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Tag: Brazil (page 1 of 3)

Vale plans run aground?

We have detailed the woes of the shipping industry as well as the implications of the new Valemax ships.  The fleet of 35 ships, weighing at 400,000 deadweight-tonnes each, was initially supposed to be completed by 2013.  Perhaps it was a bit too ambitious?

Earlier this week, one of the first ships in the fleet, the Vale Beijing, ruptured its hull and two ballast tanks, while being loaded in Brazil.  This is just the latest in a series of setbacks for the planned fleet of Valemax ships.  Vale was accused of monopolistic practices by Chinese shippers.  There has even been the question of whether these ships would even be allowed in Chinese ports due to their size.

That troubles arise amid the development of new superlative-satisfying projects should not surprise us.  The much-touted Boeing 787 was essentially Boeing’s fallback position when the Sonic Cruiser proved too ambitious for current market needs.  The Airbus A380 suffered from a series of delays during development.  But unlike Vale, Airbus had the foresight to work with airports to retrofit runways so that they would be able to handle the load of the double-deck airliner.

Regardless, Vale’s ulterior goal in developing the Valemax ships isn’t to become a shipper; it is to drive down the fixed cost of shipping iron ore so that they will be more competitive against the Australian miners Rio Tinto and BHP Billiton.  Putting aside the concept of “escalation of commitment,” even if this increases the cost of each ship slightly, as long as the economies of scale remain, Vale will be going full steam ahead with their Valemax plans.

Further Reading

FolhaVale vai manter supernavios apesar de rachadura em embarcação

ReutersAnalysis: Vale faces new blow in megaship gamble

Globe and MailMammoth Vale ore carrier may sink at Brazilian port

 

Featured Photo Credit: flickr/Geoff Livingston

Emerging markets briefing for 7 December 2011

Here is a rundown of selected developments that have come across our emerging markets desks in the past day.

 

Eastern Europe

EUobserver: “Centre-left wins in Croatia, scores well in Slovenia” – Elections on Sunday (4 December) brought to power a left-leaning coalition in Croatia, as predicted, but delivered a surprise result in neighbouring Slovenia, where a new centre-left party led by a businessman mayor exceeded all expectations.

Warsaw Voice: “Polish cabinet passes 2012 budget draft” – Poland’s cabinet passed a revised 2012 budget at the Tuesday sitting, confirming plans for a PLN 35 billion deficit on economic growth of 2.5 percent.

Bloomberg: “Lithuanian Finance Ministry Sees 3% Budget Deficit in 2012” – The new estimate is higher than an initial plan to cut the shortfall to 2.8 percent of GDP next year. The ministry also lowered its 2012 economic-growth forecast to 2.5 percent from 4.7 percent last week.

Nuclear Engineering International: “Westinghouse develops Czech supply chain” – Westinghouse Electric Company has signed a Memorandum of Understanding (MOU) with Czech company Vitkovice a.s., in preparation for the potential construction of its AP1000 nuclear power plants in the Czech Republic.

 

Asia

NYT: “Chinese Bank Pairs Up With Private Equity” – The state-owned China Development Bank announced strategic agreements on Tuesday with the private equity firms K.K.R., TPG Capital and Permira as it continued its international expansion.

Reuters Breakingviews: “Pharma center of gravity shifts eastward” – Merck is going to invest $1.5bn over 5 years in China, where growth rates are 20% per year, compared to 2% growth last year for the United States.

Bloomberg: “Three Vietnam Banks to Merge to Boost Liquidity, Cut Costs” – Three Vietnamese banks plan to merge to bolster their liquidity and cut costs as a single entity, the country’s central bank said.

 

Latin America

MercoPress: “Uruguay filed to issue up to 2 billion dollars in new 2028 global bonds” – Uruguay announced on Monday filed to issue up to two billion dollars in new global bonds maturing in 2028 and to conduct a series of liability management transactions designed to further improve its external debt profile, including an exchange offer and a cash tender offer for certain of its outstanding debt securities.

Buenos Aires Herald: “Opposition leaders blast Lorenzino’s designation as Economy Minister” – Former CB governor Alfonso Prat Gay said that “evidently, the President’s decision has been to give continuity to what has been done until now, no matter who’s in charge. The Government has done exactly the opposite of what it should have done to face the crisis: it raised the interest rate, froze the dollar and increased taxes.”

O Globo País: “Senate approves new forest bill” – The new bill, which loosens preservation requirements, passed 59-7 in the Senate, despite opposition from activists.

 

 

Africa

Reuters Africa: “Egypt’s new PM says army to give him extra powers” –  Egypt’s new prime minister said on Tuesday the ruling army would grant him extra powers, and appointed a finance minister along with most other cabinet members, state media reported.

Vanguard: “More spectrums to generate $82b in GDP in Sub-Saharan African-GSMA” – If governments in sub-Saharan Africa allocate more spectrums for Mobile Broadband over a 10-year period from 2015, this would result in US$235 billion of additional GDP and US$50 billion in additional tax revenue.

