Brazil’s Temer To Make China First Official Visit Abroad

Lise Alves – The Rio Times, 07/11/2016

SÃO PAULO, BRAZIL – If suspended president Dilma Rousseff is impeached from office in August, Brazil’s interim President, Michel Temer, plans to take his first official overseas trip as leader of the country in September to China, Industry and Foreign Trade Minister Marcos Pereira announced over the weekend. Temer’s main goal is to boost Brazilian exports to the Asian country, especially of aircrafts and beef.

Brazil, airplanes, embraer aircraft manufacturer

Last year, during Chinese Prime Minister Li Keqiang’s visit to Brazil, the two countries signed investment agreements worth US$53.3 billion to be made by Chinese companies in Brazil in the areas of agribusiness, auto parts, equipment transport, energy, railways, highways, airports, ports, storage and services. Now Temer wants to increase the presence of Brazilian products in China.

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Five reasons why the world needs Brazil to pull through its political crisis

Nick Miroff – The Washington Post, 04/22/2016

If you caught a glimpse of last weekend’s impeachment proceedings against President Dilma Rousseff, you may have noticed that Brazil is going bonkers right now. There was spitting, shoving and confetti-shooting on the floor of parliament, which at times looked more like a Roman coliseum than a legislative chamber.

Rousseff lost the vote badly, setting up what is likely to be a protracted, bitter political battle to unseat her. She will be forced to step down temporarily if Brazil’s senate votes as soon as mid-May to go forward with the impeachment process, with hearings that could drag on for six months.

The country of 200 million people, by far the largest in Latin America, is increasingly polarized and entirely consumed with its political crisis. By no means is Brazil on the verge of collapse, but here are some reasons why the turmoil isn’t so good for the rest of us.

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Exports from China to Brazil collapse as recession deepens

Joe Leahy – Financial Times, 02/25/2016

Chinese exports to Brazil collapsed last month in the latest dramatic sign of the deepening recession in Latin America’s biggest economy.

Containerised exports from China to Brazil of goods ranging from automotives to textiles fell 60 per cent in January compared with a year earlier as the weak real limits Brazilians’ ability to buy imported goods, according to Maersk Line, the world’s largest shipping company. Total volume of containerised imports into Latin America’s biggest economy halved, data showed.

“What we are seeing right now from China is not only a phenomenon for Brazil, we are seeing the same all over Latin America, declining [Chinese export] volumes into all the markets,” said Antonio Dominguez, managing director for Maersk Line in Brazil, Paraguay, Uruguay and Argentina. “It has been going on for several quarters but is getting more evident as we move into [2016].”

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Brazil’s labor market is imploding

Kenneth Rapoza – Forbes, 02/19/2016

Once China-like, Brazil’s labor market is starting to look old school Brazilian.

Maybe it was three years ago now when Latin America guru Tony Volpon of Nomura Securities in New York said over and over again in his Brazil reports that his country’s red hot labor market had no legs. China demand was slowing. Interest rates were rising. Investment was heading to the QE capitals of the world — U.S. and Europe. Volpon, now a technocrat at Brazil’s Central Bank, didn’t know how prescient he was at the time. Once the twin Petrobras bribery and money laundering scandals hit, all hell broke loose.

The big construction and engineering firms that tag-teamed with the oil giant and members of Congress to bilk billions from shareholders and public employees were rounded up like cattle. One by one, the captains of Brazilian industry were locked up. Their companies lost lucrative government contracts to build refineries and make marine vessels. Their employees lost their jobs.

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China, Brazil among emerging markets at risk of bank crisis

Tom Beardsworth and Lyubov Pronina – Bloomberg Business, 9/13/2015

Credit growth in China, Brazil and Turkey doesn’t only risk spurring a hangover in bad debt — it also signals a banking crisis is on the horizon, according to the Bank for International Settlements.

A ratio of credit to gross domestic product, a measure of how much private-sector credit has deviated from its long-term trend, stands at 25.4 percent in China, BIS said in a report on Sunday. That’s the highest of any major economy and compares with 16.6 percent in Turkey and 15.7 percent in Brazil.

