Daily Archives: Oct 15, 2012

By Juan Carlos Echeverry and Luis Fernando Mejía

Two years ago, when we started our tenure at Colombia’s finance ministry, we realised that, using IMF data, Colombia’s GDP had become larger that Venezuela’s. Having been trailing behind our neighbour for decades, such an achievement was quite satisfactory.

The obvious question back then was, Now what? So the next goal became reaching Argentina – whose GDP was nearly 30 per cent above Colombia’s. Read more

Many analysts lament that the Argentine government’s investment-unfriendly policies – heavy subsidies, restrictions on dollar purchases, import controls, to name just three – are holding the economy back.

How much? Well, growth in the second quarter this year could have been 4 per cent instead of zero, according to Argentine think-tank, the Institute for Research into Argentine and Latin American reality at Fundación Mediterránea. Read more

By Jennifer McCoy of Georgia State University

Most English-language commentary has attributed Hugo Chávez’s surprising 11-point victory in Venezuela’s presidential election on October 7 to oil-fueled public spending and “ventajismo” (incumbent use of state machinery to create an unlevel playing field and impressive mobilization), with some voters induced by fear of losing promised benefits to vote for the president. While all these factors contributed to the outcome, the analyses miss one additional factor explaining Chávez’ political longevity. Read more

Hungary, in case you didn’t know, is doing ok. At least according to Viktor Orban, the prime minister who, fresh from a meeting with Angela Merkel in Berlin, told the Magyar Nation in his regular Friday radio broadcast last week that the country is “more serious and in a stronger condition than it was at the time of the previous agreement [with the International Monetary fund],” and it therefore plans to strike “a good deal with that organisation.” Read more

With more than 400 million viewers on YouTube, South Korean rapper PSY’s “Gangnam Style” music video has become an internet hit and made Seoul’s trendy Gangnam neighbourhood a household name. The FT’s Simon Mundy examines the growth in South Korean cultural exports and talks to some of the country’s leading film and TV producers.

In a dramatic turn to the Bumi PLC saga, Nat Rothschild, the British financier, has resigned from the FTSE 250 coal miner’s board while firing a public broadside at Samin Tan, chairman.

In a letter on Monday he accuses Tan of complicity in oppressing minority shareholders and says it would be a “disgrace” to go ahead with an offer from Indonesia’s powerful Bakrie family that would unwind Bumi’s London listing (see above link). “Based on news reports and other sources,” he writes, “it appears that you shall be reimbursed for your investment at a price of £10.91 a share, whilst other investors see an estimated return of just £4.30 a share. This is a clear breach of the spirit and, I believe, the letter of the takeover code.” Full text of the letter after the break. Read more

South Africa can’t seem to catch a break at the moment. For every strike resolved, another bit of bad news pops up.

On Friday, the settlement with truckers was a short-lived boost: that evening, S&P downgraded the country’ debt a notch, sending the rand into another downward spiral. On Monday, another union threatened a walk-out and the strike at gold miner Gold Fields worsened.

There are signs that policy makers are starting to take things very seriously. Read more

More evidence on Monday of the slowdown in the Russian economy, with data showing industrial output rose just 2 per cent in September, down from 2.1 per cent in August and short of market forecasts of 2.2 per cent.

Despite some arguments about statistical quirks in the figures, there was no mistaking the general sluggishness. But, with inflation still high, the central bank won’t be cutting interest rates any time soon. After a surprise hike in September, economists are divided over whether the central bank will consider another one next month. Read more

With emerging market debt markets booming, is now time for African nations to join in? If Zambia’s recent bond is anything to go by, the answer would be a firm ‘yes’ – as many analysts are fond of pointing out, Zambia’s yield on its 10-year bond is lower than that of Spain.

So what’s stopping African countries jumping in and issing international bonds? Read more

On top of all its other challenges, Iraq has problems with its banks. While it’s understandable that banking reform may not have had top priority for a government struggling to control violence and settle the future of its oil fields, bankers say it’s high time to act. As Camilla Hall reports, banking reform could attract new finance, boost economic growth and create jobs. Read more

Whether a genuine attempt to plug the fiscal gap or a pre-election gambit, proposals by the Bulgarian government to levy tax on interest earned from bank deposits have elicited surprise and no little criticism.

Income on bank deposits would be taxed at a flat rate of 10 per cent from January under plans announced by finance minister Simeon Djankov and backed by prime minister Boyko Borisov. The change could raise an extra BGN120m for the public coffers. Initially, it was suggested that the cash could be used to fund increases in state pensions – which looked suspiciously like a populist move before next year’s general election. Read more

By Jake Robson of Norton Rose

During the last decade, while the world has looked to the Bric countries to deliver growth and China and India have been the main focus of attention in Asia, Indonesia has largely slipped under the radar.

Were it not for China and India, though, Indonesia would be a stand-out performer and the focus of a frenzy of foreign direct investment. And yet, with some exceptions, foreign investment has been relatively muted. What is holding the country back? Read more

It’s not often that Bosnia appears in international headlines these days – and most Bosnians would be grateful for that. When it does attract the attention of outsiders, it’s often for a bad reason – as it was when international media reported the closure of the country’s 124-year-old National Museum this month.

The closure is yet another reminder of the instability engendered by Bosnia’s divided administration and the crisis faced by its economy. Read more

* Most Asian stocks fall as Europe concern overshadows China data

* Thailand prepares for mobile phone auction

* Philippines to widen share ownership Read more

Parsing China’s numbers is not for the faint hearted. The more closely one looks at China’s impressive trade data in September released over the weekend, the more complicated the picture looks.

True, exports grew by 10 per cent – but Standard Chartered economist Stephen Green has adjusted the data to account for seasonal effects and found that September exports were neither hot nor cold, but lukewarm.

 Read more

By Stefan Wagstyl and Rob Minto

When it comes to inflation among the four Brics, China is in a class of its own.

Source: Bloomberg

 Read more

Monday’s picks from the BB team: why the IMF’s focus on Europe exasperates EMs; low-cost manufacturing under pressure in China; and Mexico’s relations with the US are reversing. Plus: a tourist in Tibet; the slipping halo of Rwanda’s president; and did Mo Yan fail to speak out? Read more

While portfolio investment flows into emerging markets generate headlines, not least on beyondbrics, it’s important to remember the critical role of foreign direct investment.

As the Institute of International Finance said in a weekend report, FDI flows contribute around half the total private capital inflows into EMs and could next year reach $536bn, close to the 2008 all-time record of $560bn. Read more

Is India right to congratulate itself — as it often does — on its prudent banking regulation? Perhaps not, or at least not quite so frequently, according to Montek Singh Ahluwalia (pictured), one of the country’s most senior technocrats and a close friend of Prime Minister Manmohan Singh. Read more

Among the warnings sounded by the International Monetary Fund last week was one over the dramatic surge of foreign investment into emerging market local bond markets.

As the IMF pointed out, quick inflows of capital can be followed by even faster outflows if another crisis strikes global markets. It focused on nine countries where foreign investors have been prominent since the 2008 fall of Lehman Brothers. Chart of the week picks up the trail. Read more