Latin America’s Economy May Be Affected By China’s Slowdown

latin america gdp

By Economic & Finance Report

It has been perceived that China’s economic  slow growth recently may be affecting the Latin America’s economy, because of the lack of China’s purchasing raw materials in Latin America.  Raw materials such as soybeans (Argentina), copper (Chile), coffee (Brazil) have seen recent drastic declines, especially since China’s has reduced its  ability to purchase these lucrative commodities.

Countries such as Venezuela have been hit hard by the recent slowdown especially with the declining of oil and other precious resources. The IMF has predicted a country such as Venezuela will be contracting for the next two years, this year and next year.

It is stated that Latin America has focused to heavily on raw material output and not enough on  diversifying other sectors in regional production. Many analysts speculated that China’s cheap labor eventually would outcompete  Latin America’s labor force, which it did and the manufacturing sector in Latin America’s economy has suffered horribly for it.

A growing and stable China helped cultivate  and economize many Latin American countries, and it is without this growth that stagnated the continent as well.Though it is implied by economists that Latin America may now need to focus more on regional development export and imports in the regional instead on dependency that has been plagued for decades by China, since the 1970s.

China has rebutted that the economic slowdown will be a long term effect to Latin America. They insist that the commodities that are exported to China serve as a mutual benefit for both Latin America and China, even more so then exports to the United States. As time passes and trade is one of the main focal points between China and Latin America, it remains to be seen how this economic barrier or stagnation  develops itself, if or when it does…



By: Economic & Finance Report

Aliko Dangote pic

 Energy is big business in Nigeria and in Africa in general. Billionaire Aliko Dangote, Africa’s richest man has invested $2 billion dollars in Nigeria’s oil refinery. It is Nigeria’s petrochemical and fertiliser plant. He has already invested $9 billion dollars in the refinery adding the recent $2 billion recently. This project has been noted by energy analysts as galvanizing and revolutionizing the energy sector in Nigeria.

Nigeria’s refineries have had problems for decades, not being able to output oil to its full capacity, being unmanageable and the high rate of oil robberies and theft.

Nigeria’s economy continues to expand and diversify especially within the past decade but the country is still relying on oil as it’s main producer… Nigeria’s is Africa #1 oil producer… Nigeria oil accounts for  90 percent of export earnings and 70 percent from its national GDP earnings.

Mr. Dangote and his Dangote Group investing $2 billion in the oil refinery will position Nigeria to broaden its spectrum in the energy sector within and help ease the necessity of energy from being imported..


Africa’s Growth Potential Spurring Rapidly….

By: Economic & Finance Report

Africa home to abundant resources and young potential growth force, that will make it the next frontier of expansive of growth if not already… *Africa will see GDP growth of 5 %  by year’s end.*

 Africa is growing at 1.1 billion people currently and the region will be growing faster then most other countries trajectories in the next decade or so. *Inflation has fallen to 6%.  The Debt GDP has fallen to 20% on a whole throughout the continent*

Africa does seem to hold promise it is just a matter of timing…. Eventually Africa will be sought as a mundane middle class economy. This will indeed happen.

*statistical chart from Morningstar*

statistics Africa

Energy Decline Having An Lasting Effect On European Stocks

By: Economic & Finance Report

Financial market losses on Friday, sent currencies in Russia and Norway to fresh multiyear lows. Defining concrete losses to European equity indexes.


The Stoxx Europe 600 index closed the session down 2.5 per cent, with the European subindex of oil and gas companies falling 3.6 per cent.

London’s FTSE 100, which has a very high exposure to the oil and gas sector, declined 2.5 per cent and notched up its biggest weekly loss in around two years. Howevr the DAX in Frankfurt dropping 2.7 per cent and the CAC-40 in Paris ending down 2.8 per cent. In the U.S., the S&P 500 dropped more than 1 per cent in late European trade.

The European central bank indicated a need to sell off the euro against the dollar and British pound…


Oil plunges 3 percent to new five-year lows after bearish IEA outlook

Oil plunges 3 percent to new five-year lows after bearish IEA outlook


A customer uses a petrol nozzle to fill up his tank in a gas station at a supermarket in Truchtersheim near Strasbourg
A customer uses a petrol nozzle to fill up his tank in a gas station at a supermarket in Truchtersheim near Strasbourg August 26, 2012. REUTERS/Vincent Kessler
NEW YORK (Reuters) – Crude oil markets fell 3 percent or more to plumb new five-year lows on Friday after the world’s energy watchdog forecast even lower prices on weaker demand and larger supplies next year.

