Tuesday, November 13, 2007

Breakfast Links

1. CPI rose 6.5% in China from rising food prices. Consumer inflation is highest in 11 years.

2. Ukraine to launch a money market index.

3. Slovakia was fastest growing economy in the EU for the third quarter.

4. The Ivory Coast will cut electricity exports to neighboring counties. Rise of demand at home.

5. Looks like the EU’s highest benchmark interest rate country will keep its title.

Monday, November 12, 2007

Breakfast Links

1. Sinotruk, China’s largest heavy truck company, is going to raise 1.3bn in IPO.

2. Prince Alwaleed bin Talal is the first private buyer of an A380 superjumbo, the world's largest passenger airliner.

3. Vedanta Resources to spin off Indian energy unit in a $2bn IPO.

4. Goldman Sachs is still bullish on emerging markets but is cutting back its exposure due to continual turmoil in global credit.

5. Chinese stocks take a hit after regulators announced on the 9th increase in bank reserve requirement so far this year to 13.5%.

Friday, November 9, 2007

Breakfast Links

1. China's monthly trade surplus probably topped $30 billion for the first time.

2. Petrobras finds an estimated 8bn bbl reserve.

3. The World Bank will commit $2bn to develop broadband access in Africa.

4. ArcelorMittal and Toyota sign a joint venture to process steel in S. Africa.

5. While Citi, Merril and everyone else is getting spanked, a Polish Bank shines.

Thursday, November 8, 2007

Lynching and inching towards something good

Over a week after firing E. Stan and writing down ridiculous amounts, looks like they'd like to be a trusted source for aEmerging Market currency index
I guess it couldn't hurt. A little Emerging Markets exposure never hurt anyone (not yet anyway)
US subprime is the devil

EM bonds fall

Bloomberg piece on LatAm debt falling in these trying times.

Wednesday, November 7, 2007

Breakfast Links

1. S. Africa's foreign reserves are up on dollar's weakness.

2. Mozambique opens first reinsurance firm.

3. High oil profits covers a multitude of presidential incompetence.

4. Eco-friendly chopstick bra.

5. Despite oil prices hitting $100/bbl in the next few days, the IMF does not believe that it will have a dent in global growth.

Tuesday, November 6, 2007

Pakistan

Pakistan has been taking a beating by Moody’s and S&P since emergency rule has been established. Bond holders tend not to like when single military ruler decides he needs to fight the “terrorists” and suspends democratic elections when things don’t go his way. The major issue in this case isn’t even a question of whether or not he government will renegade on it’s bonds, it’s unlikely since they will need to borrow money again sooner or later, but whether or not the economy will be sustainable. Equity investors are not pouring money into projects in the country reducing taxes to the State.

Here is where the debt investors can get play for their dollars. Pakistan, while unstable, is a partner to the United States in their war on terror. The US might not like the current powers that be, but they have to work with him. Being that the country possesses nuclear power, it is hard to imagine the US not intervening before the case gets out of hand.

Pakistan sovereigns might be worth a look right now. Why there is clearly a high political risk embedded in them now, it seems that they are largely oversold. As Bloomberg notes the yields on June 2017 have risen over 250 bps. There is no clear indication that this is indeed the bottom but it seems unlikely that the current government would allow for continual decline in social unrest. General social unrest provides difficulty for the country since they are multi-faceted entities whereas the risk being undertaken by a singular government gone rogue is quantifiable and more easily fixed.

Breakfast Links

1. See didn’t we tell you to get on the magic carpet? Alibaba’s up 193% on first day’s trading.

2. Obviously Pakistan has now gone to shit. Buying opportunity?

3. S. Africa’s growing and growing fast but someone forgot to include the need for more electricity?

4. Angola’s has a cement shortage. Opportunity?

5. At this is was one division Chuck Prince couldn’t muck up – Citi’s Poland division actually made money!

Monday, November 5, 2007

more Breakfast Links (eat up, no dieting here)

