Emerging Markets – Newsletter #5

Emerging Markets

UK Pension Funds and IMF disagree on EMs –  The UK pension funds invest again in emerging markets however IMF’s chief economist Olivier Blanchard warns of a bubble as does China. People, Reuters (pension fund), IMF (bubble)

Latin America

LatAm grows steadily – Reuters

Brazil keeps sending mixed feelings – The efts are growing strongly but the new taxes threaten to destroy the recent grains. Bloomberg Seeking Alpha

The Economist Special Report: business and finance in Brazil. Attachment

Latin America Stocks to Near Records by End 2010, JPMorgan Says – Latin America’s stock markets will rebound to almost record highs by the end of next year. Bloomberg

El Nino intensifies Latin America drought – From a devastating food crisis in Guatemala to water cuts in Venezuela, El Nino has compounded drought damage across Latin America this year. AFP

Gerdau Sells $1.25 Billion of 10-Year Bonds in Overseas Markets – Gerdau SA, Latin America’s largest steelmaker, sold $1.25 billion of 10-year bonds in overseas markets as the company prepares to boost investment in its iron- ore business, said a person familiar with the transaction. Bloomberg

Argentina’s Debt Swap May Be Delayed Until January – Argentina’s planned offer to swap as much as $20 billion of defaulted debt to help it re-enter international credit markets for the first time since 2001 may be delayed until January, Economy Minister Amado Boudou said. Bloomberg

Asia Pacific/Pacific

China –  Chinese stocks surged last week Cabot

Sharia-compliant investments – An investment fund that is sharia-compliant looks at investing in clean-tech and gains in popularity. Reuters

JP Morgan hires Shao as CEO – JP Morgan appointed the Linklaters LLP’s Asia managing partner Zili Shao. He is due to start in February 2010. WSJ

Asia farewells Obama unimpressed – The Asian countries are looking at the bottomline of Obama’s visit to Asia and are not impressed. WSJ

Air Asia to expand to India – AirAsia is looking at expanding its activities into India after having overcome large amount of documentations. Now the structure seems to stand and the potential that India can bring to AirAsia can be tremendous. The Star

Africa

European Union gives Nigeria $1bn ‘for peace’ – The European Commission has signed a $1bn (£602m) development pact with Nigeria, aimed at tackling corruption and promoting peace. BBC

Ghana pledges tough curbs on spending – The government of Ghana, an evolving democracy beloved of western donors, has pledged tough new checks on spending as it wrestles with a record budget deficit inherited from the former administration. FT

Out of Africa, into Euronext for PPR’s CFAO – French retail and luxury group PPR is set to raise up to $1.5 billion by listing its Africa-focused distribution unit CFAO in Paris next week, raising the profile of a company little known by international investors. Reuters

KENYA: Nakumatt Sets Sh1.8 Billion Price for Sale of 30 Per Cent Stake – Retail chain Nakumatt Supermarket is shoring up its financial position with the sale of a third of its shares to international private equity investors for Sh1.8 billion. AllAfrica

Eskom May Secure a $3.75 Billion World Bank Loan by Early 2010 – The World Bank may agree to lend Eskom Holdings Ltd. as much as $3.75 billion by early next year to help reduce an 80 billion rand ($11 billion) funding shortfall, South Africa’s National Treasury said. Bloomberg

Most clicked articles last week:

IIM-A’s summer placements close in four days flat

Latin America will do well, but not great

Big Risks in China’s Yuan Policy

South Korea OK’s India free trade agreement

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Newsletter – Emerging Markets #4

Emerging Markets

Are ETFs (Exchange Traded Funds) Causing an Emerging-Markets Bubble? – U.S. investors have pumped roughly $26 billion into emerging-markets funds so far this year. Of that, $15 billion came in through exchange-traded funds — portfolios that hold every stock in a market benchmark with utterly no regard to price. FT Advisor, WSJ

Latin America

Agriculture: Superpower is ready to feed the world – Malthusians worried about the world’s ability to feed itself might like to listen to Roberto Rodrigues, an agribusiness consultant and former Brazilian agriculture minister. FT

Lula sees Brazil economy growing 5 pct in 2010 – President Luiz Inacio Lula da Silva is confident Brazil’s economy will grow by 5 percent in 2010 and expects foreign reserves to reach $300 billion soon, he told the Financial Times in an interview published on Monday. Reuters

Meirelles Says Investors May Create Brazil Bubble – Brazilian central bank President Henrique Meirelles said “exuberant” investors might create an asset bubble in Latin America’s biggest economy. Bloomberg

Latin America will do well, but not great – The news that Brazil and Mexico have come out of the recession and are poised for solid growth should be celebrated, and both countries leaders should be given credit for their sound economic management. Miami Herald

Latin America low on Obama’s priority list – One year the election of President Obama, it’s time to ask whether his ambitious campaign promises for Latin America are being fullfiled. Miami Herald

