Daily Archives: Oct 26, 2011

It is D-Day for the eurozone, time for Europe’s leaders to conjure up a solution to the single currency’s problems. What will be the implications for the emerging markets more generally and Latin America and Brazil, in particular?

That depends largely on what solution the eurozone comes up with or, indeed, whether it is able to come up with one at all. But there are three major channels by which a crisis could be transmitted from Europe to the global emerging markets, according to London`s Capital Economics. Read more

A taste of things to come? Cristina Fernández, Argentina’s president, was re-elected at the weekend in a landslide and already she has taken her first market-unfriendly step.

A surprise decree published in the official gazette on Wednesday orders mining and oil companies to repatriate all their export earnings, after several years of being exempt. Read more

Central and eastern European bourses had a mixed day on Wednesday. But Hungary stood out from the pack as fears of an imminent ratings downgrade were fuelled by the country’s own government.

Bloomberg reported that economy minister Gyorgy Matolcsy told Heti Valasz, a Hungarian newspaper, that the country is under a “real threat” that one of the major rating agencies will relegate the country’s credit to junk status. Hungary’s flagship Bux index lost 2.66 per cent of its value and the forint fell 2.1 per cent on the news. Read more

As a central bank, if your banking sector is starved of liquidity and inflation isn’t a pressing concern, then you are very likely to loosen your grip on the purse strings to keep the growth engine humming.

Unfortunately, for Russia’s central bank, and the Russian banks hoping for some much needed funding help, a weak rouble aggravated by continuing large outflows of capital mean that its hands are tied. In fact, there is a distinct chance the bank might have to tighten monetary policy in the future if conditions conspire against it, according to Capital Economics,  Read more

With Croatia’s accession treaty ready for approval, the European Union is turning its attention to the next batch of aspiring member states, the Western Balkans.

The simplest to absorb should be the smallest: Montenegro. But it will be no shoo-in. The EU’s experience with Croatia will make it less forgiving on issues of governance. Montenegro’s record on corruption and cronyism will make accession a particularly difficult and drawn-out process in spite of recent efforts to clean up politics and business. Read more


It looks like Turkey’s central bank has finally chosen to ditch its unorthodox monetary policy – but, true to form, it has done so in an utterly unorthodox way.

After having cut interest rates at a time when the economy was growing by more than 10 per cent a year and the current account was swelling to unsustainable proportions, the bank has now heeded its critics and increased rates. All except one. Read more

After building the world’s cheapest car, India may be set for another milestone – the world’s cheapest SUV.

Just don’t call it “the world’s cheapest SUV”. Read more

China is heading towards a change in its leadership and the stakes couldn’t be higher. An FT Special Report on China looks at the coming transition and the political and economic choices that China’s new leaders are going to have to make – at home and abroad.

As the special report notes, the positions of president and premier are the only ones that seem to have been settled – with Vice-President Xi Jinping likely to succeed President Hu Jintao and Vice-Premier Li Keqiang expected to replace Premier Wen Jiabao. But the other seven slots on the all-powerful nine-member standing committee of the Communist party politburo are still up for grabsRead more

Those with fast fingers in the world’s texting capital now have a choice of just two mobile providers after Philippines’ biggest ever M&A deal.

After a seven-month review, Philippine regulators cleared the takeover of Digital Telecommunications Philippines (Digitel) by the dominant Philippine Long Distance Telephone Co (PLDT). The ruling will in effect hand PLDT control of 70 per cent of one of Asia’s most lucrative phone markets. The rest of the market is owned by rival Globe Telecom, giving rise to a wireless phone duopoly. Read more

Short-sellers beware: shares in Toronto-listed Silvercorp Metals, the Chinese silver miner accused of fraud, are up more than 16 per cent in the past two days after it said earlier this week that KPMG Forensic published a report backing its financials. Read more

* Fears euro summit could miss final deal

* Gupta to face charges over Goldman data

* Wen says China to adjust policy as needed

* India clears policy to build new industrial zones Read more

It’s been a long time coming but Indonesia’s notoriously slow-moving parliament has finally agreed to create a new, powerful oversight body to regulate the ballooning financial services sector in south-east Asia’s largest economy.

A bill establishing the Financial Services Authority will be signed on Thursday after years of delays caused by squabbling over its purview, the degree of its political independence, its leadership structure and the central bank’s reluctance to give up oversight of commercial banks. Read more

Wednesday’s top picks from the beyondbrics team: Lex on Indian inflation and deregulation; the hope of Tunisia’s election; the subdued African response to Gaddafi’s death; and questioning the legality of NATO’s Libyan intervention. Read more

These are hard times for Chinese developers. Sales volumes in major cities have halved in September from a year ago; banks are refusing to extend any credit to house builders and they have started to cut prices as inventory piles up. As China Vanke warns in Wednesday’s FT, the country’s property market has reached a turning point and things could get a lot worseRead more

By Lito Camacho of Credit Suisse

You would have expected the European and American delegates at the latest IMF meeting to be gloomy at a time like this. What came as more of a surprise to me was the sense of pessimism even among the Asians at the meeting in Washington, DC. The rest of the world sees Asia as the last bastion of growth, the engine of the world economy. Unfortunately, it seems Asians themselves are beginning to show concern about the contagion effect of the EU and US crises on the region. This needs to change. Read more

Bank of China overtook HSBC as the top dim sum bond underwriter in Hong Kong in October, as the state-owned Chinese bank seeks to capitalise on Beijing’s attempts to internationalise the offshore renminbi, stepping up the pressure on foreign competitors. Read more

As far as government statements go, Premier Wen Jiabao’s pledge to “preemptively fine-tune policy at a suitable time and by an appropriate degree” hardly seems one to get excited about.

But for investors and analysts who are masters of deciphering Beijing-speak, Wen’s words carried the promise of something that beleaguered markets have long been waiting for: an easing, albeit a moderate one, of China’s monetary straitjacket of the past year. Read more

* Gupta to face charges over Goldman data
* Wen says China to adjust policy as needed
* India clears policy to build new industrial zones
* KKR seeks $6bn for its second Asian buyout fund
* Call to ease Brazil’s capital controls Read more

A reserve currency is not created overnight, if at all. And China’s renminbi won’t be claiming an exclusive title any time soon.

That is the message of a report by law firm Allen & Overy which looks at the funding needs of global companies over the next decade. It finds that, although the renminbi might make strides against the euro and the dollar, there is no easy path to currency domination. Read more