How Argentina’s Debt Crisis and Brazil’s Civil Unrest are Eclipsing Latin America Opportunities

August 21, 2014

Tim Pennington – International Business Times, 8/21/2014

News stories emanating from Latin America rarely frame the region’s economy in a positive light.

This summer’s excellent World Cup – while not eclipsed on the field – was against a backdrop of strikes and civil unrest in Brazil’s major cities. Similarly, Argentina’s President Cristina Kirchner and her government were forced to default on their debts for a second time in thirteen years.

The negative image that these high-profile stories create does not do justice to the economic transformation taking place in Latin America or the investment opportunities the region now offers to business.

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Petrobras Would Make The Most Of Brazil’s Escalating Natural Gas Demand

August 21, 2014

Khuldune Shahid – Seeking Alpha, 8/21/2014

Petroleo Brasileiro Petrobras (NYSE:PBR), or Petrobras, announced on Tuesday that it had extended its agreement with Bolivian state-owned firm YPFB, which would continue supply natural gas to a thermoelectric power plant in Brazil till December 31, 2016 as a part of the Gas Supply Agreement (GSA). The deal has also provided clarification with regards to the various interpretations of the GSA via inter-party compensations.

The agreement between PBR and YPFB is of advantage for both the concerned parties, because not only does it offer short-term incentives, the deal also provides the Brazilian company the opportunity to enhance production and exploration of Bolivian natural gas. The deal ensures that any natural gas that PBR would extricate would be liable for preferable allocation to Brazil.

The deal’s positive impact on PBR’s Q3 numbers isn’t going to be tangible, with the Brazilian firm set for a $268 million loss. Even so, the calendar year’s result should witness positivity for PBR with an expected $128 million profit.

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Brazil lists 71 companies to prepare railroad concession studies

August 12, 2014

Daniel Bland – BN Americas, 8/11/2014

Brazil’s transport minister Paulo Sérgio Passos signed six decrees authorizing 71 private sector companies to carry out technical viability studies for the construction and eventual concessions of six railroad stretches totaling 4,676km, following a call for expressions of interest last month.

For a list of the companies, as published in the federal government’s official gazette, visit this page.

The companies will have six months to prepare studies for four of the stretches, which run from Açailândia (Maranhão state) to Barcarena (Pará state), Anápolis (Goiás) to Corinto (Minas Gerais), Belo Horizonte (Minas Gerais) to Guanambi (Bahia) and Estrela D’Oeste (São Paulo) to Dourados (Mato Grosso do Sul). They span 457km, 775km, 845km and 659km respectively.

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Ibovespa Falls With Petrobras as Recent Gains Deemed Excessive

August 12, 2014

Denyse Godoy – Bloomberg Businessweek, 8/12/2014

The Ibovespa fell, led by oil producer Petroleo Brasileiro SA, amid speculation that recent gains were excessive considering prospects for Brazil’s economy.

Banco Bradesco SA led financial stocks lower. Insurance group BB Seguridade Participacoes SA rallied after reporting profit that beat analysts’ estimates.

The Ibovespa fell 0.3 percent to 56,458.10 at 11:22 a.m. in Sao Paulo. Brazil’s benchmark index has rallied 26 percent from this year’s low on March 14 as Petrobras jumped on speculation that a new government will reduce intervention in state-controlled companies.

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BRICS are drifting away from US and European monetary structures

August 12, 2014

Mike Kane – Market Realist, 8/12/2014

The BRICS countries (Brazil (EWZ), Russia, India (EPI), China (FXI), and South Africa) are slowly but surely drifting away from the 20th Century monetary and political structures setup by the U.S. (SPY) and Europe (EZU), as characterized by Russia’s G8 membership being revoked in the wake of the events in Crimea. The G7, as it is now known, is at odds with Russia’s Vladimir Putin, but that rift applies to the entire BRICS coalition — a group that seems to be growing stronger and more focused as leader of the Emerging Markets.

There have been a slew of recent moves within the BRICS network. Russia and China inked a $400 billion, 30-year natural gas partnership, forged a bilateral inter-bank agreement to deal in local currencies, and announced plans to create a new credit rating system to counter the Western agencies. China is diversifying away its U.S. dollar exposure, China and Brazil finalized a local currency swap, and leaders from the group of nations just met for the sixth annual BRICS Summit in Brazil.

According to a government report released in June, China’s (FXI) holdings of U.S. Treasuries (TLT) declined for the third straight month in June 2014. China held 1.26 trillion in U.S. debt as of April 30, 2014, according to the report. This is an $8.9 billion decline from March. This fact is particularly significant given that China (FXI) is the largest foreign holder of U.S. Treasuries (IEF). According to data compiled by Bloomberg, analysts have seen this decline in holdings for three consecutive months.

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Brazil sugar maker Sao Martinho’s profit jumps 75 percent

August 12, 2014

Reese Ewing – Reuters, 8/12/2014

Sao Martinho, a Brazilian sugar and ethanol producer, reported a quarterly net profit of 60.7 million reais ($27 million), up 75 percent from a year earlier, due to improved cane crushing volumes.

In its earnings report released late Monday night, Sao Martinho said crushing volumes had increased 17 percent over the first three months of the 2014/15 season due in part to dry weather since it started in April.

The results for the quarter that ended in June also benefited from the additional cane from the Sao Carlos mill, which Sao Martinho had acquired. The company also said it had mature cane left over from the previous season, which helped quarterly crushing.

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Brazil’s Truth Commission looking into foreign companies helping the military regime crackdown on ‘subversives’

August 12, 2014

MercoPress, 8/11/2014

Newly-discovered documents suggest big international companies aided Brazil’s military regime in its war against ‘subversives’ and union activists. Academics and human rights activists have long believed that local and multinational companies helped Brazil’s military regime in their crackdown on “subversives.”

Now, the country’s Truth Commission, which is investigating crimes from the era believe they have discovered evidence that proves the link.

A government-appointed commission investigating abuses during Brazil’s 1964-1985 dictatorship has found documents that it says show how companies secretly helped the military identify suspected “subversives” and union activists on their payrolls.

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Google ranked best tech workplace in Brazil

August 12, 2014

Angelica Mari – ZDNet, 8/11/2014

Google is the best technology employer in Brazil — and the majority of the other top 10 employers are also foreign, according to a list by The Great Place to Work Institute of the best companies to work for in the country.

The ranking considered 220 organizations which employ around 287,000 people in Brazil. Google and the runner-up, Brazilian document management firm Acesso Digital, have maintained their positions in relation to last year’s list.

The change in the top three is the appearance of Microsoft, now ranked as the third best tech employer in Brazil, replacing local engineering and software company Radix.

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Brazil readies big push on solar energy but companies are wary

August 12, 2014

Bernard Orr – Reuters, 8/11/2014

Grappling with its worst energy crisis in more than a decade, Brazil is making its first big move to develop a local solar power industry that could help reduce its dependence on a battered hydro power system.

In October, Brazil will hold an auction to negotiate energy to be produced exclusively by solar farms, the first ever of the kind in the South American country.

Power companies have registered some 400 projects for the auction, but many remain wary of the outlook for solar power in Brazil and say they need more clarity on investment conditions and financing before signing any deals.

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