The link between open, efficient markets and sustainable growth is not always well understood. But, structural reform can boost a country’s capital markets and facilitate more opportunities, like reduced borrowing costs or encourage more international investors.
I know a number of strategists have written about this. Certainly, there is talk of how Russia has done this.
One of the key concepts is to adopt a market infrastructure model that offers easy and efficient access for international investors. This can set off a chain of events that encourages new capital flows, cuts borrowing costs, improves government finances and provides headroom for development spending.
As a Frenchman I have resorted to a French real-world analogy.
It’s only natural to sit in your comfort zone I suppose … but I like the tale as it demonstrates how a little known French town can become heralded as one of the best ski spots for families in Europe’s largest mountain range – the Alps.
For markets looking to secure a greater presence on the global emerging market indices then they might want to read on and take note as access to an international settlement system usually brings more foreign capital to a market, often lowering bond yields.