After three years as editor of beyondbrics, I have been appointed the FT’s Berlin bureau chief and am leaving the bb team. I want to thank everyone who has come to our site and read our stories, as well as all those who have contributed comments and guest posts, or sent us reports, links and other material. Read more
Fresh from an election victory, Malaysian prime minister Najib Razak (pictured) was full of new-term enthusiasm when he visited the Financial Times this week, speaking of his plans to push his country into the ranks of the developed world by 2020.
He didn’t say it would be easy but it may be harder than he expects, given the slowdown in the world economy: trade figures published on Friday showed a 5.8 per cent drop exports in May, nearly double forecasts of around 3.0 per cent and April’s 3.3 per cent decline. Read more
A drop in the Russian inflation rate could pave the way nicely for an interest rate cut later this month.
Consumer prices grew 6.9 per cent in June, the slowest annual rate this year, down from 7.4 per cent in May, the Federal Statistics Service announced on Thursday. The rouble held firm on the news – rising 0.5 per cent against a weak euro and staying flat against the US dollar. Read more
If you still think that markets move in cycles, this could be a good time to buy emerging market equities.
So says Richard Titherington, Chief Investment Officer for emerging market equities at JPMorgan Asset Management. You may lose money in the next three months, as the turmoil in the market works itself out. But on a one-to-three-year view, emerging market shares look good value. Read more
Thursday’s picks: the silver lining in the EM sell-off, the gold plating on an Indian bus company sale, and hard grind for China’s job-hunting graduates. Also, a tough test for Egypt’s generals and for South African labour union leaders. Read more
A China slowdown, plunging commodity prices and the looming end of QE. A perfect storm, you might think, for Malaysia – a commodity-producing country that exports to China and benefited handsomely from QE-fuelled cash that washed through emerging markets.
But that’s not the view of prime minister Najib Razak, who plays down the threats to growth coming from the world economy. As a leader fresh from an election victory, his confidence is understandable. But is it misplaced? Read more
Kazakhstan seems to have overcome its initial doubts and has decided to increase its stake in the giant Kashagan oil field.
So, ConocoPhillips will not be selling its 8.4 per cent stake in the offshore Caspian Sea project to India’s ONGC Videsh as planned since last year. Instead, as announced on Tuesday, Kazakhstan will use its pre-emption rights and put the stake in the hands of state-controlled KazMunaiGas (KMG). The price? $5bn, same as India would have paid. Read more
Billionaire Roman Abramovich has resigned as chairman of the legislature of the remote Russian region of Chukotka, to comply with a new law banning officials from owning foreign securities and bank accounts.
But that won’t be the end of his long-standing commitment to the frozen wastes of Chukotka and their population of 50,000. As the state website reported on Tuesday, Abramovich “will continue to participate in the life of the Chukotka Autonomous District. In particular, he will continue to implement a number of major regional business projects that will significantly increase the region’s future tax base.” Having got their oligarch, the good citizens of Chukotka aren’t letting him go. Read more
With violence on the streets of Egypt coming hot on the heels of the public protests in Brazil and Turkey, it takes a brave man to write a report entitled: “EM is not much riskier than DM”.
But Simon Quijano-Evans of Commerzbank has done just that – arguing that while young populations put emerging markets at greater risk of political upheavals they also provide the energy that will power developing economies into the future while the developed world is held by back by the burdens of debt and old age. It’s probably true in the long run, but for a leader like Egypt’s Mohamed Morsi it’s the next few days that matter. Read more
With the MSCI EM index dead flat at the time of writing on Monday, it’s fair to say that a bit of stability has returned to the market.
So, with the index down 13 per cent this year, is it a time to buy? Not necessarily, says Dan Morris, global market strategist at JPMorgan Asset Management: China and other big markets are down for a reason, while sorting the wheat from the chaff in the rest of the big barn of EM equities is as hard as ever. Read more
One effect of the recent turmoil in China’s financial markets is that investors are no longer surprised by gloomy news on the economic outlook.
Chinese equities barely flinched after the announcement of the official purchasing managers’ index for June and the final version of HSBC’s PMI for the same period. Even though both pointed stagnating growth in China’s factories, the often-volatile Chinese stock market was almost unmoved, with the Shanghai Composite index closing 0.8 per cent up. Read more
To nobody’s great surprise, Russia on Thursday revealed that it was cutting in half its target for privatisation revenues for 2014-16.
The government blamed the financial markets. But the truth is that Russian assets are hard to sell at the best of times. The country needs the economic reforms that president Vladimir Putin has often spoken about, including at the recent St Petersburg Economic Forum, but has so far largely failed to deliver. Read more
Top of the world…no more
In the far-off days before the global crisis, there were as many as five Chinese companies in the world’s top ten by market valuation. Now there are none.
Even though the Chinese economy is about 75 per cent larger than it was at the end of 2007, the poor performance of the country’s stock market has held back its companies’ advance in the world rankings. Meanwhile, the surge in US equities has propelled American companies back to global dominance. Despite the continuing emergence of emerging markets, all 10 of the top 10 are American. Read more
Perhaps all this turmoil in EM financial markets won’t have as much impact on their real economies as many investors seem to fear.
That’s certainly a conclusion that could be drawn from Standard Chartered Bank’s half-year trading statement on Wednesday, in which the group predicted a sharp improvement in the second quarter over the first three months of 2013 despite the “backdrop of ongoing turbulence in the global economy”. While the actual results won’t be out for a while, investors took the hint and marked the shares up 3 per cent. Read more
China’s markets stabilised on Wednesday, with interest rates easing in the crucial interbank market and stocks slipping slightly in uneventful trading.
But along with the stability, there is gloom. Equity investors are increasingly worried that slower growth and tighter credit is bad news for stocks: they’ve now fallen to their lowest since January 2009 and the depths of the global financial crisis. Read more
The US Federal Reserve signalled the coming end of QE only a month ago, but forecasters are already producing long-term forecasts of the possible impact on emerging markets of the expected cut in easy money.
That’s brave, given the amount of noise in the market. On Wednesday, the Institute of International Finance, the banker’s club, pitched in with a report predicting a drop in net private capital flows to EMs over the next 18 months to the lowest level since 2009. That sounds bad, given that 2009 was a grim year. But the IIF’s numbers are a bit less gloomy than its top line. Read more
China’s central bank seems to have decided that after giving the markets a good scare, it is time to calm things down. After Monday’s statement failed to do the trick, it came out on Tuesday with another saying that interest rate volatility and the tight liquidity situation would “gradually ease”.
While the message was delivered after the close, enough people got wind of the bank’s plans for financial markets to stage a sharp recovery in late trading. But don’t mistake this recovery for a return of stability. Investors remain nervous: if the central bank is serious about spreading calm, it has a lot more to do. Read more
The world’s emerging markets are in the grip of an unprecedented wave of public protest. Today it’s Brazil. A few days ago it was Turkey. Before that there were Russia, Indonesia, India, and South Africa, all of which have seen big demonstrations in the past year. And before that there was Egypt and the Arab Spring. Read more