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When stock markets are at odds with the economists

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For those who believe financial markets are completely divorced from economic reality, the past few weeks have thrown up some conclusive proof for their case.

Just a couple of examples illustrate the point. Deutsche Bank has published a survey of the US jobs market showing that over the past four weeks, some 25 million jobs were lost in America as the pandemic-ravaged economy ground to a halt. That is more than have been created since the end of the global financial crisis in 2009.

Another example: Goldman Sachs has calculated that the world’s developed economies — the US, Europe and Japan — will shrink by as much as 35 percent in the current quarter compared to the first three months of the year, which were not exactly buoyant anyway. That is four times the previous record set for economic contraction during the global financial crisis.

Against the background of these figures — cataclysmic by any normal economic standards — the financial markets have been quixotic. The S&P Index, the Wall Street benchmark, last month suffered its biggest one-day fall in more than three decades, in a period of almost consistent declines.

Then, towards the end of the month, the index roared ahead again, with three consecutive days of big rises after the US Congress launched its financial “bazooka” in the form of a $2 trillion support package. President Donald Trump, who lives and breathes by the stock indices, was able to proclaim another triumph.

The S&P is still well off the exuberant levels of mid-February, which was the apex of the Trump bull run, but at least the downward plummet has been halted. Goldman Sachs, the same bank that came out with those awful economic statistics, recently said that stocks were unlikely to go any further, partly because of the “do what it takes” attitude of the Trump administration and Congress.

Goldman’s other reason for some optimism was that the virus curves were beginning to flatten out in some parts of the world, and more economic policymakers — not least Trump — were beginning to talk about when they might hope to open up their economies. The prospect of a complete economic collapse was “precluded,” Goldman said.

Others pointed to flaws in both arguments. Having fired the big bazooka, the US authorities have little ammunition left to counter a second financial market threat, perhaps from the ballooning market in corporate debt, or some other aspect of the shadow-banking system.

The truly frightening historical perspective comes on calculating when shares finally recovered to pre-Black Monday levels. It was not until 1955, one economic great depression and one world war later.

______Frank Kane

While there have been some encouraging signs that the pandemic is starting to level out, especially in Asia and some European countries, there are huge parts of the world — India, Africa, South America — where there is no or insufficient evidence to make such a call. Large swathes of the global economy could be affected for many months to come.

For financial markets, there is a more immediate danger: Corporate profits for the first half of the year will be catastrophic. Many companies have just gone through the worst quarter of their existence, and profits will be non-existent.

Equity markets still pay great attention to the “price-earnings ratio” which values the shares according to a multiple of the earnings per share. It will be mathematically impossible to determine this when there is no “earnings” value to compute.

Stock markets may comfort themselves by looking to the future, in the hope of a sharp V-shaped recovery towards the end of the year.

But if they look to the past, the perspective is much scarier. In 1929, in the Great Crash — which some experts believe is a more accurate model for our current predicament than the 2008 crisis — shares crashed famously on Black Monday. But they continued falling for another two years, despite lots of little upward blips along the way. The final bottom was not reached until 1932.

The truly frightening historical perspective comes on calculating when shares finally recovered to pre-Black Monday levels. It was not until 1955, one economic great depression and one world war later.

  • Frank Kane is an award-winning business journalist based in Dubai. Twitter: @frankkanedubai

Business

PwC Australia’s culture attacked in tax leak scandal report

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On September 27, 2023, PwC Australia released a report on the tax leak scandal that has rocked the firm in recent months. The report, which was conducted by former Telstra CEO Ziggy Switkowski, found that PwC’s culture had contributed to the scandal.

The report found that PwC’s culture was characterized by a focus on “growth at all costs” and a “win at all costs” mentality. This culture led to a number of problems, including:

  • Partners overlooking rule-breaking by ‘rainmaker’ colleagues in pursuit of revenue growth.
  • A failure to adequately supervise and train staff.
  • A lack of transparency and accountability.
  • A fear of speaking up about wrongdoing.

The report also found that PwC’s culture had led to the development of a “shadow culture” within the firm. This shadow culture was characterized by a number of unethical and unprofessional behaviours, including:

  • Backstabbing and sabotage.
  • Bullying and intimidation.
  • Discrimination and harassment.
  • The use of drugs and alcohol.

