cuba's risky market

Cuba’s risky market is no basket caseBy David Stevenson Financial Times

Imagine all those well-educated Cubans standing in front of the gates marked “Capitalist Goldrush Starts Here”. Outside sits an army of hot money investors ready to stampede the world’s 17th largest island. Fidel Castro has stepped down in favour of brother Raul, with the unstated promise of “liberalisation” at some future point. But there appears to be a hitch or two. The first is that Cuba was, and still is, socialist and does not boast an evil stock market. As hitches go, that is a big one. The second bigger hitch is that there is not a convincing way of capturing that investment story in a direct way. There is an American mutual fund called the Herzfeld Caribbean Basin Fund, (Cuba) which is a closed-end fund trying to play the Cuban story by investing in stocks of the Caribbean Basin Countries. It is a nice idea but in reality 65 per cent of the fund is invested in US stocks, Florida-based stocks in particular – real estate, infrastructure, media, transport. The problem, apart from the yo-yoing share price, is that the fund does not invest in Cuba as that is against the law in the US. There is also a Canadian company called Leisure Canada, which is active in the hotels and property sector, but information on trading is a bit thin (www.leisurecanada.com).Sherritt International looks more interesting. It is another Canadian outfit, but boasts a successful mining operation in Cuba and owns a third of Cuban electric utility Energas. It is an impressive outfit but it is not a pure Cuba play as it also boasts big assets in Canada, Madagascar and Spain. The rest of the very short list of usual suspects includes huge Spanish and Brazilian outfits that do well out of Cuba (Sol Melia, Repsol, Altadis and particularly Petrobas) and some unlikely potentials in the shape of Carnival Corp and Royal Caribbean Cruises, which may apparently benefit from more cruises to Florida. With the exception of Sherritt, I cannot say that any of these shares strike me as an appealing direct play on Cuba, which is a pity because Cuba is no basket case. It has a “sort of” functioning economy that has the real potential to turn into an authoritarian social democratic market state. Depending on who you talk to, economic growth in Cuba has been chugging along at between 8 and 12 per cent per annum and private sector employment has almost tripled since 1981. There is also a fair bit of resources potential – 59 oil exploration blocks in Cuba’s Gulf of Mexico have been made available to foreign partners and there could be as much as 5bn barrels of oil in the zone, although no significant discoveries have been made so far. Cuba also holds vast nickel reserves. All this should not blind investors to the reality that tourist revenues have been declining and the economy has been running a trade deficit that hit $1.1bn in 2005. Cuba also has lots of debt – there is at least $7.8bn (£3.9bn) active debt (the stuff it is willing to pay) plus a whole load of non-performing debt it has defaulted on. Great potential, half-decent economy, but lots of over-powerful socialists, keen to keep a tight control on foreign currency earnings. These bureaucrats can easily ruin an investment overnight, although Cuba’s Foreign Investment Act does guarantee the repatriation of profits in freely convertible currency. So how do we access this promising but risky story? Step forward my latest small discovery in wonderful world of adventurous investing, Ceiba Investments, a Channel Islands-listed offshore fund that has been flying under the radar for the past few years.As one investor put it “this is the only credible play if you want to invest in this space . . . there’s simply no other real choice”. It is Barcelona-based but has offices in Cuba, has real, tangible investments on the ground and boasts investment trust SVM Global and hedge fund Value Catalyst as investors. It also takes a novel but risky approach – focusing on large-scale property projects in the business and tourist sector. Investments include a $36m beach hotel about to start construction plus Inmobiliaria Monte Barreto. This joint venture owns the Miramar Trade Centre in Havana, 16 buildings owned in partnership with the Cuban government. This centre is growing and is expected to hit 150,000 m2 although current book value (at cost) is already $135m. There is also a ragbag of other interests that include a new office and apartment block, loan notes to the Cuban Tourist ministry, plus plans for a hotel in Havana, a beach resort on Cayo Largo and a trendy magazine titled H.You are essentially making a three-to-five year bet on Ceiba’s investments – the shares’ net-asset value has not moved much in the past few years primarily because the managers have been in development mode. These projects have potential (the company already pays out a yield of just over 6 per cent per annum) but they could be undone overnight by administrative fiat. I am also more than a little worried about the relative lack of diversification – I would be happier seeing maybe five or seven big investments including housing projects as well as some service companies with real turnover. Also, there are rumoured to be some global investment banks readying Cuban investment funds and they could snaffle up Ceiba’s managers, leaving the fund in the lurch. But the mismatch between the share price (about€1.15) and the flat NAV (about €0.67) tells you the market believes these property assets are hugely under-valued. Add the possibility that a future US Democratic president could start lifting the embargo in 2009 and the certainty that Ceiba will hit Aim in the not too distant future, and you have a potentially interesting but risky medium-term bet.



