Like many emerging market currencies, the Brazilian real has quickly given up all the gains it made against the US dollar in the first half of 2011 and is now back at levels not seen for a year.
While that movement is undoubtedly part of a broader EM trend, Brazil is also a case apart. As Monday’s issue of the central bank’s weekly survey of market economists suggested, something big has changed in Brazilian monetary policy. Read more
Risk-off works in different ways. As beyondbrics reported on Friday, the move out of risky assets into safer ones has been bad for equities but good for EM bonds, especially those denominated in local currencies.
But if this suggests enduring confidence about EM fundamentals, it’s not been enough to shore up EM currencies against the recent battering of bad news from Europe and the US. As of Friday, an equally-weighted basket of 23 EM currencies followed by RBC Capital Markets had given up all the gains it made in the first half and was back to where it started in January. Read more
Hungarians will be allowed to wind up their burdensome Swiss franc-denominated mortgages in a lump sum and at a preferential exchange rate of Ft180 to the Swissie (compared to the current market rate of around Ft234), with the exchange rate loss falling on the banks. That’s what Viktor Orban, the Hungarian prime minister, told parliament on Monday, confirming a governing Fidesz-KDNP proposal floated on Friday. Read more
After years of setbacks, Renault is making a new push into the Indian market, with the launch of an India-produced SUV, which might one day lead the French carmaker to use the country as an export hub.
The Renault Duster will include 60-70 per cent India-sourced components, and is one of five vehicles Renault is launching between May 2011 and December 2012 for which India is the primary market. Read more
The resource race may have calmed down a bit recently but it hasn’t gone away.
Banpu, Thailand’s biggest coal producer, went back into the market on Monday, making a cash offer of A$423m for the 88 per cent of Perth-based miner Hunnu Coal it doesn’t already own. The offer, which has been recommended by Hunnu’s board, is 30 per cent above Thursday’s closing price. Trading was suspended on Friday pending the announcement. Read more
Attention Kenyans living abroad: buy government bonds and help your country. The Kenyan government is offering infrastructure bonds totalling 20bn shillings (US$213m), especially aimed at Kenyans living abroad. With the current global appetite for emerging markets bonds, it might look like an opportunity.
But other than wealthy patriots, African diaspora bonds are failing to attract “mainstream” investors – for a reason. Read more
Oman’s SMN Power Holding, the Gulf country’s biggest power company has sprung a surprise with an announcement that it’s selling $64m of shares despite the general gloom in the markets and a dearth of initial public offerings in the region.
The company which is three-way joint venture between Mubadala Development, an Abu Dhabi government investment arm, International Power mostly owned by GDF Suez, and Oman’s National Trading, is selling 35 per cent of its total share capital, the company said in an e-mailed statement on Sunday. Read more
If you can’t beat ‘em, join ’em. That seems to be Walmart’s new strategy as it ponders - once again – how to enter the Russian market.
While the American retailer closed its Moscow office in December after losing a campaign to acquire discount chain Kopeika, it’s now turning to a rival suitor’s former chief executive for help. Read more
By János Samu, Concorde Securities
Economies at the eastern end of the European Union face growing hurdles after a year of relative success. While they do not share the agony of the troubled Mediterranean region yet, conditions seem to be taking a turn for the worse. The external assistance that eased their recoveries from the financial crises is at risk of evaporating. Read more
In a crisis even simple decisions can become fraught. Faced with multiple political uncertainties, unrest in the streets and fraying relations with Israel, Egypt’s government decided last week to impose tough new visa rules on tourists.
Cairo didn’t want too many journalists and human rights activists creeping in by pretending to be fans of pyramids or snorkelling. But the travel trade made such a fuss that ministers reversed their decision at the weekend. The country can’t afford to lose any more tourist revenue. Read more
Monday’s top picks from the beyondbrics team: what if the renminbi ruled the world, why Medvedev got tough on Yanukovich and does India’s prime minister inhabit the cheapest house in South Delhi? Read more
Economic uncertainty around the globe and high interest rates at home are finally hitting India’s factories hard.
Industrial output growth in July plunged to 3.3 per cent, its lowest level in nearly two years. But investors are betting that it still won’t be enough to stop a hawkish central bank raising rates one more time at its policy review this Friday. Read more
By Ben Simpfendorfer of Silk Road Associates
When asked to describe his business model, the manager of a large private bank in Guangzhou replied last week: “Opportunistic”.
And that’s the problem. Originally, China’s private banks filled the shortfall left by state banks, lending to the country’s dynamic, but cash-hungry SMEs. Operating more like an investment club, they lent locally and understood their risks.
But what started out as a good idea has since been warped by China’s long standing problem of excess liquidity. The private banks are now contributing to a bubble that is starting to look like that in the West during the past decade. Read more