Daily Archives: June 18, 2010

It is being billed as the biggest private-sector investment in Brazil for 15 years, an $8.2bn steel mill built by 30,000 people that will boost Brazil’s annual steel exports by 40 per cent.

It is also another electoral boost for Luiz Inácio Lula da Silva, Brazil’s president, who was at Santa Cruz just outside Rio de Janeiro today to inaugurate Companhia Siderúrgica do Atlântico (Atlantic Steel Company, or CSA), a joint venture by ThyssenKrupp of Germany (with 73 per cent) and Vale, the Brazilian mining giant (with the remaining 27 per cent).

Mexico's IPC indexLatin American markets gained for a second week as a decision to publish results of stress tests on eurozone banks eased worries over the bloc’s debt. But falling metals prices weighed on Brazilian stocks, sending the benchmark Bovespa into the red on Friday and paring the index’s gains for the week.

Currencies strengthened against the dollar, however, as risk appetite picked up. Flavia Cattan-Naslausky of RBS Securities wrote:

Liquidity backstops put in place in Latin America over the last 18-months together with regulatory changes and central bank FX intervention policies downplay the risks of financial contagion to the region in the current scenario. Deterioration in the developed world’s credit conditions on its own will not unravel stability and favourable domestic credit conditions in Latin America. Increased resiliency to a credit crisis reinforces our bias in favour of Latin American currencies versus Eastern Europe.

By Dom Phillips in Belém

Nestle's Terra GrandeNestlé’s “floating supermarket” made its maiden voyage today under scorching Amazon skies. The Terra Grande, or Big Land, is a R$1m investment by the Swiss food group designed to reach isolated riverside communities in the Amazon region.

It set off this morning from the city of Belém near the mouth of the Amazon with a complement of journalists, shelves neatly stocked and crew in immaculate whites. Painted white and blue, decorated with giant images of Nestlé products, it caused something of a commotion two hours later when it arrived in the riverside town of Barcarena. Residents were expecting its arrival: it had been announced on local radio.

The vessel is designed to enhance Nestle’s reach among the lower income consumers that make up a core part of its market. The company has been in Brazil for 89 years and products like its powdered milk are staples among Brazil’s poorer consumers. As the economy continues to grow quickly, Nestlé is hoping that rising incomes among the poor will bring its higher priced goods within their reach, too.

From SAB Miller to Nandos, South Africa has generated a fair crop of multinationals brands. Could the country’s leading vuvuzela manufacturer be set to join them?

The high-pitched horn beloved of South African football fans has already established itself as one of the winners of the World Cup. Love it hate it, rival soccer fans in South Africa’s stadiums and those watching the matches on television around the world cannot escape the ubiquitous whine. Toot, toot, toot.

So it might seem certain that Cape Town-based Masincedane Sports, the biggest horn maker, will capitalise on all this free publicity and make a mint. But will it prove more than a one-day (or one-month) wonder? And if it does, won’t the Chinese capture the market with imitation Asian vuvuzelas?

The likeliest result of Sunday’s Polish presidential elections is that excuses will run out.

Bronislaw Komorowski, the candidate from the ruling Civic Platform party, is probably going to either win outright on Sunday or in the second round on July 4 – and when he does Civic Platform will finally have to embark on the reform programme it has promised since gaining power in 2007.

“When we win there will be no excuses,” says Grzegorz Schetyna, Civic Platform’s parliamentary chief.

For business people, who hope to see budget cuts, labour markets reforms and future tax cuts this is good news. For public sector workers and others who might fall under the Civic Platform sword it is not.

By all accounts, Russian president Dmitry Medvedev delivered a strong speech today at the annual St Petersburg Economic Forum – Russia’s top business conference.

A bit more confident about Russia’s economic performance than last year – and rightly so – and enthusiastic on economic reform. Modernisation, innovation, and high technology – all the right themes were touched for the benefit of the 2,000 Russian and international businessmen present. And there was even a carrot, perfectly selected for the executive suite – the promise of an end next year to capital gains tax on long-term inward investment.

But speeches don’t change a country. Just as Mr Medvedev was speaking came a grow from the bowels of the Russian economy – another dispute over gas supplies with a hard-up ex-Soviet republic, this time Belarus.

Emerging equities markets in central and eastern Europe stayed mostly flat after the markets closed on Friday. The investor sentiment improved slightly in most of the countries as good economic news and international commitment to help the region are expected to prevent the CEE countries from the double-dip recession.

