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Nobody thanks China, as one FT journalist found when he asked US shoppers whether they were grateful for cheap electrical goods. But BMW shareholders should make an exception. They will receive a record dividend this year, after the German carmaker’s profits benefited from – you guessed it – emerging Asian demand.
The number of BMWs sold in mainland China, Hong Kong and Taiwan rose a whopping 86 per cent last year to 183,000. That means, over the last five years, nearly half a million BMWs have been sold in those markets – two for every three high-net worth individuals (HNWIs) there.
Russian stocks fell on Monday, following China’s decision to raise interest rates. Data released earlier in the day showed Russia’s manufacturing industry is expanding at its fastest rate since March 2008. The Purchasing Managers’ Index, produced by HSBC and Markit Economics, registered 53.5 in December, where scores above 50 represents expansion.
Chinese stocks fell nearly 2 per cent on Monday, after Saturday’s interest rate rise raised concerns of further tightening. The Shanghai Composite had gained earlier in the day, with analysts suggesting that lower liquidity had already been priced into the stocks, and that efforts to tackle inflation were welcome. Other Asian stock indices were broadly positive.
Happy holidays from all of us at beyondbrics. Next week we’re running a series of guest posts on emerging markets in 2011, before returning to full service on January 4. In the meantime, here’s our contribution to the festive spirit:
After another triumphant year, China invites the global glitterati around for a Christmas party. The guests arrive, and Chinese prime minister Wen Jiabao calls them to attention.
Wen: Ladies and gentlemen, I see you’ve all brought stockings. The problem is that we Chinese have already given you so much over the years: gunpowder, pandas, a visionary economic model…
Japan: …a stray boat captain…
Taiwan: …the threat of invasion…
Turkish stocks gained on Thursday, on a quiet day of trading in central and eastern Europe. In Budapest, OTP Bank fell 1.7 per cent, and the forint hit a one-week low against the euro, after Hungary’s credit rating was cut by Fitch. “The reversal of pension reforms and lack of a coherent medium-term fiscal strategy undermines confidence in the long-term sustainability of the public finances,” the rating agency said, which now rates Hungary the lowest investment grade.
Asian stocks fell on Thursday, after China said it would seek to cool the property market with measures including the increased scrutiny of foreign companies’ purchases. Taiwanese and Philippine markets did rise, ahead of strong economic data, while South Korea’s SK Energy returned to a three-year high, after announcing it had sold Brazilian oil assets for $2.4bn.
Standard&Poor’s cut Vietnam’s long-term foreign-currency rating to three notches below investment grade; Moody’s made a similar downgrade last week.
CEE markets largely rose on Wednesday, with Russia’s Micex extending its two year-high. Policy decisions yielded few surprises, with both Poland and the Czech Republic holding interest rates at record lows, while Romania’s parliament approved a budget intended to satisfy the conditions of an IMF loan. The Russian rouble rose to a 12-week high against its euro-dollar basket, helped by impending tax payments.
Asian stocks slipped on Wednesday, after rallying in the previous session. In Mumbai, steelmaker Ispat gained almost 12 per cent, after JSW Steel bought a near-majority stake in the company for $476m, precipating an open offer for up to 20 per cent of the remaining shares. The deal, the biggest by an Indian steelmaker in over three years, will make JSW the country’s biggest player in the industry. With the holiday season approaching, trading volumes were around half their 90-day averages in most markets.
Turkish stocks led gains in central and eastern Europe on Tuesday, with trading cheered by improved global sentiment. Russia’s Micex rose 0.6 per cent, approaching a two-year high.
Few doubt the energy of Indians and their businesses. Can the country’s power supply gear up fast enough to support them? The good news is that a few hundred million of US dollars in foreign investment have just flowed into the energy sector. Unfortunately, that’s just one-thousandth of the figure that the government thinks is needed over the next five years.
GVK Energy, the power-focused branch of Krishna Reddy’s infrastructure group, announced earlier this month that it was selling a 21 per cent stake to UK private equity investors 3i for $177m. Now two more private equity players – Actis, and an arm of Singaporean sovereign wealth fund GIC – have signed into the same deal, taking the total investment to $331m.
Turkish stocks fell again on Friday, after the central bank announced a widely-expected increase in bank reserve requirements. However, with German business confidence reaching its highest level since reunification, and Poland’s industrial output accelerating, Russian and Polish stocks rose.
In Moscow, fertiliser company Uralkali underperformed, after billionaire Suleiman Kerimov outlined a plan to merge the company with domestic counterpart Silvinit, in a move that would create the world’s second-biggest potash producer.
Asian stocks saw only small changes on Friday, with South Korea’s Kospi returning to a three-year high, while Taiwan’s Taiex extended its two-year peak. India’s markets were closed.
In the Philippines, Cebu Air – the country’s biggest budget airline – fell 25 per cent in early trading, after a trader accidentally sold at 82 pesos. It closed back up at 106 pesos, down 3.7 per cent for the day. The stock remains 20 per cent below its debut closing price in late October, leading the airline’s president to call it “severely undervalued”.
For the global economy, Christmas parties came early this year: stimulus spending boosted growth to possibly unsustainable rates. Next year, a mild hangover is likely to kick in – with slower growth in much of the world, including China, India and Brazil.
Yet, for those in need of some more festive cheer, there are three regions that are forecast to see faster growth in 2011: the Middle East and North Africa, sub-Saharan Africa, and Russia and central Asia. All three will average at least 4.6 per cent growth, according to the IMF, overtaking Latin America as the world’s most dynamic regions after Developing Asia. Why are they accelerating? The common thread is oil.