Benchmark Brent oil settled at below $62 a barrel and U.S. crude slumped to under $58 to extend Thursday’s landmark fall below $60.

Surging crude inventories in the United States and top oil exporter Saudi Arabia’s reiteration that it will not cut production had roiled prices over the last two days despite data pointing to strong U.S. economic recovery.

On Friday, the Paris-based International Energy Agency which coordinates the energy policies of industrialised countries, cut its outlook for demand growth in 2015, triggering another collapse.

The IEA slashed its outlook for global oil demand growth for 2015 by 230,000 barrels per day to 900,000 bpd on expectations of lower fuel consumption in Russia and other oil-exporting countries.

It predicted that oil-producing nations outside of the Organization of the Petroleum Exporting Countries will add to global supplies. It also expected prices to fall further.

“That’s just more bad news for the oil markets,” said Andrew Lipow, president of Houston-based Lipow Oil Associates.

Brent settled down $1.83, or nearly 3 percent, at $61.85 per barrel. It fell to $61.35 during the session, the lowest since July 2009.

U.S. crude finished down $2.14, or 3.6 percent, at $57.81. It fell earlier to $57.34, its lowest since May 2009.

On the week, Brent lost more than $7, or about 11 percent. U.S. crude tumbled over $8, or 12 percent.

Both markets have lost about 46 percent of their value since their June highs, when Brent stood at above $115 and U.S. crude at around $107.

The IEA outlook had a greater impact on Friday’s market than data from U.S. oil services firm Baker Hughes showing the number of rigs drilling for oil in the United States were down by 29 this week, the biggest weekly drop in two years.

Voluminous crude from U.S. shale projects has been blamed for much of the global oil glut now, and energy traders have been watching rig data to see if prices that have almost halved since June will prompt a cutback in drilling.

Regulators in North Dakota, one of the largest shale oil producing states in the United States, also said on Friday the state’s crude production held steady in October despite strict new rules that aim to prevent wasteful burning of natural gas produced alongside oil.

(Additional reporting by Simon Falush in London and Adam Rose in Beijing; Editing by Marguerita Choy and Gunna Dickson)

Nigeria Sinks Below Zimbabwe Stock Valuations on Oil Rout

Bloomberg News

Nigeria Sinks Below Zimbabwe Stock Valuations on Oil Rout

December 12, 2014

Nigeria’s Islamist insurgency, tumbling oil revenue and a looming presidential election have turned the nation’s stocks into Africa’s biggest laggards.

The country’s main equity index lost 25 percent this quarter after tumbling to a 22-month low, the continent’s largest retreat. The Nigerian measure dropped to 8.1 times estimated earnings Dec. 11, falling below Zimbabwe for the first time since Bloomberg started tracking the southern African nation in 2010.

Tension in Africa’s largest economy is escalating before polls in February pitting southern Christian President Goodluck Jonathan against former military ruler Muhammadu Buhari, a northern Muslim, with attacks by the Islamist militant group Boko Haram killing at least 450 people in November. Crude’s plunge below $65 a barrel has deepened the rout as Nigeria needs a price of $126 to balance its budget, more than any other major developing-nation producer bar Venezuela and Bahrain, according to Deutsche Bank AG.

“The government situation is somewhat chaotic,” Mark Mobius, who oversees about $40 billion as the executive chairman of Templeton Emerging Markets Group, said by phone from Bangkok on Dec. 9. “You’re going to get a lot of hesitation on the part of investors” until after the polls, he said.

The Nigerian Stock Exchange All Share Index (NGSEINDX) decreased 1 percent to 30,763.38 in Lagos, the lowest level since January 2013. The gauge, which has dropped almost 30 percent from this year’s high in July, fell 7.4 percent this week, the worst five-day decline since the week through Nov. 7. Its fall is the fourth-biggest among 93 stock gauges tracked by Bloomberg worldwide this quarter through Dec. 11.

