Jpmorgan Brazil Investment Share Discussion Threads

[quepassa] 26/4/2016 13:17

When others are greedy be fearful, when others are fearful be greedy....


Am in. In good size.

ALL IMO. DYOR.
QP

[loganair] 18/4/2016 11:12

I do not usually make predictions on a share price, however it seems to me that JPB may reach 50p far, far earilier than I ever thought it may do and can now see possibly that 60p is on the cards by the end of this year.

[loganair] 08/4/2016 15:46

Brazil Stocks Lead Global Gains as Commodities Buoy Exporters by Denyse Godoy:

Ibovespa advances the most in three weeks as exporters gain
Speculation that president will be ousted also fuels optimism


Brazil’s stocks led a global equity rally as gains in commodities from metals to crude oil buoyed the South American nation’s raw-materials producers.

Steelmaker Gerdau SA was the best performer on a gauge of exporters as a Standard & Poor’s index of commodities climbed the most in a month. State-controlled oil producer Petroleo Brasileiro SA followed crude’s advance. The Ibovespa, which rose the most in three weeks, also got a boost from speculation that President Dilma Rousseff is getting closer to being impeached, helping to support lenders Itau Unibanco Holding SA and Banco Bradesco SA. A change in government is seen by the market as the country’s best chance at pulling out of Brazil’s worst recession in a century.

"There are many reasons for the Ibovespa to rise today, investors are pretty optimistic," Raphael Figueredo, an analyst at brokerage Clear Corretora, said from Sao Paulo. "Prospects for Brazilian companies that sell abroad and domestically seem encouraging."

The Ibovespa advanced 3.4 percent, the biggest gain among major benchmarks in dollar terms, to 50,174.49 at 10:44 a.m. in Sao Paulo. Fifty-five of its 61 stocks gained. Gerdau added 6.4 percent, and Petrobras climbed 6.1 percent. Itau advanced 4.9 percent and Bradesco gained 4.4 percent. The two banks contributed the most to the index’s gain Friday.

[loganair] 07/3/2016 16:05

Do Brazil’s woes mark the bottom for emerging markets? By John Stepek.

The stockmarket can be brutal on the ego.

We’ve all seen it. A chief executive or a high-ranking board member steps down – and their company’s share price goes up.

Ouch. Obviously, the bruised ego pains can be soothed by the corresponding increase in the value of their shares package. But still. It can’t be nice to know that your contribution to the company effectively had a negative value.

So think how much worse former Brazilian president Luiz Inácio Lula da Silva must feel.

He gets taken in by the local police for questioning. And suddenly it’s the end of an entire nation’s bear market…

Brazil’s rich political soap opera:

Last week, former Brazilian president Lula was “detained̶1; as part of a probe (the “Lava Jato” probe) into tales of corruption at Brazil’s state-owned oil giant Petrobras. Suggestions are that Lula (who left office in 2011) was getting kickbacks of some sort.

Investigations are ongoing. But it’s all just part of Brazil’s rich political soap opera.

Current president Dilma Rousseff (also of the ruling “Workers’; Party”) has separately been accused of knowingly manipulating public accounts. An impeachment process against her is also under way.

Yet markets have shot up on the Lula news. The Brazilian real jumped by more than 2% against the dollar, and the Brazilian stock exchange – the Bovespa – surged.

As Neil Shearing of Capital Economics notes, the key here is that if the investigation into Lula can prove that funds taken from Petrobras were used to finance Rousseff’s re-election campaign in 2014, then that result could eventually end up being annulled, and fresh elections called.

But that’s a long way into the future. As Shearing puts it, markets seem to be “looking through the possibility of a further period of political uncertainty and towards the possibility of new elections and a shift towards more centrist market-friendly policies”.

This does seem somewhat hopeful, particularly – as Shearing notes – given “the backdrop of an economy that is in its worst recession since the 1930s, together with growing disenchantment with the ruling elite”.

That’s not exactly a recipe for electing a market-friendly government (as we’ve seen in both the US and the UK).

But could there be more to Brazil’s rebound than this?

The real reason to buy emerging markets – they’re cheap:

It’s always darkest before dawn. Buy when there’s blood on the streets. The bear case is always most compelling right before everything turns around.

