Investing in Rio’s games
Just as Brazil’s central bank has pulled out all the stops to curb the appreciation of the real, upward pressure on the currency could come from a new source: the city government of Rio de Janeiro.
The city’s mayor, Eduardo Paes, has floated the idea of asking the central government to allow Rio to issue an initial $500m bond to help it finance the 2016 Olympic Games. Continue reading »
Dilma takes aim at defence spending
Since before Brazilian president Dilma Rousseff officially took office on January 1, there have been persistent reports that she will review some of the big ticket defence items approved by her predecessor, Luiz Inácio Lula da Silva.
These include a plan to review a proposal to buy 11 warships worth $6bn, according to Brazilian newspaper Folha de S. Paulo, and to rethink a plan to buy 36 fighter jets, according to Reuters. Continue reading »
Americas markets wrap: Mexican stocks dip on US earnings
Disappointing US earnings weighed on Latin American markets today, sending Mexican and Chilean stocks lower. Regional currencies were also softer against the dollar as commodities prices fell. Brazil’s Bovespa, the largest index in the region, was closed for a holiday. Continue reading »
Turkey: inflation and unorthodoxy
Turkey’s central bank has not won much praise for its gambit of cutting interest rates to limit capital inflows. Harsher critics of its unorthodox approach even ask if officials are competing to please politicians, who will soon appoint a new bank governor. And even the mildest critics say the central bank’s communication has been haphazard.
So many were hoping for a more coherent exposition of the new policy in the central bank’s latest quarterly inflation report, published on Tuesday. Continue reading »
CEE markets wrap: stocks fall on British slump
Central and eastern European stocks slipped on Tuesday after Britain’s economy contracted by 0.5 per cent in the fourth quarter of 2010 and fears about the solvency of Spanish banks intensified.
“The sovereign-debt crisis is an issue that will come and go through the whole year and will create volatility,” said Markus Wallner, a senior equity strategist at Commerzbank in Frankfurt. “However, corporate profits are not made in Greece or Ireland and we have a very good quarterly earnings season with strong results. Some clients want to buy equities, but are waiting for lower prices to get into the market.” Continue reading »
Guest post: don’t let terrorism distract Russia from reform
By Alexey Zabotkin, head of investment strategy, VTB Capital
The deadly blast at Moscow’s Domodedovo international airport this Monday is the second act of terrorist violence in Russia’s capital in less than a year. No one has claimed responsibility for the attack, but the finger of suspicion is pointing at Islamists from the North Caucasus.
It has been a reminder that no sustainable solution has yet been found for problems of that volatile region. And that its problems will continue to absorb a significant proportion of resources—administrative, military and financial—of the federal government, distracting the country’s leadership from other equally pressing but less explosive issues on the policy agenda. Continue reading »
Greek ship-owners miss China hand
The unofficial yet important post of China’s business ambassador in Greece is up for grabs following the death, announced on Tuesday, of shipowner Vassilis Constantacopoulos, founder of the Costamare group which controls about 4 per cent of the world’s container trade.
With the Chinese state shipping group COSCO as its biggest charter client, Costamare set the pace for Greek owners entering the “China trade”, which is credited with making billionaires out of dozens of Athens-based operators in the mid-2000s. Continue reading »
Nigeria’s bond: conflicting views
There were some doubting Thomases among the fund managers who were weighing up Nigeria’s debut eurobond last week – including at least five major financial institutions who either chose to shun Nigeria or cautioned clients likewise.
But by and large the international investment community gave Nigeria the thumbs up on Friday, when the bond was launched. The $500m issue was more than 2 times oversubscribed, and pricing, which translated into a yield of 7 per cent, was within government targets. Continue reading »
Boost for Romania as fund lists
Fondul Proprietatea’s shares rose after listing on the Bucharest Stock Exchange amid high hopes that one of eastern Europe’s largest property restitution funds will draw new foreign institutional investors to cash-strapped Romania.
Shares in the €3.6bn fund which holds stakes in 83 companies – most of them unlisted and weighted heavily towards the energy sector – traded at 0.62 lei, well above the previous over-the-counter price of about 0.5 lei. Continue reading »
Indonesia seen striking at inflation
Faced with soaring food prices and accusations of being too dovish on inflation, Indonesia’s central bank is expected to hike its key interest rate at its next policy meeting. The first tightening in 18 months will be a 25 basis point increase, on Feb 4, economists at HSBC and Barclays Capital say.
The move is likely to settle investors concerned about the central bank’s seemingly passive stance to rising inflation. Since the start of the year, Indonesia’s Jakarta Composite has fallen 3.7 per cent from near all time highs at the end of last year. Continue reading »
‘India growth’: investors lose the faith
Global investors have suddenly gone bearish on India. This is the verdict of the latest Morgan Stanley survey of 89 fund managers, which shows that only a quarter of buy-side investors believe India will outperform EM in 2011.
This is first time since January 2009 (when it launched the survey) that the majority of the participants expect India to underperform other emerging markets. It also explains why investors have sold a net $754m in equities in January, according to India’s market regulator. Continue reading »
Russia: making the country safer
Dmitry Medvedev, the Russian president, has been quick to blame security lapses at Domodedovo airport for the deadly terrorist attack that killed 35 people and injured more than 160. Like any other national leader faced with disaster he wants to know what might have been done to avert the tragedy – and what might now be done to prevent a recurrence.
The problem is that it is impossible to fight terrorism with security measures alone – as Russia’s own history over the past decade has proved. Policies are needed to deal with the roots of terrorism. Continue reading »
Asia markets wrap: stocks, currencies fluctuate
Asian stocks enjoyed mixed fortunes on Tuesday, as momentum from strong corporate earnings and share buybacks in the United States was offset by renewed fears that China’s tightening measures will curb demand for property and commodities.
“This is the perfect time for consolidation,” said James Holt, at BlackRock Investment Management Australia in Sydney. “We expect that US companies which undertook massive cost cutting during the global financial crisis will, as they regain confidence, deploy their record cash balances into mergers and acquisitions or new business investment.” Continue reading »
New York headlines
* China beats the US in wind energy
* India’s growth push gets regional boost
* Stanley Ho’s assets ‘hijacked,’ lawyer says
* Ivory Coast ban threatens cocoa trading turmoil
* Emerging markets inflows to hit $1 trln in 2012 – IIF Continue reading »
A chart for the China bears
China’s 7-day repo rate (essentially the cost of accessing cash) saw its biggest-ever single-day spike on Tuesday – jumping a full 242 basis points, hitting 7.65 per cent, its highest since October 2007.
There are plenty of possible reasons for the spike – a rush to get cash ahead of Chinese New Year (to pay for gold trinkets, drink, and banquets), a spate of IPOs, and – mostly – government attempts to rein in excess liquidity by hiking the reverse repo rate. But for the bears, this chart is a must. Continue reading »
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