Dangote Tumbles

The last time Nigeria held general elections in 2011, stocks declined 1 percent in the six months before the April poll and ended the year 16 percent down. Jonathan’s victory triggered riots across the north that killed more than 800 people and led to the burning of churches, mosques and homes and was challenged by the runner-up.

Investors are more concerned this year as increased attacks by Boko Haram “make these elections particularly fraught,” Nnamdi Obasi, a senior analyst for West Africa at Brussels-based International Crisis Group, a conflict resolution organization, said in a report last month.

Consumer and energy shares have been among the biggest drags on the benchmark index. Dangote Cement Plc, controlled by the continent’s richest man, Aliko Dangote, has dropped 27 percent this year. The stock makes up about a quarter of the gauge’s $58 billion market capitalization. FBN Holdings Plc, owner of the country’s biggest lender, fell 47 percent amid higher capital requirements.

Extreme Selloff

The estimated price-to-earnings ratio for Nigeria is the lowest of nine of the largest markets in sub-Saharan Africa and compares with 8.14 times for the main measure of the stock exchange in Zimbabwe, where a decade-long recession that began in 2000 reduced the size of the economy by half.

Kenya’s Nairobi All Share Index is valued at 11.4, while Russia’s Micex Index is at 4.6 times estimated earnings as the economy teeters on recession amid international sanctions against the world’s biggest energy exporter. Brazil’s Ibovespa Index is valued at 10.3, while the MSCI Frontier Markets Index measures 9.1.

The selloff in some consumer stocks and banks has been extreme even after accounting for a more difficult business environment amid lower oil prices, Joseph Rohm, who helps manage about $2 billion in Africa for Investec Asset Management, said by phone from Cape Town Dec. 10. “It’s a better environment now for stock-pickers with a long-term horizon.”

Nigerian securities will rebound in 2015 if the political environment improves, Mobius said. The $1.8 billion Templeton Frontier Markets Fund (TFMAX:US)hasn’t reduced its exposure to Nigeria during the recent downturn, he said.

Not Buying

The latest data from Nigeria’s stock exchange show foreign investors have been net sellers of the nation’s shares and bonds on the whole. They pulled $273 million from the country in October, the most since February when central bank Governor Lamido Sanusi was suspended.

Oliver Bell, a money manager at T. Rowe Price Group Inc. in London, said last month that the firm’s Africa and Middle East fund (TRAMX:US) has cut holdings of Nigerian shares to the lowest level since the fund’s inception in 2007, even as he predicts the country’s long-term investment case will stay intact.

Big Retail Stores In China Are Losing To E-commerce

People walk past a Suning store, one of the largest home appliance retailers in China, in Hong Kong August 26, 2013. REUTERS/Bobby Yip Thomson ReutersPeople walk past a Suning store, one of the largest home appliance retailers in China, in Hong Kong

SHANGHAI (Reuters) – It took China’s biggest retail chain Suning all last year to generate sales of about $17 billion. Last month, e-commerce giant Alibaba saw sales worth more than half that amount pass through its Tmall website in just one day.

Big retailers like Suning Commerce Group Co Ltd and foreign rivals Wal-Mart Stores Inc and Best Buy Co Inc are struggling to attract customers to their traditional stores in China, where online shopping is booming.

“The trend is definitely towards e-commerce because that’s where the consumers are,” said Frank Lavin, CEO of Export Now, which helps global firms launch their business in China.

“The ‘big box’ model here is already crowded. You need to invest a lot and be here on a large scale to make it work.”

This month, Best Buy sold its Chinese business, which had struggled to fend off local rivals.

Other firms have also complained that operating in China has become more challenging. This week, Wal-Mart said it had found pricing discrepancies on its China books, which reportedly were made to make its retail business look better at a time when transactions were slowing and unsold inventory was piling up.

French hypermarket operator Carrefour SA has also reported weak China sales.

best buy chinaIceNineJon on flickrA Best Buy store in China.

One of the main challenges facing retail chains is the shopping habits of Chinese consumers.

Most prefer the convenience, and often lower prices, offered by online shopping and when it comes to food, many people would rather go to local grocers than big supermarkets. Showrooming, or visiting a physical store to check out an item and then buying it online, is also common.

