Daily Archives: Jun 22, 2012

BTG Pactual sure doesn’t waste any time.

In its latest bid to become an emerging markets superbank, the Brazilian group announced a strategic partnership with Russia’s VTB Capital on Friday.

BTG didn’t give any more details about what that partnership would actually entail, but said it would help them both to “explore opportunities between Russia and Latin American countries”. Read more

An ominous start? No sooner did Chile’s Lan Airlines said on Friday that it has completed its takeover of Brazilian airline Tam than Fitch Ratings came out and cut its ratings on the on the newly formed group – Latam Airline Group.

See the full press release from Fitch after the jump. Read more

What is going on in Paraguay? An ineffectual president stands to be swept from office in record time by a majority vote on Friday, impeached on the highly woolly charge of “poor fulfilment of duties”, while the region furrows its brow.

The regional diplomatic bloc, the Union of South American Nations, may seek to apply sanctions to Paraguay under its so-called democratic clause, if Fernando Lugo is ousted. Read more

Drone attacks, political tension, a hidden independence war… Pakistan is living through some dark hours.

And that is true in a literal sense as well. For more than a year, Pakistani cities have faced up to 20 hours a day without electricity. The blackouts are putting a drag on economic growth, stalling everyday life for many Pakistanis and sparking mass protests across the country.

One reason is a near total inability to get the population to pay energy bills. But Kamal Munir of the Judge Business School at the University of Cambridge points to another culprit: privatisation. Read more

Ikea is planning to invest up to €600m ($757m) as the first stage of a long-awaited move into India, despite previously expressing concerns about New Delhi’s faltering attempts to open its retail market to foreign groups.

The Swedish group, which sells furniture in 26 countries, said that its total investment could reach as much as €1.5bn, but added that the investment would only come over 15-20 years, or longer.

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Is Turkey getting it back internationally? The country has been through a few squalls in the last 12 months – who hasn’t? – but its current account deficit, widely seen as the economy’s weakest point, is moving down.

And aside from the Moody’s upgrade, there are other signs that things are getting back to normal. Read more

Stocks in emerging markets are falling even faster than in the eurozone. John Authers and James Mackintosh, the FT’s investment editor, discuss why the Bric markets are moving in the same direction as their more developed counterparts, only with more velocity.

Beyondbrics commented last week that investors will take bad news as good news if they think it will force authorities into action. Well, fund flows in the week to Wednesday suggest they saw strong signals that such action was on the way – before Thursday’s disappointing news from the Fed.

EM bonds – even the riskier local currency ones – and DM high yield bonds saw significant inflows in the week according to EPFR, fund flow monitor. Money market funds, usually considered a safe bet, had big outlows. As Luis Costa at Citi put it: “A strange outflow reading in global money market funds given the current market conditions.” Read more

The recent downgrade of Montenegro’s credit rating, bringing it deeper into junk status, highlights the structural challenges the tiny country’s economy faces.

It has had impressive success in putting itself on the global tourism map, which has also attracted investment in real estate, but financial sector difficulties and fiscal imbalances, as well as exposure to the eurozone crisis, are a drag on growth. Read more

* Brazil agrees currency swap deal with China

* India Rupee Tumbles Most In 9 Months To Record Low: Mumbai Mover

* Pakistan’s political crisis deepens

* Fighting creeps closer to Damascus Read more

Moscow real estate – some of the most expensive in the world – is being targeted by low-level, corrupt officials taking over communal living spaces, an operation known as ‘raiding’. But activists are using the internet to fight back.

Two messages came out of América Móvil’s webcast on Thursday: the Mexican telecoms giant plans to become a long-term investor in Europe; but it will not be buying anything else there for a while.

Both of those nuggets, offered by Carlos García Moreno, AMX’s chief financial officer, came on the day that the company – controlled by Mexican billionaire Carlos Slim, the world’s richest man – said it had bought yet another round of shares in KPN, the troubled Dutch telecoms group. Read more

The toughest task in being an analyst in Korea seems to be to put a “sell” call on a stock. You have to be extremely brave to tell your clients to sell their shares in a company, according to Korean analysts.

The numbers bear that out. According to statistics from Korea Financial Investment Association, there was only one “sell” recommendation last year out of about 80,000 research reports. Analysts rated most Korean stocks they cover as a “buy,” issuing “buy” recommendations on more than 80 per cent of stocks. Read more

Friday’s picks from the beyondbrics team: @jihad is getting more popular and sophisticated; Egypt’s Arab Spring is in peril; and fighting in Syria moves closer to Damascus. Also recommended: ANC loses its way in S Africa, rivals in the East China Sea are on thin ice; and Rio+20 is all about developing nations.  Read more

Mark Mobius of Franklin Templeton is never one to shy away from a bullish argument on emerging markets, but 75-year-old investor has found one product that the Chinese are slowly falling out of love with: the old bicycle.

“Bicycles are the only product we could find where market penetration in china is actually going down,” he told an FT-sponsored Hong Kong asset management conference this week. So why is the push-bike push-back? It might have something to do with rocketing sales of cars in the country, where annual volumes have now overtaken the US. Read more

*Asia hit by deepening global growth fears

*Brazil agrees currency swap deal with China

*Colombia economic data disappoint

*Pakistan’s political crisis deepens

*Blow for Felda Global’s $3.2bn IPO plans Read more

What to do if consumer needs change and the demand for your star product evaporates? Economic Darwinists would find that an easy question to answer: “Adapt or die.”

When Unilever was confronted with the decline of Lifebuoy soap in the UK, however, it decided to stick with the product unchanged – but to seek its future in emerging markets. The strategy has paid off. Nearly twenty years after the iconic brand exited its UK and US strongholds, Lifebuoy thrives as never before. Read more

Anyone familiar with the name of Humayun Shahryar will know he is not a big believer in emerging markets. Take his views on China: “The whole soft-landing/hard-landing thing is a non-argument. China is crash-landing as we speak.”

But the founder and chief executive of Auvest, a Cyprus-based hedge fund, does have faith in his native India, which he reckons is next in line for China-style growth – but only after it’s been through a lot of pain. Read more

Brazil has provided a vote of confidence in China’s efforts to promote the renminbi as a reserve currency by becoming the biggest economy yet to agree a swap deal with Beijing.

Brazil and China announced the R$60bn ($30bn) local currency swap after a bilateral meeting between Wen Jiabao, the Chinese premier, and Dilma Rousseff, Brazil’s president, on the sidelines of the Rio+20 environmental summit in Rio de Janeiro.

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