I have a confession to make. Well, two confessions, actually…

I was not an early adopter of content marketing or inbound marketing techniques. In fact, when my colleague, Phil Donaldson started experimenting with these strategies, I’d catch him on Hootsuite and accuse him of wasting his time on Twitter and social networking when he should be marketing and bringing us new clients.

There, it’s out. I really did accuse him of this (he reminds me frequently).

Let’s face it. I’m really a sales person at heart who became a marketer. No, scratch that.  I’m a BUYER FACILITATOR. I don’t sell anything. I help the buyer make a decision on how to improve their results, and if I do it well and am working with a buyer that I can really help, then they make a decision that benefits me and my company. I don’t really like calling it “sales.”

So as a “buyer facilitator” who is responsible for delivering results every quarter in terms of cold hard revenue, I need consistent results. And those results only happen when I’m on the phone, talking to prospective customers and driving leads into my funnel. It’s a numbers game. Right?

[You should have seen the look of disdain on her face when she would find me in Hootsuite or on LinkedIn! — Phil]

But back to Phil and his insubordination…

I hired Phil to run marketing for PropelGrowth, to help with client projects, and to expand our company’s offerings with some amazing motion graphic skills. Check out this content marketing video he created. I did NOT hire him to “play around” with social media all day.

[I was also reading blogs, listening to podcasts and attending webinars. More like "learning around." I was also getting other work done as well. Buyer facilitators can sometimes be so hyperbolic. – Phil]

Fortunately for PropelGrowth, Phil is an independent thinker (he likes to remind me that I wanted an independent thinker and not a “yes man”). So on his own, he started researching inbound marketing, content marketing, and thought leadership strategies and figuring out how to weave these into our marketing programs. For him this came naturally. He used to work in the pharmaceutical industry where the medical education part of the business had to be educational, not promotional.

He started pushing me to blog…regularly. He pushed us to create compelling thought leadership of our own. He inspired this white paper on thought leadership, that has now been picked up in lots of blogs and even been incorporated into a couple of professional marketing curricula.

Ok, now for confession #2. Deep breath…

I expected instant results.

When our blog didn’t attract 1,000 visitors the first week, and several qualified sales leads the first month, I said it wasn’t working.

But I have a pattern of expecting instant results.

A few years ago, I planted cilantro from seed. I’m not much of a gardener, so growing something from seed was new to me. The package clearly said that the seeds would germinate in 14 days. But after a week, nothing was happening. I wondered if the seed was old. I dug a few up to see if roots had sprouted from the seeds yet. Nothing. No change at all. I decided I needed new seed.

But I have a busy schedule, so it took me about a week to go get the seed, and before I got it in the ground, I noticed that I had hundreds of tiny cilantro sprouts in my garden. Exactly 14 days after I’d planted.

What does this have to do with sales or marketing? A lot, really. Every expert on content marketing points out that it takes 6-12 months of consistent work, delivering high quality content before you start to see results. That’s exactly what happened to us. After about 6 months of steady content publication, we started to attract a following. People started subscribing to the blog and following our work on social networks like LinkedIn, the TabbFORUM, SeekingAlpha and Focus.com.

[What's ironic is that Candyce told me to read Ardath Albee's book and apply the principles to our business. Then, I signed her up on Focus and would catch her in "fits of Focus," answering questions all over the place. — Phil]

So what happened?

About 8 months into the process, we started getting leads and closed a couple small deals that were generated from our content marketing activities.

Fast forward to today. We’ve now been blogging and publishing content since 2009. We’ve posted 64 blog posts (not impressive compared to other bloggers). We now have more than a thousand visitors a month reading our blog, and we’re generating a steady stream of new well-qualified sales leads. In fact, today, 100% of our recent engagements were influenced during their buying cycle by our content marketing.

Yes, I said 100%.

So what do I mean by that? Here are three recent examples:

One client saw my article on TabbFORUM about writing a white paper about FX eCommerce. They wanted something similar and called us.

One client has been following my updates on LinkedIn for a couple years, and saw the archived webinar we did on Content Marketing for Niche Markets. They emailed me asking for a similar program.

I met another new prospective client at a conference last year. I tried to open up an opportunity with them after the conference, but couldn’t get anywhere. So we connected on LinkedIn, and I occasionally pinged him with a friendly email. They followed our updates, saw the events we put together on emerging markets last year, and are engaging us to do a series of webinars on a similar topic.

So there you go. Yes, it does work. But follow the instructions.

