Wednesday, 31 August 2011

The Cardin-Ludgar provision to help eliminate corruption in frontier markets

Frontier markets recieved a big boost with passage of the Wall Street Reform Conference Report. In this the Senate approved a measure, authored by U.S. Senator Benjamin L. Cardin, Chairman of the Commission on Security and Cooperation in Europe, and Senator Richard Lugar to increase transparency in the oil, gas and mining industries.

The Cardin-Lugar Energy Security Through Transparency provision will add stability to markets through greater information and predictability and help protect investors from undue risks associated with corrupt or unstable governments in oil-rich or mineral-wealthy countries.

The provision requires extractive companies listed on U.S. stock exchanges to disclose, in their SEC filings, payments made to governments for oil, gas and mining.

Tuesday, 23 August 2011

Pakistan situations worsens

Violence and disagrements on taxation between the provinces and central government are stressing Pakistan. The central bank governor has resigned, becasue the government has asked the central bank to print money to pay its bills. This is not good. His replacement is a professional banker, but he is an advocate of lower interest rates (focusing on growth not rising inflation). The markets dont like that either. Elections have to be help before Feb/March 2013. The politicians want to buy their victory in the way Musharaf did.

There are shortages in many things. Skills, finance, governance, electricity, gas and water. Against a backdrop of a poor economy, this is a dangerous cocktail.

The 18th amendment to the constitution has not been implemented well (provincial decentralisation) and this is leading to more friction. US/Pakistan relations have also deteriorated a lot, threatening USD 1.5bn of aid a year, some of it already being held back.

The real risk of a military coup is now very high.