Daily Archives: Jan 23, 2013

Mother Nature has dealt Central America a lousy hand. Earthquakes, floods and hurricanes of biblical proportions have battered the isthmus over the years, but the latest natural disaster is a botanical one.

A plague known as “coffee rust” has hit the region’s top-quality arabica crop. Premium blends from coffee grown in Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica and Panama are much loved by aficionados. Read more

By Peter Hakim and Sergio Muñoz Bata

Latin Americans still like and admire President Obama, yet they no longer expect much from him. He mostly ignored the region in his first term, and never mentioned it during his re-election campaign. Sure, immigration reform is on his agenda, but only because both Republicans and Democrats are now intimidated by Latino political clout. It may be that Latin America requires only sporadic attention – like when an earthquake devastates Haiti, or a political crisis undoes Honduras or Paraguay, or an economy collapses somewhere.

But at least two of the region’s 33 countries demand a more strategic approach. Read more

Argentina has designated olive oil a national food and now wants people to gobble it up so that domestic demand gives the estimated $30m industry a fillip.

You might think that Argentines already do love their olive oil – most have Mediterrranean roots, after all, and in Spain consumption of olive oil is about 13 to 15 litres per head per year, according to Juan Carlos García Zuloaga, president of the Olive Growing Chamber in the western Argentine province of Mendoza. Yet no – Argentines now consume only about a quarter of a litre each of olive oil at most a year, he says. Read more

Photo: Bloomberg

Turkey may finally be hitting the accelerator pedal now that it has less than a month to resolve a dispute that could hit the country’s ability to raise funds internationally.

The dispute in question concerns a decision by the 36-member Financial Action Task Force, which includes many of the most important financial jurisdictions in the world, to suspend Ankara from membership if it does not implement anti-terror financing legislation by February 22. Read more

Following recent successful dollar bond sales by Mexico and Paraguay, there are celebrations in Colombia as well: on Tuesday, the Andean country sold $1bn of 10-year bonds abroad. The offer was three times oversubscribed.

The paper was sold to yield 88 basis points over comparable US Treasuries, or 2.7 per cent a year – the lowest yield ever in Colombia’s “history in the international capital markets,” according to the finance ministry. Read more

Artist's impression

Kenya has begun converting 5,000 acres of savannah dotted with antelopes and ringed by hills into “the most modern city in Africa”. Contractors begin work this week on the $10bn Konza Techno City project, 60km south of the capital Nairobi, which has been dubbed Kenya’s Silicon Savannah. Read more

The choice of target in the recent bloody hostage standoff in Algeria was not by chance. By attacking the gas sector, jihadist terrorists went for maximum impact. Energy accounts for 98 per cent of Algeria’s exports and 70 per cent of tax revenue, with the In Amenas plant accounting for 12 per cent of the country’s gas output.

It is unlikely to prompt any large-scale pull-out by foreign companies, but the events cap a longer term deterioration in the operating environment of Africa’s biggest natural gas producer, where new investment has all but dried up, with steadily decreasing numbers of successful oil round awards. Read more

Lebanon has long exported its bankers and financiers across the world, but its banks have generally remained fairly conservative domestic institutions, venturing only carefully outside the country’s borders, writes Robin Wigglesworth.

Yet given the country’s perennial political turmoil – interspersed with the occasional bout of violence – many Lebanese banks have in recent years looked abroad for opportunities to diversify their operations. One of the pioneers has been Byblos Bank, the third-largest financial institution in Lebanon by assets.

Little surprise that the International Monetary Fund cut its world economic growth predictions in its latest forecasts published on Wednesday, with only three major economies escaping the chop – Japan, Mexico and China.

The forecast for China’s GDP is left unchanged at 8.1 per cent, the same as the last (October) forecast, which shows that the Fund shares the growing optimism in China’s 2013 recovery. Read more

Unilever shares were boosted by better-than-expected Q4 results on Wednesday, with sales growth in emerging markets leading the way.