 

Tuesday newsflow: Russian election, Brazil stall…

Below are headlines that have come across our desks in the past day and are worthy of note.

 

Developed Markets

CFR: “Franco-German Misstep on Eurozone” – The Franco-German accord may be a fine idea, but treaty change would probably take years–and might even prove impossible.

Reuters Breakingviews: “ECB bazooka may be short on credibility ammo” – Whatever form the ECB’s intervention takes, its success will depend on the depth of political commitment to greater integration in the euro zone. The weaker the political cover the ECB receives, the more investors will test it.

CNN: “BP says Halliburton ‘intentionally destroyed evidence’ after Gulf oil spill” – BP is accusing Halliburton of having “intentionally destroyed evidence” related to the explosion aboard an oil rig in the Gulf of Mexico that led to the worst oil spill in U.S. history.

Guardian: “Olympus inquiry blames executives and auditors” – An independent panel has issued a damning report into the £1.1bn accounting scandal at Japan’s Olympus, urging legal action against executives behind the cover-up and the replacement of others who knew about it.

 

Eastern Europe

Reuters: “Russian markets unnerved by post-election fallout” – Russian stocks and the rouble extended losses late on Tuesday as investors were unsettled by the political fallout from a drop in the ruling United Russia party’s majority at Sunday’s parliamentary election.

Moscow Times: “Rusnano and EBRD Plan $380M Glass Factory” – Rusnano and the European Bank for Reconstruction and Development joined forces to invest 2.8 billion rubles ($90 million) and 1.4 billion rubles, respectively, into a glass-manufacturing plant to be built in the Moscow region.

 

Asia

Reuters: “Samsung plans flash chip line in China” – Samsung Electronics said on Tuesday it plans to build a flash memory chip plant in China, seen costing some $4 billion, as a boom in smartphones and tablet computers is set to fuel the $22 billion chip industry’s growth next year.

BBC: “HSBC faces £40m bill for mis-selling to elderly in care” – HSBC has been fined £10.5m by the City watchdog for mis-selling investment bonds to elderly people in care.  Unsuitable sales of this product were made to 87% of NHFA customers, prompting the largest retail fine to date from the Financial Services Authority (FSA).

Bloomberg: “China Steel Seeking First-Quarter Iron Ore Price Cuts” – China Steel Corp. (2002), Taiwan’s largest steelmaker, is in talks with iron ore suppliers to cut first- quarter prices amid declining demand.

Bloomberg: “Esprit CFO Resigns Amid Rebuilding Efforts” – Esprit Holdings Ltd. (330) Chief Financial Officer Chew Fook Aun quit for personal reasons as the largest Hong Kong-listed apparel company seeks to revive earnings after profit plunged 98 percent last fiscal year.

Reuters: “Retail volte face confirms India as BRIC that disappoints” – Jim O’Neill, the Goldman Sachs banker who coined the term BRICs to capture the fast-growing emerging-markets quartet of Brazil, Russia, India and China,  has fingered India as the BRIC that has disappointed the most over the past decade in terms of reforms, FDI and productivity. New Delhi’s latest decision to put on hold a landmark reform of its retail sector will only confirm this view.

BBC: “RIM investigated after sale turns into stampede” – Blackberry maker Research in Motion (RIM) has said it will co-operate with Indonesian authorities after a product launch turned chaotic, injuring dozens.

 

Latin America

Bloomberg: “Brazil’s Economy Contracts as Rousseff Cuts Taxes, Rates to Boost Demand” – Brazil’s economy shrank in the third quarter, prompting the government to slash its growth forecast for the year, one week after announcing stimulus measures to contain the spillover from Europe’s debt crisis.

Bloomberg Businessweek: “Mexican Exchange to Consider Joining Mila Stock Combination” – Bolsa Mexicana de Valores SAB, the operator of Mexico’s securities exchange, will consider joining the Chilean, Colombian and Peruvian bourses in Latin America’s first stock market combination.

 

Middle East & Africa

Reuters India: “Dubai may use sovereign fund to repay debt” – Dubai, which narrowly averted a bond default in 2009, could use money raised by its sovereign wealth fund to help repay $3.8 billion in bonds owed by state-linked firms which mature next year, a source familiar with the matter said on Tuesday.

Reuters Africa: “S.Africa considers issuing Islamic bonds” – South Africa’s National Treasury is considering issuing Islamic bonds to diversify its investor base and could have its first sukuk in the market as early as the next financial year if approved.

Bloomberg: “Visa Develops Rwanda Payment Network” – Visa Inc., the world’s biggest bank- card network, agreed to help develop Rwanda’s payments system and connect the African nation’s 11 million citizens to the global economy as the firm pushes to boost non-U.S. revenue.

Eurozone developments and Monday rundown

Developed Markets

FT: “S&P ratings warning to top euro nations” – Germany, France, the Netherlands, Austria, Finland, and Luxembourg now have a 50% chance of a downgrade in the next 90 days.

