• Home ::
• Fundamental ::
• Analysis Reports ::
• Emerging Markets Weekly

• Send
• Print
• Add To
• Rss

Emerging Markets Weekly

4ac4581f-be21-4e6b-a182-e40277763256

0

0

Argentina's industrial output rose 9.9 percent in December from a year earlier

Mon, Jan 28 2008, 10:43 GMT
by Erste Bank Bond Research Team

Erste Bank der oesterreichischen Sparkassen AG

LATIN AMERICA

Argentina

Argentina's industrial output rose 9.9 percent in December from a year earlier, the National Statistics Institute reported. Industrial production last month rose a seasonally adjusted 0.5 percent from November, the institute reported in Buenos Aires.

Brazil

Brazil's ethanol industry has grown as the government champions the fuel as a means to create jobs, curb pollution and lessen dependence on fossil fuels. Behind the boom lies a harsher reality for the 500,000 workers who toil from March to November harvesting sugar cane to make ethanol. Most are migrants, and how much they make depends on how much they cut. Their work is backbreaking and dangerous. From 2002 to 2005, 312 sugar and ethanol workers died on the job, and 82,995 suffered accidents while working in cane fields and ethanol plants, according to Brazil's Social Security Administration.
Brazil's annual inflation rate in the first half of January rose above the central bank's target for the first time since 2006, pushed up by food prices. Inflation, as measured by the government's IPCA-15 consumer price index, quickened to 4.55 percent in the year through Jan. 14 from 4.36 percent in month-earlier period.

Chile

Chilean Finance Minister Andres Velasco said the decision by the U.S. Federal Reserve to cut its benchmark interest rate is a ``good signal'' for markets. Chile is well-prepared to deal with an international crisis, Velasco said. The world's biggest copper exporter has used revenue from record prices for the metal to pay down debt and accumulate a fiscal surplus of $19 billion.

Ecuador

Ecuador will invest U.S. $2 billion in its oil industry this year in a bid to increase production by 11 percent, Energy Minister Galo Chiriboga said Wednesday. Some $1.7 billion will be used to increase production at state oil company Petroecuador and another $300 million will be used to revamp the Esmeraldas refinery, Ecuador's largest, Chiriboga told Ecuador Inmediato radio. Ecuador is South America's fifth-largest oil producer and churns out an average of 510,000 barrels of crude a day.

Mexico

Mexican stocks dropped, pushing the benchmark Bolsa index down 20 percent from its October record, on growing speculation the U.S. economy is headed for a recession. The Bolsa index fell 4.3 percent to 25,566.34 today as of 9:55 a.m. in New York, bringing its losses from an Oct. 18 record close to 22 percent, exceeding the definition for a ``bear market.''
Mexican consumer prices rose less than economists expected in the first half of January, because of declines in tomato and travel costs. Consumer prices rose 0.27 percent in the first 15 days of the month, compared with a 0.20 percent increase a month earlier, the central bank said on its Web site.

Peru

Peru and Canada reached a trade agreement this weekend that will eliminate trade barriers between the countries, Peru's President Alan Garcia said. David Emerson and Mercedes Araoz, trade ministers of Canada and Peru, respectively, concluded six months of negotiations at the World Economic Forum in Davos, Switzerland, Garcia told reporters in Lima.

AFRICA & MIDDLE EAST

Nigeria

The indictment of a former Nigerian state governor has prompted President Umaru Yar'Adua to end the practice of sustaining legal immunity for acting governors. Mr. Yar'Adua has pledged what he calls zero tolerance for corruption since taking office. He announced his policy shift last week at the World Economic Forum in Davos, Switzerland, one day after prosecutors charged former Edo State Governor Lucky Igbinedion with more than 150 counts of embezzlement.

South Africa

South African house prices rose at their slowest pace in seven years in 2007 as interest rate increases curbed spending, said Standard Bank Group Ltd., Africa's biggest lender. House price inflation slowed to an average 8.3 percent last year, compared with 9.8 percent in 2006, the Johannesburg-based bank said in an e-mail.
South Africa is treating the country's power outages as a national emergency and won't allow them to halt planned industrial projects or threaten its hosting of the 2010 soccer World Cup. The government will accelerate efficiency programs and introduce new measures to save as much as 3,500 megawatts of electricity by 2010, Public Enterprises Minister Alec Erwin told reporters in Pretoria.