They’re all good contrarian points, and they’re exactly the sort of sentiment that John Authers was getting at in the Financial Times this weekend when he asked if Lula’s predicament could mark the bottom for emerging markets.

As you’ll have noticed, it’s not just Brazil that’s been suffering. Most emerging markets have been crushed by a combination of the strong dollar and collapsing commodity prices.

But that’s left them looking cheap. Many emerging markets are trading at levels not seen since 2008. And many of their currencies are at record lows versus the US dollar.

Meanwhile, the kicker is that the two factors that have been crushing them have slowly but surely been turning around in the last few months. The prices of several key raw materials have been creeping back up.

And as for the US dollar, following the Fed’s tiny rate rise in December, and the fit of market nerves that ensued, the market no longer expects rates to keep rising quite as rapidly as it once feared. As a result, the dollar’s relentless rise has eased somewhat.

In short, while Lula’s troubles are a nice, big, obvious news event to hang a “This is the bottom” sign on, the reality is more straightforward than that.

As Authers puts it: “It might well make sense to buy emerging markets again, simply because after long years of a bear market they are far cheaper, while the US market looks expensive by almost any sensible metric.”

[loganair] 07/3/2016 09:32

Brah - many thanks for your kind comment. Many on other threats do not seem to understand how I post all information, whether it be postive or negative for the information of any and all who are interested.

[brahmsnliszt] 04/3/2016 21:56

Yours are helpful posts for newbies here loganair. Token purchase yesterday in small.

[loganair] 04/3/2016 16:25

Brazil stocks, bonds currency surge on ex-president's Lula’s detention and signals Rousseff’s days in office may be numbered.

“The likelihood of a sudden change in government, either through judicial or legislative means, has skyrocketed,” Maplecroft, a political risk firm, said in a note to clients.

Brazilian markets rallied sharply on the news, apparently sensing a change in regime that could shake up the country’s beleaguered economy. Brazil is in the midst of its deepest recession in 25 years, statistics revealed earlier this week.

The long government investigation has focused on the state oil company, Petrobras, and a tangled conspiracy of kickbacks, graft, and money laundering that appear to have enriched much of the country’s elite. Rouseff, who was minister of energy while the alleged corruption was taking place, has denied benefitting, but analysts have said it seems improbable that she did not know anything about the alleged corruption as it was going on.

[loganair] 04/3/2016 09:39

The news is so bad, it must be a good time to invest....When noone else is...


Recovery Eludes Brazil Economy After Biggest Dive in 25 Years:


GDP better than forecast in Q4, but analysts aren't cheering.

Investment in Brazil drops for seventh consecutive quarter.

Latin America’s largest economy shrank the most in a quarter century last year and no recovery is in sight as shriveling demand and political crisis pummel activity.

Brazil’s gross domestic product contracted 1.4 percent in the three months ended in December, after a 1.7 percent drop the previous quarter, the national statistics institute said Thursday in Rio de Janeiro. While the figure was better than the 1.6 percent decline estimated by 47 economists surveyed by Bloomberg, it wasn’t enough to prevent Brazil’s GDP from sinking 3.8 percent in 2015. That was greatest plunge in 25 years, according to data from the government’s economic research institute IPEA.

“There’s nothing to celebrate in these GDP figures,” Luciano Rostagno, chief strategist at Banco Mizuho do Brasil, said by phone. “There is no reason to expect the economy will rebound. Investment and industry activity are expected to remain weak, and the outlook for private consumption remains bleak on back of job and credit market conditions.”

Investors have been holding back as political uncertainty swirls amid a sweeping corruption investigation and the central bank holds interest rates at their highest since 2006. A weakened currency has helped improve the competitiveness of exporters, which the government has said will help spur Brazil’s recovery. Still, joblessness is on the rise, inflation is in double-digits and both companies and the government are receiving downgrades.

Investment Plunge:

Fourth-quarter investment plunged 4.9 percent -- its seventh consecutive drop -- as family consumption fell by 1.3 percent. The latter was slightly better than anticipated, according to Jankiel Santos, chief economist at Haitong in Sao Paulo, and Edward Glossop, emerging-market economist at Capital Economics Ltd.

“Private consumption did fall at a slower pace, and that could be another reason why the economy performed better than it did in the previous quarter,” Glossop said by phone from London. “But it’s still four consecutive quarters of decline, so nothing to cheer about. ”

Net exports also contributed positively to the fourth-quarter result, but mainly because of a 5.9 percent drop in imports, according to Banco Mizuho’s Rostagno. Exports fell 0.4 percent.

