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Friday, 21 March 2014

Naftogaz chairman detained in Ukraine in corruption probe — RT Business #EuroMaidan

Naftogaz chairman detained in Ukraine in corruption probe — RT Business:

"Ukrainian police have detained Yevhen Bakulin, the chairman of the national gas company Naftogaz Ukrainy. Acting Interior Minister Arsen Avakov says it is part of an investigation into corruption in the gas industry.

"The actions of a criminal group cost the Ukrainian state around $4 billion in just three case being investigated by the police. And that is far from being a full list of dodgy schemes and operations that have come under the scrutiny of our investigators," Avakov said on his Facebook page.

“The uncompromising investigation that’s under way today will show colossal costs have been incurred and a lot of well-known people have a connection to this.”"

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MENA - Flushed with Liquidity and Continues to Outperform

MENA - Flushed with Liquidity and Continues to Outperform:

"Emerging Market (EM) funds' allocation to the Middle East rose in January to the highest level since 2008.This reflects the recent strong performance of MENA markets since flows from EM funds into the region have been relatively weak over the past years.

International investors bought US$ 600 mn of MENA equities in February of which Saudi Arabia saw net buying of US$ 350 mn. Institutions remained net buyers of MENA equities.

MENA markets (+9%) continued to outperform EM (-6%) in early 2014 and turnover has risen in most markets compared to last year. The most notable increase has been in the UAE, where turnover is now 23% above 2008 levels."

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Myanmar's energy bonanza comes with a price - YouTube

Myanmar's energy bonanza comes with a price - YouTube: ""

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The week explained: March 21st 2014 - YouTube

The week explained: March 21st 2014 - YouTube: ""

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Average bribe in Russia doubles in past year, reaches 145,000 rubles | Russia Beyond The Headlines

Average bribe in Russia doubles in past year, reaches 145,000 rubles | Russia Beyond The Headlines:

"The average amount of a bribe in Russia almost doubled in the past year and reached 145,000 rubles, Russian Interior Minister Vladimir Kolokoltsev said at an expanded board meeting of the ministry on Friday.

"As a result of the joint work with an interested ministry, the number of bribery cases registered grew by 18%. The rise in the number of large or especially large bribes registered is 50 percent. At that, the average bribe almost doubled and it amounts to 145,000 rubles," Kolokoltsev said."

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Putin in the Micex | FT Alphaville #EuroMaidan

Putin in the Micex | FT Alphaville:

Russian stocks having a bad morning following the sanction filled night before:

That’s the Micex off 3 per cent and the RTS off 3.7 per cent at pixel…
While we wait to see if Gunvor gets squeezed to death and if this escalates, some relevance from Citi’s Stephen Englander a few days back:
One advantage using finance as a weapon is that it can be scaled up or down as needed, and is much more reversible than military actions. It is also quicker than traditional trade sanctions to have an impact, and arguably is more likely to hit decision-makers and those who have access to them than trade sanctions, which often hit the poor and almost always create profit-making opportunities for the well-connected in sanctions-running.
How far can this go and what are the implications?
So far the steps taken are baby steps – sanctions applied to a handful of Russians and Crimeans by the US and EU, but no real screws being applied (Russian President Putin not named, for example). Probably there are huge holes through which transactions can continue to occur and the sanctions can be evaded. However, if the crisis intensifies, the US/EU may be tempted to apply broader sanctions on Russian assets on the view that this is the quickest way to apply pressure and that Russians will be unable or unwilling to move their assets into friendly jurisdictions quickly enough.
For the Russians, the temptation may be to try and sell USD assets in order to disrupt US asset markets, but the leverage may be temporary. Their reserves are almost USD470bn but they have been actively diversifying away from USD for years. Relative to the size of any market they might be tempted to disrupt, the USD holdings are small. Moreover the sense that the price was being driven down by politically-motivated selling would likely attract buyers on the view that the effects would be limited. Were they do convince other countries to join them, the impact would be more longer lasting and more disruptive, but it is a little bit like letting your own home run down because it will lower the property value of a neighbor you dislike. The damage you do to yourself is more than you can expect to do to your neighbor.
The Russian holdings of USD are probably enough to give the USD a big whack, were they to go into the market selling, especially as since there may be selling pressures already from other reserve managers, and given the trend-loving nature of currency investors. Once you get past hurt feelings, it is not clear that USD weakness would be a US economic or financial market negative. A strong dollar is hardly a US policy priority, to the extent that USD weakness would crowd in both exports and imported inflation, it would probably be viewed as going in the direction preferred by Fed policymakers. Were it not for the unfriendly motivation, it is unlikely that US policymakers would object.
Long-term implications
If the use of financial market warfare intensifies, the risks are:
1) More home bias in investing,
2) Official investors gravitating to jurisdictions and custody arrangements that insulate their assets from seizure
3) Premium on gold, physical commodities and other unattachable assets
This would unwind many years of international capital market liberalization. Moreover, it would have the greatest impact in discouraging long-term, illiquid investments, as these would be most vulnerable to seizure. It is much easier to cut positions in short term liquid assets if there is trouble brewing.
External deficit EM economies would probably suffer the most since creditors would see an extra force majeure risk premium added. Apolitical safe havens would probably benefit the most. Where there is an interaction with the traditional currency war discussion is that the damage to EM borrowers would probably be greater than to G10 borrowers. When EM countries depreciate, they often get hit by higher bond yields as well. G10 countries, even when they depreciate sharply, often do not face big pressures on their bond markets. Moreover, higher food prices from depreciation are not nearly the same social issue in G10 that they are in EM.
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Egypt investors believe Sisi presidency will bring stability |

