Daily Archives: Sep 16, 2011

Confounded again. Economists had been expecting a slowdown in Argentine economic growth in the second quarter to around 7.8 per cent because of slower sales of manufactured goods to Brazil and lower domestic demand.

But official data published on Friday by Argentina’s state statistics agency, Indec, pointed to 9.1 per cent growth. Manufacturing increased 6.7 per cent and the service sector by 9.7 per cent compared with the same period last year, according to the agency.

Argentina expects growth this year of 8.3 per cent and 5 per cent next year, according to the deputy finance ministerRead more

When a jovial Hugo Chavez received a delegation of Chinese bankers and diplomats in the Miraflores presidential palace this week, his visitors at times looked bemused as he expounded effusively on the wisdom of Chairman Mao, dragons and steel tigers.

But what Venezuela and China may lack in mutual cultural understanding is more than made up for in a burgeoning economic relationship, with a $4bn loan from the Chinese Development Bank confirmed on Thursday adding to existing lending from China of some $32bn. Read more

By Iona Teixeira Stevens and Joe Leahy in São Paulo

Brazil on Friday has unveiled yet another measure aimed at protecting its manufacturing industry – a 30 percentage point increase in the industrialised products tax, known as IPI, on vehicles that do not meet new stricter local content rules.

The move is the latest in a series of measures, notably in the currency markets, aimed at somehow arresting what the government fears is a loss of industrial competitiveness resulting from Brazil’s strong exchange rate against the US dollar. Read more

Pakistani children wave Pakistani and Chinese flagsHow do you say: ‘Welcome to Pakistan’ in Mandarin?

More and more Pakistani schoolchildren may be answering just that, as Mandarin could become a compulsory part of the school curriculum in the Karachi, Pakistan’s commercial capital, and the surrounding province of Sindh, in a move that is further evidence of the warming relations between Islamabad and Beijing.

Authorities want Mandarin to be taught to all secondary school children in the region by 2013, according to a Sindh government statement.  It may be wishful thinking in a province where over 40 per cent of people can’t read at all. But as a sign of China’s growing influence it’s significant. Read more

With most of the developed markets bonds yields falling, local currency bonds in emerging markets are one of the few places that many investors see as a safe haven.

The latest addition to the group of investment banks jumping on the EM bonds wave is Citigroup, which launched two new entirely (with the exception of Israel) EM-focused local currency government bond indexes. Read more


Thousands of miners stopped work at Freeport’s Indonesian operations this week, crippling the flow of copper and gold from a huge mine and resulting in empty cargo ships and millions in daily lost revenue for the government.

The pay dispute involves over 8,000 (and possibly up to 12,000) workers at the huge Grasberg mine, and may drive up global copper and gold prices. An eight-day strike in July cut production by 35m lb (15,876 tonnes) of copper and 60,000 ounces of gold. Read more

By Sunita Narain, director general of the Delhi-based Centre for Science and Environment

As I write this Delhi, my city, is drowning. It started raining early this morning and within a few hours the city had come to a standstill. The television is showing scenes of traffic snarled up for hours, roads waterlogged and people and vehicles sunk deep in water and muck. Read more

No news is good news. “Investors did not panic” at the rising threat of a Greek default and continued to put money into EM bond funds over the past week, Demetrios Efstathiou of RBS wrote in a note to clients on Friday.

But data for the week to Wednesday from EPFR, the fund flow watcher, show investors did take a whopping $16.7bn out of super-conservative money market funds. As Luis Costa at Citi told beyondbrics, such behaviour is erratic – and worrisome. Read more

* India raises rates after inflation rises

* BTG Pactual looks at IPO as it eyes expansion

* BG’s Brazilian finds tempt China oil groups

* FDI in China rises 11.1 per cent in August to $8.45bn

* Nigeria sells $448m of bonds

 Read more

This week’s World weekly podcast features beyondbrics regulars Joe Leahy and Jamil Anderlini discussing the possibility of emerging markets buying eurozone debt. Listen to the show in this post. Read more

Friday’s top picks from the beyondbrics team: why Europe should not count too much on Chinese cash; what yuan loans would bring to India; why (according to The Moscow Times) investors need to be cautious about Russia; and Brazil takes baby steps towards less complicated taxes.  Read more

On the heels of India’s 12th consecutive interest rate hike in 19 months the country’s equity markets are stuck in wait and see mode for the next couple of months by when, analysts say, record high inflation should have come under control.

In a widely expected move, the Reserve Bank of India on Friday responded to near double digit inflation with a 25 basis points repo rate hike, as it prioritises reining in high prices at the cost of higher economic growth. Read more

A bare two months ago Najib Razak, Malaysia’s prime minister, was being vilified for a police crackdown on a peaceful pro-democracy march in which demonstrators were pummelled by water cannon and more than 1,700 were arrested.

Today, though, Najib is the toast of many Malaysian liberals after announcing an unexpectedly far-reaching package of civil liberties reforms on Thursday night in his annual Merdeka (Freedom) Day speech. Read more

The Reserve Bank of India on Friday raised its repo rate – the rate at which the central bank lends to commercial banks – by 25 basis points to 8.25 per cent. The move was widely expected by the majority of economists, though some predicted a pause after weak industrial production figures earlier this week.

India’s is the first big EM central bank to buck the recent trend of monetary loosening among emerging markets in the face of a slowing global economy.

* BTG Pactual looks at IPO as it eyes expansion

* BG’s Brazilian finds tempt China oil groups

* FDI in China rises 11.1 per cent in August to $8.45bn

* Nigeria sells $448m of bonds Read more

Coming up with big ideas for countries to work together to make the world a better place is what the president of the World Bank is supposed to do and Robert Zoellick is certainly fulfilling this part of his job description.

One of his big ideas is to facilitate the relocation of low-paid manufacturing jobs from China, the undisputed factory of the world, to Africa, where China has been accused by some of a neo-colonial grab for natural resources. Read more