When Brazil’s PanAmericano bank came close to collapse in late 2010 following accounting “irregularities”, the central bank swore it was a one-off. And as other smaller banks have run in to difficulties since, the central bank has stuck with its “nothing to see here” line.
However, it was hard to ignore the similarities on Monday when the authorities said they were seizing control of Banco Cruzeiro do Sul following a series of irregularities.
Like a naughty dog, the illegal foreign exchange rate in Argentina has refused to come to heel, despite the harsh words of its would-be trainer.
Guillermo Moreno, the interior trade secretary, met exchange traders on Friday and told them bluntly he wanted the “parallel” dollar rate, which has opened up a wide gulf with the official exchange rate, to fall, pronto. Aníbal Fernández, a government senator, announced this weekend that the dollar would cost between 5 and 5.1 pesos from Monday, down from around 5.9 last week.
Investors have lost their appetite for IPOs. Banks are unwilling to lend. But for some sovereign wealth funds, there is hardly a crisis at all.
The Qatar Investment Authority recently bought significant stakes in high-profile companies such as Shell and Tiffany’s and is eyeing a 10 per cent stake in mining company Xstrata. The China Investment Corporation recently launched a €5oom SME investment fund in Europe and is looking for opportunities in emerging Europe and Africa. How come emerging market SWFs are so active in an otherwise depressed financial world?
Poland’s ambitious highway construction programme was supposed to provide lucrative bounty for local road construction companies; instead it has turned into a disaster, as yet another contractor declared bankruptcy on Monday due to problems resulting from its road work.
PBG, Poland’s third largest construction company, and two of its subsidiaries announced that they were taking the step because of liquidity problems stemming from their road construction contracts, delays in getting paid for work on Warsaw’s new National Stadium, and problems negotiating with banks on new financing.
By Gábor Karsai of GKI Economic Research
There’s no doubt about it: the Hungarian government under Viktor Orbán, now half way through its four-year term, is expert at producing plans. On the economic front alone, we’ve had the Széll Kálmán Plan marks 1 and 2, both aiming to rein in the budget deficit and state debt while simultaneously boosting growth.
But the Orbán government has failed miserably when it comes to delivering growth or tackling the underlying structural weaknesses in the economy.
Monday is a sad day in many Magyar eyes – 4 June is the anniversary of the Treaty of Trianon, the post World War I agreement to settle central European borders that left rump Hungary short of two thirds of its former territories and large ethnic Hungarian-speaking minorities in most of the surrounding successor states.
Monday’s good news, 92 years on, is that the forint recovered somewhat from eurozone jitters that sent it momentarily it beyond Ft307 to the common currency on Friday. By Monday afternoon it had recovered to about Ft302.
India’s abysmal GDP growth rate and industrial production figures, combined with falling inflation and a weak rupee, caused the country’s companies to suffer their worst revenue growth in over two years during the quarter that ended in March, according to a study by the Economic Times newspaper.
Another variation on Monday’s slowdown motif: the Brazilian central bank’s weekly survey of market economists shows that GDP growth this year is expected to come in at just 2.72 per cent.
That’s quite a slump from the economy’s 7.5 per cent surge in 2010 and is in line with last year’s disappointing 2.7 per cent. But what’s most remarkable is the speed with which economists are reining in their expectations. This week’s prediction is half a percentage point lower than what was expected just four weeks ago.
China may be outgrowing its “bling” phase, if a new report from International Luxury Travel Market Asia is to be believed.
“A global hunt for bling by Asian luxury travellers is beginning to evolve into a desire for rare and rewarding experiences,” the report says.
Emerging market stocks hit a six month low on Monday, driving home the size of the disappointment from Friday’s US jobless figures and a slowdown in China’s non-manufacturing economy.
Brent crude fell to a 16-month low, falling below $96 a barrel before recovering to $96.12 by late morning London time, down 2.3 per cent on the day.
As Britain celebrates, the bb team recommends a few distractions: KFC’s owner woos India, while China continues a supersize binge; Ukraine’s orange era goes bitter; the euro is sold and the renminbi gets more international; China exports fashion and an educational Trojan horse. Plus, why writing about Africa should change.
Is the world of forecasting overly fixated on China’s growth rate staying at 8 per cent? Certainly, investment banks in the past few days have tripped over themselves trying to guess the size of the China stimulus package and whether it’ll keep China on track for that default growth figure.
But has the time come to lower China’s magic number?
* Emerging market central banks sell euros
* Plane crash in Nigerian neighborhood kills more than 150
* Oligarchs threaten BP’s Russia sale
China has been on a supersize binge that has led to case of investment gigantism, according to Edward Chancellor, writing in Monday’s FTfm.
Chancellor, who is on the asset allocation team of investment manager GMO, thinks the last fiscal stimulus in 2009 led to huge amounts of capital being stupendously misallocated and wonders if the proposed new stimulus plan will lead to more of the same.