Corporate social responsibility:


Ethical or socially responsible investing, are terms used to describe any area of financial sector where the social , environmental and ethical principles of the investor influence which organisations or ventures they choose to place their money with.

Socially responsible investment (SRI), “refers to investing in companies based on financial and social performance, where the latter includes such  concerns as the environment ,sweatshop labour  and animal testing. The role of fairness related sanctioning is emphasized, wherein companies that  treat  their various stakeholders “fairly” are screened into  SRI portfolios.” (Starr, 2008,pp.51).

According to Starr (2008) Socially responsible investment (SRI) may also involve  engaging in dialogue with companies about ways to improve their social performance through shareholder encouragement and resolutions.


SRI is essentially about doing good and doing well. Generally,  it is a prossec of integrating dicissiton making process in business with social valuses and missitons in a business, to acheve  positive and sustainable outcomes towards the business ,environment and society.
Many companies nowadays believe strongly on (SRI) and they think that they have responsibility towards their socity. AS a great example of how social responsibility  in my opeinin ( The  Body Shop) company  can be consederd one of the pioneers of modern corporate social responsibility.
Body shop company stand out for its beliefs on environmental protection, human right, community trade, and animal right. One of the major achievements  of the Body Shop company was back in 1985, where they collected 4,000,000 signatures against animal testing in the European Union  with Green peace campaign.

while some companies like the body shop much more concern about the environment and animal right which is  very important in socially responsible investment and it has a great impact in to our socity, some other business  like HSB C try very hard to boost its management of ethical and socially responsible investing funds by 60% over the last few years  to assisting local communities by promoting affordable homeownership, and helping small businesses with sustainability insurance options and developing an index for climate change.

list of references:

Starr,M.(2008) ‘ Socially Responsible  Investment and pro-Social change’,   (Jei Journal of Economic Issues) Vol. XLII, NO.1 , March 2008.

http://www.thebodyshop.com/_en/_ww/services/aboutus_values.aspx

http://www.hsbc.com/1/2/sustainability

property boom: a burst housing bubble could leave kurdish region in tears

International stock exchanges and stock market efficiency


The business areas of the stock exchange has been modified in a considerable way from past may decades. The stock exchange is termed as the marketplace for selling and purchasing of the explanations of the flexible forms of securities. Within most of the cases, the securities do not deal with the point that what is identified as bonds, shares and stocks on which dividend, is to be paid at the time of earning. Stock exchange has been found as a profitable business area and large number of people has been selected to be stockbrokers, thus this business area provides satisfactory outcomes (Zaeem, 2012). 


There are large numbers of international stock exchange available and they have contributed more towards an economic development. When money is positioned within the stock market, this is done to generate a proper amount of return on the invested part of capital. Various investors make efforts for making a profitable amount of return and also they try to break the market.  The stock market efficiency can be measured in three ways: strong, semi-strong and weak. The strong efficiency states that all available information (private or public) in a marketplace is reported for a stock price. 


In case of European stock market, random walks within the stock returns have become important to test the weak market efficiency in its marketplaces. In an efficient stock marketplace, the stock prices include all related information, so the returns of stock will be shown as random walk attitude of it. 


For an example, trading on cross border within Europe has gained popularity just after giving shape to the European Union. The broader approval of equity as well as an introduction of European currency ‘euro’ has motivated the investors to be involved in the transactions at cross border level for profit generating chances (Goldberg and Radecki et.al, 2002). The stock market is more efficient and the increased level of interest in the cross-border trading has provided a broader chance or incentives to the international stock exchanges for the purpose of developing diagonally to the national margins.

 Another example In  Iraqi Kurdistan, locals are enjoying a property boom. As demand outstrips supply, buying off-the-plan is more popular. But if this housing bubble bursts, the region could face severe economic and political consequences.

In the semi-autonomous state of Iraqi Kurdistan, an area that is generally more secure and more open to international investors than many other parts of Iraq, there are more and more people climbing onto the property ownership ladder.

And one of the latest trends in this property market is buying off-the-plan properties from larger developments; they’re very much in demand and often popular projects sell out almost immediately. Even before a popular property development is completed, buyers may have been able to cash in on up to a 40 percent increase in the property’s value.

Oil production has been increasing quarter on quarter – even though it is not always being sold through conventional channels – that is, the oil supplies are trucked and do not go through the Iraqi government’s pipelines. The fact that Iraqi Kurdistan receives 17 percent of Iraq's budget and that oil prices have risen and remained above US$80 per barrel , this  kept the regional government’s finances in good shape.


The oil money comes in and is distributed through payment of inflated wages by the state. Yet ordinary people have little or no access to any kind of investment. Banks are not yet fully trusted and the local stock market has a long way to go - the local population have very little knowledge of how it works.

So property is by far the most attractive form of investment.

Before the 2003 US-led invasion of Iraq, property prices here were seriously undervalued for obvious reasons. However, since the fall of Saddam Hussein, prices have risen dramatically. And while the Kurdish Regional Government is investing heavily in commercial property, public demand appears to be driving the residential market.

