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Friday, 31 January 2014

Ukraine: over for Yanukovich? Bondholders seem to think so | beyondbrics #EuroMaidan

Ukraine: over for Yanukovich? Bondholders seem to think so | beyondbrics:

This is Ukraine’s $1bn sovereign bond maturing on June 4:
Source: Thomson Reuters
As bond yields soared, the Ukrainian hyrvnia slumped and CDS spreads widened on Friday as the country’s political crisis entered a new phase.
An advisor to Vladimir Putin, Russia’s president, warned Viktor Yanukovich of Ukraine he must suppress protests in the country or risk losing power. The hard line from Moscow came as Yanukovich himself – who had gone on sick leave on Thursday – signed into law an amnesty for protesters and a repeal of anti-protest laws. Both moves had previously been rejected by opposition leaders as they were conditional on protesters giving up control of buildings in central Kiev.
Earlier, John Kerry, US Secretary of State, told reporters in Berlin that Ukraine’s opposition had the support of president Barrack Obama.
The hyrvnia – usually firmly controlled by Ukraine’s central bank – was trading at 8.61 to the dollar on Friday after closing on Thursday at 8.40. Against the euro, it weakened to as much as 11.68 from 11.38 on Thursday, reaching its weakest level since August 2011.
The spread on a 5-year CDS rose to 1,012 basis points, meaning the cost of insuring against default in the next five years was more than 10 per cent of the debt insured, approaching levels at the height of the first wave of Ukraine’s recent crisis in December.
The yield on Ukraine’s $1.25bn bond maturing in April rose above 10 per cent. The yield on its $1bn bond maturing on June 4 – barely four months from now – rose to 15.4 per cent, suggesting investors have lost confidence in a $15bn bailout from Moscow and in the survival of the Yanukovich administration.



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IMF Warns Dubai of Risk of Real Estate Bubble - NYTimes.com

IMF Warns Dubai of Risk of Real Estate Bubble - NYTimes.com:



"DUBAI, United Arab Emirates — The International Monetary Fund is warning that Dubai's megaprojects could increase the risk of a real estate bubble.



The city, part of the oil-rich United Arab Emirates, has long had a penchant for monumental buildings and development projects, notably a large area around a new airport with hotels, housing and a new conference center to host the world Expo 2020.



But the IMF cautioned that if these projects are not "implemented prudently" they could exacerbate the danger of a bubble and create additional risks for government-owned companies and the banking system, still recovering from a 2009 financial crisis.



The Thursday statement released after an IMF team visit said that economic growth in the UAE is expected to remain strong at 4.5 percent this year."



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Once troubled Bank of Cyprus leaves politically unstable Ukraine — RT Business

Once troubled Bank of Cyprus leaves politically unstable Ukraine — RT Business:



"Protests in Kiev are spooking investors, and the latest is Bank of Cyprus, which plans on selling its loss making Ukrainian subsidiary Alfa Group Ukraine Limited for 225 million euro by the end of March.



The Chairman of Bank of Cyprus Christis Hasapis announced the bank would be selling off its Ukrainian bank operations on Friday.



“The sale falls under the Group’s strategy of focusing on core businesses and markets, and disposing of operations that are considered as non-core and is being implemented at a faster pace than what is anticipated in the Restructuring Plan,” the statement said.



Bank of Cyprus has 42 branches operating in Ukraine. Branches in Russia, China, and South Africa will remain open. Focus on clients in Cyprus, where it operates 133 branches, will be made a priority. The bank has also sold its Greek subsidiary and now has 368 working branches."



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ECONOMICS - Turkish Central Bank's rate hike may hit growth: Moody’s

ECONOMICS - Turkish Central Bank's rate hike may hit growth: Moody’s:



"Turkey’s interest rate hike will alleviate some of the pressure on its sovereign creditworthiness and help curb lira volatility but will hurt its economic growth prospects, rating agency Moody’s said on Jan. 31.



“While the central bank’s action contains the country’s currency volatility, reduces financial stress in the economy and thus limits the likelihood of a balance-of-payments crisis, it comes at the cost of significantly weakening Turkey’s economic growth prospects,” Moody’s said in a statement.



Turkey’s Central Bank raised all its key interest rates at an emergency policy meeting on Jan. 29, ignoring opposition from Erdo─čan as it battled to defend the lira following its fall to a series of record lows."



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Trade and financial-channel exposures to emerging markets | FT Alphaville

Trade and financial-channel exposures to emerging markets | FT Alphaville:



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The Peninsula Qatar - Mideast funds to raise weightings in Qatar

The Peninsula Qatar - Mideast funds to raise weightings in Qatar:



"Middle East-based investment funds have become much more bullish on Qatar’s stock market, citing heavy government spending and attractive valuations, the latest monthly Reuters survey of the region shows.



Fifty-six percent of 16 leading investment managers said they expected to raise allocations to Qatari equities in the next three months, while only 6 percent expected to cut them. That was the biggest positive change among the six major markets in the survey, and compared with 20 percent saying they would raise allocations to Qatari stocks in December’s survey.



Qatar’s government spending is expected to rise 11.6 percent in 2014 from the 2013 plan as the government boosts infrastructure construction, partly in preparation to host the 2022 soccer World Cup, the Ministry of Development Planning and Statistics said last month. "



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Ukrainian Bonds Tumble Second Day as Russia Threatens Aid Delay - Businessweek #EuroMaidan

Ukrainian Bonds Tumble Second Day as Russia Threatens Aid Delay - Businessweek:



"Ukrainian bonds slumped, pushing yields to a six-week high, as Russia threatened to delay an aid package and President Viktor Yanukovych refused to unconditionally pardon protesters.



