Daily Archives: Feb 20, 2012

The New Yorker reckons Timothy Geithner is a shoo-in as next president of the World Bank, making him its 7/4 favourite. But the New Yorker won’t take your money. Paddy Power will.

The online (and bricks and mortar) betting shop has opened its book on the race for next president of the multilateral lender with Larry Summers in the top slot. You can see a full list of opening odds after the break. Read more

[Updates earlier post with offer data]

The Czech Republic has returned to the international bond market after an absence of 17 months, grabbing the chance to raise cash cheaply as yields on its benchmark international bond fell to their lowest since the spike in investors’ risk aversion at the end of last year.

Prague raised €2bn with a 10-year bond priced to yield 3.977 per cent on Monday afternoon. Demand for the issue was €3.5bn, bankers involved in the deal told beyondbrics. Read more

Standard & Poor’s has bad news for the Russian banking sector. As the ratings agency puts it bluntly in the title of its new report: “Russia’s top 30 banks need further capitalisation and lack the means to improve in the foreseeable future”.

According to S&P, which uses its own criteria to assess lenders’ capital adequacy ratios, Russian banks suffer from a lack of “geographic, business and revenue diversification” and allot too much of their corporate loan book to individual borrowers. On a S&P scale of 1-10 for “banking industry country risk assessment” (BICRA), the Russian banking sector scores just a 7 (with 10 being the lowest). Read more

A free trade agreement between the EU and India has been under discussion for six years. Among those holding it up are Indian car makers, reluctant to face competition. James Crabtree, the FT’s Mumbai correspondent, investigates.

Poland’s zloty has had a golden 2012, rising by 7 per cent so far this year, which makes it one of the world’s best performing currencies in recent weeks. The recovery may still have some legs left. Read more

The inexorable rise of the Brics – in terms of growth, at least – hasn’t made them any safer from destabilising risks. In fact, they are just as exposed to global risks as they were before the 2008 financial crisis. And given the prospects for world growth are largely pinned on these economies, it’s a worry.

That’s the conclusion of the Global Risks Atlas 2012 by Maplecroft, a risk advisory company. The Brics are exposed to global risks which “could undermine their investment potential”. So what are they? Read more

The price of Brent crude oil hit an eight-month high last week, and is currently trading at more than $120 per barrel as fears escalated that Iran, the world’s third-largest oil exporter, could cut its exports to the European Union.

How much do emerging markets depend on oil for their energy – and who wins and who loses from high oil prices? Chart of the week investigates. Read more

Battered by global headwinds and a weak domestic economy, the Indian government has divested itself of just $232.3m of equity in its listed state-owned companies in the current fiscal year ending March 2012. With only six weeks left, the total will fall far short of  the $8.13bn goal.

But it seems ministers are trying to close some of the gap with a mega deal – selling a 5 per cent stake, worth around $2.4bn, in the Oil and Natural Gas Corporation, the energy giant. If nothing else, it should show much investor sentiment towards India has improved this year. Read more

Falling consumption, rising prices, higher taxation and rising costs. It doesn’t sound like the kind of market you’d want to invest in. But Carlsberg’s announcement on Monday that it would spend up to 4.4bn krone ($781m) to buy the remaining 15 per cent it does not already own in Baltika, Russia’s biggest brewer, sent shares in both companies upwards.

The vote of confidence by investors is especially noteworthy coming on the day that Carlsberg also announced weaker profits than expected for last year and said profits this year would remain flat. So why are investors bullish? Read more

* Iran struggles to find new oil customers

* Kingfisher woes mount as government rules out help

* North Korea raises alert for military drill

* Japan, China to help Europe solve crisis via IMF Read more

You can know a lot about a deal and still not know what really matters.

Abraaj Capital, the biggest private equity investor in the Middle East, proudly announced on Monday that it was planning to buy Aureos Capital, the London-based emerging markets specialist PE investor.

But both sides declined to give financial details for the acquisition. This is a pity since the transaction could raise eyebrows in British political circles. UK taxpayers, who used to own Aureos, have every reason to be interested in the sale price. Read more

What a shocker. Thailand’s GDP shrank 10.7 per cent in the fourth quarter – way more than the 5 per cent predicted by most economists. Major flooding – which caused many factories in the Bangkok area to shut down for months – was the reason.

But it isn’t all bad news. A terrible Q4 should lead to a much brighter 2012. Read more

South Korea’s government bonds have emerged as a darling for foreign investors seeking higher-yielding but relatively safe assets in emerging markets.

Foreign investors increased their holdings of Korean bonds by Won1.6tn in January, up to Won84.6tn. Government bonds accounted for more than 70 per cent of their total bond holdings. Although they sold a net Won9.6tn of Korean stocks last year amid the global economic slowdown, they boosted their holdings of Korean bonds by a net Won7.1tn, according to government data. What’s driving the love of Korean debt? Read more

Monday’s picks from the beyondbrics team: Lex on the mounting expectations about China’s biggest search engine; Xi Jinping’s meteoric rise to the top of China’s Communist Party; Vietnam’s leading newspapers cause a stir; time for Mexico to let its tycoons fight; and India’s tricky alliances in the Middle East. Read more

Hon Hai has announced it is raising the base salary of its 1m-plus workers by between 16 to 25 per cent, the first major pay hike since it doubled pay for operators and line managers in 2010 following a tragic series of suicides at its plants.

With Hon Hai, the Foxconn parent, and other Apple suppliers’ plants currently undergoing an audit by the Fair Labour Association, that’s good news, isn’t it? Not so for investors, according to HSBC head of Taiwan research Jenny Lai. Read more

Pierre Beaudoin, chief executive of Bombardier, the Canadian aircraft and train maker, tells the FT’s Jeremy Lerner why he is bullish on emerging markets such as China and India.

Asian markets took China’s weekend monetary easing in their stride. Investors had largely anticipated the decision to cut bank reserve ratios – indeed some had expected it a month ago.

But it was still a welcome fillip in markets where below the good humour generated by this year’s strong rally a lot of concern still lurks about possible future shocks, notably from the eurozone, China and the Middle East. After jumping by more than 1 per cent in early trading, the MSCI Asia ex-Japan index fell back later to trade 0.5 per cent higher. Clearly for many investors it was a good moment to take profits. Read more

* Japan, China to help Europe solve crisis via IMF

* China eases stance on new banking rules

* Assad extends Damascus crackdown Read more

By Mian Mohammad Mansha

The benefits of trade, especially in the global village, are well known. Neighbours such as India and Pakistan are especially well-placed to profit from doing business together due to their common heritage, languages, and physical proximity. Together, both nations could spread the economic benefits from increasing trade to large sections of their people.

Given the history of conflict, distrust and bureaucratic inertia in India-Pakistan relations, this won’t happen overnight. But a stronger emphasis on developing common interests in bilateral trade could move things forward. An Indian delegation’s visit to Pakistan last week was a small step on the right road, which could one day be followed by giant strides. Read more