Daily Archives: Jan 24, 2012

When countries crash, does it pay to sue? It’s a timely question, with Greece still poised in the balance. Experience in Argentina suggests that accepting – even with a brutal haircut – may end up being more in the money in the long run.

As this Bloomberg story shows, creditors who accepted Argentina’s first debt swap in 2005, four years after its default on nearly $100bn of sovereign debt, and kept their swapped bonds ever since have enjoyed returns of 90 per cent – outpacing a 70-per cent return on emerging-market bonds overall. That’s a sweet recompense for having accepted just 30 cents on the dollar for their investments. Read more

The IMF World Economic Outlook update released on Tuesday makes pretty ugly reading, as Chris Giles reports in the FT, with world economic growth set to be significantly weaker than previously thought.

But what specifically does it mean for emerging markets? Here are 10 things we have learnt from the IMF reportRead more

Egypt’s emergency laws will be partially lifted from Wednesday, the first anniversary of the start of the country’s uprisings against former President Hosni Mubarak.

But Field Marshal Hussein Tantawi, the head of Egypt’s ruling military council, added that exceptions would be retained for “incidents of thuggery,” without elaborating further. Read more

Even before the financial crisis caused havoc in most of the developed world, investors have long talked up Africa’s potential for growth.

Now, finds a survey by the Abu Dhabi Government, they’re set to follow with their wallets. Of 158 institutional investors, more than half believe Africa will be the most attractive region for investment growth in the next decade. What’s more, all respondents expect to have some exposure to the continent by 2016. Read more

Who do you trust? If you are Hungary’s central bank, the answer is: Viktor Orbán. The bank kept interest rates at 7 per cent on Tuesday, surprising analysts who had anticipated a half-percentage point hike and causing a brief fall in the forint. But the bank is placing its faith in the prime minister doing the right thing in the eyes of the EU.

Meanwhile the man himself was in Brussels to meet EU top brass – apparently conceding ground over key legislation that might otherwise block a deal with the IMF, particularly over the independence of the central bank. It’s a bit of a gamble all round. Read more

… and its Louvre, and a Cleveland Clinic and a vast new 700,000 sq m airport terminal, among other things.

After more than a year of uncertainty, an all-powerful government review led by Sheikh Hazza bin Zayed, a senior member of the ruling family, has given the green light for the billions of dollars worth of flagship projects whose announcement brought global attention to the emirate. Read more

photo: Bloomberg

When Grupo Aval, Colombia’s biggest banking group, said in July 2010 it was buying BAC-Credomatic, Central America’s leading credit card issuer for $1.9bn, Moody’s winced. It put Banco de Bogotá, Grupo Aval’s principal asset, on notice of a possible downgrade.

But a year after the deal was completed, the ratings agency has changed its tune. Read more

* Abu Dhabi approves major spending plan

* India’s central bank warns on ‘fiscal slippage’

* EU eases Myanmar sanctions after political prisoners freed

* IMF chief warns Europe must fuel growth Read more

The Hong Kong and Chinese stock markets are on holiday this week. But despite an overall good start to 2012, the shares of Chinese firms including former high-fliers have been so depressed that they have become the hunting grounds for private equity firms with cash in their coffers. Read more

Tuesday’s picks from the beyondbrics team: why Myanmar is struggling to keep pace with international demands; Putin’s fury at Russia’s media chiefs; why the fate of Turkey’s EU relations are tied to presidential elections in France; potentially embarrassing flaws in Chinese financial and auditing practices; and is the end for India’s anti-corruption crusader?
 Read more

It’s a slow week on Asian stock exchanges with many markets closed for the Chinese New Year, so you’d expect some wild price movements on the few exchanges trading in low liquidity. Unilever Indonesia is a case in point: its shares soared by nearly 20 per cent in early trading on Tuesday before falling back to a more modest gain of about 5 per cent.

Even so, that’s not a bad profit for one day. And it brings the stock’s gain to a stellar 43 per cent from its most recent low in mid September. What is driving Unilever upwards? Read more

Another economic report from a multilateral bank – and another grim warning, this time for central and eastern Europe.

The European Bank for Reconstruction and Development on Tuesday cut its forecast for the region – and rang alarm bells about the danger of an escalation of the eurozone crisis and its impact on the western European banks that dominate CEE banking (outside Russia). Read more

A cushion shaped like a Hong Kong 10-dollar bill Jan 2012Every retailer wants a piece of Chinese New Year – especially when it comes with something as branding-friendly as a mighty dragon. From luxurious dragon-themed Rolls-Royce phantoms, to basic red and yellow flannels at Ikea, potential new year’s gifts are everywhere.

And among those most likely to benefit is the pawnbroker. Read more

Investors have been hoping for the Indian central bank to start easing in response to fears of slowing growth. And on Tuesday, the Reserve Bank of India delivered, with a cut in the cash reserve ratio requirements for banks and a signal that interest rate reductions could be on the way.

Indian stocks jumped on the news – rising by over 1.5 per cent and extending their gain this year to nearly 10 per cent. Read more

India’s central bank paused on key interest rates for the second month in a row, but cut the country’s cash reserve ratio by 50 bps, to 5.50 per cent, in order to release more liquidity into the market.

To combat high inflation, the Reserve Bank of India had raised rates 13 times since March 2010, to 8.50 per cent, severely affecting growth. Inflation fell to 7.47 per cent last month, but economists told beyondbrics that it was not enough to force the RBI to focus on GDP growth, which it now estimates will grow 7.0 per cent in the fiscal year ending March 2012, down from 9 per cent at the beginning of 2011.

* IMF chief warns Europe must fuel growth

* Key UN nuclear visit will be test for Iran

* Top woman in oil to head $225bn plan as Petrobras CEO Read more

By Joe Leahy in São Paulo and Jonathan Wheatley in London

Colin Vaughan Foster, the husband of Maria das Graças Foster, who is set to become Brazil’s second most powerful woman after President Dilma Rousseff, expressed his pleasure at the announcement on Monday of his wife’s imminent appointment next month as head of Petrobras.

“Fantastic news about Graça. She really is the person for the job,” Mr Foster said by email when contacted by the Financial Times. Read more

There’s something about Brazilian education companies that private equity just can’t get enough of.

Actis, the London-based emerging market fund, has become the latest to invest in the sector, buying a minority stake in the Brazilian university group Cruzeiro do Sul Educacional for R$180m ($102m). Read more