Archive

Reuters blog archive

from Global Investing:

Measuring political risk in emerging markets

(Corrects to say EI Sturdza is UK investment firm, not Swiss)

Commerzbank analyst Simon Quijano-Evans recently analysed credit ratings for emerging market countries and concluded that there is a strong tendency to "under-rate" emerging economies - that is they are generally rated lower than developed market "equals" that have similar profiles of debt, investment or reform. The reason, according to Quijano-Evans, is that ratings assessments tend to be "blurred by political risk which is difficult to quantify and is usually higher in the developing world compared with richer peers.

However there are some efforts to measure political risks, and unfortunately for emerging economies, some of those metrics seem to indicate that such risk is on the rise. Risk consultancy Maplecroft which compiles a civil unrest index (CUI), says street protests, ethnic violence and labour unrest are factors that have increased chances of business disruption in emerging markets by 20 percent over the past three months. Such unrest as in Hong Kong recently, can be sudden, causing headaches for business and denting economic growth, Maplecroft says. Hong Kong where mass pro-democracy protests in the city-state's central business district which shuttered big banks and triggered a 7 percent stock market plunge last month.

As a result, Hong Kong jumped to 70th place in the index from a relatively safe 132nd place in the CUI which analyses governance, political and civil rights and the frequency and severity of incidents to assess the current and future civil unrest picture.

Hong Kong performs comparatively well in the economic, social and rights factors in the CUI, but performs poorly for democratic governance, Maplecroft says:

from Global Investing:

Bleak investment outlook sours mood at Russia forum

By Alexander Winning

What are the chances that Western investors will rush back to Russia if a shaky ceasefire in Ukraine leads to a more lasting peace? Pretty slim, judging by a keynote speech at a recent Russia-focused investment conference in London.

Dmitri Trenin, director of the Carnegie Moscow Centre, told the conference organised by Sberbank CIB, the investment-banking arm of Russia's top state-controlled lender, there was little prospect of significant Western investment in Russia over the next 5 years:

from Expert Zone:

Budget 2014/15 reveals priorities, sets the stage

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The new Narendra Modi government rides on a long wishlist of policies and reforms, with limited resources. Budget 2014/15, as expected, reveals the government’s priorities in the near and medium term.

Arun Jaitley poses as he leaves his office to present the union budget for the 2014/15 fiscal year in New DelhiThe inflation moderation imperative overshadows near-term headline growth desires, manifested in aggressive (albeit challenging) fiscal deficit targets. The projected fiscal deficit of 4.1 percent (3.6 percent of GDP in FY16) versus the 4.6 percent recorded in FY14, is in line with expectations. The reduction in the budget deficit is driven by hoped-for revenue growth rather than depressed spending growth.

from Breakingviews:

Modi win is blow for Tesco, good for investors

By Andy Mukherjee 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A win for Narendra Modi would be bad news for Tesco and its rivals, but good news for other investors. The Indian opposition leader’s party says it won’t allow foreign supermarkets to enter the country if it wins the general election. But that is just one discordant note in a manifesto that is sweet music to financial markets.

from India Insight:

“People need to be allowed to do business” – The Arvind Kejriwal interview, part 2

(This article is website-exclusive and cannot be reproduced without permission)

By Frank Jack Daniel and Sruthi Gottipati

Arvind Kejriwal, Delhi's new chief minister, stormed to power in the national capital in December on an anti-corruption platform.

His Aam Aadmi Party, or "Common Man’s Party", uses a broom as its symbol to suggest it is sweeping the dirt out of politics. Kejriwal, a bespectacled former tax collector, spoke to Reuters in a wide-ranging interview a month after getting the top job, from the same modest apartment he’s lived in for the past 15 years. What follows is a lightly edited transcript of the second part of the interview. Reuters will publish the third and final part on Sunday.

from Expert Zone:

Time for a relook at FDI in insurance intermediaries

(Any opinions expressed here are those of the author and not of Thomson Reuters)

Insurance companies in India have an FDI limit of 26 percent, which may be revised upwards in the coming months. The industry requires funds to grow and the revision can be an enabler, but the process may take some time as it requires legislative approval and there seems to be some opposition to the move.

Since the industry is still in its nascent stage, the insurance regulator also places the same FDI cap on insurance intermediaries such as brokers and web aggregators, severely limiting their ability to raise funds to grow their business.

from Breakingviews:

Quitting China is all about knowing how to go

By Ethan Bilby

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

An increasing number of foreign businesses are folding their tents in China. Multinationals used to be desperate to get into the People’s Republic. Now, as easy growth vanishes, leaving China is becoming less unusual. While some have kept a foot in the door, others have made a show of slamming it.

from Expert Zone:

How to rescue the falling rupee

(Any opinions expressed here are those of the author and not of Thomson Reuters)

I can’t predict where the rupee will eventually land and I don’t think anyone else can either.

Of course, we are not the only country at the mercy of the dollar because almost every emerging market is suffering. But surely, that shouldn’t be any consolation.

from Expert Zone:

Indian telecoms at the crossroads again

(The views expressed in this column are the author’s own and do not represent those of Reuters)

In the 18 years I have been working with Indian telecoms operators, I can recall several points where I felt the industry was at a crossroads in its evolution.

from Breakingviews:

India new FDI rules show welcome long-termism

By Andy Mukherjee

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Hurrah for long-termism. India has decised to open up local industries, including its telecoms sector, to greater foreign participation. It may not create a rush of new investments, but it should lead to a modest improvement in confidence.

  •