The report found that the shadow culture had contributed to the tax leak scandal by creating an environment in which employees were more likely to engage in unethical behaviour.

The Switkowski report made a number of recommendations for how PwC can improve its culture. These recommendations include:

  • Adopting a new set of values that emphasize integrity, transparency, and accountability.
  • Implementing new policies and procedures to prevent unethical behaviour.
  • Providing better training and supervision for staff.
  • Creating a more open and inclusive culture where employees feel comfortable speaking up about wrongdoing.

PwC has said that it will implement all of the recommendations in the Switkowski report. However, it will take time for the firm to change its culture. In the meantime, PwC needs to do more to convince its clients and the public that it is serious about addressing the problems that have been identified in the report.

The impact of PWC’s culture on the tax leak scandal

PwC’s culture played a significant role in the tax leak scandal. The firm’s focus on growth at all costs and its win-at-all-costs mentality created an environment in which employees were more likely to engage in unethical behaviour.

The shadow culture that developed within PwC also contributed to the scandal. This shadow culture was characterized by a number of unethical and unprofessional behaviours, such as backstabbing, sabotage, bullying, intimidation, discrimination, harassment, and the use of drugs and alcohol.

The shadow culture made it more difficult for ethical employees to speak up about wrongdoing. This is because ethical employees were often afraid of being retaliated against by their colleagues or their superiors.

As a result of PwC’s culture, the firm was unable to prevent the tax leak scandal from happening. The firm also failed to adequately respond to the scandal when it did occur.

What PwC can do to improve its culture?

PwC needs to take a number of steps to improve its culture. These steps include:

  • Adopting a new set of values that emphasize integrity, transparency, and accountability. PwC’s current values focus too much on growth and profits. The firm needs to adopt a new set of values that put ethics and the public interest first.
  • Implementing new policies and procedures to prevent unethical behaviour. PwC needs to implement new policies and procedures that make it more difficult for employees to engage in unethical behaviour. For example, the firm could implement a policy that requires all employees to report any suspected wrongdoing to their supervisor.
  • Providing better training and supervision for staff. PwC needs to provide better training and supervision for its staff on ethics and professional conduct. The firm also needs to create a culture where employees feel comfortable speaking up about wrongdoing without fear of retaliation.
  • Creating a more open and inclusive culture. PwC needs to create a more open and inclusive culture where employees feel comfortable speaking up about wrongdoing. The firm also needs to take steps to address the shadow culture that has developed within the firm.

Conclusion

PwC’s culture has contributed to the tax leak scandal that has rocked the firm in recent months. The firm’s focus on growth at all costs and its win-at-all-costs mentality created an environment in which employees were more likely to engage in unethical behavior.

The shadow culture that developed within PwC also contributed to the scandal. This shadow culture was characterized by a number of unethical and unprofessional behaviors, such as backstabbing, sabotage, bullying, intimidation, discrimination, harassment, and the use of drugs and alcohol.

PwC needs to take a number of steps to improve its culture. These steps include adopting a new set of values that emphasize integrity, transparency

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AI

Abu Dhabi Throws a Surprise Challenger into the AI Race

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an artist s illustration of artificial intelligence ai this image depicts how ai could adapt to an infinite amount of uses it was created by nidia dias as part of the visualising ai pr

Introduction

In the fast-paced world of artificial intelligence (AI), where Silicon Valley has long been the epicentre of innovation, a new contender has emerged from the Middle East to challenge the status quo. Abu Dhabi, the capital of the United Arab Emirates, has thrown a surprise challenger into the AI race, making significant strides in research, development, and investment in this transformative technology. This blog post explores how Abu Dhabi is positioning itself as a formidable player in the global AI landscape, and the implications of this unexpected development.

1. The Rise of Abu Dhabi in AI

Abu Dhabi, known for its opulent skyline and thriving oil industry, has been steadily diversifying its economy over the past decade. As part of its ambitious Vision 2030 plan, the Emirate has set its sights on becoming a global technology and innovation hub, and AI is central to this vision.

2. Investments in AI Infrastructure

One of the key reasons behind Abu Dhabi’s rapid rise in AI is its substantial investments in infrastructure. The establishment of world-class research centres and innovation hubs, such as the Abu Dhabi AI Institute (ADAI), has created an ecosystem conducive to AI development. These institutions collaborate with global AI leaders and attract top talent from around the world.