And the off-plan market is the new investment . Demand is high in this area but the lack of consumer protection means the potential for malpractice and fraud is also rising. 

High property prices may well lead to a mortgage market opening up in the region, which would also be a catalyst for the multinational banking sector’s presence in Iraqi Kurdistan - although an overpriced market may mean that banks are reluctant to lend a great deal if, and when, they decide the time is right to enter the Kurdish market. Lack of financing and a shortage of new capital could eventually catch up with the market and deter buyers.

Meanwhile, the rental market has risen outrageously and rental yield – that is, the amount of rent the property earns over a year expressed as a percentage of the purchase price - in the populous city of Sulaymaniyah, for example, appears to be go between 6 to 17 per cent. To compare, average rental yields in Germany sit at around 4 percent, in the USA around 5 percent and in Egypt they are around 7 percent. This rise in rental yield in Iraqi Kurdistan has made the commercial property market particularly attractive and investors have been rushing to cash in on what the market has to offer.

However this doesn’t mean the good times will last forever. Ask around estate agents in Sulaymaniyah and it quickly becomes apparent that rental demand for commercial property in other than central city locations has been sluggish; property owners are starting to lower rent prices. This could be the start of a pattern that may spread into other parts of Iraqi Kurdistan’s property market.

But as with other property bubbles, such as those recent ones in the US and in Europe, those involved convince themselves that the market is resilient and search for any excuse to prop up their convictions. Researching the property market in Kurdistan, you will often hear people using the same arguments that one would have heard in the US and UK prior to 2008, when the housing bubble there burst. They says things like: the economy is strong and will keep growing at more or less the same pace, there’s more demand than supply and even: “they don’t make land anymore”.

Should the property bubble currently inflating in Iraqi Kurdistan burst, the crash could have a damaging effecon the region. For many people, property really is their only investment option and a market correction would be a severe blow.t 

The economic impact of a failing property market could have severe consequences for Iraqi Kurdistan’s fragile economy. Property transactions are one of the main economic activities in the region and falling property prices would be directly linked to falling consumer confidence as well as business stagnation in the area. 

However policy makers in Iraqi Kurdistan do not seem to have grasped the seriousness of the housing bubble the region is sitting on and its consequences if the bubble eventually bursts. There are no real policies in Iraqi Kurdistan to try to control the property market and currently local politicians appear to be content for the general public to feel wealthy, while they see the value of their property continue to rise. The state’s Ministry of Finance is also happy to benefit from duties paid on property transactions.

M&A Between KLM and Air France

In today's market the main objective of the firm is to make profits and create shareholder wealth. Growth can be achieved by introducing new products and services or by expanding with its present operations on its existing products. Internal growth can be achieved by introducing new product s however external growth can be achieved by entering into mergers and acquisitions (Ghoshand  Das,2003). mergers and acquisitions an external growth strategy has gained spurt because of increased deregulation, privatization, globalization and liberalization adopted by several countries the world over. Merges and acquisitions have became an important medium to expand product portfolios, enter new markets, and acquire technology, gain access to research and development and gain access to resources which would enable the company to compete on a global scale .However there have been instances where mergers and acquisitions are been entered into  for non value maximizing reasons i.e to just build the company's profile and prestige.

consolidation in the form of mergers and acquisitions has been witnessed around the world in almost all the industries ranging from automobile, banking, aviation, oil and gas to telecom. Some of the biggest mergers in airline like Air France and KLM  are the ones which the world can never forget.

The news of merges is very sensitive that it can immediately impact the price of the share months before the actual merger take place for both the involved companies. The information and news which can flow can bring in positive or negative sentiments which would lead to a rise or fall in share price and ultimately shareholders wealth. The perception of information about merger is such that it tries to project the future increase or decrease in the cash flow derived out of the combination.

The following table would depict the change in share price of the acquiring company company on the day when the merger and acquisition announcement was made.

Acquiring company	Target company	Movement in price of the stock
Air France	KLM	+4%

Source: Yahoo finance website

Air France and KLM expected profit to increase after five years as a result of cost saving, rescheduling of routes and improved fleet utilisation. According to the financial times, the cost saving as (pitiful).The proposed cost savings from Air France-KLM are negligible and take far too long to emerge, the industry has too much capacity and just putting two airlines together is not enough.

As a result of the merger, the combined group expected savings of $220 million per year and this will lead to job cuts, meanwhile Air France will axe the onward Birmingham-Glasgow service and will also cancel its Bristol route because these routes had all been losing money.

the merger come against a background of financial pain throughout the airline industry, caused by 9/11 hangover, the sars crisis and the success of low cost carriers, such as Ryanair.

Therefore, although this M&A brings some job losses  in the first stage but it will brings other benefit in the organization in feature such as the market power. 

