Daily Archives: Aug 16, 2012

The Mexican economy put in a strong performance during the second quarter of this year, growing 4.1 per cent compared with the same period in 2011.

Some news agencies were quick to seize on the lower-than-expected figure (the consensus forecast from analysts was 4.3 per cent) as a sign of weakening economic activity in Latin America’s second-largest economy.

But there are several important details to suggest that there is no need to start readjusting year-end growth estimates just yet. 

Uruguay prides itself on being an open, investment-orientated economy. So what is it doing imposing capital controls? Trying to deter hot money – aka short-term capital inflows — is the answer.

The central bank says foreign participation in tenders of central bank debt has been “unusually high” in recent months. Though it recognised that that was proved the success of Uruguay’s investment-friendly policies that have led to investment-grade status and high interest rates, it called the phenomenon “a challenge for the management of domestic macroeconomic stability”. 

A nice surprise from Brazil, in the form of an economic stimulus that has actually had some effect.

As reported on Thursday, retail sales jumped in June by 9.5 per cent year-on-year,  compared with predictions of a 6.5 per cent drop, and 8.3 per cent increase in May.  It’s just one month’s figure, so don’t expect a sudden turnaround in the whole Brazilian economy or even in consumption. But the figures show policy moves can work, which is good news in a week when president Dilma Rousseff has announced a separate economic package to boost infrastructure spending. 

Mining companies are queuing up for east Africa’s natural resources boom, but one key player might now be heading for the exit.

On Thursday Barrick Gold, the world’s biggest gold producer, confirmed it is considering selling its 74 per cent stake in its African operation, African Barrick. As the FT reports, potential buyers in the frame are China National Gold and the Zijin Mining Group – both state owned. 

Loads has been written about Russia’s entry to the World Trade Organisation, for and against.

So investors might be forgiven for pushing aside the latest 33-page offering from Chris Weafer, the chief strategist at Troika Dialog.  So here is a summary from beyondbrics that focuses on what matters to fund managers – Weafer’s pick of the winners and losers among Russian companies after the country is formally joins the global trading club next week. 

The signs of a looming slowdown in Poland are everywhere, from sagging industrial production, lacklustre housing starts and slowing retail sales, but that still leaves the Polish economy as one of the EU’s star performers – and a magnet for investors.

Figures this week from the Emerging Markets Private Equity Association show a jump in private equity fundraising in the CEE (of which Poland is by far the most important part), which hit $2.6bn in the first half of the year, nearly double the total for the whole of 2011, and the highest figure since 2008. 

Konza, Kenya’s $7bn techopolis, has taken a significant step forward with the appointment of HR&A Advisors as initial developers for six months.

The US consultancy beat competition from Finland, Korea and Sweden to start work on the 5,000-acre project between Nairobi and Mombassa, which Kenya wants to be a tech cluster to rival that of Mauritius’ Cyber City, and even Silicon Valley. But after holdups, can the project get back on track? 

Russia’s 129 Olympic medallists are being showered with gifts. The most exciting is probably a luxury Audi, courtesy of a group of wealthy businessmen. The most useful? The chance of a job at Sberbank, Russia’s biggest bank. 

An investor in a business majority-controlled by another shareholder has embarked on a mystery tour, writes Jonathan Guthrie in the FT’s Lombard column.

With gold miner African Barrick, which has attracted bid interest from China, the trip has been far from magical. The shares fell roughly a third between flotation in 2010 and an announcement from 74 per cent stakeholder Barrick Gold of Canada that it is mulling a disposal.

* China in talks to buy African Barrick Gold

* Brazil unveils $66bn stimulus plan

* China blames EU turmoil for falling FDI

* Egypt-IMF: more money, more likely? 

The turmoil in the EU is hitting China where it hurts – trade and inward investment.

The commerce ministry on Thursday published figures showing how falling investment from the EU is contributing to an overall drop in FDI, while the spokesman took the opportunity to declare that: “Right now, the sharp drop of exports to EU countries is the biggest important factor weighing on China’s export growth.”

As the chart below shows, the trends are unmistakeable – and with the eurozone economy barely keeping out of recession, as figures published this week confirmed, the prospects for a rapid recovery in either EU trade or FDI are close to zero. 

Egypt’s proposed deal with the International Monetary Fund has been in the “maybe” category for many months – but there were strong indications this week that the deal will be done.

The positive signs are from both sides. First, the IMF announced that its managing director, Christine Lagarde, would be visiting the country. Then Momtaz al Saeed, the finance minster, told reporters that the country would be looking for $4.8bn, up from the $3.2bn that had been mooted since last year. 

Thursday’s picks from the BB team: expect nothing to be left to chance when it comes to the selection of China’s new Politburo standing committee; tough times for multinational retailers in eastern Europe; Brazil hopes to reap the rewards of an expected record corn harvest, but transport inefficiencies are spoiling the party; plus, Walmart hopes to get in on the action in China’s online retailing sector. 

India’s Essar Oil will buy 12m barrels of crude oil from Colombia’s Ecopetrol over a year for $1.2bn, according to a person familiar with the deal.

Essar declined to comment, but Reuters also reported that Ecopetrol confirmed it had sent its first shipment of 2m barrles of oil on July 29, and that it would arrive 25 days later. 

Investors and analysts are pouring over the minutiae of Chinese data for every little hint about the government’s policy stance. Are they about to crank up the stimulus? Investment approvals suggest so. Or are they holding back? Lending figures point in that direction.

But a far simpler and potentially more powerful signal has now come from Wen Jiabao, China’s premier. He has issued a rallying cry for “confidence”.