Daily Archives: Nov 29, 2011

Finding enough people to fill thousands of vacant jobs may seem like a nice problem to have in the current economic environment, but not in Brazil.

Poor education and a lack of qualified professionals are proving to be the Achilles heel of the country’s impressive growth story, and a new study from the IT sector shows just how acute the problem has become in certain industries. Read more

Just as one swallow doesn’t make a summer, one bad number doesn’t necessarily spell doom. But the market was taken aback on Tuesday when Chile’s industrial ouput came in far worse than expected – slumping 0.8 per cent in October compared to the same period the year before. The market had expected a rise of around 4 per cent.

Why the poor showing? Two words: eurozone contagion. Read more

Here we go again: another CEE rating gets junked. Standard & Poor’s downgraded Romania’s local currency sovereign rating on Tuesday after markets had closed. S&P lowered both the long and short term local currency ratings to BB+/B from BBB-/ A-3. Anything below BBB- is considered ‘junk’ or speculative grade investment material.

The main reason? Romania’s banking sector is massively exposed to its Greek and Austrian parents. We have seen this story beforeRead more

One had to admire Colombian President Juan Manuel Santos’ ability to keep smiling – even if it looked increasingly forced – as he sat silently in front of the cameras beside Hugo Chavez, who just kept talking into the night in the Miraflores presidential palace in Caracas on Monday.

But it was surely worth the aching facial muscles he must have woken up with this morning. Santos’ willingness to play friendly with his Venezuelan counterpart – in stark contrast to his predecessor, Alvaro Uribe, who Chavez at one point practically threatened to go to war with – has brought with it a great improvement in relations between the neighbouring countries. Read more

Tuesday was a sort of good news/bad news day for India’s embattled private airlines.

Even as the civil aviation ministry announced that it would recommend lifting the limit on foreign direct investment in the Indian airline sector from zero to 26 per cent, a consortium of banks reached an agreement on the restructuring of $3.45bn of state-carrier Air India’s massive $9bn debt.

The bad news: no such lifeline has so far been extended to India’s debt-ridden private carriers, whose current precarious position is partly due to Air India’s price-cutting tactics. Read more

After a week of dire predictions and market turmoil, Egypt’s equity markets saw their biggest single day rise in almost two years on Tuesday. The benchmark EGX index jumped 5.5 per cent as two days of peaceful polling gave investors hope that a new government could be formed and power transferred smoothly from the ruling military council.

But Egypt’s economy is not out of the woods yet and Tuesday’s equities gains did little to reverse the 43.5 per cent fall the EGX index has suffered this year. Voting continues for the next six weeks – surely a stern test of investors’ nerves. Read more

“It’s time to bid farewell to the Brics,” wrote my FT colleague Philip Stephens this week. Jim O’Neill, the Goldman Sachs economist who first coined the acronym which groups Brazil, Russia, India and China, seems to feel the same. His new book, also reviewed this week by Stefan Wagstyl, the FT’s emerging editor, is called ‘The Growth Map: Economic Opportunity in the BRICs and beyond‘.

Continue reading after the break

When South Africa’s growth slumped in the second quarter of this year to 1.3 per cent from a robust 4.5 per cent in the previous three months, much of the blame was placed on hundreds of thousands of striking workers.

The hope was that with “strike season” – which affected the mining, fuel, energy, paper and steel sectors – done with until next year there would be at least a slight spurt of expansion in the third quarter. But that theory was painfully shot down on Tuesday when figures showed that gross domestic product for Q3 was an anaemic 1.4 per cent. Read more

The Hungarian central bank raised interest rates by 50 basis points to 6.50 per cent on Tuesday, at the first scheduled meeting of the rate setting-council in the wake of the Moody’s downgrade of Hungarian debt to junk status, and subsequent pressure on the forint.

The Hungarian currency, trading at around Ft 308.50 to the euro before the decision, barely moved in reaction to the announcement, a sign that the markets had priced in the rate increase, said Zoltan Torok, economist with Raiffeisen Bank in Hungary. Read more

It was, many said, one of the most revolutionary fiscal reforms India had instituted in years. But perhaps Indians aren’t quite ready for a revolution. At least not this kind.

