Daily Archives: Mar 14, 2012

Newmont’s decision to cut 6,000 jobs at its stalled $4.8bn Conga gold and copper mine has given the project’s home base of Cajamarca a taste of what it stands to lose if the company walks away.

The mine, Peru’s biggest single investment, has been on hold since protesters blockaded Cajamarca in November over concerns about water supply. 

Things are hotting up for OSX, the oil services firm of Brazil’s richest man, Eike Batista. First came an order from London-based Kingfish Trading for 11 tankers. To be built at OSX´s shipyards, these will be leased to Brazil’s national oil company, Petrobras.

But now comes a reputed deal more closely linking OSX and Petrobras – a first between these two rivals, according to Brazilian newspaper Estado

Anyone growing up in the US remembers the Charles Atlas advertisements in comic books in which a skinny weakling who gets sand kicked in his face starts working out and returns to the beach as a muscle bound hulk.

To stretch a metaphor, Poland has been a 97-pound weakling who had sand kicked in his face for centuries, and now, thanks to a series of economic reforms, has grown some fairly impressive muscles and is starting to strut his stuff on the international stage – as finance minister Jacek Rostowski demonstrated on Wednesday. 

As Brazil tries to force Mexico to accept changes to a bilateral agreement on trade in autos, Mexican car manufacturers are making it clear they won’t give in without a fight.

Teams from the two governments were holding negotiations in Mexico city on Wednesday after Brazil failed to impose an ultimatum last week. Mexico’s car makers recognise that the agreement has worked in their favour recently – but point out that it was strongly in Brazil’s favour for most years since it was enacted in 2003. 

A good day for investors seeking dividends in Russia. Hot on the heels of the state-controlled companies looking to return around 25 per cent of profits (see previous story) comes Lukoil, Russia’s second biggest oil producer.

Lukoil isn’t state-controlled, but it has promised to become a “cash cow” for shareholders by boosting dividend payments in the coming decade. So investors can look forward to years of happy milking at Lukoil – including the top management who own substantial stakes in the company. 

A Russian government plan to boost state revenues could bring unexpected benefits to investors.

Ministers are mulling much-discussed proposals to increase the dividends paid by state-controlled companies from a ratio of around 14 per cent of net profits in 2011 to 25 per cent. If dividends are increased, it would naturally raise payouts to all shareholders, foreign investors included. Citigroup says that shareholders in other big Russian companies could also profit, since these might follow the state’s example. 

January is often a disappointing month for retailers. That was certainly the case in South Africa, where after an impressive 8.7 per cent increase in year-on-year retail sales in December, the January figure came in at 3.9 per cent.

Sign of a slowdown? It depends how you look at it. 

Everyone is talking up Africa’s potential for growth – but in a continent with more than a billion people, where should foreign companies focus their attention?

According to research by Frontier Strategy Group, Africa will have 73 cities of 1-5m people by 2025.  Matthew Spivack, head of MENA research, picks out five top urban markets across the continent – and five up-and-coming prospects. Some are very well-known; others may surprise you. 

Cautious investors who want to play the emerging markets whilst avoiding some of the possible risk have long looked to Toronto.

As the charts below show, the Toronto stock market index, when translated into US dollars, has in the past 10 years been moving almost in tandem with the $-denominated MSCI emerging markets index. Over five years, through the turmoil of the global crisis, the correlation has been even closer.

The reason is clear – natural resources companies are dominant in both Toronto and EM stock markets. So both are driven largely by swings in commodity prices. But could this relationship break down? And if so, what would be the consequences? 

GDP growth in sub-Saharan Africa is pulling ahead of the developed world and of more popular emerging regions such as Latin America. Stuart Culverhouse, global head of research at Exotix, explains to Long View columnist John Authers that this is reflected in the region’s bond markets but not yet in its equities.

* Property stocks drop on Wen’s words

* Indian inflation leaves analysts split

*Johannesburg Listings on Hold as Companies Says ANC Policy Risk Deterrent

* IEA warns of falling spare oil production capacity 

China’s surging economy has made it the world’s biggest energy consumer and by some measures its biggest polluter. Now a former senior official has put a price tag on the cost of that pollution: between 5 and 6 per cent of GDP last year, equal to some Rmb2.6tr – or $410bn, an eighth of the country’s gargantuan currency reserves. 

Whether Apple likes it or not, its love-hate relationship with Samsung is likely to continue for the time being.

Just a week after unveiling the latest version of its iPad tablet, it has reportedly had to admit defeat on one front: finding someone other than Samsung to make the fancy new retina screens. 

The most dramatic moment in Wen Jiabao’s briefing at the end of China’s parliamentary assembly on Wednesday may have been his cryptic reference to the threat of another Cultural Revolution in China.

And the most serious was perhaps his reference to the political turmoil in the city of Chongqing, in which he called on the local party to “reflect seriously and learn” from the incident in which a police commander sought asylum in the US consulate.

But, for investors, the most significant remarks were Wen’s bearish comments on the property sector. Shanghai stocks fell by 2.6 per cent, their biggest drop this year. 

Wednesday’s picks from the beyondbrics team: why monetary easing isn’t the answer to China’s growth concerns; ‘currency wars’ mask Brazil’s real problem – productivity; Lex on clashes between oligarchs at Rusal; and why China’s rigid foreign policy could have cost it in Libya.