1. Plant fresh and high quality seed (quality educational content – not marketing mumbo jumbo).
2. Consistently water and fertilize (add new content and syndicate it where your target audience is).
3. Don’t expect germination before the seeds are ready (6-12 months for germination, 12-18 months to start harvesting).

Here’s a link to some of our blog posts about content marketing.

So I’d like to hear from you…

Do you believe in the power of content marketing?

Have you seen it deliver results?

Would you like to give it a try?

Warm regards,

Candyce

The following is a guest post by Kevin Acott, Senior Vice President, Managing Director, EMEA at IPC Systems, Inc.

I recently attended a conference hosted by IPC called Emerging Markets: Opportunities and Obstacles. At the event, the TABB Group presented some of their latest research on trading in the emerging markets of Eastern Europe and Asia. Then a panel of speakers discussed a range of topics related to trading in these markets. The conference also introduced IPC’s new financial extranet, Connexus. Here are some of the insights I took away from the fascinating panel discussion.

Emerging market GDP growth has outperformed growth in the developed markets every year since 2006 by an average of 9.6% each year. During that time the combined GDP of the emerging world has more than doubled while that of the developed world has only increased by 23%. Taken to scale, this doubling is amazing. The emerging and frontier world accounts for almost 85% of the world’s population with 2.5 billion people in China and India alone. At nearly six billion people, if only six per cent of these attain a higher standard of living and a higher amount of disposable income over the next decade, the markets will be faced with another 360 million consumers. More than the entire population of the United States putting pressure on resources, prices, and production.

The More Things Change, the More They Stay the Same

Clearly, asset growth and investment opportunities abound in the emerging world. Many investors point to this opportunity and the GDP outperformance in emerging markets as evidence of decoupling, that emerging market growth is no longer dependent on exports and growth in the developed markets.

While overall growth in the emerging space has consistently outpaced that in the developed markets, the iShares MSCI Emerging Markets Index (EEM) underperformed the S&P 500 by almost 20.5% in 2011 and is off its 52-week high by more than 25%. Global debt crises and uncertainty have kept correlations high since 2008 bringing down asset values in even the best performing economies. The correlation between the iShares MSCI EM Index and the S&P 500 were 0.84 over the last twelve months against a correlation of only 0.69 over the last six years. With asset correlations at these levels, relative economic growth means less than overall investor sentiment in the short-term.

The problem in the decoupling theme is that, while many emerging countries have shifted their export reliance from the U.S. and Europe, their economies are still largely based on an export model. The only difference is the name of the country on which they are dependent. Brazilian exports to the United States and Europe have shrunk from 41.1% of total exports in 2006 to a relatively smaller 32.1% in 2010, but exports to China more than doubled from 6.2% to 13.3% of the total. Exports to other developing Asian economies also increased from 9.1% to 12.6% of total exports.

And while many emerging countries are relying more on Asia for export revenues and economic growth, exports to the United States still account for 20% of Indian exports and 70% of Chinese exports are destined for developed markets. As Europe enters the third year of its escalating debt crisis and the U.S. is facing stagnant growth at best, the slowing economic environment will continue to show up in emerging market asset values.

Will the EM Outperformance Continue This Year? Does it Matter?

While investors and pundits alike are furiously bent on forecasting GDP growth and asset values for 2012, they run the risk of losing sight of the bigger picture. With the scale and long-term potential in the emerging markets, there is little doubt that the next 10 years will belong to BRICs, CIVETS, and the myriad of acronyms for the regions.

Short-term risks do exist. Much of the growth in the EM space is dependent on the voracious appetite of the BRICs for resources. The fate of the euro zone is more precarious than it has been ever in its 13 year history.

Rather than bet on some mystical decoupling, investors should invest for the long-term while hedging knowable short-term headline risk. The most obvious risk to global growth, and that which is keeping correlations high, is the risk that Europe cannot grow or restructure its way out of the debt crisis.

The alternatives to an orderly restructuring or growth are massive printing or outright default. Either option could be disastrous for the euro. Investors may look to shorting the euro in the futures market or through one of the available exchange traded funds to tactically position against short-term volatility. If the problems in the EU accelerate to the downside it will most likely take other asset values down with it, investors can use their short-term gains from shorting the euro to offset losses in the rest of their portfolio.

Here is a link to the TABB Group emerging markets research that was presented at the event.

Warm regards,

Candyce

The marketing experts continually exhort marketing teams to provide remarkable content for our audiences. What better way than to actually get four of those experts on a panel to speak on an evocative topic? During “The Great Marketing Conversation,” Robert Rose, Mike Volpe, Ardath Albee and Marcus Sheridan discussed today’s marketing practices – content marketing and inbound marketing in particular – in a pragmatic way aimed at helping marketers make a business case to their organizations. Great conversation. Great content. The response from the audience was, “Do more of these!”

