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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Factbox: Marina Silva’s economic proposals for Brazil

August 21, 2014

Brad Haynes – Reuters, 8/20/2014

Brazilian presidential candidate Marina Silva has little experience with economic policy, but her advisers promise a more orthodox, business-friendly approach than leftist President Dilma Rousseff has taken.

Eduardo Giannetti da Fonseca, an economist and top adviser to Silva since her 2010 presidential bid, has called her economic platform very similar to that of centrist candidate Aecio Neves, with whom she is running neck and neck for second place in a recent poll.

Giannetti says the main points of her economic platform will include:

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Marina Silva becomes formidable opponent in Brazil poll

August 21, 2014

Wyre Davies – BBC News, 8/20/2014

It was hardly looking like a cliff-hanger.

Some accused it of being predictable and even boring – a presidential election in which the incumbent was all but guaranteed of being re-elected without, perhaps, even the need for a second round of voting.

But then tragedy intervened and changed everything.

We simply do not know what kind of president Eduardo Campos, the presidential candidate for Brazil’s Socialist Party who was killed in a plane crash last week, would have been.

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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’s Central Bank Takes Action As Economic Outlook Worsens

August 21, 2014

Kenneth Rapoza – Forbes, 8/20/2014

Brazil’s Central Bank injected another $12 billion into the economy on Wednesday following analyst projections that this year’s GDP will print at just 0.79%.

This is the second time the Central Bank has provided some form of stimulus to lenders. In July, it provided around $21 billion to banks to induce lending.

Brazilian equities have been on a tear lately no matter what the economic fundamentals suggest. The iSharesMSCI Brazil (EWZ) exchange traded fund is up 6.07% in the past five days, clobbering the benchmark MSCI Emerging Markets index by roughly 500 basis points.

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Silva Attacks Rousseff’s Record to Start Brazil Presidential Bid

August 21, 2014

Maria Sergio Lima – Bloomberg, 8/20/2014

Marina Silva began her campaign as the Brazilian Socialist Party’s presidential candidate by criticizing incumbent Dilma Rousseff’s management of Latin America’s biggest economy while also pledging allegiance to positions taken by predecessor Eduardo Campos.

A week after Campos died in an Aug. 13 plane crash, the PSB yesterday chose Silva, 56, to take over his candidacy and tapped Beto Albuquerque to be her running mate. According to the first poll taken since Campos’s death, Silva would push the Oct. 5 election to an Oct. 26 second-round ballot.

In her first news conference as the PSB’s candidate, Silva decried the low growth, inflation (BZPIIPCY) and high interest rates that undermine the reduction of inequality and hamper Brazil’s economic development. Saying she has long “defended fiscal responsibility,” Silva repeated her commitment to inflation targeting, a floating exchange rate and the primary surplus while calling Campos a “defender of formal central bank autonomy.” She also declared that government mistakes in energy policy had proven expensive for Brazilians.

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A New Entry Is Shaking Up Brazil’s Vote

August 21, 2014

Simon Romero – The New York Times, 8/20/2014

As the daughter of impoverished rubber tappers in the far reaches of the Brazilian Amazon, Marina Silva learned how to read as a teenager and worked as a maid before entering politics as an icon of the environmental movement. Now, with a trajectory appealing to big parts of Brazil’s electorate, Ms. Silva is stirring an acutely competitive presidential race.

After the plane crash last week that killed Eduardo Campos, the scion of a powerful political clan in northeast Brazil, Ms. Silva was chosen on Wednesday to take his place as the candidate of the Brazilian Socialist Party, challenging the ambitions of the leftist incumbent, President Dilma Rousseff, and Aécio Neves, a top challenger and favorite of the business establishment.

Leaping into the race with poll numbers suggesting she could edge past Ms. Rousseff in a second round of voting, Ms. Silva, 56, is emerging as one of the most disruptive figures in Brazilian politics in a generation, luring coveted support from Brazil’s fast-growing evangelical Christian population, young well-educated voters in big cities and some prominent business executives.

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Exclusive: Brazil’s PSDB party would support Silva in runoff

August 20, 2014

Brian Winter – Reuters, 8/20/2014

The Brazilian Social Democracy Party (PSDB), the country’s biggest opposition group, would formally support environmentalist Marina Silva in a runoff vote for the presidency if its own candidate fails to qualify, a party source told Reuters.

Such an alliance would reduce President Dilma Rousseff’s chances of winning a second term by bringing together large, disparate groups of voters who are clamouring for change after more than a decade of Workers’ Party rule.

The election is being closely watched by investors who are also hoping for a change in government after almost four years of stagnant growth and state intervention in the economy under Rousseff’s left-leaning administration.

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Former Brazil President Lula Campaigns for Dilma Rouseff’s Re-election

August 20, 2014

Hispanically Speaking News, 8/19/2014

Former President Luiz Inacio Lula da Silva, one of Brazil’s most popular politicians, came all-out Tuesday in favor of the campaign to reelect his successor, Dilma Rousseff, assuring voters they can support her without qualms.

With the campaigns for the Oct. 5 elections starting Tuesday on television, the ideal medium for getting political messages across in Brazil, Lula burst onto the small screen with a powerful message in favor of a second four-year term for his political protege.

“Everyone knows that my second term was better than the first” and “that’s how it will be with Dilma,” Lula said, appealing to what Brazilians remember about his 2003-2011 tenure.

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Silva Economy Adviser Warns Against Brazil Currency Intervention

August 20, 2014

Paula Sambo – Bloomberg, 8/19/2014

Policies to control inflation with a stronger real pose a threat to Brazil’s economy, Eduardo Giannetti, who is economic adviser to potential presidential candidate Marina Silva, said.

“The currency intervention in Dilma’s government was to contain domestic prices,” he said today at an event in Sao Paulo about the administration of Dilma Rousseff, cautioning that he was speaking on his own accord and not as Silva’s adviser. “That is an action that generates distortions and is a worrying framework for the country.”

Silva, 56, became the wild card in Brazilian politics after her running mate, presidential candidate Eduardo Campos, died in a plane crash last week. She replaced Senator Aecio Neves as second in polling for the Oct. 5 vote and is statistically tied with Rousseff in a possible runoff, according to public opinion research company Datafolha.

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