Tag Archives: south-korea
Hungry China Wants To ‘Borrow’ Land From ‘Bread Basket’ Ukraine For 50 Years
Chinese plans to lease 5 percent of Ukraine’s total land to grow crops may be nothing more than a pipe dream. Ukrainian officials say they know nothing of the deal, reported in a Chinese newspaper over the weekend. The South China Morning Post reported China’s Xinjiang Production and Construction Corps (XPCC) had a 50-year plan for crop and pig farming, spanning over 9 percent of Ukraine’s arable land. Sergey Kasyanov, Chairman of KSG agro, explained the misunderstanding. China’s reported ‘land grab’ would include eastern territories near the Dnieper river, Kherson, and Crimea, well-known for its coastal beaches. “I don’t have any information on the subject, unfortunately. I know that Chinese companies occasionally show interest,” Igor Livin, the Chairman of the Association of the Ukrainian-Chinese Cooperation told Vesti 24. On Monday, the Ukrainian Minister of Agriculture and Food said China and Ukraine will become strategic partners. A Chinese-Ukrainian cooperation could help Kiev increase its international trade, while Beijing could reach its goal of becoming 95 percent self-sufficient in food. Ukraine is home to 45 million people and boasts a gross domestic product of $176 billion. China’s population accounts for about a fifth of the global population, with at 1.4 billion people living in the country. It is also the world’s second largest economy, with over 8 trillion in GDP. Land Grab Worldwide 115 million acres are leased to foreign investors. These countries are seeking greener pastures to grow crops in Congo, Sudan, Indonesia, Tanzania, Mozambique, Ethiopia, and Australia, according to the report. Land has made a comeback – from cattle, private ski resorts, hunting and fishing clubs, to the Maine coastline – for American entrepreneurs who prefer to take a stake in natural real estate to diversify and hedge their assets against the risky gold, oil, and stock prices. Continue reading
Asian Currencies Have Best Weekly Gain in a Year on Fed Decision
By Lilian Karunungan & Yumi Teso – Sep 20, 2013 Asian currencies rallied this week by the most in a year after the Federal Reserve unexpectedly maintained monetary stimulus that’s led to capital inflows to emerging-market assets. Malaysia’s ringgit and Thailand’s baht led the advance after Fed Chairman Ben S. Bernanke said Sept. 18 more evidence of a recovery in the world’s largest economy is needed before the central bank starts paring its $85 billion a month of bond purchases. Global funds bought $494 million more stocks than they sold in the first four days of the week in Indonesia, the Philippines and Thailand. Enlarge image The Malaysian currency is headed for its best weekly gain since the 1998 Asian financial crisis, helping the FTSE Bursa Malaysia KLCI Index of shares to climb 1.4 percent this week. Photographer: Sanjit Das/Bloomberg “Investors reversed positions built up across the board on speculation about the stimulus reduction,” said Tohru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc. in Tokyo. “But the Fed will eventually trim stimulus, and investors will become more selective. The long-term trend of gradual dollar appreciation may remain intact.” The Bloomberg-JPMorgan Asia Dollar Index , which tracks the region’s 10 most-active currencies excluding the yen, climbed 0.8 percent during the five days to 116.14 as of 5:20 p.m. in Singapore, the most since the period ended Sept. 14, 2012. The ringgit strengthened 4 percent this week to 3.1650 per dollar in Kuala Lumpur , according to data compiled by Bloomberg. The Thai baht appreciated 2.9 percent to 30.96 and the Indonesian rupiah rallied 0.5 percent to 11,350. Bernanke Concern The Federal Open Market Committee is concerned that the rapid tightening of financial conditions in recent months could damp growth, Bernanke said at a press conference in Washington on Sept. 18. Economists surveyed by Bloomberg were predicting a cut of $5 billion in the Fed’s monthly bond buying. The Malaysian currency posted its biggest weekly gain since the 1998 Asian financial crisis, helping the FTSE Bursa Malaysia KLCI Index of shares climb 1.8 percent. The U.S. is Malaysia’s fourth-largest overseas market. Shipments rose in July after a five-month contraction. “We are building up our portfolio to come back to a long position on emerging currencies versus the dollar,” said Philippe Jauer, chief investment officer for global fixed income and currencies in Singapore at Amundi, which oversees about $1 trillion, said in an e-mail interview yesterday. “The Philippines, Malaysia and Thailand are the first countries any investor should come back to because the economic fundamentals are much better than in India and Indonesia.” RBI Policy The Reserve Bank of India unexpectedly raised its benchmark repurchase rate by a quarter percentage point to 7.5 percent today, the first increase since 2011. Governor Raghuram Rajan , who took office two weeks ago, is seeking to rein in inflation that’s hurting the poor and dimming economic prospects. The rupee dropped 0.6 percent to 62.1387 in Mumbai, trimming the week’s gain to 2.2 percent. It reached 61.6450 yesterday, the strongest level since Aug. 16, as markets reacted to the Fed decision. The S&P BSE Sensex Index of shares fell 2 percent, after climbing 4.6 percent in the previous four days. The rupee and Indonesia’s rupiah are the worst-performing Asian currencies this year after the yen, with losses of 12 percent and 15 percent, respectively, as investors fled nations with worsening current-account deficits. “Asian currencies’ strength this week has a lot to do with the Fed’s decision not to taper quantitative easing,” said Nizam Idris , the head of fixed income and currency strategy at Macquarie Bank Ltd. in Singapore. “It gives countries with worsening current accounts more time to get their houses in order.” Elsewhere in Asia, the Philippine peso rose 1.9 percent this week to 43.037 per dollar. Vietnam’s dong traded at 21,115, unchanged from the end of last week. South Korea’s markets are shut for three days from Sept. 18 for public holidays, while China and Taiwan are closed for two days from Sept. 19. Hong Kong also has a public holiday today. To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net ; Yumi Teso in Bangkok at yteso1@bloomberg.net To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net Continue reading