Barbara Mooty sent Candyce this encouraging note:

“THANK YOU! for hosting #TGMC as it was: relevant, informative and the conversation moved at a ‘perfect’ pace for me.”

Candyce and I would like to express our great appreciation to the panel for coming together and making the webcast such a memorable event. Thanks also to DemandGen Report for providing the platform for “The Conversation” to take place. But the Gratitude Express doesn’t end there. Oh, no. Many thanks go out to our audience, an exuberant group who blogged, tweeted, shared and engaged in the conversation. Using the hashtag #TGMC, you were agents of wisdom as you quoted the panelists and shared your own insights. Take a look at the many tweets below.

If you missed the webcast, you can register to watch here:
https://www2.gotomeeting.com/register/934411922

The discussion was lively, and we ended up running out of time before we got to all the audience questions. So Robert Rose followed up in a blog post that addressed some queries:

The “Great Marketing Conversation” Continues – A Baker’s Dozen Answers To Questions

If you’d like to keep up with other panelists, I encourage you to visit their blogs:

Marcus Sheridan – http://www.thesaleslion.com

Ardath Albee – http://marketinginteractions.typepad.com

Mike Volpe – http://www.mikevolpe.com

Be sure to respond in the comments section to engage with these experts and keep the conversation going. If you attended the event, what was your great takeaway? What would you like to have the next “Great Converation” touch upon? Let us know by leaving your comments below. But first, allow me to share the conversation on Twitter during the webcast (thanks again, let’s keep the conversation going):

jditlev 5:40am har været til webinar med 4 content / inbound marketing eksperter og blogget om det: ow.ly/8F6wg #tgmc
 

jlynnwrites Jan 24, 12:06pm
T minus 1 hour and counting #TGMC
landing.propelgrowth.com/TheGreatMarket…

Marketing in the Capital Markets

Having my head in emerging markets and cross-asset trading these days, I’ve been finding the term “alpha” unavoidable. TABBGroup’s Adam Sussman recently spoke on investment in emerging markets as a way to achieve alpha. The industry is all aflutter about cross-asset and multi-asset trading as a means to seek alpha. The concept of exceeding benchmark performance permeates our business in the form of whitepapers, webinars, forecasts and executive briefs.

But let’s some of us be honest, that concept is sorely lacking when it comes to marketing strategy. Many companies say they want the most bang for their marketing buck, but when it comes down to it, they hang all their hopes on one monolithic whitepaper or live event. This is similar to what I call “practicing wishcraft” – taking any action to say you did something and wishing for some magical outcome. There’s a difference between spending money for the sake utilizing available budget and spending it to achieve what I like to call “marketing alpha.”

I seem to be on a roll with the specialized terms. Like a marketer (LOL!).

Anyway, as I mentioned in a previous blog post, banks are under increasing pressure to reduce overhead and increase profit margins via technology consolidation. However, since the financial crisis began, companies across the board have been faced with budgetary challenges that have made buyers cautious and salespeople crazy. The new reality is one of longer, more complex sales cycles with today’s web-enabled buyer in the driver’s seat.

Brave New World of B2B Marketing

Unlike the Aldous Huxley novel, effective marketers have moved away from treating customers like cattle and feeding them marketing soma. Why? Because the buying behavior of capital market buyers has changed dramatically in the past few years, rendering the majority of old-school marketing practices ineffective (and as a result, expensive). Truth be told, old-school marketing was about creating noise to be heard over the competition and get in the door.  It used to be about one-way push. Now it’s about two-way engagement.

In earlier times (some might call them “the good old days”), the company with the most marketing dollars often got the most sales, simply because the customer recognized their name. But as more companies enter the race, more companies start making as much noise as possible. The Internet and email make it easier and cheaper to make noise, resulting in a virtual cacophony of marketing claims barraging customers every day – with everyone claiming to be “the leading, number-one, unique, value-added, trusted provider” of “robust, innovative, cutting-edge, high-performance, ultra low-latency technology….”

Yawn.

How can every vendor be the “leading provider”, anyway?

If you’re in marketing or sales and have not heard the terms “content marketing” or “inbound marketing,” then it’s time to start paying attention to the evolving best practices in marketing. The pressure is on for Marketing to support Sales and help to generate revenue. Your performance depends on it.

