FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

VAM: Vietnam Equity Market – May 2014

Market Updates – After tumbling as much as 11% in the first 2 weeks of May, to a new low of 513.9 on May 13th, due to the tension with China in Vietnam’s East Sea, the market rebounded in the second half of the month and closed down 2.8% (VNIndex) and 2.3% (VN30). The HNX lost 5.1%.

View full market analysis VAM Monthly Newsletter – May ’14.

Inflation advanced slightly in May, backed by moderate improvement in demand and supply.

May inflation was recorded at 0.2% MoM, down from April’s 0.33%. Consequently, the CPI increased only 1.08% YTD. Moderate improvement continued to be recorded in both demand and supply sides. 5M2014 real retail sales advanced 6% YoY, surpassing the same period last year’s growth rate of 4.6%, whilst the index-industry products (IIP) increased 5.6% YoY, higher than the rate of 4.8% of 5M2013.

Sustained YTD trade surplus driven by FDI sector

GSO estimated that 5M2014 trade surplus reached USD 1.6bn, a slight drop from the historic high of USD 2bn recorded for 4M 2014 in April, due to a trade deficit of USD 400mn in May. FDI continued to be the biggest contributor to the economy as the sector generated a trade surplus of USD 7bn in 5M2014 whilst the domestic sector made a trade deficit of USD 5.3bn. FDI disbursement remained steady with 5M2014 disbursed FDI recorded at USD 4.6bn, up 0.4% YoY.

FDI sector’s confidence largely restored through appropriate compensation and strong determination of the Vietnamese Government to prevent recurrence of riots

The PM has requested urgent support and compensation for businesses affected by anti-China protests and riots, including tax cuts, workers’ salary subsidy and land rental reduction etc. to offset against damages suffered. These prompt incentives and the Government’s affirmative measures to punish rioters and to avoid recurrence of such events have more or less calmed the public’s and FDI sector’s sentiment, as well as restored investors’ confidence.

Rumor about another round of currency depreciation was denied by the SBV

As the USD/VND rate has been increasing, amidst the tension with China, to 21,140 – 21,190 (official bank rates) in May, the highest level since the beginning of the year, concern about another depreciation of the Dong has again emerged. However, the SBV denied the rumor, given (1) sustained YTD trade surplus; (2) historic high FX reserves; and (3) the wide gap between deposit rates of the Dong and the USD. The SBV also affirmed that the depreciation (if any) will not exceed 1% in 2014 (down from the 2% stated at the beginning of the year) to show their confidence in maintaining the Dong’s stability.

Vietnam consumer confidence once again improving

Vietnam Consumer Confidence Index reached 99 points in 1Q2014 in the global survey of Nielsen, the highest level since Q4/2011. Consumers were found to be more willing to spend after 2 years of consumption tightening as 56% of respondents across the country had positive perception of their personal finances for the year ahead. Although saving still remained the top priority, consumers channeled more spare cash into tourism, house renovation and stock investment.

Our view The sell-off due to the political tension with China was fairly short-lived as by month end, the VNIndex was almost back to where it started for the month. We think although the tension may not go away very soon, it will not have significant long-term downside impact on Vietnam’s economy. In fact, economic stability has been maintained on the broad base since the beginning of the year with inflation under control, relatively stable exchange rate and sustained trade surplus. Discussion on amendments of the Law of Investment and a comprehensive legal framework for Public – Private Partnership (PPP) in the ongoing 7th cabinet meeting will provide investors with uniform guidance and regulations in PPP to encourage more private investment in infrastructure. This will also help to improve the administrative process in getting investment project approval to make the investment environment in Vietnam more favorable. The Government’s prompt support rendered to affected businesses in the anti-China riots has shown that FDI is still a top priority for Vietnam. We think the market will likely remain volatile in the coming weeks and we will continue to monitor it closely for buying opportunities.

Source: VAM, 13.06.2014

 

Filed under: Asia, News, Vietnam, , , , , , ,

China: Update on Shanghai FTZ Financial Reform

In year 2014 we expect to see numerous new policy and regulation updates on the financial reform of Shanghai FTZ. Where are we today?

Shanghai local government and Chinese central government will endeavor to expand the market functions, deepen the opening of local financial markets to foreign investors, increase the number of financial institutions in the FTZ, encourage the financial business innovation and make Shanghai more of an international financial center.

Many reform details are under consideration or have already been executed in 2014, such as setting up crude oil futures, international gold trading, financial asset trading, syndicated loan trading platforms and building nationwide trust registry service institutions. Besides, rules regarding foreign and FTZ-registered firms’ parent companies RMB bonds issuance are on the way. Moreover, Shanghai FTZ regulators will also consider introduction of free trade account management by allowing financial institutions to set up FTA (Free Trade Account) accounting units segregated for residents and non-residents. Furthermore, Shanghai FTZ regulators encourage direct investment abroad from local firms and private equity funds. The main contents of Shanghai FTZ’s reform could be described as a ‘1+4’ policy, where ‘1’ stands for risk control segregate account system; ‘4’ stands for interest rate liberalization, foreign exchange liberalization, RMB cross-border utilization and RMB capital account opening.

