9 reasons why Brazil is the new America

July 22, 2013

Steven Perlberg – Business Insider, 07/21/2013

Brazil has something of an identity crisis right now.

As protests continue, the world has been exposed to the massive social unrest in the country over inequality, corruption, and the adverse economics of preparing to host global sporting events like the upcoming World Cup.

Still, as one of the so-called BRIC countries — a term that has become less vogue as investors take a wider look at emerging market countries — Brazil is uniquely positioned to keep growing.

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In Brazil, a reminder of emerging-market risks

July 8, 2013

Tim Gray – The New York Times, 07/06/2013

THE protests in Brazil last month were the latest vivid reminder of the perils of investing in emerging markets. Tens of thousands of demonstrators thronged the streets of São Paulo, Rio de Janeiro and other cities, incited partly by a rising cost of living and a slowing economy. Cars burned. Tear gas billowed. And the Brazilian stock market sank.

Yet Brazil was one of the investment darlings of the last decade — the “B” in the ballyhooed BRIC quartet that also included Russia, India and China. Brazil’s economy at times grew at a rate of more than 5 percent a year. Most years, its stock market rose by double digits — in 2009, it returned more than 100 percent. Millions of people moved from poverty into the middle class, and Brazilian companies, like the oil driller Petrobras and the mining concern Vale, attained international prominence.

So far this decade, though, the Brazilian stock market has been a bust. It has dropped by a cumulative 25.3 percent over the last three years, and it has dragged Latin America stock mutual funds down with it. In the first half of 2013, Latin America funds tracked by Morningstar lost almost 17 percent, on average. Over the last three years through June, they lost 4.6 percent a year, annualized. But over the much longer term, they have still fared the best among emerging-market regional funds tracked by Morningstar, returning 16.7 percent, annualized, over the last decade.

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Protests in Brazil burst bubble: everything is not fine

June 20, 2013

Rasheed Abou-Alsamh – International Business Times, 06/20/2013

The mass street protests that broke out last week in Sao Paulo, and have since spread to other major cities in Brazil, caught many by surprise. Investors and politicians who thought the economic miracle of South America’s biggest country — the headliner of the BRIC group with Russia, India and China — would never end were especially surprised. So were many observers who had bemoaned the passivity of Brazilians in seemingly accepting corruption and overtaxing by their government. The past week’s events have shown that the Brazilian giant, sleeping for so long, has awoken again.

The protests began last week with a demonstration organized by the Passe Livre (Free Pass) movement, a leftist group that wants free public transportation in all of Brazil as its ultimate goal. The announcement that bus fares were being hiked from R$3 (US$1.37) to R$3.20 (US$1.47) was the spark for the march on Avenida Paulista, Sao Paulo’s largest boulevard.

The city’s mayor and the governor of Sao Paulo state, Fernando Haddad and Geraldo Alckmin, both said they would not budge on the price hike and promptly flew off together to Paris to pitch their city as a candidate host of the 2020 World Expo. As the demonstrations grew and continued, they quickly returned home. But it was not until violent clashes between protesters and riot police, using rubber bullets and tear gas on June 13, which left 105 protesters and 12 policemen wounded, that they started to pay attention and soften their stance. On Thursday, Sao Paulo and Rio de Janeiro, the country’s two largest cities, both decided to backtrack and cancel the fare hike.

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Brazil: eager to explore new frontiers in Africa

June 13, 2013

Ruth Costas – BBC Brasil, 06/11/2013

The government and some large Brazilian companies are betting on the opening of new frontiers in the African market.

In recent years, Brazil has increased its economic presence both in Lusophone Africa – mainly Angola and Mozambique – as in South Africa (considered to be one of the more “mature markets” in the region along with North African countries.)

Now, explained Ambassador Paulo Cordeiro, secretary-general of the Ministry of Foreign Affairs for Africa and the Middle East, one of the greatest challenges for Brazilian diplomacy is to create the right conditions so that a growing number of companies explore new investment opportunities in emerging African markets, such as Ethiopia, Nigeria, Sudan, Kenya, Guinea, Tanzania, Senegal and Ghana.

