Daily Archives: Mar 8, 2012

Do the ends justify the means for PDVSA, Venezuela’s state oil company?

That at least is the impression you get from reports that it is considering a covert privatisation, anathema to Venezuela’s socialist government, or that a recent major oil spill was allowed to continue simply so that production could be maintained.

The ends at least are clear enough: to keep afloat Hugo Chávez’s revolution, which in turn depends on the well-being of PDVSA, one of the world’s biggest oil companies that doubles up as the Venezuelan president’s piggy bank. The problem is, that often means that PDVSA’s hugely ambitious production targets far exceed its ability to fund them. Read more

A year after integrating its stock market with those of Peru and Colombia in the MILA initiative (which Mexico now wants to join), Chile’s bourse is innovating again.

Working with BM&FBovespa, Brazil’s largest financial exchange operator, the exchange now plans this year to start trading new derivatives – foreign currency, blue-chip share index and fixed-income futures – in a bid to draw foreign investors. Some derivatives have previously been traded in Chile but traders say the market in them is small and illiquid. Read more

Oh dear. No sooner had Budapest government officials on Wednesday convinced themselves (though surely not Brussels) that the European Commission had accepted “90 per cent” of the Hungarian replies regarding its concerns over the independence of the country’s central bank, than another damning report emerged.

This time it’s Transparency International Hungary (TIH) dishing the dirt. Read more

Des Moines, Iowa is best known for its corn fields; Milwaukee, Wisconsin for its beers and bratwursts. But for a small but growing number of blue chip companies from Latin America looking to raise cash, the Midwest – believe it or not – is also quickly developing a reputation as something of a fundraising hub. Read more

Brazil is strongly associated with rising oil production in Latin America, yet the region has another rising star shaping prices and industry trends: Colombia.

Over the past five years, Bogotá has had as much new crude oil production as Brasilia has done, contributing to increased non-Opec supplies. Oil output in Colombia increased nearly 450,000 barrels a day between January 2007 and December 2011, compared with 500,000 b/d in Brazil over the same period, according to estimates by the US Department of Energy.

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Greece, Portugual and other members of the troubled eurozone periphery could do worse than take a look at the experience of tiny Slovakia, which is showing that it is possible to undertake deep fiscal consolidation while still managing to eke out a reasonable rate of economic growth.

In what could be his final days as finance minister – his government faces defeat in Saturday’s parliamentary election – Ivan Miklos (pictured left with Evangélos Vénizélos, Greek finance minister) tells beyondbrics that Slovakia’s centre-right coalition reduced the budget deficit from more than 8 per cent of GDP in 2010 to about 4.3 or 4.4 per cent in 2011, all while having the economy grow by 3.3 per cent last year. Read more

By Kevin Gallagher

In Germany this week Brazilian president Dilma Rousseff rebuked industrialised countries for creating a “liquidity tsunami” of speculative capital that is bubbling currencies, stock and bond markets across emerging markets and the developing world.  To stem the tide, her government extended a tax on speculative inflows of capital into Brazil. Read more

With Russia’s election out of the way, the country is moving onto bigger and better things: International Women’s Day, which is cause for a long holiday weekend beginning on Thursday.

Though perhaps overblown, the spending-oriented holiday provides a good moment for checking in on the state on the Russian retail economy and corporate economic sentiment. Read more

By Jacy Meyer of business new europe

With a glut of new apartments saturating Prague’s residential market, you might think the city’s developers would be exercising their marketing skills to sell existing stock, some of which has been languishing unsold for nearly two years. But according to recent research by Ekospol, a developer, the Czech capital could see another 20,000 new residences built over the next few years. Read more

East Africa has just gained its 30th home-based private equity fund.

