Daily Archives: Apr 14, 2011

Latin American markets edged lower on Thursday hitting a two-week low. Investors were cautious about the global recovery after US unemployment claims jumped unexpectedly and renewed concerns about Eurozone fiscal problems. The MSCI Latin American index was 0.3 per cent lower at 4,566. Brazil’s benchmark Bovespa index fell 0.3 per cent to 66,279, with the biggest component, Petrobras shares down 0.7 per cent. Read more

With so much stormy weather in global financial markets, Turkey wisely avoided controversy when it on Thursday appointed its next central bank governor.

While Erdem Basci has run into some criticism in the financial community as the architect of Turkey’s unorthodox monetary policy, he is a long-serving deputy governor and is seen as the continuity candidate.  His appointment was widely expected and is likely to be welcomed by investors who feared the government might make a more overtly political appointment. Read more

Glencore’s IPO is breaking all records, including some in emerging markets. The plan to raise $9bn-$11bn, announced on Thursday, outstrips the $5.4bn offering from Hutchinson Port Holdings, so far the biggest IPO of 2011.

According to Dealogic, if Glencore, which is listing in London and Hong Kong, is priced at the top of the range, it will be London’s largest ever IPO but, in a sign of the times, it won’t come close to Hong Kong’s record which is held by Agricultural Bank of China with last year’s $22.1bn offering. The world’s largest commodity trader will, if all goes well, produce the world’s 11th biggest IPO. Read more

Sales of beauty and personal care products in emerging markets are booming. In India, China and Brazil, they are set to rise at an average rate of 10 to 13 per cent a year between 2000 and 2015, compared to a mere 2 per cent for the US, according to Euromonitor.

Over the next four years, the three countries’ share of global sales will rise from a twelfth to a quarter – while that of the US will fall from a fifth to a ninth. The boom has created big opportunities for multinationals in recent years. But now they face competition from local brands. Read more

Euroset mobile handset store in MoscowUh oh – here they go again. Russian handset retailer Euroset late on Friday pulled its $1.3bn London listing, igniting concerns that mid-April is starting to look a lot like early February, and not just because of the endless snow in Moscow.

Euroset has blamed its decision to cancel the flotation on market conditions. But according to investors and analysts, the company was simply asking for too high a valuation – a lesson Russian issuers have a hard time digesting. Read more

not “punching above its weight”To the casual observer, South Africa might look like something of a poor relation at this week’s Brics summit on the lush Chinese island of Hainan. At 3.5 per cent, its expected GDP growth this year is by far the lowest in this club of high-growth economies. Its gross domestic product last year was just $357bn,  about one-sixteenth of China’s.

Yet when it comes to transparency and business standards, the other Brics could learn a thing or two from their new drinking buddy. Read more

McDonald's BrazilShares in Arcos Dorados, the world’s largest McDonald’s franchise-holder, were going even quicker than its fast-selling burgers. The stock in the Latin American operator soared on Thursday 27 per cent above its IPO price as investors queued up to super-size.

Canny punters who bought shares in the offering will be happy as kids with milkshakes. Shareholders headed by chief executive Woods Staton, and their investment bankers, will be frowning into their (paper) coffee cups at the blatant underpricing.

 Read more

One of the few points of substance to come out of the Brics summit this week was Thursday’s statement calling for regulation of commodities prices.

This is odd. Just two months ago, Guido Mantega, Brazil’s finance minister, specifically ruled out the idea of regulating commodities prices, saying to do so would stand in the way of growth and production. What is going on? Read more

Ratan TataEmerging markets are yet to produce brands equivalent to General Electric or Microsoft. But when they do, Tata, the Indian conglomerate, would like to be counted among them.

The company,  which values its brand at about $14bn, more than double what it was six years ago,  is embarking on an ambitious branding push into the US, UK, South Africa – and China.

