Brazil’s Real Falls as Ukraine Turmoil Saps Emerging-Market Bid

July 29, 2014

Paula Sambo and Filipe Pacheco – Bloomberg Businessweek, 7/29/2014

Brazil’s real dropped the most among major Latin American currencies as turmoil in Ukraine dried up demand for emerging-market assets.

The real declined 0.2 percent to 2.2279 per U.S. dollar at 9:42 a.m. in Sao Paulo. Swap rates, a gauge of expectations for interest-rate moves, increased six basis points, or 0.06 percentage point, to 11.33 percent on the contract maturing in January 2017.

Investors sought refuge in the dollar as the European Union and the U.S. prepared new sanctions against Russia while President Vladimir Putin’s administration formulated its response to international pressure over the conflict in Ukraine.

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Brazil’s Longer-Term Swap Rates Rise on 2015 Inflation Outlook

July 28, 2014

Filipe Pacheco and Paula Sambo – Bloomberg, 7/28/2014

Brazil’s longer-term swap rates climbed as economists surveyed by the central bank raised their inflation forecasts for 2015, adding to speculation that policy makers will resume raising borrowing costs next year.

Swap rates on contracts maturing in January 2018 increased one basis point, or 0.01 percentage point, to 11.41 percent at 9:52 a.m. in Sao Paulo. The real was little changed at 2.2294 per U.S. dollar.

Economists increased their inflation forecast for 2015 to 6.21 percent from 6.12 percent a week earlier, according to the median of about 100 estimates in a central bank survey published today. President Dilma Rousseff is facing a combination of slower economic growth and above-target inflation as the October election approaches.

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Brazil Leads Latin American Ecommerce Growth, Becoming Amazon’s Biggest Foreign Market

July 25, 2014

Robert Schoon – Latin Post, 7/24/2014

Latin America, led particularly by Brazil, is continuing rapid growth in its online economy, according to a new study by Internet Retailer. And the boom in ecommerce is good news not only for Latin American Internet retailers, but also for some prominent U.S.-based companies as well — especially Amazon.com.

According to the new 2014 edition of the “Latin America 500,” an annual report by ecommerce research and analysis firm Internet Retailer, Latin America, as a whole, remains the world’s second fastest-growing ecommerce market — only trailing behind China. And Brazil is leading the way, thanks to high Internet penetration rates, a booming market for affordable mobile devices, and an increasingly digital culture.

Internet Retailer ranked the top 500 web merchants in Latin America by sales and 128 other data points — like sales growth rates, web traffic, average checkouts, social media prominence, etc. — tracking retailers in 12 of the most digitally active Latin American countries, including Argentina, Bolivia, Brazil, Chile, Colombia, El Salvador, Mexico, Peru, Uruguay, and Venezuela.

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Brazil Sells $3.5 Billion in First Dollar Bond This Year

July 24, 2014

Filipe Pacheco – Bloomberg, 7/23/2014

Brazil issued $3.5 billion of government bonds in exchange for cash and old debt securities, offering the country’s longest maturity in its first dollar-denominated offering this year.

The country issued the bonds due in 2045 to yield 5.131 percent per year, the Treasury said in a statement today. The country raised about $1.5 billion of new cash, according to a person familiar with the offering who asked not be identified because the details haven’t yet been made public. The country also swapped new bonds for outstanding securities with maturities ranging from 2024 to 2041, according to the statement.

Brazil tapped the bond market a week after Fed Chair Janet Yellen reiterated in congressional testimony that U.S. borrowing costs will probably stay low for a “considerable period,” making emerging-market assets more attractive. The Latin American country sold 1 billion euros ($1.3 billion) of seven-year bonds in March to yield 2.961 percent just three days after Standard & Poor’s lowered Brazil’s credit rating by one step to the lowest level of investment grade.

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No Growth, No Problem For Brazil Investors As Market Beats World

July 24, 2014

Kenneth Rapoza – Forbes, 7/22/2014

Slow growth, protests, and a humiliating defeat against the Germans in the World Cup earlier this month hasn’t soured investor sentiment on Brazilian equities. Over the last four weeks, Brazil’s stock market as measured by the MSCI Brazil index has beat out the MSCI World and the S&P 500.

The same can be told when looked at three months out, with the iShares MSCI Brazil (EWZ) exchange traded fund up 8.9%, beating the MSCI World and the MSCI Emerging Markets Index.

Who cares if GDP is expected to come in under 2% again this year, or that a hotly contested election is just three short months away. Brazil is the cheapest market in Latin America.

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Emerging-Market Stocks Rise as Brazil Gain Outweighs Russia Drop

July 22, 2014

Julia Leite and Natasha Doff – Bloomberg, 7/21/2014

Emerging-market stocks rose for a second-day as Brazilian state-run companies gained on speculation a new government will boost economic growth, outweighing declines in Russian shares.

Indonesia’s benchmark rose for a second day before the release of presidential election results tomorrow. The Micex Index fell the most since March in Moscow as President Vladimir Putin faced mounting international pressure after the downing of the Malaysian passenger jet in Ukraine. The Shanghai Composite Index declined amid concern new share sales may divert funds from existing shares.