6. More comments on the BRIC bubble in Bloomberg.

7. Portfolio Managers discuss to how to manage risk globally and what specific funds they are currently using.

8. Kirby Daley says go into Asian stocks.

Breakfast Links

1. Are you kidding me??!! PetroChina is now worth over one TRILLION dollars!!!

2. Sinotrans Shipping Ltd may raise up to $1.5bn in its IPO.

3. China to prevent its citizens from buying Hong Kong stocks. WTF????

4. Beijing to build the world’s largest Ferris Wheel.

5. US credit issues continue to take a toil on Asia.

Friday, November 2, 2007

Breakfast Links

1. Indonesia to offer $2bn Bond.

2. Leading banks in Kazakhstan downgraded.

3. At least seven Chinese shipbuilders are planning IPOs.

4. Russian Soccer team had to train in their socks because the Romanians stole their boots.

5. The IDB releases its 2008 report.

Thursday, November 1, 2007

Ranting on Bubbles

There a huge line between being a bear and being Chicken Little. Chicken Little, as the story goes, is constantly crying out that the sky is falling. A bear is one who believes the market is going to crash and is waiting patiently to start feasting on cadavers.

Over the last few weeks we have been bombarded with alerts that there is a bubble going on in China. No shit Sherlock. I mean, is there some idiot out there buying in that believes we're only at the beginning of the market cycle? A quick search on Google for 'China + bubble' gave us 7 million hits!

Rather than constant writing about the obvious these people get need to get involved. Just think about the recent credit crunch, people have been "predicting" a housing crash for the past 4 years. Would you have shorted the ABX 2 years ago? Your portfolio would look like bloody Iraq right now.

The point is that we are always in one bubble or another, that's just the nature of business or credit cycles. But say you do have a timeframe for the eventual Chinese meltdown. You know that Shanghai is going to have its ass kung pao-ed. As this Forbes article believes it will after the 2008. Don't write articles about it, put your money where your mouth is.

Do you really have what it takes to be a bear on this market? Are you willing to buy puts or short the index? With Ipos coming out that rise 50-60% on the first day you are either loony or brilliant. To tackle this bull you have to ask yourself, do you have the moral fortitude and the balls the size of mangos to put on a short position in front of the charging train?

You're a brave one Chicken Little. We who are about to die, salute you.

Breakfast Links

1. China to soon offer futures contracts on their stock index.

2. Hyundai’s bottom line is hurt because of rising Korean currency.

3. China not only has to fight against fake drug makers but fake drug watchdog website!

4. As we mentioned before, China’s price caps are hurting it’s oil companies so their raising fuel prices 6%. Thanks guys!

5. AngloGold Ashanti Ltd., the world's third-largest gold producer posts $310m loss for third quarter.

Wednesday, October 31, 2007

evening commute links

figured with the breakfast links, we needed some just before dinner right after we begin our descent. homeward bound we are.

1. Market Strategists see not only domestic threats being a problem to US economic growth, but also those from EM.

2. Quiet honestly, if you're going to read an article on EM, this is the one for you to READ!

3. I'm tired of beating you guys over the head over Chinese IPOs! Giant Interactive Unit! It should price at around 16-17 (above it's range) and open somewhere north of $25. Demand on these things are like crack!

4. Your dentist was right about brushing at least twice a day. Seems like folks throughout the Emerging Markets might be brushing about three times a day.

Are Western Islamic Bonds even necessary?

As I understand it, the selling point of the sukuk or Islamic bond is that investors who wish adhere to Shariah principles can invest in them. Sound good right? Well as posted in our breakfast links, the yields on the ones issued from the West will not be attracting any Middle Eastern tycoons anytime soon.

As expected, when it comes to choosing between God or money, most of us spend more time at the office. The yields on these things are sad especially if you compare the Islamic bonds being issued out of Malaysia or Saudi Arabia. What is even more tragic is that they seem fairly redundant. The major parameter is that they are not allowed to charge or pay interest. The other parameters would include that the income be generated from a hard asset and not cash. This of course excludes lots of the movements in face values thereby excluding repos, strips, or trade receivables (I’m still confused on the last one).

