India ElectionsMuch of the recent ramp up in Indian equities and its currency has tracked polls which increasingly point to a stable government being formed after the elections. Now, there is a chance that markets are getting over excited — as JP Morgan put it, they run the risk of getting ahead of themselves and becoming a victim of their own ever-growing expectations… Read more

The Mexican peso has had a very nice 2012 so far and it is easy to see why. In a world where the prospect of a strong US economy and a faltering global economy is very real, Mexico is uniquely placed among emerging markets to hitch a lift on its neighbour’s coat-tails.

The peso’s 9 per cent bump against the dollar, 7 per cent bump against the euro, and 17 per cent bump against the yen since January 2012 speaks volumes about its strong correlation to the health of the US economy. That correlation might just make the peso the perfect EM currency bet in a risk-off world. Read more

Everyone is moving to the city – and, especially, emerging market cities. According to a report by Credit Suisse this week, by 2037 half of the world’s population will live in one emerging market city or another.

So where should investors look to first if they want to capitalize on this trend? Apparently the smart money should head to China, Egypt, India, Indonesia, Nigeria, Pakistan, the Philippines, Thailand and Vietnam. A motley bunch indeed but the logic is compelling. Read more

It has been a long road and it is threatening to get longer. Every month since the start of 2011 has brought with it an average fall of $1.4bn in Egypt’s foreign currency reserves.

And according to the Egyptian ministry of finance they now sit at $15.1bn. That is below the three months of import cover viewed as safe minimum by the International Monetary Fund and well below the $36.1bn Egypt boasted in December 2010, before its revolution began. Read more

Many politicians and despots agree that democracy can be really annoying. Unfortunately for them, there will be around 60 political transitions of one kind or another in 2012. Happily for investors, markets seem to like the idea.

It is in emerging markets where elections will hit hardest —  if you include China’s transition, nine of the biggest EMs will vote this year. Those nine account for 71 per cent of the GDP of the 21 countries in MSCI global emerging markets (GEMs) index, 78 per cent of population and 73 per cent of market cap.

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It’s not easy being a bull in central and eastern Europe these days. No matter how much you might want to sell the story the facts just keep getting in the way.

Henning Esskuchen, head of CEE equity strategy for Erste, is one such bull who finds himself in a very tough position. In a report on CEE equity strategy Esskuchen’s normal optimism is very definitely dimmed… not that he couldn’t find some sparks of light in the gloom. In his own words, Esskuchen “dares to hope”. Read more

African beer is big business and every brewer you can name is looking to gain a foothold in its fast-growing markets. Diageo, which already sells more Guinness in Nigeria than it does in Ireland, this Tuesday confirmed it has once again upped its presence on the continent by buying Ethiopian state-owned brewer Meta Abo for $225m. Read more

After a long, loud build-up Nigeria’s battle of the fuel subsidy got serious over a very quiet New Year’s weekend. If the government had hoped a muted announcement would lead to a muted reaction they were, to put it mildly, disappointed.

The removal of the subsidy led to a doubling of fuel prices on Monday morning, according to Reuters, and an unsurprisingly furious reaction from Nigerians for whom the subsidy had represented one of the few tangible benefits they received as citizens of Africa’s largest crude-oil producer. Read more

It has been a torrid year for emerging markets and there have been very, very few success stories. Amid fears of a global recession and huge volatility across markets, investors have fled even remotely risky assets. That has spelt disaster for EMs.

The MSCI emerging market index has fallen 21.5 per cent since January and there have been very few economies which have escaped that trend. Read more

It has been a miserable 2011 for Asian markets. Fears of a global recession and extreme market volatility have seen Asia’s bourses shed nearly one-fifth of their value with many suffering their worst annual losses since 2008.

And 2012 is unlikely to bring any succour for investors who are fleeing into safe havens while warily eyeing up a European led recession and a slowdown in China. Risk-off is here to stay – for a while at least. Read more

Vale, the world’s largest iron ore producer by volume, took a significant step towards its goal of controlling all its shipping to China after it was confirmed that one of its giant new Valemax ships had been allowed to dock in China for the first time.

