The coronavirus (COVID-19) pandemic has severely impacted multinational corporations (MNCs) and foreign direct investment (FDI) in developing countries, jeopardizing these firms' contributions to crucial development outcomes. In addition to bringing capital to developing countries, MNCs are key drivers of global trade, accounting for about 80 percent of total exports. FDI can drive economic transformation by introducing new technologies and best practices in developing countries.

Covid-19 looks like a "bend but won't break crisis" for globalization. International capital flows are plummeting, but globalization ? and opposition to globalization ? will continue to present business opportunities and challenges. Careful attention to the drivers of globalization's future can help companies navigate through and even profit from globalization's turbulence. Sectors including the primary and manufacturing sectors that have been severely impacted by the pandemic in developing economies account for a larger share of their FDI than in developed economies.

In Asia Pacific, S&P Global Ratings' base-case scenario assumes that corporate balance sheets may recover slowly from 2nd half of 2021, albeit, at a slow pace. Furthermore, this may not be enough to stabilize credit quality yet. Even within countries, there are significant recovery differences expected, depending on the corporate's industry segment of operation. Foreign Direct Investment (FDI) could play an important role in supporting host economies during and after the crisis through financial support to their affiliates, assisting governments in addressing the pandemic, and through linkages with local firms.

You and your team are part of the country risk assessment division in the world-renowned Standard and Poor's rating agency. This division provides business reports to listed companies considering investing in emerging nations. Zebra Automotive Manufacturing Company (ZAMC) is a New South Wales-based automotive company that manufactures spare parts for cars, buses, and trucks. The company is aware of country and foreign exchange risks once their operations move from domestic to international markets, but they do not really know what risks and exchange rates are in operation in the various countries, especially as most of the countries are severely affected by Coronavirus. Though some countries have started recovering, still, some others have a long way to go. ZAMC currently exports the majority of their auto parts to China but their director - JC Clark - approaches your division with his dilemma:

- Should ZAMC consider marketing or producing its equipment in other emerging nations, despite their risks? Provide arguments in favor of your decision.

- Should ZAMC consider other foreign investment strategies to enter China and other new markets? Provide arguments in your favor.

- What will be the probable benefits to host countries (The emerging countries you have selected) if ZAMC decides to enter their countries through Foreign Direct Investment (FDI) route?

- After considering investing foreign investment in the recommended countries, what sort of exchange rate risk ZAMC may face. What FX risk management strategies will you recommend managing the foreign exchange exposure of ZAMC? Illustrate your strategy with the usage of at least two foreign exchange derivatives.

ZAMC requires your team to consider and evaluate CHINA and TWO other emerging nations, at least one from the BRICS and one from MINTs report back with your recommendations. NB: BRICS = Brazil, Russia, India, China, and South Africa

MINTs- Mexico, Indonesia, Nigeria, and Turkey

From above the selected countries are China, Turkey, and India

Please answer the below question:

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2 3 Undertake a country risk analysis of each country, considering political, economic and financial risks. Perform a comparative analysis to advise the client of the preferred country and investment strategy. Review and recommend investment strategy and which country is the most suitable For each country, please address the following: What are the political, economic and financial risks that your client would face? - Does Government of any of these countries have given stimulus to automotive industry? What are the current exchange rate regimes for each country? What is the expected future trajectory of exchange rate movements in the emerging nations? What types of foreign investment strategies could your client consider for each country? How the three undertaken emerging markets differ in terms of automobile industry? Is it worthwhile to adopt a one-size- fits-all approach by the client? Critically analyze the findings of the team's qualitative and quantitative analyses of each country to identify the risks - Provide a risk rating - Rank the countries under consideration - Determine an appropriate investment strategy Provide your client with a recommendation of where his company should invest and what strategies he should incorporate to minimise the risk of investing in an emerging nation. Ensure you justify your groups' decision. 2 3 Undertake a country risk analysis of each country, considering political, economic and financial risks. Perform a comparative analysis to advise the client of the preferred country and investment strategy. Review and recommend investment strategy and which country is the most suitable For each country, please address the following: What are the political, economic and financial risks that your client would face? - Does Government of any of these countries have given stimulus to automotive industry? What are the current exchange rate regimes for each country? What is the expected future trajectory of exchange rate movements in the emerging nations? What types of foreign investment strategies could your client consider for each country? How the three undertaken emerging markets differ in terms of automobile industry? Is it worthwhile to adopt a one-size- fits-all approach by the client? Critically analyze the findings of the team's qualitative and quantitative analyses of each country to identify the risks - Provide a risk rating - Rank the countries under consideration - Determine an appropriate investment strategy Provide your client with a recommendation of where his company should invest and what strategies he should incorporate to minimise the risk of investing in an emerging nation. Ensure you justify your groups' decision.

Answer rating: 100% (QA)

1 Should ZAMC consider marketing or producing its equipment in other emerging nations despite their risks Provide arguments in favor of your decision Yes ZAMC should consider marketing or producing it... View the full answer