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Monday, 3 August 09:02 (GMT -05:00)



Foreign exchange market

How Does Urbanization Influence Economies, Investments And US Dollar Exchange Rate?


Last week Credit Suisse Group released a sensational report. According to it, the urban population of emerging economies will make 50% of the global population by 2037. It appears that the analysts show investors which countries (and currencies) they should pay attention to when planning long-term investments. The list includes: China, Egypt, India, Indonesia, Nigeria, Pakistan, Philippines, Thailand and Vietnam . They also provided the list of those countries that will lose their investment attractiveness due to excessive urbanization. These are the USA, EU states etc.

What are the reasons behind such conclusions? Should we trust Credit Suisse’s forecasts?
 
Urbanization
According to Eugene Olkhovsky, Masterforex-V Academy’s leading expert from Canada, in a broad sense, urbanization is a complex social, economic, demographic and geographical process connected with increasing the role of cities in the modern society. In a narrow sense, this is just the growth of cities and their population as compared with the rural population.
 
The contemporary urbanization is different from those seen hundreds of year ago. Previously, cities used to grow only at the expense of migrating rural population and foreigners. These days, apart from migration, there are 2 more factors contributing to urbanization: villages turn into towns while big cities get surrounded by vast suburban areas. As more and more suburbs are built around big cities (usually, big industrial and administrative centers or capitals), they turn into metropolises.
 
For now, there are over 20 metropolises with over 10 million people living in each of them: Sao Paulo and Rio de Janeiro (Brazil), Tokyo (Japan), New York (USA), Shanghai and Beijing (China), Bombay (India), Jakarta (Indonesia), Moscow (Russia). Mexico remains the world’s biggest city (25.8 million people).
 
Another outcome is the so-called “rurbanization” – it is when urban lifestyle spreads over rural areas.
 
Megalopolises represent the ultimate stage of urbanization. This is the merge of several metropolitan areas. It means that you can move from one city into another without leaving the urban area. Here are some examples: Blue Banana (Dublin, Liverpool, Manchester, Leeds, Sheffield, Birmingham, London), Taiheiyo Belt (Chiba, Tokyo, Kawasaki, Yokohama, Nagoya, Kyoto, Osaka, Kobe, Hiroshima), Northeast Megalopolis (New York, Boston, New Jersey, Washington, D.C., Baltimore, Philadelphia, Hartford, Richmond, Norfolk), Great Lakes Megalopolis (Chicago, Toronto, Montreal, Ottawa, Detroit, Pittsburgh, Milwaukee, St. Louis, Minneapolis, Indianapolis, Cleveland, Cincinnati, Dayton, Columbus, Grand Rapids, Toledo, Akron, Rochester, Buffalo).
 
Indeed, the pace of global urbanization is shocking:
In the 19th century the global population increased by 1.7 times while the urban population quadrupled. In the 20th century the stats increased by 3.7 and 13.3 times correspondingly. In 1950-2000 the amount of urban citizens increased by 400%. During the period of 1991-1995 it increased by 61 million people a year while the rural population of the world kept increasing only by 25 million people.
 
According to the UN, within the first 2 decades of the 21st century the urban population of the world will increase up to 5.1 billion people. The future urbanization will take place mainly at the expense of emerging states as 90% of the rural population lives there.
 
Can you believe it? Today almost 50 % of the global population lives in cities, which occupy only 1% of the land.
 
The future belongs to emerging economies
 
In the early 1990s the level of urbanization in developed countries reached 72% while emerging economies were lagging far behind with 33%. However, the situation is changing rapidly. In 1950 the share of urban citizens was only 19-20% while in 1990, it increased up to 38-40%. In 2000 it reached 45% and is nearing 50%.
Emerging economies will keep boosting their manufacturing industries and investing in human capital and innovation technologies, which will obviously contribute to the growth of their cities.
 