A person familiar with the situation confirmed that the Berge Everest, owned and operated by Berge Bulk, part of Hong Kong’s BW Group, but chartered long-term to Vale, was allowed into the port of Dalian, north-east China, to unload on Wednesday. Read more

Another emerging market has seen the kinder face of the ratings agencies. This time it is Nigeria’s turn – its credit rating outlook has been upgraded to positive, from stable, by Standard and Poor’s on Thursday.

Nigeria is currently rated ‘B+/B’ by S&P, which is three steps away from the minimum investment grade. But, according to the ratings agency, its new positive outlook means there is now “at least a one-in-three likelihood of an upgrade if Nigeria’s reform initiatives support economic growth, build stronger buffers against Nigeria’s dependence on petroleum revenue and reduce pressure on the exchange rate”. Read more

Japan and India are looking to increase economic ties and a $15bn currency swap agreement, announced on Wednesday, is one way to do just that.

The new pact, sealed by Yoshihiko Noda, Japan’s prime minister and Manmohan Singh, his Indian counterpart, replaces an old $3bn swap-deal and will see the two countries swap currencies for US dollars and tap into each other’s foreign exchange reserves to ease any liquidity problems, according to the BBCRead more

Construction of a new luxury apartment in downtown BeijingChina has again outshone the US as the top venue for initial public offerings despite steep share price falls on the mainland and Hong Kong stock markets, highlighting the shift in global financial activity from west to east.

Companies raised $73bn from IPOs in Shanghai, Shenzhen and Hong Kong this year, according to Dealogic – almost double the amount of money raised on the New York Stock Exchange and Nasdaq combined. Read more

China's currency, the renminbi

China's currency, the renminbi

It’s always nice to see a bit of academic clarity injected into a muddy debate. And in a paper published on Wednesday looking at the impact of renminbi appreciation on company valuations, Barry Eichengreen and Hui Tong (of Berkeley and the IMF) do just that.

The authors’ findings suggest that, unfortunately for those who advocate a “RMB must appreciate now” position, the actual situation is not that simple: it is entirely conceivable that a RMB appreciation might have overall negative consequences for foreign firms. Read more

Cheung Kong Holdings, which is controlled by Hong Kong based billionaire Li Ka-shing (pictured), has had its long-term corporate credit rating withdrawn by Standard & Poor’s, the rating agency, which says it is not in a position to “accurately assess” its credit quality.

In its statement, S&P said Cheung Kong Ltd (1:HKG), Hong Kong’s second-biggest builder by market value, had lost its A- rating because the ratings agency had “no access to the company management for the past three years.” Read more

Moody’s, rating agency, has downgraded Egypt’s sovereign bond ratings by one notch to B2 from B1, pushing it further into junk territory. It has also placed Egypt on review for a further downgrade.

In its statement on Wednesday, Moody’s said the downgrade was prompted by the political uncertainty being violently played out on Cairo’s streets and by Egypt’s precarious fiscal situation – in particular the imminent and increasing risk of a balance of payments crisis. Read more

It’s risk on again in Asia as investors take solace in the European Central Bank’s decision to play Santa, some better than expected economic data emerging from the US and a growing belief the leadership transition in North Korea will pass peacefully. Read more

When is a dictator’s death good for your pension? When that dictator is Kim Jong-il. Here’s how.

According to Andrew Chappell of Exotix, the frontier markets specialists, a number of blue chip institutional investors are holders of North Korea’s (admittedly tiny stock of) foreign debt. That means that if – as Exotix hopes and believes – those investments pay off, you, dear reader, could be quids in. Read more

These are desperate times and central banks all over the world are turning to extraordinary measures to pump liquidity into ailing banking systems. Lithuania’s central bank is no exception. On Tuesday it sent a clear signal to its banks that it is ready to act if needed. Read more