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from The Great Debate:
The looming U.S.-China rivalry over Latin America
President Barack Obama meets with Chinese President Xi Jinping (L) in California, June 7, 2013. REUTERS/Kevin Lamarque
Though the U.S. and Chinese presidents heralded a “new model” of cooperation at their weekend summit, a growing competition looks more likely. The whirlwind of activity before President Barack Obama met with President Xi Jinping in the California desert revealed that Beijing and Washington’s sights are set on a similar prize -- and face differing challenges to attain it.
Their focus is Latin America and the prize is increased trade and investment opportunities in a region where economic reforms have pulled millions out of poverty and into the middle class. Latin America is rich in the commodities and energy that both China and the United States need, largely stable politically and eager to do deals.
Consider the travel itinerary: Obama visited Mexico and Costa Rica last month. Vice President Joe Biden recently went to Colombia, Trinidad and Tobago and Brazil. Chile’s president paid Obama a visit last week, Peru’s leader arrived Tuesday and Brazil’s is due in October.
from Global Investing:
South Africa’s perfect storm
Of all the emerging currency and bond markets that are feeling the heat from the dollar's rise, none is suffering more than South Africa. A series of horrific economic data prints at home, the prospect of more labour unrest and the slump in metals prices are making this a perfect storm for the country's financial markets.
Some worrying data from the Johannesburg Stock Exchange this morning shows that foreigners sold almost 5 billion rand (more than $500 million) worth of bonds during yesterday's session alone. Over the past 10 days, non-resident selling amounted to 10.7 billion rand. They have also yanked out 1.2 billion rand from South African equities in this time. And at the root of this exodus lies the rand, which has fallen almost 15 percent against the dollar this year. Now apparently headed for the 10-per-dollar mark, the rand's weakness has eaten into investors' total return, tipping it into negative return for the year.
from Entrepreneurial:
Q & A with Joel Jackson, founder of Mobius Motors
In February, Global Post profiled an interesting startup in Africa called Mobius Motors that is working to manufacture affordable ($6,000) cars designed specifically for Africans.
By simplifying the designs through the elimination of non-essential parts like power steering and air conditioning, the team at Mobius is able to drastically reduce the cost of the vehicle, which they hope will help small business owners in need of affordable transportation. Reuters reached Mobius founder and CEO Joel Jackson over email to ask him about his plans for the car company and some of the challenges he foresees.
from Photographers Blog:
Salt caravans of the Danakil Depression
Danakil Depression, Ethiopia
By Siegfried Modola
To descend into the Danakil Depression is to step into another world.
The thick warm air, the hazy sky and the rugged empty mountains that gradually give way to the immensity of a white, shimmering salt desert all leave the traveller in awe of this cruel yet fascinating landscape. Overlapping the Afar region of northeastern Ethiopia, Eritrea and Djibouti, this is the lowest point in Africa and one of the hottest places on Earth.
Venturing deep into this inhospitable land requires a well organized plan. Getting stuck with no back-up vehicle, no satellite communication or simply not enough water could become life threatening within a matter of hours.
from Full Focus:
Ethiopia’s ancient salt trails
Photographer Siegfried Modola traveled to document Ethiopia’s ancient salt trade in the Danakil Depression, one of the hottest and harshest environments on earth, with an average annual temperature of 94 degrees Fahrenheit (34.4 Celsius). For centuries, merchants have traveled there with caravans of camels to collect salt from the surface of the vast desert basin. The mineral is extracted and shaped into slabs, then loaded onto the animals before being transported back across the desert so that it can be sold around the country. Read Siegfried's personal account here.
from Global Investing:
Turkey: ceasefire with PKK may bring economic gains
Turkey's ceasefire last month with the Kurdish militant group PKK could boost its trade partnerships multilaterally, as increasing prospects for stability in the region bring economic opportunities in the Middle East and Africa.
The halt in the decades-long armed campaign came on March 21 after the leader of the Kurdistan Workers' Party, Abdullah Ocalan, sent a letter with the announcement from the island prison cell where he has been held since 1999 when he was arrested for treason.
from Ian Bremmer:
New strings attached
China’s influence in Africa goes so deep that African leaders are starting to shape their own agendas after China’s. In February 2012, South African President Jacob Zuma gave his “state of the nation” speech in Cape Town, but he might as well have been in Beijing. “For the year 2012 and beyond,” he said, “we invite the nation to join government in a massive infrastructure development drive.” By October, Zuma was vowing $100 billion in Chinese-style infrastructure investment to help create jobs. In welcoming Xi Jinping, China’s new president, to South Africa last month for a BRICS conference, Zuma gushed, “We view China’s success as a source of hope and inspiration.” Apparently, he also views China as a model for his country’s development.
The infatuation is mutual. Xi Jinping recently made his first major foreign diplomacy trip, choosing to go to Africa (after a brief visit to Moscow), stopping in Tanzania, South Africa and the Republic of Congo as he made the rounds of one of China’s most important regions for investment. After all, China’s foreign direct investment in Africa stood at less than $100 million in 2003; today, it’s more than $12 billion. China is already responsible for more than a quarter of all foreign investment in Africa — and commerce is still growing at a rapid clip.
from Global Investing:
Emerging earnings: a lot of misses
It's not shaping up to be a good year for emerging equities. They are almost 3 percent in the red while their developed world counterparts have gained more than 7 percent and Wall Street is at record highs. When we explored this topic last month, what stood out was the deepening profit squeeze and steep falls in return-on-equity (ROE). The latest earnings season provides fresh proof of this trend and is handily summarized in a Morgan Stanley note which crunches the earnings numbers for the last 2012 quarter.
The analysts found that:
--With 84 percent of emerging market companies having already reported last quarter earnings, consensus estimates have been missed by around 6 percent. A third of companies that have already reported results have beaten estimates while almost half have missed.
from Full Focus:
Imaging Mali: Joe Penney
Since French troops first arrived in Mali on January 11, 2013, photographer Joe Penney has spent all but one week of 2013 covering the conflict. "The first three weeks were probably the most intense I have ever worked in my life, and at times, the most frustrating," Joe says in his personal account here.
from Global Investing:
Dollar drags emerging local debt into red
Victims of the dollar's strength are piling up.
Total returns on emerging market local currency bonds dipped into the red for the first time this year, according to data from JPMorgan which compiles the flagship GBI-EM global diversified index of domestic emerging debt. While the EMBI Global index of sovereign dollar debt has already taken a hit the rise in U.S. yields, local bonds' problems are down to how EM currencies are performing against the dollar.
JPMorgan points out that while bond returns in local currency terms, from carry and duration, are a decent 1 percent, that has been negated by the 1.3 percent loss on the currency side. With the dollar on the rampage of late (it's up almost 4 percent in 2013 against a grouping of major world currencies) that's unsurprising. But a closer look at the data reveals that much of the loss is down to three underperforming markets -- South Africa, Hungary and Poland. These have dragged down overall returns even though Asian and Latin American currencies have done quite well.