Let’s face it folks, our customers are not idiots. They’re sick of the noise, and they no longer trust the marketing puffery. They’re also getting really good at tuning out the noise. They use spam filters, caller ID, gate keepers, DVRs and any number of other methods to tune out advertising and marketing messages.

That doesn’t mean they’re not still buying, but they’re getting more savvy. THEY are in control of their buying process. Research shows that most business buyers of technology do all their early research about business problems and possible solutions BEFORE they talk to a sales person. In fact, their buying processes are generally 75% complete before they’re willing to engage with Sales. So how do you go about influencing the buying decision of a buyer who is wary and weary of traditional marketing hype? How do you now differentiate yourself from your competition?

Achieving Marketing Alpha

Content marketing is about creating educational content that helps your prospective customers understand their business problems, gain a vision of how to solve the problem, and build a business case to get internal buy-in. This content can take the form of whitepapers, blog posts, live events or video. As you provide the prospect with high quality content – information that they can rely on to steer their decisions, you’ll gain their trust and have a significant influence over the buying decision. To quote Ardath Albee, author of eMarketing Strategies for the Complex Sale, “Publishing compelling content builds credibility.” This credibility is what gives you competitive advantage.

At this point, you’re probably thinking, “That’s interesting, but how do I get this great content to the customer?

That’s where inbound marketing comes in. This technique uses high-quality content, strategically placed, that is found by prospects who are looking for it and as a result, are ready to engage with you. (talk about warm leads!). According to inbound marketing specialist HubSpot, “72% of companies who blog weekly have acquired customers through their blog.” As a new form of lead generation, inbound marketing is bringing in revenue for companies who have really dug in and focused on sharpening their marketing strategy.

The question arises, “O.K., now how do I incorporate inbound marketing and content marketing to my process?”

On January 24, I will be discussing this with a panel of the foremost experts on modern marketing in a live web event. These speakers are at the top of their game as authors, bloggers and recognized thought leaders in content and inbound marketing. They will discuss the differences between and the convergence of these techniques as well as practical approaches for getting it done as part of a holistic marketing strategy. The goal of this live web event is to give you clear insight into current marketing techniques, going beyond the hype to what works now.  We want you to be better equipped to build a compelling case to gain the funding to implement these techniques.

I highly recommend that you tune in for this hour long session. You can ask questions in advance of the event and online during the Q&A process. I’ll be moderating, and will be joined by:

• Mike Volpe, CMO of HubSpot and a master at inbound marketing (HubSpot generates 40,000 leads a MONTH!)
• Ardath Albee, author of eMarketing Strategies for the Complex Sale. Ardath consults for some of the largest technology companies in the world and is well-known speaker on best practices in content marketing.
• Robert Rose is Strategist In Residence at Content Marketing Institute. He co-authored the book Managing Content Marketing – The Real-World Guide for Creating Passionate Subscribers for Your Brand and is also a speaker and consultant in high demand.
• Marcus Sheridan (“The Sales Lion“) is a master blogger who teaches companies how to blog effectively to bring in business. He’s also the author of three books and numerous e-books. Marcus actually inspired this event when he drew attention to a debate between proponents of content marketing vs. inbound marketing on his blog. That post attracted more than 80 comments. You can read that post here: http://www.thesaleslion.com/inbound-vs-content-marketing-compare-hubspot/

It’s No Longer About Marketshare, It’s About Mindshare

The days of “spray ‘n pray” are over. Buyers want to know what’s in it for them, what of value you have to offer them that meets their need. They’re unaffected by perceived market share. They’re seeking a Trusted Advisor to help inform their entire buying process. Achieving that coveted role requires an understanding of what works in this context and directly affects your ability to generate revenue.

Are you struggling with creating an effective marketing strategy? Do you find yourself mistaking tactics for strategy? Are you just a little bit shaky in your understanding of current marketing language? Are you struggling to achieve “marketing alpha”? Join us for:

The Great Marketing Debate Conversation
Tuesday – January 24, 2012
1:00 – 2:00 PM EST (10:00 – 11:00 AM PST)

Click here to register now.

The old marketing model is broken. Time to start the new year with a new foundation for a solid marketing strategy. Here’s your opportunity to learn from four of today’s top marketing thought leaders. They’re passionate about what they do, so the discussion will be quite lively.

Join us, won’t you?

Warm regards,

Candyce

In this the second part of this two-part TrendSpotters installment, I continue my conversation with Harry Gozlan of smartTrade Technologies and Greg Wood of Credit Suisse on cross-asset trading. You can listen to part 2 the discussion by clicking below:

Cross-Asset Trading, Part 2

You can also click here to read a transcript of the conversation.