Yields on dollar-denominated debt due in June surged 127 basis points to 13.25 percent at 2:48 p.m. in Kiev, the highest since Dec. 16 on a closing basis. The cost of insuring the country’s debt with credit-default swaps jumped 50 basis points to 1,004 basis points, Europe’s highest, according to CMA data.



Yanukovych went on sick leave today after he pushed through a law last night requiring activists to leave seized buildings before detained protesters can go free, prolonging a two-month standoff that prompted Premier Mykola Azarov to quit on Jan. 28. Russia, which lent Ukraine $3 billion last month to help it avoid a default, should withhold further aid until Azarov’s government is replaced, President Vladimir Putin said yesterday."



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Emerging opportunities

Uncertain future for Turkey

Norway fund blacklists Israeli firms with colony ties | GulfNews.com

Norway fund blacklists Israeli firms with colony ties | GulfNews.com:



"Norway’s huge sovereign wealth fund, the world’s largest, blacklisted two Israeli companies involved in construction of colonies in occupied East Jerusalem, the country’s finance ministry said on Thursday.



The ban on investing in the firms revived a three-year prohibition on them that the Government Pension Fund of Norway had dropped in August last year.



The companies are Africa Israel Investments, an Israeli real estate developer, and its construction subsidiary Danya Cerbus."



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Flydubai moving to DWC, General Civil Aviation Authority says | GulfNews.com

Flydubai moving to DWC, General Civil Aviation Authority says | GulfNews.com:



"Flydubai will be permanently moving from Dubai International to Al Maktoum International at Dubai World Central “in the next year,” the UAE’s top aviation official said on Thursday.



Saif Mohammad Al Suwaidi, Director General of the UAE General Civil Aviation Authority, said flydubai will not divide its operations between the two airports because “Dubai International has reached its maximum capacity [and] cannot offer more slots to newcomers.”



Al Suwaidi was speaking to the media on the sidelines of the Authority’s “2014 – 2016 Strategic Plan” launch event.



Earlier this week, a flydubai spokesperson speaking to Gulf News, denied that it had confirmed it will move its operations to Dubai’s newest airport."



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Record Cash Leaves Emerging Market ETFs on Lira Drop - Bloomberg

Record Cash Leaves Emerging Market ETFs on Lira Drop - Bloomberg:



"Investors are pulling money from exchange-traded funds that track emerging markets at the fastest rate on record, as China’s slowing growth and cuts to central-bank stimulus sink currencies from Turkey to Brazil.



More than $7 billion flowed from ETFs investing in developing-nation assets in January, the most since the securities were created, data compiled by Bloomberg show. The iShares MSCI Emerging Markets ETF has seen its assets shrink by 11 percent, while the Vanguard FTSE Emerging Markets ETF is poised for the biggest monthly redemption since the fund was started in 2005. The WisdomTree Emerging Markets Local Debt Fund is on track for an eighth straight month of withdrawals.



Investors accelerated redemptions after data showed Chinese manufacturing contracted and Argentina’s unexpected devaluation of its peso dented confidence in Latin America. Surprise rate increases by central banks in Turkey and South Africa failed to boost their currencies, while the U.S. Federal Reserve opted to press on with reductions to its monetary stimulus."



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Goldman Made $350 Million on ‘Worthless’ Trades, Libya Says - Bloomberg

Goldman Made $350 Million on ‘Worthless’ Trades, Libya Says - Bloomberg:



"Goldman Sachs Group Inc. (GS) made about $350 million on “worthless” derivatives trades after exerting “undue influence” on managers of the Libyan Investment Authority, according to the sovereign-wealth fund, the second-largest in Africa.



LIA sued Goldman Sachs on Jan. 21 in London over investments of about $1 billion made in 2008. The fund said in court documents released today that its executives, who were given gifts of chocolate and after-shave by the bank, never understood the transactions.



“The unique circumstances allowed Goldman Sachs to take advantage of the LIA’s extremely limited financial and legal experience to deliberately exploit its position of influence and to take advantage in a way that generated colossal losses for the LIA but substantial profits for Goldman Sachs,” LIA Chairman AbdulMagid Breish said in an e-mailed statement."



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BlackRock Bets on Recovery as Turkish Banks’ Value Falls - Bloomberg

BlackRock Bets on Recovery as Turkish Banks’ Value Falls - Bloomberg:



"BlackRock Inc. (BLK), the world’s biggest money manager, said it favors investments in Turkish financial firms as the country’s 16-company bank index fell below book value for the first time in five years.



The book value of Turkish banks included in the index fell to 0.98 at 3:07 p.m. in Istanbul, according to data compiled by Bloomberg. The last time the ratio fell below 1 was the first quarter of 2009, when it sank to 0.96. The Borsa Istanbul 100 Index added 0.9 percent to 62,633.17.



Pressure on Turkey’s lenders is growing after the central bank increased the one-week repo rate to 10 percent from 4.5 percent at an emergency meeting this week and limits on consumer credit were introduced earlier this year. The rate increase will restore investor confidence in the bank and the country, according to BlackRock."



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