Putting Brazil’s political risk in perspective

March 13, 2015

Kenneth Rapoza – Forbes, 3/13/2015

The case for Brazil is not hard to make: diverse economy, rising incomes, cheap assets, high investment grade yield, and despite scandal a relatively stable government. But the noise is so deafening, and the recent data so awful, that it’s hard to make the case that Brazil has hit bottom. The bottom is coming, only not until next year.

For the contrarian investor, maybe you get ‘em while they’re hot?

Think about this for instance: the Brazilian real is trading near historic lows at R$3.20 on Friday’s opening in São Paulo. It is projected to stay there for another year, hovering between R$3.00 and R$3.15, according to Barclays Capital’s estimates. If you bought a local currency Brazilian bond, and held it for three years, you’d be getting 12.75% interest at least, and most likely a gain from the currency when the real strengthens again in a year or two.

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Brazil real seesaws in volatile session

March 10, 2015

Reuters, 3/10/2015

The Brazilian real moved 1 percent up and down in less than two hours of trading on Tuesday as a combination of global headwinds and domestic problems made the currency vulnerable to wild swings.

The real opened more than 1 percent lower and hit 3.1722 per dollar, its weakest in more than 10 years, before erasing losses to rise more than 1 percent to 3.097.

It last traded at 3.1244, 0.2 percent stronger than Monday’s close.

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Brazilian President’s approval rating drops

February 9, 2015

Rogerio Jelmayer – The Wall Street Journal, 2/8/2015

Brazilian President Dilma Rousseff ’s approval rating fell to a record low for her amid Brazil’s poor economic performance and corruption allegations involving the state-run energy company, poll results showed Sunday.

According to a survey by the Datafolha polling institute, 23% of respondents said the Rousseff administration was “excellent or good,” compared with 42% in a poll published in December. Ms. Rousseff’s approval rating reached the lowest level for a country’s president since 1999, when Fernando Henrique Cardoso was in the post.

The drop in Ms. Rousseff’s approval rating came as Brazil´s economy is failing to regain traction and state-run energy company Petróleo Brasileiro SA, or Petrobras, is in the middle of a corruption scandal.

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Petrobras to help pull Brazil into recession

February 9, 2015

Kenneth Rapoza – Forbes Magazine, 2/9/2015

A few months ago, I asked here whether Petrobras could possibly disappoint investors more? That answer is now a resounding yes, it can!

Last week, two of Brazil’s largest banks revised their 2015 forecast for the country’s GDP. Thanks to Petrobras, it’s now negative. Only Russia and Argentina’s economy is expected to do worse than Brazil’s within the emerging market universe. As they say in Portuguese, “parabens”.

Or…congratulations, Petrobras, for a job terribly done.

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DEALTALK – Banks pin hopes for Brazil IPO revival on Levy’s success

February 4, 2015

Guillermo Parra-Bernal – Reuters, 02/04/2015

Any revival in initial public offerings in Brazil seems to hinge on whether new Finance Minister Joaquim Levy can clean up public finances and get the country’s economy back on track.

Strengthening the market for new listings depends increasingly on how much leeway President Dilma Rousseff will give the University of Chicago-trained economist to cut Brazil’s record budget gap and reverse the interventionist policies that marred her first term.

Stung by dozens of deals that failed to deliver the promised returns in recent years, money managers have become cautious about Brazilian offerings. In 2014, only one company went public on the São Paulo Stock Exchange, the worst performance for domestic IPOs in 11 years.

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Brazil registers record deficit in current accounts

January 26, 2015

Lise Alves – The Rio Times, 1/26/2015

Brazil’s current accounts in 2014 registered a record deficit of US$90.948 billion, according to data released by Brazil’s Central Bank (CB) on Friday, January 23rd. The result was well above 2013’s deficit of US$81.108 billion and the highest registered since the CB started the series in 1947.

Last year’s annual deficit is equivalent to 4.17 percent of the country’s GDP, the worst result since 2001.

The Central Bank released both December 2014 results as well as results for the entire year. For December, the country’s current account, which is measured by the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers, registered a deficit of US$10.317 billion.

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Brazil’s 2015 economic outlook darkens as fiscal measures bite

January 26, 2015

Reuters, 1/26/2014

The outlook for Brazil’s economic health this year has worsened considerably, according to data released on Monday, as analysts weigh the impact of painful fiscal measures and consumers become increasingly worried about the future.

Economists sharply raised their forecasts for Brazil’s 2015 inflation rate while slashing their economic growth estimate for the year, a weekly central bank poll showed on Monday.

The median forecast of about 100 market economists shows 2015 ending with inflation at 6.99 percent, up from 6.53 percent a month ago. Brazil’s government targets a rate of 4.5 percent, with a tolerance margin of two percentage points.

 

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