According to the list of emerging and frontier sovereign debt covered by the specialists at Exotix (and Exotix cover a lot) the 10 per cent foreign-currency yield might be dying out (click to enlarge):
Big call from Citi’s Kato Mukuru and Alex Atienza.
In a 132-page note out on Wednesday, they recommend investors buy Portuguese banks — in order to gain exposure to Africa, and specifically Angola. Portugal’s Banco BPI and Banco Espirito Santo, they believe, “have built some of the most profitable and well managed banks on the African continent which, we believe, need to be introduced to the global investor community.” Read more
A narrow win for a left-winger in Peru’s presidential election sent mining stocks exposed to the country reeling and caused its stock exchange to fall 12 per cent, the FT says. Ollanta Humala, a former coup leader, has previously suggested that mining companies could face a 40 per cent windfall tax on operations in Peru, which is the world’s second-biggest copper producer after Chile. Humala has however promised to lead a government of ‘national consensus’ and distanced himself from the radical socialism espoused by Venezuela’s Hugo Chávez. FT Tilt has a full round-up of analyst reactions to the election result.
Greece debt restructuring chatter => Greece CDS blows out => peripheral sovereigns blow out with it. Usual stuff.
What’s wrong with this picture? Read more
Fresh from our inbox, a chart and some commentary from State Street Global Advisors:
Drastic developments in Egypt overnight:
At 22:34 UTC (00:34am local time), Renesys observed the virtually simultaneous withdrawal of all routes to Egyptian networks in the Internet’s global routing table. Approximately 3,500 individual BGP routes were withdrawn, leaving no valid paths by which the rest of the world could continue to exchange Internet traffic with Egypt’s service providers. Virtually all of Egypt’s Internet addresses are now unreachable, worldwide… Read more
Is there something afoot in Zimbabwe? As The Times (via The Australian) reported on Monday, influential UK-based fund manager Neil Woodford, who manages about ₤15bn for Invesco Perpetual, has committed $25m of clients’ money to investment in Zimbabwe.
Woodford bought a 29.5 per cent stake in Masawara, a Jersey-incorporated fund that the Times says will be valued at $80m when AIM trading in the shares begins in a fortnight. Read more
Hundreds of Bangladeshi garment factories supplying western buyers such as Walmart and H&M gradually reopened on Wednesday, after days of violent protests by tens of thousands of labourers demanding higher wages. Economists say the unrest highlights how pressure for higher wages is not just confined to China, and is likely to spread to other cheap Asian manufacturing bases like Vietnam, raising inflationary pressure in the global economy, the FT reported.
“Evrgreening” is thriving in the UAE’s banking sector, the FT’s beyondbrics blog reported, citing a Fitch report published on Tuesday. UAE banks are hiding the true extent of their dud loans by restructuring and rescheduling debts to avoid writedowns – known as “evergreening”. The practice may reduce pressures on profits and capital, but will tie up money in dud loans when banks are needed to resume lending and offer at least some support for the wilting property market, beyondbrics said.
Hopes that the UAE and Qatari stock markets would be upgraded to emerging market status by MSCI Inc suffered a blow on Tuesday after the index provider said it was to continue classifying them as frontier markets, the FT’s beyondbrics blog reported. MSCI said in a statement that both the UAE and Qatar needed to move away from the frequent use of dual account structures, such as separate custody and trading accounts.
Dubai has aggressively positioned itself as an international financial center and a destination for capital. But recent events – like the Nakheel restructuring and a long-running probe into financial misconduct in its property sector, suggest it’s quite some way from shedding its frontier market trappings, FT Alphaville writes. Read more
CMA DataVision released its quarterly global sovereign credit risk report on Tuesday, featuring 17 pages replete with charts and data on the ever-so-topical question: who’s the riskiest of them all? Venezuela continues its run as the riskiest sovereign, while Greece ranks 9th by CMA’s metrics. The UK, triple-A rating and all, is riskier on CMA’s proprietary basis than Japan, the Czech Republic, Slovakia and Slovenia. By the same measure, Finland, Australia and Hong Kong are safer than the US. Read more
The National Investor, an Abu Dhabi-based investment company, has launched a fund that it says is the first European Union-compliant vehicle to focus on the Middle East and North Africa region, the FT said. The company plans to invest a substantial proportion of the Dublin-registered fund’s assets in Saudi Arabia, in an effort to attract foreign portfolio investors to the region’s biggest economy. The fund’s closing date is April 15.
Did you get your fingers burnt by mortgage-backed securities in the US subprime bubble? This may give you a jolt. Fresh from the op-ed pages of Liberia’s Daily Observer, emphasis ours:
The modernization of Liberia through a community-based development can begin at an alarming rate if the government of Liberia can provide end loans, which is a permanent, long-term loan used to pay off a short-term construction loan or other form of interim financing to a borrower interested in buying a piece of real estate such as an affordable housing. The provision of a mortgage loan for affordable housing would create a buying market that would set the housing industry in motion and create construction type jobs like carpentry, masonry, electrical, plumbing, etc. Read more
Emerging market investors are weighing increasing their exposure to a tiny market: Bangladesh.
The country’s benchmark Dhaka Stock Exchange General Index has scaled new highs almost every week this year, after a stellar 62 per cent gain in 2009. Read more
Merrill Lynch’s international investment strategist Michael Hartnett posed the question in a report released on Tuesday, in which he noted, inter alia:
For much of the decade Frontier markets were an uncorrelated, outperforming asset class. Read more