Even the Carnival Can’t Save Brazil From a Slump

Holly Ellyat – CNBC, 02/11/2013

As raucous Latin American rhythms, colorful processions and street parties go, Brazil’s Carnival is among the best, but Citigroup’s strategy team is questioning whether the party for Brazil’s economy could be over before it’s really begun.

The five days of celebrations began over the weekend against a backdrop of national pride and optimism. The main carnival in Rio de Janeiro contributes $628 million to the country’s economy and has added around 250,000 temporary jobs. The world-famous samba parade of exotically dressed “carnival queens” and bands generated $42.8 million in ticket sales, advertising and TV rights.

But the celebrations come as economic growth slowed to less than one percent in 2012. At the same time, inflation risks are rising and the currency has strengthened – providing warning signs that all is not well for the “BRIC” economy.

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Biggest BRIC Buybacks Driven by Earnings Miss: Corporate Brazil

Lucia Kassai and Ney Hayashi – Bloomberg, 8/21/2012

Brazilian companies from JBS SA (JBSS3) to Banco do Brasil SA (BBAS3) are planning to buy back 2.4 billion reais ($1.2 billion) of stock, the most among the world’s four largest emerging economies, after shares faltered and earnings disappointed investors.

Of the 430 companies that trade in Sao Paulo, at least 12 have announced repurchases since the end of the second quarter, compared with three in India, one in Russia and none in China, according to data compiled by Bloomberg. A year earlier, 10 Brazilian companies bought back shares in the period.

Thirty-six companies out of the 58 listed on the Bovespa index that are tracked by Bloomberg reported earnings that missed forecasts in the second quarter, while sales trailed estimates by the most since 2009. The index has plunged 13 percent from its 2012 intraday high on March 14.

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Russian GDP Beats Brazil’s Even As Investment Slips

Forbes, 8/20/2012

Russian GDP growth in percentage terms surpassed Brazil in the first half of the

year. And while this is no surprise, and the market still prefers Brazil’s diverse economy over Russia’s any day of the week, Brazil is now dead last in terms of economic growth in the big four emerging markets.

Russian statistical agency, Rosstat, said the economy grew 4.4 percent in the first half, on par to what the government is hoping for by year’s end. Meanwhile Brazil’s economy grew by around 1 percent in the first half of the year.  India is also sluggish, growing under 6 percent and China’s GDP is consistently being revised downward from 8 percent for the year to around 7.5 percent to 7.9 percent by most economists estimates. In April, the Russian Economic Development Ministry cut its forecast for Russia’s economic growth in 2012 from 3.7 percent to 3.4 percent, suggesting expectations for a worsening second half.

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Brazil’s Scrapped IPOs Follow Worst Stock Rout in BRICs

Ney Hayashi and Lucia Kassai – Bloomberg, 7/24/2012

Brazilian companies are canceling initial public offerings at the second-highest rate among the biggest emerging markets as slowing economic growth makes the country’s benchmark stock index (SHCOMP) the worst performer this year.

Three IPOs in Brazil were scrapped this year, while seven were announced, compared with zero withdrawals in China and less than a third of offerings this year in India, data compiled by Bloomberg show. One initial share sale was announced in Russia as well as one cancellation. Brazilian companies raised a combined 3.88 billion reais ($1.89 billion) in 2012 through IPOs, down 40 percent from the same period a year ago.

Louis Dreyfus Holding BV’s Biosev SA (BSEV3) sugar-processing unit became the latest company to scrap its initial share sale when it canceled a 1.14 billion-real offering last week because of “market uncertainties.” The Bovespa stock gauge has dropped 23 percent from this year’s high on March 13 as Europe’s debt crisis worsened, prices for commodity exports fell and analysts cut their economic growth forecasts to the weakest since 2009.

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Who’s who among the ‘new’ aid donors?

IRIN/Guardian, 10/25/2011

As the global economy begins to be reshaped by the new emerging powers, so too is the aid industry. IRIN looks at the rise of the Bric countries, with South Korea joining counterparts Brazil, Russia, India and China as the new donors.

Brazil

Brazil gave $35.6m in humanitarian aid in 2010, and $4bn in foreign assistance – equivalent to Sweden or Canada.

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Mubadala sets its sights on Brazil

Asa Fitch – The National, 05/02/2011

Mubadala Development is studying several possible investments in Brazil as its strategy shifts towards emerging markets.

Any investments in Brazil’s energy, aluminium, aerospace and agriculture sectors would be the first in Latin America for Mubadala, a strategic investment company owned by the Abu Dhabi Government.

Waleed al Muhairi, the company’s chief operating officer, travelled with a delegation to Brazil last week to discuss Mubadala’s plans there.

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The BRIC countries hold a summit meeting

The Economist, 04/11/10

THE leaders of Brazil, Russia, India and China (collectively known as the BRICs) are set to hold a two-day summit meeting in Brasília starting on Thursday April 15th. The four developing-market giants held a first summit in Russia last year, where they flexed their growing international muscle by raising the possibility of a new global reserve currency to replace the dollar. This time the BRICs are likely to renew calls for increased representation and voting rights for emerging economies in international financial organisations such as the IMF.

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Brazil takes off

The Economist, 11/13/09

Now that scepticism looks misplaced. China may be leading the world economy out of recession but Brazil is also on a roll. It did not avoid the downturn, but was among the last in and the first out. Its economy is growing again at an annualised rate of 5%. It should pick up more speed over the next few years as big new deep-sea oilfields come on stream, and as Asian countries still hunger for food and minerals from Brazil’s vast and bountiful land. Forecasts vary, but sometime in the decade after 2014—rather sooner than Goldman Sachs envisaged—Brazil is likely to become the world’s fifth-largest economy, overtaking Britain and France. By 2025 São Paulo will be its fifth-wealthiest city, according to PwC, a consultancy.

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FACTBOX-The IMF common reserve proposal and BRIC savings

Reuters, 11/05/09

International Monetary Fund chief Dominique Strauss-Kahn has proposed creating a common pool of reserves to help rebalance the world economy by dissuading emerging market countries from accumulating massive foreign exchange reserves. Such ideas are likely to come into play as Group of 20 nations develop a plan to build a more balanced global economy, which would shrink surpluses in export-rich countries such as China and boost savings in debt-laden nations like the United States.

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Brazil, India, China currencies seen strengthening

Luciana Lopez and Anurag Joshi-Reuters, 10/09/09

Brazil’s real and India’s rupee should hold firm into 2010 as investors look to emerging markets for growth instead of developed economies, a Reuters poll of BRIC nations’ currencies showed on Thursday.

Brazil’s currency, the real BRBY, is expected to fluctuate in a narrow range and trade at 1.76 per dollar, near current levels, a year from now, according to the median of around 50 forecasts taken for that currency.

The Indian rupee INR=IN will end the 12-month period at 45.3 per dollar, compared with a little over 46 to the dollar currently, according to the median of around 40 forecasts.

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