We had allowed the World Bank’s annual ranking of, well, everyone by the ease of which their country facilitates business to pass unremarked. Singapore retained its top spot for the sixth year in a row, under criteria that clearly take no account of chewing gum preferences.
However, Maquarie have dug a little deeper into the survey results, and they find that the Philippines is on the up and up, while warning lights are flashing in China which slid to 96th globally, from 78th four years ago. Read more
Jim O’Neill, chairman of Goldman Sachs Asset Management, Red Knight, and all-round Mr Bric, will retire later this year, the bank announced on Tuesday.
The full statement follows… Read more
Or, a new Bloody Ridiculous Investment Concept to save Germany.
From Handelsblatt (in the fine FT Alphaville tradition of Google Translated German): Read more
Consumer and business confidence in Europe and the US is down. Even McDonald’s, the fastfood eatery that ensures students can afford meat for dinner, is worried about the impact of the gloom on its profits. It’s ugly out there.
However, let’s take a moment to reflect on the longer term, and more global, picture.
Also we need to meet our quota of one positive news story per week. Courtesy of UBS, here’s how consumption of certain white goods generally evolves as the GDP per capital for a country increases (using data from Euromonitor as well as their own): Read more
Slowing GDP growth and political roadblocks to economic policymaking could put India at risk of losing its investment-grade rating.
That’s the Standard & Poor’s latest warning on India, coming just two months after it revised the country’s BBB- rating (one notch above junk) from stable to negative as GDP growth fell to 5.1 per cent in the first quarter. Are the Brics about to become the Brcs? Read more
China intends to extend renminbi loans to other Brics nations, in another step towards the internationalisation of its currency, the FT reports. The China Development Bank will sign a memorandum of understanding in New Delhi with its Brazilian, Russian, Indian and South African counterparts on March 29, say people familiar with their talks. Under the agreement CDB, which lends mainly in dollars overseas, will make renminbi loans available, while the other Brics nations’ development banks will also extend loans denominated in their respective currencies. The initiative aims to boost trade between the five nations and promote use of the renminbi, rather than US dollar, for international trade and cross-border lending. Under 13 per cent of China’s Asia trade is transacted in renminbi, according to Helen Qiao, chief Asia economist for Morgan Stanley. HSBC estimates that the currency’s share of regional trade could swell to up to 50 per cent by 2015.
Knights in shining armour that is.
The recently-floated plan for the big emerging markets to send money to Europe via an IMF-led SPV, which could be used alongside the EFSF to buy sovereign debt, is getting the lead balloon treatment. Read more
Not quite, but near enough, according to reports on Friday afternoon from the FT and Reuters.
The pink paper revealed on Thursday that Bric countries were looking at ways to support the eurozone, such as via a
unicorn SPV, increased IMF funds, and lines of credit to sovereigns struggling to access liquidity. But it looks like Geithner and Osborne have put a stop to such emerging market altruism: Read more
Emerging market countries are working on ways to contribute money rapidly to expand the effective firepower of the International Monetary Fund, with the aim of increasing its role in combating the eurozone sovereign debt crisis, reports the FT. The discussions, in parallel with talks in the eurozone about creating a bigger “bazooka” to intervene in financial markets, are aimed at producing a confidence-boosting announcement by the Group of 20 heads of government summit next month. (Before that there’s today’s G20 finance ministers meeting in Paris, which will be all eurozone, all of the time, says Reuters.) Meanwhile, in Europe, policymakers are as ever desparate to prevent a technical default by Greece, writes the FT.
With hedge funds going into the meedja sentiment business this is probably worth exploring:
Finance news articles mentioning ‘crisis’ are at a three-year low, say Société Générale’s cross-asset research team using a famed indicator: Read more
Silver prices plunged for the fifth consecutive day on Friday as the grey precious metal suffered its biggest correction since the billionaire Hunt brothers cornered the market in 1980, the FT reports. The reversal of fortunes for silver – which until this week’s 25 per cent drop had been up 56 per cent since January – has led a wider sell-off in commodities markets, which were heading towards one of their worst one-day falls on record. Brent crude dropped as much as $12.17 to a low of $109.02 a barrel, the FT says. The drop was the largest in percentage terms since the financial crisis and the largest ever in absolute terms. FT Alphaville has a round-up of some extraordinary commodities sell-off numbers. Goldman’s Bric fund is among the most hurt in the “panic selling,” according to Bloomberg. The WSJ cites an analyst saying “hedge funds got scared and everyone’s running for the door”.
