Nostalgia Swells for Mandela Era; As Markets Fall, South Africans Lament Nation’s Dimmed Prospects

Updated June 12, 2013, 7:46 p.m. ET

Nostalgia Swells for Mandela Era

As Markets Fall, South Africans Lament Nation’s Dimmed Prospects; Statesman Responds to Treatment

By PATRICK MCGROARTY, DEVON MAYLIE and PETER WONACOTT

JOHANNESBURG—With their former president in the hospital and their nation’s economic promise unfulfilled, South Africans are suffering from a powerful moment of Nelson Mandela nostalgia.

On Wednesday, President Jacob Zuma elicited rare across-the-aisle cheers from parliament when he said the 94-year-old statesman was responding to treatment after five days in a Pretoria hospital for a lung infection. “We are very happy with the progress that he is now making following a difficult few days,” Mr. Zuma said in Cape Town.

Mr. Zuma’s comments lightened what has been a hard week for South Africa. On Tuesday—amid both the latest news of Mr. Mandela’s failing health and declines in emerging-market assets across the globe—South Africa’s rand fell to a four-year low against the dollar. The Johannesburg Stock Exchange posted its steepest one-day drop in 20 months. Read more of this post

Cosco Highlights Doubts Over China Deals; why investors in Hong Kong-listed units of Chinese state giants are sometimes concerned that the interests of the parent companies come first in asset sales

Jun 12, 2013

Cosco Highlights Doubts Over China Deals

By Joanne Chiu

Cosco Pacific Ltd. 1199.HK -3.49%’s plan to sell its stake in a container maker back to its parent sheds light on why investors in Hong Kong-listed units of Chinese state giants are sometimes concerned that the interests of the parent companies come first in asset sales.

On Thursday, shareholders of the port operator will vote on a plan to sell its 21.8% stake in China International Marine Containers 000039.SZ -3.29%(Group) Co. to its ultimate parent: state-controlled China Ocean Shipping (Group) Co., or Cosco Group. CIMC has been hurt by the rout in trade since the financial crisis, but is still the world’s largest container maker and accounts for almost a fifth of Hong Kong-listed Cosco Pacific’s earnings. Read more of this post

Bank Indonesia raised its benchmark interest rate by a quarter of a percentage point to 6%, the second time in two days the central bank has surprised market participants

June 13, 2013, 3:36 a.m. ET

Bank Indonesia Raises Benchmark Rate Again

By FARIDA HUSNA And I MADE SENTANA

JAKARTA—Bank Indonesia raised its benchmark interest rate by a quarter of a percentage point to 6%, as it works to rein in inflation expectations and support a weakening rupiah following recent outflows.

It is the second time in two days the central bank has surprised market participants as it is widely perceived to be dovish, after having kept the benchmark rate at a historic low since February 2012.

Late Tuesday, the bank raised its overnight deposit rate by 0.25 percentage point to 4.25%, effective Wednesday, to improve sentiment toward the rupiah. The currency has fallen against the U.S. dollar to its lowest since 2009 as foreign investors pulled money from emerging markets, and as domestic investment decisions are influenced by the prospect of slowing growth. Read more of this post

Debt Makes Comeback In Buyouts

Updated June 12, 2013, 6:45 p.m. ET

Debt Makes Comeback In Buyouts

By MATT WIRZ

Shareholders in BMC Software Inc. BMC -0.18% will receive $6.9 billion to sell the corporate-software developer to a group of private-equity firms. But the buyers, led by Bain Capital LLC and Golden Gate Capital, only intend to pay $1.25 billion in cash out of their own pockets. The rest will come from debt raised by BMC to finance its takeover.

The little-noticed acquisition is another milestone in the return of cheap debt and higher-risk deals to Wall Street: The cash put down by BMC’s private-equity buyers is the lowest as a percentage of the purchase price of any buyout with loans exceeding $500 million since 2008, according to data-provider Thomson Reuters LPC. Read more of this post

Madoff Evoked in N.Z. as Ponzi Scheme Loses $317 Million

Madoff Evoked in N.Z. as Ponzi Scheme Loses $317 Million

New Zealand charged a 63-year-old financial adviser with running the biggest Ponzi scheme ever alleged in the South Pacific nation.

The Serious Fraud Office and Financial Markets Authority allege David Ross defrauded investors of about NZ$400 million ($317 million) through his closely-held Ross Asset Management Ltd., which collapsed in November last year. He will face four charges of false accounting and one of theft in the Wellington District Court, the agencies said in a joint statement today.