ASIA

China

Foreign investment in China rose 13.8 per cent last year to US$82.7 billion, despite curbs meant to cool a boom in spending on real estate and other assets, data released Monday showed. Foreign investment outside the financial sector rose 13.6 per cent to US$74.8 billion, while investment in banks and securities totalled US$7.9 billion, the Commerce Ministry reported on its website.
China's inflation rate accelerated to 4.8 percent in 2007 from a year earlier, according to the statistics bureau. The inflation number was in a report about prices in the southwestern province of Yunnan, posted on the bureau's Web site. The rate in 2006 was 1.5 percent.
China's economy grew 11.4 percent in 2007, its fastest expansion in 14 years, driven by a boom in exports and investment, but growth slowed slightly toward the end of the year, according to government data. The sharp increase in output brought China closer to overtaking Germany as the world's third-largest economy after the United States and Japan.

Malaysia

Fitch Ratings has affirmed Malaysia's 'A-' (A minus) Long-term foreign currency Issuer Default Rating (IDR) and revised the Outlook to Positive from Stable. "The country's sovereign ratings are mainly supported by its strong balance of payments surplus and rising external assets. Moreover, Fitch believes the country remains firmly on the path of gradual transformation towards a more efficient, private sector-led economy, and the stable political condition is conducive to continual gradual reforms," commented Franklin Poon, Director in Fitch's Asia Sovereign ratings team. Ongoing external surpluses and reforms to enhance medium term growth prospects would strengthen Malaysia's sovereign credit profile.

Philippines

Moody's Investors Service raised the credit rating outlook on the Philippines to positive while Standard & Poor's said government finances had improved, bringing gains to the peso and to Philippine bonds. Manila's Acting National Treasurer Roberto Tan said the government would not rush to issue bonds, although the cost of borrowing was likely to fall. The Philippines has said it will raise $500 million through a global sovereign bond this year. "There are no immediate plans right now," Tan told Reuters. "We are just monitoring the market. It will depend on how it impacts our paper," he said, referring to the outlook change. Moody's, which had a stable outlook on Philippine ratings, said the change was prompted by "progress in stabilising public sector finances and an easing in the government's dependence on external financing." Finance Secretary Margarito Teves said the government would work on further cutting debt and raising revenues. "We are hopeful that Moody's outlook change will be followed also by positive ratings actions by other rating agencies," he said in mobile phone text message.

Singapore

Singapore's inflation accelerated in December to the highest since 1982, placing pressure on the central bank to allow faster gains in the currency. The consumer price index jumped 4.4 percent from a year earlier, after gaining 4.2 percent in November, the Department of Statistics said.

South Korea

South Korean President-elect Lee Myung Bak chose Han Seung Soo to be his prime minister, saying the former finance chief and foreign minister is the most qualified to lead the government and drive Lee's economic plans. Han, 71, must be vetted by the National Assembly before he can take office. The prime minister oversees South Korea's cabinet and government administration.

South Korea is forecast to post a trade deficit for a second straight month in January after oil prices surged, Yonhap News reported, citing Commerce Minister Kim Young Ju. The country may see a trade shortfall of about $2 billion for this month, even though exports remain healthy, Kim was quoted as saying. Still, the nation is likely to see a trade surplus for the year, he said.

Thailand

Thailand's parliament elected abrasive People Power Party (PPP) leader Samak Sundaravej prime minister as the country returns to a democratically-elected government after a 2006 coup.
Here are five facts about the pugnacious 72-year-old politician:
-- Born in Bangkok on June 13, 1935 into an aristocratic family, Samak earned a law degree from Bangkok's prestigious Thammasat University and worked in various jobs as a clerk, tour guide and journalist.
-- Samak ran a radio campaign against pro-democracy student activists in the mid-1970s and supported a bloody crackdown on them in October 1976 which led to a coup. He served briefly as interior minister in the military-appointed government.
-- He was elected Bangkok governor in a landslide in 2000 but left office four years later with low approval ratings. He still faces graft probes into projects started while he was in office.
-- Samak was elected to the Senate in 2006, but lost his job after the Sept. 19 coup abolished the constitution. He stayed in the public eye as host of a television cooking show.
-- The political knife fighter was elected PPP leader in August last year and vowed to fight "military dictatorship".

