Daily Archives: Jan 28, 2013

Last July, Colombia made its first rate cut since 2010. Since then, it has been on a chopping spree. On Monday, the Andean country’s central bank trimmed rates once again by a quarter point to 4 per cent.

So far the bank, with governor José Darío Uribe at the helm, has lowered interest rates at five of its last seven meetings. Now, it has reached the lowest level in Latin America. Read more

Want to start a business? Chile could be the place for you.

The government is slashing through what little red tape remains in what is already one of the speediest places in the region – and, indeed, the world – to set up a company. As of May, the process will be free, online – and, incredibly, doable in a dayRead more

It is one of the more peculiar corporate stories in Latin America.

How in the world can a company like Colombia’s Ecopetrol boast a bigger market capitalisation ($128.6bn as of Monday) than its Brazilian counterpart Petrobras ($126.1bn) which produces three times as much oil and gas?

One conspiracy theory that has been doing the rounds is that Ecopetrol’s shares are being used in repo trades – where brokers and investors use the stocks as collateral to borrow money and buy even more shares, artificially inflating the price. Read more

Photo; Bloomberg

Time for some smug smiles in Colombia, perhaps, and some gnashing of teeth in Brazil: Ecopetrol has once again surpassed Petrobras as the largest listed energy company in Latin America by market capitalisation, even though production at Petrobras is about three times bigger.

How can that be? Read more

Two years on, and Egypt is back in crisis. Mohamed Morsi, Egypt’s Islamist president, announced a month-long state of emergency on Sunday following violence in which nearly 50 have died.

For anyone hoping for a turnaround in Egypt’s economic fortunes, it’s another big blow and one that may hurt chances of a deal with the IMF. Read more

A weaker rand might not be such a bad thing for the South African economy, given the boost it would give to exporters – so said the South African central bank last week. Are they correct, or just looking on the bright side?

That depends on whether the devaluation is steady, or turns into a meltdown – a matter which may be out of their hands. Read more

A sign, perhaps, that the recent Chinese equities rally is running out of steam?

It emerged on Monday that Goldman Sachs has launched the sale of another slice of its stake in Industrial and Commercial Bank of China. According to Reuters and Bloomberg, the US investment bank is offering about $1bn-worth of Hong Kong-listed ICBC shares at HK$5.77 each, a discount of 3 per cent to Monday’s close. Read more

As Hungary prepares to tap the international bond market for the first time since 2011, here comes a stark reminder of the challenge facing Budapest.

Moody’s says in a report on Monday that Hungary has 2013 refinancing needs worth 19 per cent of GDP – that’s nearly double the average of 10 per cent for central and east European EU members. Read more

Photo: Bloomberg

A word of advice to investors thinking of taking a flutter on central European refiners: don’t.

That comes from Tomas Pletser of Erste Bank, who took a look at the region’s refiners and found little to cheer in a sector buffeted by overcapacity, and by the slowdown in western Europe, all with the threat of growing competition from Russian refiners. Read more

The horrific fire in a nightclub in southern Brazil at the weekend will indeed, as Samantha Pearson wrote on Monday, add to scrutiny on Brazil. For a country climbing the global economic league table and preparing to showcase its progress with the World Cup and the Olympic Games, the list of errors and failures that led to Saturday night’s fire make the worst kind of advertisement.

But is it fair to question the running of a country when a lone idiot starts a fire on stage? Read more

What was 2012 like for emerging markets when it came to inbound mergers and acquisitions? Good but not great, according to Freshfields Bruckhaus Deringer.

Global M&A investments targeting emerging markets* rose 5 per cent last year to $162.4bn. This comes after a lacklustre 2011 that saw deal values drop 25 per cent. Read more

* Yi Warns on Currency Wars as Yuan Close to ‘Equilibrium’

* China’s brokerages turn shadow banks

* ERA founder breaks silence over Caterpillar claims Read more

Those (few)Bulgarians who made it to the polls in Sunday’s referendum on nuclear power have voted in favour of further development.

The vote was a political exercise which is unlikely to lead to the building of new atomic plants any time soon. But it was an unusual show of support for the much-criticised industry. How many other European Union countries would have voted in favour? Read more

In the world of fast-moving consumer goods – known as FMCG in the retail industry – China is a big prize. With a rapidly-expanding middle class, and the quick adoption of western brands alongside home grown products, it’s also a highly competitive market.

So which companies are making headway? Chart of the week takes a look. Read more

It hasn’t taken long for a familiar foe to spoil Ukraine’s joy at signing a $10bn gas exploration deal with Royal Dutch Shell.

Within hours of the Davos ceremony last week, it emerged that Gazprom, Ukraine’s main energy provider, had slapped a $7bn bill on Kiev. This doesn’t mean an immediate resumption of the gas wars that have in the past hit European-wide winter gas supplies. But it is a sharp reminder of the pressures Ukraine faces as it struggles to find a way forward between Russia and the west.

 Read more

Monday’s picks from the beyondbrics team; Chinese security brokerages try their hand at shadow banking; Gazprom drives a hard bargain with Ukraine; mining companies get thrifty; why violence rather than celebration marks the second anniversary of the Egyptian revolution; EM consumers lap up ‘made in England’; plus, Angola’s ample opportunities. Read more

No retail sector in the world has benefitted as much from the new wealth in China as Hong Kong’s has. But in the second half of 2012 retail sales growth slumped to single digits, a far cry from the 20 per cent monthly growth rates in 2011.

However, despite this slowing growth, the Hong Kong Tourism Board revealed on Monday a 16 per cent increase in visitor arrivals to the city to 49m in 2012, with a staggering 35m coming from mainland China. Why the slump? Read more

The Reserve Bank of India is widely expected to cut interest rates on Tuesday.

But by how much, nobody knows. Will the rate be reduced by 25 or 50 basis points? And contrarian analysts are even wondering whether loosening monetary policy is a good idea right now. Read more

Another good start to the week in emerging market equities, with Chinese stocks rising sharply following news of Volvo‘s plans to buy a $1bn stake in the commercial vehicle operations of Dongfeng Motor and a government report a 17.3 per cent increase last month in industrial companies’ profits.

The Shanghai Composite index closed on Monday 2.4 per cent up, at its highest level for seven months and nearly 20 per cent above its recent low of December 3. How much more juice than can there be in the New Year equities rally? Read more