#Indonesia gets investment grade from Fitch. Majulah!
2011 as reviewed by Lego: http://t.co/BVV7tgux
@scottybarber Mums go to Iceland…for work! *Ba-da-boom*
Startling developments in the Chinese village of Wukan. Does this herald something larger? RT @Telegraph: http://t.co/kxMD7NkP
#Russia Prez Medvedev responds to protests via #Facebook. Italy’s Berlusconi went on FB before quitting. Are press releases obsolete?
Moscow is not Cairo: http://t.co/MzUieO2K
Moscow is not Cairo. Time to buy shares?
The speed of the backlash building against Russia’s paramount leader Vladimir Putin following this week’s parliamentary elections has taken investors by surprise and sent the country’s shares and rouble down sharply lower.
Comparisons to the Arab Spring may be tempting, given that the demonstrations in Russia are also spearheaded by Internet-savvy youth organising via social networks.
But Russia’s economic and demographic profiles suggest quite different outcomes from those in the Middle East and North Africa. The gathering unrest may, in fact, signal a reversal of fortunes for the stock market, down 18 percent this year, argue Renaissance Capital analysts Ivan Tchakarov, Mert Yildiz and Mert Yildiz.
First of all, Russia’s youth unemployment rate is relatively low at 14 percent, compared to Syria’s 18 and 30 percent in Tunisia.
Secondly, the percentage of young men as part of its rapidly ageing population is low — those aged 15-29 account for 11 percent in 2009 versus a range of 13-17 percent in its fellow oil-exporting peers in the Middle East. This is particularly significant since the relationship between a country’s political stability and its proportion of angry young men has been well elucidated.
And although Russia’s GDP per capita is generally higher than those in the Middle East, its income inequality is more pronounced. Energy exports per capita are also lower in Russia. All this suggests there is room for the Kremlin to ratchet up government spending to cool public anger if it wanted to.
“A strategy of moderately higher government spending on the eve of Russia’s March presidential elections may help assuage current pressures. Russia’s 2012 budget already assumes that spending grows at higher rates than inflation, but we believe additional fiscal disbursement may well occur,” the Moscow-headquartered investment bank said.
Sovereing wealth funds showing unprecedented interest in emerging debt: http://t.co/pP9uEhnp via @reuters
BNPP IP sees record sov wealth fund interest in emerging debt
LONDON (Reuters) – Sovereign wealth funds of emerging economies are showing an unprecedented level of interest in emerging market bonds as part of a deepening institutional commitment to the asset class, says BNP Paribas Investment Partners.
“What we are seeing is a record amount of RFPs (requests for proposals) for emerging debt (mandates) from sovereign wealth funds. These are sovereign wealth funds from top-notch emerging markets. We are not seeing developed world sovereign wealth funds,” Sergio Trigo Paz, chief investment officer for global emerging fixed income at BNP Paribas Investment Partners, told the Reuters 2012 Investment Outlook Summit on Wednesday.
“We are expecting more participation from sovereign wealth funds, pension funds and central banks. They are in the process of increasing allocations to the asset class, which are now just under 10 percent of assets held by institutional investors.”
Sovereign wealth funds are seeking to hold more local-currency emerging bonds as a strategic allocation while central banks want to raise their exposure to higher-rated emerging economies such as Singapore, Chile, Brazil, Peru and South Africa, Trigo Paz said.
“We are getting subscriptions from sovereign wealth funds from December. If it is happening for us, it will be happening for everybody,” he said, speaking at the summit in London.
Trigo Paz said the dominant theme for emerging markets next year would be re-pricing as corporate and sovereign borrowers will probably find themselves paying more as bank lending tightens, causing liquidity to dwindle in some pockets of the financial markets.
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Bond insurance market evolving, not dying
LONDON (Reuters) – The failure of credit default swaps to pay out to bondholders burnt by Greece should have spelt the beginning of the end for a bond insurance market accused of exacerbating Europe’s debt stresses.
That it may not underscores just how much investors have learnt to use the much-maligned derivatives for other purposes than purely guarding against default.
The euro zone crisis has also given impetus to the over-the-counter market and investors’ need to hedge their investments in bonds – like those of Germany – for which they previously thought such moves unnecessary.
It was easy to cast doubt on the value of CDS in insuring creditors against outright default after the latest proposal to restructure Greek debt with a 50 percent haircut failed to trigger payouts on contracts referencing the country.
Add to this an impending European Union ban on “naked” sovereign CDS trades aimed at investors who don’t have ownership of the underlying government debt, and it is little surprise that economists wondered whether the market would survive.
But while parts of the trade appear to be withering, certain segments are thriving.
Figures from New York-based Depositary Trust & Clearing Corp (DTCC) show active contracts currently worth $27.7 trillion versus around $26 trillion a year ago and the year before.
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