Daily Archives: Nov 2, 2011

After a raft of market-unfriendly foreign exchange and dollar repatriation measures unveiled in the past 10 days, the Argentine government has finally unveiled one that looks like it may – eventually – be more market friendly. For the first time, it has announced that it is starting to cut subsidies.

What does that mean? Read more

A bill making its way through Brazil’s Senate confirms what many economists have suspected for a while. Politicians in Brasília are preparing to widen the central bank’s mandate to focus not just on inflation but also on economic growth and employment creation.

At issue is the credibility of one of the central pillars of Brazil’s economic prosperity for more than a decade – the inflation-targetting regime. The bill, which was approved by the powerful economic commission of the senate this week and now must go to the full Senate and the lower house, is sponsored by Senator Lindbergh Farias of the governing Workers’ Party. Read more

A strange thing has started to happen in Argentina’s real estate market: since new foreign exchange controls were introduced this week, some people have started to buy property… in pesos.

For decades, the norm has been to buy real estate in dollars – which tells you a lot about popular faith in a currency that has changed repeatedly over the years, been rocked by economic crises and hyperinflation, and which even spent a decade believing itself to be as powerful as the greenback (the 1:1 regime in the 1990s). Read more

At $179bn, China’s trade with Latin America last year far outstripped its investment in the continent – which stood at $15.6bn for the 12 months to May.

But this could be changing. Investment for the prior year was just over $4bn, and a raft of deals that hit the headlines on Wednesday offer more evidence that China is upping further its LatAm engagement from mere trade to physical assets. Read more


Anyone looking for a case study in acrimonious relationships between company and creditor could do worse than look at recent events at Vitro, Mexico’s leading glassmaker.

On Tuesday, a group of Vitro’s creditors rejected a proposal to restructure almost $1.5bn in debt barely hours after a bankruptcy court-appointed mediator made the offer. The face-off is a tough test of Mexico’s new bankruptcy laws, designed to facilitate agreements between debtors and creditors. If it goes wrong, creditors say, borrowing will become more expensive. Read more


Poland’s robust consumers may help the overall economy to deliver one of the EU’s best growth rates next year – but Polish shoppers are also saving western European retailers like Portugal’s Jeronimo Martins group.

While Portugal spirals deeper into crisis, Jeronimo Martins is staking its future on faster-growing emerging markets. Read more

Poland, for long one of Europe’s economic laggards, looks set to end 2012 with some of the strongest growth numbers in the region. An FT Special Report on investing in Poland, looks at the challenges facing the country and its prime minister Donald Tusk, who is about to begin his second term in office.

And in a video below the break, the FT’s emerging markets editor, Stefan Wagstyl and east european editor, Neil Buckley talk through Tusk’s political challenges and whether he has the will to deal with the nation’s problems. Read more

Temelin nuclear power plan in the Czech RepublicBy Nicholas Watson of business new europe

The Czech Republic is steadily moving ahead with a nuclear tender that could generate orders worth €20bn for the hard-pressed nuclear engineering industry.

Electricity group CEZ  this week invited the qualified candidates – France’s Areva,  Westinghouse Electric ( a Toshiba subsidiary)  and a Russo-Czech consortium led by Atomstroyexport – to submit bids by July 2, 2012, with the winning bidder expected to be announced in late 2013. Read more

Russia’s central bank delivered some startling but expected news this week. While the central bank had long maintained its prediction that Russia would have no more than $36bn in capital outflows this year, it has finally faced reality and on Tuesday announced that the country faced a whopping $70bn of outflows instead.

The number is painful to look at – especially compared to the original $36bn projection. But according to Ivan Tchakarov, Renaissance Capital’s chief economist for Russia and the CIS, there is a silver lining. Read more

Mikheil Saakashvili, president of Georgia, Sept 2011By Isabel Gorst and Stefan Wagstyl

With Georgian president Mikheil Saakashvili (pictured) seemingly ready to drop his objections to its arch-enemy, Russia, joining the World Trade Organisation, it’s worth asking – what’s in it for Tbilisi?

Since Russian troops still occupy the Georgian territory they seized in the 2008 war, Georgia might be forgiven for digging in indefinitely on the trade front. But Tbilisi has good political and economic reasons for taking a co-operative approach. Read more

Emerging market companies are perceived as more likely to be involved in bribery than developed world groups! While this is hardly a shock it is a reminder that the issue is growing in importance as the big EM countries, headed by the Brics, increase their global economic impact.

A report by Transparency International, an anti-corruption group, found Chinese and Russian companies are perceived to be the most corrupt of the world’s corporates while their Indian and Brazilian rivals can afford to feel a little smug, having done rather better in TI’s rankings. Read more

Romania on Wednesday became the first European Union country to cut interest rates in response to the Greek crisis and the consequent deterioration in the economic outlook.

Faced with the risk of renewed recession, the central bank surprised the markets by reducing its benchmark rate by 25 basis points to 6 per cent – despite clear risks of a run on the currency.  Investors have so far taken the news in their stride, with the leu holding steady against the euro. But Romania’s close ties to Greece leave it vulnerable. Read more

Maybe it’s Mum’s magic touch all over again.

Estranged billionaire brothers Mukesh and Anil Ambani – they of the Shakespearean break-up of the Reliance Group conglomerate – seem to have buried the hatchet a bit deeper, according to sources close to the two men. Read more

* Papandreou wins backing for referendum

* Thai floods force Honda to cut US production

* Eurozone crisis to divert leaders at G20

* Sinopec in talks to buy stake in Galp unit Read more

The global chill in the banking industry is finally getting to Standard Chartered Bank. With its operations dominated by emerging markets, StanChart has so far weathered the freeze better than most.

But a trading statement on Wednesday showed revenue growth slowing in the third quarter. Investors, who like the way the bank has handled the world financial turmoil, took note – and marked the shares down 3.8 per cent in early trading in London. Read more


Should China assist the eurozone in its hour of need? Yes, says the European Union which has gone to Beijing cap in hand. Perhaps, says China, mindful of the global effects of the crisis in its biggest trading partner. No, says independent economist Andy Xie.

In a note on Wednesday, Xie, a Shanghai-based consultant and writer, says bluntly that “it is not in China’s interest to participate in any European bailout scheme”, especially after Greece’s sudden announcement of a referendum. “The abrupt change [in Athens]  and deepening uncertainty are warnings against any China’s involvement in European affairs,”  says Xie. Read more

Now that it is clear that Taiwan’s economy is headed for a slowdown, the media and politicians have taken up arms against an old ‘enemy’: the tricky issue of no-pay leave.

“Are you asking any of your workers to go on no-pay leave?” has become a standard question asked of nearly all Taiwanese chief executives whenever they appear in public these days. Read more

Wednesday’s top picks from the beyondbrics team: Alan Beattie on the challenges facing the G20 when they meet in Cannes on Thursday; Lex on Rothschild’s Bumi problems; Lula’s battle with cancer and its effect on Brazil’s political landscape; and the challenges of India’s growing population. Read more

China property market slows. A saleswoman sits unoccupied at the 2010 Beijing Summer Real Estate Trade FairThey say it’s “location, location, location” but Tuesday’s sale of a prime site in Guangzhou was a complete washout after major developers failed to show up for the auction.

The complete lack of interest in 12 plots of land located next to the spanking new Guangzhou South Railway Station surprised even the most bearish of observers, according to local media. Read more

* Thai floods force Honda to cut US production

* Eurozone crisis to divert leaders at G20

* Sinopec in talks to buy stake in Galp unit

* Israel hits back at Unesco move Read more