During the second half of our conversation, we dig deeper into talking about the complexities of cross-asset/multi-asset trading, profitability and wallet share.

To gain further insight on the evolving landscape of multi-asset trading, read smartTrade’s informative whitepaper:

Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena

This whitepaper goes into detail about the components needed to build a global multi-asset trading platform.

Click here for part 1 of the conversation.

TrendSpotters by PropelGrowth is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Warm regards,

Candyce

In this installment of the TrendSpotters Thought Leadership Series, we consider the evolution of cross-asset trading, how the industry is changing, and the drivers behind these changes. Joining me are Harry Gozlan, CEO and Founder of smartTrade Technologies, and Greg Wood, Futures Business Development Manager at Credit Suisse’s Advanced Execution Services.

Because of the complexity of this topic, we’ve segmented this episode into two parts. This post contains part 1.

My interview with Harry and Greg was fascinating. They stand at the forefront of this cross-asset trend, and the shared a lot of interesting insights with me. I invite you listen in by clicking below:

You can also click here to read a transcript of the conversation.

Emerging Trends in Cross-Asset Trading

The institutional investment industry not only wants, but needs, to do more with less. Bank consolidation continues worldwide, while the emphasis on holistic enterprise risk management increases challenges for dealing banks and their clients in a post-Dodd-Frank world.  These forces have combined to force the industry to simplify products to improve transparency. The process of simplification has spurred growth in cross-asset trading as asset managers look for alternative alpha.

In the interview, Harry Gozlan points out that buyside demand, particularly from hedge funds have driven the evolution of cross-asset trading. Hedge funds asked for a “single access point to multiple assets to do cross-asset trades, either through auto-hedged securities…,cash against futures, basis trades,” or other combinations. Gozlan points out that traditionally, banks have maintained “siloed FX, equities and rates systems… [assembling] a single entry point to all these assets to provide a kind of cross-asset service to clients.”

As Greg Wood comments in the interview, “People are taking natural steps of looking for alternative alpha. They may be trading domestic equities first. Then they look into cross-border trading. They use derivatives as a hedge… or as an alternative source of alpha. This introduces multi-asset capacity to their trading, where they want to be able to trade each of these asset classes in a similar manner, and then ultimately, manage, risk manage, [and] position-manage those asset classes.”

Cross-asset trading, much of it over-the-counter (OTC), can involve any number of instruments, from conventional equities and fixed income products with FX components, to interest rates and futures,  also often involving foreign exchange as well as options for hedging.  But while the siloed approach can work in the short term, growing volume in cross-asset execution requires the technological capabilities to exploit and actively manage an institutional client’s overall book of business with the trading partner.  This requires a standardized approach to pricing, routing and execution, and ideally should enable clients to use similar execution algorithms across a variety of trading instruments.

Client demand is not uniform and not static.  Whereas large institutional traders or hedge funds may need to execute and measure several components in multiple series of trades, other clients require reliable execution and reporting predominantly for trading in one instrument.  Servicing both kinds of client order flow – and any number in between demands a simply designed yet flexible system that standardizes the trading workflow.

Risk management and best execution mandates are also placing demands on sell-side firms to provide more execution transparency. This demand will only grow in the future, requiring firms to standardize their approach to market data aggregation, internalization, and smart routing while also consolidating and harmonizing their approach to risk management across instrument types.

We invite you to read smartTrade’s informative whitepaper on the evolving landscape of multi-asset trading:

Meeting Multi-Asset Trading Challenges: Workable Approaches for Success in a Dynamic Capital Markets Arena

This whitepaper goes into detail about the components needed to build a global multi-asset trading platform.

Click here for part 2 of the conversation.

TrendSpotters by PropelGrowth is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Warm regards,

Candyce

The following is a guest post by Michael Speranza; Senior Vice President, Global Product Management at IPC Systems, Inc.

Investing in emerging markets used to be akin to riding a roller coaster. No longer, judging by new metrics from investments in those regions. I previewed some of TABB Group’s recent emerging markets research, and with their permission, am sharing a few nuggets…

Faster Recovery / Stronger Growth

Emerging markets are growing more reliably and recovering more quickly than developed economies. Consequently, they have enjoyed a lasting boom among investors that does not seem to be weakening. Since 2006, the compound annual growth rate for emerging economies has been 13%, well above the 4% benchmark set by developed markets. In 2010, emerging markets grew GDP at a 17% clip, well outpacing other regions that sought economic recovery.