Latin American Leaders Seek to Rein in Media, Press Group Says – Populist leaders in Latin America are increasingly making legal and political moves to silence their critics in the media, the president of the Inter American Press Association said Friday. NYTimes

Asia Pacific/Pacific

Indian IIM-A placement record – The famous business school IIM-A manages to place all 321 students within four days. India Times

Asian stocks falling third week in a row – The Asian stock markets have been experiencing the longest decline for the last 8 months. Bloomberg

Russia – German carmaker Audi is aiming at doubling its sales to 30,000 by 2015 in Russia while Gazprom is cutting its profits in half for first half of 2009. WSJ, The Associate Press

Is China unbalancing the world economies? – China is again growing at 8% and is bound to overtake Japan as the second largest economy in the world. Critics now say that this growth is at the expense of the rest of the world especially with regards to the Yuan policies. Economist economist Herbert Stein goes even further criticing that this growth is not sustainable: ” too much investment, too much saving, too little consumption”. NY Times

India – JPMorgan to Grow Indian Investment Banking Unit. Bloomberg

Indian-South Korean freetrade agreement – India and South Korea are moving closer by increasing economic ties and entering a free trade agreement. JoongAng Daily, Businessweek

Japan – Uncertainty about US Army Bases in Japan after new Japanese government has taken power and Obama heading to Japan. WSJ Reuters

Mekong Delta – The last frontier of the Asian Emerging Markets is gaining increasing attention especially now as Japan makes more economic ties. Channel News Asia, Reuters

Asia most affected by climate change – The APEC summit has concluded that it is most affected by the Economic Change and focuses more attention on environmental protection now. Xinhuanet

Obama in Asia – The US president is faced with tough situations when visiting Japan, China, Singapore and South Korea this week. Honolulu Advertiser LA Times

Africa

Angola Seeks $4 Billion in Bond Sale, JPMorgan Says Angola, which vies with Nigeria as Africa’s biggest oil producer, is seeking to raise $4 billion in the sub-Saharan African region’s largest sale of bonds. Bloomberg

China pledges $10bn in Africa loans The Chinese government has pledged to give African countries billions of dollars in cheap loans at a two-day Africa-China summit in Egypt. Aljazeera

Ghana to renegotiate $900m Vodafone deal The government of Ghana on Tuesday night said it would renegotiate Vodafone’s $900m (£550m) purchase of a leading local telecoms group after an official review into alleged “irregularities” in the deal. FT

Why deregulation is essential for Nigeria, by Yar’Adua PRESIDENT Umaru Musa Yar’Adua yesterday said that deregulation of the petroleum sector was inevitable to curb corruption and other abuses in the system. NGR Guardian News

SA terminate $5.4bn Airbus deal The South Africa government has terminated the US$5.4 billion Airbus A400M military aircraft deal, cabinet announced on Thursday. The decision which was taken two weeks ago but was only made public Thursday would have seen the southern African country acquire eight Airbus A400 military aircraft. Africa News

Why Ugandans want to work in Iraq At the Watertight security training ground in Uganda, a group of men and women are doing target practice with their AK47s. BBC

Most clicked articles last week:

HSBC On Lookout For Acquisitions In Emerging Markets –WSJ

Emerging Markets Offer Operators Best Opportunity to Gain Foothold in Growing Mobile Business Customer Market, Says ABI Research – Reuters

The Double-Edged Sword of Emerging Market Growth – Seeking Alpha

Forget China, Brazil’s a cheaper investment – CNN Money

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IIM-A places all students in four days

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Update [27.11.2009]: I spoke to professors of IIM-B today, who are visiting ESADE this week. They confirmed that all the numbers and facts refer to MBA students and full-time positions. This was not sure previously but now it is! Apparently the figures are also the same for IIM-B, hence congratulations to both IIM’s.

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I would like to share this article from the India Times with you because it is impressive (thank you for the information, Romit). We have just completed our Career Week 2009 at ESADE ourselves as have most other Business Schools around the world. With the flat world we are living in ESADE is competing with the universities around the world.

One of those universities is the Indian Institute of Management – Ahmedabad (IIM-A). Have a look at those facts because they are impressive:

• Placed all 321 students in four days
• Investment banks made 77 offers on Day Zero (first day)
• 76 students received offers oversears (eg. US, France, Germany, the UK, the Middle-East, Africa and Southeast Asia)
• McKinsey & Co, Boston Consulting Group and Bain & Co placed 3-5 students each
• We are experiencing a Financial Crisis!!!!

I think that those figures are quite stunning and have set the bar high for other universities. This also exemplifies the quality of the Indian universities and students. The statistics for ESADE are not available to me but I would love to them know them.