Turkey

According to Turkey's investment agency, USD 3.3 bn worth of Greenfield investment for 2008 has been signed. Agency hopes that Asian capital especially from India and China, will help to mitigate possible negative impacts of global financial turmoil on FDI inflows. Year-to-date (January - November) FDI inflows stand at USD 16.7 bn. Given government's loaded privatisation agenda, analysts expect FDI inflows to reach USD 20 - 22 bn by end-2008. Foreign capital is crucial for Turkey in financing current account deficit which stands at USD 32.8 bn in January - November 2007 period.

EMERGING EUROPE & CIS

Iceland

Iceland's Aaa ratings are at a crossroads, according to Moody's Investors Service in a new special comment. The report does not announce any change in ratings. In Moody's view, Iceland compares favourably to many other advanced industrial countries also rated Aaa, given its low government debt, consensus-based political system, and well-functioning institutions. However, the Icelandic government is also potentially more vulnerable to a confidence crisis than other Aaa-rated sovereigns because of the country's large, internationalized commercial banks. "Iceland enjoys high per capita incomes, well-developed political, economic and social institutions, favorable demographics and a fully-funded public pension system," says Moody's sovereign analyst Joan Feldbaum-Vidra, author of the report. "Its government debt ratio is less than half the average of the Eurozone member countries." Still, the decidedly more challenging situation in the global financial markets has not left the highly leveraged economy unaffected, as the recent widening of funding spreads reveals. The continued international expansion of the Icelandic commercial banks has caused the government's contingent liabilities to rise above normal comfort levels.

Romania

Revenue in Romania's construction industry will grow as much as 30 percent this year to about 13 billion euros, Ziarul Financiar said. The cost of construction materials such as cement, paints and bricks, will increase as much as 15 percent, the newspaper said, citing Laurentiu Plosceanu, president of the Romanian Association of Construction Companies. Romania's construction industry grew an annual 30 percent by November as a result of increased investment in commercial property since Romania joined the European Union on Jan. 1 of last year, the National Statistics Institute said on Jan. 10.
AVAS, the agency in charge of selling Romanian state assets, will fire 20 percent of its full- time staff as largescale sales slow, Ziarul Financiar reported. AVAS will fire 100 of its 610 workers, the newspaper said, citing the text of a government decision. Drugmaker Antibiotice SA is the largest company the state plans to sell this year. The sale of a 53 percent stake is scheduled for March 18 at a starting price of 136 million euros ($200 million).

Russia

Independence for the Serbian province of Kosovo would create a precedent which will be used by separatists elsewhere, Russian Foreign Minister Sergei Lavrov said. Lavrov told a news conference that Russia had never said that Kosovo independence would lead Moscow to recognise the pro-Russian breakaway Georgian regions of Abkhazia and South Ossetia but added: "The precedent will be not because we want it but because it will be objectively created ... because justice is an understanding that drives people. If someone is allowed to do something, many others will expect similar treatment."

Slovakia

Slovakia is still expected to adopt the euro next year but other Eastern European countries are at least four years away from joining the currency bloc as inflation concerns linger, a Reuters poll showed. A poll of 34 analysts and strategists, taken Jan 15-24, found some adoption dates are now expected to be a year later than forecast in an October poll, with Estonia and Lithuania now seen joining in 2012 and the Czech Republic and Poland in 2013. "Inflation is now a hurdle for all of the new member states except for Slovakia," said Sharon Fisher at Global Insight. Slovakia is expected to become the next euro user, ditching its crown currency in 2009, having brought inflation under control and reduced its fiscal deficit. Wide fiscal deficits and pension reforms have forced the Czech government to abandon euro adoption in 2009-2010 and the central bank said last month it planned to mint more crown coins due to uncertainty about the timescale for euro adoption.

Ukraine

Ukraine's President Viktor Yushchenko said in a televised interview that he was positive that Ukraine would join the World Trade Organization on February 5, 2008, when its ascension will be on the WTO General Council's agenda. Integration into the global economic space will boost Ukraine's GDP by 1.8 percentage points, he added. According to earlier reports, Ukraine completed additional talks with the European Union over how it could guarantee its commitment to reduce a number of export duties.
Russia has proposed raising the tariff for Ukraine's exports of spent nuclear fuel for 2008 by 18 percent from the previous year's figure, a Ukrainian government source told journalists, adding that Ukraine was opposed to the increase. If the countries fail to reach a compromise on the cost of services, Ukrainian nuclear power plants will be forced to cut back nuclear fuel exports to Russia 2.5 times from target levels in 2008.

• Download Full Emerging Markets Weekly

Published on  Mon, Jan 28 2008, 11:28 GMT