Daily Archives: October 14, 2010

Just how bad is Venezuela’s dollar crunch?

October 14, 2010 10:50 pm by Benedict Mander

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One has to wonder whether Hugo Chávez ever read that part of the book of Genesis where Joseph interprets the Pharaoh’s dreams, predicting seven years of plenty followed by seven more of famine – and hence the importance of saving during the years of plenty.

If a recent analysis by Morgan Stanley is correct, not only did Chávez fail to save during the years of plenty (read: the oil boom that ended in 2008), but now that years of plenty are back again (that is, oil prices have recovered to relatively comfortable levels in 2010), Venezuela’s financial indicators seem to suggest behaviour more akin to leaner years. Continue reading »

Nigerian power: watt now?

October 14, 2010 10:35 pm by Tom Burgis

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Essar, the Indian conglomerate, plans to invest $2bn or so in Nigerian power plants provided the government honours promises to make the market viable – but this could be just the beginning.

Nigeria’s power sector is so dilapidated the country needs a total of $50bn to sort it out. With promises of reforms (not believed by everyone) and plenty of red wine, it has this week set about wooing investors whose pockets are deep enough to take the job on. Continue reading »

Brazil’s markets start to price in Serra

October 14, 2010 10:14 pm by Vincent Bevins

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The markets now seem to think Brazilian presidential candidate José Serra has a chance of upsetting Dilma, and that if he takes office, he will cut spending and interest rates will fall.

After polls came out today putting Serra within striking distance of Lula’s designated successor, yields on interest rate futures contracts fell across the curve, indicating investors think there is an increased likelihood that rates will fall in the future. Continue reading »

Posted in Brazil | Permalink

Americas markets wrap: Markets mixed on US data, capital controls worries

October 14, 2010 10:06 pm by Shannon Bond

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Latin American markets were mixed on Thursday as Brazil’s presidential race tightened and the US reported an uptick in jobless claims. The Brazilian real fell against the dollar and most Brazilian stocks fell after local media reported the finance ministry may further raise its tax on foreign inflows. Mexico’s IPC index rose 0.11 per cent despite a drop in homebuilder stocks on worries over the US economy. Continue reading »

Posted in Global, LatAm | Permalink

Argentina: Telecom Italia buys in

October 14, 2010 8:18 pm by beyondbrics

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Telecom Italia is taking control of Telecom Argentina, the country’s second-largest telecoms group, in a convoluted transaction in which no money is changing hands.

But the complex deal’s implications are clear enough: it is a vote of confidence by the Italian group in the Buenos Aires government, a commitment to building its presence in emerging markets, and a sign of its determination to fight hard against Spain’s Telefonica, the biggest external investor in Latin America’s telecoms sector. Continue reading »

Tags: telecoms Posted in Argentina | Permalink

The hot money’s on Poland

October 14, 2010 6:40 pm by Jan Cienski

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Very low interest rates in developed countries are affecting markets in central Europe, which are seeing a flood of foreign capital looking for higher earnings.

Poland saw inflows of €24bn ($34bn) in the first eight months of this year – that’s similar to the same period in 2008, when the country was booming. But there’s a key difference: two years ago, most of the new money was aimed at productive investment, while now about 70 per cent is portfolio investment. That creates the danger of a quick outflow if conditions become less favourable. Continue reading »

Posted in Poland | Permalink

CEE markets wrap: currencies gain; power company CEZ at 18-mth low

October 14, 2010 6:30 pm by Henry Mance

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CEE stocks fell on Thursday, following their western European counterparts downwards. With rising expectations of further quantitative easing in the US, currencies gained against the dollar, with the Turkish lira at a two-year high (see graph). Russian prime minister Vladimir Putin said the rouble was at an “optimal level”, adding that a significant strengthening would be “bad for the economy”. Continue reading »

Posted in Global | Permalink

Not over yet: Serra fights back in Brazil

October 14, 2010 5:10 pm by beyondbrics

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By Andrew Downie in São Paulo

Brazil’s presidential election once seemed a walk in the park for Workers’ Party candidate Dilma Rousseff. Not any more. Following an exhilarating televised debate with rival Jose Serra (pictured) and an internet campaign against her, Rousseff’s lead in the polls has tightened dramatically.

Three new surveys put Rousseff in front, but by as little as 4 per cent. A Census poll released on Thursday morning gave her 46.8 per cent and Serra of the Brazilian Social Democratic Party 42.7 per cent. Continue reading »

Tags: elections Posted in Brazil | Permalink

Why Hungary’s spill is affecting Vietnam

October 14, 2010 4:30 pm by Ben Bland

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Last year Vietnam’s government successfully contained widespread opposition to a massive, Chinese-led bauxite mine. Critics were arrested, and the country’s only independent thinktank was effectively outlawed.

