Friday, June 5, 2009

The only fundamentals improving are commodities

Jim Rogers makes an real life appearance on CNBC and talks to the masses of finance news junkies in the United States.

CNBC's website is bombarding readers with articles about this Jimmy Rogers interview. If you follow this site, or if you happen to keep your eyes and ears open for Jimmy Rogers in your daily information news sessions, you know he really is not saying anything he hasn't said before.

Basic conclusion – when the reality of printing so much cash catches up with the major economies of the world, people are going to realize their stock gains are in worthless, debased currencies. When this happens, hard assets and the companies producing them will flourish. Demand for copper and steel are not going to disappear, but is just may greatly diminish for U.S. Bonds and Dollar assets if hyper inflation hits.

Get the picture?


Thursday, June 4, 2009

Peru ETF to start trading this month reports Bloomberg

Are you a international investor with a global perspective? Are you looking to get in on all the action down in Latin America? Well now is the time to consider jumping on board the "Peruvian growth miracle?"

Before you do however, I implore you to proceed with caution if you decide to park your hard earned currency in Peru. As always, it would be a good idea to do your own due diligence and listen to what your textbook, academic gut feeling has told you about Latin America since you started reading about continent in economic and finance classes you took in college.

Peru's Lima General Index has sky rocketed a whoppin' 95% this year due to the following reasons in particular (in my opinion)

a) The country's investment grade debt rating

b) Rising metals prices; copper, gold, silver, etc (note I did not include Zinc here)

c) Optimism in Peru's metropolitan middle and upper-middle class residents of Lima who partially feed the international excitement by telling stories of economic boom. Ask a university student of la Universidad de Lima, UPC, Universidad Pacifico or a employee at Banco Santander and they will probably (some of them at least) tell you of rising apartment buildings, new beach houses and cafes so full of customers you must wait to get a table. Yes, it is still difficult to find a job that pays well, but if you know anything about Peru this has been the case since the beginning of time...

d) Shrinking investment opportunities in the region because of western fears and dislike of Chavez in Venezuela, Correa in Ecuador, Morales in Bolivia and more recently Cristina Fernández de Kirchner in Argentina.

e) LIES... LIES... oh and yes, more LIES. Farid Matuk the previous head of INEI (Peru's statistics office) and Otto from IncaKolaNews have been telling readers for months that you simply can not trust economic data from Peru. Alan Garcia has replaced the people working at the statistics office with those loyal to his political party and they have inherently changed the way statistics are collected and the way GDP and other economic indicators are calculated.

Here are some links to Farid Matuk and Otto's recent observations of Peru's economic picture. I will stick to English, but I highly recommend if you can read Spanish that you check out some of Matuk's non-English posts.

Doubts grow about accuracy of Peru GDP numbers -- Reuters Terry Wade

Peru's Economic Model and Poverty Reduction: Is it Working -- Farid Matuk

Farid Matuk Explains Peru's False GDP Figures -- INK

Now that you know one side, here's the other. GAINS AND LOTS OF THEM.

Peru Lima General Index - 2 yr performance as of 6/4/09

It seems to me the majority of the international financial community have bought into Garcia's lies and have come to believe Peru is a solid place to park your money.

This is despite, as Otto says, demand for base metals just simply does not add up. The Chinese are stockpiling their metals and eventually prices will have to go back down to reality. Check this article.

Despite this reality, investors and what they perceive can go a long way in financial markets. If investors jump on board, this new Peruvian ETF might begin to soar... albeit temporarily until reality sets in.

Benito's conclusion: Invest with caution. I've included the Bloomberg article below, but if you like to access it directly, please click here.


Peru ETF to Start Trading This Month, Global X Says (Update1)

By Veronica Navarro Espinosa

Peru’s first Exchange Traded Fund will start trading on the New York Stock Exchange by the “middle of June,” said the chief executive officer of Global X Management Company LLC, a New York-based asset manager.

“The stock market has risen a lot, investors are bullish, and that’s helping us,” Bruno del Ama, the New York-based CEO of Global X, said in a phone interview. “We’re giving access to the Peruvian market and in the future people can go short in Peru, which is an option that doesn’t exist today.”

