Argentina: taking the scissors to subsidies?
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? Continue reading »
Brazil’s inflation-targetting regime under siege
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. Continue reading »
Argentine real estate: ditching the dollar?
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). Continue reading »
China-LatAm: moving up a gear
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. Continue reading »
Shaken and stirred: Vitro’s bondholder face-off tests Mexico’s bankruptcy law
Bloomberg
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. Continue reading »
Poland’s shoppers to the rescue
Bloomberg
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. Continue reading »
Poland: climbing the value chain
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. Continue reading »
Czechs edge forward with nuclear plans
By 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. Continue reading »
Capital flight: bad now, worse to come?
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. Continue reading »
Russia/WTO: what’s in it for Georgia?
By 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. Continue reading »
Bric companies: exporting bribery
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. Continue reading »
Romania: a risky rate cut
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. Continue reading »
Ambanis: being brothers means never having to say you’re sorry
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. Continue reading »
New York headlines
* 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 Continue reading »
StanChart: feeling the chill
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. Continue reading »
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