But now environmental concerns have resurfaced, prompted by events 9,000 kilometres away in Hungary. Several people there were killed after a spillage of red sludge, the highly toxic byproduct created when bauxite is refined into aluminium. Continue reading »

Tags: environment, mining Posted in China, Hungary, Vietnam | Permalink

Foreign investors are keener than South Africans on South Africa

October 14, 2010 4:00 pm by Simon Mundy

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For a people sometimes prone to pessimism about their country, the months leading up to this year’s football World Cup in South Africa saw a rare, sustained feel-good atmosphere.

The fuzzy feeling extended to many foreign investors: the rand has risen inexorably this year as traders, tired with near-zero interest rates in the rich world, chase higher returns in South Africa’s bond market. But the public mood of optimism proved more fragile, dissipating within a matter of weeks after the World Cup, according to a new report. Continue reading »

Tags: World Cup Posted in South Africa | Permalink

Egypt’s politics don’t faze Electrolux

October 14, 2010 3:20 pm by Heba Saleh

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Egypt offers investors low costs and a growing consumer market, but the attractions are tinged by concerns over political instability. So it’s a modest victory for the country’s government that the world’s second-largest white goods manufacturer has decided the opportunities outweigh the risks. Sweden’s Electrolux is paying up to $480m for a leading Egyptian white goods manufacturer, Olympic Group. Continue reading »

Tags: FDI Posted in Egypt | Permalink

Lex on Norilsk Nickel

October 14, 2010 2:43 pm by beyondbrics

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Those on the hunt for value in emerging markets are often directed by strategists to Russian equities. The Moscow market’s forecast 2010 price/earnings ratio is 7.1 – meagre compared with 12.5 in Brazil, 13.7 in China and 20.3 in India.

But there’s at least one clear reason why: corporate governance. It leaves much to be desired and a prime example is a tussle over Norilsk Nickel, a big mining company. Two oligarchs are waging a bitter fight over its management and a note in the FT’s Lex column on Thursday highlights the damage this is doing to minority shareholders. It also warns that things could get worse: if the two oligarchs can’t resolve their dispute, the government may decide to intervene.

Posted in Russia | Permalink

India’s big issue is leadership

October 14, 2010 1:49 pm by beyondbrics

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Vikram Singh Mehta, chairman of Shell India, talked to Stefan Wagstyl of beyondbrics about the slow pace of government reform, in the fuel sector and beyond:

Posted in India | Permalink

Guest post: give the renminbi time

October 14, 2010 12:21 pm by beyondbrics

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By Giulio Martini, chief investment officer, currency strategies, AllianceBernstein

In a world in which the US is no longer as convinced as it was of the benefits of free trade, the temptation to campaign on “punishing” China is tempting. But it’s important to avoid bad political decisions that repeat the mistakes of the past.

With the US Treasury’s report on international economic and exchange rate policies expected to be published on Friday, the markets are focusing on what it will say about China. If the Treasury doesn’t brand China as a currency manipulator, there is a risk that Congress will hijack the issue – at the risk of strained international relations and a potential loss of credibility for US policy. Continue reading »

Tags: guest post Posted in Global | Permalink

Asia markets wrap: stocks gain; S Korea holds rates

October 14, 2010 11:57 am by Henry Mance

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Asian stocks rose on Thursday, on robust commodity prices and hopes for strong earnings from exporters. However, Indian stocks underperformed after Wednesday’s rally, with banks and industrial stocks hit hard.

In South Korea, for a third successive month, the central bank decided not to raise interest rates, although the won continued to rise against the dollar. Continue reading »

Posted in Global | Permalink

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beyondbrics

Daily Archives: October 14, 2010

Just how bad is Venezuela’s dollar crunch?

Nigerian power: watt now?

Brazil’s markets start to price in Serra

Americas markets wrap: Markets mixed on US data, capital controls worries

Argentina: Telecom Italia buys in

The hot money’s on Poland

CEE markets wrap: currencies gain; power company CEZ at 18-mth low

Not over yet: Serra fights back in Brazil

Why Hungary’s spill is affecting Vietnam

Foreign investors are keener than South Africans on South Africa

Egypt’s politics don’t faze Electrolux

Lex on Norilsk Nickel

India’s big issue is leadership

Guest post: give the renminbi time

Asia markets wrap: stocks gain; S Korea holds rates

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