Source: India Times

Newsletter – Emerging Markets #3

Emerging Markets

EM new opportunities for Mobile Phone Operator – Mobile Phone Operators see a great growth opportunities with the large amount of SME emerging and growing in the Emerging markets. Reuters

HSBC is looking at the EM – HSBC is on the look out for M&A’s in EM and is particularly interested in China – WSJ, Reuters

Pension Funds are heading to the EM – Fund managers are looking at increasing the amount of pensions funds investmented in EM. Pionline

Latin America

Banco do Brasil wants US$5.7bn US share sale – SAO PAULO, Oct 31 (Reuters) – Banco do Brasil (BBAS3.SA), Brazil’s biggest bank, wants to fetch up to 10 billion reais ($5.7 billion) in a share offering in the United States to replenish its capital base, newspaper O Estado de S. Paulo reported on Saturday, citing unnamed sources. Reuters

Honduran coup leaders agree to restore ousted president to power –  The de facto government announces that it will sign accord reinstating Manuel Zelaya. The Guardian

AEI Pulls Offering Amid Record Low Returns for IPOs – Oct. 30 (Bloomberg) — The market for initial public offerings, hurt by the worst returns in at least 14 years, suffered another setback after AEI pulled its sale. Bloomberg & Reuters

EMERGING MARKETS – LatAm stocks tumble, worst day in 8 months – NEW YORK, Oct 28 (Reuters) – Investors pulled back from riskier markets again on Wednesday after weak U.S. housing data upset economic recovery hopes and slammed Latin American stocks for their worst one-day fall in nearly 8 months. Reuters & Bloomberg

Forget China, Brazil’s a cheaper investment – The bustling economy survived the global slump in style, and many of its stocks are still reasonably valued. CNN Money

Asia Pacific/Pacific

Pakistan’s National Bank Net Declines on Provisions – National Bank of Pakistan, the nation’s biggest lender by assets, said third-quarter profit declined 18 percent after it set aside additional funds to cover bad debts and received lower dividend income. Bloomberg

China’s Sinopec posts 25% drop in 3Q net income – Sinopec Profit May Fall as Fuel Prices Lag Behind Oil. Bloomberg, China Economic Review

China sovereign fund buys 45% stake in Russian oil company – China Investment Corporation (CIC), the nation’s sovereign wealth fund, announced Friday that it had closed the first phase settlement for the purchase of a 45 percent stake in Nobel Oil Group. People.com.cn

China’s economic policies, RMB exchange rate to remain stable – China is to maintain basic stability and continuity in the economic policies and RMB exchange rate to ensure a foreseeable prospect for its businesses. Xinhuanet

India is wondering what to do with all the capital – India is facing an unprecedented inflow of foreign capital into the market and now needs to find new ways to cope with that challenge and opportunity.  Seeking Alpha

SE Asia Stocks-Markets subdued, Thailand leads falls. Reuters

Africa

China’s direct investment in Africa, excluding in the financial sector, shot up 78.6% – Mbendi, People.com.cn

IMF forecasts Kenya’s economy to grow by 2.7% in 2009 – A statement issued in Nairobi following the conclusion of a two-week visit to the East African nation said the economic performance is expected to improve gradually.Xinhuanet

Uganda’s Inflation Slowed to 13.3% in October – Uganda’s annual inflation rate declined to 13.3 percent in October after the prices of some foods fell, the Uganda Bureau of Statistics said.Bloomberg

IMF sees 3% Zimbabwe growth, warns on wages demands -Zimbabwe’s economy would grow by 3 percent this year due to improved policies said the IMF. Busrep

Sudan’s oil production has plunged to less than 500,000 barrels per day – Sudan’s oil production has plunged to less than 500,000 barrels per day in 2008/2009, said the minister of energy in an interview with Reuters on Oct. 25. Sudantribune

ArcelorMittal South Africa has posted a headline loss of R65 million – The third quarter loss represents a substantial improvement on the R607 million loss of the previous quarter. Mbendi

SA Rand Pares Loss After Steepest Intraday Decline in One Year – The rand posted its biggest intraday decline against the dollar in more than a year as the Tokyo Financial Exchange Inc. quoted a price on its Web site that was 35 percent below the rest of the market. Bloomberg, Update by Busrep

South Africa’s unemployment rate increased by 0.9% to 24.9% Mbendi

Middle-East

Mizuho Said to Form Investment Bank in Saudi Arabia – Mizuho Financial Group Inc., Japan’s third-largest bank by market value, received a license to start offering investment-banking services in Saudi Arabia. Bloomberg

Dubai’s Drake & Scull Q3 net profit $19 mln – Dubai-based contractor Drake & Scull International DSI.DU recorded a third-quarter net profit of 71 million dirhams ($19.33 million) on Monday and said it continued to review expansion opportunities in the region. Reuters

Most clicked articles last week:

Asian leaders seek to reduce Western trade ties Reuters

No Asia without us, India reminds Asean, Japan Hindu

East Asia Needs New Economic Model, Says Najib Bernama

This newsletter was sent by the ESADE Emerging Market Club. If you wish to unsubscribe please reply to this email with the word “unsubscribe” in the subject. To subscribe please email to ESADE Emerging Market Club and write “subscribe” in the subject.