Daily Archives: Sep 27, 2011

From Jim Chanos, best known for his strident bearish call on China to Muddy Water of Sino-Forest short-selling fame, shorting China has become something of an industry sport within the fund investment community over the past year.

But are those shorting Chinese stocks about to get their fingers burnt?

Société Générale certainly thinks so. According to analysts at the French bank, China is now “The World’s Most Crowded Short” and Chinese stocks are on the verge of a “massive short squeeze”. Read more

An Indian labourer carries a sack of vegetables on his head at a wholesale market in Kolkata on September 14, 2011Foreign investors are pulling out of India as global uncertainty makes them more skittish about emerging market investments, and high domestic inflation and interest rates make doing business in India more difficult.

Still, experts said India was performing better than other major emerging markets and would continue to do so, unless catastrophic global events overtake it. Read more

Poland’s parliamentary election was supposed to be a romp for the governing centrist Civic Platform party – touting its success in avoiding recession in 2009 – but recent opinion polls are showing steady growth for the right-wing opposition Law and Justice party, threatening to introduce an element of political risk to assessments of the Polish economy and the Polish currency. Read more

By Richard Tekneci of mergermarket

Tronox (TROX:PKN) has struck an M&A deal, although it is not the type of transaction investors may have expected. With rumours swirling of a possible sale, Oklahoma City, Oklahoma-based Tronox announced it is acquiring Exxaro Resources Limited’s (EXX:JNB) mineral sands assets in Australia and South Africa in exchange for 38.5 per cent of Tronox’s equity. Read more

Eastern European equities rallied on Tuesday as investors rediscovered an appetite for riskier assets amid hopes that Europe would be able to avert a Greek default and increase the size of its €400bn rescue fund.

The Russian MICEX Index gained 2.49 per cent, the Polish WIG 20 climbed 4.16 per cent, the Hungarian Bux Index was up 4.5 per cent and the Turkish ISE 100 recorded gains of 2.57 per cent. Good news – but don’t expect it to last. Read more

Nigeria may be a country plagued by corruption, violence and pockets of deep poverty but it’s also home to the largest middle class in Africa.

And that middle class, of some 37m people, is ready to spend. According to an opinion poll carried out for Renaissance Capital, a Russian investment bank, more than 9m of them plan to buy a microwave in the next 12 months and more than 8m plan to buy a washing machine. Manufacturers take note. Read more

Brazil cut one of its taxes on petrol on Tuesday morning as government ministers – reportedly coming home shell-shocked from their meetings in Washington at the weekend – began preparing the ground for expansionist policy moves to counteract the impact of the global economic crisis. Read more

For investment banks, fees from work in US and Europe equity capitals markets have been a bit of a bright spot so far this year.

As deals in emerging markets IPOs, rights issues and secondary offerings dry up, banks’ revenues from ECMs have powered ahead in Australia, US and Europe, according to data from Dealogic. Read more

By Shelina Janmohamed of Ogilvy Noor

The fashion industry is currently showcasing its wares for next year’s spring/summer collections. New York and London have already strutted their stuff and with Milan winding up and Paris on later this week, you might be forgiven for thinking Europe and North America have the global fashion business stitched up. (Pun intended.) Not so.

Big fashion brands may be wondering how to stem a decline in business – Dolce & Gabbana for instance announced the closure of their diffusion line last week. But there is one growth segment just waiting to be brought into the mainstream of the industry: global Muslim fashion. Read more

Renaissance Capital Moscow headquarters 2008After the market rout comes the axe. Among the investment banks to disclose big payroll cuts is Renaissance Group, the Moscow-based emerging markets specialist, which on Tuesday announced it was cutting its payroll by 10 per cent.

But the reductions apparently won’t hurt its push into other emerging markets, including Africa, where it has made chunky investments in the past few years. The group said: “Renaissance Group is aligning its costs with current market conditions, a process which has affected 10% of staff.  Renaissance continues to invest in growth markets across its geographies.” Read more

Is the foreign love affair with Indonesian government bonds really over?

Foreign ownership of Indonesian state bonds earlier this month reached a record high of 36 per cent of the total issue, or more than $28bn, capping years of strong inflows. But now those holdings have slid nearly 3 percentage points in less than a week as investors pulled their money out of Jakarta.

The selling has sent the local currency, the rupiah, tumbling the most since the 2008 crisis and prompted intervention by Bank Indonesia, the central bank. That’s serious. But there are few signs that the foreigners are leaving for good. Read more

* Markets calm after Medvedev fires mutinous finance minister

* Brazil fights rearguard action in currency war

* Citic Securities $2bn HK deal four times covered

* India mulls cutting securities transaction tax Read more

Alexei Kudrin, finance ministerRussian president Dmitry Medvedev’s dramatic dismissal of finance minister Alexei Kudrin has had a less than dramatic effect on the markets.

After some wobbles late on Monday,  investors on Tuesday took Kudrin’s departure in their stride. Russian stocks were up in line with a global rebound and the rouble held steady, albeit at its recent weak levels.

But these are early days: thanks to Kudrin’s achievement in stabilising the public finances, his successor faces no immediate crises. It will take time before the full impact of Kudrin’s ignominious exit becomes clear. Read more

Customers rushing to buy gold in Hanoi 2011Global investors have been rushing to liquidate gold positions in the last few days after the recent price surge but demand has remained strong in Vietnam, where people traditionally see the precious metal as a buffer against stubbornly high inflation.

On Monday the domestic gold price was trading at a record premium to the international price of 11 percent, according to Ho Chi Minh City Securities, a local stockbroker. On Tuesday morning, the premium had moderated to nearly 9 percent but remained much higher than the typical premium of 1 or 2 percent. Read more

Tuesday’s top picks from the beyondbrics team: Lex looks at Rio Tinto’s problems in Mongolia while Gideon Rachman and others discuss Putin’s return, Kudrin’s departure, Medvedev’s problem and what it means for the world.

 Read more

At last a little ray of hope. Asian markets are sharply up on Tuesday in the belief that European Union policymakers are edging fractionally closer to a solution of the eurozone crisis.

The MSCI Asia ex-Japan index of Asian emerging markets was up 4.5 per cent at 0800 BST, its first rise in five days,  powered by particularly good bounces in Seoul, Jakarta and Hong Kong and a general improvement in Asian currencies.  But keep a sense of perspective: the $-based MSCI index is still down 21 per cent on the year.  The clouds of gloom are still omnipresent. Read more

* Medvedev fires mutinous finance minister

* Brazil fights rearguard action in currency war

* Citic Securities $2bn HK deal four times covered

* India mulls cutting securities transaction tax Read more

The US economy may be in the doldrums and the eurozone debt crisis is lurching from bad to worse. But for private equity investors looking for returns, China remains the flavour of the moment.

Fundraising for China-focused private equity and venture capital has been unscathed by the global financial market turmoil. Having hit $20.8bn in 2010, fund raising activities are on track for another record year after having reached $18.6bn so far this year, according to the latest figures from Asian Private Equity Review.

And while China’s budding private equity scene has long been dominated by big foreign players – think Carlyle, TPG and Blackstone – homegrown Chinese groups are catching up fast. Read more

Ask Alexandre Tombini, Brazil’s central bank president, whether inflation will end this year within target and the answer is always a resounding yes.

If not, Tombini himself faces the rather embarrassing situation of having to write an open letter to the government next January explaining why he failed to do his job properly. For Brazil’s new president, Dilma Rousseff, such an event could also prove politically dangerous. Read more