When General Motors, citing “very challenging long term prospects,” slammed the brakes on its Russian investments this week, the Kremlin said it was making a big mistake. Russia’s car market would eventually rebound from the crisis and the US auto company “would find itself among the losers,” said Dmitry Peskov, spokesman for President Vladimir Putin. Read more
Blink and you missed it. The day after the US Federal Reserve appeared on Wednesday to put back the date of its long-awaiting interest rate rise, analysts at Bank of America Merrill Lynch wrote to clients: “Emerging market currencies temporarily halted their losing streak with a dovish Federal Open Market Committee sending the USD lower.”
“Temporarily” is right. The Brazilian real closed at about R$3.21 to the dollar on Wednesday from its open of R$3.24, a rare day’s gain in a two-month slide. But on Thursday it was back on course, falling quickly beyond R$3.30 before recovering a bit, an intraday move of nearly 3 per cent. In less dramatic manner, the Turkish lira, Russian rouble and South African rand all resumed their downward slides, too. Read more
** FT News **
* Dollar recovers ground after dovish Fed | Bond yields fall while equities cheer prospect of lower-for-longer US rates Read more
So, how would you go about bailing out a war-zone? The IMF’s rescue plan for Ukraine, agreed by the fund’s executive board last week, has to grapple with an extraordinary combination of problems. On top of the usual party pack of issues endured by IMF borrowers – a collapsing currency, a large debt burden, a corrupt and sclerotic economy – Ukraine faces the unusual challenge of a belligerent nuclear-armed neighbour fomenting a civil war.
In this context, the critical question of whether to restructure private sector debt becomes an unusual one. The IMF made obvious mistakes in previous crisis countries such as Argentina and Greece, where debt restructurings were delayed until the situation had gone critical. This experience suggests a rapid early reduction in net present value, including a cut in face value if necessary, to tip debt dynamics towards stability. But where there is a large and completely uncontrollable risk that might instantly change the situation, there is a strong case for giving Ukraine medium-term breathing space rather than a once-and-for-all write-off. Read more
By David Mann of Standard Chartered
Much of the negativity about world growth prospects at the moment seems to stem from the absence of a credit boom in any major market and worries over the consequences of higher US interest rates for the first time since 2006.
The lack of a credit boom means that growth is more subdued than it was in the run-up to the global financial crisis.
In particular, there are fears about China’s growth prospects, given the recent bad news concerning weak credit demand, high real interest rates and tight liquidity. However, we see three reasons for at least some optimism. Read more
How many places can you be in at one time? South Korean shareholders say the obvious answer to this question is being exploited unfairly by publicly traded companies to restrict their ability to raise their concerns and gather information at annual general meetings.
The result is known in Korea as Super AGM Day. The most recent was on March 13, when 58 companies, comprising 8 per cent of companies listed in the benchmark Kospi index and about 40 per cent of its market capitalisation, held their AGMs. Two more are coming up: on Friday, March 20, 260 companies, more than a third of those in the Kospi index, hold their AGMs; next week, on March 27, it is the turn of another 252 Kospi-listed companies to hold their AGMs, all on the same day. Read more