“I usually go to offline stores to check the real products, then I will go online to compare the price and services of different online stores,” said Lena Chen, 31, a university professor in Shanghai.

“That means I rarely buy in stores such as Suning or Best Buy, though they do help me decide what to buy,” she said.

Traditional retailers have taken note.

Sun Art Retail Group Ltd, China’s largest hypermarket operator, launched an online store this year and said its e-commerce business would help drive future sales.

Suning and rival Gome Electrical Appliances Holding Ltd are also trying to boost online sales to help revive profit growth.

The competition between traditional retailers, as well as their e-commerce rivals, means firms spend more on marketing and discounts, giving those with the deepest pockets an advantage.

Alibaba, which recently raised a record $25 billion in an initial public offering, saw more than $9 billion of trade on its online Tmall platform on its annual “Singles Day” shopping event last month, while Inc, China’s second largest e-commerce firm, said revenues rose 61 percent to $4.73 billion in the third quarter of the year.

“E-commerce just amplifies competition and some players in the consumer space will get squeezed out,” said Torsten Stocker, Hong Kong-based partner at consultancy firm A.T. Kearney.

(Additional reporting by SHANGHAI newsroom; Editing by Miral Fahmy)

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Nigeria, not Kenya, is about to become Africa’s next big technology hub

Nigeria Developing Tech Hub 

*(pic above)Konga, an e-commerce site, is a Nigerian tech pioneer. (Reuters/Akintunde Akinleye)

There’s too much money in Nairobi.

 That’s one way to explain why some venture capitalists are setting their sights elsewhere.

Largely off the back of Mpesa, the hugely successful mobile money-transfer system, the Kenyan capital has gained a reputation for technological innovation—and with it an influx of no-strings (or few-strings) development funding that has crowded out some of the private investment searching for tech startups to finance.

Now investors are looking to the other side of the African continent for results. Nigeria, with nearly 200 million people, a growing economy, and no shortage of local problems, stands out as an option. It’s slowly building up a tech sector of its own. The funding circuit is still small: probably no more than 10 companies investing money, says Kresten Buch, founder of the Nairobi tech accelerator 88mph (which has since expanded to South Africa).


Buch recently started working with Chika Nwobi of seed investment firm Level 5 Labs in Lagos, to become the latest investor to enter Nigeria. The pair have teamed up to start 440ng, a tech accelerator that puts between $20,000 and $100,000 into startups and provides a workspace and mentorship. It graduated its first cohort of nine startups this week. (Underscoring the newness of the local tech scene, only two of the nine have founders with prior startup experience.)


The biggest difference between Nigeria and other major African economies is its sheer size. With roughly four times as many people as Kenya or South Africa, Nigeria is big enough to reward products and services that are domestic in nature. “When I was investing in Kenya and in South Africa, it was very hard to find businesses in those markets where the opportunity is big enough for them to stay in that market. Nigeria has parallels to the US market, where you can say, ‘Let’s just take the US, even if we stay there, we will become a very big company,’” says Buch.


The first set of companies that are growing up in Nigeria, says Nwobi, are based on proven models from the West: things like travel, e-commerce, jobs, and deals. “But now I think, what I’m seeing with 440ng, is more people trying to solve more local problems.”


One example of that is Obiwezy, a venue for selling used smartphones. Nigeria is primarily a pre-paid market, where customers pay the full cost of a handset up front. That puts most high-end devices out of reach for all but the very rich. But the aspiration to own a high-end Apple or Samsung handset remains, as it does elsewhere in the world. Obiwezy’s founders figure that a secondhand market—with warranties—is one way to sate that demand. They have tied up with MTN, a large telco, to offer the service.


Nigeria still has a big hole where investors willing to put in between $100,000 and $1 million should be, says Buch. For now, those investors are ensconced in Nairobi. But Buch suggests that will change as Nigeria’s companies grow larger, signaling opportunity to deeper-pocketed investors looking for returns. “We want to create successful companies. I don’t want to think, ‘Is this helping some poor farmer in a rural area?’ I want to create a big, successful company that will create the next wave of entrepreneurs,” Buch says. “Making a profit is a signal that we’re creating value.”