Emerging Economies Outpace Developed World

Unquestionably, emerging markets have now earned a reputation as the most reliable way to achieve alpha. From December 2008 until April of this year, the equity market performance of emerging economies far outpaced developed economies. This explains why investors have been favoring the BRICs of the world quite blatantly. Historically, emerging markets have been tightly correlated with developed markets. However, since early 2009, the equity fund flow to emerging markets has drastically decoupled from that of developed economies. The IMF predicts that by 2015, one-third of the top world economies will be today’s emerging markets.

So the inflows are there, as are the returns. This reflects either strong fundamentals or great confidence in those markets among institutional investors. Unlike the bad products that have made the front pages, strong demand for institutional offerings that target emerging markets is not just a matter of Wall Street doing an exceptional job of marketing its own creations. Now it’s based on strong market fundamentals.

Emerging Markets vs. Frontier Markets

There are no exact criteria for defining emerging vs. frontier markets. In general, frontier markets are still dangerously unpredictable. But, increasingly, emerging markets offer steady performance, in some cases, in spite of political uncertainty and regulatory challenges. The relative inaction of the 112th Congress in the U.S. highlights that developed markets are not immune to damages borne from inept policy-making. In fact, the bullish state of emerging markets can be read another way: as a significant, no-nonsense threat to developed markets.

Challenges in Accessing these Markets

More generally, the primary challenge for investors that desire access to emerging markets is doing so quickly. Gaining access to a new fund in India, for instance, can take six months. China can take multiple years.

Institutions have enhanced their product offerings in several different ways to accommodate emerging market growth.

• Bulge bracket global banks emphasize their on-the-ground presence in nearly every major global market as a differentiator. This brings with it local knowledge of how the markets operate (beyond simple regulatory documents) and often the ability to trade in the local market as a local.

• For those just out of the bulge bracket, the offering of tailored products for a client’s investment needs at a low cost can attract significant business.

Increasing Demand

European and North American sell-side firms are encountering continuing demand for emerging market exposure and access from their buy-side clients. We expect that demand to continue for several years, as the developed world continues to struggle with complex economic and political issues while emerging markets continue to experience explosive growth in their middle class and domestic consumer base. Providing access to these markets creates a unique opportunity for sell-side banks, brokerages, and financial technology providers to differentiate, create specialized offerings, and grow their client bases.

You can find more information and a presentation about the emerging markets from the TABB Group by clicking here.

IPC has a financial extranet that helps clients gain access to emerging markets. To find out more, click here.

Warm regards,

Candyce

Institutional investors know that emerging markets often provide the greatest opportunity for alpha. But putting money to work in those markets is not always easy. Liquidity, regulation, infrastructure, even local customs, can all become hurdles that can quickly shift the risk-reward balance away from the investors’ side. That said, emerging markets are still among the few around the globe that are offering solid growth rates.

One of the key drivers of emerging market growth and stability is capital formation. On Nov. 22 in London and Dec. 1 in New York, live panel discussions are scheduled to talk about trading in some of the fastest growing emerging markets in Asia and Eastern Europe. We recently interviewed Nigel Roberts, CEO of Marco Polo Europe, a leading global agency broker specializing in emerging markets, to get his thoughts on this new dynamic.

In our conversation, Roberts, who is one of the panelists for the U.S. event, talked about what makes emerging markets attractive to institutional investors. He also shared some thoughts on the importance of capital formation and which markets have the strongest domestic capital basis on which to grow.

Moving the “Needle”

Emerging markets become interesting to a broader spectrum US and European asset managers when they offer enough scale and liquidity to “move the needle” in a large portfolio or investment strategy. Traditionally, this scale has only been available in the large emerging economies such as China and Brazil; but we see increasing opportunity in other markets as they grow, encourage domestic participation, and open up more to foreign participation. In the event, we’ll talk specifically about which countries offer scale today and which markets are poised for providing that level of scale in the next one to two years.

Drivers of Scale and Liquidity

The ideal driver of this scale and liquidity is domestic market participation and an increasingly vibrant derivative market. In the 1990’s there was a rise in international flow into emerging markets, particularly in Latin American, which resulted in foreigners becoming the dominant players in many cases. This can become a problem. As shown historically; institutions have a tendency to repatriate moneys at home when their own domestic markets are under pressure. This then results in an exaggerated sell-off in the emerging markets.