FX reform and FTA accounts

PBOC announced that, starting on March 17, 2014, the interbank RMB/USD spot price’s fluctuation spread increased from 1% to 2%. For commercial banks, the fluctuation range of RMB/USD spot price offering to the clients could be expanded from 2% to 3% from the mid-price calculated by Chinese interbank FX market. This is the third time for PBOC to expand the fluctuation range. Analysts say the expansion in RMB/USD spot fluctuation range is a clear signal that RMB will be internationalized in the near future and Shanghai FTZ is thought to be a test-bed for that. The most prominent aspect of Shanghai FTZ FX reform is the FTA (Free Trade Account). FTA is essentially a free trade bank account for Shanghai FTZ registered firms, very similar to an offshore bank account, which enables free capital flow inside the FTZ. FTA system allows both foreigners and local residents to get their money in and out through FTZ. Overall, there are mainly 3 types of FTA accounts. Local firms in the FTZ could open FTA accounts; individuals in the FTZ could open FTA accounts; foreign firms in the FTZ could open FTN accounts. As regulators are treading conservatively with hot money inflows and money laundering risks in mind, there is still no detailed timeline. However, we believe the FTA mechanism will be released in 2014 or 2015 as a momentous milestone in the financial history of China.

Interest rate reform

In March, 2014, a PBOC official claimed that the sequence of Shanghai FTZ interest rate reform will be ‘liberalize interest rates for foreign currencies prior to RMB interest rates; free the loan rates prior the deposit rates’.
There were actions towards interest rate reform in Shanghai FTZ from the regulators. PBOC announced that from March 1st, 2014, the deposit rate of foreign currencies below the amount of USD3 million would be liberalized, which actually removed the ceiling for foreign currencies’ deposit rate. This is thought to be an important step on the road to fully liberalized interest rate reform. The next step could be liberalization of the deposit rates of the local currency, which may not only be applicable in Shanghai FTZ, but also the rest of China.

Cross-border RMB utilization

On Feb 21, 2014, PBOC released the detailed regulation on expanding the usage of RMB overseas, which simplified the process of RMB overseas usage under current and direct investment account. However, overseas RMB financial scale and usage range will still be restricted, as well as cross-border e-commerce transactions and RMB trading services.
Six banks constitute the first batch of firms applied for the cross-border RMB settlement licenses. ICBC and Bank of China helped their clients within the zone to make an overseas RMB loan; Bank of Shanghai, HSBC and Citi Bank launched cross-border RMB current account centralized collection and payment services; Bank of Communications signed the first overseas RMB borrowing service for the non-bank financial institutions.

Capital account liberalization (to be announced)

In the future, the capital account might be opened for local and foreign investors. As Chinese reformers are relatively prudent and conservative, the liberalization process of capital accounts have been advancing relatively slowly so far. One important step in the process will be a gradual opening of commercial futures market to foreign institutional investors.

2014 version of ‘negative list’ (possibly to be released in the 1st half of 2014)

In the 1st half of 2014, a new version of ‘negative list’ will be released to update the 2013 version. Although it is not clear what items this version may include, there are two aspects which are certain. One aspect is that the contents included in the negative item list will be shortened, which implies that the restrictions on types of companies to register in the zone will be reduced. The other aspect is that Shanghai FTZ might cooperate with Hong Kong to introduce advanced practices from the city.

In-depth report on Shanghai FTZ are available here.

Source: Kapronasia, 05.06.2014

For more news and insights into Chinas Financial markets please visit www.kapronasia.com

Filed under: China, News, Risk Management, , , , , ,

Option the Dragon: Stock Options set for launch in China

On August 6, 2013, Chinese securities companies received ‘the notice of preparing the initiating stock options full simulating trading works’ sent by the Shanghai Stock Exchange. This information implies that SHSE is already fully prepared for the launching of stock options. Although there is no clear timetable for launching the stock options, it is likely that they will appear in Chinese capital markets in 2013 or 2014.

Exchange traded stock options are new to Chinese capital markets and these derivatives provide a number of benefits. For one, both long and short-term trading are accessible and, similar to other derivatives such as futures, t+0 is allowed. Another benefit, which is an advantage over futures, is that leverage is provided but buyers can only lose the amount that they paid for the option. Options traders can also execute more complicated strategies through the combination of buying and selling call and put options, including straddles and spreads. Moreover, stock options are perfect hedging tools for individual stocks. Currently, Chinese stock index futures can only hedge the risks of the CSI 300 index and can not directly hedge non-systematic risks from individual stock options. And, despite providing leverage, security companies charge high transaction fees and interest rates for customers interested in selling short and buying long. Furthermore, the introduction of stock options comes with a high minimum threshold, which may largely change the structure of investors in the stock market by increasing the proportion of institutional investors. Thus the introduction of stock options may largely change the landscape of Chinese stock markets and may stimulate trading volumes.

However, there are also potential problems and doubts from the public that my come with the introduction of Chinese stock options. One issue regards the minimum threshold for investors of stock options. Some market analysts estimate that this threshold could be as high as one million yuan, which is higher than thresholds for index futures and securities lending services from securities companies. Currently, only 1% of accounts in the stock market can meet this requirement. Critics argue that stock options may serve as a tool to short the market by institutional investors and rich individuals, who may be in a disadvantaged position. But there are also analysts stating that the threshold may be lower, which would give normal individual investors a better opportunity to participate. The minimum threshold will depend on the final decision from CSRC.