Cuba supo construir "moderno estado democrático": GorbachovPor Mario Osorio Beristain. Enviado

Turín, 28 Mar (Notimex).- Cuba hizo una revolución popular que ha sabido construir un moderno estado democrático, dijo el último presidente de la extinta Unión Soviética, Mijail Gobachov, al inaugurar aquí una conferencia internacional. "Tengo un gran respeto por Cuba y su pueblo, que hicieron una revolución popular que ha sabido construir un moderno estado democrático", dijo Gorbachov a la prensa reunida en la Fundación CRT de Turín. El considerado padre de la Perestroika abrió en la ciudad de Turín la conferencia internacional denominada "De la alarma global a la política global", patrocinada por organizaciones como el World Political Forum (de la que Gorbachov es presidente) y el Club de Roma. Señaló que el gobierno cubano debió enfrentar condiciones difíciles, como el bloqueo económico por parte de Estados Unidos, que en cierta manera justificaron el autoritarismo, dijo. Pero resaltó algunos de los logros de la revolución, como su "excelente" sistema de sanidad pública o su avance en el campo de la biología. También abogó por poner fin al embargo contra la isla, que dura ya medio siglo y opinó que "los cubanos son hermanos, gente seria que ama su tierra". Gorbachov dijo conocer "muy bien" al actual presidente cubano, Raúl Castro y expresó su estima por el líder histórico Fidel Castro. "Conozco muy bien a Raúl Castro; fue mi huésped en el Cáucaso, tengo una fotografía suya a caballo, con el indumento típico caucásico", dijo. Gorbachov también recordó que ha visitado México varias veces. "Un país como México, con su historia, con sus paisajes y sus cactus. Creo que sin este país el mundo estaría manco", apuntó. En la conferencia internacional, que durará dos días, personalidades de todo el mundo analizarán los principales retos que la humanidad debe enfrenar en los próximos años. Entre ellos se ubica el cambio climático, la crisis de los ecosistemas, el consumo excesivo e insostenible de energía o la devastación de los recursos hídricos. La idea es indicar soluciones posibles y analizar las consecuencias "dramáticas" del calentamiento climático que, según los organizadores, causará "gigantescas" migraciones de refugiados ambientales, además de conflictos locales y regionales.

Cuba to extend its telecommunication services

THE Cuban Telecommunications Company (ETECSA), has announced that, via an investment process, it is now able to supply the population with a cell phone service, introduced into the country in a limited form in 1991.In a note published in the national press, ETECSA states that it has given priority to an investment program that will make it possible to begin to extend certain services as part of the development of telecommunications on the island.It adds that the investment is to be based on credits and technology forthcoming from friendly countries.Priority will be given to the municipalities with the lowest phone density and to areas with more than 300 inhabitants that are still lacking a telephone service.The first stage will consist of solutions for a collective use of the service. In relation to cell phones, these will be offered on the basis of personal pre-paid contracts. The service is available in convertible Cuban pesos (CUC) "to defray the development of cable connectivity, which has an important role in the computerization of society, as well as to facilitate the introduction of new telephone services in national currency."The national press added that the Ministry of Informatics and Telecommunications has announced that it is about to publish regulations to assure the instigation and control of the program in an orderly and progressive way.



Los amos de la prensa por Ernesto Carmona*La enorme variedad de diarios, revistas, radios y otros medios de comunicación, a cual damos el calificativo de prensa, lejos de constituir una riqueza por su aparente imagen de variedad informativa, constituye más bien una uniformidad de la información, controlada por unos pocos y poderosos grupos comerciales. Esto constituye un nueva manera de dominación, por la influencia y control que ejercen estos sobre las conciencias de las poblaciones. Este fenómeno nunca antes visto en la evolución de la historia humana. Nuestro colega Ernesto Carmona, periodista chileno nos describe las ramificaciones y otros tentáculos de estos grupos patronales en América Latina.http://www.voltairenet.org/article156208.html,



Fidel Castro, the first superdelegate http://www.aljazeera.com/news/newsfull.php?newid=97768,


Yoa-ni chicha ni limoná, pero amiga de terroristas Yoani Sánchez, la blogera cubana, matiza el supuesto bloqueo a su página. J.M. Álvarez

Desesperados en Internet "Entonces, ¿qué hicieron estos exquisitos demócratas, hijos de papá? En un blog que llamaron El Potro Salvaje empezaron a publicar los IP de los autores que defendían a la Revolución, para que todos los editores de su calaña los bloqueasen. ¿Libertad de expresión?" Enrique Ubieta Gómez

Una pañoleta roja contra el Plan Bush Entre los ítems que nos ofrece Bush para una "Cuba libre" está no sólo que el capitalse adueñe del aulita azul de mi hijo, y que reconvierta esa vieja edificación en propiedad de alguien. Piensan privatizar la educación y con ella privatizan la risa prendida de estos niños que además de ser vecinos, todos, absolutamente todos aprenden las mismas letras y los mismos números. Celia Hart Santamaria