“Early warning indicators of banking stress pointed to risks arising from strong credit growth,” according to the bank. Historically, a country with a ratio above a 10 percent threshold has a two-thirds chance of “serious banking strains” occurring within three years, BIS said.

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France, China weigh on Carrefour second-quarter sales, Brazil resilient

Dominique Vidalon – Reuters, 7/16/2015

Carrefour (CARR.PA), Europe’s largest retailer, on Thursday reported a slowdown in second-quarter sales reflecting competitive pressure in its top French market and slumping sales in China amid weak consumption.

Sales however picked up in Spain, the group’s third-largest market, and held up well in a slowing Brazilian economy, unlike those of smaller rival Casino (CASP.PA).

Carrefour, which makes 73 percent of its sales in Europe, is seeking to seal a global revival by focusing on price and cost cuts, expansion into smaller convenience stores, while also renovating its core traditional hypermarket network to boost growth despite weak consumer spending.

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Brazil, Peru, China plan trans-South American railway

Anadolu Agency, 5/9/2015

Brazil, Peru and China are working on an outline agreement to create a new railway that would cross South America, the Folha de S.Paulo newspaper reported Tuesday.

The train line would cross the continent, linking Brazil’s Atlantic coastline with the Pacific Ocean in Peru, and in part boost commodity exports.

Preliminary reports estimate the Transoceanic Railway would cost at least $10 billion, and the Brazilian government hopes Chinese businesses will bid for sections of the project.

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Brazil Scientists Fear Golden Mussel Threat to Amazon River

Jenny Barchfield – ABC News, 2/5/2015

The world’s mightiest waterway, the Amazon River, is threatened by the most diminutive of foes — a tiny mussel invading from China.

Since hitching its way to South America in the early 1990s, the golden mussel has claimed new territory at alarming speeds, plowing through indigenous flora and fauna as it has spread to waters in five countries. Now, scientists fear the invasive species could make a jump into the Amazon, threatening one of the world’s unique ecological systems.

“There’s no doubt the environmental effect would be dramatic,” said Marcia Divina de Olivieira, a scientist with the Brazilian government’s Embrapa research agency.

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Why Brazil looks expensive compared to the BRIC nations

Stephanie Johnson – Market Realist, 11/12/2014

Looking at the price-to-earnings (or P/E) multiple for Brazil over the last two years, equity shoppers may find that Brazil became a bit more expensive. Brazilian equities have been selling at 15–20x their earnings in the last two years. The valuations become clearer when we compare Brazil to its closest emerging market counterparts—Russia, India, and China.

The above chart compares Brazilian equity valuations with those of other emerging countries—like Russia, China, and India—over the last two years. Comparing the economies in the Brazil, Russia, India, and China (or BRIC) nations, Brazil is the more expensive or overvalued economy—compared to China and Russia.

However, part of the recent surge in Brazilian equities can be attributed to the four yearly elections in Brazil. This year the elections were in October. Markets surged partly on the expectations of a change in presidency from Dilma Rousseff—chief of the Worker’s Party—to Aécio Neves da Cunha—chief of Brazil’s Social Democracy Party. Brazil’s economic conditions hadn’t changed much. The conditions got worse during Rousseff’s first tenure as president—starting in 2011.

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For Labor Market, Brazil Becomes China

Kenneth Rapoza – Forbes, 9/25/2014

The unemployment rate in Rio de Janeiro state, home to 16.5 million people, is just 3%. It’s never been so low. It’s almost as if Brazil has developed some sort of China-style full-employment policy. On a national level, unemployment is just 5%. By comparison, China’s official unemployment rate is a little over 4%.

When it comes to unemployment statistics, Brazil has become China.

Brazil’s economy is slowing. It entered into a technical recession in the second quarter, defined by back-to-back quarters of economic contraction. China’s economy is slowing, with Barclays Capital economist Jian Chang in Hong Kong expecting Beijing to lower its official GDP target to 7% instead of 7.5%. Yet, miraculously, unemployment is just 4.1%, unchanged year over year.

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