The whole concept is to shoehorn a market into a system of rents. This should increase demand for lease backed notes. If nothing else, bankers should focus less on creating Western Islamic bonds and putting more effort into increasing offers for equipment lease certificates. I’m assuming that they are using capital lease backed structures to bypass the question of buying on credit. Such a huge demand would help lower the cost of leasing for many corporations which can then become valuable investments for the population.

The West has very little to offer Muslim investors in terms of Islamic bonds, the focus should be on marketing Western securities that will fit into the Shariah parameters. The majority of corporate issues seem to be coming from Malaysia.

Western investors should take a closer look at Islamic bonds some which are offering fairly attractive yields. The market is beginning to slowly become more cohesive as HSBC begins its Index into the market. High quality corporates are very attractive. Some of the offerings for 2007 include:

GFH Sukuk Ltd (Bahrain) 3m Euribor + 125bps
National Industries Group SAK (Kuwait) 3m Libor + 105bps
Dar Al-Arkan International Sukuk Co (Saudi Arabia) 3m Libor + 225bps
Jimah Energy Ventures Sdn Bhd (Malaysia) Expected yield 9.3%

The issuance of the bonds are slowing down worldwide as the American liquidity issue has made investors par back their holdings of exotics. This might represent the time to look seriously at Islamic bonds as a means of adding a non-correlated fixed income item into your pool. It is certainly beating out US receivables bonds but then again your repo options might be higher with the more familiar US issue.

Breakfast Links

1. S. African coal prices rise as demand from India increases.

2. Islamic bond offer might be delayed because no Islamic investor wants to buy a non-coupon, low coupon denying ambiguous coupon bond. What? Just click the link...

3. China’s CPI is expected to grow by more than 3% for 2007.

4. China & India to may get spanked if our spineless Fed chief continues to cut rates.

5. Going long on Australian real estate – Former Auzzie convict loved his cell so much he bought it.

Tuesday, October 30, 2007

some dinner time links

1. The revolution will not be televised. It'll be sent to you via text message on your mobile phone instead. It's thought that of the next 1bn mobile users globally, most will come from IC (India and China, not IC as in the short hand text messaging for "I see")

2. "It's gone daft" so says John Bennett who says emerging markets have been overheating too rapidly. With 6.8% returns YTD, I'd say things aren't nearly warm enough.

3. Funny to see how far removed money managers really think of themselves in Africa, from us folks in the good ol US

The Devil Wears Ghana

In what seemingly used to be reserved for western culture, international cosmetics companies are starting to realize there may be huge potential for women who don't feel pretty enough.
We hit them over the head with our hollywood stars, our commercials, and voila! you have the makings of a young, but growing society of women who no longer feel good about themselves physically. This trend seems to be growing and companies like Unilever are ready to step in and fill that void.
In all fairness, plastic surgery has been fairly common in areas like LatAm for those who could afford it for years. Now it seems like going au natural is no longer beautiful in the BRIC countries.
Well isn't that just fantastic?
Or should I say Marvelous? Marvelous Dahling, Marvelous!

Shorting Emerging Markets?

Blasphemy!
Check out these new ETF's for you EM bears out there.

Panamania!

Ok the title's lame but you try finding something funny to work Panama into.

An interesting paper on public debt markets in Central America, prepared for the IMF by authors Hemant Shah, Andreas Jobst, Laura Valderrama-Ferrando, and Ivan Guerra, gives us a closer look at Panama.

This morning I had a sudden interest in Panama, why? No idea, my fellow snarky economists here asked me the same thing, but now I am a firm believer in looking deeper into this quiet country. It is worth our while to start looking past Brazil, Mexico and Columbia into other areas that while not exhibiting growth certainly is increasing stability.

Reasons to look more closely at Panama

1. Panama continues to have sustained and strong economic growth - 7.6% Real GDP in 2004, 6.4% in 2005 with low inflation (2.9%)

2. Panama has a well developed and liquid banking center - it's always a plus to have a liquid domestic credit market

3. There is plenty of room for growth in the nonbank financial sector e.g. insurance, investment management, etc. And there seems to be good insulation from financial crisises in neighbouring countries.

