Tag Archives: investors
Algeria To Open Up Farming Sector To Foreign Investors
REUTERS Friday 31 May 2013 Last Update 30 May 2013 11:57 pm ALGIERS: Algeria is to open up its farming sector to foreign investors for the first time to try to help cut food imports and also diversify its economy, which is heavily dependent on oil and gas exports, the head of a government agency said. Kamel Chadi, chairman of SGP-Proda, a holding company for animal production, said 16 pilot farms focused on grains, vegetables, fruit trees and cattle breeding would be on offer via tender to investors. “This tender is intended for both Algerian private investors and foreigners,” Chadi said. “The invitation stipulates creating joint ventures for managing and operating farms. The land is not for sale,” Chadi said. Agriculture in Algeria has been largely closed to foreign investment. Algerian law requires that foreigners partner with Algerian firms and limits any stake they take in an investment project to 49 percent. But the government has pledged reforms to cut dependence on oil and gas, which account for about 97 percent of total exports. Volatile oil prices have forced the country to look for alternative sources of revenue and to attract foreign capital. Algeria’s food imports account for about 20 percent of an estimated $ 45 billion annual import bill. Main food imports include wheat, barley, milk and meat due to insufficient domestic production in the country, which has a population of 37 million. It has begun providing financial incentives for farmers, including interest-free loans, also as way to create jobs. The head of Algeria’s farmers union, Mohamed Alioui, said earlier this month the government would launch its first commercial maize production next season. The country currently imports almost all its maize requirements. Chadi said the winning bidders for the farmland tender would sign contracts that stipulate mainly modernizing the farms through introducing new equipment. “Partnership could bring something new and help create the necessary conditions for development,” Chadi said. The areas on offer are set to be sowed with cereal and vegetables such as potatoes, an essential ingredient in Algerian cooking. Each farm is between 100 and 500 hectares and they are located in central, western and eastern provinces. Some of the farms will be devoted to producing fruit, including olives, apples and dates. Foreign investors would also help develop breeding activities for poultry, dairy cattle and also beekeeping, Chadi said. “We are optimistic agriculture will play a leading role in our economy.” Continue reading
Many Investors May Not Be Living In The Real World
http://www.ft.com/cms/s/0/614d007a-c3b6-11e2-aa5b-00144feab7de.html#ixzz2UTnogynv By Stephen King A recovery in the global economy would appear to be hallucinatory, writes Stephen King No one can be strong when China is weak. That, at least, appeared to be the message from the economic data this week. New data suggest lacklustre growth in China – sparking nervous sell-offs in other countries. A one-day decline of over 7 per cent in the Nikkei stock market index might seem like an overreaction but, last year, China was Japan’s most important export destination, accounting for more than 18 per cent of its goods exports. China now accounts for one-quarter of South Korea’s exports. China is also the third-largest destination for US exports, after Mexico and Canada. Stock market wobbles cannot be attributed to China alone. Ben Bernanke, Federal Reserve chairman, revealed that asset purchases associated with quantitative easing might be tapered earlier than investors expected, providing another reason for stock markets to lurch down. Meanwhile, rising bond yields in Japan have led to a new sense of unease: financial bets are no longer all one way. The relationship between China and the rest of the world has changed significantly in recent years. Before the onset of the global financial crisis, China’s growth was heavily export-led and primarily driven by productivity-driven gains in competitiveness. Adjusted for inflation, exports rose between 20 and 30 per cent a year. Since the crisis, export momentum has faded rapidly. In 2012, exports rose a mere 6 per cent, held back in part by trauma in the eurozone. One consequence has been a remarkable reduction in China’s current account surplus, dropping from over 10 per cent of its gross domestic product in 2007 to 2.6 per cent last year. During this period, China has tried to limit the pace of its economic slowdown by boosting investment in infrastructure. There is a strong case for doing so. The average rail density per square kilometre in China’s 10 largest urban cities, for example, is just a quarter of the developed world’s typical urban areas, according to the OECD. Yet the boost to infrastructure investment has not been without its costs. Credit growth has been excessive, capital has been allocated inefficiently and productivity increases have faded. While the reduction in China’s surplus can be regarded as a welcome contribution to the easing of global financial imbalances, it has coincided with a loss of domestic economic momentum that is weighing on growth well beyond China’s borders. The Chinese economy is not about to collapse. Continued urbanisation should deliver productivity gains fast enough to allow it to continue outperforming other countries. Unlike most developed nations, there is still