Why a slowdown in Brazil is almost as bad as the China slowdown

Bob Pisani – CNBC, 7/31/2015 

Can it get any worse for Brazil? Last week the government lowered the country’s growth output from a modest gain to a contraction of 1.49 percent. Unemployment, no doubt under-reported, is at 6.9 percent in June and rising.

Dilma Rousseff, the country’s president, who had previously been a big spender, is now pushing austerity to maintain the country’s credit rating.

To little avail. She is on a collision course with Congress, which wants to raise wages and spend even more. Labor unions are threatening ongoing strikes.

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Brazil’s BankFacil secures $3M, launches low-rate consumer loans

Lizette Chapman – The Wall Street Journal, 8/3/2015 

BankFacil aims to make getting a consumer loan in Brazil inexpensive and easy and has raised venture backing to do it.

The online lending startup has built an underwriting platform targeting what founder and Chief Executive Sergio Furio believes is a massive and untapped opportunity: extending personal loans to Brazilians who own homes and cars but aren’t using them as collateral.

This group has a collective debt of R$178.7B ($52.2B USD) across credit card financing, personal loans and overdraft fees and is paying an annual interest rate of 178.8%, according to a report this month by Brazil’s Central Bank. BankFacil investors believe the three-year-old startup can do a better job of serving those customers.

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Brazil: engine trouble

Joe Leahy – Financial Times, 8/2/2015 

The boardroom of heavy vehicle maker MAN in São Paulo is decorated with a Boys’ Own collection of model trucks, soccer balls and the jerseys of local football teams.

But the toys do little to lift the mood here. Once a champion of the Brazilian corporate world with double-digit growth rates, the truck industry, like the national football team which was thrashed by Germany in last year’s World Cup, has fallen on hard times.

In the first six months of this year, truck and bus production fell 45 per cent compared with a year earlier. It is a disaster that is expected to be repeated across Latin America’s biggest economy this year.

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HSBC to sell Brazil business to Banco Bradesco for $5.2 billion

Margot Patrick and Julie Steinberg – The Wall Street Journal, 8/3/2015

HSBC Holdings PLC retreated back to its Asian roots Monday with an agreement to sell its Brazilian business for $5.2 billion, in the latest dismantling of HSBC’s former ambition to be “the world’s local bank.”

HSBC said it has entered an all-cash deal to sell the Brazilian unit to Banco Bradesco SA, leaving it with a rump Mexican business in the region that will increasingly be focused around North American trade. The bank in a June strategy update said it would pivot its business back to Asia, where its Hongkong and Shanghai Bank has been operating for 150 years.

The announcement came as HSBC reported a 4% fall in second-quarter net profit to $4.36 billion from $4.54 billion, reflecting higher operating costs and tax charges in the period. But a rise in revenue and lower bad loans pushed pretax profit higher in the three months to June 30, to $6.57 billion from $5.56 billion.

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Brazil port town’s boom-to-bust Is window into what went wrong

Carla Simoes and Mario Sergio Lima – Bloomberg Business, 7/27/2015

Santos Port has always been known as Brazil’s gateway to the world. Now, it’s also a window into what went wrong in Latin America’s biggest economy.

Exports from Santos have tumbled as demand from China sags. Companies betting on a boon as massive offshore oil finds were developed are now scaling back after Petroleo Brasileiro SA said it will cut investments by a third. And real-estate prices are falling as entire buildings stand vacant.

Nowhere, perhaps, are Brazil’s unfulfilled promises as an almost superpower more apparent than Santos, Latin America’s busiest port. About an hour outside of Sao Paulo, Santos benefited from the dual boon of the commodities supercycle and the government spending spree it afforded. Now, it’s feeling the double blow of a corruption scandal at Petrobras and Brazil’s worst recession in a quarter century.

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Brazil’s real closes at weakest level in 12 years

Jeffrey T. Lewis – The Wall Street Journal, 7/24/2015

The Brazilian real closed at its weakest level in 12 years against the dollar on Friday, extending a slide that began on Wednesday, as concern about the government’s inability to get its budget and debt problems under control continues.

The real lost more than 1.7% Friday and exited active trading at 3.3488 to the dollar, according to Tullett Prebon via FactSet, after closing at 3.2904 on Thursday. The Brazilian currency hit 3.3570 during Friday’s session, and has weakened from 3.1699 at the close on Tuesday.

Brazilian Finance Minister Joaquim Levy announced Wednesday that the government is cutting key fiscal targets for this year, next year and 2017. The government’s target for its primary budget surplus, a measure of its ability to save, was slashed to 0.15% of gross domestic product for 2015, from 1.1%, and the targets for the next two years were also reduced.

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Brazil hopes to strengthen trade relations with Russia

Sputnik, 7/27/2015

Brazil wants its trade relations with Russia to strengthen and continue past the end of the Moscow-imposed ban on agricultural imports from Western countries that hit it with sanctions, Brazil’s Minister of Agriculture, Livestock and Supply Katia Abreu told Sputnik Brazil.

The European Union, the United States and their allies imposed several rounds of sanctions against Russia for its alleged involvement in the Ukrainian crisis in 2014. Moscow has repeatedly denied those claims, and, in August 2014, responded by imposing a year-long ban on certain food imports from the countries that imposed the economic restrictions.

In late June, Russian President Vladimir Putin signed a decree extending the countermeasures.

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