4. There isn't an enormous amount of secondary trading in the Bolsa de Valores de Panama SA but if the Bovespa IPO is any indication, there is a continued "flight to quality" in Latin America where companies continue to seek stable financial centers to list their companies and are not shy about crossing borders.

5. Taxes are attractive - I wouldn't buy any munis but that's another issue. Our authors note "Domestic income is only lightly taxed and foreignsourced
earnings as well as dividends and capital gains from exchange-listed companies are tax-exempt. Interest income from nonlisted securities is subject to a flat tax rate of 5 percent."

6. Sovereign credit quality has continued to improve. The country has gone from borrowing a 10 year tenor @ 10.75% in July 2000 to it's more recent March 07 30 year offering @ 6.7%. Current 5 year CDS spreads place it higher than it's neighbors (Brazil, Venezuela, Mexico, and Colombia) Though I would argue that Venezuela poses far greater political risks.

Current attractive corporate offerings include

Panama Canal Railway Co - 20years @ 7%
Banco de Credito del Peru (Panama) - 15years @ 7.17%
AES Panama SA - 10years @ 6.35%

Breakfast Links

1. Chinese oil giant Sinopec loses money in oil as oil prices go up. Huh? Ohhhh. That’s why Communism blows.

2. China bans the use of "seductive" words like "foxy lady", "handsome guy" and "moneybags" in personal ads. I’m guess they prefer ones like “Single, parent honoring, female available - will produce many sons…”

3. Bank of China posts 40% rise in its nine month profit. Would have done better but took a hit in US subprime.

4. Petrobras’ finance arm prices $1 billion bond. 2018 @ 98.612 with 5.75% cpn to yield 1.67% over Treasuries.

5. JP Morgan to $2 billion to invest in Indian Infrastructure.

Monday, October 29, 2007

Making music in Indonesia

So President Susilo Bambang Yudhoyono of Indonesia on the campaign trails does not mention anything about the problems of trade stangnation, diminished trade relations with the rest of Asia, the fact that their natural gas resource which has been holding the GDP up, is depleting, what does he talk about? His new album!

Apparently he’s hoping that his collection of love ballads will beat out the love ballads of his rival, Army Chief Wiranto.

Indonesia has several investment grade whole loans that came out this year. Companies to look at include

Indorama international (Textile)
PT Ultrajaya Milk Industry and Trading Co (Food & Beverage)
PT Austindo Nusantara (Mining)

I am interested in how PT Bakrie Telecom will fare in the future. They took out a fairly high leveraged loan in July (5 year tenor). Sales are down 7% though.

I’m still a fan of telecom in the emerging markets. Aside from possible nationalizing or tanks rolling over them, there is little political risk that would result under civil unrest – people still need to call each other right?

According to the IMF, the problem with Indonesia is that it hasn’t really found a way to increase market share in the export market. Indonesia has an open trade policy with little or no tarrifs making it a relatively open economy. Yet it seems to have it’s focus in the wrong place. It is currently over trading with Latin America, the Middle East, and Africa. It is under-trading with the US, EU, and the rest of Asia.

As it stands now, it may be worth getting into these short term corporates that are paying extremely high yields in Indonesia. I certainly would not want to invest in the sovereign paper nor it’s equities unless you really know where to look. The macro fundamentals in Indonesia do not seem poised for growth unless its leaders push for increased trade with China, EU and the US. Currently it’s Debt/GDP is on par with Argentina, and we already been down that road.

Breakfast Links

1. China now has 5 out of the world's 10 largest companies. And no, none of them involve sweatshops.

2. India's Sensex finally breaks thru 20,000.

3. Angola is forecasting 2008 GDP growth of 16.2% and all of it from one product. Hint what other product out there allows incompetent governments to grow this quickly?

4. Nissan and India's second largest truck and bus maker, Ashok Leyland, are doing a commercial vehicle joint venture. I always did love Nissan, just won't drive their cars .....