Another problem has to do with the underlying stock that stock options are based upon. Currently, it seems as though only very large blue chip listed companies can enjoy stock options, so not all stocks can be optioned. Because large-cap stocks fluctuate less dramatically than small-cap and medium-cap stocks, the meaning of stock options may not be as transparent as in the fully opened western markets. But for institutional investors like mutual funds, as large-cap stocks take larger proportions of their shares, stock options may be an ideal hedging tool for stabilizing the performance of their portfolios. As current stock markets have adopted t+0 and t+1 trading, short-term day trade for hedging is not feasible. Thus traders may either choose longer-term hedging strategies or speculate through high-frequency intra-day trading.

Furthermore, large amounts of speculation in stock options may lead to dramatic fluctuations in stock prices. Similar to trades within A-share markets, the cost of short-selling is much higher than longing the stocks. So under the current unbalanced system, both hedgers and speculators may choose short in the stock options and the performance of A-share markets in the future may weaken. This has already been proven from the stock index future’s impact on A-share stock markets.

In conclusion, despite the risks, the launching of stock options is important for the development of Chinese capital markets.

Source: KapronAsia, 20.08.2013

Filed under: Asia, China, Exchanges, News, Risk Management, , , , , , , ,

Private banking in China finally taking hold

Considered one of the best retail banks in China, China Merchant Bank (CMB) has started their private banking business in 2007. At the end of 2012, CMB’s pre-tax profit from their private banking business reached 2.3 billion yuan. Other major banks in China have similarly increased their wealth management profit since 2010, when growth of the market really accelerated.

ICBC and BOC still have the largest private banking AUM among the top 5 while CMB has the most private banking centers to serve its HNWI customers. The high net worth customer segment (over 10M RMB in investable assets) is growing at 18% growth rate and reached to 700,000 by the end of 2012. It seems that banks have finally cracked the code and wealth management is set to grow in China.

Potential of private banking

Up coming Webinar on Banking and Risk Management in China on August 7th, 2013.

Source: KapronAsia, 18.07.2013

Filed under: Banking, China, Wealth Management, , , , , , ,

Mexico Investment News Letter 07 June 2013

Mexico Is The Next China

“Mexico is the next China,” Ferrari North America CEO Marco Mattiacci said during a panel discussion today about the future of luxury.

Mexico and the cursed Dragon Mart

The closest People’s Republic of China President Xi Yinping came to China’s controversial top project in Mexico was on his Thursday visit to the Chichén Itzá archaeological site with President Enrique Peña Nieto.

China, Mexico vow broad cooperation as Xi visits; no trade pact soon

MEXICO CITY – China and Mexico promised broad cooperation on issues ranging from energy to mining and infrastructure during a state visit by Chinese President Xi Jinping on Tuesday, but any free-trade pact between the emerging market powers is still some way off.

What does Xi see in Mexico?

Analysis: Much of Latin America has for years found in China a voracious trade partner. Mexico has found its fiercest competitor.

Death map’ of deserts aims to save lives of desperate Mexican migrants

Illegal immigration: Humane Borders support group charts bodies found in US-Mexico frontier to try to limit future tragedies

Grupo Gigante buys rest of Office Depot’s Mexican arm

MEXICO CITY – Mexican retailer Grupo Gigante on Tuesday said it purchased the 50 percent stake of the Mexican unit of U.S. office-supply store chain Office Depot Inc it did not already own in a deal worth 8.78 billion pesos ($691 million).

Heineken-Modelo Beer Probe Nears Mexico Agency Decision

Heineken NV (HEIA) and Grupo Modelo SAB, the dominant brewers in Mexico with brands such as Dos Equis and Corona, are nearing the end of an almost three-year-old government…

Pemex Mulls Bolsa Listing of Projects to Lower Funding Costs

Petroleos Mexicanos, Mexico’s state- owned oil producer, is considering securitizing some assets in a way tailored to attract national pension funds to unlock money for its equipment needs.

Analysis: Mexico peso poised at precipice, may face much steeper fall

MEXICO CITY – Mexico’s peso could slide even further if convictions mount that the massive monthly U.S. monetary stimulus is nearing an end and lead to an exodus of foreign investors who have piled into Mexican markets.

1st Marijuana  “Starbuck” style Chain in the US by ex Microsoft Exec  using drug fighting former Mexican president Vincent Fox as marijuana grower

More projects of passenger trains in Mexico

With the Plan Nacional de Infraestructura 2013-2018 the routes that will be developed during the six year period will be made known, as well as the required investment.

The Mexico Paradox

In spite of the violence, illegal drug and arms trade, trucks continue to line up at the border in Ciudad Juarez Mexico.

Filed under: China, Latin America, Mexico, , , , , , , , , , , , , , ,

Nyse Technologies expands SFTI network in Asia

Nyse Technologies, the commercial technology division of Nyse Euronext, today announced the continuing expansion of its Secure Financial Transaction Infrastructure (SFTI) in Asia with the introduction of two access centres located in Hong Kong.