Global X and Barclays Plc have been competing to introduce the first Peruvian ETF, aiming to lure global investors to the world’s best performing stock market this year. The funds issue a number of shares and trade throughout the day like stocks. Most are designed to passively track a benchmark equity index.

Peru’s Lima General Index has jumped 95 percent this year on speculation a rebound in prices of the country’s commodity exports will fuel growth amid the global recession. The index’s advance is the biggest among 92 world benchmarks tracked by Bloomberg, reversing a 60 percent plunge in 2008 that was the steepest in Latin America.

“It will create liquidity and that’s what this market lacks,” Carlos Rojas, who manages $160 million in Peruvian stocks and bonds for Compass Peru, said in a phone interview from Lima. “But it’ll all depend on the size. If it attracts less than $150 million, it’ll be a non-event.”

FTSE Peru 20

The new ETF will track the FTSE Peru 20, which will include the nation’s biggest commodity producers such as Maple Energy Plc., an oil and natural gas producer that has gained fourfold this year, the best performer in the index. Del Ama said other members include Austral Group SA, Peru’s biggest fishmeal producer, and Cia. de Minas Buenaventura SA, the largest precious-metals producer.

Resource companies account for 21 of the 36 stocks in the Lima index because Peru is the world’s third-largest producer of copper, zinc and tin, the biggest miner of silver and the fifth- largest of gold.

IShares, a unit of Barclays, is working on introducing its own Peruvian ETF, said Barclays spokeswoman Christine Hudacko in an e-mail today. There’s “no news on timing,” she said.

The iShares MSCI Brazil Index Fund, managed by Barclays, is among the 10 most-traded ETFs in New York, with daily volume of about $1 billion, Barclays Global Investors’ chief executive for Latin America Daniel Gamba said in December. Trading in ETFs in Mexico now accounts for about 20 percent of average daily volume, Gamba said.

[Source] -- Bloomberg


Monday, June 1, 2009

Jim Rogers: Profit from commodities, currencies and bonds in times of crisis

Can't seem to find part 2. Rogers covers his general view of where markets currently are and where he's putting his money right now.



As the US struggles to recover its economic standing in the world, the doors of change will be wide open. For better or worse... The structure of the American-US insurance industry will change in the next 8 years.

Micro-Insurance always took a back seat in my personal interests in the world economic development theories and tools. However, as this article highlights, the sector is growing and innovative ways to offer insurance to poor people are being tested. If a individual is able to grow his/her business from the ground up on monthly loans of a mere $60-120, why too should not they experience the economic benefit of having a life insurance plan if they pay for it. Surely, life insurance will be cheaper developing countries.

Microfinance has exceeded the expectations of most skeptics. Why can't Micro-Insurance do this too?


PlaNet Finance to launch micro-insurance schemes

The UAE-based PlaNet Finance Group plans to introduce micro-insurance schemes in the region to reduce the impact of the crisis on micro entrepreneurs who have outstanding loans.

While the organised banking system has been severely hit by the financial crisis as individual and corporate customers fail to repay huge amounts of loans, the micro finance sector has been relatively unaffected. Even big insurance companies such as Allianz are interested in providing insurance to the poorest members of society.

Speaking to Emirates Business, Sawsen Ayari, Microfinance Expert and Programme Manager, PlaNet Finance UAE, said the agency is planning to expand its micro-insurance schemes across the Middle East and North Africa (Mena).

Through PlaNet Guarantee, a company specialised in the distribution of micro-insurance products, the group intends to spread micro-insurance facilities in several Mena countries. The company has a tie up with the global insurance company Allianz and successfully implemented a micro-insurance scheme in Egypt.

The current global financial crisis has created a situation to expand microfinance to other institutions in the region, Ayari said. The group is also working closely with leading pharmaceutical companies such as Pfizer.

Under PlaNet Finance's tie up with Allianz, it is providing micro insurance schemes for the first time in Middle East in Egypt, where premium rates are as low as $1 and cover loans of $1,500 (Dh5,509) to $2,000 availed by micro entrepreneurs, Ayari said.

"The global financial crisis has not directly affected microfinance institutions because they operate in areas not directly linked to global finance. Some entrepreneurs in travel and tourism may be hit, but it will take some time before micro entrepreneurs in the region can be affected. Such insurance schemes will insure their loan repayment capacity."

