By: Rolf Li
In a few hours, North America will jump into the new year. With stocks closed and people at home enjoying the last few days of the holidays at home, it is a time to celebrate the achievements that have occurred this year. May I present the top 10 business and politics stories that Zakopinion has chosen to represent our modest year of 2014.
10: Tim Hortons and Burger King
The deal was sealed when the Canadian government allowed for the $11 billion USD that merged Tim Hortons into Burger King, making the third largest fast food company in the world. With stocks jumping more than 10% in their values, and the headquarters being moved to Canada, this created over $10 million USD in bonus tax that the Canadian government can use. Many companies are attracted to Canada due to the 7% difference in corporate tax, and this deal is estimated to reach $12.5 billion USD over the next 10 years.
9: US Elections
You may have heard of this, but the USA had elections to replace the house and parts of the senate. With the Republicans winning the majority in these houses, both parties in the USA have the power to veto bills that are presented by the other. A recipe for disaster? Sounds about right to me. With the original $11 million spent in the 2012 elections by the two parties for election, the USA cannot afford to sidetrack this late in the term.
8: The Japanese Elections
Late in December, the Prime Minister of Japan called for an emergency forced election in an attempt to gain more seats for an important vote in the coming year. The PM went on to win the election by a landslide, and this allowed for his party to pass a $29 billion USD stimulus plan which will determine the second largest economy in Asia. As Asia is on the upcoming, and it is the current economic engine of the business world, this election could end up creating over $100 billion USD in benefits for Asia in general.
The World Health Organization is calling this outbreak a “very serious” one. The largest Ebola outbreak that every occurred is still happening right now. Although it sounds like more of a science story, this virus has had a tremendous effect on the affected countries. The GDP of these countries have dropped some 1.5% and millions of dollars are being spent to combat the disease. Originally called for $10 million, the WHO is now saying that up to $100 million USD will be needed to stop the outbreak.
6: Keystone XL
Internationally, this may not be well known, but here in North America, it dominated headlines for weeks. A senate vote denied the pipeline, but the bill must be agreed upon by the President and the house in order to pass or be rejected. $20 million USD have already been spent on construction on parts of the pipeline, and if completed, it will carry over 800,000 barrels of bitumen a day to refineries in the Gulf of Mexico. However, the USA already creates over 8 million barrels a day, and the extra oil is not needed. And the falling price of oil have driven costs higher still.
5: MH370, MH17, and QZ8501
Needless to say, these three major aviation accidents were the worst crashes in the last decade. These crashes forced a growing airline (Malaysian Airlines) to cut growth and shrink in the past 3 quarters. Riddled with high premiums, the companies that were directly involved lost more than 60% of their shares in the two companies, and over $50 million USD has been directly lost in these accidents. Shock waves rippled through the airline industry, and has cut passenger volumes in some countries by over 35%. Most airlines in Asia have reported up to 15% lower passengers and a cut of over 5% in profits.
4: The Russian Ruble
Russia has been on the world stage recently, and not for very good reasons. Starting with the Crimea conflict, over 15 nations have imposed sanctions and travel bans for the Kremlin. Along with the price of oil going down, the Russian currency has taken a 52% dip in the past 3 months. With the economy starting to contract, and sanctions getting no closer to ending, it is inevidable that there will be a serious crash. In fact, investors in Russia have stopped trading the Ruble, and have started trading CAN, USD, and CNY to protect investments. The Ruble is expected to drop to 35-40% of its original value.
3: Hong Kong
Democracy is one of the things that “developed” nations all have in common. We share the freedoms of speech, the right to life, and many other benefits–and the economy has not suffered, if not grown because of this. When there is happiness, there is economic prosperity. However, Hong Kong has been rejected democracy by the Communist Party discreetly, and the people were not happy. As one of the major ports and economic powerhouses of China, it would be necessary to control the island, so the government took control the “communist” way. With lost productivity estimated at around $50 million USD, and future financial loss from tight government control at over $200 million, this is a story that will stick around for years.
The price of oil is now trading around the $55 USD mark, a far cry from the booming $120 in the July of this year. A drop in over 60% may have investors scrambling, but this is the start of potential. All high growth periods in the history of the world as we know it today were directly related to the drop in oil. But with many countries dependent on oil, the price is bad news. Over $400 million USD directly lost in the past months, it is safe to say that the drop is a blessing and a curse.
This was one of the most talked about subjects this year. With Russia annexing the Crimean territory, it sparked a war between the Ukrainian government and the Russian-backed rebels. Most famously however, was the shooting down of MH17 (which is still blamed on the rebels). The Ukrainian currency has lost over 65% of it value (in first place) with Russia trailing behind. This event also sparked a political war between the West and Communist Russia, which has cost tens of millions in lost productivity and future investments.
This year was an amazing year for some, and a terrible year for most. 2015 will bring the conclusions to many problems that continue though the last days of 2014. Have a safe and happy New Years from Zakopinion, and enjoy 2015.
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