Daily Archives: Nov 1, 2011

Economists last year grew accustomed to talking about Brazil’s economy as characterised by having one foot on the brake and the other on the accelerator. The brake was interest rates as the central bank sought to curb overheating and the accelerator was fiscal policy as the government sought to spend its way to an election victory.

But recently, analysts have begun talking about Brazil’s “two-speed economy” – one in which domestic demand and credit growth, though cooling, are still growing at the sort of high levels not seen in many other parts of the world while domestic industrial production is actually in decline. Read more

Kenya’s central bank shocked markets on Tuesday by raising its benchmark policy rate 550 basis points to an eyewatering 16.5 per cent. The central bank’s monetary policy committee, led by Njuguna Ndung’u, vowed to continue tightening monetary policy to fight inflation and further rate hikes cannot be ruled out.

Kenya’s rate hike followed Uganda’s 3oobp interest rate increase to 23 per cent earlier in the day, as both countries struggle to contain rampant inflation driven by soaring food and fuel costs. Kenya’s central bank also raised its cash reserve ratio by 50bp to 5.25 per cent. Read more

Even before George Papandreou announced a referendum on Greece’s debt deal, Turkey’s central bank told the FT that the eurozone’s travails had made a shift of tack necessary in Ankara.

“All of these measures taken so far should be seen as a preparation for the eurozone debt problems,” said Bank Governor Erdem Basci in an email last week, referring to a set of announcements pushing up the cost of borrowing. “Now we are ready and waiting.” Read more

The surprise decision by George Papandreou, the Greek prime minister, to hold a referendum on last week’s bailout deal didn’t just spook eurozone investors. The emerging world followed them down into a state of nervous fear.

Central and eastern European bourses led the rout with Russia’s Micex index dropping 2.82 per cent. Read more

“In a few days’ time, all this will seem fleeting and temporary.” So says Amado Boudou, Argentina’s economy minister and vice president-elect, of the pressure on the peso and mounting capital flight, which led the government to introduce foreign exchange controls this week.

The market thinks otherwise. It patently does not buy Boudou’s argument that there won’t be a devaluation from the current rate of 4.265 pesos to the dollar. Read more

Cassava cropSABMiller has finally started selling the world’s first commercially-produced cassava beer. Nearly a year later than envisaged, bottles of Impala are available under a pilot scheme in northern Mozambique.

The delay highlights how even a big multinational with deep experience of emerging markets can still be held up by details such as sourcing fresh cassava from hundreds of  individual farmers. In EMs, implementation matters as much as strategy. Read more

Kazakhstan has made an impressive recovery from the global financial crisis thanks to a rebound in oil prices, the main driver of central Asia’s biggest economy.

However, the health of the banking sector, the litmus test of a robust economy, is still shaky and highly vulnerable to further external shocks, says the International Monetary Fund. Read more

Maruti Suzuki may have finally resolved the labour strikes affecting its biggest factory last month. But the repercussions of the two-month hit to production were on full display in its recent quarterly results and October sales figures released on Tuesday: both profits and sales were down by more than half.

However analysts believe India’s biggest carmaker for the last two decades can make a comeback in the next six months, and investors seem similarly confident. Read more

* Brics ready to pay EU loans only via IMF

* Libya’s NTC elects ex-professor as interim PM

* China PMI falls unexpectedly in October

* China’s Winsway in Canadian coking coal bid

* Bakries agree Bumi deal with Indonesian investor Read more

Lashou, the leading Chinese group-buying company in a sea of over a thousand sites, has filed for a $100m US IPO in what will be a test of investor appetite for the troubled Chinese internet sector.

US-listed Chinese internet stocks have suffered from investors wary of high valuations, fears of a political crackdown and concerns that the structure which they use to list in the US – the variable interest entity (VIE)  - does not make it clear what shareholders actually own. Read more

Aburizal Bakrie, billionaire head of the Bakrie GroupIndonesia’s Bakrie Group has bitten the bullet. On Tuesday the debt-laden family-run Indonesian conglomerate announced a $1bn plan to sell half its stake in London-listed Bumi, its coal venture with financier Nathaniel Rothschild, to Borneo Lumbung Energi, an Indonesian rival.

Bakrie has had to sell a chunk of its crown jewels to avoid defaulting on $1.35bn in loans,  after refinancing talks with commodity trader Glencore fell through. Investors’ early take is that the deal is risky for Borneo (BORN:JKT) – the stock plunged 15 per cent -  but acceptable for minority shareholders in Bumi (BUMI:LSE), which opened just 0.2 per cent down. Read more

Tuesday’s top picks from the beyondbrics team: why Beijing can’t control China’s culture forces; why India’s tariff-based ‘China strategy’ is a bad idea; why the rule of law will be the real test of the Arab spring; and the rise of Bogota’s newly-elected mayor. Read more

After months of suffering, the Indian economy got a double-dose of good news on Tuesday. For the first time in six months, Indian manufacturing made significant gains in October, according to PMI figures released by HSBC and Markit.

Meanwhile, September’s export figures, released by the Ministry of Commerce & Industry, showed a 36.4 per cent increase to $24.8bn from the same month last year, driven largely by India diversifying beyond the US and eurozone as export destinations. Read more

South Korean officials are sweating as they see the first sign of a crack in their export locomotive. Slowing export growth in October has renewed concerns that the world’s seventh-largest exporter could be hit hard again by the global financial turmoil as it was in late 2008 and early 2009.

The country’s exports grew just 9.3 per cent in October from a year earlier – the slowest pace in two years – as exports to the debt-laden European Union tumbled 20 per cent and those to the US dropped 7 per cent. That is a sharp drop from September’s 18.8 per cent growth, highlighting the increasing growth risks that the export-driven economy faces. Read more

Asian markets had plenty to mull over on Tuesday, thanks to a manufacturing, inflation and export data dump taking in most of the region’s big economies.

There’s some good news, and some bad. Either way, here’s a very quick summary. Read more

* Brics ready to pay EU loans only via IMF

* Libya’s NTC elects ex-professor as interim PM

* China PMI falls unexpectedly in October Read more