Do emerging market bondholders risk ignoring history?
It’s no secret that emerging market bonds are booming. As worries grow over the west’s growing debt pile, investors are piling into EM bonds. Judging by credit default swaps, investors think Chile is less risky than France and Malaysia safer than Austria.
But the FT’s James Mackintosh warns that investors need to remember their history. Continue reading »
Americas markets wrap: Brazil jobs growth raises rate hike fears
Brazilian stocks fell today as Latin America’s largest economy reported record job growth in August, fueling fears that the central bank may raise interest rates to cool the economy.
Brazil’s labour ministry reported the economy added 299,415 jobs last month, the eighth straight month of increases, for a total 1.95m new jobs this year, driving a surge in interest-rate futures contracts. Continue reading »
Why investors aren’t recognising Serbia’s fiscal prudence
Serbia may be a rogue in European politics, but it is an obedient follower of the IMF’s calls for fiscal discipline.
Yet the country still lacks a bond market that acts as a good benchmark for other investments. And so the markets give no reward for its good behaviour. Continue reading »
Pharma companies reveal their EM secrets
Western pharmaceutical companies have been revealing more about their activities in emerging markets – and now they’re starting to see the benefits of that transparency.
One London broker decided to upgrade GlaxoSmithKline this week following the release of more details about its sales in emerging economies, a move that highlighted the importance analysts are attaching to the industry’s expansion outside its traditional markets. Continue reading »
CEE markets wrap: stocks mixed; rouble falls again
The Russian rouble continued its losses on Friday – falling to its lowest level against the dollar since July 1. The Turkish lira also fell, after the central bank kept interest rates unchanged for a tenth month running.
The region’s stocks were again mixed, with gains in Istanbul and Bucharest but falls elsewhere. Continue reading »
Deal of the day: Polish regulators may blow apart $2.5bn power swoop
By Hafsa Kara of mergermarket
Victory is by no means guaranteed for Poland’s biggest energy generator, PGE, in one of Europe’s key privatisation deals. On Wednesday, the Polish finance ministry opted to sell PGE the state’s majority stake in smaller rival Energa.
But the $2.5bn deal now depends on approval from anti-monopoly regulators. And those regulators have made clear their view that a merger would restrict competition and increase electricity prices. Continue reading »
Infrastructure: a $6,000bn investment opportunity
For all the excitement over emerging markets, they can still be tough places to do business. One of the main frustrations is poor infrastructure – notably in India, some parts of Latin America, and large parts of Africa.
But rather than griping about it, market investors can turn it into an investment opportunity all of its own. That’s what Bank of AmericaMerrill Lynch says in a new report that predicts governments and the private sector will spend over $6,000bn on infrastructure in emerging markets over the next three years. Continue reading »
Saris dropped from India’s price basket
India’s goods basket, the basic toolkit used to measure inflation (and thereby the cost of living), has been revamped for the first time in 16 years this week in an attempt to give a “truer picture of the Indian economy,” as the country’s trade minister put it.
Is that really the case? Well, the index introduced 241 new consumer items including ice cream, microwave ovens, mineral water and dish antenna, which seems to makes sense as it reflects the changing habits of Indian consumers. However, what seems a little more peculiar is the 176 items that have been ditched. Continue reading »
Beijing’s war of words with Washington
China has called America’s bluff in what is becoming a game of chicken between the world’s top two economies. On Thursday China’s foreign ministry responded officially to a statement from US Treasury secretary Tim Geithner (pictured) by saying American pressure on China would not solve the problem.
In excerpts from Geithner’s planned statement at Congressional meetings Thursday, he had said the US would consider ways to push up China’s currency. Could the back-and-forth amount something more than a war of words? Continue reading »
* India raises rates to rein in inflation
* US considering ways to push renminbi higher
* Nigeria to free pension funds for investments
* Montblanc eyes rich pickings from China’s luxury market
* Offshore challenge looms for Petrobras
Thailand: tangled state interests hold 3G auction hostage
(Updated at 12:30 BST)
Thailand has been dubbed the 3G troglodyte, and with reason. The trials and tribulations of the Asian tiger’s telecoms sector never seem to end.
After years of wrangling, the country’s National Telecommunications Commission was finally due to hold an auction for the country’s 3G licences on Monday, but two state-owned companies, that are both competitors and licensing authorities to the country’s privately owned mobile operators in the 2G spectrum are questioning the NTC’s authority, revealing how entrenched the state is in the sector. Continue reading »
Greenspan on India: a textbook case for central bankers
The structure of the Indian economy puzzles many. Asia’s third largest economy has a burgeoning band of billionaires, but also the world’s highest concentration of poor people. High economic growth, enjoyed by the few, is in danger of bypassing the many.
Yet where monetary policy is concerned, little is mysterious, says Alan Greenspan, the former governor of the US Federal Reserve. Continue reading »
Further reading: Gome’s ghosts, China’s Tea Party, Russia the Great?
From the FT,
From elsewhere,
No doubt in a valiant attempt to feed our insatiable curiosity ahead of time, some excerpts from Tim Geithner’s written testimony and prepared oral statement have come out tonight, before Thursday’s appearance in front of two Congressional committees. The key passage:
“We are concerned, as are many of China’s trading partners, that the pace of appreciation has been too slow and the extent of appreciation too limited. We will take China’s actions into account as we prepare the next Foreign Exchange Report, and we are examining the important question of what mix of tools, those available to the United States and multilateral approaches, might help encourage the Chinese authorities to move more quickly.” Continue reading »
Foreign retailers: if you can’t beat China, join it
Shanghai Tang’s Sir David Tang just turned the heat up a notch or two. On Wednesday the Hong Kong-based entrepreneur warned an audience of CEOs in London that Chinese companies are taking over the world.
Tang’s bombastic rhetoric had the audience sitting up, even if many of them already had first hand experience of China’s growing economic power. What was different about Tang’s warning was the advice that came with it: use the new challenges that China is throwing up to reinvigorate yourself; it might even give you a new lease of life in your home markets. Continue reading »
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