Daily Archives: Jun 26, 2012

Banco Continental Paraguay’s $200m bond sale is the first tangible casualty of the spillover of Paraguay’s political crisis into the investment community. The bank scrapped the sale – but unusually on the day the deal was due to settle. Now it has to pay investors back.

The bank issued the bond two days before the ousting of Fernando Lugo as president in a ligtning impeachment trial. The former priest slammed his removal as an “institutional coup”, and he rallied Paraguayans to oppose the new administration through peaceful means. 

Argentina has confirmed one thing (thought it was never seriously in doubt): it will pay $3.44bn to the holders of GDP warrants in December.

That’s because the GDP warrant payment is linked to the previous year’s growth, and in 2011 it was 8.9 per cent, though it is running downhill fast – putting next year’s payment in doubt (but that’s another story). 

That’s two in a row. Coca-Cola, the world’s largest soft drinks maker, announced on Tuesday a total investment of $5bn in India by 2020, just days after Ikea, the Swedish furniture retailer, reaffirmed its long-term commitment to an economically beleaguered country in need of some good news.

Coke’s commitment – which adds $3bn to $2bn already earmarked – is a reminder that India’s huge market, rising incomes and favourable demographics remain attractive, in spite of serial failure by the government to enact pro-growth reforms and a slew of negative economic data. 

Ever been put off buying property in emerging markets because of a lack of market transparency? Well, it may be time to think again.

EM countries such as Turkey, until recently plagued by uncertainty, have made huge strides in real estate transparency, according to the latest biannual survey by Jones Lang Lasalle, an international real estate agent. 

Karamehmet

Is the tide turning in the tussle over Turkcell?

For years, Turkey’s biggest mobile group has been the focus of an almighty struggle between, on one side, Mehmet Karamehmet, one of the country’s richest men, and his Cukurova group and, on the other, Alfa group of Russia, and TeliaSonera, the Nordic telco.

There have been multiple fronts in the battle over control and compensation, and last year for a while there seemed to be a fairly steady flow of good news for Alfa (via it’s telecom arm, Altimo) and TeliaSonera. But the battle is far from over. 

Cyprus and Spain may be lining up for EU bailouts, but that isn’t spooking Polish shoppers, who are spending more than analysts expected, adding resilience to the economy at a time of growing crisis in the rest of the EU.

The government’s statistical agency on Tuesday released retail sales numbers for May, showing a 7.7 per cent increase over the same period in 2011, with the European football championships playing a key role in boosting business by encouraging Poles to buy televisions. 

Photo: Bloomberg

Ikea’s decision to invest €600m in the first stage of a possible €1.5bn investment over the next 15-20 years gave a precious boost to the Indian government on Friday – reinforced by Moody’s on Monday, when it declined to follow Fitch and S&P’s downgrades of India’s outlook and held its own outlook steady.

Anand Sharma, trade and industry minister, made the point talking with reporters in Belgium: “Investors [have shown their] confidence in India, irrespective of the country’s rating… the fundamentals of our economy are strong and will remain strong.” 

They look happy

The world’s cheapest tablet, Aakash, has received a long-delayed upgrade and is ready to hit the market in July. And it’s even a little bit cheaper. Will it please the critics and public this time around?

The device got off to a rather rocky start last year on account of poor performance and user experience, but even though the government is giving away the Rs2,263 ($40) device to students for half the price, analysts remain skeptical about its potential. That’s despite the addition of some new features, which include a faster processor, longer battery life, a more responsive touch screen, and a USB port (something still amiss from higher-end tablets like Apple’s iPad 2 and Samsung’s Galaxy Tab). 

Falkland Oil and Gas Limited, the London-based, Aim-listed exploration company, has sold a share in its licences to drill for oil around the Falkland Islands to Edison International, a subsidiary of French energy group EDF. FOGL’s shares surged by as much as 9 per cent on Tuesday before falling back.

It brings a nice historical circularity to the Falklands dispute between the UK and Argentina. The islands, after all, were originally settled by French sailors from Saint Malo – hence their Spanish name, Islas Malvinas. 

* South Korea suspends Iranian oil imports

* Most Chinese Stocks Gain On Speculation New Lending To Rebound

* Heavy fighting around Syrian capital 

But will he blow the IMF's trumpet?

While eurozone policy makers thrash out the growth vs austerity debate, the evidence from Romania seems to be that the traditional medicine works.

The IMF has given Romania a qualified thumbs up on it’s economic reforms and recovery. However, the Fund may have praised Romania’s progress, but it still warned of substantial downside risks and that reform still has a long way to go. 

Tuesday‘s further reading from the BB team: EMs get out their cheque book, as does AB Inbev in Mexico; India’s call-centres move upmarket, but their IT companies lack innovation; steelmakers and investors keep an eye on S Africa’s ANC gathering; and Egypt’s president faces a difficult balancing act. Plus, is Myanmar reforming too much, too fast? 

Counting house of the Bank of England 1880

When analysts starting talking up dividends, it’s a sure sign of a bear market, not least in emerging markets.

But it’s also a reminder that over the very long term – 50 years and more – dividends have contributed about half the total return on equities. They may do so again, assuming that the glorious years of out-sized capital gains are now well and truly over. 

Yet another of the China ‘one-way bets’ is rapidly unravelling. Macau casinos were once the perfect place for super-charged bets on Chinese growths, at a time when revenue growth was regularly ticking topping 30 per cent year on year.

But no more. Tuesday brought another bout of selling across the sector. 

* Qatar seeks $5bn Chinese investment quota

* China says June trade improving in sign slowdown stabilizing

* EU could rewrite eurozone budgets