Share Name Share Symbol Market Type Share ISIN Share Description
Jpmorgan Brazil Investment Trust Plc LSE:JPB London Ordinary Share GB00B602HS43 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.25 0.39% 64.75 61.50 68.00 65.50 64.50 64.50 47,605 14:45:37
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 0.9 0.4 1.0 65.4 24

Jpmorgan Brazil Investment Share Discussion Threads

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Brazil's currency and stocks rose on Friday as traders hoped for progress on an ambitious reform agenda despite a growing political crisis ensnaring President Michel Temer. Efforts by Temer's administration to foster trust in plans to streamline Brazil's pension system and reform labor laws seem to have to borne fruit among investors. House Speaker Rodrigo Maia has said he expects the lower house to vote on pension reform by mid-June, clearing the way for a final Senate vote. That cautious optimism has rekindled bets that the central bank would cut interest rates by a brisk 100 basis points next week despite market volatility drive by political turmoil, driving yields on rate futures lower.
Peter Donisanu, investment strategy analyst at Wells Fargo: "We believe that the sharp sell-off and continued weakness in Brazilian assets is reflective of the fragile underpinnings that had supported the recent stock, bond and currency rallies. We expect Brazilian equities, bonds and the real to face continued headwinds, given the reemergence of political uncertainties. ... We would expect uncertainty related to the political environment to act as a headwind to business and consumer sentiment, likely weighing on economic growth and challenging investor theses of improving growth and reforms. As a result, we maintain our unfavorable equity rating on the Latin American region (of which Brazil is the largest member). Instead, our emerging-market equity guidance favors exposure to Asia—where improvements in trade and growth remain positive contributors to equity-market performance there. For Brazilian local-currency bonds, we expect yields to face to upward pressure stemming from political developments and potentially weaker-than-expected economic data releases ... we expect the U.S. dollar to appreciate this year, putting downward pressure on the Brazilian real and likely leading the currency to 3.40 from 3.30 reais to the dollar ..." Ned Davis explains the conundrum for Brazil's economy: good demographics, bad pension obligations and now "slim chances" that pension reform will happen under President Temer. Ned Davis Economist Alejandra Grindal and Analyst Patrick Ayers write that Brazil's demographics are quite attractive. But they note Brazil has an Illinois problem: benefits to the elderly are high, in line with the developed world, because pension payouts are structured to rise with cost-of-living adjustments: "Despite the high levels of corruption, Brazil has a lot of things going for it. It remains the biggest economy in Latin America, with a large land and resource base. The workforce is becoming more educated, with almost half of its population ages 25-64 attaining at least an upper secondary education, much higher than China and Mexico, which are at 25% and 35% respectively. Adding to that, Brazil has an impressive demographic outlook. Thanks to a decline in its fertility rate over the past several decades, its dependency ratio has dropped dramatically ... Furthermore, Brazil's share of working-age population is projected to rise for at least another decade. This is a luxury that most of the developed world can't afford ... Temer knew the public pension program was unsustainable and was looking to make some major reforms, including requiring individuals to work longer and reducing payouts ..."
