Emerging Markets’ Presence Grows at Davos Economic Forum — Bloomberg

Jan. 29 (Bloomberg) — Emerging markets are gaining attention at the
World Economic Forum in Davos, Switzerland, as developed nations flounder and seek a solution to the global financial crisis.

The financial meltdown has undermined western-style capitalism as an economic model, leading some to question whether emerging markets are willing to listen follow western advice for their economic development as they did in the 1990s. (Source: Bloomberg)

For more Bloombergcoverage from Davos see http://www.bloomberg.com

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Who wins during a recession in China? — Op/Ed from ptl-group China newsletter

Just as the world’s financial system faces the most severe crisis since WW-II China’s economy is reaching a level of maturity and strength that will give it a unique and central role in the future financial order. Although it has shown that China is not decoupled from the rest of the world, the crisis represents more of an opportunity than a threat for China. There is good reason to believe China has significant comparative advantages over other economies that are trying to navigate clear of serious damage during the crisis and emerge in a position of strength.
Click here to access the full article from ptl-group

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China National Offshore Oil Corp. to invest $6.76 billion

The China National Offshore Oil Corp., announced yesterday that it plans to invest $6.76 billion US dollars in developing oil fields and in exploring / securing rights to new sources of crude oil and natural gas.

Investment figures are up about 18.9% according to the article published by Asia Pulse Pte Ltd yesterday, and accessible through this link to Rigzone.

“Seeking long-term increase in Chinese demand, the state-owned entity will continue with investment aimed at boosting its production capacity at a time when OPEC has reduced its own output.

The pie is being divided as follows. Oil field development will be getting $4.38 billion of the total investment and exploration for new oil and gas fields will receive about $1.1 billion.

So how to you decipher the meaning behind all this sudden spending? For starters, exploring for commodities when prices are as low as they are is quite risky. The reward can be potentially huge if legitimate and cost-effective discoveries are made, but new resources still take years to develop until they are extractable.

China is therefore being smart about things. Allocating the majority of the investment towards developing fields that will start to produce oil so that when demand does pick up it won’t be left scrambling for crude. Furthermore, if demand does not pick up and the global economy continues to slow, China will not have wasted too much of the investment in finding new resources that there is no demand for.

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South-South Cooperation: Africa’s largest bank to move its headquarters to Sao Paulo, Brazil

Standard Bank Group Ltd., the Johannesburg-based bank has hired Eduardo Centola from Goldman Sachs Inc. to head it’s headquarters in Brazil, which will represent the bank in the greater region of the America’s.

In this bloomberg article president of Banco Standard de Investimentos, the Brazilian unit of the bank stated: “The epicenter for the Americas needs to be a country like Brazil, which is the most promising emerging country in the region. Our plan in Brazil is for the long term.”

Standard Bank Group will form a private equity fund of about $250 million to invest in Brazil. Very interesting to see Africa and South America “brushing shoulders.”

Since the start of this site, I don’t think I’ve once stumbled on a story of Africa making a investment in South America. I’ve had many posts about leaders from the two regions meeting with one another, but never about a African bank entering a South American market as a new investor.

It will be interesting to see what form South American-African Economic Cooperation will take in the future. With the global economy as it is today it is inevitable, two continents which lie at opposite ends of the ocean from one another (like the US with Europe and Asia) shouldn’t have a open exchange.

At the moment however, the two areas have a similar niche in the global economy as commodity producers. However, as the investment above shows, there is room for each region to help each other in its respective development.

Creating a fund for investing in Brazilian companies is a perfect example. This particular bank from South Africa will be earning returns (hopfully) from investing in Brazilian companies that need cash and have aspirations to grow into bigger and more profitable entities.

Very nice. Very nice indeed.

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South-South Cooperation: Andean Community (Comunidad Andina – CAN) to be modernized

Mincetur, Peru’s Ministry of Commerce and Tourism announced that the country’s of the Andean Community (Comunidad Andina – CAN) have plans to work together to redefine the community in order to promote a more modern and efficient environment for investment and trade.

