Americas markets wrap: Chinese data fuels rally
Latin American markets surged today as China’s robust exports rise fueled optimism about global demand and eased fears over a eurozone-led slowdown.
“China’s trade data for May suggest that the fiscal crisis in the eurozone has not sparked a sudden slump in demand”, wrote John Higgins of Capital Economics.
Petrobras gets the go-ahead on capitalisation plan
Sighs of relief all round at Petrobras after Brazil’s Senate early on Thursday approved a bill allowing the national oil company’s proposed capitalisation to go ahead as early as next month.
It is a complicated procedure but the road ahead now looks fairly clear. The plan has two parts. One involves the government selling to Petrobras the rights to 5bn barrels of oil in the pre-salt fields – the potentially enormous reserves of oil and gas discovered in 2007 off Brazil’s coast under several kilometres of sea water, rock and a hard-to-penetrate layer of salt. Petrobras will buy these rights at a price to be determined by two outside certifiers, one hired by Petrobras, the other by the ANP, the industry regulator (in fact the ANP’s price will come in only after the fact but the process allows for a subsequent adjustment).
South Africa’s economy feels the World Cup vibe
Whether they were football fans or not a few months ago, most South Africans are now – in the words of Charlotte Makoti, a 35 year old recruitment agent from Krugersdorp – “feeling the vibe”. Popular enthusiasm for the World Cup has surpassed expectations, with the minority white, Asian and coloured communities as passionate as the football-loving black majority.
Former President Nelson Mandela will be present at today’s opening ceremony and opening game in Soweto’s Soccer City, when South Africa takes on Mexico. And there is a growing feeling in the country that the tournament could be another Mandela moment, as important in promoting social cohesion and togetherness as was the 1995 World Cup victory in the dominant white winter sport of rugby union.
Fewer foreign tourists will arrive than was expected last year, partly because of the impact of the economic slow down in Europe. Yet South Africa has and will benefit economically from staging world sport’s biggest event.
At Poland’s central bank, Belka likely to mend fences with finance chief
Marek Belka’s parliamentary confirmation as Poland’s new central bank governor this afternoon is likely to stabilise the zloty – pummelled in recent weeks by risk-averse investors – as well as reduce traditional tensions with the finance ministry.
Mr Belka was the surprise nominee of Bronislaw Komorowski, the country’s acting president and candidate for the ruling Civic Platform party in the June 20th presidential elections. There were few doubts about Mr Belka’s qualifications – he is a former finance minister, prime minister and the European director of the IMF – but opposition parties had questioned the timing of putting forward Mr Belka before the election.
Not quite right on Turkey, Mr Gates
There is an element of truth in the assertion by Robert Gates, US defence secretary, that the hostility of some European leaders – principally in France, Germany and Austria – to Turkish entry into the European Union has pushed Turkey eastwards.
Gates, commenting on the breakdown in Turkish-Israeli relations in London on Wednesday, just as Turkey voted against the new package of Iran sanctions at the UN Security Council, said: “If there is anything to the notion that Turkey is moving eastward it is, in my view, in no small part because it was pushed, and pushed by some in Europe refusing to give Turkey the kind of organic link to the West that Turkey sought”.
But there is more to it than that. Turkey is a transformed country. A dynamic economy, a constitutional revolution expanding democratic rights and an activist foreign policy establishing Turkey as a regional power have imbued Turks with a new self-confidence.
CEE markets wrap: global sentiment lifts currencies and equities
Strong data from China, Japan and Australia, combined with success at a Spanish bond auction, helped lift the mood on global markets on Thursday, boosting the currencies and equities of most central and eastern European emerging markets.
Even a poor showing in a Hungarian bond auction – the first since Viktor Orban, the new prime minister, announced his economic plan on Tuesday – failed to dampen the general sense of relief.
China’s property riddle: sales down, prices up
Slightly odd news from China’s property market today. Ever since the government launched an all-out crackdown on property speculation in mid-April, the housing market has been at a near standstill. The number of flats sold over the last month was down by around three-quarters in several major Chinese cities – the prelude, many believe, to a substantial drop in house prices of around 20 per cent.
