China’s rich head for the exit
There’s no denying that China has come a long way in terms of economic growth.
But even as the country produces ever more millionaires and foreigners flock to seek their fortunes in the world’s second largest economy, many of its elites are making a dash for the exit. Continue reading »
EM bond defaults: rising
It’s been a good year for emerging markets bonds. Even as investors, unnerved by the latest in the eurozone debt crisis, continue to pull out of EM equities and EM currencies, appetite for EM bonds shows no sign of abating.
EM bond issues for the first five months of the year are at a record high of $403.2bn according to data provider Dealogic, while fund inflows into the asset class hit $18.4bn for the year to May 2 compared to $5.7bn during the same period last year, according to EPFR data.
But the level of EM bond issuance and the JPMorgan EMBI Global index (which scaled to a new high of 608.7 this month) are not the only indicators in town. A look at the rate of EM bond defaults suggest things are not quite as positive as they might appear. Continue reading »
China gets VVIP treatment from US
In China, the super rich routinely expect luxury goods stores to pamper them with VIP treatment.
Beijing, as the single biggest buyer of US Treasury bonds (it currently holds $1.17tn of the stuff), appears to expect nothing less than VVIP treatment from Washington. And what China wants, China gets.
According to Reuters, the People’s Bank of China has been given direct-bidder status in US Treasury auctions – meaning China can bypass Wall Street when buying US government debt. Continue reading »
LatAm banks: new target for China Inc?
It’s shopping season for China Inc. As banks in Europe and the US are forced to pare back their operations and shed assets to meet heightened regulatory requirements back home, Chinese banks are moving in.
The latest to shop abroad is China Construction Bank. According to Dow Jones, CCB, the world’s second largest lender by market value, is in talks to buy the Brazilian assets of WestLB, the troubled German bank, in a deal that could be worth $200m-$300m. Continue reading »
EM markets wrap: what decoupling?
The idea was that even as both the US and Europe remained mired in debt and recession, emerging markets would continue to power ahead. That might be true for GDP growth, but not when it comes to the equities market – as Tuesday’s sell-off showed. Continue reading »
Luxottica stays in vogue in EM
Despite jitters about slowing growth in China and Brazil, emerging markets remain a good place to be for luxury goods makers.
The proof? Luxottica, the Italian eyewear maker and owner of the upmarket Ray-Ban and Oakley brands, on Monday said it recorded its best first quarter ever, with sales and net income up 15 and 27 per cent respectively, thanks to surging demand for designer shades in Brazil, India and east Asia. Continue reading »
Brazil: Facebook’s #2 fan
How many friends does Facebook have in Brazil?
46,339,720 according to the latest figures released by Socialbakers, a web analytics agency. That is a 22 per cent jump from 3 months ago and catapults Brazil ahead of India as Facebook’s second biggest market by users after the US.
The numbers matter. As the market prepares for Facebook’s eagerly awaited $13.6bn stock market debut later this month, one question investors will need to start focusing on is if and how the the online social networking site can maintain its breakneck growth and whether it can generate enough money from its vast user base to justify its eye-watering $95.8bn valuation. Continue reading »
Hugh Hendry: forget Europe and the US, the next crisis will be in China
He’s back. Hugh Hendry, the outspoken hedge fund manager best known for his bearish views on China and this jerky, homemade video of empty malls and deserted developments, has come out with a new letter to his investors after an 18 month absence.
China bulls will find few comforting words in it though. Quite simply, Hendry thinks China’s massive property bubble will burst in a spectacular fashion and become the focal point of the next financial crisis. Continue reading »
Peru: LatAm’s latest currency warrior
Has Peru replaced Brazil as Latin America’s currency warrior?
Less than two months after it said it would not impose capital controls to stem the rise of its currency against the US dollar, Peru has gone ahead and done just that.
On Monday, the Andean country said it was raising deposit requirements on bank accounts to curb credit expansion and weaken the sol. Continue reading »
Caterpillar/Apple – a tale of two Chinas
High-end consumer goods are hot, construction activities are not.
That is one conclusion that investors can make about the state of the Chinese economy after going through this week’s quarterly results from Apple and Caterpillar.
While Apple saw sales for the three months to the end of March surged on the back of ferocious Chinese demand for its iPhones, iPads and Macs, shares in Caterpillar took a pounding on Wednesday after the earthmoving equipment maker reported a marked slowdown in demand from China. Continue reading »
Apple Q2: it’s all about China
By Pan Kwan Yuk and Richard Waters
How important is China to Apple’s growth?
Consider this little tibit that came out of the conference call for Apple’s second quarter results on Tuesday: Sales in greater China during the first half of the year totaled $12.4bn, compared to $13.3bn for the WHOLE of 2011.
Even Tim Cook, Apple’s new chief executive, appeared taken aback by the strength of the company’s China performance. As he said during the call, “It is mind-boggling that we could do this well.” Continue reading »
BP/Bridas: a light on a deal gone bad (updated with BP statement)
How much would you pay to avoid fraud allegations?
$700m, it seems, if you are BP. On Monday, subsidiaries of the British oil major filed a lawsuit against Bridas, the Argentina-based oil and gas group that is half-owned by China’s Cnooc, over the terms of a collapsed deal that would have seen Bridas acquire its majority stake in Pan American Energy for $7.06bn. Continue reading »
US Inc: thank goodness for EMs
Half way into first quarter earnings season in the US and one trend is already becoming apparent – the extent to which US Inc is being propped up by emerging markets.
Kimberly-Clark, maker of Huggies diapers (nappies) and Kleenex tissues, on Friday became the latest US corporate to sing the praises of EMs – where strong sales growth has helped the consumer goods company offset weaknesses in its core US market. Continue reading »
Repsol/YPF – the Chinese connection
Well, the rumours were partly correct.
Following Monday’s move by Cristina Fernández de Kirchner to renationalise YPF, the chatter among Argentina observers was that China somehow had a role to play in the story.
Why else, as one person put it, would Fernández go ahead and seize the majority stake held by Spanish oil major Repsol unless she thought she could get Chinese oil majors to step in and provide the billions needed to develop YPF’s assets?
But as the FT reported on Tuesday night, it was actually Repsol, not Argentina, that had been talking to the Chinese. Continue reading »
World Bank chooses Kim (surprise!)
The World Bank on Monday chose Jim Yong Kim (pictured left), the US nominee, as its next president. While the decision was widely expected, many observers would consider that in choosing Kim rather than Ngozi Okonjo-Iweala, Nigeria’s finance minister, the world’s premier development institution has rejected the more qualified candidate.
In doing so, it has wasted an opportunity to show developing countries that it supports global meritocracy – not least for citizens of the emerging world. Continue reading »
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