The news comes on the heels of the upcoming meeting CAN is having with the European Union in regards to a FTA the two economic unions have in the works.

Bolivia which is also a member of CAN had previously been against the FTA agreement with the EU, but stated that it is open to negotiations and willing to compromise if certain changes are made.

If you would like to read more on this story and can read Spanish,
check out —> this article published on Andina.com

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A world without poverty — ACCION & LendtoEndPoverty.org

Microfinance is a topic i’ve touched upon before on this site (See June 17, 2008 post). In this turbulent time, Microfinance borrowers believe it or not but are still paying back their loans despite the credit crisis.

Microfinance is an effective, long-term solution to ending poverty that empowers poor families with the financial resources they need to improve their lives.

But there is an urgent need to expand these services. Right now, microfinance is only reaching 10-20% of the estimated 500 million people who would benefit from these life-changing opportunities.

As you’ll see in the two-minute video, microfinance has the power to improve the lives not just of individuals, but of families and entire communities around the world.

~ ACCION Video Link courtesy of Youtube

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Special Report: Is the Grim Commodities Outlook Prices in? — Bloomberg

Coverage from Sao Paulo, Brazil: Emerging Markets Dropped in Second Half, Morgan Stanley’s Index Plunging 55% for the Year

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Does Brazil have a cash flow problem?

Brazil seems to be having some money troubles by the looks of the press. It’s not good news for Latin America when its largest economy slows, especially when until just recently it seemed Brazil (the depreciation of the Real aside) was well relatively well poised to weather the storm.

Like its fellow BRIC country’s, Brazil is far from immune to the global crisis. The country is still heavily dependent on commodity exports, which was the main engine of growth for both the Brazilian economy and stock market the past few years.

Despite reports that consumer spending is still holding up and that Brazil’s big state conglomerates like Petrobras are increasing spending (see MercoPress article here), it simply won’t be enough to keep the economy afloat forever—and it definitely will not be enough to maintain growth levels of 4-5%.

Poor Ronaldo seen here losing at the French World

Now… for the grim news. While just days earlier Petrobras reported it will be increasing spending, yesterday things did not go its way when it went shopping in international markets to raise money. The company was forced to put off plans to sell bonds because the cost of borrowing to finance the bonds in dollar denominated debt was simply too high (see Bloomberg article here)

Moving on. Brazil’s government also had some bad news to bring to the table, announcing plans to freeze roughly 6% of its planned spending budget for 2009 because slow economic growth is eroding tax collection ( see bloomberg article here)

To round up the negative news is one last story concerning loan defaults in Brazil. Credit card spending may be surging, people may be packing the stores but they aren’t paying their bills. Loan defaults surged last month to their highest since September 2002 (see Bloomberg article here).

Not good news people…

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China starts spring cleaning on the internet

Chinese authorities have shut down about 1500 pornographic websites and are making no secret about it, reporting about it in their own state press.

A total of 41 individuals where also apprehended during the crackdown after being linked to the vulgar content.

Singapore’s Straits Time reported:

“The government has warned that Internet giants such as Google, MSN and Baidu, the most popular Chinese search engine, could also be shut down if they continue to link to vulgar content.

Google, Baidu and others have since issued apologies and said they have taken steps against online porn.“

Click here to read more on this story from the Straits Times

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South-South Cooperation: Venezuela’s PDVSA begins drilling in Bolivia’s Vibora Field

Petroleos de Venezuela SA (PDVSA), announced today one of its oil rigs began operations in Bolivia. Drilling is reported to have begun in the Vibora field, roughly 170 km north of the city of Santa Cruz.

Not a bad headline for Morales and his supporters who voted “yes” for a new constitution just days ago which allows for Morales to run beyond his term limits and which is partly designed to empower indiginous rights.

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