Daily Archives: June 23, 2010

Dilma RousseffMore good news for Dilma Rousseff, pro-government presidential candidate in Brazil’s October elections: an opinion poll published this afternoon shows her leading the race for the first time.

The poll, commissioned by the national confederation of industry and carried out by Ibope, one of Brazil’s most respected polling organisations, gives Dilma 40 per cent of voting intentions against 35 per cent for José Serra of the centrist opposition PSDB and 9 per cent for Marina Silva of the Green party.

The previous poll in early June had Dilma and Serra (as they are known) neck and neck with 37 per cent each – the same as they scored in last month’s Datafolha survey, the other most-watched of Brazil’s many polls.

Shopping area of Wangfujing Avenue in BeijingAs Gap, the US clothing retailer, prepares to enter China for the first time later this year, it’s expressing optimism that its “casual American” style will find a ready market among the country’s rapidly expanding middle class.

John Ermatinger, president of Gap’s Asia Pacific region, says that Gap is targeting the “golden generation” of young adults brought up after the market opening of 1979, mostly as single children under the country’s one-child policy, who face the intense stress of competing in a rapidly evolving society.

“Unlike their parents they have only known prosperity, they have only known freedom, they’ve only known growth and they have essentially been afforded everything they could imagine,” he said in an interview with the Financial Times. “This is a core group now that has grown up with a lot more modern and different view of China than their parents.”

Brazil's BovespaLatin American markets pared losses to close higher today as data showed Brazilian bank lending rose at the fastest pace in 10 months. But fears over the US recovery fueled by weak new home sales dragged Mexican construction groups, and news that Petrobras had delayed its share sale weighed on the Brazilian oil company.

Tony Volpon of Nomura wrote of Petrobras,

While the cancelation is a set-back and may have some short term negative effect on Brazilian markets, there is no doubt that the government  will keep pushing ahead with its bold and risky state-led development strategy, which will, given Brazil’s American-like saving rate, imply large inflows of foreign investments and debt for years to come. Let’s all hope this time it works.

The surprise announcement by Petrobras on Tuesday night, that it would postpone until at least September a share issue that had been expected to raise some $25bn as early as next month, smacks of confusion and on-the-fly management.

Petrobras’s statement made little sense. The reason for the delay, it explained, was that the ANP, the industry regulator, had informed Petrobras on Tuesday that it would not be able to deliver a valuation needed for the share issue until at least August.

But Petrobras knew this already. On April 30 it issued a statement saying the share issue would go ahead even though the ANP’s valuation would not be available in time and that, once the valuation became available, any necessary adjustments would be made.

By Tim Bradshaw in Cannes

Facebook is the world’s largest social network and a growth phenomenon the likes of which has not been seen in the US and Europe since the emergence of Google. But even the social networking behemoth is now looking to tread that well-worn path of American giants looking to Asia in search of new growth.

Attracting just shy of 500m users in six years, Facebook is now planning to change its cookie-cutter approach to international expansion and do “specific things in specific countries” to attract its next half billion, founder Mark Zuckerberg told the Cannes Lions advertising festival. Japan, South Korea, China and Russia are the only markets where local social networks have not capitulated to Facebook’s dominance.

Amado Boudou, Argentina’s economy minister, is beaming. The country’s debt swap has closed with 66 per cent acceptance – above expectations – and taken together with Argentina’s swap in 2005, overall acceptance was 92.4 percent.

That means Argentina ends up paying $25 for every $100 of defaulted debt tendered – a haircut Mr Boudou looks pleased to have got away with. He says this is a deal consistent with Argentina’s means, but at the same time predicts growth this year will now be at least 6.8 per cent and central bank reserves are more than $49bn.

Countries in central and eastern Europe need more reforms to improve public finance in order to maintain their rating status, it emerged on Wednesday after Fitch warned Poland it might lose its A- rating if it doesn’t implement economic reforms. The IMF is demanding tougher fiscal policies in return for the international aid.