Unilever is investing heavily in EMs, at some cost to margins, but investors are more than happy to back the strategy, in which the group is planning to raise the proportion of revenues coming from EMs from 55 per cent last year to 70-75 per cent in 2020. The stock was up 3 per cent – the best performer on the FTSE 100 as of mid-afternoon. Read more

Well, they thought it was going to be bad. But not this bad. Consumer price inflation in Brazil was 0.88 per cent in the month to mid-January and 6.02 per cent over the previous 12 months, the IBGE, the national statistics institute, said on Wednesday.

On Monday, the central bank’s weekly survey of market economists showed inflation expectations were creeping up: the consensus for January had risen to 0.81 per cent from 0.78 per cent a week earlier. But Wednesday’s figure was off the chart. Read more

Shares in PKO BP, Poland’s largest bank, have dropped sharply on news that the state is selling a chunk to help meet its privatisation target and to raise funds for a government-owned development bank. Read more

* Thai activist sentenced over royal insults

* Economists slash growth forecasts for Asian economies in 2013

* Emerging stocks fall as volatility drops to seven-year low Read more

Coming soon: sportswear for dogs

X5, the Russian food retailer controlled by Mikhail Fridman’s Alfa Group, has won a tender for rights to market official merchandise for the 2014 Sochi Winter Games.

The prestigious deal may boost the appeal of X5’s grocery stores but probably comes too late to prevent the London-listed retailer from being overtaken by its fast growing rival Magnit in the battle for sales. Read more

Wednesday’s picks from the beyondbrics team: as the Polish economy slows, youngsters head for the exits in search of work overseas; China’s lottery habit may be getting out of hand; Hong Kong’s Epic trouser maker on the trials and tribulations of the Asian garment industry; an FT special report on the world in 2013; plus, what the end of global negative interest rates might mean for frontier market fixed income. Read more

Emerging Markets across the world should be in a hurry to grow richer, according to Jonas Prising, president of recruitment company ManpowerGroup. “Otherwise they’ll lose the a race to get rich before they get old,” he told beyondbrics at Davos.

Whereas countries like Sweden, the UK or the US had several generations to adjust to new levels of economic growth, and could adjust their institutions so everyone could benefit from the countries’ increasing wealth, EMs won’t have that luxury, according to Prising. Read more

The star turn at the World Economic Forum in Davos on Wednesday belongs to Dmitry Medvedev, the Russian prime minister, who will once again try to convince sceptical business people why they should invest in his country, writes Stefan Wagstyl.

It will be the third such appearance by a Russian leader in Davos in just five years. There’s not much chance that the foreign investors’ views will change that much – but Medvedev is likely to have interesting things to say about Russia’s $10bn privatisation programme. Meanwhile, here, below the break, is a guest post from his WEF hosts, spelling out Russia’s economic challenges. Read more

Nigeria’s capital markets received a filip in October when the country was admitted to JP Morgan’s emerging market Government Bond Index, a move that that could potentially attract $1.5bn of new capital inflow into the country. Now there’s some more good news for sub-Saharan Africa’s second biggest economy, and this time it is the thinly-traded corporate debt market which stands to benefit.

The International Finance Corporation, the World Bank’s investment banking arm, is getting ready to launch a five-year naira-denominated bond, aimed to develop local capital markets. Read more

Shares in Hindustan Lever, Unilever’s Indian affiliate, were down 4.5 per cent to Rs458.70 in trading on Wednesday, after dropping 3.3 per cent on Tuesday after the company on Monday reported disappointing figures for the quarter ended in December.

Several brokers downgraded the stock, one of India’s top-rated companies and a darling of foreign portfolio investors. Read more

Critics of lotteries the world over often describe them as taxes on the poor, and for good reason. From the US to Spain, lower-income citizens are the biggest buyers of lottery tickets, and, as a group, they will lose at least 35 per cent of what they spend.

In China, though, it is more accurate to describe the lottery as a tax on hope. Those buying tickets tend to earn more than average, but they have run into the chasm that is China’s wealth gap and see the lottery as their best bridge across it. Read more