Opposition parties – and even some members of the ruling coalition government – halted proceedings in parliament again on Tuesday in the wake of last week’s decision to open up India’s lucrative retail market to foreign investment. The lawmakers say it threatens millions of small businesses. Read more

Poland spent most of the last few centuries fighting for its independence but the euro crisis has now become so serious that its foreign minister is calling for Germany to take the lead in forming a much tighter EU federation to save the Union from a “crisis of apocalyptic proportions”.

Radoslaw Sikorski’s speech in Berlin on Monday night set off a firestorm of protest from Polish nationalists on Tuesday but his comments underscore the seriousness of the crisis and the high stakes for Poland, which fears being left out of any new and tighter core EU based on the 17-member eurozone. Read more

When they are not ignoring Africa altogether, big-hitting institutional investors regularly bemoan the continent’s illiquid small markets, political insecurity and shaky regulations, or fret that despite pretty decent returns little or nothing would make them touch the continent right now.

But as Africa’s economies grow and its nascent middle class starts spending into the trillions of dollars, with all the accompanying developing of banking, insurance, construction, retail and more, it is time for catch-up. Nevertheless, some simply can’t fathom the best route in, be it through stock markets, private equity or even property. Read more

Hungary raised its benchmark interest rate to the European Union’s highest on Tuesday in an attempt to shield its currency, the forint, from further losses. The central bank raised its two-week deposit rate to 6.5 per cent, from 6 per cent – an increase of 50 basis points. Read more

After the China-inspired commodity price boom, talk of a Chinese slowdown is a hotter topic in Latin America than concerns over the eurozone. Jonathan Wheatley, the FT’s deputy emerging markets editor and John Paul Rathbone, Latin America editor, discuss the prospects for the continent if China’s appetite for raw materials begins to wane.

* Millions of Egyptians head to the polls

* Iran to downgrade diplomatic ties with UK

* Codelco sees low chance of accord with Anglo

* Chinese police release Ai Weiwei’s wife Read more

China’s leaders insist they roll out the red carpet for “foreign friends” who want to invest in China (although Europeans may complain to the contrary). And figures show there is still plenty of foreign amity going on: overseas direct investment in China remains strong, despite the global financial crisis. In the first 10 months of this year, FDI rose to $95bn, up nearly 16 per cent year on year.

But is it worth it? According to a new study from the University of Nottingham’s Globalisation and Economic Policy Centre, China is wasting a lot of that investment. Read more

It is a symptom and not a cause but Goldman Sachs’ decision to reverse its recommendation on Chinese equities is a reminder for those banking on looser policy on the mainland.

For now, tinkering is just that: tinkering. Read more

Asian stocks jumped again on Tuesday, adding to Monday’s gains. The MSCI Asia Pacific index (ex-Japan) was up 1.37 per cent in late afternoon trading driven by a bubbling confidence in the region that Europe, whose finance minsters meet in Brussels later, will be finally forced to draw a line under its ongoing crisis.

“We are buying Asian equities,” David Gaud, a Hong Kong- based senior portfolio manager at Edmond de Rothschild Asset Management, said on Bloomberg Television. “When I look at the valuation of the market, a lot has been priced in already. Europe has the financial means to respond to this crisis.” Read more

Tuesday’s top picks from the beyondbrics team: why Egypt’s rural voters are feeling the pull of political Islam; the rise of China’s green power and what it means for competitors; why Peña Nieto is likely to be Mexico’s next president; and why Tata can, and does, take the long view. Read more

Taiwan’s upcoming presidential election is as much about bread-and-butter issues as it is about the future of cross-Strait relations with China. So it was that, with growing concern over the economy just weeks before the mid-January vote, president Ma Ying-jeou (pictured) this week announced a package of new labour policies tackling the tricky issue of no-pay leaveRead more