The iShares MSCI Emerging Markets ETF advanced 0.3 percent to $44.31. The Brazilian state-controlled oil producer Petroleo Brasileiro SA led the Ibovespa to a four-month high in Sao Paulo as a voter poll dimmed the prospects for President Dilma Rousseff’s re-election bid.

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Brazil Mid-July Inflation Decelerates More Than Forecast

July 22, 2014

David Biller – Bloomberg, 7/22/2014

Brazil’s consumer prices in the month through mid-July rose less than economists forecast, as food and transport prices dropped.

Inflation as measured by the benchmark IPCA-15 index decelerated to 0.17 percent from 0.47 percent the prior month, the national statistics agency said on its website today. That was slower than the 0.21 percent median estimate from 37 analysts surveyed by Bloomberg.

Above-target inflation is eroding consumer demand and industrial confidence less than three months before President Dilma Rousseff runs for re-election. Policy makers have responded by cutting back on planned spending and raising benchmark borrowing costs three times this year while extending a currency intervention program to support the real.

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Nigeria lags behind Brazil, South Africa in telecoms investment per capita

July 21, 2014

Business Day, 7/21/2014

With more than 127 million active mobile subscriptions in Nigeria, Africa’s largest economy by GDP significantly lags behind fast growing economies of Brazil and South Africa in terms of telecommunications investment per capita, industry analysts have said.

According to World Bank, Nigeria invested an estimated $6.6 billion in telecoms infrastructure from 2010 through 2012, which works out to a total of about $40 per person. Brazil, on the other hand, has a telecoms investment per capita of $167. Between 2010 and 2012, Brazil and South Africa spent about $127 and $62 more per person, respectively, on telecoms infrastructure. As at March 2014, Brazil has a mobile subscription base of 273 million.

The country has a population of 201 million people. South Africa, on the other hand, has a mobile subscription base of 59.4 million. The country has a population of about 50 million people, according to the 2013 GSM African Mobile Observatory report.

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The New Development Bank: The start of a new economic consensus?

July 21, 2014

Erica Kliment – Brazil Institute, 7/21/2014

2014 BRICS Summit in Brazil

The leaders at the 2014 BRICS Summit in Brazil

Is the rest of the world ready for a new order upheld by developing nations? In 2010, when former President Luiz Inácio Lula da Silva invited then-President Mahmoud Ahmadinejad of Iran to the Itamaraty Palace in Brazil, the meeting was highly criticized by the Obama administration. Lula, who had seemed to enjoy international acclaim when dealing with regional politics, was then chastised when he had reached too far out of the western hemisphere. His response was that he was merely attempting to better situate Brazil on the global stage, yet could the criticism have come from the fact that larger power players did not believe Brazil was ready to graduate from the role of regional babysitter?

Four years later, with an unexpectedly successful World Cup under Brazil’s belt and planning on another fruitful mega-event in just two years, the Summer Olympics in Rio de Janeiro, the developed world seems slightly more willing to accept developing nations’ role in the international sphere. Individually, these nations’ global clout is diminishing with slowing economic growth rates, yet collectively, they have the potential to create a new platform upon which they and future developing nations can flourish. Towards the close of the most recent BRICS Summit, five of those countries reached an agreement that, depending on its success, could bring developing nations to the position they desire – the forefront of international affairs.

During the 2014 BRICS Summit in Fortaleza, the leaders of Brazil, Russia, India, China, and South Africa jointly created the New Development Bank, a multinational fund of $150 billion in capital to provide stability and finance infrastructure for the five developing nations involved in the negotiations as well as future emerging markets. It will be headquartered in Shanghai with its first president from India, on a five-year rotating schedule, and with Brazil taking chairmanship of the board. Read the rest of this entry »


Emerging-Market Equities Post Weekly Advance as Brazil Rallies

July 18, 2014

Julia Leite and Natasha Doff – Bloomberg Businessweek, 7/18/2014

Emerging-market stocks posted a weekly gain as oil producer Petroleo Brasileiro SA led a rally in Brazil on speculation a new president will revive growth in Latin America’s largest economy, offsetting declines in Russia.

The Ibovespa surged the most among the world’s biggest equity benchmarks as a poll showed President Dilma Rousseff’s lead narrowing in the October election. Chinese stocks rallied amid speculation more cities will loosen property curbs as home prices slump. The S&P BSE Sensex Index increased for a fourth day as Indian software stocks advanced. The Micex Index (INDEXCF) slid to a seven-week low in Moscow, with natural-gas producer OAO Gazprom posting its longest losing streak on record.

The iShares MSCI Emerging Markets ETF (EEM:US) increased 1.6 percent to $44.16, pushing its gain this week to 0.6 percent. The second-biggest exchange-traded fund that holds developing-country stocks sank 1.9 percent yesterday amid concern the shooting down of a Malaysian jet in Ukraine would escalate tensions in eastern Europe.

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