Egypt's Uprising: Population Growth – Not Politics – Remains This CIVETS Economy's Biggest Challenge
Seven months ago, global investment bankers had anointed Egypt as the "next big thing" in the world of emerging-markets investing – naming it as one of the exciting "CIVETS" economies that every investor had to consider.
At that time, in a column here in Money Morning, I told you that I had my doubts, and said that "with an 82-year-old dictator and a radical Islamist movement, it doesn't look that attractive to me."
Given Egypt's uprising of the past two weeks, that call must look like it was quite prescient.
But here's a surprise: Egypt's brewing political troubles weren't the reason that I told you to steer clear of that economy. In fact, even with the escalating violence of the past couple of days, there's still another issue that remains Egypt's greatest challenge.
Investors should take heed. The challenge that faces Egypt is the same problem that plagues a number of the world's other emerging-market economies. That challenge will prompt us to question the long-term growth projections "experts" are throwing down for some of these other highly touted investment plays.
Beat the BRICS: The Three Latin America Markets You Can’t Afford to Ignore
The stock exchanges of Colombia, Peru and Chile agreed last November to merge their trading, giving international investors access to roughly 600 stocks – more than any single country in Latin America.
Earlier this month, the trio demonstrated just how serious they were, with the Peruvian and Colombian stock exchanges entering into a full-blown merger agreement. These are the three best-run countries in Latin America, with a combined gross domestic product (GDP) of more than $500 billion.
Let me show you why…
China's Global Currency Expansion Bringing More Yuan Denominated Products to Market
Chinese regulators plan on developing more yuan-denominated products and allowing more offshore yuan investment opportunities in the continued push for the global expansion of China's currency.
More yuan-denominated bonds, foreign direct investment (FDI) opportunities and eventually initial public offerings (IPOs) will hit the markets in coming years as China gradually allows its currency, also called the renminbi, to be more accessible in international trade and investment. Chinese regulators also want to support international development of Chinese entities.
The People's Bank of China (PBOC) earlier this month announced that it has started looking into permitting Chinese companies with overseas yuan accounts to engage in FDI in the mainland. The central bank also recently said it would allow mainland companies to conduct overseas direct investments (ODI) with the yuan.
Investing in Germany: The Closed-End Fund to Buy Now
U.S. investors tend to regard the European Union as a region of low growth, an area of the world that has little to offer to non-EU investors.
For much of the EU, this is true (I've never found much of anything that's investment-worthy in Italy, for example).
Overall, however, this anti-EU sentiment is pretty unfair.
In fact, it's now becoming increasingly clear that even U.S. investors would be mad not to have some of their money in Germany.
Global Currency War: How to Keep the "Race to the Bottom" From Stealing Our Future
When Brazil Finance Minister Guido Mantega recently warned of a "currency war that is turning into a trade war," he wasn't far off the mark – at least as far as Latin America is concerned.
In that region – in the last two weeks alone – at least three countries have taken steps to prevent their currencies from appreciating against the U.S. dollar.
If you're a U.S. investor with no Brazilian holdings, you probably wouldn't think you'd have to worry a whole lot about what Brazil is doing to keep its currency – the real – from appreciating.
But on that point, you'd be wrong.
In fact, as Mantega warns, the fallout from a currency war could actually be quite severe – and global in reach. The games that governments are currently playing in currency markets could cause countries to set up trade barriers against imports. And that could bring about the end of the truly global economy – a "de-globalization" that would steal our current standard of living and thwart a return to prosperity.
Fortunately, there is a solution.
BP PLC (NYSE ADR: BP) Attempts Another Venture Into Russian Oil Industry in $16 Billion Deal
BP PLC (NYSE ADR: BP) on Friday announced it was entering a $16 billion share swap deal with Russian oil industry giant NK Rosneft OAO (PINK: RNFTF). The deal will give BP access to areas of the Russian Arctic that were previously off limits to foreign companies, but it will come at a political cost.
The deal involves BP swapping 5% of its shares, valued at $7.8 billion, for 9.5% of state-controlled Rosneft's shares. The British oil company already owns a 1.3% stake in the Russian business. BP Chief Executive Officer Robert Dudley said the deal is the first cross-shareholding between a Russian state-owned national oil company (NOC) and western oil giant, and called the move "a new template for how business can be done in our industry."
The joint venture will make Rosneft the largest single BP shareholder. Their newly formed joint operating company will be two-thirds owned by Rosneft and one-third owned by BP. It will spend up to $2 billion in an initial phase of testing and well-drilling.
Hot Stocks: DuPont (NYSE: DD) Shoots for Top Spots in Biofuels and Food Sectors
U.S. manufacturing group E.I. du Pont de Nemours & Co. (NYSE: DD) announced Sunday it would buy Danish food ingredients company Danisco A/S (PINK: DNSOF) for $6.3 billion to broaden its presence in the fast-growing biofuels and food sectors.
DuPont will pay $5.8 billion cash and also assume $500 million in Danisco's debt. The company expects the deal to establish it as a leader in industrial biotechnology and help it successfully address global issues in food production and fossil fuel reduction.
"Danisco has two well-positioned global businesses that strongly complement our current biotechnology capabilities, R&D pipeline, and specialty food ingredients, a combination that offers attractive long-term financial returns," DuPont Chief Executive Officer Ellen Kullman said Sunday in a statement. "This also would create new opportunities across other parts of the DuPont portfolio, including traditional materials science offerings."
Record High World Food Prices Spark Fears of Looming Global Crisis
World food prices hit a record high in December, jumping above the 2008 food crisis levels and developing into an "alarming" situation, according to a report released yesterday (Wednesday) by the United Nations' Food and Agriculture Organization (FAO).
"We are entering a danger territory," said Abdolreza Abbassian, an economist with the FAO. "It will be foolish to assume this is the peak."
The FAO's Food Price Index, which tracks the prices of 55 food commodities, climbed for the sixth consecutive month to hit 214.7 points in December, its highest reading since the measure was first calculated in 1990. This beat the previous June 2008 record of 213.5 and is a 25% increase from December 2009.
Commodities, Europe's Winter Storm and NIKE Inc. (NYSE: NKE) Hint to 2011 Market Trends
Stocks rose last week with all the excitement of water turning to ice in the freezer.
I kept hitting the side of my monitor to see if the pixels were stuck — but no, it was just another one of those low-volume, low-drama late-December sessions that we have come to know and love.
The Dow Jones Industrial Average rose 0.12%, the Standard & Poor's 500 Index fell 0.16%, the Nasdaq Composite Index fell 0.08% and the Russell 2000 small caps fell 0.2%. Overseas developed and emerging markets were exactly the same. The liveliest U.S. sector was health care and basic materials, up 0.2%, while financials and industrials lagged, down 0.4%.
Breadth slightly favored decliners over advancers by a 3-2 margin, and the number of new highs was way down at 394 — yet so was the number of new lows, at 34. Gold fell by 0.4%, crude oil jumped out to a new two-year high by 1.1%, to $91.51, and the grains jumped to a new one-year high as well, led by corn.
Buy, Sell or Hold: Six Reasons Claude Resources Inc. (AMEX: CGR) is a 'Buy'
When I was doing due diligence for my investors, I remember the CEO of an oil and gas company once telling me: "If you want to find oil, it's easier if you drill where oil has already been found."
This rule carries with it a lot of truth about geology. However, it works with gold resources just as much as it does with oil. It's always easier to find gold, where it has already been discovered.
In Canada, the most prolific gold mining district is the Red Lakes District. If you want to find gold, it helps to have ownership in a Red Lake property. It is the heart of high volume gold production in Canada.