Daily Archives: Nov 21, 2011

When is austerity not austerity? When the country in question is Argentina.

The government has long described inflation, for example – a phenomenon now running at 23 per cent according to private economists, who the government has fined for misinformation – as mere “price tensions”. Read more

It all sounds so great on paper.

Direct Edge, the US exchange operator, is planning to set up an electronic equities platform in Rio de Janeiro to tap the country’s fast-growing capital markets.

The new platform, which will be launched in the fourth quarter of next year, will offer equities, exchange-traded funds and depositary receipts.

But there is one little problem. Where is it going to clear those trades? Read more

You would hardly call it a vote of confidence. On the day that Vallares – the investment vehicle set up Tony Hayward and Nathaniel Rothschild – completed its acquisition of Genel Energy, its shares slumped by as much as 104p before recovering to close down 83p, or 8.3 per cent, at 912p.

The former head of BP and the London financier might have expected their investment vehicle to rise on the deal’s completion. After all, ExxonMobil’s recent entry into Kurdistan, where Genel operates, could be seen as a huge vote of confidence in the semi-autonomous region of IraqRead more

Reuters is reporting that the Egyptian cabinet has submitted its resignation to the ruling council which is considering whether to accept it. The news comes as violence escalates in Tahir Square where protesters are demonstrating against what they see as an attempt by the army to retain power over whatever government emerges from elections planned for November 28.

Sri Lanka announced a shock 3 per cent currency devaluation on Monday in an attempt to boost export competitiveness and keep the country’s paymasters at the International Monetary Fund happy.

Mahinda Rajapaksa, who is both president and finance minister, made the announcement to parliament while presenting the 2012 budget. His speech – interrupted when ruling party politicians attacked protesting opposition members – included a projected 14.15 per cent increase in spending and a narrowing budget deficit based on increased revenues. Read more

Ewald Nowotny, Austrian central bank governor

The Austrian authorities are getting tough with their banks over eastern Europe.

On Monday, the central banks announced strict new capital rules and lending curbs that will make it harder for the banks to lend to CEE. It should help to protect Austria’s AAA credit rating. But it will do little to restore confidence in the more vulnerable economies of eastern Europe, starting with Hungary. Read more

Mike Grant, the newly appointed chief restructuring officer of Al Jaber Group, an Abu Dhabi-based family company in talks to resolve more than $1bn in debt, won’t get an easy ride.

Nearly a year since it first announced a restructuring, the company has yet to reach even a standstill agreement with creditors, often the first step in a debt work-out process. “He’s going to come in all guns blazing and then be slapped down,” a person familiar with the company told beyondbrics. Read more

Five months ago president Dmitry Medvedev announced that the government would be redoubling its privatisation programme, relinquishing controlling stakes in giants including Rosneft and Russian Railways, and completing the sales on an accelerated timetable.

But doubts are  growing about whether Medvedev’s vision – one of the few hallmarks of his presidency – will actually come to fruition. Read more

Walk onto a crowded train in New York, London, or Tokyo, and odds are many of the commuters seated there will be tapping away at an Apple iPhone.

Walk onto a train in Mumbai or Delhi, on the other hand, and of the smartphones on board, none of them are likely to be iPhones. That may not change soon, either. Read more

European banks account for the great bulk of cross-border lending to emerging economies so if they’re cutting back their loans because of the eurozone crisis this spells trouble for the developing world. Right?

Wrong, actually, says Jonathan Anderson of UBS, challenging a widely-held view. Outside central and eastern Europe, EMs are less dependent on eurozone banks than is commonly believed. And even in CEE, the picture may not be totally bleak. Read more

Egypt erupted into deadly protest this weekend and investors are feeling nervous as uncertainty grips the country once again. Egypt’s headline equities index had fallen 2.7 per cent by early afternoon trading on Monday  and the cost of  insuring Egyptian sovereign debt against default for five years had surged 60 basis points to its highest since early 2009. Read more

Taiwanese banks have started to trigger “market disruption clauses” on syndicated loans to Asian companies, the latest sign of how the eurozone debt crisis is sending shockwaves through emerging markets. Read more

* China fears lasting worldwide recession

* Libya in spotlight over Seif Gaddafi capture

* IFC buys $500m insurance to help global trade

* StanChart reduces eurozone exposure Read more

When you hike rates 13 times in less than two years, there’s going to be someone who loses out. Borrowers, basically, and that means business.

According to a report from Morgan Stanley, corporate spending on debt service has risen to a 9-year high and is eating up almost 2.5 per cent of company revenues. Read more

Russian Prime Minister Vladimir Putin was loudly booed on Sunday by the crowd at a martial arts fight in Moscow, a rare publicity setback for the man who is planning to return to the presidency next year.

Watch the video after the break. Read more

Monday’s top picks from the beyondbrics team: Lex on the scramble for oil in Kurdistan and Hungary’s on/off relationship with the IMF; the divide between China’s poverty at home and wealth abroad; and Lionel Barber asks whether America’s re-engagement in the Pacific in November 2011 marked the moment when tensions with China, the superpower-in-waiting, escalated irreversibly. Read more

A market of more than 70m people where economic growth outstripped 10 per cent for the first half of the year. An energy import bill of some $50bn a year, accounting for two thirds of the country’s current account deficit. An emphasis by the government on energy sector privatisation as a means of delivering economic reform.

In normal circumstances, one would expect such a set of ingredients to produce a rush of international capital into the energy sector. But Turkey – says General Electric, no less – is a bit different. Read more

Pearson, the international education and media group, announced on Monday that it has agreed to acquire Global Education and Technology Group, a provider of test preparation services for students in China who are learning English, for $155m. Read more

By David Lubin at Citi

What is China entitled to receive in exchange for its financial support of the eurozone? An end to Europe’s arms embargo? Recognition as a ‘market economy’ within the WTO? More voting power in the International Monetary Fund? Few really know what might be on China’s list.

But it does seem that one of the things China most wants is for the yuan to be included in the basket of currencies that make up IMF’s Special Drawing Right (SDR), alongside the dollar, the euro, the yen and the pound. Read more

Wetlands, Kalimantan, IndonesiaIndonesia’s growth rate is expected to hit 6.4 per cent this year and if a report by Rabo Bank is correct much of that growth will be driven by its booming agriculture industry.

Agriculture already accounts for at least 15 per cent of Indonesia’s GDP, employs nearly 43 per cent of the country’s available labour force and generates annual trade flows of $44.5bn but it is still relatively undeveloped, lacking value-adding industries. Agri-businesses take note. Read more