By: Frank Holder
Frank Holder makes it his job to assess risk in corporate and investment operations and advise his clients appropriately. At times, this includes dealing with matters of corporate or even national security. At other times, such as now, this means issuing a general advisory to companies and investors to approach certain situations cautiously and what pitfalls to avoid when they do.
The latest issue that Holder wants to bring to the attention of investors everywhere is the potential risks posed to the investment community in emerging markets overseas.
"In recent years," says Frank Holder, "American corporations have taken advantage of the movements toward industrialization and the rapid growth rates occurring across the world by increasing their investments into these foreign markets. Because of these not insignificant investment opportunities that foreign markets present, many companies in America now generate just as much profit and revenue from their operations in markets overseas as they do from those markets here in the United States."
However, warns Holder, this trend has not come without its risks. According to a recent report by MarketWatch, the recent selling off of these markets has struck fear into the wallets of investors everywhere. Rising interest rates in the United States have done serious harm to the attractiveness of many of these markets, while investment bankers are cutting international investment ties and advising their clients to keep away from markets in areas such as Indonesia, India, and potentially Thailand.
While vulnerable to macroeconomic changes, "...the most widespread and significant issue to spot with corporate investments in foreign markets is corruption," says Frank Holder, and this contributes to why corporate investors need to be especially wary. "The foreign operations of these multinational companies now face many rapid changes in the environment of financial governance," remarks Holder. "An increase in scrutiny by the United States government, the Sarbanes-Oxley Act's implementation, and the Foreign Corrupt Practices Act of 1977 (FCPA) are all making it more vital than ever for executives in these corporations to enhance the tightness of their control on their financial practices in overseas markets."