3. Strategic Partnerships

Abu Dhabi has also formed strategic partnerships with leading AI companies and organizations. These collaborations enable knowledge sharing and provide access to cutting-edge AI technologies. Notable partnerships include agreements with Google’s DeepMind and OpenAI, facilitating joint research projects and talent exchange programs.

4.AI Research and Development

Abu Dhabi’s commitment to AI goes beyond mere infrastructure and partnerships. The Emirate has actively engaged in groundbreaking research and development projects, contributing to AI advancements on a global scale.

5.Focus on Ethical AI

In a time when ethical concerns around AI are gaining prominence, Abu Dhabi has taken a proactive stance. The ADAI, in collaboration with international experts, is actively researching ethical AI frameworks, ensuring that AI technologies developed in the region align with global standards and values.

6.AI Applications

Abu Dhabi is also exploring diverse applications of AI across various sectors. From healthcare and finance to transportation and energy, AI is being integrated into existing industries to enhance efficiency and productivity. For example, AI-powered predictive maintenance in the oil and gas sector has significantly reduced downtime and maintenance costs.

7.AI in Government and Public Services

What sets Abu Dhabi apart is its integration of AI into government services and public infrastructure, leading to tangible benefits for its citizens and residents.

8. Smart City Initiatives

The Emirate’s Smart City initiatives leverage AI to enhance urban planning, transportation, and public safety. From traffic management systems that optimize traffic flow to AI-powered surveillance for enhanced security, Abu Dhabi is creating a safer and more efficient urban environment.

9. Healthcare Transformation

Abu Dhabi’s healthcare sector has witnessed a significant transformation through AI. The integration of AI in diagnosis and treatment planning has not only improved patient outcomes but also reduced healthcare costs. AI-driven telemedicine platforms are providing convenient and accessible healthcare services to the population.

10.AI Education and Talent Development

To fuel its AI ambitions, Abu Dhabi is heavily investing in education and talent development.

11. World-Class Universities

Abu Dhabi is home to several world-class universities, such as New York University Abu Dhabi and Khalifa University, which offer cutting-edge AI programs. These institutions attract top talent and produce graduates well-equipped to contribute to the AI field.

12. International Collaboration

Abu Dhabi’s AI institutes actively collaborate with leading global institutions to facilitate knowledge exchange and skill development. This collaboration extends to organizing international AI conferences, workshops, and hackathons, which foster innovation and creativity.

13.The Economic Impact of Abu Dhabi’s AI Push

Abu Dhabi’s AI initiatives are not only about technological advancement but also about economic diversification and sustainability.

14. Economic Diversification

Historically reliant on oil revenues, Abu Dhabi is proactively diversifying its economy. AI-driven industries, including technology startups and research-driven enterprises, are emerging as significant contributors to the Emirate’s GDP.

15. Job Creation

The AI sector in Abu Dhabi is creating a multitude of job opportunities for both Emiratis and expatriates. From AI researchers and data scientists to software engineers and AI ethics experts, there is a growing demand for talent in various AI-related roles.

16. Challenges and Future Prospects

Despite its rapid progress, Abu Dhabi faces several challenges on its AI journey.

17. Global Competition

Abu Dhabi’s entrance into the AI race means it competes with established players like the United States, China, and Europe. Maintaining competitiveness in this highly dynamic field will require sustained investments and innovation.

18. Ethical Concerns

As AI technologies continue to advance, ethical considerations become increasingly important. Abu Dhabi must navigate complex ethical questions and ensure that AI development adheres to global standards.

Conclusion

Abu Dhabi’s surprise emergence as a challenger in the global AI race is a testament to its commitment to innovation, economic diversification, and sustainable development. Through investments in infrastructure, research, and talent development, the Emirate has rapidly positioned itself as a significant player in the AI landscape. While challenges lie ahead, Abu Dhabi’s dedication to ethical AI and its strategic approach to partnerships and collaborations make it a formidable contender in shaping the future of artificial intelligence. As the AI race continues to evolve, Abu Dhabi’s contributions are sure to play a pivotal role in shaping the industry’s trajectory.

