Americas markets wrap: mixed picture weighs on stocks and currencies
Latin American equities closed lower on Thursday as global markets struggled to shake off debt fears, and the Brazilian real and Mexican peso weakened slightly after oil prices fell and mixed US jobs data dragged on Wall Street.
Enrique Alvarez, head of research at IDEAGlobal, told Reuters, “We remain in a sort of waiting period after absorbing very good headlines out of Europe and the overall size of the rescue package”.
Brazil growth boosts banks, but how long will the party last?
Brazil is taking further steps to cool its white-hot economy: Guido Mantega, the finance minister, announced today that the government would cut 10bn reais in spending as it tries to rein in potential overheating and bring inflation back down to its 4.5 per cent target. A note from Nomura suggests this may not be enough however, as “explosive credit growth” continues to fuel inflationary pressures.
In the FT tomorrow: China’s banking sector in depth
A handful of Chinese banks now occupy top slots in global bank rankings according to market capitalisation, but the days when the nation’s state-owned banking system was basically insolvent are not so long ago. In tomorrow’s paper, the FT’s Beijing and Hong Kong correspondents look closely at what has changed and whether forays into offshore banking have been successful, what foreign banks have invested in Chinese banks and how rural banking is helping to reduce the growing disparity between China’s rural and urban areas.
Heavy-handed intervention exacerbates Venezuela’s economic woes
Across Latin America, governments are fretting about appreciating currencies as a result of strong capital inflows. In Venezuela, the problem is quite the opposite: President Hugo Chavez’s tub-thumping socialist rhetoric and heavy-handed intervention in the economy is causing capital flight to continue apace.
So despite a major devaluation in January, the floating or “parallel” rate of the bolivar has steadily depreciated since.
It has reached all-time lows in recent days – 8.2 bolivars to the dollar today compares to around 6 at the time of the devaluation of the official rate in January.
Will contagion from the Greek crisis spread to central and eastern Europe? That is the most pressing question on the agenda for the nervous participants in this year’s annual meeting of the European Bank for Reconstruction and Development (EBRD) which starts today in Zagreb.
The EBRD‘s 60-odd government shareholders are putting money into backing the region, with a €10bn capital increase to €30bn for the bank that is set to be approved unanimously. The International Monetary Fund is doing its bit all over the region – with programmes in place for vulnerable states, for example Hungary.
But that is not enough. What really matters is what bankers and business people will do as they contemplate the Greek crisis and its Europe-wide aftermath.
StanChart: India’s growth will overtake Hong Kong’s this year
India looms ever larger, even for multinational companies with decades of experience in the subcontinent. Standard Chartered Bank, which has been in India for 152 years today confirms that India will soon overtake Hong Kong as its top profit generator.
Richard Meddings, UK StanChart’s financial director, exclusively told the FT’s James Fontanella-Khan that he expects profits in India to outpace those from its key market in Hong Kong. Meddings was speaking in Mumbai during an event to announce details of the British bank’s plans to issue an Indian share sale, with plans to raise between $500 to $750m. The bank announced today plans to start selling shares from May 25 to May 28.
China cements its Africa link, sees South Africa as a springboard for African expansion
China’s new investment in South Africa pales alongside the landmark $5.5bn stake that the Industrial and Commercial Bank of China acquired in Standard Bank two and a half years ago. Nevertheless, the investment by Jidong Development Group and the China Africa Development Fund is a highly significant one for two reasons. First, it reflects growing Chinese commercial interest in South African – and more broadly African – domestic markets. Second, it provides another illustration of how South African companies themselves are reorienting their own business towards Africa, China, India, Brazil and other big emerging markets, in line with a broader shift in the country’s trade patterns.
Rusagro latest Russian company to postpone IPO
Analysts that once predicted a wave of $20bn in Russian initial public offerings this year are starting to eat their words as another planned IPO by Rusagro, a Russian food group that produces every eighth spoonful of sugar in Russia, today postponed plans for a $300m Moscow listing.
The company cited “recent market volatility” as the reason for the postponement, a fair excuse given the number of companies that have also postponed listings in recent weeks. China’s New Century Shipbuilding last week pulled an S$666m flotation in Singapore, while other notable cancellations include the €491m Frankfurt offering by GSW, the German property company.
Telefónica: an urgent call to Brazil
By Mark Mulligan in Madrid
If any more evidence were needed as to why Spain’s Telefónica is so keen on plans to expand in Brazil it has come today with the group’s first quarter results. As with other large Spanish multinationals, the main trend continues to be growth in Latin America offsetting weakness in Spain and other parts of Europe.
According to the Spanish telecoms giant, the region was the main driver of revenue growth, and now accounts for more than 40 per cent of global sales. Brazil, by far Latin America’s most important growth market, accounted for more than 16 per cent on its own.
[UPDATE] Thai crisis reaches confrontation, rogue general injured
The chief general for Thailand’s anti-government protestors has sustained head injuries after being struck in the head while speaking with a reporter, as Thailand’s military closes in on red shirt protestors who have refused to disperse from their protest ground in Bangkok’s business district. Reuters reports explosions and automative gunfire were heard earlier in the evening in this area after protestors defiantly stood ground while the military entered the district with armoured vehicles. As beyond brics reported earlier Thai equities and the baht took a hit today on news of increased confrontation, and consumer confidence figures in April showed a fall for a third straight month.
From the FT’s Energy Source blog:
A rig drilling for gas in Venezuela sank in the early hours of today. All 95 people on board were saved and there is no risk to the environment, according to Rafael Ramirez, Venezuela’s energy minister.
The Aban Pearl semi submersible rig was working in the Caribbean Sea close to the islands of Trinidad and Tobago and had been visited by Mr Ramirez and Mr Chavez in the past, according to Reuters. It was being operated by Pdvsa, the country’s national oil company, without the help of international partners.
Sime Darby: ceo and shares suspended
Environmentalists have long had it in for Ahmad Zubir Murshid, chief executive of Sime Darby, because of the century-old Malaysian conglomerate’s role in establishing massive oil palm plantations and building controversial dams.
Ironic, then, that Mr Zubir Murshid was suspended yesterday as the company demonstrated its determination to get on top of long-running problems connected with the Bakun hydroelectric dam in Malaysian Borneo.
The Kuala Lumpur based-group, Malaysia’s second largest company by value, said it might need to book a M$450m charge in the second half to cover cost overruns at the dam, which is designed to generate 2,400MW from a reservoir the size of Singapore when it opens this year or next.
Abu Dhabi’s gold ATM machine a sign of more opulence to come
Abu Dhabi’s Emirates Palace is a case study of the opulence and glitz that has come to characterize cities in the oil-rich Arab Gulf.
So it should come as little surprise that the $3bn government-owned hotel was the chosen destination for the region’s latest example of extravagance – an ATM machine that dispenses gold in exchange for cash based on the latest prices. The Gold to Go machine, which is covered in 24-carat gold, was unveiled on Wednesday by Thomas Geissler, chief executive of Ex Oriente Lux AG.
Asia markets wrap: markets rally
Events in the region today helped to put concerns of an overheating Chinese economy on the shelf as Chinese bank shares were lifted by news from local media that an additional $42bn would be given to China’s four biggest lenders; while Malaysia’s government announced a major jump in Q1 GDP. But analysts warn the Asian markets rally may not last long as the fallout from Europe’s sovereign debt woes creep closer to Asia, threatening in particular the Asian export sector.
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