Daily Archives: Jan 27, 2012

The Mexican currency closed Friday at below 13 pesos to the US dollar, its strongest level since mid-September.

It will probably come as no surprise that some of this week’s gain came as the US Federal Reserve told the world that interest rates would remain low until at least 2014. The news has encouraged investors to put more money into emerging markets to take advantage of relatively higher interest rates, and Mexico is no exception. Read more

Felipe Calderón, president of Mexico, tells Lionel Barber, editor, that he’s confident about the prospects of his own country but concerned about the ‘timebomb’ in Europe.

It looks like officials at the World Economic Forum have learned their lessons after all.

Fresh from the embarrassment of not having any high level officials from China attending Davos this year, WEF officials are apparently in discussions over moving the date of next year’s event so that it does not clash with Chinese New Year. Read more

A huge jump in the stock of foreign direct investment was one of the marked features of Brazil’s economy in 2011.

This from Itau Unibanco last month after the central bank released the November FDI figures. (see after the break) Read more

Benjamin Wey

US authorities have raided the New York office and home of Benjamin Wey, a promoter of controversial Chinese reverse mergers, according to law enforcement officials.

Agents with the Federal Bureau of Investigation executed search warrants at Mr Wey’s home and New York Global Group, the company where Mr Wey is president, the agency confirmed.

 Read more

The growing presence of Chinese travellers on the luxury shopping circuit of the US and Europe is well known, but catering to ordinary Chinese and the country’s growing band of super rich are two different things, as the FT reports.

The wealthy don’t want bus tours and showy logos. Instead they are looking for VIP treatment and knowledge about the history and manufacturing of luxury brands. But China experts say there is also a dark side. Read more

Funny what a bit of humility and a seeming willingness to take heed can do. Viktor Orban’s apparent readiness to listen to the EU and IMF to start talks on a new credit line has had a  powerful effect on the Budapest Stock Exchange, as well as the forint.

This, plus positive sentiment towards emerging markets in general has made the Budapest stock market one of this year’s top performers, with the benchmark BUX  index closing on Friday at 19,286 – that’s a 13.6 per cent up in forint terms, and a whopping 22  per cent up for greenback investors. And the best part of those gains have been made since 18 January, the day of Orban’s begging visit to Brussels. Read more

Wherever it turns, the Romanian government seems to run into trouble. On Friday, it was the constitutional court rejecting plans to delay local elections by a few months and hold them on the same day as parliamentary polls due in November.

Prime minister Emil Boc hoped postponing the local elections  might win a bit more time for the benefits of his tough IMF-backed austerity programme to come through, and recent public protests to lose momentum.

But the judges said no. So Boc’s only relief is the distraction generated by the snowstorms that have this week swept Romania, taking the edge off the anti-government demonstrations. But the snows will melt – the anti-government sentiment probably won’t. Read more

What a difference a new year makes.

It’s been a good start to 2012 for most emerging market equity investors. But how good? Chart of the week finds out. Read more

Tanzania has long dragged its heels among its east African neighbours as they heave themselves towards harmonising everything from tax law to capital markets. Ambitious to a fault, the five-member East African Community foresees a single currency this year, and political federation by 2015.

Neither will happen, not least because they can’t even sort out the basics. And because Tanzania, despite being the most populous country in the would-be bloc, fears domination by Kenya, which is a bit smaller in population but much more dynamic. Read more

How do you make money in a crisis? By doing the legwork, says East Capital, an asset manager specialising in eastern Europe and China with about €3.4bn under management.

“Trips and knowledge pay off,” says Aivaras Abromavicius, partner in the firm’s Moscow office. “Broker research is obsolete. You need to do your own homework.” Read more

Domestic travel by Chinese citizens shot up during the first three days of the current lunar New Year holiday, demonstrating continued consumer confidence in China despite the slight economic slowdown. Read more

* China cadmium spill threatens drinking water for millions

* Chevron to face charges over Brazil spill

* Brazil’s jobless rate falls to record low

* Africa facing ‘serious’ threat from European crisis as 2011 growth halves Read more

Some good news from Europe amid all the gloom. Poland’s GDP grew at 4.3 per cent last year, according to figures published on Friday. That’s slightly above expectations and comfortably higher than 2010′s 3.9 per cent. What’s more Marek Belka, the central bank governor, told Bloomberg television that he was “more optimistic than most analysts” – and forecast growth of over 3 per cent for 2012. Who else in the EU is going to match that? Read more

News that Fung Brands is in negotiations with Sonia Rykiel, the French fashion house, to buy 80 per cent of the company, suggests that the private company owned by the Hong Kong billionaire Fung brothers, William and Victor, is taking a page out of the playbook of the luxury menswear company, Trinity Group, also controlled by the Fungs. Read more

More evidence of a rip-roaring start to 2012. Figures from EPFR, the fund monitor, show investors back in risk-on mode, with flows to EM bond funds in the week to Wednesday at $907m and flows to EM equity funds at $3.5bn.

Significantly, EM local currency bond funds saw significant inflows ($374m) for the first time since September. One week doesn’t make a trend but it does come as EM currencies are enjoying a big bounce. So, time to fill your boots? Read more

Planning to invest in Russia? Here’s a reason to think again, courtesy of our colleague Gideon Rachman, blogging from the World Economic Forum in Davos. Even Igor Shuvalov, Russia’s deputy prime minister (pictured), was unable to give potential investors the assurances they wanted when speaking about the notorious death in custody of lawyer Sergei Magnitsky.

Shuvalov, himself a lawyer, acknowledged that the case was “horrendous”, but blamed “the system”. Read more

Friday’s feast from the beyondbrics team: Lex on China’s insatiable demand for Canadian fertiliser maker Potash; grounds for optimism in Libya despite scrappy and slow progress; who gains and who loses by Nigeria’s controversial subsidy cut? India: too quick to take offence, too quick to accept applause; and will 2012 be an even tougher year for Chinese dissidents? Read more

South Korea is flustered about sticky buns, croissants and black puddings.

In the run-up to this year’s parliamentary and presidential elections, politicians have turned bakeries and black pudding vendors into a battleground where they are trying to vaunt their populist credentials. Read more

How worried should investors be about a slowdown in China? According to the latest GDP statistics, China’s economy expanded 8.9 per cent in the fourth quarter of last year, confounding those who had been predicting a “hard landing” for the country.

But other indicators, such as sales of earthmoving equipment, tell a different story. Read more