Silva Aide Outlines Plan to Lure More Investors to Brazil

September 15, 2014

Presidential candidate Marina Silva wants to make Brazil alluring to investors again by improving public finances and giving the central bank more independence, her campaign coordinators said Monday.

Mauricio Rands, one of Ms. Silva’s main economic advisers, said the candidate will adopt “rigorous” fiscal policy and refrain from “putting makeup on public finances.” Critics accuse current President Dilma Rousseff’s administration of using questionable accounting procedures and one-off revenue sources, such as a tax amnesty program last year, to meet its fiscal targets.

Speaking at an event at the U.S.-Brazil Chamber of Commerce, Mr. Rands also highlighted Ms. Silva’s proposal to pass a law creating an independent central bank. The credibility of the Central Bank of Brazil, which lacks the institutional autonomy that most developed countries enjoy, has been questioned by some economists in recent years for letting inflation run too high and for intervening in the currency market.

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Some companies profit as Brazil struggles to secure power

September 11, 2014

Todd Benson and Marguerita Choy – Reuters, 09/11/2014

A small group of energy companies in Brazil are increasing revenues at a time when the country is grappling with its worst power crisis in more than a decade, taking advantage of sky-high prices to sell electricity in the spot market.

Power generators that have managed to produce extra energy in recent months or who aren’t restricted by long-term supply contracts are being rewarded with prices up to six times higher than the average cost on conventional electricity contracts.

At the same time, distributors that had to resort to the short-term market to fulfill demand increases are facing financial burdens and are being rescued by the government. The situation underscores the imbalances of the Brazilian power system, which has come under stress because of a prolonged drought. The energy crunch has also become a hot topic in Brazil’s presidential race, with the government facing criticism for not ensuring a stable power supply at reasonable prices.

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Brazil’s Market Gains as Politics Shift

September 10, 2014

Matt Day – The Wall Street Journal, 09/09/2014

Investors are piling into Brazilian stocks, adhering to one simple rule: The lower President Dilma Rousseff falls in the polls, the higher share prices go.

Ms. Rousseff has few fans in the investment world, where she is blamed for not doing enough to reverse a prolonged economic slump. Until recently, she looked like a sure bet to win a second term in October elections, but her numbers have slipped against Socialist Party candidate Marina Silva.

That has caught the attention of some investors who had previously steered clear of South America’s biggest economy. “We’ve added to positions in companies that we don’t particularly like because they’re cheap and poorly managed,” said Michael Reynal, a portfolio manager with RS Investments, which oversees about $25 billion. “If there’s any change in government, that would change.”

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Brazil needs to keep pace with rise of “China 2.0″

September 9, 2014

Ji Ye (Xinhua) – English.people.cn, 09/09/2014

Brazil needs to develop a strategic vision in order to cooperate with China in a new era, said Marcos Troyjo, a Brazilian economist and co-director of the BRICLab at Columbia University, in a recent exclusive interview with Xinhua.

According to Troyjo, the way China’s economy progressed over past 30 years following thecountry’s reform and opening-up policies is called “China 1.0.”

During that period of time, China took advantage of public-private partnership, cheap workforce and a favorable approach to foreign capital to become the largest manufacturing park in the world. According to Troyjo, China has now entered a new stage, which he calls “China 2.0,” and itshould no longer rely on governmental investment and foreign trade to simulate its economic development.

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Market Reduces Brazil Growth Forecast After Weak 2Q

September 2, 2014

Kenneth Rapoza – Forbes, 09/01/2014

Brazil’s back-to-back economic contraction in the first and second quarters now has the nation’s top banks reducing their year-ending GDP forecast to a whopping 0.52%. This is the 14th consecutive week that economists reduced their forecasts for Brazil’s economy.

Last week, the Central Bank’s Focus survey had GDP growth ending 2014 at 0.7%. The survey comes out every Monday.

The decline comes on the heels of a poor showing in the second quarter. The economy contracted 0.6% from the first quarter, which had also contracted, putting Brazil in a technical recession. Compared with the second quarter of 2013, Brazil’s GDP slipped 0.9%.

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U.S. World Cup Love Prompts Brazil to Shift Olympic Ads

August 28, 2014

Bill Faries – Bloomberg, 8/28/2014

American enthusiasm for soccer’s World Cup prompted Brazil to shift more of its advertising toward the U.S. ahead of the 2016 Olympics in Rio de Janeiro, the head of Brazil’s tourism agency Embratur said.

U.S. citizens represented just over 10 percent of the 1.04 million foreign visitors to Brazil during the month long tournament that ended July 13, Embratur President Vicente Neto said in an interview. That made the U.S. the second-biggest source of foreign fans after neighboring Argentina, whose team made it to the final against Germany.

“It exceeded all our expectations,” Neto said in Miami last week. “We’re expecting that to be the same with the Olympics, given the U.S. history and participation in the Games.”

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BR Partners Offers Debt Restructuring as Brazil Stalls

August 27, 2014

Cristiane Lucchesi and Jonathan Levin – Bloomberg, 8/27/2014

BR Advisory Partners Participacoes SA, the investment bank and asset-management firm founded by Goldman Sachs Group Inc.’s former Brazil chief executive officer, is creating a debt-restructuring advisory business as the country’s economy stalls.

Claudio Citrin joined as a managing director to build the new division, said Andrea Pinheiro, who founded Sao Paulo-based BR Partners in 2009 with Ricardo Lacerda, Goldman Sachs’s former Brazil CEO. Citrin, 52, previously worked as an executive at Spinnaker Capital Ltda for about 14 years, overseeing hedge fund investments in Latin America.

Demand for restructurings may rise amid estimates Brazil has slipped into recession. Credit Suisse Group AG lowered its second-quarter gross domestic product forecast to negative 0.5 percent from negative 0.2 percent this month, and said revisions to the first quarter might also show a contraction. The corporate delinquency rate rose 4.9 percent in the 12 months through June compared with a year earlier, according to data provider Serasa Experian.

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