Daily Archives: Jun 27, 2012

Eike Batista, Brazil’s richest man, just got a little bit poorer. Shares in OGX, the oil exploration and production company in which he holds a 61 per cent stake, fell by as much as 30 per cent on Wednesday after issuing a disappointing production forecast.

The stock recovered to close down 25 per cent to R$6.25 but that still translates into a R$6.9bn ($3.3bn) drop in market capitalisation. Ouch. Read more

What is in an election? As Mexico gears up for Sunday’s presidential vote, much of the chatter has centred on the possible return of the centrist Institutional Revolutionary Party (PRI) under Enrique Peña Nieto, its candidate and far-away favourite, according to opinion polls.

And with little wonder: when the party finally lost power in 2000 after ruling for 71 consecutive years of pseudo democracy, many political analysts predicted that the party would shrivel and die as the country embraced a new, more pluralistic future.

But let’s step back a moment from the constant questions of “will a PRI victory mean a return to the past?” and consider the political and economic stability that this election season offers investors compared with six years ago. Read more

Hungary’s is not the first name that springs to mind when you mention uranium mining. Back in the bad old days of communism, in fact, the Magyar People’s Republic produced plenty of the stuff – or at least the “yellow cake” ore that, on further processing, yields uranium oxide (U308), one of the ingredients of nuclear fuel rods.

Now, with uranium prices around $150 a kg – about ten times what they were when mining ceased in 1997 – Budapest has promised to enter a joint venture with Australia-based Wildhorse Energy (WHE) to examine the viability of restarting mining in the Mecsek Hills near the city of Pécs. Read more

Opposition from Qatar’s sovereign wealth fund to the terms of the planned merger between Glencore and Xstrata merger has brought the $65bn deal to the verge of collapse.

The Qatari fund’s move shows the extent to which big sovereign funds, many from emerging markets, have begun flexing their muscles, and of the influence they may now exert on big developed nation corporations. Read more

Eight thousand trucks; 3,000 tractors; 30 mobile missile launchers; 3m items of school furniture. These are some of the things the Brazilian government will buy in an R$8.4bn ($4.1bn) spending spree announced on Wednesday.

It’s an extraordinary programme. Not just for its size but also for some strangely candid admissions it makes along the way – and for what it says about economic policy. Read more

By Carroll Colley of Eurasia Group

A draft proposal circulating in the Russian parliament would put Russia’s largest Internet companies under the auspices of its Strategic Investment Law – and give the government the right to limit foreign ownership.

While the legislation will almost certainly become law, the immediate impact on investors in Internet companies will be fairly limited. But the Kremlin’s critics fear the authorities are plotting to increase their influence over the Internet in ways that investors in Russia in general would be foolish to ignore. Read more

It is India’s most popular cola, commanding over 40 per cent of a market estimated at $700m. It’s bigger than Coke or Pepsi but, odds are, you’ve never heard of it.

It’s called Thums Up (the missing “b” is not a typo) and Coca-Cola’s announcement on Tuesday that it would invest an additional $3bn in India over the coming eight years should mean Indians will see even more of it. But Coke has had a complicated relationship with Thums Up since it bought it in 1993. Read more

These are early days, but interest from energy majors in Bulgaria’s offshore gas potential is raising hopes that the country can reduce its dependency on Russian imports.

ExxonMobil of the US, Total of France and Melrose Resources of the UK have submitted bids for the 15,000 sq km Khan Asparuh field in the Black Sea near the maritime border with Romania. A five-year exploration permit should be awarded in coming days and, if deposits are found, extraction could start in three to four years. Read more

* Glencore’s $65bn deal close to collapse

* Nigeria replaces head of state oil group

* Brazil’s bad loans hit record high in May Read more

By Akshay Mathur and Neelam Deo of Gateway House

Two recent developments – the $75bn bailout contribution from the Brics countries to the IMF, and the western push for sanctions against Iran – show how exposed the Brics economies are to western financial policies.

For decades, they have been successfully co-opted to submit to western-dominated institutions, leaving them with little motivation to build their own. Now, the Brics must urgently organize to build institutions of mutual economic benefit. The June 28 deadline that China faces on complying with Iran sanctions,  highlights the urgency of the issue. Read more

With Africa playing catch-up on developed countries and other emerging markets, it’s easy to focus on the infrastructure projects or the big consumer market plays. And at the other end of the spectrum, for (really) small investments, there’s microfinance.

That leaves something of a “forgotten middle”: African SMEs with the potential for high growth but are not big enough to get on the radar of most western investors, and have trouble getting lending from local banks.  Read more

On Wednesday, the BB team picked the following stories for your perusal: ‘Indestructible’ Nigerians face oil thefts and Boko Haram; Indians hope for a fresh economic life; Foreign Policy makes sense of the “Six Chinas”; and new middle-class Mexicans shake up the presidential poll. Plus, why are Russian billionaires backing a ‘Jewish Nobel Prize’? Read more

Standard Chartered Bank on Wednesday became the latest company to warn of the impact of this year’s sharp decline in emerging market currencies.

The bank said in a statement that growth in income and in pre-tax profits would be below 10 per cent in the six months to the end of June,  due to the slow down in Asia and a drop in Asian currencies against the US dollar, not least in the Indian rupee.

StanChart shares fell 2 per cent early in Hong Kong, before investors decided that there wasn’t much in the announcement that they didn’t know already – and the stock recovered to trade 1 per cent lower.  But StanChart is not alone. Procter & Gamble and Philip Morris International have both this month warned of the impact of EM currency swings on their results. There will be others. Read more

Rarely a day goes by without a rumour from some corner of China of an imminent loosening (or further tightening) of property market controls. Often they involve a single city – Shanghai and Shenzhen are common culprits, with both of them experiencing still lofty prices.

But the latest snippet comes not from a tier 1 or tier 2 metropolis, but instead China’s second most populous province. Read more

* Qatar turns on Glencore-Xstrata terms

* Coke’s $3bn to add fizz to India presence

* Nigeria losing $1bn a month to oil theft

* Brazil’s bad loans hit record high in May Read more

In a world obsessed with the European crisis, few might have noticed that today was an historic moment in the history of Brazilian credit.

For the first time, the total stock of Brazilian debt advanced to the equivalent of more than half of gross domestic product, or 50.1 per cent as of end-May, up from 45.7 per cent a year earlier, the central bank said. This is an important moment in a country that was once starved of credit because of its history of runaway inflation. Read more