But it has its work cut out to home. Tata managers are worried India’s spate of corruption scandals might tarnish the global standing of its largest company. Read more

Thomas Mirow, EBRD presidentThe countries of central and eastern Europe must carry out reforms to improve competitiveness  if they are to catch up with the growth of more nimble emerging markets elsewhere. So says Thomas Mirow, president of the European Bank for Reconstruction and Development.

In an interview with the FT to mark the bank’s 20th anniversary this Friday, Mr Mirow said the bank’s 29-country region was bouncing back well from the financial crisis – but  growth still lagged behind other emerging regions. Read more

Czech media are having a field day with this:

Indian banks reluctantly acquired a stake in Kingfisher Airlines as part of the carrier’s debt restructuring last month.  They were right to be worried: the value of the airline’s stock plummeted by 30 per cent in ten days after the deal and analysts are forecasting a bumpy flight ahead.

Will the banks recoup their investment in the highly-indebted airline?  A lot depends on the oil price – and it’s not helping right now. Read more

*Glencore unveils $11bn IPO plans

*BP extend Rosneft share-swap deadline

* Brics leaders see threat to growth from commodity volatility

* China banks said to need $131bn equity over six years

* Spain: China mulling €9.3bn cajas investment Read more

Thursday’s picks from the beyondbrics team: BP’s Russian debacle puts pressure on Bob Dudley, simmering unrest in the Middle East, and a face-off between Medvedev and Putin in Russia. Read more

Bob Dudley, BP chief executive, and Vladmir Putin, Russian prime minister, when the BP-Rosneft deal was announced in January 2011

By Stefan Wagstyl and Catherine Belton

Rosneft’s decision on Wednesday to give BP another month to try to complete their controversial cooperation plan gives everybody involved a breathing space.

But such is the acrimony between BP, its existing Russian partners led by oligarch Mikhail Fridman, and warring Kremlin clans,  that it’s unclear a deal can be done. Perhaps it can be completed only when the Moscow political temperature subsides after next year’s presidential election. Read more

Even by China’s impressive control-freak standards the Brics summit in the resort island of Hainan on Thursday has been an unedifying, stultifying affair for the international press corps.

All delegates to the event have been issued with colour-coded badges that allow varying degrees of access and most of the world’s largest media organizations have been given lowly yellow badges that allow them into a “media center” to listen to three short press conferences but shut them out of everything else. Read more

Regulatory obfuscation is beginning to take its toll on Cairn Energy’s proposed sale of its Indian oil assets to London-listed Vedanta Resources for $9.6bn. Sir Bill Gammell, Cairn’s chairman (pictured), is likely to give up on the deal by May 20 unless he receives an encouraging sign from New Delhi in coming days.

Vedanta’s offer was launched in August. Months on, an inscrutable New Delhi is plainly in no hurry to give approval, or even a nod and a wink that it might be an outside possibility. Read more

* Brics leaders see threat to growth from commodity volatility

* China banks said to need $131bn equity over six years

* Spain: China mulling €9.3bn cajas investment

* Indian telecoms regulator boosts support for local mobile equipment manufacturers

* Huawei declares truce with Motorola Read more

By Nicholas Kwan of Standard Chartered

China’s efforts to develop its currency – the renminbi, or Rmb – into an international reserve currency with controlled convertibility are unprecedented. Its strategy of achieving this through parallel development of the onshore and offshore RMB markets is also unique. Progress in both attempts so far has been remarkable, although it remains a small step in a long journey.

It is a welcome and necessary move, from the perspective of both China and the world. Read more

Amidst the euphoria surrounding the internationalisation of China’s currency, the renminbi, attention on the Indian rupee appears to have fallen into the shadows. Admittedly China has been announcing new measures on the path to internationalisation almost on a weekly basis whilst India appears to have taken a more gradual approach, but it’s not too late for India to regain some of the limelight.

Perhaps it is surprising that the rupee is hardly talked about when discussing reserve currencies. Read more