** FT News **
* China seeks end to gold medal fixation | ‘Blind pursuit’ of success condemned as sports administrator scraps rewards for victory
So you thought a six-month break on a desert island looked appealing and spent long hours in silent meditation, reflecting on self-actualisation, harmony and humanity’s ceaseless race to consume the planet. Now you’ve just made the return journey to find that the oil price collapsed from over $110/barrel to less than $50. Peak theorists having turned into piqued theorists. You didn’t see that coming. And, frankly, neither did we. Nor did we expect to see the Swiss franc jump 28 per cent in a single day – as it did recently.
The lesson being that extreme volatility has to be an assumption when building portfolios, and doubly so when investing in frontier markets, where volatility is often amplified. Read more
The notorious “Rufo” clause (for rights upon future offers) in restructured debt contracts appears to have been the red herring that many had warned it was when the government cited it as an excuse for not cutting a deal with the holdouts last year, triggering Argentina’s default in July. Read more
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Just what are we to read into this? Mainstream and social media in India are abuzz with the revelation that, when Prime Minister Narendra Modi met US President Barack Obama on Sunday, the pinstripes of his suit were not pinstripes at all but his full name, Narendra Damodardas Modi, spelt out in block capitals over and over again. Read more
It’s official: India and the US will resume negotiations on a high-standard bilateral investment treaty (BIT). In a joint statement on Sunday by Prime Minister Narendra Modi and President Barack Obama, the leaders affirmed their “shared commitment to facilitating increased bilateral investment flows and fostering an open and predictable climate for investment.”
Since 2008, the two countries have been engaged in sporadic discussions to arrive at such a treaty. In the coming days, negotiations will begin on its wording, based on each country’s revised model treaty texts. Read more
The task facing Brazil’s new economics team came further into focus on Monday morning with inflation expectations rising and the consensus on economic growth falling, both for the fourth consecutive week. The central bank’s latest weekly survey of market economists has GDP rising just 0.13 per cent this year, down from the 0.55 per cent expected four weeks ago, while consumer price inflation is seen ending the year at 6.99 per cent, up from 6.53 per cent four weeks ago and some way beyond the upper limit in the government’s target range of 4.5 per cent plus or minus two percentage points. Read more
January is normally a quiet month for dealmaking in Brazil as executives collapse on a beach somewhere for their long summer holiday between Christmas and Carnival. However, that could all change this year as bankers push ahead with the next stage of the telecoms market’s consolidation.
Late on Thursday, the Brazilian mobile phone operator Oi finally got approval from its merger partner Portugal Telecom to sell the Portuguese company’s assets to France’s Altice. (Altice agreed to the €7.4bn acquisition in November but minority shareholders had threatened to sabotage the deal.) Read more
Emerging Asia is set to be the world’s fastest-growing region again in 2015, skirting the contagion from Russia’s crisis and riding the fall-out from weak commodity prices, according to Fitch, the credit rating agency. Nevertheless, structural frailties stalk seven out of 10 countries in the region, with surging debt levels a particular concern, the agency said.
The region, excluding China, is expected to expand by 5.9 per cent in 2015 and 6.1 per cent in 2016 – compared to an average for global emerging markets of 4.1 per cent and 4.5 per cent respectively, Fitch said in a report. These forecasts compare with the International Monetary Fund’s (IMF) estimates that developing economies would this year grow at 4.3 per cent, accelerating to 4.7 per cent in 2016. Read more
This week, world leaders from the public and private sectors, civil society and academia are gathered at Davos to discuss a “new global context” – the theme of the World Economic Forum’s 2015 annual meeting. In this new context, the WEF fears that profound transformations – social, economic, political and technological – are hastening the end of “economic integration and international partnership”. Read more
While we all enjoy the ECB-inspired feeding frenzy across all risk assets this week it might be well to remember why Mario Draghi opted for yet another extraordinary measure in line with the message that he will do “whatever it takes”. Indeed, it is perhaps a reflection of the immense challenges facing Europe that he is betting the bank and, especially, other peoples’ (Germans’) money. Europe is in the worst state it has been in at any point in the entire post WWII era. Read more
Evo Morales was sworn in for his third consecutive term as president of Bolivia on Thursday. Before that, on Wednesday, he turned up for an indigenous ceremonial inauguration at the pre-Inca ruins of Tiwanaku wearing an outfit engraved with the sun god, worthy of an emperor. The symbolism was fitting: Bolivia’s longest-serving leader has not only championed indigenous rights but also managed to enrich one of Latin America’s poorest countries.
Investors are often known to buy on the rumour and sell on the fact but on Thursday, following the announcement of the European Central Bank’s €60bn-a-month asset-buying programme, they carried right on buying.
That’s true, at least, of central and eastern European currencies, if you measure them against the freshly-weakened euro. Read more
Economic slowdowns in Macau and China have driven headlines recently, but a new report by the Brookings Institute ranks Macau as the top economically performing metropolitan area in the world for 2014, followed by four Chinese cities in the top 10 and 11 in the top 20.
Macau’s casino industry took a hit over the second half of 2014, due mainly to a Chinese crackdown on corruption and graft that has reduced the number of VIP high-rollers travelling to Macau from the mainland. In December, gambling revenues hit their lowest point since 2011, and for the whole year, the industry recorded its first ever year-on-year decline – much to the dismay of casino and junket operators. Read more
After building expectations for so long, it will come as a disappointment today if the Eureopean Central Bank does not promise to buy (or have others buy) €50bn’s worth of assets every month for at least the next year.
Assuming Mario Draghi delivers as hoped, what will it mean for EM? Will ECB QE pick up where the US Federal Reserve’s variety left off, floating EM asset prices once again? Beyondbrics has been asking around. Read more
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