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Business

10 Business Development Tips for Prospective Entrepreneurs

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Introduction

Starting a business can be an exciting and fulfilling journey. However, it can also be challenging and uncertain, especially for prospective entrepreneurs. To help you navigate the world of business development and increase your chances of success, we have compiled 10 essential tips for aspiring entrepreneurs like yourself. Whether you are launching a startup or looking to grow an existing business, these tips will steer you in the right direction.

1. Start with a Solid Business Plan

A well-crafted business plan is the foundation of any successful business venture. It outlines your mission, vision, and objectives, and includes a detailed analysis of your target market, competition, and financial projections. A solid business plan will guide your decisions, help you secure funding, and keep you on track as you navigate the challenges of entrepreneurship.

2. Understand Your Target Market

To effectively develop and market your products or services, you need a deep understanding of your target market. Conduct market research to identify your ideal customer profile, their needs, pain points, and purchasing behaviour. This knowledge will enable you to tailor your offerings to meet their demands and gain a competitive advantage.

3. Build a Strong Online Presence

In today’s digital age, building a strong online presence is crucial for attracting customers and growing your business. Create a professional website that is user-friendly and visually appealing. Optimize it for search engines to increase your visibility online. Engage with your target audience through compelling content, social media marketing, and email newsletters. Leverage the power of online advertising to reach a wider audience.

4. Foster Innovation and Adaptability

Innovation is key to staying ahead in a rapidly evolving business landscape. Encourage a culture of innovation within your organization by promoting creativity, empowering employees to share ideas, and rewarding entrepreneurial thinking. Additionally, remain adaptable and open to change. Be willing to pivot your strategies based on market feedback and emerging trends.

5. Develop Strong Networking Skills

Networking plays a vital role in business development. Building relationships with industry professionals, potential customers, and other entrepreneurs can open doors to new opportunities, partnerships, and collaborations. Attend industry events, join business organizations, and engage in online communities to expand your network. Remember, meaningful connections can lead to valuable insights and growth opportunities.

6. Focus on Customer Relationship Management

Delivering exceptional customer experiences and building strong relationships is crucial for business success. Treat your customers as your most valuable asset. Provide personalized and prompt customer support, listen to their feedback, and continuously improve your products or services to meet their expectations. Happy and satisfied customers become loyal advocates who can drive further growth through word-of-mouth referrals.

7. Invest in Continuous Learning

The world of business is constantly evolving. To stay ahead of the curve, invest in continuous learning. Attend workshops, conferences, and seminars to acquire new knowledge and skills. Take advantage of online resources, industry publications, and podcasts to stay updated on the latest trends, developments, and best practices in your field. As an entrepreneur, your ability to adapt and grow is crucial to long-term success.

8. Seek Mentorship and Guidance

Seeking the guidance of experienced mentors can provide invaluable insights and support throughout your entrepreneurial journey. Look for mentors who have experience in your industry or have successfully built businesses themselves. Their advice and guidance can help you avoid common pitfalls, make better decisions, and accelerate your business growth.

9. Embrace Strategic Partnerships

Strategic partnerships can be a powerful catalyst for business development. Look for complementary businesses or individuals with whom you can collaborate to achieve mutual growth and shared objectives. By leveraging each other’s strengths, you can access new markets, expand your customer base, and jointly develop innovative products or services.

10. Prioritize Self-Care and Well-being

Entrepreneurship can be demanding and stressful, often leading to burnout if not managed properly. Prioritize self-care and well-being to maintain your physical and mental health. Establish work-life balance, practice stress management techniques, and surround yourself with a supportive network of family, friends, and peers. Remember, taking care of yourself is essential for your long-term success as an entrepreneur.

Conclusion

These 10 business development tips provide a solid foundation for prospective entrepreneurs looking to embark on their entrepreneurial journeys. By starting with a solid business plan, understanding the market, building a strong online presence, fostering innovation, developing networking skills, focusing on customer relationships, investing in continuous learning, seeking mentorship, embracing partnerships, and prioritizing self-care, you can equip yourself with the tools and knowledge needed to thrive in the competitive world of business. Remember, perseverance, passion, and a willingness to adapt are key ingredients for entrepreneurial success. Good luck with your exciting business development journey!

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