Latin American stocks mostly gained on Thursday as eurozone debt fears eased with news that an aid package for Greece would be finalised soon.
Emerging markets get boost from Greek crisis
Emerging markets are doing very nicely out of the Greek crisis. If you don’t fancy Greek two-year bonds at 12.79 per cent, why not buy some other debt – say Turkish at 9.49 per cent?
The rush to emerging market bonds became clear again yesterday when EPFR Global published the latest inflows into the asset class. They now stand at $15.3bn so far this year. Compare that with the previous record of $9.7bn in 2005 – and that was for the whole of that year.
UBS back in Brazilian banking
UBS is back in Brazil, but in a different way.
Today it said it was buying Link, a broker-dealer, for about $112m. That is a tiny fraction of the amount it paid for Pactual, a thrusting Brazilian investment bank, in 2006. It must also be a tiny fraction of the hit it took when it sold Pactual back to its former owners last year in a fire sale forced upon it by the global crisis.
Estonian PM keen on euro, taxi driver not
For any journalist on a flying trip to a foreign capital, it is always tempting to use taxi drivers as a gauge of public opinion. Why bother seeking out ordinary people in between meetings with the great and good when the cabbie will often deliver the ideal quote? It is a dubious journalistic practice but worked well for me during a visit to Tallinn, Estonia, today.
I was on my way to an interview with prime minister Andrus Ansip on Estonia’s plans to join the euro next January. My taxi driver, Allan Alajaan, was only too happy to act as “voice of the people”.
What does Brazil’s move mean for Mexico?
Last night, Brazil, Latin America’s largest economy, pushed up rates 0.75 percentage points in an effort to cool its overheating economy. So what does that mean for Mexico?
The short answer is absolutely nothing. Mexico and Brazil occupy what often appear parallel universes. Brazil’s economy has shot ahead in recent years thanks to its role as commodity producer for China and India, but also because of its large and dynamic internal market. Result? Brazil contracted by a mere 0.2 per cent last year, and will likely grow 6 per cent this year.
Algeria to MTN: get lost
Algerians have a reputation for blunt speaking. But the Algerian authorities seem to have found it necessary to use the verbal equivalent of a sledgehammer to say they want to block the sale by Egypt’s Orascom Telecom Holding of its Algerian subsidiary to MTN of South Africa.
A statement from the Algerian telecommunications ministry threatened that any move by OTH to sell the subsidiary could result in a withdrawal of its telephone license and the “expropriation of the shareholders” of Orascom Telecom Algeria.
Turkey planning rate rises, but not yet
Turkey’s central bank today joined the queue of emerging market policymakers heading for higher interest rates – but it seems in no hurry to push its way to the front.
In the quarterly inflation report, it raised its forecast for inflation this year to 8.4 per cent – roughly in line with market expectations, although above the bank’s 6.5 per cent target. But it is still signalling it is unlikely to raise interest rates from their low of 6.5 per cent until the last quarter of 2010.
Mortgage-backed securities are back with a vengeance in Dubai
Riddle me this: What is the highest rated credit in Dubai, the former boomtown emirate now weighed down by more than $100bn of debts?
Oddly enough, the answer is an exotic, fiendishly complicated residential mortgage-backed security (RMBS) that complies with Islamic law, originated from a mortgage lender that was an early casualty of Dubai’s property implosion.
Indian ban on Chinese telecoms could help European suppliers
A ban by India’s government on Chinese imports of telecommunications equipment, reported on India’s Hindu Business Line website, will have far-reaching implications if confirmed.
Thailand’s stiff upper lip : despite protests, GDP forecast is up
Just when you might expect Thai economic officials to err on the side of caution, the central bank has come out today with a set of bullish forecasts. Despite the violence on Bangkok’s streets, the political crisis and the travel warnings to tourists, the bank says Thailand’s economy is steaming ahead.
The bank has raised its 2010 GDP forecast from a previous range of 3.3-5.3 per cent to 4.3 to 5.8 per cent. In addition, its CPI for 2010 has also been revised, from 3.0-5.0 per cent to 3.3-4.8 per cent (data from Reuters).
Currencies among the central and eastern European countries rallied on Thursday thanks to an interest rate increase in Brazil, and on hopes that a rate cut in Russia would be the last in the current cycle. There was also respite from the European sovereign debt crisis as observers anticipate a bigger-than-expected aid package from the International Monetary Fund and European Union.
New York morning headlines
Latest headlines:
By Kevin Brown in Singapore and Michael Hunter in London
Asian currencies had a slight wobble on Wednesday over the downgrading of Greece’s sovereign debt, but the region’s self-confidence reasserted itself today as most shrugged off the impact of a later downgrade for Spain and worries about Portugal and Ireland.
The Asian currencies were helped by the US Federal Reserve’s overnight pledge to keep interest rates low for an “extended period”, even though it offered only a modest upgrade to its outlook for the US economy.
Russia cuts interest rates but signals end to easing
When to stop worrying about recession and start fretting over inflation? Soon, says the Russian central bank. It today cut interest rates for the 13th time in succession but signalled that the monetary easing may have run its course. Russia is behind the curve in comparison with other emerging economies. Brazil yesterday raised rates, the first Latin American state to do so this year. Last month India raised rates; earlier this year, China tightenend bank reserve requirements to stem credit growth.
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