Daily Archives: Sep 13, 2010

The facade of an Itau bank branch in downtown Rio de JaneiroThe new Basel III capital requirements famously let Germany and others off the hook – they had warned of the potential effects of capital requirements which were too high, too soon. The US and the UK, countries at the core of the 2008 crisis, would have liked to see tougher rules.

But what about Brazil’s famously conservative – and profitable – banking sector? Read more

Brazil's BovespaUpbeat Chinese data and new rules for global banks gave global markets a surge of enthusiasm on Monday and lifted stocks and currencies in Latin America.

“The combination of news (US, China and Basel) have reduced concerns about global growth and the risk of a double dip.  This has seen risk appetites increase further at the start of the week”, said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. Read more

A billboard showing Venezuelan president Hugo Chavez in CaracasNever mind the fact that just a few months ago Hugo Chávez declared “war” on the business community. The compensation agreement with Holcim announced today, following a similar deal reached with Casino recently, suggests that Venezuela’s socialist leader is making an effort to show that he does care about the private sector after all.

If so, the reason is clear enough: there are crucial legislative elections later this month, and it looks like the result will be close – so every vote counts. And Chávez knows that many Venezuelans hold their right to private property dearly. Read more

‘Unsustainable growth in credit’ has prompted the Peruvian central bank to raise its reserve requirements. Banks will need to hold funds equivalent to 75 per cent of borrowings abroad maturing in less than two years, up from 65 per cent, reports BloombergRead more

Turkish stocks hit an all-time record on Monday, adding nearly 3 per cent, as investors responded to the government’s convincing referendum victory. The lira hit a one-month high against the dollar.

With better global sentiment, other central and eastern European equities also rose, while the Romanian leu, the Hungarian forint, the Polish zloty and the Czech koruna all added over 1 per cent against the dollar. Read more

India’s petrochemical tycoon Mukesh Ambani is less than four years away from fulfilling his father’s dream of becoming the richest man on the planet, according to Forbes magazine.

The US magazine predicted that Ambani’s global commodities empire will boost his personal net worth to $62bn by 2014, overtaking the net wealth of Mexico’s telecoms tycoon Carlos Slim, whose current net worth is $53.5bn. Read more

The publication of a new report from Tony Blair’s Commission for Africa on Monday coincided with the launch of the latest in a string of new investment funds focused on Africa, this one with $100m of capital from the United Arab Emirates and Japan.

The Blair report “celebrated” a quadrupling of foreign investment in Africa from 2003 to 2008. But it also made an important point: the vote of confidence in Africa that foreign investment represents should not be mistaken for a sign that the lives of most ordinary Africans are getting better. Read more

By Samuel Wang and Yumin Wang of mergermarket

In another fertiliser-fuelled deal, Hong Kong-listed Century Sunshine Group has acquired Gold Strategy Investments for $47m, primarily for its serpentine mining operations in China. Serpentine - a magnesium-rich mineral – is benefiting from a wider shift towards magnesium-based fertilisers, and from more generalised interest in the sector since BHP’s bid for Potash.

As competition intensifies in China’s fertiliser space, and the government drives consolidation, companies like Century Sunshine must go upstream to reduce costs and diversify their product portfolios. This deal should help.  Read more

Gold demand is volatile, especially in Asia, but what on earth is happening in Thailand?

According to some numbers buried in the Thai customs website, gold imports in July, the latest month for which data is available, hit Bt55.4bn ($1.8bn), which is equivalent to a bit less than 45 tonnes and more than 13 times June imports of Bt4.1bn ($130m). Read more

If Wen Jiabao is to be believed, many of the difficulties foreign companies encounter with Chinese officialdom are about to disappear. In a speech to hundreds of Chinese and foreign businessmen on Monday, the Chinese premier was forthright in promising that the Chinese subsidiaries of foreign companies would be treated in the same way as their locally-owned rivals.

He bolstered his message with a near-apology for the government’s “not-clearly-defined policies” – a reference to a 2009 public procurement law which appeared to discriminate against foreign companies.

But the proof of the rice cakes will be in the eating. Read more

Although the debate over new capital reserve rules at the Basel Committee on Banking Supervision has been dominated by fights between the US and Swiss on the one hand and Germany on the other, the global standards announced on Sunday apply worldwide and could affect the long-term shape of banking in emerging markets.

The committee said banks must hold core tier one capital equivalent to 4.5 per cent of their assets, adjusted for risk, plus an additional 2.5 per cent to avoid restrictions on dividends and bonuses. The rules known as Basel III also require banks to stop using hybrid capital and deduct a bunch of things, including deferred tax assets and mortgage servicing rights, from their capital totals. Read more

The weekend’s Chinese data, suggesting the world’s second-largest economy has stopped decelerating, buoyed Asian stock markets on Monday. The MSCI Emerging Markets Index entered a bull market – having now risen over 20 per cent since May.

India’s equities also briefly entered a bull market, led by bank stocks. Read more

* Caracas to pay Holcim $650m for seized assets

* Hungary says it won’t alter policies for lenders

* China to loosen west’s grip on rail sector

* Thai groups target the west

* Mantega market actions meant to slow real rally: Brazil credit Read more

The August economic data for China were more eagerly awaited than usual, because there had been marked signs of a slow-down in the industrial sector during the spring and summer months. Coming on top of the drop in US growth, this triggered fears that both of the world’s largest two economies were slowing simultaneously. But the good news is that the August data in China were unequivocally strong, and probably stronger than has been recognised from the headline figures. Read more

Turkey’s prime minister, Recep Tayyip Erdogan, gave an unsmiling victory speech on Sunday night as he claimed victory in a referendum on constitutional change. But the result, a much stronger endorsement than expected with 58 per cent voting Yes, has certainly cheered investors.

Istanbul’s main equity index bounced more than 2 per cent to hit a fresh record after markets opened on Monday, and the lira strengthened more than 1 per cent against the dollar. Traders are making a simple calculation. Read more

From the FT:

From elsewhere:

* China to loosen west’s grip on rail sector

* Thai groups target the west

* China’s Geely eyes online car sales

* Mantega market actions meant to slow real rally: Brazil credit

* Doubts on Coal India’s coal reserves Read more

Today beyondbrics is launching a new feature called Fund File that will offer views on emerging markets from the fund management industry. It will draw on content from FTfm, the Financial Times’ weekly review of fund management, and will appear here on Monday mornings. Here’s the first post:

Investment funds looking to diversify are increasingly lured by the charms of emerging markets, but as FTfm’s Steve Johnson notes this week, the race is on to come up with a grouping that will deliver the success of the Bric quartet. Read more