The urbanization prospects in emerging countries are especially high as most citizens are young (2/5 of them are under 14). It is especially true of Latin American countries (with over 70% of the population living in cities). As for China, India and some African countries, it is 40% or roughly 1 billion people. According to some forecasts, the share of urban citizens in Africa is expected to touch 50% in 2030.
 
In terms of the level of urbanization, all the countries around the globe can be divided into 2 groups:
 
Highly-urbanized countries (the share of urban citizens is over 50%). These are the countries of North and South America (except Bolivia, Guatemala, Honduras, Salvador, Costa Rica, Haiti and Dominican Republic) Australia, West European States (except Portugal ), Japan, Mongolia, Kazakhstan, Baltic states, Russia, Ukraine, Belarus, South Africa, Tunis, Libya, Saudi Arabia, Iraq, Kuwait etc.
 
Moderately-urbanized countries (the share of urban citizens is under 20%). Afghanistan, Nepal, Laos, Butan, Bangladesh, Ethiopia, Somali, Madagascar, Botswana, Uganda, Burundi, Mali, Niger, Chad, Burkina Faso, Ghana, Tonga, Sierra Leone, Guinea.
 
Why is urbanization beneficial for investors?
Urbanization favors the development of economies. There is direct connection between the urbanization and GDP growth. According to some estimations, each 5% increase in a country’s urban population causes a 10% GDP-per-capita increase. Those countries with 30-50% of urban citizens can boast record-high GDP-per-capita growth. According to Credit Suisse, as soon as a county’s level of urbanization exceeds 40%, its economic growth reaches the climax (the annual GDP growth is roughly equal to 8%). Therefore, urbanization directly influences production, demand and investments.
 
 
Urbanization stimulates multiple industries, including construction and machine-building industries, metallurgy, services and banking sectors, information technologies, mass media etc. Higher concentration of production and capital results in higher quality of life in megalopolises.
 
There is false urbanization. Investors should consider this factor as well. It emerges when a substantial increase in the amount of urban citizens is not attended by a considerable increase in the amount of new jobs. Ex-rural citizens start replenishing the unemployed army. They live in slum areas. This is especially true of third-world countries.
 
 
 
How does urbanization influence the US Dollar and other major currencies?
In terms of fundamental analysis and Credit Suisse’s recommendations, this is an unstudied question. Eugene Olkhovsky assumes.
 
However, those countries that show a fast pace of urbanization can see their national currencies gaining value against the US Dollar.
 
The following national currencies can boast positive dynamics against the US Dollar:
 
The Russian Ruble:
 
 
The Hungarian Forint
 
 
The Turkish Lire
 
 
The Czech Koruna
 
 
The South African Rang
 
 
 
Market Leader and Masterforex-V Academy would appreciate if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following question:
 
In your opinion, is there correlation between the US Dollar and the national currencies of the countries fast urbanization?
 
 
 
 
 

 

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Forex-Market Claim They Can Overcome Any Challenges in Financial Markets

The global economy keeps on seeing more and more shocks and challenges from time to time. In early 2015, it became clear that even the notorious Swiss banks cannot guarantee 100% security and safety of funds, not to mention plain FX brokers, which are constantly in jeopardy of going bankrupt. Does it mean it is better to cancel all FX trading and put the money under the mattress? No, it doesn’t! This is what the representatives of a young but promising FX broker named Forex-Market think about it.

 
They assume that the way an FX broker conducted its business is the key factor when it comes to financial security, stability and safety of client funds.
Publication date: 31 July 07:59 AM

Masterforex-V EXPO Names Best FX Brokers For Rookies. July 2015

 

Any FX broker faces the problem of choosing a suitable FX broker to go with at some point in his/her trading career. However, it is always a good idea to start working with a reputable FX broker right off the bat.
 
