Daily Archives: Mar 26, 2012

US patience with Argentina has been wearing thin of late. Washington has been voting against loans to the South American country at the World Bank and Inter-American Development Bank – symbolic actions, admittedly, since the US has only minority stakes, but a sign of increasing irritation nonetheless.

But now, Barack Obama, the US president, has gone further: On Monday, he announced the suspension of trade benefits that allowed Argentina to export $477m of goods, principally wine, prepared beefs, sugar confections and olive oil, to the US duty-free last year. Read more

It all sounds very cloak and daggers. Argentina, according to Bloomberg, last November secretly sold a bond in its local market, probably to the state pensions agency, Anses. The $2.3bn issue, due in 2018 and carries a coupon of 9 per cent, was the biggest local sale since 2005 by a government which has been stuck outside international credit markets since its 2001 default on nearly $100bn. The bond sale was not reported by the official gazette or economy ministry, though these details are available on the stock market’s website.

But why would Argentina sell a bond locally shrouded in such secrecy? Read more

Vladimir Putin has dealt Gazprom a blow by turning down the gas company’s bid for a 26 per cent rise in domestic prices this year – compared to the previously-agreed 15 per cent hike.

On the face of it, the president-elect’s widely-publicised move could simply be a stage-managed act to show he’s ready to be tough with business and kind to the consumer.

But Gazprom executives must be worried: even if they never expected to get 26 per cent, it’s clear that the politics of the gas industry is running against them. Read more

The African Union on Monday endorsed the candidacy of Nigerian finance minister Ngozi Okonjo-Iweala to become World Bank president.

The AU said the multilateral bank’s success would be judged, to a large extent, by its achievements in Africa, according to a statement. Okonjo-Iweala had undisputed credentials to lead the World Bank, the AU said. That adds a lot to the rhetoric behind the Nigerian official’s candidacy – but not necessarily to her chances of success. Sub-Saharan Africa has just 5.9 per cent of the vote at the World Bank. Read more

There is obviously a communications problem in Poland – namely, someone has failed to inform Polish consumers that there is a crisis brewing and that they should keep their heads down and wallets closed.

February retail sales data released on Monday were surprising, showing an annual increase of 13.7 per cent while markets were expecting a 9.9 per cent increase. Read more

Currency wars are back on the agenda. Some frank talk about competitive devaluations (see posts on beyondbrics here and here) from Brazil has put the debate back on the agenda, and bashing China over alleged currency manipulation periodically makes headlines in the US presidential race.

To try and sort out the facts from the political rhetoric, chart of the week looks at several emerging markets, and how their trade-weighted currency indices have fared. Have emerging markets prospered – or suffered – from currency skirmishes? Read more

Ready your cheque books. Russia plans to place a multi-billion dollar sovereign eurobond issue this week.

Moscow could raise up to $7bn, beating its own April 2010 record, when it collected $5.5bn. According to Reuters, Russian officials are due to complete a roadshow on Tuesday, with pricing to follow. The paper could come in 5-, 10- and 30-year tranches. And investors look ready to buy. Read more

Shares in Tullow Oil, the UK-registered oil company, rose more than 4 per cent on Monday after it said it had made Kenya’s first oil find in Turkana County, in the north of the country.

The kilometre deep well was Tullow’s first attempt at finding oil in Kenya and follows recent discoveries of oil in Uganda and of natural gas in Tanzania and Mozambique. Read more

India is  no stranger to corruption allegations when it comes to defence – see, for example, the 1980s Bofors scandal.

But on Monday, the army chief, General VK Singh (pictured), told The Hindu newspaper that he was shocked when, two years ago, he was offered a $2.73m bribe to approve the purchase of 600 “sub-standard vehicles”, though he did not give the name of the defence lobbyist, an ex-army officer, who made the offer, or of the company allegedly involved. Read more

Investors who were worried about Indonesian shares at the start of the year have been proved right. Equities in the Big Durian haven’t gone totally pear-shaped, but Jakarta has lagged behind the leaders in the 2012 rally.

HSBC on Monday described the country’s “long-term story” as among the region’s best— and then downgraded its equities to underweight. What’s keeping equities wobbly, and when will they pick up again? Read more

Further evidence, if it was needed, that the first quarter of 2012 was all about liquidity: this year’s was the biggest first quarter on record for EM debt issuance, according to Dealogic, the capital markets data gatherer, while equity issuance was the weakest since the post-Lehman crisis.

Both the profile of EM debt and the way it was sold, show issuers were taking the chance to hoover up global liquidity while riskier equity issuance remained on hold. Read more

EFG-Hermes, the biggest publicly-traded investment bank in Egypt and the Arab world, has found a potential partner after the battering its stock has suffered in Cairo’s political turmoil. Deep-pocketed Qatar may be coming to its assistance.

EFG and Qatar’s QInvest said in a statement on Monday that they are in talks to create a “strategic alliance”.  While nothing is certain, investors are betting that something will come out of the discussions: EFG stock jumped 7 per cent. Read more

Few companies embody the sheer size and ambition of the Chinese state-owned enterprise like Sinopec, China’s biggest oil and gas refiner. Not only is Sinopec one of the world’s biggest oil companies by asset size, it is also the single most acquisitive Chinese state-owned company, having invested more than $35bn in overseas deals since 2009.

But for Sinopec Group’s Hong Kong-listed subsidiary, which is majority-owned by Sinopec Group, the past year has not been smooth sailing. Read more

* US seeks to ‘reset’ Russia nuclear talks

* Sinopec to Boost Oil, Gas Output to Counter Refining Losses

* Minsheng Bank seeks $1.46bn in Hong Kong share sale Read more

Want to crack emerging markets? Don’t forget localisation. One of the companies applying this strategy most successfully is Hyundai Motor, South Korea’s largest automaker, offering tailored models to meet local needs in markets such as Russia and India.

The carmaker has incorporated some very specific features, from heated wing mirrors to extra headroom for turban-wearers. The question is whether this will help in what is set to be a difficult 2012. Read more

Monday’s picks from the beyondbrics team: liberalising the renminbi; how Kim Jong-eun is muddying the nuclear waters; Gavyn Davies on a better era for equities; and how the US and Russia may be (temporary) NBFs. Read more

Shareholders are often wary of companies issuing new stock, fearful of the dilution. But Citigroup has found that in emerging Asia, this isn’t necessarily the case.

Investors in Asia seem to think that a company that is issuing shares is interested in growth, just as long as the issue isn’t too big – as elsewhere, that could be an early warning of trouble or of excessive ambition. Read more

Here’s another facet of a Chinese slowdown: its role as an importer.

The longstanding notion of China as the world’s exporter is beginning to look a bit dated, argues Tao Wang, UBS’ China economist. Recent data shows imports have risen while exports have fallen, and Tao says China’s import power should not be underestimated:

 Read more

Philippe Carré of SunGard surveys exchange consolidation in central and eastern Europe

It is impossible to discuss the financial markets of central and eastern Europe without highlighting the accomplishments of the Warsaw Stock Exchange. The recent adrenaline rush among the CEE’s other exchanges, desperate to transform themselves into serious players, can only be understood in the context of the WSE’s success in positioning itself as a regional champion. Read more

* Minsheng Bank seeks $1.46bn in Hong Kong share sale

* Qantas in Hong Kong budget airline deal

* UK seeks probe into China death Read more