Emerging Market Investors Hide Out in ‘Korexico’
http://www.ft.com/cms/s/0/7bb3efaa-1c85-11e3-a8a3-00144feab7de.html#ixzz2f3XJ2xx3 By Paul J Davies Markets are awash with buzzwords. Ever since Brics was coined we have recoiled from PIIGS, grappled with Chimerica and been sceptical about both Abenomics and Liconomics. So here is an aide memoire for where to invest when the US Federal Reserve threatens to taper its ultra-loose monetary policy and emerging markets sag with a draining of vital liquidity. When the markets correct, go “Korexico”. South Korea and Mexico have been two of the best defensive stories around in emerging markets in recent months for a handful of simple reasons: their exports are geared towards a US recovery, they did not suck in the hot money unleashed by central banks and they have not seen credit booms in the past two years. Stock markets in both countries suffered with the rest after Fed chairman Ben Bernanke first talked of “tapering” on May 22. However, they did not fall as far and they recovered more strongly. Stocks in Brazil, Indonesia, Thailand, and the Philippines fell deeply into late June and have not enjoyed a big bounce from the recent weaker US economic data that may have put off the end of “quantitative easing”. Korea’s Kospi index fell 11 per cent at worst by the last week of June and is now back to where it was in late May. Mexico did not even drop that far, losing only about 6 per cent at most. Now it is up 1.5 per cent. The other four were down between 15 and 24 per cent at worst. Brazil’s Bovespa is still 5.5 per cent lower since late May, while Bangkok’s SET, Jakarta’s JCI and the PCOMP in Manila are all down about 17 per cent. Part of the story is in fund flows. Both Korea and Mexico suffered outflows from equity markets at first, but not for long. Mexican markets saw almost $4bn of foreign cash leave stock markets in June, but more than $2bn return in July and August. In Korea, where data are published daily, inflows of more than $7bn since the end of June have more than replaced the outflows of $6.6bn during June. What is more, according to Freya Beamish at Lombard Street Research in Hong Kong, money that came out of Korean equities did not leave the country. “When the taper hysteria first hit, foreigners pulled out of Korean equities in the same way as they did across Asia,” she says. “But they went into Korean bonds. Then when the taper concerns eased foreigners went back into equities.” So what has kept these markets attractive and is the defensive story justified? Both have avoided the hot money problem of other emerging markets to a great degree. On the credit side, bank lending to GDP in Korea may look high at 86.5 per cent, but it is lower than many Asian neighbours and has declined a few points since 2009. Other Asian markets have seen explosive credit growth. In Mexico, the ratio has barely moved, remaining at about 20 per cent of GDP. Their stock markets attracted less hot cash, too, especially compared with the dizzying highs reached by the Philippines, Thailand and Indonesia. Korea and Mexico are both exposed to a US recovery via exports. More than two-thirds of Mexico’s exports head north across the border, but only about 10 per cent of Korea’s go to the US. But while Korea is much more dependent on China in general for exports, its key industries of electronics and cars are more influenced by US buying than Chinese. A boon for Korea has been Japan. The yen’s recent depreciation was meant to hit Korea’s competitiveness – but that has not happened. Oddly, a boon for Korea has been Japan. The yen’s recent depreciation was meant to hit Korea’s competitiveness – but that has not happened. “At the corporate level, there had been a concern about renewed competition from Japan benefiting from a weaker yen, but Japanese companies have focused on restoring profitability not boosting sales,” says Jeff Shen, head of emerging markets at BlackRock. But it is not entirely rosy. For a start, first-half earnings were a big disappointment. According to Citigroup, almost half of Korean companies missed analyst estimates and less than 20 per cent beat them – the worst in Asia. In Mexico, again half of companies missed forecasts, but fewer than one-in-ten beat them, the worst in Latin America. In Korea, investors were not expecting great things. The Kospi trades on 8-times forward earnings, one of the cheapest in Asia and below its average over the past 10 years, according to JPMorgan. Mexico, however, is one of the most expensive markets in the world on 17 times forward earnings, a good way above its average. This could well prove a dangerous place to be. For both countries, a sustained US recovery is what will really help – and that is far from certain. Their key attraction in the months ahead is more likely to be as a short-term haven from bouts of taper-hysteria in other emerging markets. Korexico is less a destination than a hide-out. paul.j.davies@ft.com Continue reading