5. Some good news for our Asia - targeted funds that invests in Australia, their index is going up. When gooks and Auzzie's live in perfect harmony, it's a beautiful thing. Goozzies?

Friday, October 26, 2007

some breakfast links to get you going for the weekend

T. Rowe fund returning 62% YTD investing in some previously untapped markets

Don't forget about Russia from Barron's with love.

Don't rely on the BRICs to pick up the slack or the dry cleaning for that matter

The IMF shows some concern. All together now: awwww!

Thursday, October 25, 2007

I'm trying to convince my girlfriend to let me go to Brazil for Carnivale

While i'm down there maybe i'll do an IPO.
By now you've probably heard that Bovespa raised over $3bn.
I hear Brazilian women like American men so I like my odds. Of course with what the Reai is doing, my puny dollars may not get me very far.
I'm convinced about Brazil! As for my girlfriend.....

Links - Bidding on hair

1. ‘Che’ Guevara’s hair’s on sale so what sick Latin American dictator could possibly be interested?

2. Sanluis Rassini (NR/B2/B-) coming out with a 11.5% $275m 10 year senior unsecured bond issue.

3. IDB approves $500 million conditional credit line for Costa Rica’s power company.

4. Hipotecaria Su Casita (BMV: CASITA) is worth watching as it continues to price monster Mexican RMBS.

5. Carlos Slim loses a billion or so but it ain’t no thang.

more Chinese IPOs (because they're good for you)

if we've said it once, we've said it 1 million times! Chinese IPOs are what you want to be paying attention to. Throughout our illustrious history we've made this point, and hope it's becoming clear to some of you now.
Longtop Financial gained 85% after it's first day of trading (although it gave back about 8% today)
Perhaps you should listen to Buffett when he says to dump PetroChina; the soon to be largest company in the world by market cap, but that doesn't mean you can't still make $ from Chinese issuers. We're hearing Longtop has decided to exercise their shoe. I'm in the mood for some pot stickers

Apples with Oranges

The one great thing about EM debt is the fact it simply follows B-school fundamentals. Credit, liquidity, political risks are more or less priced in. Investors know more or less exactly what they are getting into. It's no secret if your bond has a guy in power who is looking to nationalize everything, build a nuclear bomb, or make cheezy movies. Unlike fishy accounting - riots, civil wars, high inflation, etc., are all laid out in the open. Everyone invests in China, people has heard of China, buy lead painted Chinese toys, and eats kung pao chicken. But is China really making clear the risks involved to you? Plus firms like Cnooc and PetroChina are borrowing at 4-5%, doesn't make for attractive bargins.

Is investing in a current war zone any worst than investing in an American bond? Now I don't mean munis but some of current exotic corporates out there. For example, take MTN's tied to something. Toyota has priced several of these MTNs tied to caps, swaps, it's most recent CMS, claiming a interest target of 9%. Now I'm pretty lazy when it comes to options, if you are using CMS to hedge durations, that's fine, it what it's intended for, but they're talking about a serious arb move.

Honestly who would trust something like this :