some room for manoeuvre on fiscal policy. But a Chinese slowdown, alongside – at best – anaemic recoveries in the developed world is a headache for policy makers. The temptation to pursue policies of economic nationalism is on the increase. Quantitative easing and other related policies operate primarily through two channels. The first is the so-called portfolio channel, whereby central bank purchases of government paper lead to lower long-term interest rates, encouraging investors to switch into higher-yielding but riskier assets. This is supposed to make it easier for companies to raise money, boosting investment; households should also enjoy bigger gains in wealth, thereby prompting faster consumer spending. This channel has not worked as well as expected. Asset prices have surged but the results have been mediocre. A gap has opened between financial hope and economic reality. By limiting export prospects for producers elsewhere in the world, a slowdown in China only widens the disconnect. Removing monetary support threatens to close the gap in abrupt fashion – not because of a pick-up in activity but via a sudden correction in asset prices. The second channel works through a falling exchange rate. Some argue that one country’s QE-related exchange rate decline will ultimately bring benefits for other countries. Faced with a loss of export earnings, those who have chosen to avoid QE will eventually be forced to follow suit, thereby triggering more in the way of domestic portfolio effects. But if the domestic economic effects of QE are disappointing, the primary effect of exchange rate declines will be to boost exports. With lacklustre global growth, that will surely only lead to accusations of currency wars. This second channel is bound to be a source of tension in Asia in the months ahead thanks to Japan’s massive continuing monetary loosening. At the beginning of the year, there were high hopes that the world economy would be dragged out of its torpor thanks to the copious use of monetary drugs, recovery in the US and strength in China. Monetary drugs, however, appear to have hallucinatory effects. In the absence of a recovery in the developed world, China’s slowdown is just one more reason to question whether financial investors have remained in touch with economic reality. The writer is HSBC’s chief economist and author of ‘When the Money Runs Out’ Continue reading
Farming Investments Continue Their Bull Run
Catherine Paice Saturday 25 May 2013 Rural property delivered another year of strong growth for investors in 2012, narrowly missing out on a second year of double-digit returns, according to Carter Jonas and Smiths Gore, sponsors of the IPD Rural Property Investment Index. Total return was 9.9%, although once again almost all this came from capital growth of 8.2%. Income return was just 1.6%, remaining for the third year running at its lowest point in the index’s 32-year history. Total return beat bonds and both commercial and residential property, only just being overtaken by the rally in equity markets. Transaction activity had a strong effect on performance, driving total annual returns up to more than 12% within the portfolio. There is demand from farmers looking to expand and from individuals looking to protect their wealth as well as investment funds, said Giles Wordsworth, head of Smiths Gore’s farms and estates agency. “The main driver of growth has been from capital value increases, which was higher than residential property, which had 5.9% capital growth, and prime commercial property, which saw capital values fall 2.2% over the same period,” he said. “We will see more capital growth this year – possibly as much as 7%.” Over the past five years, rural property has returned 8.9% per annum, against 0.7% from commercial property, 4.6% from residential, 2.1% from equities and 8.8% from bonds. Richard Liddiard, head of rural agency at Carter Jonas said that rural property had continued to stand out as an attractive capital hold since the downturn. “While values for commercial property almost halved in some areas and the volatility of equities deterred risk-averse investors, rural property values only dropped 0.4% in 2008 and have risen by an average of 7% per year since the start of the recession in 2008.” For the £2.7bn of assets measured by the index around the UK, which includes the Crown Estate, better prospects for farming have underpinned this capital growth, as well as the increasing appeal to investors of the potential for alternative use such as renewable energy. Lack of investment-grade property to buy remains a hindrance, with significant activity happening off-market. For smaller private investors, there are more opportunities, although lack of supply and stronger demand remain the key drivers of capital growth, said Tim Jones, head of Carter Jonas’ rural division, at the presentation of the Index. Providing the beneficial tax status of the sector, with IHT for own-occupied land, remained in place, this was unlikely to change, he said. Equally, the “long game potential” – whereby a development opportunity such as a shopping centre or housing estate 20 years in the future – can considerably hike up returns. Richard Liddiard of Carter Jonas adds: “The continued strength of rural investment property shows that it has a serious part to play in investment portfolios that need to off-set volatility and risk with stable, solid performance.” Continue reading