Reuters: “Franco-German budget plan demands EU change” – The proposal includes automatic penalties for governments that go beyond the 3% budget deficit.  It also launches a permanent bailout fund.  However, as changes to the EU treaty will require referenda in various member states, passage in countries like the Britain, Ireland, and the Netherlands, seem improbable.

BBC: “More cuts as Irish Republic’s budget begins to be unveiled” – Taxes will rise, including VAT to 23%.  Cuts to the public servant budget will be €3.5bn, or 20%, from 2008 to 2015.  Among other initiatives, €543mn will be cut from health and €475mn will be cut from social protection.

Reuters Breakingviews – “Monte dei Paschi’s independence looks shaky” – The foundation that controls Italy’s oldest lender, 539-year-old Monte dei Paschi di Siena, is in trouble.  The foundation borrowed €1.1bn in 2008, secured against the bank’s shares.  Those shares have fallen by 70%, placing the foundation in danger of violating their covenants.

Mohamed El-Erian – “Prepare for a different financial landscape” – El-Erian outlines what PIMCO has been calling the “new normal.”  Expect banks to be less global and interconnected.  Also expect “new credit pipes to be built around those that are now clogged […] some of these pipes will be directed or enabled by governments.”

Eastern Europe

Guardian: “Russian elections: support for Vladimir Putin’s party drops sharply” – Parliamentary elections expected to result in Putin’s United Russia party losing 77 of its 315 seats in the 450-member Duma.

FT: “Croatia’s wake up call” – The centre-left Kukuriku coalition will likely seek IMF financing in order to provide political cover for austerity measures.

FT: “Poland: mining its own business” – NWR invests €544mn in a Polish mine that will yield 2mn tonnes of coal per year.  Total deposits are 190mn tonnes.

South & East Asia

Bloomberg: “Hong Kong Sees 20 IPOs From Mainland by Dec. 31: China Overnight” – Companies have raised $14.3bn through November this year, compared to $49.1bn in the same period a year ago.  About 110 firms are currently in the Hong Kong pipeline.

WSJ: “Feeling Success in China, H&M Targets Smaller Cities” – Swedish chain set to open more stores in world’s second-largest economy than anywhere else next year.

FT: “CME to allow renminbi as collateral” – CME Group, the world’s largest futures exchange, will allow international investors to use the Chinese currency as collateral for trading in all its futures products from January 2012.

James Fallows: “China Air-Quality Catastrophe—It’s Back” – The figures are available hourly on the Twitter feed @BeijingAir.

Central Asia

CFR: “Afghanistan’s Crucial Economic Transition” – Briefing of a meeting in Bonn by world leaders to discuss security and economic development plans for Afghanistan post-2014.

Latin America

BBC: “Brazil Labour Minister Carlos Lupi is latest to resign” – Lupi resigns amid allegations that he demanded kickbacks from charities and NGOs in exchange for funding.

Reuters: “Peru declares emergency to stop protest over mine” – Protests at Newmont’s Conga mine have been happening for the past 11 days.  The state of emergency was declared to quell the protests.

Middle East & Africa

WSJ: “Turkish Inflation Surges” – Surging food prices in May lifted Turkey’s consumer-price index to its highest level since November, smashing economists expectations and raising pressure on the country’s policy makers to lift interest rates from their historic low.

WSJ: “The Nuclear Alternative” – Despite the Fukushima disaster, Nigeria and Kenya are looking at nuclear energy.  Egypt reactivated its nuclear program in 2007, but its outlook remains unclear.  South Africa is planning to build six new reactors.

WSJ: “Stelios Takes Stake in African Airline Project” – Stelios Haji-Ioannou, the founder of easyJet PLC, is investing in a new low-cost African Airline.

Emerging markets news flow for 2 December 2011

Here is a rundown of selected developments that have come across our emerging markets desks in the past day.

 

Asia

Bank of China sees turning point in property prices.

Shanda earnings RMB9.7mn this quarter vs. RMB96.7mn quarter ending September 2010.

More on the relevance of the “BRIC” term.  See our coverage here.

Ranbaxy approved to sell Lipitor generic.

HSBC PMIs mostly down.

Samsung surges on smartphones.

Latest statistics from Indonesia.

Latest statistics from the Bank of Thailand.

Petronas fiscal 2Q ended September 30 net profit up 53%.

Churchill asks Indonesian government to intervene over East Kutai.

 

Latin America

Venezuela to pay $600mn for seizure of Cemex unit.

Brazil orders Chevron to shut well.

Donald Ramotar wins presidency in Guyana.

IMF’s Lagarde visits Mexico City as Mexico assumes chair of G20 for the upcoming year.

 

Middle East

Shell to end operations in Syria amid sanctions.

More on Dow-Aramco Sadara JV.

 

Africa

Kenya raises key lending rate fourth time to fight inflation.

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