Customers now, for the first time, have direct access to the SFTI network, allowing them to connect from Hong Kong to services offered by NYSE Technologies through SFTI, including access to Hong Kong Exchanges & Clearing (HKEx), all major international trading venues, market data solutions, plus the NYSE Euronext capital markets community.

As part of the expansion of the SFTI network to include Hong Kong, NYSE has also extended SFTI to the new HKEx Data Centre colocation facility, giving customers there access to all the services available on SFTI through a simple cross connect to their colo racks. NYSE Technologies also plans to expand SFTI in the region to connect other markets like Australia and Korea.

NYSE Technologies’ Secure Financial Transaction Infrastructure provides access to a comprehensive range of capital markets products through a single point of access and offers low-latency trading access to the NYSE Liffe and NYSE Euronext markets. SFTI Asia is the most recent extension of the global backbone, enabling Asian firms to receive market data and trade on multiple markets. Designed to be the industry’s most secure and resilient network, SFTI is specifically built for electronic trading and market data traffic thus enabling firms to reduce their time-to-market, improve their performance and significantly lower the cost of their trading infrastructure. Furthermore, the global backbone allows customers to connect to their trading infrastructure distributed in financial centres around the world using a SFTI connection on the other side of the world.

“The addition of these important access centres in Hong Kong is a further step in the expansion of NYSE Technologies’ footprint and reach of the SFTI Asia network and adds to our established presence in Singapore and Tokyo.” Daniel Burgin, Head of Asia Pacific, NYSE Technologies, commented. “Offering multiple access centres in the Asia Pacific region allows them to use SFTI Asia to connect to regional and global exchanges and markets in a cost effective way through a single connection at each of the client’s locations around the region. This eliminates the overheads and costs associated with maintaining separate network connections in each location to multiple trading venues.”

Source: NYSE Technology 06.12.2012

Filed under: Australia, China, Data Management, Data Vendor, Exchanges, Hong Kong, Japan, Korea, Market Data, News, Singapore, , , , , , , , , , , , , ,

Latin America: Investor News Letter 17 November 2012

Mexico

Slim Acquires Controlling Stake in Real Oviedo, El Pais Reports

Billionaire Carlos Slim agreed to invest 2 million euros ($2.5 million) to acquire a controlling stake in Spain’s soccer team Real Oviedo, newspaper El Pais reported today.

Mexico lawmaker introduces bill to legalize marijuana
Sherwin-Williams to buy Mexico’s Comex for $2.34 billion
Mexico Third-Quarter GDP Rose at Slowest Pace in Over Year
Cemex Latam Falls in Bogota After $1.14 Billion Initial Sale
Mexican banks invest domestically
Mexico: Investors’ New China
TransCanada to build, operate Mexican natural gas pipeline; will invest US$1B

 

Brazil

Top names drop off list of Thyssen Americas bidders

FRANKFURT – Several top steelmakers are sitting out ThyssenKrupp’s auction of its U.S. and Brazilian mills and there appears little interest in the latter, suggesting the German firm may fall well short of its $9 billion asking price.

Eletrobras to take over bankrupt Brazil power utility
Cuba opens sugar sector to foreign management
Microsoft’s investment in Brazil to spur Rio research boom-execs
Telecom Italia looking at GVT, other opportunities
Wuhan Steel shelves plans to build Brazil mill
A new wave of Brazilian infrastructure investment
Brazil’s Itaqui port plans $3.2 billion upgrade
Rio Olympics, World Cup at risk with royalty bill, governor warns

 

Latin America

Paving the Way  High-­Tech Financial Infrastructure Hits LatAm

Foreign market leaders such as Fidessa, Direct Edge and Navatar are challenging local providers in the race to meet the booming region’s needs. The growth in size and sophistication of LatAm capital markets has both fueled and been fueled by the implementation of high-tech financial infrastructure in the region, as the hardware and software that have  been the foundation …

 Latin American yields fall further in a warning to bond investors
Impoverished Iberians, booming Latin America eye new relations
Africa and Latin America Still Fight Vulture Funds
More LatAm ETFs Your Broker Forgot to Mention
UN asks LatAm firms to grow with social responsibility
Private Equity Lures Pensioners as Bond Yields Sink
Argentina’s Debt Restructuring Argument Could Be Very Significant For The Global Economy
Argentina’s YPF 3rd-Quarter Profit Down 51% on Year at $159 Million
Bolivia Returns to the Global Bond Market
Chile pension fund-ordered estimate lowers Endesa Latam asset value
Chilean regulator to put new limits on pension fund investments
Germany’s Solarstrom enters Latin America with 2MW in Chile
Colombia opens criminal probe into Interbolsa collapse
Colombia’s Interbolsa brokerage to be liquidated
Public-Private Partnerships in Colombia: Scaling-up Results
Paraguay, Worst LatAm Economic Result of 2012
Peru May Invest About $5.2 Billion in Water, Wastewater Projects
Aeropuertos del Peru mulling over opportunities in Brazil and Chile
Overseeing Peru’s international appeal at ProInversión

Filed under: Argentina, Banking, Brazil, Chile, China, Colombia, Energy & Environment, Latin America, Mexico, Peru, Risk Management, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Latin America: Investor News Letter 2 November 2012

MEXICO

Mexico 2013 inflation view steady despite price spike
Credit Suisse Raises $420 Million to Create Mexico Fund
Mexico: Big investment for citrus producers
Indigenous Groups Protest Mexico’s Biggest Wind-Energy Project
FOX BUSINESS – Mexican fishermen and indigenous groups from the southern state of Oaxaca protested Wednesday in front of the Mexico City offices of participants in a wind-energy project that would be one of the largest ever in Latin America, targeting Coca-Cola bottler and convenience-store operator Femsa (FMX), the Inter-American Development Bank and the Danish government, among others.