Risk assets have not had a great month so far, with global equities now having eliminated most or all of the gains they recorded during January and February.
It is tempting to view recent setbacks as a natural response to the heightened uncertainty which has been caused by an extraordinary combination of exogenous shocks hitting the system. But these shocks will ultimately cause a bear market only if they are sufficient to cause a major slowdown in global economic activity. Read more
Jim O’Neill, who coined the term “Bric”, is about to redefine further emerging markets and will explain the new approach to clients this month, the FT reports. The chairman of Goldman Sachs Asset Management plans to add Mexico, South Korea, Turkey and Indonesia into a new grouping with the Brics – Brazil, Russia, India and China – that he dubs “growth markets”. “It’s just pathetic to call these four emerging markets,” he told the Financial Times. The new approach will involve looking at fresh ways to measure exposure to equity markets beyond market capitalisation – for example, looking at gross domestic product, corporate revenue growth and the volatility of asset returns.
We knew that Jim O’Neill couldn’t stay out of the limelight for long after moving out of centre-court as chief economist of Goldman Sachs late last year.
Now, in the loftier position of chairman of Goldman Sachs Asset Management, the man who still dines out on coining the term “Bric” says he is about to “redefine” emerging markets once again. Read more
Just another way to underline the fact that the next innovations in growth are not really coming from the BRICs…
Something from Société Générale’s Dylan Grice (and something of a reply to his SocGen colleague Albert Edwards), who recently indulged in the “mugs game” of forecasting capital gains in world equity markets, to start the week.
In his own words, the outlook is distinctly underwhelming: Read more
Bank earnings season is now underway, and here’s a trio of charts from the Economist Intelligence Unit showing that most of the banks whose shares outperformed the Bloomberg World Banks Index in the past year are in the Brics.
(These figures are as of Tuesday, before JP Morgan announced earnings on Wednesday morning. JPM was down 1.2 per cent as of 2:41pm in New York.) Read more
So farewell Jim O’Neill.
Goldman’s Mr BRIC is moving on to head the bank’s asset management business – FUM $802bn — and here (via Zerohedge) are some excerpts from his farewell letter. Read more
In emerging markets, things get made. China has long enjoyed (or endured) the moniker ‘workshop of the world’. But perhaps China will soon be better known as the wallet of the world, if Morgan Stanley’s latest projections on global spending power are anything to go by. As the FT’s beyondbrics blog reports, the number of households in Bric countries with an income over $10,000 a year will surpass that of both the eurozone and the US, before rocketing off into the stratosphere. Spending power is moving south and east, and it’s doing so at blistering pace.
Africa’s top 40 companies — ranging in size from $350m to $80bn and already regional players in mining, consumer industries and services — are emerging as competitors on the global stage, the FT said, citing research by the Boston Consulting Group. The report also identified a group of fast-growing nations which it describes as the “African Lions” – Algeria, Botswana, Egypt, Libya, Mauritius, Morocco, South Africa and Tunisia. Their collective per capita GDP, at $10,000, is already higher than the average for the Brics.
Ah, Yuan revaluation worriers: name-calling won’t win the argument for you. But sage advice from a certain investment bank just might.
Monday brought the sound and fury of a letter from 130 U.S. Representatives to the Treasury demanding that it brand China as a ‘currency manipulator’. Read more
You may well be feeling “Bric-ked out” after the recent surge of media attention, including the FT’s all-singing, all-dancing “Building Brics” special. But that’s nothing compared to how you might feel later this year, if the latest figures are anything to go by.
Brazil, Russia, India and China have issued a record amount of equity since the start of the year, as the so-called Bric countries have rushed to take advantage of increased appetite for emerging market assets Read more
London will thrive as a financial centre over the next decade as the natural western hub for emerging market growth, according to UK hedge fund Toscafund. While some UK funds such as BlueCrest Capital and Brevan Howard move staff to Switzerland amid warnings of the City’s imminent demise, Savvas Savouri, Tosca’s chief economist, predicts that London will attract at least 100,000 new financial services jobs over the next decade, spurred by growth of the BRIC nations.