This is a crucial decision to make since it is the broker you trade with that determines the trading conditions as well as your overall comfort and performance. No trader can do without a reliable broker. And no trader can eventually succeed in FX trading with a scam or fake broker since the ultimate goal is to withdraw the profits and enjoy them by spending them.
Publication date: 30 July 09:34 AM

Forex Trend: Lessons and Prospects

History always gyrates, which means there will always be ups and downs, clear trends and periods of standstill. For all FX traders out there, it is all about timing. In other words, it is important to join and leave the trend just in time.

A company’s name reflects its aspirations and prospects. That is why they founders called their company Forex Trend. The company’s history over the last 5 years is a crying example of a classic Forex trend with momentums and retracements.

 
In 2010 through 2014, Forex Trend saw an uptrend allowing its clients to make millions of dollars. In early 2015, the trend slowed down and a retracement followed, which reflected in some major difficulties for the company and its clients.
 
However, a new uptrend is coming, thereby giving Forex Trend clients hope for the better. The new uptrend for the company and its clients is expected to start in September 2015…
 
The thing is that Concorde Capital, one of the biggest investment companies out there, decided to purchase Forex Trend, thereby giving all of its clients to get the frozen funds back and make new profits.
Publication date: 30 July 08:14 AM

Brent Oil Drops below 54 Dollars per Barrel

 

The cost of September future contract of Brent oil has dropped to 53.71 US dollars during London trading session this Monday. This is 1.69 percent lower than the cost of the previous trading session held on Sunday. That day the price of Brent during a trading session amounted to 54.67 dollars.
 
The last time oil of this brand dropped below 54 dollars per barrel was on March 20. This is proved by data recorded at the stock exchange. That day barrel of Brent has reached the minimal point of 53.55 dollars.
Publication date: 30 July 07:21 AM

“Gazprom” Reduces Gas Recovery in 2015

Ministry of Economic Development and Trade of the Russian Federation (MEDT) has held monitoring of economic situation around “Gazprom”. “Results of the research show that during the first six months of 2015 “Gazprom” has considerably reduced the volume of gas recovery and export,” inform the experts of “Market Leader” online-magazine.

 

Publication date: 29 July 01:57 PM

Orbex Launches New Partners Area for FX Affiliates

 

Not so long ago, Orbex started a new partners area for all those who promotes this FX broker and makes money by doing so. As a client-oriented company, Orbex strives to make it a better place for both client (traders and investors) as well as partners (affiliates, introducing brokers etc). Therefore, The Orbex team is constantly working on the quality and efficiency of the company’s products and services.
Publication date: 29 July 10:02 AM

Forex. EURUSD: Dollar Drops Versus Euro Amid German Import Figures

 

According to the recent report published by Destatis, Germany’s official statistics agency, the import prices in Germany dropped in June 2015. It should be noted that the June decrease indicated acceleration in the dynamics, i.e. relative to the the same figures seen in May. The actual figures exceeded analyst expectations.  
 
Publication date: 29 July 09:15 AM

Forex. USDSGD: U.S. Dollar Raises VS Singaporean Counterpart As Singapore’s Biggest Bank Reports Higher Profits

 

Market Leader reports that according to the recent statement made by DBS, Singapore’s biggest bank, it’s net profits increased by 15% in Q2 2015. In absolute figures, this is some $800 million.
 
Publication date: 29 July 05:32 AM

Forex. GBPUSD: British Pound Keeps On Retracing Amid Poor UK Retail Sales Figures

 

The latest retail sales report published by the Office for National Statistics (ONS) earlier in July indicated a decline. According to Market Leader, this came as a surprise for most analysts out there.
Publication date: 28 July 11:24 AM

NordFX Names TOP 5 FX Signal Providers In June 2015

 

These days, there are so many financial opportunities that you don’t even have to work hard to get a passive income on a regular basis, which can sometimes be way bigger than monthly salaries. Undoubtedly, they can guarantee pretty good standards of living and even lead you to true financial freedom, given that you actually know where to find those decent opportunities and how to implement them to make your dreams come true.
 
Publication date: 27 July 11:41 AM