The Finance Ministry said the economy may stabilize in the third quarter and rebound by the end of the year as the government focus on initiatives to boost investment, expand credit and keep jobs. “The main challenge at the moment is to recover internal demand,” it said in a statement.

Elusive Recovery:

Consumer and investor confidence levels have rebounded this year from record lows, which would normally suggest that the economy is bottoming. However, private-sector credit problems signal there’s no turnaround in sight just yet, Carlos Kawall, chief economist at Banco Safra, said by phone from Sao Paulo.

“This is a big difference compared to prior crises,” Kawall said. “This will prevent the bottom from being as soon as the confidence indicators are suggesting, and poses downside risks.”

The prolonged recession has made it tougher for the government to shore up its finances. Fiscal consolidation plans were met with resistance from an opposition emboldened by proceedings to impeach President Dilma Rousseff, as well as from coalition lawmakers incensed by initiatives to cut spending. The nation’s nominal budget deficit as a percentage of GDP reached 10.8 percent in January, its highest on record, as gross debt as a percentage of GDP climbed to 67 percent.

Fourth-quarter data will also weigh down near-term performance due to a statistical quirk known as the carry-over effect, by which the previous quarter affects the subsequent period’s result. If 2016 GDP were to remain at the same level as recorded in the fourth quarter, it would decline 2.4 percent, according to Enestor dos Santos, principal economist at Banco Bilbao Vizcaya Argentaria SA in Madrid, said by phone.

Brazil’s economy will contract 3.45 percent this year, according to the median forecast from economists surveyed by the central bank. The Organization for Economic Cooperation and Development forecasts the Brazilian economy to contract 4 percent this year, while the International Monetary Fund sees a 3.5 percent recession. Both forecast stagnation next year, which would mean no growth until 2018 when Brazilians elect a new leader.

[loganair] 04/3/2016 09:30

Wood - most of my spare cash has been put in to JPB since it went sub 50p. In my good opinion in the long term I am going to do very nicely out of my investment in JPB the rest I´ve been putting in to JP Morgan Russian Securities Trust (JRS) which is yielding a whoping 5.5% which again in my good opinion I´m going to do very nicely out of.

[woodcutter] 04/3/2016 08:19

I've been buying heavily this week. With a rising stockmarket and appreciating currency against the GBP£ and a discount of 16% to NAV the highest historical level, i can see good risk reward for further upside.

NAV in GBP£ will be increasing as the real appreciates in value the discount will narrow and commodity prices are beginning to turn up so a triple whammy as far as i can see.

woody

[loganair] 03/3/2016 10:52

31st January 2016 - Portfolio analysis by JP Morgan:

The JPM Brazil Investment Trust significantly outperformed the Brazilian market. Our structural underweight to commodity names, including Petrobras and Vale, added to returns as commodity prices, including iron ore and oil, continued their precipitous fall. Asset allocation was positive driven by our underweight to commodities (materials and energy) and overweight positions in industrials and healthcare. Our underweight exposure to defensive sectors including consumer staples, utilities and telecoms detracted from relative returns. It is hard to justify a greater weighting to these sectors, as they are expensive. Stock selection was weakest in the industrials sector, where falling domestic demand outweighed the benefit of a weaker currency. Trading activity was minimal and cash positions were elevated given the recent volatility. We have maintained our more defensive and secular exposure.

[loganair] 10/2/2016 21:58

31st December 2015 - Portfolio analysis by JP Morgan:

The trust's net asset value outperformed the benchmark in December, while the share price also underperformed. Asset allocation was positive, driven by our reduced exposure to both energy and materials. Commodity prices including oil and iron ore fell precipitously in 2015, driving down returns in these sectors. Energy and materials represent two of the trust's most significant underweight positions at the sector level. Stock selection was weak and detracted from overall performance during the month, notably in consumer staples and industrials. During the month, we added to our position in Cielo, a leading payment processor in Brazil, following some recent underperformance. The portfolio is tilted towards the export sector and beneficiaries of the weak currency. In the domestic market, we continue to limit our exposure to stocks with secular drivers or business models that have proven relatively recession-proof.

