(Institutional Investor, June 24, 2015)
A major emerging-markets nation opened its doors to multinational investors last week. Well, sort of.
Foreigners over the centuries have found it easier to enter Eastern Europe than to extricate themselves from it. Vienna–based Raiffeisen Bank International (RBI) is learning this painful historical lesson anew.
Austrian banks naturally leapt at the chance to expand eastward after the Berlin Wall and Soviet Communism fell. Erste Bank and Bank Austria (since acquired by Italy’s UniCredit) dueled Raiffeisen for market share across the former Warsaw Pact. But RBI ranged farthest and most aggressively of all, establishing itself as the largest foreign bank in both Russia and Ukraine, with the former as its top profit center.
June 12, 2015
Evolving technology promises to revolutionize the way a vast nation shops and communicates. Online merchants’ sales grow geometrically, as do their losses. Investment banks proclaim they have seen the future, and it works with eye-popping stock-market multiples. Tech investors may feel like they have seen this movie before, but the backdrop is new: India.
Rotten broadband networks and dodgy electricity have kept India, population 1.25 billion, as the world’s sleeping digital giant, despite its depth of engineering talent. A leap forward in cellular, with smartphones selling as cheap as $40 and 3G rates dropping steeply, is set to change all that. The value of goods sold online will double this year to $7 billion, and keep on multiplying to $220 billion by 2030, Goldman Sachs projected in a report last month.
After years in the financial wilderness because of its mounting debt and widening corruption scandal, Petróleo Brasileiro is showing signs of recovery.
In late April the giant state-owned oil company issued a long-delayed fourth-quarter 2014 earnings report and sought to draw a line under its troubles by taking a 44.6 billion real ($14.1 billion) write-down for overvalued assets and an additional 6.2 billion reais for costs related to the alleged graft. “We have made our best efforts to turn the page on this sad chapter that the company has passed through,” chief executive Aldemir Bendine, who came on board in February, told reporters after the announcement.
The Egyptian Exchange roared back to life in 2013 and 2014, with its benchmark EGX 30 index doubling in the 18 months following the July 2013 coup that removed President Mohamed Morsi and his Muslim Brotherhood government from power. The military-backed regime of his successor, President Abdel Fattah el-Sisi, cashed in on that optimistic tide last September, raising 61 billion Egyptian pounds ($8 billion) from its own population through a bond issue to finance expansion of the Suez Canal.
INSTITUTIONAL INVESTOR
A Russian analyst who has monitored corporate credit for the past decade at a Big Three rating agency in Moscow still maintains the habits of the go-go years,enjoying a steak tartare lunch at a plush restaurant just off the capital’s Garden Ring, but his outlook for the country is grim — and not only in economic terms. He worries about the official media’s increasing focus on a “fifth column” supposedly seeking to undermine Russia from within, and about events like the 35,000-strong February march in Moscow, encouraged by the government, that was directed against “internal enemies.” Such efforts to stifle dissent and rally support for the government’s policies toward Ukraine could metastasize into a modern version of Stalinism, he warns.
Iran: The Next Frontier?
Bibi Netanyahu and most of the U.S. Congress may still view Iran as an axis of evil. But a few brave analysts are starting to pitch it as something else: the next great emerging market. “Iran is the largest economy in the world by far that remains cut off from global markets,” says Charles Robertson, chief economist of Renaissance Capital, a London-based investment bank that had a good run in Russia and now wants to expand across the Middle East and Africa. “It’s like Turkey, but with 9% of the world’s oil reserves.”
In this era of instant financial and economic contagion, a butterfly’s wing flapping in Greece or Thailand can send reverberations through stock exchanges in New York and London. Yet world markets have shrugged off a disturbance of potentially historic proportions during the past few weeks: Russia’s annexation of the Ukrainian province of Crimea and the resulting revival of cold war–style tensions between Moscow and the West. “Except for the Russian and Ukrainian markets themselves, this is basically a nonevent,” says Melissa Brown, senior director of applied research at New York–based risk analytics and financial data firm Axioma, which studies equity and currency volatility around the world.
March 7, 2015
Sovereign wealth funds swelled to a $7 trillion investing gorilla on a rich diet of oil windfalls, so it makes sense that they would lose some punch as oil prices fall. Marc Faber, a Barron’s Roundtable member and the editor of The Gloom, Boom & Doom Report newsletter, stressed at this year’s Roundtable that a tapering of sovereign-fund earnings would undermine global demand for securities in coming years.
Investors Gear Up for Opening of Saudi Stock Market
(Institutional Investor – March 2015)
The price of oil may be depressed, but investor spirits in Riyadh are anything but. Anticipation is growing that a long-awaited opening of the Tadawul, the Saudi stock market, to foreign investors will come as early as next month. Analysts believe the move will provide fresh momentum for the $500 billion market, which has risen by nearly 30 percent since mid-December. “This will be the event of the year in emerging markets,” says John Sfakianakis, a veteran economist and investment strategist in Riyadh who opened an office there in September for the London-based emerging markets specialist Ashmore Group.