Dubai World did not need this.

Potential buyers have pulled or reduced their bids for one of the debt-laden Gulf group’s prize assets, Inchcape Shipping Services, after they discovered what they think is an investigation into its contracts with the US Navy.

Istithmar, the government-owned conglomerate’s investment arm, has dropped the sales process in the belief that it can’t now get a good offer.

Fortunately, good progress towards the acceptance of Dubai World’s $23.5bn restructuring proposal will probably give the holding company up to eight years to dispose of its assets and maximise value to repay creditors.

But yesterday’s news will not help Dubai World as is struggles to secure its financial future at a tricky time in global markets.

Starting tomorrow in Singapore, 350 teams of humanoid robots will play pseudo-footie at RoboCup 2010, the Artificial Intelligence world’s answer to the World Cup.

The pitch will be green, and the ball will be red, and the little critters will communicate wirelessly to figure out when to kick the ball – and when to kick the other robot. Check out RoboCup’s website to see a demonstration.

By Kasper Viio from mergermarket

The merger of Danone’s and Unimilk’s dairy product businesses in the Commonwealth and Independent States marks another milestone in the French dairy giant’s determination to tap into emerging markets for future growth.

The deal will help to expand the market shares of both companies. Unimilk is one of Russia’s largest milk producers and has 14 per cent of the the total Russian dairy market, and Danone has a 7 per cent share of the total Russian diary market. The combined market share will make Danone-Unimilk Russia’s biggest diary organisation by market share.

It’s a good time to be Thailand, an export-dependent economy in Asia.

This from Barclays Capital:

“Exports grew 42% y/y in May, significantly above the consensus projection (34%). Imports surprised to the downside, up 55.1% y/y vs. expectations of 60.5%. There are more signs that the external sector was not materially affected by recent street protests in Bangkok. The trade balance surged to USD2,210mn in May, from a deficit of USD266mn in February.”

Are the authorities in Kiev finally getting worried about a surge of investment in the Ukrainian steel industry by secretive Russian groups? It would seem so, given the latest pronouncement by Mykola Azarov, the prime minister.

After weeks of silence, Azarov this week put his foot down, pledging to defend a top Ukrainian steel group which could become the third in six months to pass into Russian hands.

The Russian moves have come amid a broad push from Moscow to reassert its political and economic influence in Ukraine following the election this year of Viktor Yanukovich, the Russia-oriented president, in place of the pro-west Viktor Yushchenko. Yanukovich has openly sought a warming of ties – but has left unclear how far he wants to re-open the doors.

Not content with buying Volvo and large chunks of Africa, China Inc may be shifting its sights from mines, oilfields and clapped-out auto companies to taking minority stakes in famous global brands.

Last weekend’s deal which saw Fosun, one of China’s largest non-state owned conglomerates, take a 7 per cent stake in Club Med, the French travel group, could be a sign of the future. China has kept the global luxury market alive throughout the economic crisis: it only makes sense that Chinese corporates now want a bigger piece of the profits.

It’s hard to know what might be next: would-be Chinese buyers keep their cards close to the chest and not everything they might want will be for sale. But if the preferences of Chinese shoppers are any guide, then taking a chunk of practically anything from Armani to Zara might be in their sights.

* World Bank urges China to use rates, currency to manage economy
* Russia courts investment as Morgan Stanley names it ‘top Bric’
* Czech president to name new central bank governor
* Reliance should cede oil block, Indian regulator recommends
* Brazil to suspend action in US cotton dispute
* StanChart closes on Agricultural Bank stake
* PepsiCo sees double-digit Russian 2010 sales growth
* Autos, FMCG to lead India growth
* China may adjust stake in Fannie
* Mongolia seeks investors for $10bn mine building boom
* Russian Ministry Proposes Higher Nickel Duty, Vedomosti Says
* Markets slightly higher

Most Asian markets ended on a positive note on Friday, continuing the week’s cautious but steady gains as positive data coming out of the region boosted sentiment.  Thai exports figures for May released today showed the best growth in two years, with exports up 42 per cent year on year. Earlier in the week the Philippines raised its economic growth forecast to 6 per cent, from a previous 3.6 per cent.

Shanghai was the region’s main loser, marking its biggest daily drop this month, as weak sentiment spread after a senior central bank advisor, Xia Bin, warned that Chinese growth might slow.

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