Daily Archives: March 1, 2011

oil rigsOil prices surged again on Tuesday afternoon, with Brent crude settling above $115 a barrel and West Texas Intermediate just below $100 – not as high as last Thursday’s dramatic spikes, but a reminder of how volatile commodity markets are likely to remain over the coming months.

As beyondbrics has noted, emerging markets face unique risks from surging oil prices, not least because they consume a proportionally higher amount of oil than their developed counterparts. There’s also the looming spectre of inflation – and just what measures central banks will take to contain it. Continue reading »

Bovespa chartLatin American markets fell Tuesday as investors pulled back from risky assets and oil prices spiked up again amid ongoing turmoil in the Middle East.

Brazil’s Bovespa shed 1.7 per cent as homebuilders extended their slump following yesterday’s budget cuts announcement and banks fell on concerns over credit expansion after consumer prices rose more than expected, spurring inflation concerns. Banco do Brasil retreated 2.7 per cent while real estate company Gafisa lost 3.3 per cent. Continue reading »

Criticised by the IMF and the EU, and described as “brutal” by banks, plans to extend Hungary’s controversial bank tax through to 2013 were unveiled on Tuesday. In reaction to the announcement by Hungary’s government, the Budapest stock market took a dive, led by bank shares. But the damage on Tuesday afternoon was not just limited to Hungary – shares of major European banks across the region also fell.

A statement from Tamas Erdei, chairman of Hungary’s Banking Association, gives a clue to dampened market sentiment. He warned that the tax would mean lower profitability for banks and restrained lending. Continue reading »

Turkish stocks suffered their biggest fall since May 2010 on Tuesday amid intensifying fears about political unrest in the Arab world. Hungarian stocks also dropped sharply, after the government unveiled plans to cut spending by $4.6bn a year from 2013.

“The losses in Istanbul reflect concerns about the economy’s exposure to countries experiencing troubles,” Neil Shearing, economist at Capital Economics in London, told beyondbrics. “Hungary’s decline, meanwhile, is a vote of no confidence in the new fiscal package from the markets. The government’s rhetoric is tough, but the detail isn’t.” Continue reading »

Nursultan Nazarbayev, president of KazakhstanThe historic rulers of central Asia used to hand out gifts to win popularity – gold to the courtiers and food to the villagers.

Never a man to miss a trick, Kazakh president Nursultan Nazarbayev is following their example  and planning to offer his people discount shares in the country’s key companies in a move announced on Tuesday, a month before the country’s presidential election. Continue reading »

Argentine officials have racked up the air miles going back and forth to Paris in recent months as they seek to hammer out a deal to repay Argentina’s decade-overdue debt to western creditors in the Paris Club.

The government has made progress, but its hopes of announcing a deal still look far away. Why? Because the two sides apparently remain far apart on the timing of payment. According to the latest talk, while Argentina wants to repay slowly, over five or six years, without interest, the Paris Club will only waive interest if the payment is speedy – in a year to 18 months. Continue reading »

Giving is a lot easier than taking. That’s what the Polish government is finding out with its promises to slash civil service numbers, part of its campaign to bring down the budget deficit from its worrying level of 8 per cent of gross domestic product.

Donald Tusk, the prime minister, has been promising to cut government jobs by 10 per cent since 2009. But an article in Tuesday’s Rzeczpospolita newspaper revealed that public sector employment has in fact soared 17 per cent over the last two year. Continue reading »

The latest delay to the reopening of Cairo’s stock exchange has tipped the impatience that some market players were feeling with the authorities into downright anger.

“They are just looking for excuses,” said one broker from a major firm. “They have no real reason for this. They are just afraid to take a hit. It is like someone who faces an exam, but he is not prepared and his book has been burnt, so he is avoiding it because he doesn’t want to fail.” Continue reading »

Investors have been waiting months for the Hungarian government to announce its fiscal reform package. But when the day finally came it was rather a damp squib.
The headline figures announced by economy minister Gyorgy Matolcsy and deputy prime minister Tibor Navracsis on Tuesday were broadly in line with expectations. Even still, Hungary’s Budapest SE, the main stock exchange, fell 1.9 per cent from an opening price of 23,308.07. It was down 1 per cent at 22,873.91 in afternoon trading.

Continue reading »

SAudi children greet King Abdullah on his return to Riyadh from medical treatment abroad feb 2011The arrest of a prominent Shia cleric and the prospect of demonstrations in Saudi Arabia, the world’s largest oil exporter, has spooked the local Tadawul stock exchange.

The Tadawul, the largest stock market in the Arab world by capitalisation, plunged 6.78 per cent to 5,538.72 on Tuesday, bringing its decline for the year to date to 16.34 per cent.

Reassurances from the finance ministry that a $35bn welfare spending boost announced last week by King Abdullah did nothing to calm investors’ nerves. The fear of political contagion, it seems, have gripped the kingdom. Continue reading »

Mirko Cvetkovic, Serbia’s prime minister is looking increasingly like he’s stuck between a rock and a hard place. He is working hard to send positive signals to the International Monetary Fund that the government will slash expenditures – ahead of an April 1 expiration date for the latest IMF loan – while simultaneously tending to angry union members demanding higher wages.

Speaking at an investment forum on Tuesday, Cvetkovic said continued IMF presence in the Balkan country would “secure stability and predictability of the market.” Continue reading »

To the unscrupulous, the US Trade Representative’s latest Out-of-Cycle Review of Notorious Markets reads like a handy guide to free and illicit stuff. It lists 16 websites and 17 places on earth “which exemplify the problem of marketplaces dealing in infringing goods and helping to sustain global piracy and counterfeiting”.

The list is controversial for other reasons, too. It names Baidu, the most visited site in China and one of the top ten in the world, as being “engaged in “deep linking” to allegedly infringing materials, often stored on third-party hosting sites”. But attempts to sue Baidu and others for deep linking have a chequered history. Continue reading »

Indian stocks gained the most in 21 months on Tuesday after the government unveiled its annual budget, which included measures to rein in food inflation and cut the fiscal deficit.

Equities rose more modestly elsewhere in Asia, as falling oil prices and strong personal income growth boosted confidence in the strength of the global recovery. In the Middle East, however, bourses fell sharply on fears that unrest could continue to spread across the region. Continue reading »

Saudi Arabia’s benchmark stock index fell 7.4 per cent, plunging to the lowest since September 2009, on concern that political unrest in the Middle East may spread to the kingdom.

The Tadawul All Share Index, which closed down at 5538, has lost 18 per cent since Tunisia’s ex-president Zine El Abidine Ben Ali fled the country amid protests that spurred similar uprisings in nations across the region. Continue reading »

India may have completed two decades of market-oriented economic liberalisation. But its’ deep-rooted socialist mindset – especially attitudes about the poor, and how they live, or should live – are hard to shake.

That is apparent in a particularly bizarre approach to a new service tax on health care in the budget unveiled by Pranab Mukherjee, the finance minister, on Monday. Continue reading »

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12.4% Fall in Mail.Ru shares on Monday, on the back of its Facebook stake.

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