According to the Institute of International Finance (IIF), the global association of 340 financial institutions, the decline reflects substantial pre-financing by sovereign bond issuers last year in anticipation of tighter global markets.
The IIF notes that the stronger pace of private capital flows continued in the first two months of 2006 with large amounts of bond and equity issuance. It projects that net direct investment into emerging markets will reach a record $170bn this year, up from $158bn in 2005.
Other highlights include:
- Net portfolio equity flows are expected to reach an all-time high volume of nearly $71bn, up from $62bn in 2005.
- Net non-bank private sector lending (mostly) bonds is expected to decrease to $65bn from $91bn in 2005.
- Net commercial bank lending is expected to slow to $52bn this year from $89bn in 2005.
- Overall growth of emerging economies is projected at 6.2% in 2006, unchanged from last year, with Asia expected to remain above 7% for the fifth consecutive year.
JAVELIN REPORT
CONTACTLESS PAYMENTS: OPPORTUNITIES AND THREATS FOR BANKCARD ISSUERS
A new report on contactless payments by California-based Javelin Strategy & Research, based on data from 900 merchants in the US, produced the following key findings:
- Merchants that are most likely to implement contactless payments in the near future see private-label cards as the best payment mechanism for driving revenue and achieving business goals. Javelin believes that this could lead to some disintermediation for bankcard issuers of contactless cards, with merchants using the technology to drive store-branded, private-label transactions more easily.
- Most merchants in the survey view credit card transactions as among the two-to-three most expensive payment types, and view cash as a less expensive alternative. They have no motivation to convert cash transactions to card transactions. Issuers and payments networks that seek to drive contactless acceptance must engage with these merchants on a variety of levels to help increase understanding of the benefits of the contactless method and how it could drive both the top and bottom lines.
- Merchants that are considering contactless technology prefer private-label cards by a wide margin over credit cards.
