Daily Archives: Jan 4, 2012

No wonder Brazil’s finance minister, Guido Mantega, got in such a huff about the strength of the real last year, inciting a global currency war wherever he went.

New data from the central bank on Wednesday shows that a whopping $65.28bn in dollar inflows poured into Brazil in 2011 — almost triple the previous year’s total of $24.35bn. Read more

It’s hard to imagine an unpopular president inviting his better loved predecessor for a cosy chat on policy – especially when that former leader has iconic status in the country and is seen as a shoo-in in elections next year if she decides to run.

Yet that is just what Sebastián Piñera did this week, when he met Michelle Bachelet, current head of UN Women for two hours of talks at the La Moneda palace. He has been holding talks with other past presidents too, but it is Bachelet who is seen as the left’s best hope to succeed the billionaire businessman, who is barred by law from seeking a second consecutive term. Read more

What do you do if you are a big Chinese company that has been given marching orders by Beijing to seek growth overseas? Where do you go? Head to Europe and the US — which are both facing the spectre of a prolonged downturn?

China Telecom, for one, doesn’t think this is such a daft idea.

The company — China’s third largest mobile operator — on Wednesday announced plans to launch a UK mobile phone business. But here’s the twist. Rather than compete with established UK operators, the plan is to target Chinese residents as well students and tourists from China. Read more

Hungary’s new central bank act has led to outcry from the IMF, the European Central Bank, the European Commission and the National Bank of Hungary itself.

The act, rightly, is perceived as part of a broader power grab by prime minister Viktor Orbán from any institution or individual that serves as a check on government policy. It is also the latest in a series of attempts to undermine the current governor, András Simor.

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“Politics is just show business for ugly people,” as Jay Leno once said. Or was it Jean-Paul Sartre? Whoever it was, Mexico’s supremely self-assured chattering classes are sure to know.

And the dictum is certainly appropriate for Mexico’s politicians, paid about three times as much as their counterparts in the rest of Latin America and more than in most European countries – Spain, for example, even though the average Mexican earns only a fraction of the average Spaniard. Read more

What to make of emerging markets M&A in 2011? Overall deal values were 13.6 per cent down on 2010, EMs’ global share retreated, and the number of deals fell 7.8 per cent. So a bad year overall – or was it? It depends how you look at it – and which country you are interested in. Read more

Far be it from beyondbrics to encourage schadenfreude among EM investors. But it’s hard not to notice the difference in fortunes between Mexico and its one-time colonial masters in Spain shown by purchasing managers’ indices published on Tuesday and Wednesday. Read more

It may not be as sensational as hurling a shoe at a statesman but Indonesians are turning to their favorite footwear as a symbol of simmering frustration against the country’s corrupt elite.

The peaceful protesters are tapping widespread unease about standards of public behaviour in the country. But the extent of corruption – and an acceptance in the investor community that Indonesia cannot advance quickly without it – suggests their struggle will be a hard one. Read more

After a dismal 2011 which saw the Indian auto industry slump to a standstill for the fiscal year ending in March 2012 (after growth rates of nearly 30 per cent during the previous two years), the launch of the Delhi Auto Expo on Wednesday was a source of optimism. Whether it is misplaced is another matter.

Gone was the talk of high interest rates and labour unrest and the downward spiral of a once-vibrant industry. Instead, industry insiders could focus on the lights, cameras, and concept cars that defied all logic. And more importantly, a chance to show off brand new shiny models that might save the industry, after November sales figures showed the first growth in five months. Read more

Anyone who has ever visited an Indian governmental office and seen the civil servants slowly scratch out information in massive red ledgers, the shelves behind them sagging under the weight of many more, knows that data collection in India can be, shall we say, archaic.

That was in evidence this week when local media reported that the Reserve Bank of India had revised down its export figures by $6bn in its balance of payments statement for the quarter ending in June 2011. The correction was likely based on data provided by the commerce ministry, which last month announced it had overestimated export figures from April to October by $9bn, according to the Times of IndiaRead more

Hungary cancelled a bond swap auction on Wednesday as the forint hit a record new low against the euro and fears grew about the country’s planned bid for International Monetary Fund/ European Union financial aid.

Gyula Pleschinger, a senior economy ministry official, did nothing to calm markets by telling the WSJ that “it would not be a tragedy” if there were no IMF/EU deal. The forint fell below 320 to the euro before recovering a little to 319 to trade about 1 per cent down. These are dangerous times for Hungary – and for its CEE neighbours. Read more

* China pushes minimum wage rises

* Indian top funds see yields at one-year lows on series of rate cuts

* China takes aim at U.S. naval might

* US dismisses Iranian threats over carrier Read more

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

By Stanislaw Gomulka, chief economist at the Business Centre Club

The sharp declines in emerging currencies have generated bad headlines with fund managers complaining about the losses imposed on their emerging market investments. But currency depreciation will bring benefits next year, as these countries adjust to the coming global slow down, in the form of boosting export competitiveness. In Poland this is already happening. Read more

Struggling with another bout of flooding, Thailand received a spot of good news on Wednesday. As elsewhere in the region, inflation is falling faster than expected.

That should help the country’s central bank if it decides that rates need to drop in order to ward off some of the ill-effects of the eurozone crisis. Read more

A spot of cheer amid all the gloom? Or a bit of wishful thinking?  Entitled Unfashionably Bullish, a Citigroup report published on Wednesday on the Middle East and North Africa (MENA) paints a surprisingly rosy picture of the region’s equity markets.

The authors argue that investors are exaggerating the region’s political risks - including the threat of a possible Iran war - and underestimating the growth prospects of some of the region’s companies, notably in transport, investment services and consumer markets. Read more

Wednesday’s top picks from the beyondbrics team: Lex on whether stock market reform in India will entice foreign investors; “Great successor” faces ominous political challenges; Ecuadorean appeals court upholds $18bn ruling against Chevron, the energy giant; and a response to Gordon Chang’s updated prediction of an imminent Chinese collapse. Read more

The vultures are flying east.

From Kohlberg Kravis Roberts, which recently announced plans to set up shop in Hong Kong, to Apollo Management and US financier Wilbur Ross – China, it seems, is on the forefront of many distressed debt investors’ mind.

You can’t blame them. With China’s economic growth tailing off, the view is that companies which have overleveraged themselves during the boom years are going to start to drop.

But feasting on the carrion is likely to be easier said than done. Read more

* US dismisses Iranian threats over carrier

* India raises iron ore export duties to 30%

* Temasek sets up S$2.5bn China fund

* Macao gaming revenue surges in 2011 Read more

The new year begins with what ought to be good news for workers in southern China.

First, Shenzhen announced that it would raise local minimum wage from Rmb1,320 ($210) a month to Rmb1,500, the highest in the country. Then, a Guangzhou newspaper reported that cities in Guangdong province were planning to raise wages by 13 per cent on average this year.

The reaction from factory workers is cynical. Read more