BRIC TV: Russian President Dmitry Medvedev meets with Luiz Inacio Lula da Silva

Russian President Dmitry Medvedev meets with Brazilian counterpart Luiz Inacio Lula da Silva

Jim Rogers TV: Jim Rogers Talking on China and Economic Future

Talking on China: stocks, investment, stimulus - infrastructure key at this time




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Bank of China to Open in Brazil Starting Early 2009

After a request in August 2007 to operate in Brazil, the Bank of China was finally granted permission and will officially open its doors in early 2009, according to China’s ambassador to Brazil, Chen Duqing. Brazilian President Luiz Inácio Lula da Silva signed the agreement last Friday.

At this time, the main focus of the Bank of China in Brazil will be to offer financing to Chinese companies looking to do business the country, said president of the Brazil-China Chamber for Economic Development Sao Paulo (CBCDE), Paul Liu.

The Development Bank of China is already doing business in Brazil, and has already funded a couple construction projects. They are also looking to expand their operations by focusing on larger infrastructure projects like energy, ports and railways.

China to Offer Stimulus Package Worth Over $585 Billion

Even though China has been doing pretty well economically, projections are its growth will slow by about 3 percent over the next year, down to a little over 8 percent.
That has caused China to enter into the stimulus package fad, and has announced it will offer a package worth over $585 billion to generate growth.

With China being especially vulnerable to export demand slowing down, much of the package will focus on huge infrastructure spending in order to shore up domestic growth.

Some of the sectors targeted, which will focus primarily in ten key areas in the country, are transportation, rural infrastructure, low-income housing, electricity and water. Some of the funds will also be used to build up areas ravaged from natural disasters, particularly the May earthquake in the Sichuan province.

Along with the stimulus package, which is scheduled to be spent over a two-year period, China will also loosen up credit and cut "value-added" taxes which should eliminate up to $17.5 billion in costs to industry.

Concerning credit, commercial bank ceilings will be ended in order to stimulate more lending to projects considered vital to the country. Hopes are it will have an impact on small businesses, rural areas, industrial mergers and acquisitions, and innovation in the technical sector.

Commodity Futures Ban In India Should End November 30

In a misguided decision to suspend futures trading on rubber, chana, soyoil and potatoes, the Indian government has hurt two of the three major commodity exchanges in the country.

With there being no proof that traders had anything to do with increased food prices, chairman of the Forwards Markets Commission, B.C. Khatua, says he believes the suspension will be lifted on November 30.

India will have to make a decision to allow unimpeded trading if they want to be a serious global player in commodities.

The suspension of trading reveals they don't have an understanding on how markets work. Foreign investors won't consider them reliable if they step in when prices go beyond their desired range.

BRIC Economies Slowing but will Still Remain Healthy

While there's no doubt every country in the world is being hurt by the economic crisis, BRIC countries will continue to grow, albeit at a significantly slower pace than in the recent past. The CIS states, as far as emerging markets go, will be hit the worst, according to the International Monetary Fund.

For BRIC countries, Russia's growth will drop to about 3.5 percent, a decline of 2.6 percent; Brazil will fall by close to 2 percent; and India will fall by over 3 percent in GDP. China will also plunge by about 3 percent, but will still grow at a healthy rate of over 8 percent in 2009.

One positive development that is helping the BRIC countries is a growing middle class, which has created domestic demand for products and services, which in turn is helping bolster their economies, even as their export markets dry up.

Russia, Italy Forge Nuclear Power Agreement

Russian President Dmitry Medvedev and visiting Italian Prime Minister Silvio Berlusconi came to an agreement to help rebuild the Italian nuclear industry today. Berlusconi came to power partly because of riding the nuclear platform.

The nuclear deal will entail working on thrid and fourth-generation reactors, said Rosatom head Sergei Kiriyenko. Kiriyenko added that while Italy still has some expertise, they've lost some of it since dropping a nuclear program in 1986 after the Chernobyl incident.

Berlusconi is looking to the industry to make Italy into a major nuclear power in the European Union.

In other agreements between the two countries, Russian automaker Sollers agreed to manufacture low-cost cars from Fiat in Russia; Italian tire maker Pirelli will produce tires in Samara in cooperation with Russian Technologies; and Finmeccanica, an Italian aerospace and defense company will work with a number of Russian state-controlled companies in a variety of deals, including the Russian rail sector.

A 1.35 billion euro deal between LUKoil and Italian refiner ERG will give Russia a presence in the European refining business.

In a side note, Berlusconi made a statement about U.S. president-elect Barack Obama that caused a stir.

Talking of Russian president Medvedev, he said he shouldn't have any problems working with Obama, as he is "also handsome, young and even suntanned."

When the Obama-loving mainstream media got hold of it and attacked Berlusconi for the comment, he fired back saying they were faulty of "not having a sense of humor."

Microsoft Chairman Bill Gates Upbeat about Indian IT Companies

Even in the tough economic conditions, Microsoft (MSFT) chairman Bill Gates said in a seminar at IIT Delhi that Indian IT companies will be affected by the worldwide economic slowdown, but will still do well because of the good reputation of the industry in India.

“IT companies in India are great partners of Microsoft. They are investing in the long term and they have a pretty incredible reputation. They are always considered whenever a global project comes up,” he said.

Gates is in India as a representative of the Bill & Melinda Gates Foundation, specifically focusing on anti-polio efforts, along with other health issues.

Hong Kong Businessman Richard Li and China Unicom Make $1.9 Billion Offer for PCCW Ltd

With the purpose of wanting to take the largest fixed-line operator in Hong Kong private, Richard Li and China Unicom have made a $1.9 billion offer to gain control of the entire company.

