Economy

Colombia markets rise in wake of government defeat in local elections

Published

7 months ago

October 31, 2023

Colombia markets rise in wake of government defeat in local elections

By Nelson Bocanegra

BOGOTA (Reuters) – Colombian markets rose on Monday, pushed higher on the view that the defeat of President Gustavo Petro’s coalition in regional elections would dampen political capital for pushing a number of controversial reforms through Congress.

Voting on Sunday for mayoralties and governorships saw opposition candidates beat those backed by Petro, whose administration ends in 2026.

Petro, Colombia’s first leftist president, has seen a sharp deterioration in approval ratings, according to opinion polls.

He has been beset by challenges, including the breakdown of the government’s coalition in Congress and the loss of several close allies over investigations into alleged influence peddling and abuses of power, while his eldest son will face trial for alleged crimes of illicit enrichment and money laundering.

The Colombian currency appreciated 1.19% to 4,060 pesos to the dollar, its highest level in five weeks while the MSCI Colcap index on Colombia’s stock exchange rose 0.50% to 1,099.33 points.

TES domestic public debt bonds maturing in February 2033 were valued at a yield of 11.859%, versus 11.93% on Friday’s close.

Petro is pushing a raft of reforms through Congress, concerning pensions, health, and labor, which have caused uncertainty among business owners and investors.

The proposed pension reform has caused uncertainty among the finance sector because if approved, it would see the migration of billions of dollars of savings from privately run funds to state-owned Colpensiones, which would affect capital markets.

Sergio Olarte, Scotiabank’s chief economist in Colombia, said Sunday’s result will force Petro to further negotiate the reforms.

“The possibility of passing overtly structural reforms is very difficult because it’s not going to be a fight between right and left,” he said. “The majority of regional leaders are not extreme and that takes away the power of Petro’s extremist speech.”

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

5 months ago

December 26, 2023

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.

The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.

Economy

China identifies second set of projects in $140 billion spending plan

Published

5 months ago

December 25, 2023

China identifies second set of projects in $140 billion spending plan

© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo

SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.

With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.

The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.

China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.

The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.

“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.

The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.

($1 = 7.1315 renminbi)

Economy

Russian central bank says it needs months to make sure CPI falling before rate cuts -RBC

Published

5 months ago

December 25, 2023

Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.

“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.

Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.

“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.

The bank will next convene to set its benchmark rate on Feb. 16.

The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.