"
The Notes will bear interest from and including the Original Issue Date to but excluding the Interest Payment Date on October 31, 2008 at the Initial Interest Rate of 9.00% per year. The Notes will bear interest from and including the Interest Payment Date on October 31, 2008 and each Interest Payment Date thereafter to but excluding the following Interest Payment Date until the Interest Payment Date on October 31, 2017 (each, a “First Interest Calculation Period”) at a rate equal to the Initial Interest Rate of 9.00% per year multiplied by the Barrier Amount. The Notes will bear interest from and including the Interest Payment Date on October 31, 2017 and each Interest Payment Date thereafter to but excluding the following Interest Payment Date until the Interest Payment Date on October 31, 2022 (each, a “Second Interest Calculation Period”) at a rate equal to 10.00% per year multiplied by the Barrier Amount. The Notes will bear interest from and including the Interest Payment Date on October 31, 2022 and each Interest Payment Date thereafter to but excluding the following Interest Payment Date (or Maturity, as applicable) (each, a “Third Interest Calculation Period”) at a rate equal to 20.00% per year multiplied by the Barrier Amount.
“Interest Calculation Period” means each First Interest Calculation Period, Second Interest Calculation Period and Third Interest Calculation Period, and “Floating Interest Rate Period” means collectively the First Interest Calculation Periods, Second Interest Calculation Periods and Third Interest Calculation Periods.
“Barrier Amount” means an amount calculated in accordance with the following formula:
n / N
Where:
“n” is the total number of calendar days in the applicable Interest Calculation Period on which the difference between the 30-Year CMS Rate minus the 10-Year CMS Rate (the “Spread”) sets greater than or equal to 0.0%; provided however, that the Spread determined on the fifth U.S. Government Securities Business Day (as defined below) prior to each Interest Payment Date (or Maturity, as applicable) shall apply to such U.S. Government Securities Business Day and each of the remaining calendar days in the related Interest Calculation Period; and
“N” is the total number of calendar days in the applicable Interest Calculation Period.
No interest will accrue on the Notes with respect to any calendar day on which the Spread is determined or deemed to be less than 0.0%. For each calendar day in an Interest Calculation Period that is not a U.S. Government Securities Business Day, the Spread for that calendar day will be the Spread determined on the immediately preceding U.S. Government Securities Business Day."


Now granted that CMS Rates are not specifically pegged like other interest rate swaps but this involves too many ifs. It boggles my mind as to who actually invests in stuff like this. At least if I'm investing in Sri Lanka, the war zone is paying me my 325 bps. It's clear on where the risks are and posts a huge sign in front it's crumbling infrastructure, warning the buyer to beware.

If Buffett says it, then it must be true

Signaling caution about China, Buffet warned about investing in China after he excused himself from the PetroChina party he'd been attending since 2000
The man from the Cornhusker state says he is "appreciative" of the performance of PetroChina and that he doubts he'll find another stock like it. Cheer up old Chap, Alibaba is just around the corner.

Breakfast Links

1. Industrial and Commercial Bank of China to buy about 20% of Africa's biggest lender by assets for $5.6bn.

2. Is anyone NOT spanking the dollar? Polish Zloty rises against the Euro.

3. Brazilian power company Copel expects to invest about 7bn reais (US$3.88bn) for 2008 to increase capacity.

4. China's GDP up 11.5% in first nine months!

5. How does mining giant Xstrata motivate it's Australian coal miners? What else - offer Kama Sutra lessons.

Wednesday, October 24, 2007

fuqme? no fuqu! no fuqi!

In the great tradition of assystem, wang on group, wienerberger AG; Fuqi Int’l Inc brings us another company with a semi-obscene, yet funny when you said it aloud name.
The 21 Chinese IPOs listing for the first time in the states year to date have 1 day returns of 18% and one week returns of almost 23%.
How do I know? Use your terminals people!
Also be on the lookout for Longtop Financial which opened today at 27.01, 34% higher than what it priced at last night.
Nothing in the world makes us here at Markets Emerge! as happy as Chinese IPOs do. Maybe except some really good tapas.

Assorted Links - Is the credit crunch affecting EM?

1. South Africa’s getting spanked! Stocks & Bonds down, long the RAND

2. Angola takes out $3.5 billion @ Libor + 325-375 bps

3. Credit crunch is taking a toil on expected emerging sovereign debt issues

4. Financials and brokerages leading the Brazilian ride up.

5. Empresa de Energia de Bogota SA ESP, Colombia's second-biggest electricity transporter, may sell $710 million 9% 7 year bonds.

Loving it long time

Peter Ryder is hardcore. He chugs agent orange with his kool-aid in the morning to wash down the mountain yak he had for breakfast. His skin richly tanned from working in the trenches, he believes in Asia so much that he not only invests there, he lives there. Who are you going to trust to invest in Asia - This guy or that pale and pasty asset manager investing Asian ETF money into Australia?

Why does an Asian ETF invest in Australia? Are the pickings among us gooks so slim that we are investing in a continent that has a growth rate of 2.7%? I think its because the prospectus are in English as opposed to Vietnamese.