But today’s markets are much more stable and sustainable because of strong domestic participation. In the past decade, emerging markets have seen 600-700 percent growth in cross-border trading to over 4 trillion dollars in 2010. Domestic participation has held steady at around 65%, indicating that domestic investment is growing at the same rate as international flow. Interestingly, there has been a similar increase in cross-border trading in the derivatives markets, culminating in over seven billion contracts traded last year.

In our conversation, Roberts shared his thoughts about three markets we’ll highlight in the panel discussions.

Poland

Poland requires all citizens to contribute 7 and a half percent (7.5%) of their incomes into pension funds. This has created substantial growth in Polish pension funds, and consequently attracts listing business. Many Eastern European companies list in Warsaw because the available money creates increased liquidity for their listings. As the market grows, liquidity increases, and market rules and regulations change. As a result, the market has attracted increased international flow – from both long-term investors and high frequency traders. This makes Poland a very interesting emerging market. In addition, the Poland derivative market has grown alongside its equity market.

Turkey

Turkey is a bit different. According to Roberts, the level of domestic institutional participation is still relatively small, but growing. Approximately 2/3rds of the trading on Turkdex and the Istanbul exchanges is retail. Turkey is a relatively large player in the emerging market “bucket” and sits firmly in the tier just below BRIC with ambitions to be a regional financial hub. Turkey has made large strides in recent years, highlighted by significant changes in its market rules and regulations and a new trading platform for Turkdex that will be implemented Q1 of 2012.

India

India has one of the highest savings rate in the world at approximately 7% of income. This increasing wealth creates substantial market opportunity. The Indian markets are growing quickly, and domestic retail investors now account for approximately 60% of trading volume. It should be noted that the trading in derivative instruments is approximately 10 times that of equities. The Indian markets are evolving and working to attract more foreign and domestic participation, as highlighted by continued market reforms and continued introduction of improved technology. All this solidifies India’s position as an important BRIC nation.

Come Join the Conversation

Join us for a dynamic and informative evening as we talk about these markets and others on November 22 in London and December 1 in New York. Tabb Group will share results of their recent research in the emerging markets, and we’ll have a lively panel discussion about some of the tricky issues around market access, regulatory issues, and infrastructure needs for trading in these markets. The panels will include renowned industry experts who will share some of their hard earned knowledge and expertise in how to be successful trading in the emerging markets.

Register here for the London event.
Register here for the New York event.

Warm regards,

Candyce

Sasha Dichter of Acumen Fund gave the keynote at FPL Americas on Tuesday. It was a great talk, just as inspiring as I’d hoped it would be.

Here are a few observations from his talk:

The Well Being of the Tribe is Everyone’s Responsibility

The concept that “charity begins at home” is relatively new in history. Traditionally, there was more of a sense that the well-being of the tribe was everyone’s responsibility. If a member of the tribe was struggling, the rest of the tribe chipped in to help the struggling members without expectation of recompense or profit. Sasha quoted Deuterotomy 23:19-20 “Do not charge a fellow Israelite interest, whether on money or food or anything else that may earn interest. You may charge a foreigner interest, but not a fellow Israelite, so that the LORD your God may bless you in everything you put your hand to in the land you are entering to possess.” (NIV). He also told the story of the Potlach ceremony. This was a practice common in many west coast Native American tribes. During the ceremony, the wealthiest members of the tribe passed out gifts to the other tribe members. In this social setting, status was based not on how much you had, but on how much you gave.

Sasha’s point was that the concept of the gift economy – of charitably helping members of our tribe without expectation of recompense – has shrunk in much of the modern world. It first shrank from the tribe to the extended family and now has shrunk even further to exclude most everyone outside our nuclear families.

Shockingly, some of this transformation has actually been driven by our government. According to Wikipedia, the Potlach ceremony was actually made illegal in Canada and the United States in the late 19th century. The ban was only repealed in 1951.

I wonder what the world would look like if we eliminated the axiom that “charity begins at home” and started accepting responsibility to help the less fortunate across the board? (Note: Politically I’m actually a fiscal and social conservative. While I feel it’s everyone’s responsibility to help each other, I’m not convinced that the government welfare system is capable of delivering a sustainable solution.)

Can the Power of the Markets Inspire Innovative Solutions to Poverty?

The developed nations have created tremendous wealth and provided innovations that changed the lives of most people who live in the Western world. But there are still massive problems with extreme poverty throughout the world. More than 3 billion people still live without basic sanitation (which is vital to health). More than 2 billion lack access to safe drinking water.

The Acumen Fund asks, “Can we take the best of philanthropy and the markets, the best of accountability and patience, the best of innovation and extend it to solve the problems of extreme poverty?”