BRAZIL

The Brazilian Law on Money Laundering
Precautions Investors Must Take when Investing in Brazil. Brazil has recently altered its money laundering law. The new bill has tightened the government’s grip on most of the investment operations and has significantly broadened financial institutions’ and investment brokers’ duties to report suspicious activities …

ThyssenKrupp Brazil mill fined for pollution, could face closure
The long, brutal haul from farm to port in Brazil
Brazil hit by new blackout, infrastructure in spotlight
Brazil Gives Tax Exemption to Foreign Mortgage Investors
Brazil Power Generators Ask to Renew 106 of 123 Concessions

LATIN AMERICA

Private Aviation takes off in Latin America
The growth of private wealth in LatAm has led to a rise in demand for private aircraft and private aviation services. For the region’s mounting numbers of high-net-worth and ultra-high-net-worth individuals, a plane can be purely a luxury item, of course; but for increasingly global and mobile professionals and business owners, it meets a demand unsatisfied by local transportation alternatives, as well .

Colombia Regulators Seize Interbolsa Brokerage on Funding

Colombia’s financial regulators seized Interbolsa SA’s brokerage, the country’s largest, after the company said it faces a “temporary” funding shortage.

 Latin America stocks rise on China, U.S. data
20 Latin American in the World’s 200 Richest People
Argentina bonds close lower after S&P downgrade
Argentina Plans Regulatory Overhaul to Spur Investments
Increase in pension fund investments makes for headwinds in Andean market
Colombia Equity Fund targets European countries for distribution
Protests in Peru Scaring Off Mining Investment, Government Responds With Social Programs
Honduran supreme court rejects idea of building independently governed ‘model cities’
CAF and OFIC ink agreement to promote energy efficiency projects in Latin America
Modern airport terminal to be opened in Bogota
IDB approves $200m financing for Latin America hydro plant

Filed under: Argentina, Asia, Banking, Brazil, Central America, Chile, Colombia, Latin America, Mexico, News, Peru, Risk Management, Wealth Management, , , , , , , , , , , , , , , , , , , , , , ,

Latin America: Investor News Letter 19.October 2012

Mexico

Elektra to offer No-Fee Banking and Long Term loans to US low income population
Billionaire Ricardo Salinas said he wants to offer no-fee banking deposits and longer-term loans to low-income U.S. consumers, aiming to export his Mexico business model, successful in 8 Latin American countries to the world’s biggest economy.

Mexico’s market shines as reforms, confidence take hold
NYSE Technologies, Bolsa Mexicana and ATG build Mexican trading infrastructure
Slim-backed Mexican firm plans IPO, new cement company
Alsea to invest $110 million in Mexico, Argentina Starbucks cafes
Mexico passes law to combat cartel money laundering

Brazil

Itau Sinks as Rousseff Plan Hurts Bank Profits: Corporate Brazil

Brazil’s push to drive down consumer borrowing costs is eroding the value of its biggest banks.

Brazil wants to restrict strikes in public sector
Monsanto suspends collection of royalties in Brazil following state court ruling
Brazil M&A hits five-year low on turmoil, state intervention
Brazil and South Africa Form Partnership On Future Investment Promotion Initiatives
Brazil’s Water Sector Benefits From Investment Ahead of World Cup, Olympics

Latin America

Cencosud of Chile to Acquire Carrefour Colombia Division

Cencosud SA agreed to buy Carrefour SA’s Colombian unit for 2 billion euros ($2.6 billion) as it taps rising consumer spending in Latin America and the world’s second-largest retailer retreats from markets it can’t dominate.

Venezuela/Paraguay rift spoils Brazil’s plans for a ‘normal’ Mercosur summit
Singapore, the fastest growing market for Latin America
CAF Encourages Singapore to Invest in Latin America
Cuba Praises China-Latin America Ties
Latin America can produce double-digit investment returns over next decade
Arab and Latin American leaders agree to investment bank
LatAm’s Largest Solar Power Plant  in Peru receiving 40 MW of Solar PV Modules from China
Arab and LatAm leaders agree to investment bank
Peru central bank could allow more pension funds invested abroad
Latin American Ratings Strong Enough to Weather a Commodity-Cycle Downturn
Latin American gold rush brings riches, conflict
Latin lithium output mired in controversy

Source: Various 19.10.2012

Filed under: Argentina, Banking, Brazil, Chile, China, Colombia, Energy & Environment, Mexico, Peru, Singapore, Venezuela, , , , , , , , , , , , , , , , , , , , , , ,

Latin America: Investor News Letter 21.September 2012

Mexico

Analysis: China worries spur Mexico stock market flows

MEXICO CITY – Mexico has been on the wrong side of China’s economic boom for the last decade, but is now seeing an upturn in its fortunes as the Asian powerhouse’s economy slows and international stock pickers look to hedge their bets.

