Daily Archives: Jan 12, 2012

Chile’s central bank has sprung a surprise, cutting rates by a quarter-point to 5 per cent just as the market had U-turned on initial expectations of an easing and had been betting on rates staying unchanged following high inflation numbers.

Now the easing cycle has begun, the big question is whether it will continue. The bank’s statement was ambiguous. More cuts, the bank made clear, will depend on how inflation pans out. It said in its monthly communiqué: 

They have got attractive yields, promising growth prospects and they’re unlikely to let you down. If you have to put your money somewhere, it might as well be in Brazilian bonds, it seems.

After the bumper $825m offering at the beginning of the year by the Brazilian government, the country’s companies have rushed to follow suit. 

It has now been two years since an earthquake tore apart Port-au-Prince, Haiti’s capital, and it’s obvious that there’s widespread dissatisfaction at the excruciatingly slow progress of reconstruction.

But amid all the desperation, there have been some successes, in which the private sector has exercised an important role. Ideally, it would play a much bigger part. 

Russia’s total capital outflows in 2011 were $84bn as political uncertainty in the fourth quarter caused volumes to rise sharply.

However, while the year’s outflows are the second largest ever recorded in absolute terms, they are not as significant when measured against overall GDP. 

Nigeria’s nationwide strikes are going strong for a fourth day – and as oil workers threaten to shut down production from Sunday, investors in Africa’s most populous country should be wary.

That, at least, is the view of Helima Croft and other analysts at Barclays Capital. Violence is not a new phenomenon in Nigeria, they say – but this time, Nigeria faces twin threats: the mass protests sparked by the withdrawal of a fuel subsidy at the start of the year, and the rise in casualties of religious conflict over the past week. Taken together, doubts must be raised about the country’s political stability. 

Kazakhstan’s decision to shell out $160m to relieve the troubled BTA Bank of a stake in a Turkish lender won’t be enough to rescue the state-controlled BTA from default.

But the move has lifted the mood among creditors afraid that Kazakhstan was ready to give up BTA as a bad lot: Samruk Kazyna, the Kazakh sovereign wealth fund, would not be paying out the cash if it intended to walk away. 

After downgrades towards the end of 2011 by Moody’s and S&P and a severe current account deficit, not to mention continued violence and upheaval, Egypt could do with some good news.

So it may be a relief to investors to learn that IMF talks will resume on January 15 – and that Egypt’s short term debt is being snapped up in auction. 

Sometimes beating market expectations with a 33 per cent increase in net profits just isn’t enough.

India’s second-largest software company, Infosys, found that out on Thursday when its shares closed down 8.4 per cent despite a rise in profits to 23.72bn rupees ($459m) in the quarter ending December, year-on-year, and a 31 per cent rise in revenues, to 93bn rupees ($1.8bn), on the back of an 11 per cent depreciation of the rupee 

Floods hit southern Brazil

Supply side problems look like keeping the price of iron ore high in spite of falling demand in both China and the EU. The latest news to fray traders’ nerves came late on Wednesday from Vale, the world’s biggest iron ore producer by volume, which said heavy rain and flooding in Brazil would reduce shipments by about 2m tonnes.

As if that wasn’t bad enough, the world’s biggest iron ore ports in western Australia were closed after tropical cyclone Heidi battered the shore on Wednesday with 75mph winds. 

The forint gained another 1 per cent on Thursday to Ft308 to the euro amid growing hopes that Budapest will manage to strike a deal with the European Union and International Monetary Fund.

The increasing optimism helped the government pull off a successful bond auction, selling 10-year paper at 9.38 per cent, compared to 9.70 per cent in late December. Bloomberg said it was the first drop in yields for 10-year bonds since September. That’s good news for Budapest. But there’s still some way to go before a deal is done. 

The Kazakh sovereign wealth fund has officially denied an Italian newspaper report which on Thursday said it had bought nearly 5 per cent of the beleagured UniCredit bank.

But investors still seem to think something is up. At 2.30pm Milan time, the shares were trading 8.3 per cent up on the day. That’s down from the 15.6 per cent peak they hit just before Samruk-Kazyna issued its denial – but it’s still a sizeable gain on a day when the Italian market is just 2.4 per cent higher. 

The room full of cubicles at Sitel’s new call centre may look sterile at first glance. Yet it buzzes with conversations conducted in five languages as around 20 newly-hired customer care agents handle calls from seven European countries. 

* Japan pledges to cut Iran oil imports

* Myanmar signs ceasefire with Karen rebels

* Iran oil risk sends refiners’ bond yields to one-year high: India Credit

* China’s Hony Capital raises $4 bln in new funds 

While China’s headline inflation rate fell again in December to 4.1 per cent, a small rise in food prices suggests the inflation battle is not yet over. Cui Li, chief China economist at RBS, talks to Josh Noble of beyondbrics.

Shares in UniCredit, the beleagured Italian bank with extensive operations in eastern Europe and the former Soviet Union, rose over 7 per cent on Thursday on an Italian newspaper report that oil-rich Kazakhstan’s wealth fund had bought a stake of nearly 5 per cent.

Il Giornale newspaper said Samruk Kazyna had built up the holding in a friendly operation.  If the story is confirmed it should help UniCredit – market value €5bn – in its struggle to complete a €7.5bn capital-boosting rights issue.  But it’s quite a turnaround from the halcyon days of 2007 when an ultra-confident UniCredit paid $2.1bn for Kazakhstan’s ATF bank.