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: Read more

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. Read more

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. Read more

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. Read more

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. Read more

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. Read more

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. Read more

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 Read more

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. Read more

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. Read more

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. Read more

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. Read more

* 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 Read more

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. Read more

More evidence of the baleful effects of Viktor Orbán on Hungarian banking. On Thursday, Germany’s BayernLB said it would report a net loss for 2011 because it was writing down the value of its Hungarian subsidiary, MKB Bank.

The write-down and the loss are as yet unspecified. But the message is clear. The damage done by the Hungarian prime minister’s policies can’t be contained within Hungary. The losses are hitting group headquarters at BayernLB, as they have done at other west European groups unfortunate enough to have put money into Hungary, including Erste Bank, Raiffeisen International and Unicredit. Read more

After a dismal October, India’s industrial production swung back into positive territory, growing 5.9 per cent year-on-year in November,  according to data released by the Central Statistics Office.

After five months of IP growth falling – and indeed contracting in October -  it was a welcome respite, but might the comeback be too goodRead more

Thursday’s top picks from the beyondbrics team: emerging markets must watch out for more euro shocks; Europe must take the same medicine it once prescribed to east Asia; Taiwanese voters push for a strong opposition;  why ship hijacking is good for the Somali economy; and does a mullah living in Pennsylvania hold the reins of power in Turkey? Read more

The eurozone crisis rumbles on, gnawing away at confidence around the globe, even in far-off emerging markets, including China and Brazil. But, as Stefan Wagstyl reports on ft.com , the biggest impact in the EM world is the countries close to the eurozone – in central and eastern Europe.

The states that have done the most to integrate their economies with western Europe – headed by the Czech Republic, Hungary and Poland – are all at risk from any further shocks coming from Greece and the rest. But, as Wagstyl writes, they are not equally vulnerable. Read more

It’s a new year, but for Foxconn, the old problems seem to be coming back all over again. It turns out that early last week, at least 150 workers at the Taiwanese group’s factory in the Central Chinese city of Wuhan threatened collective suicide in a pay dispute gone wrong.

After a Chinese internet post with pictures was picked up by Taiwanese media and then by Western blogs this week, Foxconn hurried to say late Wednesday that the dispute had been settled “peacefully” the same day, and Microsoft, one of the companies whose products are manufactured at the Wuhan plant, said it was looking into working conditions there. Read more