The group has microfinance institutions in Afghanistan, Egypt, Syria, Oman and Jordan.

Another company in the field, First Microfinance Foundation (FMF), successfully tested the first micro insurance scheme in the Mena region in Egypt, where it introduced credit life insurance to micro entrepreneurs. The FMF currently provides death and disability insurance to its clients.

Allianz Life Insurance covers the entire loan portfolio of the microfinance firm against a premium, which is paid upfront at each new loan disbursement.

Each new client is insured against death and disability, in case of which, the FMF gets 110 per cent of the initial loan amount and keeps the outstanding amounts to pay back the unpaid installments. The remaining balance is paid to the client's family in case of death due to disease or accident or to the client in case of permanent total disability.

About 100 loan officers of FMF are trained on death and disability insurance for the benefit of the company's 14,000 clients.

PlaNet Guarantee is targeted at people who do not have access to traditional insurance. Such clients also are not beneficiaries of social protection mechanisms to protect themselves against different risks such as health and natural catastrophes.

It works closely with the microfinance institutions that have strong presence on the ground. The company also works closely with insurance and reinsurance groups, health professionals and development agencies.

PlaNet Guarantee, which also acts as an insurance broker, works for the promotion of micro-insurance schemes around the world, with schemes running in 10 countries. It also provides consultancy service to microfinance institutions.

[Source] -- Emirates Business 24/7


Sunday, May 31, 2009

Newswire: China

Regulate with a Big Stick, Not a Fly Swatter
China's securities regulators should focus on sound oversight and tough discipline to protect, not merely stabilize, the market.

Three cases that came to light during the second week of May drew attention to regulatory efficiency and tight enforcement in the securities market. A former president of China Galaxy Securities, Xiao Shiqing, was arrested May 13. That same day, Sinolink Securities (SSE: 600109) announced that its chairman, Lei Bo, had been placed under investigation. And a day later, Rongtong Fund Management booted fund manager Zhang Ye for suspected involvement in so-called "rat trading."

On the surface, these cases seem unrelated. Each involves a different context. But deep down, each is connected to how regulatory agencies shoulder their responsibilities. And now, once again, concerns have been raised about regulatory oversight and regulatory capture.

Securities legislation protects investors

Small investors' interests are high on the agenda in the revision of China's Securities' Law, which will be deliberated by China's legislature later this year.

But the country's legal system still needs improvement to enable investors to make full use of the Securities Law, including taking steps like "collective action" against listed companies that cheat, said a senior lawmaker.

China Spends 61.2% of 2009 Investment Budget
The central government has already spent 61.2 percent of its 2009 investment budget as it pours funds into infrastructure, education and health care, the official Xinhua News Agency reported on May 27.

China's Manufacturing Expands for Third Month, Adding to Signs of Recovery
China’s manufacturing expanded for a third month, adding to evidence that the world’s third-largest economy is recovering from its deepest slump in almost a decade.

Geithner to Tell China No One More Concerned About U.S. Deficit Than Obama
Treasury Secretary Timothy Geithner arrived in Beijing with a pledge that the Obama administration will control its borrowing as he sought to reassure China its holdings of U.S. government debt are safe.

China's Steel Association Rejects Iron Ore Prices Reached by Rio, Nippon
The China Iron & Steel Association rejected an agreement on ore prices reached between Rio Tinto Plc and Nippon Steel Corp., according to a statement on the group’s Web site. The price reached between Rio and Nippon Steel doesn’t reflect changes in the global market and would result in losses for Chinese steelmakers, the group said.

Treasuries `Only Game in Town' as China Boosts Holdings While Dollar Falls
For all the hand-wringing over the dollar’s slide, the expanding U.S. deficit and the nation’s AAA credit rating, the bond market shows international demand for American financial assets is as high as ever.

China Increases Diesel, Gasoline Prices as Much as 8%, Aiding Oil Refiners
China, the world’s second-biggest energy consumer, increased fuel prices by as much as 8 percent today, allowing the nation’s refiners to pass on climbing crude oil costs.

Prices charged by refiners to wholesalers for gasoline and diesel rose by 400 yuan ($58.57) a metric ton, the National Development and Reform Commission, China’s Beijing-based economic planning agency, said on its Web site late yesterday.