“It’s yet to be seen if he’s New Zealand’s Bernie Madoff, but the amounts were high by New Zealand standards and hurt a lot of people,” said Wellington barrister Kevin Sullivan. Read more of this post

Hong Kong Chief Executive Pledges Property Curbs to Stay; “This is not the time to relent.”

Hong Kong Chief Executive Pledges Property Curbs to Stay

Hong Kong, the world’s most expensive home market, will not ease its real-estate curbs until there’s a steady supply of new properties as the government seeks to address concerns that it favors developers.

Earlier actions have brought down prices and rents, and the government can do more if needed, Chief Executive Leung Chun-ying, 58, said in an interview in New York.

“There’s a voice out there in the Hong Kong community that the government should ease off,” the former property surveyor said yesterday. “This is not the time to relent.” Read more of this post

Emerging-Market Bond Anxieties Surging by Most Since 2008

Emerging-Market Bond Anxieties Surging by Most Since 2008

The biggest drop in perceived creditworthiness for emerging-market borrowers since the credit crisis is deepening as speculation intensifies that central banks will scale back record stimulus.

Prices on the Markit CDX Emerging Markets index, a credit-default swaps benchmark for debtor nations from Latin America to the Middle East and Asia, have tumbled 4 cents in the two weeks through yesterday to 107 cents on the dollar. The decline is the biggest since the failure of Lehman Brothers Holdings Inc. reverberated across financial markets and caused the index to plunge 6.7 cents in the period ended Nov. 18, 2008. Read more of this post

Indonesia’s Delayed Fuel Decision Haunts Rupiah: Southeast Asia

Indonesia’s Delayed Fuel Decision Haunts Rupiah: Southeast Asia

Indonesia’s government needs to rein in fuel subsidies that have spurred a current-account deficit to support efforts by the central bank to stabilize the weakening rupiah, economists say.

Rupiah forwards rose the most in a year yesterday after Bank Indonesia increased the rate it pays lenders on overnight deposits and said it was ready to buy government debt in the secondary market to maintain monetary stability. Still, the spot rate weakened 0.3 percent to 9,860 a dollar, the most since May 16, according to prices from local banks compiled by Bloomberg. Read more of this post

Emerging markets at risk when loose policies end: World Bank

Emerging markets at risk when loose policies end: World Bank

8:53pm EDT

WASHINGTON (Reuters) – The World Bank said eventual monetary tightening in advanced economies could crimp growth in emerging markets as interest rates rise, lowering the nations’ potential output by as much as 12 percent.

That long-term risk is likely greater than the short-term impact from volatility in emerging market currency and bond markets, as traders try to position themselves for when the U.S. Federal Reserve begins its exit from ultra-loose monetary policies, said Kaushik Basu, the World Bank’s chief economist. Read more of this post

After emerging corporate bond boom, default risks on rise

After emerging corporate bond boom, default risks on rise

12:49pm EDT

By Sujata Rao

LONDON (Reuters) – The $1 trillion market in emerging corporate bonds could be headed for a surge in defaults if company earnings in swiftly depreciating roubles or pesos fail to keep pace with dollar-based debt repayments. As the U.S. Federal Reserve considers when to turn off its printing presses, emerging currencies have crashed to multi-year lows against the dollar. That rout is a big risk for corporate debt, which has gone from being a sideshow of the sovereign bond market to an asset class that surpasses U.S. junk debt in size. As past decades show, a surging dollar can make trouble for emerging markets, rapidly pushing up debt service costs. Read more of this post

Traders Pay for an Early Peek at Key Data

June 12, 2013, 8:28 p.m. ET

Traders Pay for an Early Peek at Key Data

By BRODY MULLINS, MICHAEL ROTHFELD,TOM MCGINTY and JENNY STRASBURG

On the morning of March 15, stocks stumbled on news that a key reading of consumer confidence was unexpectedly low.

One group of investors already knew that. They got the University of Michigan’s consumer report two seconds before everyone else.

Infinium Capital Management, a high-speed trading firm in Chicago, used the information to launch a wave of trading in futures contracts, in just one example of the activity that followed. In a single second, according to a Wall Street Journal analysis, traders from various firms bet nearly seven million shares that equity markets would decline—which was exactly what happened when news of the survey became widely known. Read more of this post