Egypt investors believe Sisi presidency will bring stability |

"Egyptian Army chief Field Marshal Abdel Fattah al-Sisi may not look like a model democrat, but foreign and local businessmen believe he can deliver stability to open up investment opportunities in the most populous Arab nation.

Sisi — whose smiling face, framed in sunglasses and capped by a beret, appears across Egypt on posters, T-shirts and even chocolates — inspires fear in his opponents that the country will soon have a military man as its president once again.

But to investors, and many Egyptians, Sisi offers the hope of relief from three years of political turmoil that began with the Arab Spring uprising, even though he was the man who toppled Egypt’s first freely-elected president, Islamist Mohamed Mursi.

“I think most investors would say it doesn’t appear all that democratic, but it’s more stable, so my investment will be safer,” said Gabriel Sterne of Exotix, a frontier market bank in London which handles investments in Egypt."

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Ukraine Dollar Bonds Jump as IMF Says Aid Talks Making Progress - Bloomberg #EuroMaidan

Ukraine Dollar Bonds Jump as IMF Says Aid Talks Making Progress - Bloomberg:

"Ukraine’s Eurobonds rallied, sending yields to a two-week low, as the International Monetary Fund said its making progress toward an aid agreement which may help unlock further bailouts from western governments.

Bonds maturing on June 4 gained to 95.1 cents on the dollar, cutting the yield by 9.51 percentage points to 34.53 percent, according to data compiled by Bloomberg. The rate on sovereign dollar notes due April 2023 slid 28 basis points, or 0.28 percentage point, to 10.14 percent, the lowest since March 6, by 7:13 p.m. in Kiev.

Ukraine’s 2014 notes have rebounded from a record low since IMF officials went to Kiev last week and announced plans to conclude the talks by March 21. While the IMF extended the mission to March 25, “significant” progress has been made, according to an e-mailed statement today. U.S. President Barack Obama, who slapped more sanctions on Russia today for its annexation of Crimea, called on the IMF to help Ukraine swiftly."

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U.S. Cedes Top Spot in Russian Reserves to France for First Time - Bloomberg

U.S. Cedes Top Spot in Russian Reserves to France for First Time - Bloomberg:

"France leapfrogged the U.S. as the top destination for the Russian central bank’s investments, dethroning America for the first time and underlining the challenge faced by Europe as it weighs sanctions over Ukraine.

The amount of reserves in French assets, including government bonds and deposits, rose to 32 percent as of June 30, a jump of 4 percentage points from three months earlier, the central bank said in a quarterly report on its website today. Bank Rossii decreased investments in the U.S. to 29.7 percent from 33.8 percent in the period, and the portion of German assets shrank to 19.3 percent. U.K. and Japanese holdings rose.

The U.S. slid into second place for the first time since records began in 2006. President Vladimir Putin, who has criticized the dominance of the U.S. dollar and stood by Russia’s investments into the euro during the continent’s debt crisis, faces the threat of further Western sanctions over Russia’s annexation of the breakaway Ukrainian region of Crimea."

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