Daily Archives: Mar 12, 2012

Investors who have already committed money to South America’s second-biggest economy, or are thinking of doing so, will be watching this week’s events carefully.

YPF – big, foreign-owned and a leader in the local energy market – appears set to be stripped of operating licences in the provinvce of Chubut in southern Argentina. Other provincial governments could follow suit, punishing YPF for what they say is a failure to stick to promised investment levels under their contracts. Read more

As far as growth prospects in the Turkish airport sector go, it depends on where the wind blows.

Those prospects are particularly important for Aeroports de Paris, the French operator that has just bought a 38 per cent stake in TAV, its Turkish equivalent, for $874m.

Namely because when it comes to TAV’s main asset- Istanbul’s Ataturk airport- there are some potential constraints. Read more

Bashneft, Russia’s seventh biggest oil producer, has announced terms for the long-awaited consolidation of its downstream subsidiaries that should help pave the way for the company to attract strategic investors.

Although not large by Russian oil standards, Bashneft has some juicy assets to tempt international oil majors scouring the world for new reserves. And it’s not state-controlled. Read more

The European Central Bank’s liquidity injections have had a knock-on effect on emerging market fixed income products, including in central Europe, which have seen a strong increase in investor demand for government debt.

The revival in investor interest is also coupled with a return to bonds denominated in local currencies – attractive to investors as the zloty and forint recover from the risk flight that saw them fall steeply against the euro and the dollar in the second half of last year. Read more

It’s not easy convincing investors that your brand-new country is worth backing. Last July, Riek Machar, South Sudan’s vice president, was in New York to mark his newly-independent country’s admission to the United Nations. As he did so as the oil wealth that provides 98 per cent of state revenue was flowing fast.

Today that oil flow is frozen due to a dispute with its neighbours in Sudan. So to reduce its vulnerability to such troubles Machar has been back to New York to fire up South Sudan’s search for American investment. But did anyone bite? Read more

Nokia, which has had its fair share of troubles in developed markets, plans to close its mobile money business in India. The financial service allowed user to pay bills, transfer money and make purchases using their mobile phones.

“The mobile financial services business is not core to Nokia so we plan to exit the business,” a spokesman for the company told Reuters. While it may not be core to Nokia – which only launched nationwide services late last year – analysts said the business has incredible scope for growth because it bridges the gap left by India’s massive dearth of banking infrastructure. Read more

The Brazilian real was “exploding lower” in the words of one currency trader after the central bank made another manoeuvre on Monday in the increasingly high-stakes currency war.

Monday’s measure may look like fine-tuning in isolation but it is the third such move in a month. It comes in the wake of a weekend interview given by President Dilma Rousseff in which she slammed developed nations for “fierce protectionism” through currency depreciation and vowed to do “the possible and the impossible” to defend Brazilian industry. Read more

Robert Fico has won the first stand-alone parliamentary majority in Slovakia’s short history as an independent country, but so far analysts are relatively sanguine about the return to power of the centre-left populist. Read more

For the past ten years, the Brazilian economy has surfed a giant wave. It has been an exhilarating ride, based on two main factors: the rising prices of Brazilian commodities – which has boosted the external sector; and a boom in domestic consumer credit, which has boosted internal demand (and was sparked, largely, by Lula’s innovation of allowing credit payments to be deducted directly from workplace wages). Now, however, this twin-pronged Brazilian “model” faces its first serious test. That, probably, is why the recent economic slowdown has attracted so much interest. Read more

Aeroports de Paris, the state-controlled group which owns the 14 airports in France’s capital, has agreed to buy a 38 per cent stake in Turkish airports operator TAV Havalimanlari.

The deal, worth $874m, will “create one of the largest airport alliances in the world,” ADP said in a statement. The partnership will manage around 180m passengers in 37 airports, it added – and could lead to further acquisitions. Read more

Investors are getting nervous about Hungary again.  It’s four months since Budapest made a public policy U-turn and announced it was seeking support from the International Monetary Fund/European Union. But formal talks have yet to start.

The forint,  which was as strong as Ft285 to the euro last month amid hopes of an EU/IMF deal,  was down 0.5 per cent on Monday at Ft293.  That’s still a far cry from its record weak point of Ft324, touched  in early January, when relations with the IMF/EU were particularly difficult.  But Hungary urgently needs to make progress if confidence is to be restored. Read more

After a disastrous 2011, India has bounced back in 2012 but fundamental problems remain. The FT’s James Fontanella-Khan and James Crabtree discuss why weak politicians, corruption and poor regulation remain the biggest obstacle to India’s development.

* Blow to Indian coalition ahead of budget

* China’s largest online video company Youku to buy rival Tudou

* Kenya Airways in $250m cash call for expansion

* China slowdown may portend easing as Asia considers stimulus Read more

About time: Chinese online video sites are merging. On Monday afternoon, rivals Youku and Tudou, both listed in New York, announced a $1bn all-stock merger. The combined company will go by the inventive moniker Youku Tudou Inc, which will continue to be listed in the US.

Since Tudou’s IPO last summer, shares have fallen 47 per cent. Youku, meanwhile, has dropped from $67 a share to just $25 in less than 12 months. Neither company has yet turned a profit, though Tudou did report a narrowing quarterly loss earlier this month. Youku, due to report on Wednesday, is also expecting to show a loss. Read more

Monday’s picks from the beyondbrics team: Political maneuvering in the US as Republicans take aim at China; Lex on why, amid stuttering growth, things may continue to get tougher in Brazil; subtle signs of liberalisation in North Korea – but don’t get too excited; any why Putin’s claims of an “open and honest” election are undermined by the quality of his opposition.
 Read more

Now that Taiwan’s elections are over and a new cabinet has had time to settle in, investors are turning to the question, “What comes next in cross-Strait relations?”

One intriguing possibility emerged on Monday when the China Daily newspaper quoted Guo Shuqing, chairman of the China Securities Regulatory Commission, as saying that Beijing may include Taiwan in its nascent Renminbi Qualified Foreign Institutional Investors programme. Read more

Oil futures declined on the news that China’s export growth rate was slowing based on data released over the weekend. This might seem good news for inflation in India and China but don’t celebrate just yet: the respite is likely to be short-lived.

Frederic Neumann, an HSBC economist, argues that oil prices drifting higher – currently at about $106 per barrel – feeds eventually into higher prices for food through higher transportation and fertiliser costs. Read more

In a surprise bounce, India’s industrial output grew by 6.8 per cent in January compared with a year earlier – significantly higher than the 2 per cent most economists had predicted, according to data released on Monday.

But economists believe the high growth – up from 1.8 per cent the previous month – is probably unsustainable, not only because of the erratic nature of IP as an indicator, but because it was driven by an explosion of thus far inexplicable 92.6 per cent growth in the food and beverage segment. Read more

The weakest loan growth figures since 2005 may prompt further easing by China’s central bank, according to analysts, if the country is to avoid a significant slowdown in demand.

Loan and deposit data released over the weekend by the People’s Bank of China showed deposits recovering dramatically in February from the record Rmb800bn withdrawn in January, but also showed loan growth that came in below expectations for the second month in a row. Read more

* China slowdown may portend easing as Asia considers stimulus

* Delay EU carbon levy, says air industry

* China trade deficit spurs concern

* India unpicks cotton export ban Read more