Submerging Markets?

Only eight days into the new year, stories are hitting the newswires suggesting that global emerging markets, one of last year's favorite investing themes, are suddenly becoming a whole lot riskier.

In Venezuela, Bloomberg and others are reporting that Chavez Plans to Nationalize Cantv, Other Utilities.

Venezuelan President Hugo Chavez said he plans to nationalize utilities, including the biggest phone company, as he moves toward transforming the country into a socialist state.

Shares of CA Nacional Telefonos de Venezuela plunged, and the currency sunk in street trading, after Chavez said he will also ask congress for authority to make law through executive order, a power he held for a year during 2000 and 2001. Chavez reiterated that he will seek to end foreign control of heavy- crude refineries in the Orinoco region.

Political and economic uncertainty is also on the rise elsewhere in Latin America. According to Reuters,

Moody's Investors Service on Monday revised its outlook on Ecuador's sovereign ratings to stable from positive, citing concerns regarding the incoming government's willingness to service its debt and uncertainty over its policy direction.

The outlook change affects Ecuador's "Caa1" foreign currency government bond rating, its "Caa1" country ceiling for foreign currency bonds, and its "Caa2" country ceiling for foreign currency bank deposits....

Ecuadoran President-elect Rafael Correa who campaigned on a hard line on servicing the foreign debt, is scheduled to take office on Jan. 15.

"While a market-friendly re-profiling of Ecuador's obligations would be perfectly consistent with a positive outlook, such an outlook is incompatible with the incoming government's repeated assertions that it would consider an outright moratorium despite its ability to pay", said Alessandra Alecci, analyst at Moody's.

Meanwhile, the Mining Journal is reporting that

Bolivia plans to raise the taxes paid by mining companies by almost 600% in a shake-up of the industry set to be announced in the coming weeks.

Mining Minister Guillermo Dalence was quoted in Bolivian daily newspaper La Razon as saying that the leftist government of President Evo Morales received only US$45 million of `Impuesto Complementario a la Minería` (ICM) tax on mining exports totalling US$1 billion in 2006.

Over in Eastern Europe, there was news that Belarus-Russia Row Cuts Oil Flow to Germany, Poland.

Russian oil flows to Europe were cut off by a disagreement with Belarus, the third time in as many years that energy supplies have been disrupted because of a dispute between Moscow and nations that ship its crude and gas.

The cutoff comes after Belarus introduced a transit tax in retaliation for higher charges imposed by Moscow for crude supplied to the former Soviet state. Last year a disagreement between OAO Gazprom and Ukraine lowered deliveries to Europe from the Russian natural-gas producer.

In Asia, the Bangkok Post reported that a Taiwan Bank Run Threatens Crisis.

Taiwanese authorities on Monday appealed for calm following a bank run that has rocked the local stock market and threatened a financial crisis on the island....

The appeal came after the private Chinese Bank suffered from a run since Friday when jittery investors and depositors withdrew funds from or terminated time savings deposit contracts with the bank, which has 35 branches island-wide.

The run came after two subsidiary firms of the conglomerated Rebar Group filed a restructuring request with the Taipei District Court last Thursday after suffering losses totaling 25.2 billion Taiwan dollars (US$763 million) in the past seven years.

The situation also remains dicey in another Asian nation. According to the Associated Press,

Thailand has no immediate plans to lift remaining capital controls imposed last month to curb the baht's appreciation, the central bank governor said Monday amid growing calls from foreign brokers to ease the restrictions.

Bank Gov. Tarisa Watanagase told reporters that the bank was considering revisions of "minor" measures but that the baht's relative stability since controls were imposed Dec. 19 shows that the much-criticized move was effective and necessary for the time being.

Thai shares plunged nearly 15 percent Dec. 19 after the central bank announced regulations restricting foreign capital inflows to stem the baht's surge, which was hurting exporters. Authorities quickly lifted the controls on foreign stock investments but retained those on bonds and other debt instruments, prompting the benchmark stock index to bounce back 11 percent the next day.

That's the funny thing about complacency. One day it's there, and the next day it's not.

Comments

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Isn't it great?! South America is waking up from its slumber! :)

I bet Ecuador will follow Argentina's lead by the end of the year.

And if the US attacks Iran - well, the dollar will sink like a ton of bricks.

I better pick up a copy of your book - before it's too late! ;)

Thanks, for the link!