Market reality may torpedo India’s new free float rule
Normally no one in Indian markets would have a bad word to say about any plan to increase the free float – the percentage of listed companies’ shares that must be publicly held – except perhaps market manipulators.
Until this month, India allowed companies that have held initial public offerings of Rs1bn or above to maintain a free float of only 10 per cent. Smaller companies were required to maintain a free float of 25 per cent but they were mostly too minor to register on investors’ radar screens.
International investors shun Hungary’s bond auction
Loose talk costs money in the world’s market place. Hungary has found that to its cost. On Thursday, the country saw the first bond auction failure since it was bailed out by the International Monetary Fund in November 2008.
This is nothing to do with parlous finances.The main cause of pressure in the bond markets is the ongoing debt problem of Hungary’s eurozone neighbours. The country is awash with cash and has been showing strong commitment to structural and financial reforms. It has a €20bn loan from the IMF and the European Union, of which it has drawn €14bn. Much of this money is still locked away in the central bank’s reserves.
Back to health: discipline puts Russia’s economy on the right track
Investors may be jittery about the fiscal outlook in some central and eastern European countries this year – Hungary, Bulgaria and Romania have all found themselves in the spotlight in recent days. But one country where forecasts are moving in the right direction is Russia.
Russia is cutting its forecast budget deficit to 5.4 per cent of gross domestic product this year – a significant fall from its original projection of 6.8 per cent – thanks to higher prices for commodities, particularly oil. The government will approve revisions to the budget today.
Deal of the day: Carlsberg wins battle of Chongqing
By Paul Francis-Grey of mergermarket
Carlsberg’s $349m deal to increase its interest in Chongqing Brewery to 29.71 per cent from 17.46 per cent, announced today, highlights the Danish company’s ambitions for growth in Asia.
The company fought off stiff competition from companies including Anheuser-Busch InBev and China Resources Snow Breweries (Hua Run Xue Hua) – a partnership between SABMiller and China Resources – to buy the 12.25 per cent stake paying Rmb40.22 per share. The company was trading at Rmb37.00 per share prior to the transaction.
MTN and Orascom: a tale of two bosses
Two chief executives of leading mobile phone operators in emerging markets are licking their wounds this morning.
MTN of South Africa on Wednesday said it had terminated talks about a possible deal to buy some or all of the mobile phone businesses of Orascom Telecom, the Cairo-based telecoms group.
Phutuma Nhleko, MTN’s chief executive, had held talks with Naguib Sawiris, chairman of Orascom, but a deal foundered after the Algiers government objected to the sale of the Cairo group’s Algerian asset.
The discussions are likely to have been fascinating, given the contrasting personalities.
New York headlines
*India may modify public holding rule
*Brazil raises rates to slow growth
*More Chinese wage rises expected as worker unrest spreads
*China’s imports and exports rise strongly in May
*Russia cuts budget deficit forecast to 5.4% of GDP
*Life Healthcare gains after S. Africa’s biggest IPO
*Mumbai, Dubai in race to build the tallest residential tower
*MTN halts deal talks with Orascom
*Senators vow action on China currency bill
*Reliance Industries planning telecoms move
*Bulgaria put on notice over Russian oil pipeline
*Liquidnet to offer trading in Mexican equities
*Markets slightly higher
Asia markets wrap: Chinese exports boost region, but Shanghai rally fizzles
Asian equities took heart from confirmation that Chinese exports jumped by almost 50 per cent in May, helping cool fears about the potential impact on its exporters of economic problems in destination markets in Europe. But after impressive gains for mainland Chinese indices over the previous session, when the data leaked, stubborn worries about policy moves to quell overheating property markets once more exerted pressure there.
South Korea: currency trading controls imminent
Currency traders in South Korea are braced for new controls which could be announced as soon as tomorrow. But earlier fears of heavy immediate restrictions eased after a report that banks would be given two years to adjust to the planned regulations.
After opening 1 per cent down against the US dollar, the Korean won, among the most heavily-traded of emerging markets currencies, ended the day in Seoul up 0.25 per cent as investors took a more relaxed view of the measures’ likely impact.
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