Progression Capital Africa’s first fund, which was launched in Nairobi on Thursday, will put $40m to work in microfinance across the region. Investing funds from three European state-backed development institutions, it’s ready to accept gains of only 10 per cent to 15 per cent – far less than the 30 per cent sought by private sector investors – as long as the projects generate decent social benefits. Read more

So, an economic turbo boost for the Brazilian chicken on Wednesday evening, as the central bank surprised most economists (and some traders) by cutting its policy interest rate by 75 basis points to 9.75 per cent a year. Brazil’s soaraway economy, which grew by 7.5 per cent in 2010, has come back to earth and the central bank, at the government’s urging, is determined to get it airborne again.

But should authorities be fixated on GDP? Some commentators say they shouldn’t. Surely, they ask, 2.7 per cent growth and 6.5 per cent inflation in 2011 don’t reflect the reality of Brazil? Yes, we reply, they do. Read more

That’s a bit better: after a tough two years, Standard Bank delivered a 22 per cent increase in earnings for 2011,  attributing the increase in profits to keeping an eye on costs and a fall in bad debts.

After South African rivals FirstRand, Absa and Nedbank earlier announced double-digit earnings growth for 2011, there were no surprises in Standard’s numbers, and investors marked the shares up just 0.5 per cent. The interesting questions about Standard are over its strategy to refocus on Africa. Read more

* Brazil in bigger than expected rate cut

* Standard Bank’s 2011 profit climbs 22%

* China offers other Brics renminbi loans

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Europe isn’t all doom and gloom for business. Hyundai Motor is on a roll, defying the region’s slowing economy and debt woes. The group has sharply increased sales in recent months thanks to South Korea’s free trade agreement with the European Union, which took effect last July.

Hyundai and its affiliate Kia Motors, which together form the world’s fifth-largest carmaker, outperformed the weak European market, reporting 17.2 per cent and 33.2 per cent increases respectively in January’s European sales. Combined, their European market share grew from 4.7 per cent in 2010 to 5.4 per cent in 2011. Read more

Thursday’s picks from the beyondbrics team: Lex on life insurance and changing demographics in China; how Indian voters are becoming disillusioned with the Gandhi-Nehru dynasty; Brazil needs to revive its battered manufacturing sector to get growth back on track; and how Mexico is quietly emerging as a capital of LatAm’s growing IT outsourcing industry. Read more

While Brazil surprised the markets with a bigger-than-expected interest rate cut, South Korea and Indonesia on Thursday delivered exactly what had been predicted.

The Bank of Korea and Bank Indonesia both left rates unchanged – in a clear sign that concerns about the impact of rising oil prices on inflation are matching worries about the threats to global growth coming from the eurozone. It’s a striking shift for Indonesia, which has – like Brazil – been a standard-bearer for aggressive pro-growth rate cutsRead more

Holi, celebrated on Thursday, is one of the truly singular Indian festivals – a sort of go-crazy day in which throwing powdered dyes and water balloons on complete strangers (see: Karl Pilkington) and recreational marijuana use by pretty much everyone is generally acceptable. Markets teem with wooden carts piled with powdered dye. At some point it all explodes in a countrywide water-fight/colour bomb. Read more

The annual session of China’s rubberstamp parliament has always been entertaining for the delegates: They get ten days in Beijing with a steady stream of good lunches and dinners on public expenses. For the rest of the nation, it was much less so, as state media presented the National People’s Congress and the Chinese People’s Political Consultative Conference in ever-same images.

No more. Following the boom of social media in China over the past year, the ruling Communist party is rapidly losing propaganda control over this most ritualised of all events in the country’s political calendar. Read more

* China offers other Brics renminbi loans

* Brazil in bigger than expected rate cut

* Syria’s rebels feel abandoned by west

* China factory slowdown may spur stimulus Read more

Following news of the imminent deal between the development banks of China, Brazil, Russia, India and South Africa for each to lend its own currency into the other countries, comes news of another piece of financial infrastructure for the emerging world.

Citigroup has opened a Latin America trade desk in Shanghai to help clients from the south with all their trade finance, payments and settlement issues as they export and import to and from China and Asia more widely. Read more