Can Mexico live up to its investment potential?
Deutsche Bank Downbeat On Brazil In Wake of Intervention; Mexico Retail Sales Up

Mexico, the “Forgotten” Emerging Market


Brazil

Brazil mulls raising Mexico car trade quota – sources

Brazil is considering raising a three-year bilateral auto trade pact quota it agreed to with Mexico in March, potentially allowing Mexican exporters to sell around $350 million worth of additional vehicles to the Brazilian market annually.

Brazil: PE cools in Brazil, warmes in Mexico and Andes

US urges Brazil in “clear terms’ not to hike tariffs

Brazil reacts to US stimuli saying it will keep the Real ‘devalued’ and competitive

Brazil ethanol returns to US as biofuel rules pave way

Goldman Sachs Plans Private-Equity Comeback in Brazil


Latin America

Colombia rapidly becoming another “positive surprise” from Latinamerica

Uruguay’s economy suffers slight deceleration in 2Q but on track to the 4% target

IMF calls on Argentina to implement measures on the quality of official data

Moody’s changes Argentina rating outlook to negative from stable

Deal Analysis: Panama City Metro Line 1

Gazprom in talks with Argentina’s YPF on LNG supplies

Private equity in LatAm: less new money, more deals

Shadow banking to dominate in LatAm projects

Cuba struggles with foreign investment, growth

China Steps Up Push Into Latin America

Korean Art fair highlights Latin American art

Filed under: Argentina, Banking, Brazil, Central America, Chile, China, Colombia, Energy & Environment, Events, Latin America, Mexico, Peru, Risk Management, Wealth Management, , , , , , , , , , , , , , , , , , , , , , ,

Luxury Spending in China – Are the wealthy disappearing? Wealth Management Research – KapronAsia

Earlier this week, Burberry announced lower than expected earnings which largely disappointed and somewhat scared markets. Their slowdown is global, but a key challenge was declining luxury spend from Chinese consumers – which is seen by many as a bellwether for the rest of a general industry slowdown. We’ve talked about luxury spending in China in the past, but it’s worth considering the implications of a potential slowdown in the luxury industry and the implications if the slowdown is indeed an indicator of a shift in the habits of China’s wealthy.

The origins of money

If you look at the development of China’s wealthy, it really started in the late 70s with the opening up of China’s economy and then picked up speed again in the 1990s through today as China’s inclusion in the WTO gradually brought the country to become known as the ‘factory of the world’. Although cost and quality questions have arisen again recently, the ability of chinese factories to produce low-cost and medium to high quality products drove incredible revenues and profits for small and medium enterprises and, at the same time, made their owners tremendously wealthy. Due to a somewhat challenged national transport network, many of these factories were by necessity concentrated on or near the east coast of the country in order to decrease the complexity of actually exporting the goods; mainly near the port city of Shenzhen or further up the eastern seaboard near Shanghai or Beijing.

But factory owners weren’t the only ones to benefit. As China’s insatiable appetite for natural resources has increased, companies and individuals have benefited greatly as commodity prices have increased rapidly. Mine owners and processors as well anything energy related has driven another level of wealth that is not just located near the coast, but often much further in-land either to the west in Xinjiang or to the North in Inner Mongolia. Finally, although a civil service job in the west typically means ok pay, but high stability, government officials in China do quite well so many of officials and families of officials are known to be quite well off.

Show me what you got

I don’t want to make any suggestion as to whether it’s right or wrong or the meaning behind it, but the wealthy Chinese, in general, like to show off their wealth. Carrying the right bag, driving the right car or telling time with the right watch is important in both a personal and or a business context. At large dinners, people (typically the men) will fight over who pays for the bill as not paying can often mean a ‘loss of face’ (similar to respect) in the eyes of others.

This need for showing off wealth has driven the growth of the luxury industry in China. What it has also done is created another layer of what you might call ‘wealthy aspirants’, who while not necessarily wealthy themselves, are keen to give the appearance of being wealthy or at least hip to the latest trends. For the extremely wealthy, the sign that you’ve made it is the BMW 7-series or Bentley that you pulled up in, for the rest, it’s an iphone. An iphone is a sign that you’ve made it

The iphone is a great insight into wealth or lack thereof in China: although there are iphone knock-offs out there, most of what you see when you walk around the big cities are real iphones whether bought directly from Apple, a mobile network operator, or off the grey market (HK imports). When you consider that a new iphone in China from Apple costs about US$800, even if you look at the GDP per capita in Shanghai, one of the wealthier parts of China, which is about US$13,000, that still represents about 7% of the average yearly salary for a phone. So some people are spending up to, and in many cases over, a month’s salary to have the latest and greatest from Apple.