[loganair] 06/2/2016 19:35

By Sam Antrobus - Brazil's stock market surged and emerging markets outpaced the developed world as the dollar took a dive this week.

Brazil has proved to be the toast of emerging markets this week, as a weakening dollar and mining sector turnaround helped bring relief to the beleaguered South American country.

The MCSI Brazil index blew global markets out the water with a 9.1% surge. The index is now the best performing major global stock market this year in pound terms, albeit it has still made a 2.1% loss.

A further surge in the Brazilian real, which is now the best performing emerging market currency this year, helped. But for a country in which commodities account for around half of all exports, the real joy can be found in the rising price of metals.

Stabilising commodity prices lie at the heart of the Brazilian comeback, as gold hit a three-month high and copper climbed. Silver meanwhile led gold, with rises of 3.1% and 1.2% respectively, as our table shows. Although Brent crude suffered a 2.7% loss, the international benchmark was still trading in a range of around $34-$35 today - well up on the 12-year lows experienced last month.

[dunnieboy1] 31/1/2016 12:22

Amongst all the doom & gloom written & spoken about Brazil it appears to have gone unnoticed that Brazil Investment Trust have repurchased 1,007,500 of its own shares since the 23Dec(300,000),31 Dec(60,000),15Jan(487,508),29Jan(160,000).
The total cost was £354,381,28 which is a considerable investment given that the market cap is £17m,they may feel that the market is turning otherwise they would either sit on the cash or invest it in the market so they must feel there is more value in its own shares,another point is that if good news does come then due to the illiquidity of the shares it would cause s tight squeeze with anyone short on stock would drive the price high very quickly.

[loganair] 26/1/2016 20:07

IF THE global economy is being dragged toward a downturn by China and other large developing countries, then Brazil is one of the principal dead-weight anchors. Once celebrated as a rising power alongside South Africa and India, the Latin American giant is mired in its worst recession in decades, compounded by a political crisis that could lead to the impeachment of President Dilma Rousseff. What’s more, recovery will require Brazil to face deep-seated structural problems in both its economy and its political system — something its current leaders are unlikely to do.

One primary cause of the trouble is both easy to detect and common to Latin American and African economies: plunging commodity prices. Brazil depends on exports of iron ore, soybeans and other basic goods for 45 percent of its trade revenue, and prices for these have collectively fallen by more than 40 percent since 2011. Having borrowed heavily to develop deep offshore oil deposits, the state oil company Petrobras is now the most indebted in the world and will struggle to sell oil at $30 a barrel.

Yet Brazil’s problems go far deeper than the downcycling of commodity prices. For a decade, the country relied on those growing exports to paper over structural problems. When the global recession hit, it borrowed heavily to sustain growth — public debt, as a percentage of Brazil’s overall wealth, is now nearly twice that of Greece, according to the Economist . Meanwhile, corruption flourished. As much as 40 percent of the current National Congress is under criminal investigation, including dozens of legislators suspected of taking bribes in connection with Petrobras contracts. For her part, Ms. Rousseff is charged with concealing excess government spending ahead of her 2014 reelection; an impeachment vote in Congress could come next month.

Getting out of this mess will require more than a purge of legislators and a recovery of China’s appetite for raw materials. Brazil will have to tackle fiscal and political ills that, in many instances, are written into its 1988 constitution. The charter mandates heavy and growing government spending, especially for pensions; workers typically retire in their 50s, and the Brazilian government is obliged to devote almost 12 percent of gross domestic product to them — more than in rich and aging Japan.

The congressional election system, meanwhile, makes famously fractious Israel look stolid. Parties can win seats by gaining less than 1 percent of the national vote; as a result, more than two dozen are represented in Brasilia, and vote selling by marginal deputies is a chronic problem. Fixing these and other distortions would require a three-fifths vote in both congressional houses for constitutional amendments. That’s a most unlikely prospect, given that Ms. Rousseff, with a 12 percent approval rating, is fighting for her political life by appealing to a left-wing base that opposes all austerity measures.

Brazilian politicians, like the country’s famous soccer stars, are good at improvising, so it’s possible that the country will maneuver through what is likely to be the recession’s second year in 2016 without a debt default. The current betting is that Ms. Rousseff will survive the impeachment process. But the reforms needed for the country to thrive again may be years away, which is more bad news for the global economy.