I love Vietnam, the food is good, the women beautiful, and it has one war with the West that we didn’t lose! Now granted there are not as many stocks on the Vietnamese stock to actually put in a singular ETF but it should at least be part of the portfolio. If nothing else a good Asian ETF should incorporate some Vietnamese corporate bonds. While credit risk is still a little shaky, at least there’s little political risk unlike say a war zone like Sri Lanka.

Vietnam Shipbuilding Industry Corp (VINASHIN) has borrowed, to date, $4.5 billion for an average life of 10 years at an average coupon of 10%. Vietnam Electricity Construction Joint Stock Corp took out a 5 year issue for 10.15%.

There are lots of good issues from solid companies that would provide healthy yields for ETF dividends. It seems strange that we are investing in Asia only through equity when there is so much debt that can be had for solid risk adjustments.

Plus if nothing else, you gotta love a country that is this enterprising:

‘…investors must maintain constant vigilance, as Ryder found while clearing land for a golf course at China Beach. Regulations require a payment of about $2 for every tree cut down or removed. The rule led to a flurry of planting by locals, some of whom stuck large branches into the ground hoping to pass them off as bona fide trees deserving compensation. Ryder greets such antics with a philosophical shrug: It would take something far worse to drive him from his adopted country. "The only way I'm leaving this place," he says, "is feet first.”’

Breakfast Links

1. The Bespoked Investment Group lists Chinese ADRs that SUCK.

2. More Brazilian Exchange Love to go around.

3. S. African NOC, PetroSA, to build a $5.85 billion refinery for crude to reduce dependence on imports

4. More proof that African Telecom will the next king makers.

5. Tacos for all! Grupo Mexico (GMEXICOB.MX) posted a 27 percent jump in third-quarter net profit on Tuesday to $499 million,

Tuesday, October 23, 2007

Take that Slim!

Showing that he doesn't control every form of telecommunicating in Mexico, Maxcom Telecomunicaciones listed for the first time last friday in the US with little to no fan fare. Seems like Mr. Slim in more concerned with fixed lines in the country that invented the chimichanga, rather than servingmedium and small sized businesses
But Slim and his Telmex need not worry over their monopoloy being spoiled. When you own over 90% of the telephone lines in the country, you can collect whatever you want when passing go. Seems like Cofetel (the Mexican version of the FCC) is applying a little pressure to Slim as well.
One point for the little guy. No points for Slim (not a little guy)

Is your recently launched IPO not performing how you'd like?

Well then Noah Education has the solution for you.
Rather than sit back and watch as it's stock price dipped, the executive team took action! After it's ADS's priced at $14, it opened it's first day of trading at $22.90 to meet it's seeminly high demand. But by yesterday's close the stock had dipped to below $17. So, what did management do?
Did they panic? Did they immediately short the stock? Did they dump their entire position? No, no and no. They immedediately chartered what in our own sick fantasy was a fully equipped private plane with plenty of green tea to cleanse the dirtiest of sinners (we should've flown with them.)
Destination you ask?
New York City. And not just anywhere in NYC, but the NYSE, where Noah's team greeted traders, specialists, the guy who hates the fact that he had to replace Grasso and all of the other big boards' movers and shakers.
Result? Stock finished up 23% for the day recovering yesterday's losses and then some.
Let this be a lesson to you Chinese companies out there soon to be listing on the NYSE: make nice with the good folks who walk daily on that treacherous cobblestone on Nassau Street. It might be in your best interest.