At this time there shareholders own 52 percent of PCCW Ltd, and if 10 percent or over of shares reject the offer, the deal won't go through.

The offering price of HK$4.20 ($0.54) is a 53 percent premium over the last day the shares traded on October 14 at HK$2.75. Trading has been suspended on the company since then.

India Making 2 Million Tons of Wheat Available for Export

A bumper crop of wheat in India is making 2 million tons of wheat available to export to some of its close neighbors. This could put downward pressure on wheat around the world, as exports in the U.S. have dropped by 40 percent over the week before.

This is quite a turn around for India, as in 2006 and 2007 the country had to import wheat because of domestic needs and poor crop results which drove up prices.

India's wheat crop could grow above 78.5 million tons to attain a new record.

Wheat production around the world is projected to grow by 12 percent by June 30 to a record 683 million metric tons, or 25.1 billion bushels.

MSD Pharmaceuticals Hiring 1,500 People in India Over Next 2 Years

Merck & Co. (MRK) subsidiary MSD Pharmaceuticals says it'll be expanding its workforce in India by 1,500 people over the next two years, specifically targeting sales and marketing positions.

“We will be doubling our staff strength in India in next two years as part of our plans to consolidate our marketing network in the country which will further help us achieve our aim of listing among first five pharma companies by 2015,'' MSD Pharmaceuti cals Managing Director, Mr Naveen A Rao said.

Rao added that there will soon be vaccines for rotavirus, hepatitis-A, and Chickenpox available soon from the company. Longer term goals are to focus on providing better medicine for asthma, dyspledemia and heart-related diseases.

The company has a goal of introducing new medicine and vaccines into the Indian market every 6 months.

MSD Pharmaceuticals wants to be a major player in India by 2015. They currently employ about 700 people.

Sugar Production in India Could Drop by 25% this Season

With uncertainty over the commencement of crushing by sugar mills of Uttar Pradesh, farmers there have started supplying high-recovery sugarcane to jaggery units. This has posed a threat to the country’s sugar output which is expected to fall over 25 per cent this season as a result of the lower coverage.

Sugarcane is a commodity which cannot be left unprocessed for long after harvest as it gradually loses its sucrose (sweetener) content. Therefore, farmers of early sugarcane crop supply their produce to jaggery units and divert the land for wheat.

“Any further delay in cane harvesting may hit wheat sowing. Hence, it is important to vacate the land for another remunerative crop and not just to wait till cane procurement prices are determined for sugar mills,” said a local farmer.

Generally, cane with less than 9 per cent of recovery is supplied to jaggery units as cane with low sugar content is unviable for sugar mills.

But, as mills are awaiting Supreme Court directive on cane prices, they are holding back on procurement of cane as well leaving no option for farmers but to supply to the jaggery processing units.

Uttar Pradesh raised the state advised price (SAP) — the price at which mills procure cane from farmers — to Rs 140 per tonne for the 2008-09 season, from Rs 125 per tonne during the previous year.

Sugar mills resisted the price hike arguing that the crushing of cane would not be viable at such high cane prices. The matter is presently pending with the Supreme Court and Allahabad High Court.

Largely dominated by unorganized players, the number of jaggery processing units fell 40 per cent this year because of the pre-season fear over supply of cane. But, since supply has risen phenomenally, the existing jaggery units are operating over their capacity.

Deepak Shah, Partner of Nagindas Harlal, a Vashi-based jaggery trader said, “Jaggery units are the ultimate beneficiary of the huge financial strains faced by sugar mills. Hence, farmers’ preference for cane supply to jaggery units is justifiable.”

While comparing the payment system, Shah said farmers receive the full payment from jaggery producers at a promised time soon after selling the cane while sugar mills stretch the payment for up to two years.

Nothing unusual Is happening on Tuesday as the glut in the pre-season cane supply to jaggery units is a normal phenomenon, said Arun Khandelwal, president of Muzaffarnagar—based Federation of Gur Traders. Even 5-10 per cent higher estimated output at 1 crore tonnes this year, jaggery price is presently quoted 67 per cent higher, between Rs 600-650 per bag (40 kgs each), as compared to Rs 360—400 per bag around same time last year.

Source: Business Standard

How is India Faring Among the BRIC Countries?

For now at least, it looks like India will outperform other BRIC countries, primarily because it relies less on imports than the rest, although Brazil is strong in that sense too.

Russia has of course been pummeled by the worldwide economic conditions, as its markets have lost 65 percent of their equity since July. China and Brazil or close, with China losing 40 percent and Brazil 38 percent of market value. Brazil has been hit hard because of their reliance on commodities.

India on the other hand, has only dropped by 27 percent since July, a testament to their focus on domestic consumption rather than exports.

"India imports about 85% of its oil requirements and hence, the drop in prices augurs well for the trade and current account deficits. On the other hand, we are one of the few economies driven by domestic consumption and investment , unlike other regional economies which are dependent on exports. This makes us relatively insulated to global slowdown," Sukumar Rajah, chief investment officer (Equity) of Franklin Templeton Investments India said.

Another key factor in retaining a fairly strong position in a difficult climate has been the fall in commodity and energy prices, which has eased inflation in the country. Earnings have also been stronger the expected, so a more positive attitude has been maintained in spite of the challenges.

India is hoping investors and financial institutions will take note of this, and they will have an interest in continuing to invest in the country.

The downside of course is when demand from emerging markets surges again, and prices of commodities go up, making the more insular business climate of India not as robust as its competitors. But for now, as far as BRIC countries and a number of their Asian neighbors, India has a much stronger economic position to work with.