporate policies. Nor do those investors have a high enough risk appetite to venture into uncharted emerging markets.

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Thu 21 Feb 2019 / Asia Pacific

Financing emerging Asia infrastructure

Despite much discussion and effort, private capital is still not playing the role it can or should in financing infrastructure projects in emerging Asia. Increased geopolitical uncertainty and shifts in terms of sources of infrastructure financing, as well as broader trade and political partnerships, are accentuating market sensitivity in the region. In the light of such uncertainty, multilateral institutions such as the Asian Infrastructure Investment Bank can bolster public investment, given their ability to lend counter-cyclically and take longer-term exposures.

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Tue 27 Nov 2018 / Global

Countries victims of 'ninja' loans

Countries need infrastructure in much the same way that US families needed houses before the 2008 financial crisis. The 'American dream' was to provide everyone with their own home. Similarly, poorer countries dream of infrastructure, to propel them to prosperity. People in the US bought houses through 'no income, no jobs, no assets' ('ninja') loans, unsure of how to reimburse their bank. Countries are doing the same to fund infrastructure projects. Both groups were lured by easy financing conditions.

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Wed 14 Nov 2018 / Africa

Zambia's infrastructure habit

Infrastructure development in Zambia is a powerful tool for swaying public opinion. However, despite its importance to economic growth, it is contentious. Past projects are associated with high costs, opaque tender processes and rising public debt. The tension between development and debt dominates, and the two issues often lead back to China and its funding of Zambian infrastructure projects. In a nation that emerged out of colonialism, fears of its reoccurrence in a different form are well founded.

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Thu 6 Sep 2018 / Global

'Tokenisation' of infrastructure assets

A large funding gap exists in the infrastructure space. Available funding covers only 10% of sanctioned projects, while 90% of financing for Asian infrastructure projects comes from the public sector. Private sector participation has been prescribed as a remedy for the funding shortfall – but this solution demands a supportive framework to make the assets more tradable and palatable to investors. The 'tokenisation' of assets through blockchain technology can play an important role in developing this structure.

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Wed 8 Aug 2018 / Global

Pension funds for infrastructure

A gigantic problem bedevils efforts to harness development funds for much-needed infrastructure investment in emerging markets. Massive volumes of financial resources controlled by pension funds and other long-term financial institutions around the world are held back from investment in developing countries because of fears of unmanageable political risk. But improvements could be on the way if the precepts of an 'eminent persons group' assembled by the G20, due to report in coming weeks, are properly implemented.

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Mon 21 May 2018 / Asia Pacific,North America,Europe

Flexibility in allocation strategy

Bonds have been one of the worst-performing asset classes over five, 10 and 20 years, and oil prices have declined dramatically since 2014. This combination of forces, exacerbated by a decade of quantitative easing, low interest rates, slow productivity growth and aging populations in advanced economies, has led to heated debate over which asset classes and strategies public investors should pursue. It has also helped to intensify the shift into alternative assets, particularly real estate and infrastructure.

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Mon 9 Apr 2018 / Europe

Chinese investment divides EU

Views on Chinese investment into the EU are dividing core and peripheral member states. Moves by the Commission to strengthen screening of foreign investment have found support in France and Germany, whose governments worry about the move of assets considered important for public security into Chinese hands. Businesses also fear the transfer of know-how and its ability to transform China into a competitive tech hub. But they are at odds with Europe's crisis-hit south, which views China as a source of much-needed foreign funds.

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Mon 26 Mar 2018 / Latin America Caribbean

IDB bets on Latin America reformers

The leaders of Latin America's flagship development bank, the Inter-American Development Bank, asserted at its annual general meeting that it would lend its financial influence to the hemisphere's reformers. Latin American governments spend barely 3% of GDP on infrastructure, a marked difference from the investment in Asia or the Middle East, and little more than sub-Saharan Africa. One European finance minister called it 'the semi-secret, unknown tragedy of a part of our world that has squandered so much for so long'.

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Wed 20 Dec 2017 / Latin America Caribbean

Latin America's shift

On the eve of a year when several leading Latin American countries go to the polls, Chile has voted decisively for a right-wing billionaire whose agenda confirms a regional trend away from populism and towards no-nonsense pragmatism. Sebastián Piñera needs no introduction to his people — he was president in 2010-14. The return to power of the former airline magnate is based on a go-for-growth manifesto, including policies for cutting corporate taxes, spending billions on infrastructure and reshaping labour laws to create a possible 1m new jobs.

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