Argentine statistics: A guessing game with plenty of losers
Argentina’s national statistics office, Indec, has lost all credibility since the government began moving key officials, changing the methodology and publishing suspiciously rosy data in 2007. As a result of more than three years of suspected manipulation, no one in the market takes the inflation print seriously. Even the IMF has gently upbraided the government in its annual economic outlooks with the remark that statistcs here are disputed by private economists.
The government, which says the economy will grow by at least 6.8 per cent this year, denies there is any problem with inflation or Indec, despite the fact that unions are securing pay deals of more than 30 per cent, well above the 10.7 per cent official rate in May, and that private economists reckon inflation is now accelerating again from a floor of around 25 per cent.
Nevertheless, it at least recognises the need to overhaul Indec’s image, and has convened a council of university academics to look into the issue.
Emerging markets in central and eastern Europe advanced the most in two weeks, despite Friday’s slightly disappointing US jobs data.
Polish stocks gained 1.3 per cent to 2,300.67 points, ahead of the presidential election on Sunday. Investors will watch the election closely, as a win for business-friendly candidate Bronislaw Komorovski would mean a stronger mandate for the current government, and no obstacles in implementing tough austerity measures.
Why a slowing Chinese economy is a good thing
On the face of it, there was more bad news about China’s slowing economy today. This time it was the decision by Goldman Sachs to reduce its forecast for 2010 growth from 11.4 per cent to 10.1 per cent. The Shanghai market reacted by falling more than 2 per cent – before ending the day slightly higher on more positive noises from the government.
The Goldman research report followed the release of the June PMIs for China yesterday, which also showed that the pace of expansion of the economy was slowing.
It is the sort of news that investors have been waiting for with some trepidation since the government launched a crackdown on property speculation in mid-April. And it feeds into the growing view that the global recovery could be losing steam.
Deal of the day: HSBC acquires Indian unit from RBS
Paul Francis-Grey of mergermarket
HSBC has increased its slice of the Indian banking market with its purchase of an Royal Bank of Scotland’s Indian retail and commercial unit today. The deal will give HSBC over 1.1m customers and highlights the bank’s expansion into emerging markets.
“The main focus of our strategy is on emerging markets and this acquisition is our third transaction in one of the world’s largest and fastest growing developing markets in the last two years,” said Michael Geoghegan, HSBC’s chief executive.
India marks another record-breaking month of car sales for June
Indian carmakers today laughed in the face of data which showed that economic growth in Asia was slowing down. Car sales in June shot through the roof, boosted by high domestic demand and new model launches.
Tata Motors performed the best among India’s car majors, with sales up 63 per cent in June from the previous year. It sold close to 28,000 units on rising demand for the Nano while sales of the company’s Indigo range doubled, overtaking Hyundai Motors, as the second largest player in the domestic market.
Asia markets wrap: China revises 2009 GDP, inches closer to Japan
China came closer to surpassing Japan as the world’s second biggest economy Friday as the National Board of Statistics revised its 2009 GDP figure up from 8.7 per cent to 9.1. The move helped to reverse earlier losses on the mainland’s main Shanghai index after Goldman Sachs revised its full-year 2010 GDP growth forecast from 11.4 per cent to 10.1.Goldman’s bearish tone triggered a 2.3 per cent fall on the Shanghai Composite, to hit a 15-month intraday low.
The NBS revision did little to appease investors in Hong Kong where Hang Seng fell 1.1 per cent to a three week low of 19,905, as anticipation for AgBank’s listing mops up liquidity in the market. Asian markets were mixed, reflecting a lack of clarity on the direction of regional economic growth.
New York headlines
* China revises 2009 growth up to 9.1%
* China joins global media with network launch
* Immelt hits out at China and Obama
* Zimbabwe to sell $1.7bn diamond stockpile
* Hong Kong retail sales rise 19.7% as China leads record jump in tourists
* Petrobras will meet share sale deadline in September
* Agricultural Bank attracts $50bn in Hong Kong bids
* Tata Motors races past Hyundai
* KNOC makes bid approach for Dana
* UBS China dealmaker quits
* China plans route back for offshore funds
* Nigeria to clear $10bn toxic debt of banks
* China fears rise as Asian growth slows
* Emerging corporate bond sales jump on yields below governments
* China to improve access to finance for SMEs
* Markets mixed
Guest Post: How Europe can meet Asia’s challenge
By Alan Keir of HSBC
We’re experiencing a fundamental shift taking place in the global economy with a very clear move from West to East. As Asia and the Middle East assert themselves as the brightest prospects on the global landscape, it has massive and exciting implications for Europe’s business community.
This changing global economic landscape is truly fascinating. Who would have thought just 25 years ago, that today in India, two thirds of exports would go to markets other than the US and Europe? And that China would become the largest importer of Brazilian goods?
This is the emergence of South-South trade: globalisation isn’t just a process of goods moving from developing to developed countries; it crosses and connects emerging markets.
Malaysia’s move to liberalise Islamic banking may raise some eyebrows
Malaysia is well known in the Islamic finance world for a liberal interpretation of religious principles that has made the country a centre of innovation. But eyebrows will be shooting skywards in more conservative countries over its latest decision to allow banks to impose late payment penalties on customers who default.
The country’s Shariah Advisory Council, a statutory body that sets the rules for Islamic finance, said on Tuesday that it would allow the imposition of late payment charges as a deterrent against default, under the concepts of gharamah (fine or penalty) and ta’widh (compensation).
Further reading
From the FT,
From Elsewhere,
Banco do Brasil versus Holland
By Andrew Downie in São Paulo
Brazilians have never been known for advance planning but the decision to open trading on new Banco do Brasil shares the same day Brazil faces Holland in the World Cup quarter-finals smacks of truly bad planning.
Traders are none too pleased at having to field calls on the R$9.8bn (US$5.4bn) offering just one hour before the game is scheduled to start.
“Nobody is very happy, but we have to work, don’t we?” Pedro Galdi, a trader at the SLW brokerage house, said only half seriously.
London headlines
* China joins global media with network launch
* Immelt hits out at China and Obama
* Zimbabwe to sell $1.7bn diamond stockpile
* Petrobras will meet share sale deadline in September
* Agricultural Bank attracts $50bn in Hong Kong bids
* Tata Motors races past Hyundai
* KNOC makes bid approach for Dana
* China plans route back for offshore funds
* Nigeria to clear $10bn toxic debt of banks
* China fears rise as Asian growth slows
* Emerging corporate bond sales jump on yields below governments
* China to improve access to finance for SMEs.
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