Brazil’s Real, Ibovespa decline as exporters retreat on China

Paula Sambo, Andressa Lelli and Filipe Pacheco – Bloomberg, 8/11/2015 

Brazil’s real and the Ibovespa slid as China’s yuan devaluation fueled concern that demand from the nation’s top trading partner will falter. Stocks and the currency pared losses after Moody’s Investors Service signaled a cut to junk isn’t likely any time soon.

The real dropped 1.1 percent on speculation that trade inflows from the Asian nation will slump and as Goldman Sachs Group Inc. said it may weaken to 4 per dollar in the next 12 months. Vale SA, which gets a third of its revenue from China, extended this year’s plunge to 24 percent. Commodity companies in the MSCI Brazil fell 3.4 percent, the most among 10 industries.

Brazilian assets joined a global selloff that pushed a gauge of emerging-market equities into a bear market, following a 20 percent tumble from a September peak. China devalued the yuan as policy makers at Asia’s largest economy stepped up efforts to combat the deepest slowdown since 1990 and support local exporters.

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JPMorgan Brazil nears ‘rock bottom’: time to go in?

Gavin Lumsden – CityWire Money, 7/17/2015

Outside the UK and US investors are often wary of single country funds, disliking the lack of diversity they offer.

The experience of JPMorgan Brazil (JPB +) over the past five years suggests this is wise. Since its launch in April 2010 the investment trust has lost shareholders 45% of their money. After a good first year, it was literally downhill all the way for the unfortunate investors! In the last financial year the shares fell 12%.

Of course this has been a tough period for all funds investing in emerging markets with the slowdown in China and the consequent hit on commodities combining with fears of a capital flight to the US when interest rates rise.

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3 Reasons Why Brazil’s State-Controlled Oil Giant Petrobras Should Be Privatized

Anderson Antunes – Forbes, 11/20/2014

One of the most famous songs by the late Brazilian rock star and songwriter Raul Seixas is entitled ‘Rent,’ in reference to what he considered to be the best solution for Brazil: literally, to rent the country for foreigners. The song was composed in 1980, at a time when Brazil was going through a difficult economic period marked by hyperinflation.

Fast-forward to 2014. Today the ghost of price increases gone out of control has come back to haunt Brazilians, partly due to a government-sponsored rise in fuel prices that resulted in consumer prices advancing 6.54% in the 12 months through mid-November, down from a rise of 6.62% through the previous month but still above the 6.5% ceiling of Brazil’s Central Bank target, according to the median of 22 market forecasts for the IPCA-15 inflation index.

Add to that a total lack of confidence from investors, a growing budget deficit, falling industrial production and rising poverty. Even the stability of the Brazilian job market, one of the few bright spots for the government, has begun to show signs of difficulties ahead: For the first time since October 1999 the weekly payroll numbers showed a net loss of 30,000 jobs last month, well below the market expectations of a gain of 56,000.

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Brazil’s Silva winning over investors in presidential race

Walter Brandimarte – Reuters, 8/27/2014

Investors are warming up to a possible victory by Marina Silva in Brazil’s presidential election as the popular environmentalist emerges as their best shot at avoiding four more years of a government they strongly dislike.

Disdain for President Dilma Rousseff’s leftist policies runs so deep in Brazilian financial markets that one comment making the rounds there says: “Marina is like Russian roulette, but Dilma is like a fully-loaded revolver.”

It captures the mistrust that many investors feel toward Silva, whose history of volatile decisions, lack of executive experience and emphasis on eco-friendly policies, even at the possible expense of economic growth, have all raised red flags.

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Brazil-Ethiopia- Djibouti-South Sudan investment seminar going on

Zeryhun Kassa – All Africa, 06/06/2013

The first ever two-day Brazil-Ethiopia-Djibouti-South Sudan Trade and Investment Seminar opened on 6 June 2013 in Addis Ababa. Organized by the Embassy of Brazil in Ethiopia, the Seminar aims to provide an opportunity for business and investment networking between governments and companies from Brazil, Ethiopia, Djibouti and South Sudan.

It also aims to encourage strategic information-sharing on potential investment opportunities and available incentives, market potential and trade flows between entrepreneurs and policy makers of the four countries.

Those attending from Ethiopia include officials of the Ethiopian Ministries of Trade, Industry, Foreign Affairs and Agriculture, and representatives of the Ethiopian Sugar Corporation, and private businesses among others.

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Wasn’t a weaker currency supposed to help Brazil?

Kenneth Rapoza – Forbes, 06/03/2013

When the Brazilian real was strengthening like gangbusters against the dollar, all the way to R$1.55 back in July of 2008, the government both loved it and hated it.

They loved it because it meant the world loved Brazil and Brazil, with its nagging (and misplaced) inferiority complex, was mighty proud of its strong currency.  Fast forward to the Lehman Brothersand pending fall out in late 2008-09 and the strong currency became a curse. It became part of the “currency war”, a term made quite popular over the last two years by Brazilian Finance Minister Guido Mantega.

The Fed and European Central Bank were weakening their currencies.  Investors were looking for yield were finding it in places like Brazil. Money poured in. The real kept gaining on the dollar and euro.  Mantega and big businesses complained.  They couldn’t be competitive at R$1.70. They needed R$2.00 to $1, everyone was told.

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Brazil’s booming beauty market draws investors

Juliana Barbassa – Huffington Post, 02/13/2013

RIO DE JANEIRO — Looking good has always been serious business in Brazil. Now it’s big business, too.

A flush new middle class and a population strong on working adults is dropping major cash on designer shampoos, lotions and cosmetics, rapidly turning this country into a beauty industry powerhouse.

Sales of beauty products in Brazil hit $43 billion in 2011, a growth of 142 percent in five years that puts it on a pace to overtake Japan as the world’s second-largest beauty market within a few years, according to Euromonitor, a global market research company. At the same time, Japan’s beauty market grew by 40 percent and the United States’ by 7.3 percent.

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