“These efforts are a big part of my work. We are committed to creating the right environment for this expansion to take place, and to convince Brazilian society that the African continent has many interesting opportunities to offer- and not only in Portuguese speaking countries,” said Lamb.

Official initiatives range from programs for military and technical cooperation to projects for expanding the financing of investments in the continent as well as efforts for political rapprochement.

These initiatives work alongside some large Brazilian companies that have been actively seeking out business opportunities in countries that until recently were synonymous with conflict and extreme poverty, interested primarily in opportunities in the infrastructure and natural resources sectors.

According to Cordeiro, the decision announced by President Dilma Rousseff to forgive $900 million dollars of African debt took place amidst these expansion plans.

Financing

In total, 12 countries will benefit from President Rousseff’s decision: Congo, Tanzania, Zambia, Senegal, Ivory Coast, Democratic Republic of Congo, Gabon, Guinea, Mauritania, Sudan, Sao Tome and Principe and Guinea-Bissau –of which only the last two classify as Lusophone nations.

Until recently, Brazilian state-owned banks could not finance investments and trade flows to these countries because of their unsettled debts with Brazil.

This measure will allow the Brazilian Development Bank (BNDES) and Banco do Brasil to finance Brazilian exports as well as investments and infrastructure projects carried out by Brazilian companies (today, almost all BNDES loans for projects in Africa go to Mozambique and Angola.)

“The demand for investment and cooperation called for by African countries is immense,” said Cordeiro. “Tanzania wants Brazilian companies to help in the hydroelectric sector, for example, and Gabon seeks investments in oil. We also have many Brazilian companies interested in participating in this market – but we are still lacking the means to finance such projects.”

According to the Ambassador, in order to solve this problem, proposals were made to BNDES to create a board responsible solely for loans to Africa and Latin America.

“We need to think of appropriate financial instruments for these projects in Africa and understand what their guarantees could be,” stated Cordeiro.

Cooperation

Cordeiro points out that in the field of technical cooperation, the Brazilian Agricultural Research Corporation (Embrapa) already has projects in several African Countries – among them Senegal, Mali and Ghana. In addition, in terms of military exchange, there has been significant Brazilian participation in the training of Namibia’s Navy.

In the past three months, Dilma made three trips to Africa. Besides her trip to Ethiopia where she participated in the celebration of the African Union’s anniversary, she also went to Guinea Bissau in February to attend the third South America-Africa Summit and to Nigeria to meet with President Goodluck Jonathan.

In March, she attended the 5th BRICs summit in South Africa, taking the opportunity to also meet with leaders of other African countries.

Moreover, according to the Foreign Ministry (Itamaraty,) in recent years efforts have been made to expand the infrastructure of various Brazilian embassies in Africa, which more than doubled over the last decade, allowing Brazil to rank fourth, along with Russia, in terms of countries with the largest representation in the Continent (behind the United States, China and France.)

Translated from Portuguese

Original article here


Agriculture and food security: Brazil’s chance to assume leadership among the BRICS?

June 11, 2013

Oliver Stuenkel – Post-Western World, 06/09/2013

The stark differences between Brazil’s and India’s agricultural productivity and their differing positions during trade negotiations in the past years are an often used argument of why South-South cooperation will always be an elusive dream. And indeed, India has often been accused of being a nay-sayer in the realm of agriculture, even by its fellow emerging powers.

It may then come as a surprise that agriculture and food security are among the first topics that emerged when the BRIC grouping began to discuss ways to cooperate. In fact, during the first BRIC Leaders Summit in 2009 in Yekaterinburg, a separate declaration on food security was issued, underlining the importance of the matter.

In the document, the BRICs professed to be “committed to opposing protectionism, establishing a just and reasonable international trade regime for agricultural products, and giving farmers from developing countries incentives to engage in agricultural production.” The 2-page document argues that “the developed and developing countries should address the food security issue according to the principle of common but differentiated responsibility”, a concept that would become a trademark of future BRICS declarations, particularly in the field climate change. Finally, the BRICs signaled their interest in cooperating by “sharing the best practices of operating successful public distribution programmes.”

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Even the Carnival Can’t Save Brazil From a Slump

February 11, 2013

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

August 21, 2012

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

August 20, 2012

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

July 24, 2012

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?

October 25, 2011

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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