“For most of the countries, the 2011 budget preparations are likely to be very difficult and could become politically charged, particularly where elections are underway,” said Christian Keller, analyst at Barclays Capital.

The CEE markets were mostly down at the end of Wednesday afternoon trading, as risk appetite waned.

By Pamela Barbaglia of mergermarket

UK Sage Group’s 12.75 zlotys per share cash offer for Teta shows how Eastern Europe has moved to the top of the IT industry’s agenda.

Wroclaw-based Teta provides enterprise resource planning (ERP) software to large and medium-sized companies. If the tender offer meets shareholders’ consent, Sage will become a leading provider of business management software across Eastern Europe gaining a portfolio of 2000 customers across Poland and Hungary.

It looks like Argentina may have pulled off a better debt swap than many expected.

Unconfirmed reports are talking about an acceptance rate of 68 per cent – well above the 60 per cent minimum that Amado Boudou, the economy minister, set.

At first, that looked like a deliberately conservative estimate; then, as debt markets plunged on eurozone turmoil, it looked out of reach. Perhaps the intense charm offensive with retail bondholders in Italy paid off.

A global business summit starting on Thursday in New York will be a showcase for companies from emerging economies looking to highlight their credentials in promoting ethical corporate values. But there are questions about whether there is real substance behind their glossy presentations.

Over a thousand people are expected at the June 24-25 “leaders’ summit” of the United Nations’ Global Compact, the world’s largest corporate social responsibility initiative, including hundreds of executives from emerging economies, where CSR has been catching on in recent years.

Not surprisingly, foreign automakers in China are on the qui vive for any signs that the labour woes of their Japanese counterparts Toyota and Honda may spread.

Volkswagen and General Motors are the twin foreign pillars of China’s auto industry (VW makes the most passenger cars of any foreign OEM in China and GM makes the most light vehicles including mini-trucks, through joint ventures with Chinese manufacturers). Both say they have had no copycat strikes or supplier disruptions – nor do they expect any.

*Emerging markets to gain manufacturing edge
*Toyota Guangdong plant remains on strike
*Petrobras postpones $25bn share issue
*Airbus mulling China JVs
*S Korea to restrict foreign currency loans overseas
*China looking at new offshore pipeline safety rules
*Vivendi leading race for Reliance Comms stake
*Asian millionaires overtake Europeans
*Unilever to build more factories in Indonesia as P&G steps up competition

*Markets down

Sheikh Mohammed bin Rashid Al-Maktoum, Dubai’s ruler, likes to adopt an upbeat tone when addressing the travails of his debt-burdened emirate.

So it should come as little surprise that he is using an interview with CNN, the US news network, to say the worst is over for Dubai, the business hub that has endured much pain as its spectacular boom so dramatically turned to bust over the past two years.

“I don’t call it a recession, I call it challenge,” Sheikh Mohammed, who is also prime minister of the United Arab Emirates, told CNN. “The companies are restructuring because it’s a new world. You have to stop and restructure.”

Asian markets took their cue today from Tuesday’s negative session on Wall Street – after US home sales data disappointed, fuelling doubts on the recovery story. Exporters across the region lost ground, although losses on most markets were tamer than those in New York, with some markets in the region making minor gains.

The Shanghai Composite fell 0.7 per cent to 2,569.872, with Chinese exporters also feeling the added affects of a government decision to remove export tax rebates for hundreds of products. Airlines also lost ground – having gained previously on the revaluation of renminbi. Chinese airlines hold most of their debts in foreign currencies.

When they built the Sheraton Futian Hotel in Shenzhen, the Chinese special economic zone bordering Hong Kong, they must have harboured an aspiration to one day host US government press conferences. The hotel’s West Lobby could be in Washington, with its wall-to-wall marble and six large eagle statues providing the perfect backdrop for America’s ambassador to Beijing.

Jon Huntsman came south to attend an intellectual property rights forum and was keen to talk about the issue. Unfortunately for him, the assembled press corps – comprised of local media, the Financial Times’ south China correspondent and Plastic News’ Asia bureau chief – were only really interested in labour unrest and the renminbi.

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