Americas market wrap
Latin American stocks fell on Friday as investors sold off riskier assets amid fears that the eurozone budget crisis will spread to Spain and concerns over China’s tightening monetary policy to contain inflation. Continue reading »
Christmas feast under threat in Venezuela
Christmas is approaching, a time for feasting. In Venezuela, the favoured seasonal dish is the hallaca, a mix of meat, capers, raisins and olives held together in maize flour, all wrapped in plaintain leaves, and then boiled or steamed.
But after the government “suggested” the prices at which these ingredients should be sold earlier this week, Venezuelans are fretting there won’t be enough to go around. Christmas may be a time for giving, but some shop owners seem to think the government is going too far: the price caps are so low that they say they are being forced to sell at a loss. Continue reading »
Alexandre Tombini, the next president of Brazil’s central bank, says he is confident there will be no change in the way the bank has pursued inflation targeting free of political interference. But his staff are not so sure.
In an extraordinary statement this afternoon, the union representing the bank’s workers criticised recent statements by Dilma Rousseff, president elect, and called on her to grant the bank full legal independence, as opposed to the operational variety it has enjoyed at president Luiz Inácio Lula da Silva’s pleasure. Continue reading »
Capping wages in S Africa
South Africa’s new economic “growth path”, unveiled this week, contained little in the way of shocks. We already knew the government wanted to create 5m jobs in the next decade, and that an expensive state infrastructure programme would lie at the heart of that drive. But the document’s proposal to restrict wages has drawn flak from a range of sources.
Just as Britain’s swingeing tax on bank bonuses led to prophecies of an exodus of top talent, there was a nervous reaction from parts of the South African business world to the mooted cap on the pay of anyone earning more than R550,000 ($77,000) a year. Continue reading »
CEE markets wrap: Hungary leads equity, currency losses
Hungary’s woes continued on a chastening day for central and eastern European stocks. The Budapest Composite lost almost 3 per cent as concerns about its pension reforms continued to unnerve investors. CEE currencies all fell against the dollar.
“Hungary’s pension reforms are causing havoc in the markets,” Neil Shearing of Capital Economics told beyondbrics. “Speculation that the measures could trigger a downgrade is pushing stock prices down. Eurozone sovereign fears are only making matters worse.” Continue reading »
Hungary’s troubling pension reforms
When Viktor Orban’s Fidesz party won an overwhelming victory in Hungary’s parliamentary elections in April, many international investors cheered the prospect of a reformist centre-right government with a rock-solid mandate. Seven months later, the disappointment is palpable.
The latest move to unsettle the markets was an announcement this week that the government, in effect, wants to use private pension assets to help it strengthen public finances. Economists and fund managers have argued that this amounts to the nationalisation of the system, which has been regarded as highly progressive since being created in 1998. Continue reading »
A key element of intrigue over Brazil’s new economic policy team has been the question of what happens to Antonio Palocci, a former finance minister and a Wall Street favourite.
The answer, if you believe one of Brazil’s top newspapers on Friday, is that he will be chief minister in the government of Dilma Rousseff, the incoming president. Investors would welcome his appointment as a sign Rousseff is serious about fiscal discipline – although they were more preoccupied on Friday by the future of monetary policy. Continue reading »
What elections mean for Egypt’s future
Concern is growing in Egypt over parliamentary elections due this weekend, as a growing number of candidates – members of the Muslim Brotherhood and independents – are rejected by an election commission heavily influenced by the ruling National Democratic Party. In this podcast the FT’s Heba Saleh discusses the importance of the election, which comes ahead of a presidential poll next year.
Deal of the day: betting on Russia’s e-readers
Rusnano, Russia’s state nanotechnology company, tends to specialise in projects too difficult or expensive for ordinary mortals to understand. But the logic of its latest Russian venture is a no-brainer in a nation renowned for bookworms: it wants to make screens for e-readers.
The company approved plans this week to invest $150m in making state of the art plastic electronic displays in a partnership with Plastic Logic, a California-based electronics group. Oak Investment, a US venture capital fund, is expected to support the project, part of Russia’s drive to promote innovative industries to diversify the economy away from oil and gas. Continue reading »
Should the UK export more to EM?
A statistic has surfaced in the past week that casts significant doubt on the hype about Britain’s trade relations with emerging markets: British exports to lowly Ireland are greater than its exports to Brazil, Russia, India and China – the mighty Brics – combined. Can this be true? And if so, should Britain be doing more to promote its products in emerging markets?
The latest data from the International Monetary Fund confirm that it is indeed correct. In June, British exports to Ireland were $1.93bn (6.1 per cent of total exports), while exports to the Brics were $1.5bn (5 per cent of total exports). This was not a one-off: exports to Ireland have made up a greater proportion of total exports than those to the Brics since at least 2005. Continue reading »
Asia markets wrap: Korea fears drive down stocks, currencies
Asian stocks plummeted on renewed concerns about tensions on the Korean peninsula and Chinese anti-inflation measures. Almost all indices fell, with those in Hong Kong, South Korea and Indonesia suffering the biggest losses. The Korean won led sharp falls in Asian currencies against the dollar.
“General risk aversion has gone up due to event risks like the Korea tension and China inflation that seems to be above expectations,” Geoffrey Ng of Hong Leong Asset Management in Kuala Lumpur told Bloomberg. “As a result of that, China may impose further tightening measures.” Continue reading »
New York headlines
* Petronas Chemicals jumps on Malaysia debut
* South Korea names defense minister amid criticism
* Colombia to sell 9.9% of Ecopetrol
* Rio earmarks $11bn capex for 2011
* China detains Australian executive
* Markets down Continue reading »
S Africa’s cabinet wades into iron fight
To the untrained eye, the South African government’s announcement that it will look into iron ore prices appears innocuous. But the news takes on more significance when one considers the mighty three-way tussle between the state and the local subsidiaries of Arcelor Mittal, the world’s biggest steelmaker, and the mining giant Anglo American.
Arcelor used to have an agreement with the Anglo unit Kumba Iron Ore that entitled it to an annual 6.25m tons of ore at cost plus 3 per cent. But Kumba considered the deal conditional on Arcelor’s share of mining rights at its Sishen mine – and when the steelmaker forgot to renew those rights last year, Kumba argued that it was now entitled to charge whatever price it chose. Continue reading »
Malaysia: Petronas roadshow not over
Petronas, Malaysia’s state owned oil and gas producer, has successfully completed the second of two big initial public offerings in subsidiaries with the listing of its newly formed Petronas Chemicals Group. The chemicals group – an agglomeration of 22 subsidiaries – achieved a 10 per cent rise in its share price on debut on Friday, before falling back a bit. Malaysia Marine & Heavy Engineering Holdings, which raised M$2.03bn a couple of months ago, was 27 times oversubscribed by institutions.
So can investors expect an IPO of the parent group, and what would its valuation look like? Continue reading »
[update] Won continues to slide
South Korean markets showed signs of being spooked in the afternoon session on Friday, as mysterious reports rolled in of “explosion sounds” near the South Korean island shelled on Tuesday by North Korea. The sounds have since been attributed to firing drills on the north side of the border, but clearly markets are on edge.
The Kospi index closed down 1.3 per cent – with Hana Financial falling over 4 per cent, and Korea Exchange Bank dropping more than 3 per cent, just a day after announcing their tie-up. But the biggest casualty was the won. Continue reading »
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