Built into relationships

We’ll get into the implications for wealth management shortly, but one last illustration of how important wealth is in China, and again, this is changing slowly, but typically before a Chinese woman will accept a marriage proposal from a man, the man needs to have an apartment for the couple to move into. With housing prices in the major Chinese cities reaching that of London or NY, but with salaries hovering at about 15% or less of London/NYC salaries, this can be a daunting prospect. A son will often need to rely on his parents and potentially even grandparents to be able to afford a place.

So what now

So with that context in mind, what will happen with China’s wealthy? Well, there is a certain segment of wealthy customers that are unaffected by economic downturn. These are simply the ones that have accumulated enough wealth to maintain their lifestyle at the same level regardless of the economic conditions. The wealthy aspirants that we mentioned above however will likely be more negatively affected as they have less disposable income or built-up wealth, so what could we reasonably expect see if that demand for ultra luxury products (think a Hubolt watch or a Bentley) will be unaffected, but the demand for lower luxury products such as handbags and phones will likely drop – already we’re seeing increased indications of the slowdown in hiring, which would put a squeeze on the middle-class market segments.

Implications for the wealth management industry

read full article at KapronAsia WealthManagement

Source: KapronAsia, 12.09.2012

Filed under: Asia, China, Wealth Management, , , , ,

Latin America: Investors Newsletter 19 August 2012

Mexico

Diageo May Buy Jose Cuervo for $3 Billion, Sunday Times Reports
Mexico Ousts Brazil as Investors’ Top Choice in Latin America
Santander Bank’s Mexican unit files for U.S. IPO

Brazil

Overpriced Brazil to Be Profitable for Latam

Latin America and Asia

LatAm and Asia form bright spots for CitiIndia seeks to deepen trade ties with LatAm, Caribbean nationsChina to boost ties with Latin AmericaSpanish Companies Need Latin America For Economic ExpansionNo substitute for domestic strength in Latin AmericaIndia’s trade with Latin America may touch $50 billion by 2014

See also LIQ Latin America Infrastructure ALI Alternative Latin Investor  or MercoPress more information about Latin America.

Filed under: Argentina, Brazil, Chile, China, Colombia, India, Japan, Latin America, Mexico, News, Peru, , , , , , , , , , , , ,

China relaxes QFII rules to attract overseas investment

BEIJING — China has eased its grip on its control on investments made by qualified foreign institutional investors (QFIIs), according to a revised QFII regulation released by the nation’s securities regulator.

Compared with previous rules, the regulation published by the China Securities Regulatory Commission (CSRC) on July 27 lowers the QFII threshold and allows QFIIs to invest in the nation’s capital market through more than one securities dealer.

The regulation also allows QFIIs to invest in the interbank bond market and private placement bonds issued by small and medium-sized enterprises and hold up to a 30% stake in a listed company, up from the previous 20% stake cap.

The move aims to make it easier for QFIIs to invest in China’s capital market, part of the nation’s efforts to free up capital flows and accelerate the opening of domestic capital markets.

 The CSRC said it received 28 submissions after opening draft rules to solicit public opinion from June 20 to July 5, and the commission has made adjustments accordingly.

The CSRC said it will continue to speed up the approval of QFIIs, facilitate the operation of the QFII scheme with related authorities and strengthen supervision to attract more long-term overseas investments.

            The CSRC has quickened QFII approvals lately, granting 5.62 billion U.S. dollars in quotas to 51 QFIIs since December 2011.

The State Council, China’s Cabinet, in April increased total QFII quotas to 80 billion U.S. dollars from the previous 30 billion U.S. dollars.

The CSRC has granted QFII licenses to 172 foreign investors since the program started in 2002.

Foreign investment under the QFII program accounts for 1.1 % of the total market value of the country’s A-shares. (CM)

Source: China Money, Xinhua News, Citic NewEdge, 28.07.2012

Filed under: China, Services, , , ,

Finamex: It’s a Fine Time to Cross the Border – Mexico the Emerged Market of Growth

In January of this year the theme of emerging markets became more of a primary investment rather than that of an alternative one. Many people ventured toward countries that have had rocket high growth over the last few years such as the BRIC countries of Brazil, Russia, India and China which received the preponderance of excitement in the emerging market approach.

Read full article Mexico the Growth Market

Today, the BRIC countries have been challenged to maintain upward momentum. The simmering down of the American market crisis and the expanding concerns for the Eurozone present a dilemma and are showing the effects. The Institute of International Finance (IIF), a global association of financial institutions, says that “net private capital flows to emerging market economies remain quite volatile and subject to disturbance from the euro area”. According to the research, data capital flows fell in 2011 to $1.03 trillion from $1.09 trillion in 2010 and are expected to fall again this year to $912 billion before rising to $994 billion in 2013.

The woes of the Eurozone monetary crisis have influenced investors to move money out of country and to seek safe haven in securities markets elsewhere. Brazil, Indonesia, China as well as others are no longer experiencing upward momentum and are now even in decline or negative.

However year after year, analysts continue to see strong signs of growth and long term prosperity in Mexico as many of the emerging markets troubles are not being seen in Mexico, in fact quite the opposite.

