Daily Archives: Jun 23, 2011

With crushing inflation top of its to-do list, Uruguay’s central bank hiked its benchmark interest rate by 50 basis points to 8 per cent as expected on Thursday, after a 100 point rise last month.

Mario Bergara, the central bank president, told Dow Jones this week that “people have seen clear signs that the central bank and government are really committed to fighting inflation”. Prices accelerated 8.53 per cent year-on-year in May, sharply outside the 4 to 6 per cent inflation target for the 12 months to June 2012. Inflation in 2010 was nearly 7 per cent. Read more

Can it or can it not? The question of whether China can rein in inflation and sustain its blistering pace of growth is one that has been at the forefront of investors’ minds.

Wen Jiabao, China’s Premier, tackles this question head-on in Friday’s FT. And his answer is an emphatic yes. Read more

A Reuters story that appeared on Thursday reads like a script of analysts’ worst fears before President Dilma Rousseff took office in January.

The president’s administration, Reuters reports, is frozen amid differences between her Workers Party and its main coalition partner, the PMDB, a fractious bunch of regional politicians who are known for their love of pork. Read more

Middle East skilled workers, unemploymentThe Arab Spring is expected to improve the long-term growth prospects of the moribund Arab world — but that’s not going to happen if companies have to keep struggling to find skilled local labour.

To overcome the skills gap, smart companies are realizing that when it comes to education, they’ve got to take matters into their own hands. Read more

It was a monster Paris Air Show for Airbus. The French-based airline manufacturer logged orders and commitments for 730 airliners worth more than $72bn, including 667 for its flagship A320neo.

The biggest buyers were from emerging markets, including Air Asia, the fast-growing Malaysian airline, which said it would buy 200 aircraft. As our chart from Airbus’s rival Boeing shows (after the break), the industry is pinning its hopes on EMs as developed markets slow down. But it is not all clear skies ahead. Read more

Ask any discerning Hong Kong diner and they will tell you that not all dim sums are created equal. Dim sum bonds – renminbi-denominated corporate bonds that have taken off in a big way over the past year – are no exception.

The recent divergence in performance between plain vanilla and so-called “synthetic” dim sum bonds would suggest that – for all the talk about the market’s seemingly bottomless appetite for renminbi-denominated products – investors are getting finicky about what’s on their plates. Read more

The IEA will release oil from its strategic reserves “around end of next week”, Reuters reports. The price of Brent crude fell over US $6 to $108/barrel on Thursday ahead of speculation that it would do so. The price of Brent crude was US $109.16/ barrel at 14:30 BST. Read more

Everyone is getting gloomy about China these days. Whether it’s a slowing economy, towering debt, fraudulent companies, or flopped IPOs, there are bearish China stories all over the place.

But on the eve of Prada’s IPO – a listing already threatened by choppy markets, and a fair bit of doubt about its pricing – there’s a small glimmer of hope. Read more

The – slim – chance that the Turkish central bank might abandon its unorthodox low-interest-rate policies following the ruling AKP’s election victory has failed to materialise.

As widely predicted, the bank decided on Thursday to stick to its guns and keep its one-week repo lending rate at a record low of 6.25 per cent despite the recent acceleration in inflation and widening of the current account deficit Read more

Kenya ShillingLike the Ugandan shilling last week, the Kenyan shilling hit an all-time low against the dollar this week, as the country battles rising inflation, a widening current account deficit and speculation.

Having fallen even faster than its neighbour, the Kenyan currency is down 13 percent to a record low at 91.90 shillings to the dollar on Wednesday, making it the world’s third-worst performing currency this year. Read more

By Mark Shapland and Sam Weisberg of mergermarket

Here’s a story you don’t hear often: a US-listed Chinese company has decided to go private. But it’s an option that similar Chinese reverse mergers might want to consider as the sector continues to get pummelled by short-sellers.

This week, Harbin Electric, which saw its share price drop 50 per cent last Thursday,  announced its much-delayed decision to go private following a series of accusations about the accuracy of its accounting and share dealings from Citron Research, a stock research firm.  Read more

* China warns US over South China Sea

* Obama outlines timetable for Afghan withdrawal

* Russian party barred from poll

* India: Outward FDI at $5bn in Apr-May

* AirAsia to buy 200 A320neo plus 100 options Read more

Shipping containers at Yangshan port, ShanghaiIf emerging markets grab a bigger share of world output, as is almost universally forecast, they are very likely to take an even larger slice of world trade – with all sorts of consequences for service, manufacturing, and trading companies.

According to Citigroup, big changes are coming very soon:  China will replace the US as the biggest economy by trade, developing Asia will overtake western Europe as the largest region by trade,  and  intra-EM trade will exceed trade among developed economies – all by 2015. Read more

Thursday’s top picks from the beyondbrics team: India’s inflation is becoming structural rather than cyclical; and Nato faces tough choices in Libya. Elsewhere, Chilean students on the march, while Russian students struggle to study abroad. Read more

Cashiers ring up sales at a Pao de Acucar supermarket in Sao Paulo, Brazil, on Tuesday, April 20, 2004.Browse the freezer compartments of any supermarket in Brazil and you’ll notice two things. Firstly, Brazilians really like their meat. And secondly, almost everything in there – from burgers to frozen pepperoni pizza – is made by one company: Brasil Foods.

Which is why, in terms of market share alone, the company will have a tough time convincing the country’s competition commission not to block the $3.8bn merger of food processing companies Perdigão and Sadia that created Brasil Foods. Read more

 Pierre Chen, chairman of Yageo Corp., speaks at the opening ceremony of the second phase of Yageo's plant in Suzhou, Jiangsu province, China, on Monday, Oct. 29, 2007If there’s one consolation for Kohlberg Kravis Roberts (KKR) and Pierre Chen, Yageo’s chairman, after the Taiwan government rejected their bid to take Yageo private, it’s that they were neither the first, nor likely the last, to have run afoul of Taiwan’s finicky regulators.

Given the tenuous arguments presented by government, the latest rejection is likely to dampen foreign private equity interest in Taiwan.  Read more

HSBC PMI June 2011Another sign of a slowdown in China. On Thursday HSBC published its flash PMI manufacturing  index for June (the earliest economic data for the month), showing a sharp drop from 51.6 in May to 50.1.

As HSBC says, this level of PMI is consistent with industrial production growth of 13 per cent a year. So, a slowdown not a meltdown. But there could still be investment implications, not least for copper. Read more

Soldier stands guard in front of chairman Mao's portrait at the entrance to the Forbidden City, BeijingPolitical forecasting is even more dangerous than economic. Particularly about the future, as the old joke goes. So all credit to Charles Robertson of Renaissance Capital for having a shot at the biggest call of all.

China, he boldly predicts, could be a democracy by 2017 assuming the economy grows and annual incomes rise to $15,550 a head. And that would be good for China and good for the world. Nice if it things turn out that way, of course. But how can be so sure? Read more

* China warns US over South China Sea

* Obama outlines timetable for Afghan withdrawal

* Russian party barred from poll

* India: Outward FDI at $5bn in Apr-May

* AirAsia to buy 200 A320neo plus 100 options Read more