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.
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.
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.
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.
Uh 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.
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.
Shares 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.
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?
Emerging 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.
The 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.
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.
*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
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.
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.