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There is only one, real story this week. The resounding defeat of the Republicans in the US mid-term elections. My former Oxford classmate, David Rose, called me last Wednesday morning. “I feel I contributed to the Democrats’ victory,” he purred. David, a journalist for Vanity Fair, had interviewed some of the leading neocons for the magazine.

Textile group Varteks cuts loss by 74% y/y in Jan-Sep. The textile group Varteks announced that its consolidated net loss declined by 74% y/y to HRK 4.7mn (EUR 0.6mn) in Jan-Sep. The total revenues of the group increased by 2% y/y to HRK 320.6mn while total expenses dropped by 2.1% y/y to HRK 325.1mn. In Q3 alone, the group posted a profit of HRK 1.1mn, which represented a marked improvement as compared to the loss of HRK 5.7mn in the same period last year. The parent company Varteks posted a loss of HRK 1.9mn in Jan-Sep, which was eight times less than the negative result a year ago. The total revenues of the company remained virtually unchanged at HRK 309.1mn while total expenses fell by 4.5% y/y to HRK 311mn. Exports amounted to HRK 145.2mn in Jan-Sep, and the largest share was to UK (EUR 4.9mn) while the largest growth, of 93.5% y/y to EUR 2.1mn, was registered with Sweden .

There is only one, real story this week. The resounding defeat of the Republicans in the US mid-term elections. My former Oxford classmate, David Rose, called me last Wednesday morning. “I feel I contributed to the Democrats’ victory,” he purred. David, a journalist for Vanity Fair, had interviewed some of the leading neocons for the magazine.

Moody’s changes outlook on Ukrainian bonds to positive. Moody's Investors Service changed the outlook on Ukraine 's bonds to positive from stable, citing higher political stability that has increased the likelihood of prudent and consistent economic policy. Moody's changed Ukraine's "B1"-rated local and foreign currency medium-to-long term government bonds and its "B2"-rated foreign currency bank deposit ceiling to positive from stable. The rating outlook for Ukraine 's "Ba3" foreign currency country ceiling for bonds was also changed to positive from stable.

Mutual funds’ assets add 15.6% y/y to EUR 8.8bn at end-September. Assets in domestic and foreign mutual funds amounted to CZK 248.1bn (EUR 8.8bn) at end-September, representing a 15.6% y/y growth, Association for the Capital Market (AKAT) statistics showed. In Q3 alone, clients’ assets added 3.8%. As of end-Sep, foreign funds added 6.1% q/q to CZK 104bn, while domestic funds preserved their larger share at 58.1%. Assets in money market funds decreased by 5.1% y/y (1.5% q/q decline) to CZK 96.5bn, while those in bond funds dropped by 7.7% y/y (1.2% q/q) to CZK 40.7bn with their development being negatively affected by low yields. On the other hand, all other types of funds reported both y/y and q/q growth. Mixed funds soared by 32.3% y/y (8.8% q/q) to CZK 34.8bn, secured funds surged by 82.4% y/y (17.2% y/y) to CZK 31.1bn, equity funds increased by 47.4% y/y (10.3% q/q) to CZK 31.1bn, while funds of funds reported the smallest amount at CZK 12.8bn at end-Sep, up by nearly 3 times y/y and by 6.7% q/q.

RUR vs FX basket appreciation flat in m/m terms in October. According to CBR data, RUR vs. trade basket appreciation was 0.0% m/m in October, following a downward revised 0.2% m/m appreciation in September. In ytd, terms, RUR appreciated by 8% in October against 7.9% in September and 9.3% in Oct 2005. RUR strengthening vs. EUR slowed down to 12.6% y/y, while RUR vs. USD strengthening picked up to 9.6%. In nominal terms, USD gained 12 kopeks to 26.86. EUR depreciated against RUR by 20 kopeks to 33.90. Real Exchange Rate Dynamics Oct 05 Sep 06* Oct 06 % y/y % m/m % ytd % y/y % m/m % ytd %y/y %m/m % ytd RUR against basket of currencies 7.5 0.9 9.3 9.9 0.2 7.9 9.8 0.0 8.0 RUR/EUR 10.8 1.9 16.4 12.9 0.6 6.0 12.6 1.1 7.1 RUR/USD 12.0 -0.2 2.1 9.0 0.7 12.1 9.6 0.4 12.5 Source: CBR * - revised data

CBR may cut refinancing rate by 0.25-0.5pps. CBR may cut the refinancing rate by 0.25-0.5pps, CBR Deputy Chairman Alexei Ulyukayev said during a meeting with State Duma’s committee on economic policy. He said the reduction is possible if CPI inflation will not exceed 8.5% y/y in 2006. Another required condition is that real RUR appreciation will not exceed 9% in 2006. Ulyukayev said that according to CBR’s estimations, inflation may reach more than 8.5% however would not exceed 9%. Presently, the refinancing rate is set at 11%. The last reduction was made in Jun 2006, when the rate was cut by 0.5pps.

Fuel taxes to grow slightly above baseline projections. The leaders of the three ruling parties decided yesterday to raise the excise taxes for car fuels slightly above the initial plan approved the cabinet for next year. The change was proposed by the finance ministry after complains of the second ruling partner NMS-II that the budget of the defence ministry was cut to 2.3% of GDP. The ministry projects that the new excise tax would raise the line fiscal revenues by BGN 51mn (0.1% of GDP) and would satisfy the demand of NMS-II for raising defence expenditures to 2.4-2.5% of GDP. The overall effect on retail fuel prices would be in the range of 6-7% instead of the initially estimated 3-4%. The finance ministry explains that the new tax proposal moves country's commitments to the EU ahead of schedule as earlier pledged hikes for 2007 and 2008 will be concentrated in the first year. This could eventually help follow-up efforts for meeting the price criterion for joining the eurozone, as the reference period for evaluating the country's inflation would most likely start in 2008.

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Pension fund manager TRUSTFUND reports USD 467mn administered assets. TRUSTFUND’s Chairman, Alhaji Rufai Ahmed announced that it is Nigeria ’s largest Pension Fund Administrator ( PFA ). Ahmed further said that TRUSTFUND has over NGN 60bn (USD 466.6mn) under management. Ahmed further informed that TRUSTFUND is also the best capitalised PFA ; with a balance sheet size of NGN 800mn.

Monetary base rises by 3.8% m/m to HUF 2,632.3bn in October. The monetary base rose by 3.8% m/m to HUF 2,632.2bn in October, according to the preliminary data of the central bank. The main growth driver was monetary financial institutions’ overnight deposits, which added HUF 76.7bn m/m to HUF 99.8bn. The other two components of M0 also increased – currency in circulation was up by HUF 7.8bn, while MFIs’ current account balances rose by HUF 12.6bn to HUF 618.5bn in October. The NBH commented that the surge in overnight deposits was linked to credit institutions’ temporarily liquidity problems and thus it was unlikely to be sustained. The annualised m/m growth of M0 accelerated to 24.8% in October compared to 20.6% in September. The central bank added that the net position of the government deteriorated by HUF 125.3bn in October on the back of HUF 129.2bn decline in the sub-sector’s deposits and HUF 3.9bn drop in the loans outstanding.