[votiem] 21/1/2016 23:13

....and ditto my last post re JRS

[loganair] 21/1/2016 20:58

More than one-third of respondents said poor governance was the key barrier to Brazil returning to higher growth. Corruption and excessive government debt also contributed to barriers to growth in Brazil.

[loganair] 26/12/2015 09:58

30th November 2015 - Portfolio analysis by JP Morgan:

The trust's share price and net asset value outperformed the benchmark. Stock selection in the materials sector contributed positively to performance. We have a longstanding underweight in the sector as we struggle to find companies that meet our fundamental requirements based on economics, duration and governance. Our lack of exposure to Vale, a Brazilian multinational diversified metals and mining corporation, added to performance. The Brazilian government has filed a lawsuit suing Vale and BHP Billiton for USD 5.2 billion in order to remedy environmental issues caused by a collapsed dam. The stock fell approximately 25% on the back of this negative news. Stock selection was strong in both consumer sectors?discretionary and staples. Stock selection was weak in industrials, as a weak currency continued to weigh on returns, but our overweight in the sector was rewarded. Holdings in information technology were positive, while financials hurt from both a stock and asset allocation perspective.

[loganair] 22/12/2015 21:13

Analysts expect Brazil's economy to contract by 3.7 percent this year, with inflation hitting 10.7 percent, the Central Bank said Monday.

The gross domestic product (GDP) and inflation forecasts come from the Boletin Focus, a weekly Central Bank survey of analysts from about 100 private financial institutions on the state of the national economy.

The government started using the survey in preparing its own forecasts this year.

Last week, analysts projected that Brazil's economy would contract by 3.62 percent and the inflation rate would come in at 10.61 percent.

Analysts now are forecasting that Latin America's largest economy will contract by 2.8 percent in 2016, with the inflation rate falling to 6.87 percent.

If the forecasts turn out to be accurate, Brazil will go through two consecutive years of negative GDP growth for the first time since 1948.

Brazil, in a technical recession with GDP contracting for three consecutive quarters, has had its sovereign debt lowered to junk status by Standard & Poor's and Fitch Ratings in recent months.

Those downgrades have occurred even though analysts note that Brazil's foreign currency reserves are far in excess of its international liabilities.

The South American giant's economic growth has been hampered by spending cuts implemented by President Dilma Rousseff's administration to reduce the budget deficit and control inflation.

Joaquim Levy resigned as Brazil's finance minister last Friday amid the struggling economy and a push by some in Congress to impeach Rousseff.

His replacement - Nelson Barbosa, who had been heading up the Planning Ministry - was critical of some of the austerity measures put forward by his predecessor.

[loganair] 16/12/2015 20:02

Fitch cut Brazil's rating to BB+ with a negative outlook, saying impeachment proceedings against President Dilma Rousseff heightened political risks amid a deepening recession.

Standard & Poor's had stripped the country of its investment grade in September, while Moody's Investor Service said last week it was considering doing the same.

"It was a done deal; Fitch won the race. Now Moody's is just embarrassed to be late to the party," said Pedro Tuesta, an economist with 4Cast in Washington D.C.

The real hit its lowest in two months after the announcement but recovered partially as many traders were already prepared for a second downgrade to junk. The currency tumbled about 2 percent after the Brazilian government decided to cut a key fiscal goal for next year, despite protests from Finance Minister Joaquim Levy.

Levy has spearheaded the government's efforts to rein in spending as it tries to regain investor confidence and fight a deepening economic downturn. Local media reports said he had threatened to leave his post if the target was reduced.

Investors worried that the move could usher in a return to the interventionist policies left-leaning Rousseff pursued over her first term.

[loganair] 10/12/2015 20:10

Brazil's Supreme Court on Wednesday said it had suspended impeachment proceedings against Rousseff until it rules on their validity.

Some traders believe an impeachment could help Brazil fight what is likely to be its longest recession since the 1930s by ushering in more market-friendly policies. Others warn that political wrangling could delay efforts to cut spending and raise taxes, possibly triggering a downgrade of the country's sovereign debt.

"The current interpretation is that yesterday's events represent a defeat for the government and this is positive for the market," said João Paulo de Gracia Correa, a trader at Correparti brokerage in Curitiba. "But it is still too early and the situation is too premature to have a medium-term assessment," he added.