Igor Sechin: prince of darkness?
It’s an edgy time on global markets, as the sharp moves in Russian equities showed on Wednesday. The RTS index was down a vertiginous 4.4 per cent in afternoon trading. Analysts said investors had been spooked by news late on Tuesday that looks bad for privatisation, and by the falling oil price – never a good thing for Russian stocks.
Maybe investors should hang onto their hats. We’re not saying the outlook for privatisation isn’t bad – just that it’s too soon to know. Continue reading »
Fund flows: danger ahead?
Risk aversion is spreading across the EM world, according to the latest numbers from EPFR, the Boston-based fund flow monitor. EM equity funds were hit particularly hard in the week to Wednesday, with outflows equal to 0.3 per cent of assets under management, or $2.23bn in EPFR’s sample universe – the biggest outflow for six months. Continue reading »
Ecopetrol: bigger than Petrobras?
Ecopetrol, the Colombian national oil company with proven reserves of about 1.8bn barrels, has a bigger market capitalisation than Petrobras, the Brazilian giant with 18bn barrels of reserves and, potentially, multiples of that in its vast new pre-salt oil fields.
That, at least, is what a São Paulo consultancy announced this week. And even if the boffins’ numbers don’t quite add up, something remarkable is going on. Continue reading »
Bottom fishing in India
How’s this for a ringing endorsement of India’s economic outlook? “We believe a few things have improved marginally.”
Despite that heavy dose of faint praise, Manishi Raychaudhuri of BNP Paribas in Mumbai says equity investors can still carve out some earnings if they choose their stocks well enough. Continue reading »
How worried are EM investors? Extremely worried, says SocGen
Some anecdotal evidence on the mood among investors has come across our desks: a note from Benoit Anne of Société Générale entitled “EM investor survey: Investors are now extremely worried”.
Among the survey’s conclusions: “it is quite clear that the shorter-term bullish investor on GEM has virtually disappeared”. Continue reading »
Brazil’s consumers: deeper in debt
More interesting data on Brazil’s credit market on Tuesday: the number of consumers looking for loans fell by 11.2 per cent from March to April and demand for credit during the first four months of the year fell by 7.6 per cent compared to the same period last year – the sharpest fall in demand for credit since 2008, according to Serasa Experian, a credit data company.
The figures offer further evidence that Brazil’s credit-fuelled consumer boom is running out of steam. Continue reading »
Mercosur: dead in the water
“I don’t know what Argentina will do. I believe Brazil will have to reconsider Mercosur.” That’s what the head of Brazil’s pork exporters’ association told Reuters after Brazil imposed non-tariff barriers on several perishable products including wheat flour and wine.
While the rules apply to products from anywhere they will hit Argentina the hardest. They come as Buenos Aires is pulling every string it can to reverse its trade deficit, including forcing importers to become exporters too and raising barriers against Brazilian goods. It is all making Mercosur, the supposed common market, look like a nonsense. Continue reading »
Brazil: reflating credit-driven growth
The latest weekly survey of market economists by Brazil’s central bank, published on Monday, shows that interest rates are expected to keep falling. Whether you think the central bank is acting for purely technical or for political reasons, there is not much doubt that it is acting.
Why? Brazil’s credit-fuelled consumer boom seems to be running out of puff. One very simple chart from Alliance Bernstein shows how hard it might be go get it going again. Continue reading »
Fund flows: bonds good, equities bad
A consensus appears to be emerging among fund managers: if you want to avoid risk, EM bonds – but only ones denominated in US dollars – are the place to hide.
That, at least, is the pattern shown over the past few weeks. Fund managers put 0.73 per cent of assets under management into EM bond funds during the week to Wednesday, or $1.06bn in the sample universe surveyed by EPFR, the Boston-based fund monitor. Continue reading »
C&A Brazil: do you Facebook like me?
Photo: springwise.com
What do you think is going on here? Continue reading »
Venezuela: say hello to the junta
Is Venezuela’s government preparing for transition? In the past few weeks Hugo Chávez, the president, has gone from denial about the lethality of his cancer to praying for a bit more life. On Wednesday night he appointed a Council of State, a consultative body created by the 1999 constitution but not set up until now.
It’s first task? To withdraw Venezuela as quickly as possible from the Inter-American Commission on Human Rights, run by the Organisation of American States. Now, why would that be a priority? Continue reading »
Latvia: carrying on regardless
The Latvian government is hell-bent on joining the eurozone by January 2014 even though the move is unpopular among its people. Well, the government will be cheered and the people perhaps dismayed after Standard & Poor’s, the ratings agency, promoted the country to investment grade on Wednesday and applauded the government’s progress. Continue reading »
Avon: ding, dong, crash, bang
A rotten first quarter for Avon Products. Its earnings were expected to take a hit but nothing like this: net profits fell by 82 per cent compared with the first quarter of 2011, resulting in earnings per share of just 6 cents – vs 33 cents in Q1 last year – or 10 cents after one-off items. Compare that with the 28 cents consensus among analysts according to Thomson Reuters, and you just feel the disappointment. Continue reading »
Raven Russia: sticking to plan A
Picture: Raven Russia
Nobody ever said doing business in Russia would be easy, let alone for a London-listed company in the property sector. But when your management, finances and business model are singled out for praise by investors and you still see your share price struggling, it must be doubly tough.
Even in the age of decoupling and the discriminating investor, is seems, it’s still macro economics and the risk-on, risk-off mood of the moment that drive share prices. Even so, Raven Russia is sticking to plan A. Continue reading »
Asia, dull? Don’t be fooled
Frederic Neumann, HSBC’s Hong Kong-based economist, has been visiting clients in Europe where the view, apparently, is that Asia is getting dull, offering few obvious risks and little imminent reward. Nobody likes their own patch to be seen as unexciting, of course, but in a note to clients on Monday Neumann presents four reasons why investors should not underestimate Asia’s ability to surprise. Continue reading »
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