Guillermo Moreno: Argentina’s lethal weapon
Argentina is wielding a new weapon in its fight to control the black market exchange rate that has soared to 17 per cent higher than the official rate in recent days amid tough new foreign exchange controls and devaluation fears.
It is the same – rather blunt – weapon that the government has deployed in the past to seek to curb rising food prices and to ration gas to factories, to quell petrol price hikes and to block imports. Its name: Guillermo Moreno. Continue reading »
Eurozone turmoil hits Poland’s privatisation plans
The gloom and turmoil spreading east from the eurozone is hitting the Polish treasury ministry, which is revamping its privatisation plans amid fears that the time is not right to get a decent price for its assets. Continue reading »
EM bonds fall prey to eurozone fears
The latest jitters in the eurozone hit emerging markets with a vengeance on Tuesday, with currencies and local bonds coming under heavy pressure following the recent losses in equities.
From South Africa to Poland and Mexico there were few places to hide as long-term bond investors followed in the wake of the short-term investors who have been running for cover in recent weeks. While markets are extraordinary volatile at the moment, it’s hard to avoid the conclusion that many fund managers have started early with a year-end clearance of risk assets. Continue reading »
Turkey: current account deficit swells
If the Turkish economy is performing a soft landing, it is so soft it is barely noticeable. Balance of payments data released on Tuesday revealed that, far from narrowing, the country’s current account deficit remains as hefty as ever.
The deficit was $6.8bn for September, about 80 per cent greater than the same month a year before, bringing the rolling deficit for the previous 12 months to a new record, at $77.6bn. Continue reading »
Western Balkans: pain but no gain
With the eurozone in crisis, the small states of the Western Balkans are bracing themselves for another round of pain without gain. For the immediate future, their economic destiny of will be almost totally out of their own hands.
So warns the World Bank in a report released on Tuesday. Albania, Bosnia-Herzegovina, Kosovo, Macedonia, Montenegro and Serbia – dubbed “SEE6” in Bank terminology – can expect to be bruised by every financial tremor in the eurozone and European Union. Continue reading »
Guest post: Hungary must turn the markets around
By Timothy Ash of RBS
Hungary seems to be centre stage at the moment, due to market worries of fallout from problems in the eurozone to emerging Europe.
So what is the government of Viktor Orban doing wrong, and how can it turn market sentiment in its favour? Continue reading »
Nigeria: inflation up, growth down.
Nigeria’s 275 basis points rate hike last month, to a record 12 per cent, was its central bank’s sixth attempt this year to rein in inflation. And, if figures released Tuesday by the Nigerian bureau of statistics are right, it has failed.
Inflation increased again in October to 10.5 per cent, from 10.3 per cent in September, which means that the central bank, whose target is single-digit inflation, is likely to hike once again when it meets on November 22. Continue reading »
Kingfisher: still flying
Louis Armstrong singing “What a wonderful world” over the PA seemed to suggest that things were going to be just fine for the “King of Good Times”.
But those wishing for greater clarity about the future of Kingfisher Airlines were left sorely wanting by Tuesday’s press conference with billionaire Vijay Mallya, the debt-laden carrier’s founder. Many expected the self-styled ‘King’ to announce Kingfisher’s demise. Instead, they got vague promises that the airline would keep flying Continue reading »
Revolutions across the Middle East have been accompanied by a surge in defence spending.
At this week’s Dubai air-show, all manner of fast jets and attack helicopters were on display as international manufacturers sought to tap into the region’s insatiable appetite for military jets and passenger airliners.
But given the domestic nature of threats to regimes triggered by this year’s popular uprisings, one segment is booming more than most: armoured vehicles. Continue reading »
Guest post: Egypt must bite IMF bullet
By Theodore May of Ergo
The Egyptian government appears to be seriously reconsidering a loan from the International Monetary Fund that it turned down last June. Early this month, Egyptian officials invited a delegation from the IMF to Cairo to discuss the country’s finances and to revisit the possibility of a loan.
The conversation is timely. The country faces a worsening budgetary and liquidity crisis, and the loan offers a major opportunity for Egypt to dig itself out from its current situation. Continue reading »
Gillard wants to sell uranium to India
Don’t like the sinking rupee? Love India’s voracious energy appetite? Well, there may be a new place for you to invest: Australia.
On Tuesday, Julia Gillard, prime minister, outlined plans to lift an Australian ban on uranium exports to India, a potential boom for the country’s mining companies. Continue reading »
RBS: sell Argentine GDP warrants
Argentina is flying in the face of economic orthodoxy – really flying. The economy will grow by about 8 per cent this year and president Cristina Fernández sailed triumphantly into a second four-year term last month on the promise of maintaining her pro-growth model.
To some, Argentina is proof that economic orthodoxy can be plain wrong (see comments by Walter Molano, a broker, after the break). Many international investors have bought Argentina’s GDP warrants, which pay out in proportion to GDP growth.
To others, the Argentine “model” is heading for trouble. And Siobhan Morden at RBS, for one, is telling clients they should unload their GDP warrants a bit quickish. Continue reading »
Shanghai’s bond issue: thanks dad
Nothing beats a bond issue these days when you’re looking for an opportunity to jump to conclusions. No, we’re not talking about Rome, Athens, or Lisbon. Instead attention was on Shanghai, where the municipal government became the first local state entity to offer bonds in almost two decades.
It went well. Yields came in at 3.3 per cent on 5-year notes, lower even than South Korean sovereign debt of the same maturity. So the Chinese local debt crisis, involving Rmb10,700bn ($1,650bn) owed by local authorities across the country, is over? Continue reading »
New York headlines
* Sino-Forest panel rejects fraud claims
* IMF warns on Chinese financial system
* BofA to reduce CCB stake with $6.6bn sale
* Kingfisher Airlines’ quarterly loss doubles Continue reading »
Brazil capital markets: more to do
Brazil’s capital markets are growing up fast. From a slow start, of fewer than 10 initial public offerings in the decade up to 2003, they have recently sped up and in 2007 alone hosted 86 equity deals worth more than $41bn.
However, an FT Special Report argues that Brazil’s financial markets have yet to reach their full potential and, as global conditions bite, must act fast if they wish to keep growing. Continue reading »
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