Daily Archives: Dec 10, 2012

It was no surprise that Venezuelan bonds rallied strongly on Monday after Hugo Chávez named Venezuela’s vice-president, Nicolas Maduro (pictured), as his chosen political heir on Saturday.

An opposition candidate would probably have a fair chance of beating Maduro if new presidential elections are called – but is it also possible that even if Maduro were to win he would be less radical than Chávez? 

It’s an old Brazilian cliché but one that now seems more apt than ever: Brazil is not for beginners.

With only three weeks to go until the new year, the world’s best economists still can’t work out what their 2012 GDP forecasts should be for Brazil. 

Last week’s assertions by a Colombian lawmaker before Congress regarding the implosion of Interbolsa, the country’s biggest brokerage – reported by beyondbrics after an interview – have solicited strong responses from the country’s regulators and former government officials.

“The Financial Superintendence acted on time and with complete independence. The intervention and subsequent liquidation was performed according to Colombian law,” said Colombia’s financial superintendent, Gerardo Hernández, in a written statement to beyondbrics. 

Tuesday will see one of India’s largest IPOs for years, as Bharti Infratel, the telecoms tower arm of Bharti Airtel, seeks to raise $715m.

With regulatory flip-flop reducing confidence in a debt-mired telecoms industry and the Indian government relaunching its privatisation programme to reduce the budget deficit, all eyes are on tomorrow’s IPO as a measure of market sentiment. 

Fiat factory, Tychy, PolandPoland’s economic slowdown is beginning to bite. More and more companies are announcing layoffs, pushing unemployment to its highest level in six years.

The latest big employer to let workers go is Fiat, which will slash its payroll by about a third, or 1,500 employees – a combined effect of slumping demand for Fiat cars in the eurozone and of the company’s decision to shift part of its production to less efficient but politically more expedient factories in Italy. 

“Like a train without a driver” is how one commentator described Egypt after President Mohamed Morsi’s latest policy U-turn, scrapping a planned increase in taxation. In a different vein, one joke doing the rounds in Cairo has doctors telling Morsi that, like a pregnant woman at risk of miscarriage, he should lie down for a few weeks to let his decisions take hold.

But there is a grimness to the humour. Stocks and the currency fell on Monday as the air of uncertainty became pervasive. With government supporters and the opposition preparing fresh rallies before Saturday’s controversial referendum on a new constitution, the danger of further violent unrest is rising. 

Kuwait has introduced new corporate legislation as it tries to compete for foreign investment with its more successful regional peers, primarily the United Arab Emirates, write Camilla Hall and Simeon Kerr.

Notorious in the region for its recent economic underperformance, Kuwait is trying to move ahead with more coherent regulations in an effort to kick-start its non-oil economy and boost confidence in markets. 

 Men fish on the Bosphorus on February 23, 2012 in Istanbul, Turkey. Turkey’s latest growth figures – just 1.6 per cent in the third quarter – show that talk of a booming Turkish economy may be somewhat outdated.

But the sources of the growth are important too. To a certain extent, it is due to gold, government and Goldilocks. 

China’s trade figures released on Monday aren’t much to cheer about. In contrast to improved retail sales and investment data released over the weekend, Monday’s figures showed exports increased just 2.9 per cent year on year, with imports flat. Markets were uncertain what to make of it all.

See the chart after the break. 

Indian wholesale customers browse the newly-opened Walmart outlet in northwestern Punjab state's Jalandhar on August 4, 2010.After years of waiting for permission to set up shop in India, Walmart should be heaving a sigh of relief, as it finally reaches the light at the end of the long dark tunnel of Indian policy-making.

India’s Congress-led government has approved foreign direct investment in retail, paving the way for the US-based retailer and its rivals such as Tesco and Carrefour to enter the market. The Indian Parliament gave its blessing to the policy, after contentious votes last week. 

* Morsi scraps Egyptian tax increases

* China trade suffers amid global fears

* Chavez names loyalist heir 

Ahead of next Wednesday’s presidential election in South Korea, both leading contenders are full of talk about rebalancing the economy away from the export-focused manufacturers who have long served as its main growth engine.

But a steady stream of data is showing that the reliance on exports is, if anything, becoming more pronounced. 

Monday’s picks from the beyondbrics team: Moscow should embrace constraints of the WTO; Myanmar’s education system holds the next generation back; and Niemeyer’s greatest and most troubled creation. Plus: Egypt’s flawed constitution; Congo – how not to resolve conflicts; and China’s new leaders hint at reform. 

parliament building, Ulan BatorWhen the Mongolian People’s Revolutionary party (MPRP) threatened to quit the country’s ruling coalition last week, the bond market panicked. Mongolian government bonds – which are brand new to the market – sank as much as 8 per cent.

It may have been a rude awakening for investors and the government alike, but a report released on from rating agency Moody’s argues that such local politics is not the real problem facing the country. 

Are emerging markets decoupled or not decoupled from the stresses afflicting developed markets? There was more evidence on Monday that they are less decoupled than they would like.

It comes in a study from the Bank for International Settlements which looks at the reasons for contractions in cross-border bank lending from DMs to EMs in 2008 and 2011. While EM factors had a big part to play in the first contraction, it finds, the contraction in lending in 2011 was almost entirely determined by problems in the countries of origin – especially in Europe.