Assorted Links - Bulls, Bears, Bubbles Oh My

1. AU Optronics and Asia's bull market on flat screen TVs.

2. Ernest & Young bearish on BRIC IPOs

3. Uganda discovers that it was paying no one to do nothing

4. African telecom Pacman, Celtel International, eats another competitor

5. Nonemerging market emerging market island of Hong Kong cuts income and corporate taxes.

6. We already have a Bubble? We just started this bloody blog!

For those of you who missed out on Baidu.com in 05, fret not

Hope may very well be around the corner in the form of Alibaba.com
For those of you who have been in the witness protection program without access to the internet, alibaba.com is sort of what would happen if e-bay and craigslist got married and learned how to speak Chinese.
The aforementioned Baidu.com often referred to as "The Chinese Google" has returned 316% since it listed on Nasdaq just over 2 years ago. Although Alibaba isn't yet available to retail clients here in the states (only available to institutional guys via 144A), the fact that it's been oversubscribed 50 times gives an indication of the demand for this stock.
In other words, be patient; it's coming.
There's so much demand for this thing that they just revised the range today from 10-12 HK$ to 12-13.50 HK$

With a 40% stake in the company, Yahoo may finally have something to smile about when staring at Google. We'll find out on Monday.

NASDAQ? Don't make me laugh

Brazil is best known for Carnivals, giant Jesus statues, and extreme waxing. But coming soon it will be known for it's Stock Exchange on steriods. According to Bloomberg the greatest IPO of the Year, Bovespa Holdings SA, will raise as much $3.67 billion with the estimated price of 20-23 reais per share. With 705 shares outstanding, Bovespa will be almost twice the size of Nasdaq.

The most interesting part of the Brazilian exchange is the fact that other Latin American countries list their companies on it as well since places like the Columbian exchange is not inspiring confidence. Though I am quite bullish on spot prices for blow.

This is turning out to be good month for Brazilian issues. Currently priced this month has reached $2.04 billion:

Sul America SA (Insurance-Multi-line)
Construtora Tenda SA (Residential Construction)
Banco Industrial e Comercial SA - BICBANCO (Commercial Bank)
Trisul SA (Residential construction)
SEB - Sistema Educacional Brasileiro SA (Schools)
Marisa SA (Department Stores)

If the deals for the rest of the month price it will bring the volume of Brazilian IPOs to $8.035 billion for October.

Helbor Empreendimentos SA (Real Estate)
Brasil Brokers Participacoes SA (Real Estate)
Laep Investments Ltd (Finance)
Agrenco Ltd (Agriculture)
Amil Participacoes SA (Healthcare)
Bovespa Holding SA (Securities Exchange)

Middle of a War Zone - Where else would you invest?

Sri Lanka prices $1.25 billion Eurobond (NR/B+/BB-) with an 8.25% coupon and offered at Treasuries +397.2bps for a five year tenor. The offer was oversubscribed 3.2 times. Credit default swaps on the issue were trading at 360bps.

Is anyone longing the swaps for a country currently fighting a civil war? It might be an interesting play considering a similar offering by Pakistan ($750m,10years @ 6.875%), who with the return of Benazir Bhutto, is facing a disruption themselves.

What is an emerging market?

This blog deals with the world of emerging markets investing. Of course, that begs the question – What is an emerging market? It seems that everyone has their own definitions, some of which makes no sense whatsoever. For example, the Economist magazine lists both Hong Kong and Singapore as emerging markets. Why is Taiwan on the list while New Zealand is quite clearly noted as a developed nation? Taiwan has six times the GDP of New Zealand and manufactures everything from oil tankers to microchips. The only things I see coming out of New Zealand are lamb chops and cashmere sweaters.

One of the defining features I think all are in agreement when it comes to developing markets is their potential for growth and their affect on the general marketplace. For example no one gives a flying flip about Zimbabwe but India is another story. The world is moving way beyond GM and Ford, the new giants are not waiting til the country stabilizes. It is more likely that our current landscape is going be shaped by the likes of ChinaPetro and Mittal than a US company like GE.

But of course, investing in the third world isn't easy. Companies in these places operate with questionable electricity, infrastructures designed by 3 year olds, and government officials ever ready to take their bribe. You invest at your peril and no amount of chart reading or even fundamental analysis will help you here.

But of course, if you fancy yourself a coming of age George Soros, there is no other arena to play in. Enjoy and any advice to the site is welcomed. We don't have a plan yet on where this will go, only following the topic listed above, we're a market trying to emerge.