Daily Archives: Mar 1, 2012

YPF dodged the bullet – for now – as Cristina Fernández, Argentina’s president, defied expectations and announced no investor-scaring moves to seize influence, control or even renatinalise the former oil monopoly.

Shareholders, who had seen millions wiped off their shares in recent weeks as prices fell off a cliff on the speculation that an investor-unfriendly move was in the offing, were rewarded with their highest rise in a decade – a 17 per cent bounce on Thursday, which followed Wednesday’s 15 per cent fall. 

By Samantha Pearson and Iona Teixeira Stevens

It’s like September 2010 all over again. The real is up against the dollar, Brazil’s Finance Minister Guido Mantega is evangelising about a global “currency war” while his government introduces a series of rather ineffective capital controls.

On Thursday, Brazil’s government extended the 6 per cent IOF transactions tax to foreign borrowing of up to three years. Previously, the tax had only applied to loans with maturities of less than two years. 

By Geoffrey Dennis

One of the more interesting aspects of the strong rally in emerging market equities this year is that local investors in many of the biggest emerging markets have largely missed the big move.

In general, foreigners have been more bullish than local investors and have been the main drivers of higher markets. 

Confusion reigned on Thursday during the Indian government’s ultimately successful sale of a 5 per cent stake in the country’s largest oil company.

The one-day auction – the first under a newly approved streamlined process – of 427.7m shares in Oil and Natural Gas Company ended up being 98 per cent subscribed, and raised up to $2.5bn, much needed given the country’s widening fiscal deficit. Earlier, it had seemed that the auction had floppped – as beyondbrics briefly reported (our story has been removed), as did many other media. 

Just when Hungary is trying to polish up its tarnished reputation among foreign investors, along comes another ugly commercial dispute between Budapest and two big west European companies.

Budapest city council announced this week that it was cancelling a management contract signed in 1997 between Hungariaviz, a Franco-German joint venture, and Budapest Water Works. The city fathers couldn’t have got their timing worse – acting just days after the government pledged to launch a new initiative to encourage foreign investors to reinvest profits. 

Nursultan Nazarbayev, the president of oil-rich Kazakhstan, has found a curious use for his oil diversification fund: financing KazMunaigas, the Kazakh state oil company.

It’s bad enough that Nazarbayev has decided to invest part of the nation’s oil windfall helping KMG pay its way at Kashagan, a domestic oilfield development. Even worse, some of the funds will go to support KMG’s less than successful investment in a foreign oil company – Rompetrol of Romania. 

Could the UN have met its first Millennium Development Goal – to halve extreme poverty between 1990 and 2015 – five years early?

The World bank thinks so. In an uplifting report released on Wednesday, it revealed that the percentage of people living on less than $1.25 a day declined in every region of the developing world between 2005 and 2008, according to more than 850 houshold surveys. What’s more, in spite of global food, fuel and financial crises, that trend continued post-2008 – and preliminary surveys for 2010 show that the number of people in extreme poverty was less than half that of 1990. 

By Tom Gara and Josh Noble

Erecting magnificent mosques has long been a favoured way for leaders in the Islamic world to establish or enhance their political legitimacy. That tradition continued this week as Algerian authorities signed a deal with a Chinese state contractor to erect one of the biggest and most expensive mosques ever built, the billion-euro Grand Mosque of Algiers.

China State Construction Engineering (CSCE) picked up the contract in a signing ceremony in the Algerian capital. Algeria’s religious affairs minister, Bouabdallah Ghlamallah, said president Abdelaziz Bouteflika, in power since 1999, wanted to “leave his mark” by building the vast new house of worship. 

Photo: Reuters

Turkey has chosen a new symbol for its currency – and the country’s prime minister has lost no time in linking it to his country’s resurgence on the world stage.

Ankara is self confident as rarely before in both economic and diplomatic terms and that confidence spreads to the Turkish lira, which not too long ago was a byword for hyperinflation and counted in millions rather than ones. 

The world’s shortest life expectancy, largely caused by communicable and parasitic diseases stamped out in the developed world; two thirds of the global burden of HIV/Aids; widespread lack of clean water, sanitation and nutrition; rising rates of chronic diseases such as diabetes, hypertension, obesity and cancer – any one of Africa’s healthcare challenges would be daunting in isolation. Together, they are all but overwhelming.

How to respond? The Economist Intelligence Unit has some suggestions. 

Central Europe appears to be shrugging off problems in the eurozone, with the region’s largest economies indicating that the second wave of the economic crisis will have a far milder impact than the first wave in 2009.

Poland today released its fourth quarter GDP numbers, which showed the economy grew by an annual 4.3 per cent in the final quarter of 2012, slightly faster than analysts had expected. 

* N Korea nuclear pledge receives cautious welcome

* Tata Communications in talks about offer for C&W Worldwide

* UK withdraws diplomats from Syria

* Increased export orders lift China PMI 

The Philippines on Thursday cut its main policy rate by 25 basis points for the second time in less than two months in line with expectations. The move that could give a boost to what could be the beginning of a domestic credit and investment boom.

Hours before the central bank announced the reduction in the overnight borrowing rate to a record low of four per cent, the Philippine Stock Exchange index surged past the 5,000 level for the first time and closed 0.84 per cent up at a new all-time high of 4,897.65 – around 1,000 points above its pre-2008 high. That’s confidence, even allowing for the global surge in emerging market equities. 

Indian economic indicators painted two different stories in data released on Thursday. PMI was down, but only fractionally, and still comfortably in positive territory. The trade deficit widened, however, and remains a worry.

It leaves the Reserve Bank of India with little room for manoeuvre. 

By Stephen Snyder of Ergo

US Secretary of State Hillary Clinton visited Algiers on Saturday and gave Algerian President Abdelaziz Bouteflika a free pass on two major issues of contention between the two countries: his government’s upcoming rigged elections and his support for Bashar al-Assad in the worsening crisis in Syria.

In the midst of a regional tour to promote democracy-building and rally international support for intervention in Syria, Clinton’s sudden silence on these issues in Algeria spoke volumes. At the root of this silence is Algeria’s position as a cornerstone in the global oil and gas market.