The Acumen fund works in some of the poorest parts of the world – in Pakistan, India, and East and West Africa. In these areas, basic infrastructure such as roads is terrible; they have no access to electrical grids, clean water supplies, or sanitation. Corruption is high, trust is low, and interaction with the markets looks very different than it does in the developed world.

They apply a concept Sasha calls “non-profit venture capital.” They invest in innovative solutions to fundamental problems – such as providing villages with inexpensive access to clean drinking water, building electricity generators powered by rice husks, and providing lower cost lamps to replace kerosene lamps. They allow longer time horizons for the return of their capital, and they look for long-term social impact instead of short-term financial gain. At the same time, they understand that having a long-term impact demands a sustainable business model. While not all of their investments are successful, many are having significant impact and are gradually figuring out a business model that allows for scale and financial sustainability. Acumen Fund lives up to the old Taoist proverb, “If you give a man a fish, you feed him for a day. If you teach him how to fish, he’ll feed himself for a lifetime.”

I’d like to hear your thoughts. Have you seen other innovative ways to solve extreme poverty?

Warm regards,

Candyce

Planning the FPL Conference

I’ve been heavily involved in planning the FPL Americas conference this year. I’ve served as co-chair of the marketing committee and was also very active in the program committee planning out the conference content. In this role, I had the opportunity to suggest and secure this year’s keynote speaker. I’m very excited about the keynote, but before I tell you about it, let me give you a sense of WHY I recommended this particular speaker.

Protesters Blame Wall Street for Everything

The past three years have been incredibly difficult, and it seems that the news isn’t getting much better. We all struggle with the consequences of the economic climate. Many of us are facing more layoffs and spending cuts. Most are expected to do the work of 2-3 people to fill the gaps from earlier layoffs. And just to get to and from work, many have to skirt Occupy Wall Street protesters who blame Wall Street for practically every wrong in the country today. While I feel that the protesters are poorly informed in many respects, I do think it’s important for Wall Street to pay attention.

Why the Capital Markets Exist

African mosquito nets being manufactured

Jim Northey wrote an interesting note to his Global Finance students at Michigan Tech. Northey points out that we seem to have forgotten why the capital markets exist. It’s important to remember that equity and debt markets were established to provide the capital to build businesses and industry and fund government investments in infrastructure and public services. In return for risking their capital, investors have an opportunity to grow their wealth. Futures markets were created to manage risks involved for the producers and consumers of commodities. Derivatives markets were developed as a way to hedge the risk of investments in other vehicles.

Trading Practices Obscure the Purpose

But as Northey points out, in many ways, trading practices have obscured the purposes of these markets. “Don’t get me wrong,” Northey clarifies, “I am an ardent believer in markets, likely I would sacrifice well-being and even life to defend a free capitalist based society….”

He goes on to share his hope that “this industry can be changed and can return to its rightful place as the engine that drives societal growth and prosperity.”

A Different Perspective

Family with mosquito net

I agree with Jim. The capital markets and a capitalist system can do incredible good in the world. So for the FPL conference this year, I’d like to introduce a different perspective of the capital markets – one that uses the power of the markets to help solve some of the toughest social problems in the developing world – things like providing safe drinking water, making affordable healthcare available, bringing power to poor and remote corners of the world.

Our keynote speaker, Sasha Dichter, has a different message than that of the Wall Street protesters: that the power of the markets can bring real and significant change to our lives and the lives of others.

Patient Capital

Sasha works for a firm called the Acumen Fund. Their mission is to create a world beyond poverty by investing in social enterprises, emerging leaders, and breakthrough ideas. They bring together the best of market approaches, equity investment and philanthropy in something they call patient capital. The Acumen Fund has been pioneering this work since 2001.

Sasha is a Talented Speaker

Sasha is a recognized blogger and speaker on philanthropy, generosity and social change. He was recently featured as a TED.com “best of the Web” speaker, has been profiled as an Innovation Agent by Fast Company magazine, and is a Top 10 Business Blogger on Say:100 media.

Here are some links to learn more about Sasha and the Acumen Fund.

http://blog.acumenfund.org/2010/04/20/acumen-fund-and-ecotact-on-pbs-newshour/

http://www.youtube.com/user/acumenfund

http://www.acumenfund.org/ten/

Come to the FPL Americas Conference on November 1 and hear Sasha speak. I’m certain you will find the stories he’s going to share inspiring and uplifting. The keynote starts at 8:35 am, and this is one talk you won’t want to miss.

Warm regards,

Candyce