Monthly Archives: December 2011

This week on beyondbrics:Brazil overtook the UK as the 6th biggest economy in the world, tens of thousands mourned North Korean dictator Kim Jong-il, Argentina’s president Cristina Fernández was diagnosed with thyroid cancer, India’s billionaire Ambani brothers had a reunion of sorts, while Turkey’s decision to to allow Russia permission to build the South Stream gas pipeline alarmed Ukraine. Read more

As chosen by you, the beyondbrics readers. We can’t disagree with what you clicked on – there are some of the key themes to 2011 in the list, as well as some of the more off-beat stories. See you in 2012. Read more

All countries would like to be able to move people about quickly, cleanly and (relatively) safely. Hence the attractions of high-speed rail. The downside is that it is very expensive to build, and there can be tough political decisions over where to run the track.

With those concerns in mind, it comes as no surprise that China is the country building the most, despite the recent fatal crash. But which other countries are investing in high-speed rail? Chart of the week finds out. Read more

It has been a torrid year for emerging markets and there have been very, very few success stories. Amid fears of a global recession and huge volatility across markets, investors have fled even remotely risky assets. That has spelt disaster for EMs.

The MSCI emerging market index has fallen 21.5 per cent since January and there have been very few economies which have escaped that trend. Read more

The Hungarian government has to sort out the economy, find a solution to the indebtedness of both state and folk, and allow its multi-talented people to blossom. It has to do it fast, and against vested interests which are opposing this crusade. But the government will not be swayed from its course. All of which is something foreigners – including journalists – just don’t understand.

That, in essence, was the pre-Christmas message Viktor Orban, Hungary’s prime minister sent to his people, or at least his loyal followers, via a long interview in the pro-government daily Magyar NemzetRead more

China might have once again dominated the league tables for initial public offerings this year, but for an increasing number of global banks, getting a piece of the action in the world’s busiest IPO market appears to have become all pain and no gain.

A Société Générale Chinese venture has become the latest to turn its back on the Chinese stock market, saying that it will stay away from mainland IPOs because their quality has become too difficult to assess. Read more

This post is the fourth of a series – 12 for 2012 – that beyondbrics is running on key emerging markets topics for the coming year.

By Dong Tao of Credit Suisse

I do not expect a hard landing in China. Despite a slowdown in exports and weaker fixed asset investment, private consumption is holding up too well at the moment for that to happen, because of salary increases, tax cuts and continued urbanisation.

But I do believe that China is going to grow more slowly than before – and for a longer period than was previously expected. Read more

Life often imitates art, and more prosaically in Turkey, football imitates the economy.

That’s the verdict of Renaissance Capital, who in an end-of-year sporting note, draws out the parallels between Turkey’s macroeconomic woes and its national game.

According to RenCap: “Turkey’s declining success in football can be mapped to economics”. Read more

* North Korea warns policies will not change

* US, Saudi Arabia sign $29.4bn F-15 fighter deal

* China manufacturing contracts for 2nd month

* Alibaba hires lobbyist amid Yahoo bid talk

* Iran’s rhetoric sets diplomacy on edge

* VTB buys stake in metals company Read more

It has been a miserable 2011 for Asian markets. Fears of a global recession and extreme market volatility have seen Asia’s bourses shed nearly one-fifth of their value with many suffering their worst annual losses since 2008.

And 2012 is unlikely to bring any succour for investors who are fleeing into safe havens while warily eyeing up a European led recession and a slowdown in China. Risk-off is here to stay – for a while at least. Read more

Friday’s pre-weekend tasters from the beyondbrics team: Lex on resource nationalism and how commodity rich nations are hungry for a bigger slice of the pie; how the mechanics of post-war Iraq are little changed from the days of Saddam; the aftermath of Typhoon Washi in the Philippines; and the rise of the Islamists in Egypt. Read more

The winter session of India’s parliament ended not with a bang, but with a whimper on Friday, as the Congress Party-led coalition left Delhi without passing a single bill, let alone any meaningful reforms.

The 21-day session began with high hopes: 54 bills, including anti-corruption, food subsidy and whistleblower legislation, as well as fiscal reforms including FDI in retail, aviation and pension funds, were up for consideration. Read more

Chinese manufacturing activity declined for the second consecutive month in December but showed tentative signs of stabilising, according to a survey published on Friday.

The HSBC purchasing managers’ index (PMI) for China hit 48.7 this month, weighed down by falling orders and remaining below the 50 mark that denotes a contraction. Yet the decline was softer than November’s 47.7 reading, signalling that Chinese manufacturing growth may be nearing a bottom, at least in the short term, according to Simon Rabinovitch in Beijing. Read the full story of

The very public reunion of India’s billionaire Ambani brothers on Wednesday could not have come at a better time. Neither will be sorry to see the back of 2011 after a tough year that saw the pair moving toward cooperation.

The brothers, after a rare pronunciation by their peacemaker mother that the family was “united”, arrived in Chorwad – the village in Gujarat where their father grew up – to celebrate of the 80th birthday of the late father whose business empire they tore apart in a bitter public feudRead more

While European debt capital markets have struggled this year, investor appetite remains healthy, to say the least, in Asia.

Bolstering a recent report that China has clinched the top spot as the number one venue for initial public offerings, new data show corporate bond volume in greater Asia (excluding Japan) hit a record high this year. Read more

* US, Saudi Arabia sign $29.4bn F-15 fighter deal

* China manufacturing contracts for 2nd month

* Alibaba hires lobbyist amid Yahoo bid talk

* Iran’s rhetoric sets diplomacy on edge Read more

According to Vale’s new management team, the Brazilian miner has one big resolution for 2012: to become more transparent.

The company’s new chief executive, Murilo Ferreira, and revamped top management have spent the last month flying around the globe, trying to convince investors, analysts and journalists of precisely this. Read more

Turkey’s decision to allow Russia permission to build the South Stream gas pipeline seems to have caused a degree of panic in Ukraine. The agreement, reached on Wednesday, could have significant implications on long-running gas negotiations between the two countries and reduce Ukraine’s bargaining power in extracting much needed price concessions from Moscow.

The South Stream pipeline would see Russian gas exported across the Black Sea to Europe, bypassing Ukraine, whose gas transit network is currently responsible for carrying 80 per cent of Russian energy exports to the EU. Read more

India’s stock market regulator has issued a wake up call to investment banks operating in the country by banning some prominent banks from new listings and warning that it will overhaul the rules governing initial public offerings, according to James Lamont and Neil Munshi of the FT. Read the full story on

This post is the third of a series – 12 for 2012 – that beyondbrics is running on key emerging markets topics for the coming year.

By Jonathan Garner, Morgan Stanley

Since the end of the Asian crisis in 1998, EM equities have been in a 13- year relative bull market compared to DM equities. Total outperformance including dividends has been 215 per cent in US dollar terms.

A year ago we were cautious on the outlook for EM equities in 2011. We warned of a setback as EM policymakers combated overheating and inflation with tighter policy in the context of a market that was slightly expensive to long run average valuations. In 2012 we expect the bull market to reassert itself. Read more