Trends and theory of foreign direct investment (FDI)
Foreign direct investment is also recognized as international direct investment, verities part of capital account of payment’s balance. Direct investment is described as an investment which includes deducts from or obtains a permanent interest in a project functioning in a financial system except that of the financier where the reason is to get an effective voice in administration of the enterprise.
Effective voice is calculated as ten percent in FDI statistics, of the company’s share capital; any savings below this is calculated as portfolio savings under the balance of payment statistics and not integrated FDI (Allen and Dar, 2012). It must be distinguished that FDI is economical thought and it is not similar as the expenditure of capital on fixed assets. Normally FDI statistics verified on the basis of net, meaning investments are included by companies. A range of investment firms are covered by FDI. For an example, a company of UK establishes a subsidiary or branch in foreign country, introducing start up capital. Often this is recognizing as green field investment (Moosa, 2002). Another example is of a company in UK that sells or purchases the equity of functioning foreign company. Often this is recognizing like M & A activity.
There are two major statistical foundation quoted for the flows of international FDI. Several data of flow was published by OECD. The flows of world FDI were published by UNCTAD annually by covering the earlier year in WIR (World Investment Report). This gives information on a greater group of nations and also contains the data and commentary. Both the sources support their figure on statistical sources of national level.
In 2010, FDI inflows of world increased by five percent to dollar 1.2 trillion from dollar 1.1 trillion in the year 2009 (Allen and Dar, 2012). Both the figures remained well shorter of the higher record of dollar 2.1 trillion in year 2007. In developing countries FDI flows increased by twelve percent in 2010, to five hundred and seventy four billion USD in next year. In 2010, total flow of developed countries fell by one percent to just over six hundred billion USD, being the sub region through Europe where both outflows and inflows fell very sharply.

HSBC - Inward investment trends
Levels of FDI broadly follow global and regional economic cycles so that there are periodic troughs of inward investment activity as well as peaks. But the timing and the extent of them can’t always be foreseen. In 2000, for instance, global FDI reached a record high only to tumble in 2001 with flows down more than 50% due to the economic slowdown in the US and other parts of the world.
In terms of overall FDI performance the UK still remains dominant in Europe and is second only to the US in having the greatest inflows and outflows of FDI. UNCTAD estimates that the UK had inflows of US$171 billion in 2007, an increase of nearly 23%. For the financial year ended March 2008 UK Trade & Investment reported continuing strong growth of inward investment with a total of 1,573 projects from 48 countries, a 10% increase. Forty-two per cent of projects were new investments; 28% were expansions; and 30% were M&As. A considerable number of these were in the high-value category now targeted by UKTI, and R&D was particularly strong. This once again emphasises the UK’s innovation credentials. The United States continues to be the main source of investment projects into the UK with 30% of the total. There were significant increases in projects from Germany and Japan, our second and thirdlargest investor countries. And projects from India and China continued to grow.
The UK focus is on sectors where it has clear competitive advantages: ICT, life sciences, financial and business services, creative industries, environmental technologies and advanced engineering. Trying to predict in terms of FDI which sectors will rise and fall over the next five years is not an exact science. But plainly the single most influential factor is the growth of economies and consumers in the developing world, with the effects of China and India’s explosive growth already being felt. We have already seen commodity prices soar – everything from iron ore and cement to rice and gold. At the same time the global demand for energy increases every year while pressure on supplies of carbon fuels continues.

As to the rising star nations of FDI in the next few years, China and India will continue to be both huge sources and recipients of FDI. And staying in Asia Pacific, Vietnam and Cambodia are already on the rise as recipients of outsourced operations from China. Indonesia is another emerging nation to watch. Canada and Mexico and the slowly waking giant of Brazil are flexing their FDI muscles, whilst the Gulf States, Turkey, and the transition economies in central Europe are interesting prospects as FDI players.
Finally, has the current FDI bubble burst? UNCTAD along with the OECD forecasts significant FDI falls in 2008. The US is experiencing economic difficulties deepened by the effects of the financial credit turmoil. We have already seen in late 2007 and the first half of 2008 the slowing of outward investment from the US and a significant fall in cross-border M&A activity. As a result FDI into Europe and particularly the UK could be severely affected. Even the inflationary wobble in China may blunt FDI inflows and outflows.
Yet as we know, when companies are experiencing pressures in their home market there is a greater incentive for them to look overseas for new opportunities and so there may be a degree of self-levelling. So while the short-term picture is less positive, the medium to longer-term picture is one where growing business enterprises and rising consumer demand across an even more globalised economy will continue to be drivers of strong and sustainable foreign direct investment.

Allen G. Dar A. (2012), Foreign Direct Investment (FDI), House of CommonsMoosa I. A. (2002), Foreign Direct Investment: Theory, Evidence, and Practice, Palgrave Macmillan
Reference  http://www.weeklytimesofindia.com/index.php/business-news/hsbc-upbeat-on-asia-as-profit-hits-22-billion/http://www.ft.com/cms/s/0/31ac6efa-5091-11df-bc86-00144feab49a.html#axzz1oVEAhLZxhttp://www.bbc.co.uk/news/business-17176332