Brazil with its lucrative energy industry capitalized by the largest South American exchange, has attracted many investors to seek opportunities in Latin America. Brazil has enjoyed the influx of foreign investments and has gone further to encourage more interest from the North by recently lowering some of its staggeringly high tax penalties on returns and additionally allowing the shares of foreign instruments to take more of a part in portfolios of its domestic shareholders. “Investors are more cautious with Brazil,” Gustavo Mendonca, an economist with Oren Investimentos in Sao Paulo said this week. “The country has slowed very sharply and the prospects for long-term growth have gone downhill.”

Policy adjustments invite and attract investments, but many of these actions are late and under pressure by issues developing in other countries such as Spain. On the other hand, the opportunities for a rudimental Northern investor looking South of the Border to Mexico remain solid.

A key factor with Mexico is that it has  some of the most definitive metrics that provide the level of transparency needed in a volatile global market.  Unlike Brazil, Russia, India or China, Mexico is directly tied to American monetary policy with a correlation that does not exist in other Emerging Market countries and not surprisingly is also growing alongside the American economy.

Is Mexico beyond ridicule and examination? Of course not, but to begin to understand the benefits of investing in Mexico for the short and the long term we should begin with how Mexico plays a key role as a member of NAFTA (North American Free Trade Agreement). The implementation of NAFTA along with close inter-country relationships, ties Mexico’s trade and currency valuation to that of the US and Canada.

 For example, in 2010 many believed the US would remain flat for the next two years, but we now see this was not the case. As a result of American performance, Mexico’s markets have also increased working in parallel a framework portfolio managers find affirmative Mexico has also maintained a weak peso over the last ten years. The Mexican peso has been priced at a competitive advantage with China.

 Currency rates have helped Mexico realize an economic boom that continues to rise since the 90’s. The move to NAFTA in 1994 could be the key contributing factor for Mexico’s 600 percent increase in sales to the US. With inflation no longer under control in countries like China and  Brazil, analysts are discovering that Mexico’s policies have proven successful in weathering many global financial catastrophes.

…..

As opportunities within the developed markets diminish, the Mexican marketplace is standing strong. As a top emerging market for the global investing community, particularly in Latin America, Mexico represents a substantial alternative to Brazil, home of the leading Latin American stock market. Mexico, although not a BRIC country, certainly has more promising economic stability and growth potential than some of the most mature economies. With a clear goal in sight, the local markets in Mexico continue to take measures that enhance liquidity in equities and derivatives trading which provide surety to its financial institutions and reach more investors abroad.

Source: FINAMEX /Dan Watkins, 01.08.2012  dwatkins@cc-speed.com

Filed under: Asia, BMV - Mexico, Brazil, China, Exchanges, Latin America, Mexico, News, Trading Technology, , , , , , , , , , , , , , , , , , , ,

Greater China Exchanges: Hong Kong, Shanghai and Shenzhen Stock Exchanges set up joint venture

Hong Kong Exchanges and Clearing Limited (HKEx), Shanghai Stock Exchange (SHSE) and Shenzhen Stock Exchange (SZSE) signed an agreement today (Thursday) to establish a joint venture (JV) in Hong Kong with an aim to develop financial products and related services.  The three exchanges hope this new venture will help promote the development of China’s capital markets, enhance the competitiveness of these markets and promote the internationalisation of the three bourses.

 The principal business of the JV will include, but not be limited to, the development and franchising of index-linked and other equity derivatives products; the compilation of cross-border indices based on products traded on the three markets; and the development of industry classification for listed companies, information standards and information products.  They will also include market promotion, customer services, technical services and infrastructure development.

Initially, the JV will develop a series of cross-border indices on which a family of index products will be introduced.  This series of indices will include a benchmark cross-border index comprising large Mainland enterprises listed on HKEx’s wholly-owned subsidiary.  The Stock Exchange of Hong Kong Limited, SHSE and SZSE, and two indices based on this cross-border index – an index comprising A-share constituents and an index comprising Hong Kong market constituents.  The index products will include equity index futures and options based on these indices and they will be traded on HKEx’s derivatives market.

The JV’s nine-member board will be comprised of three directors nominated by each of the exchanges.  SHZE and SZSE will each nominate a Joint Chairman from their representatives on the board.  HKEx will nominate the Chief Executive from its designated directors.

The JV will have an initial paid-up capital of $300 million, with HKEx, SHSE and SZSE each contributing $100 million.  The three exchanges will have equal shareholding interest in the JV.  The exchanges aim to establish the JV within three months from the execution of the agreement.

“Building on the many well-established ties among the three exchanges, the new venture will provide a new platform for our cooperation and we hope that it will contribute to the further development of Hong Kong and the Mainland’s capital markets,” said HKEx Chief Executive Charles Li.

“As China continues to open up and the RMB gradually internationalises, it is inevitable we will have to compete in the international capital market.  Our efforts to further cooperation with HKEx and develop products for the offshore market will bring about a win-win situation for both Hong Kong and the Mainland,” said SHSE President Zhang Yujun.

“The establishment of the JV will help increase foreign investors’ exposure to the Mainland market via Hong Kong.  In addition, the JV can help raise the Mainland capital market’s influence in offshore markets and provide opportunities to explore opening up measures,” said SZSE President and CEO Song Liping.

Source: Mondovisone, 28.06.2012

Filed under: Asia, China, Exchanges, Hong Kong, , , , , , , , , , ,

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