Thanks Logan. QP
Brazil highlights the risks and rewards of emerging markets by GRAHAM SMITH: Ever since the lights dimmed on the Rio Olympics last summer, Brazil’s stock market has blossomed1. However, while the Games helped to shine a light on the impressive attributes of a country steeped in potential, with its young and vibrant population and deep cultural assets, shorter term economic and political considerations have been behind the market’s recent renaissance. The recoveries of oil and commodity prices last year have been key. The export of raw materials accounts for around 42% of Brazil’s annually traded goods2. When the world economy is doing well, so should Brazil. Another factor has been the tenor of the government, wedded to reforms and tough cuts in public spending at the tail end of a long recession. Michel Temer, who took over as president last August, promised to turn the economy round and restore the public finances. As a turnaround situation, Brazil seemed to be without peers among the world’s large developing nations. That position received a sudden and substantial jolt last week though, as the president found himself on the receiving end of corruption allegations, which he has denied. With memories of the demise of the previous government still fresh – Dilma Rousseff was impeached amid a hail of criticism about her management of the economy – Brazil’s stock market immediately relinquished a large part of its year-to-date gains3. There are other underlying problems too. Not unlike many Middle Eastern countries, Brazil remains highly dependent upon the demands of other nations as opposed to the requirements of its own industrial heartlands. That’s left the economy substantially tied to excess demand from China, which has been lacking over recent years. Growth has evaporated and the unemployment rate is now at 12.6% compared with 6.2% at the end of 2013. There are some bright spots. Commodities have stayed firm so far this year, partly down to pledges by OPEC to limit oil production and by Donald Trump to cut taxes and embark on a vast programme of infrastructure renewal. The central bank’s key economic indicator rose in February and March. Meanwhile, Brazil’s ports appear to be gearing up for real-world surges in demand. Works for a fourfold raising of the capacity of a large terminal in the north of the country are expected to be completed next month and follow bumper harvests of soy and corn. Then there’s Brazil’s technology sector and creative industries which are starting to take on more important roles in the economic landscape. Backed by government initiatives, entrepreneurship is in the ascendency promising substantial improvements in future wealth and productivity. Government moves to privatise parts of the state-controlled electricity company Electrobras and sell operating licences for some airports are also seen as positive steps in the right direction7. The programme promises to usher in more private investment and its associated expertise. Against that, other economic indicators have been mixed, highlighting a challenging road ahead. For instance, retail sales in São Paulo fell last month suggesting the country’s improved export prospects are at odds with consumer confidence. As of today, Michel Temer is stoutly defending his position, denying any wrongdoing. From a market perspective, that may be a good thing, since much needed reforms in Brazil – the eventual determinant of a sustainable economic recovery – currently lie in his hands9. However, the political tide against him could end up being too strong to resist. The latest episode in Brazil illustrates two things. First, that emerging markets can produce impressive returns but rarely without a hiccup along the way. Unforeseen shocks tend to deliver the sharpest downward market spikes. Second, that diversification is probably a growth investor’s best weapon against market fluctuations, even though that will not do away with the ups and downs completely. For longer term investors particularly, maintaining an exposure to countries with the potential to grow faster than the world economy as a whole is an attractive proposition. However, that potential usually comes with greater risks and from countries with less well established institutions or lax laws. The counterbalance is that emerging markets tend to benefit from growing populations – at variance with many developed countries in the west – and have large untapped natural resources and attractive business opportunities.
Brazil's economy is starting to "breathe" again and show signs of growth after two years of recession, while slowing inflation will allow interest rates to come down further, President Michel Temer said on Wednesday. Speaking after enacting new rules aimed at attracting more than 20 billion reais ($6.3 billion) in private investments to modernize Brazil's ports, Temer said Brazilians are showing more optimism about the future of Latin America's largest economy. "The economy is starting to show signs of growth, in the retail sector and in agribusiness," Temer said, adding that polls show Brazilians are more optimistic today about the future of Latin America's largest economy. Temer signed a decree that will lengthen contracts for operating public ports to 35 years from 25, and allow them to be repeatedly extended for up to 70 years. The decree allows investment outside contracted port areas and ends a limit on the expansion of private terminals, he said. Brazil's annual inflation rate fell in April to its lowest level in nearly 10 years, bolstering the view of a steep interest rate cut by the central bank at the end of this month. Consumer prices rose 4.08 percent in the 12 months through April, slightly below market forecasts for a 4.10 percent increase and compared with an increase of 4.57 percent in the year to March, the national statistics bureau IBGE said on Wednesday. It marked the lowest annual inflation rate in Brazil since July 2007. It was also below the government target of 4.5 percent. "With headline inflation now below target, COPOM's main focus will be the on the progress of fiscal reforms through Congress," wrote Edward Glossop, emerging markets economist at Capital Economics. A major investor focus is the prospect of congressional approval of a pension reform bill, the cornerstone of a government plan to curtail a gaping budget deficit.
The Brazilian government is considering the possibility of auctioning off distributors' energy surpluses, enabling the government to achieve its fiscal target by turning a profit of up to R$ 27 billion (US$ 8.5 billion). Today, distributors can only sell in a regulated market, with pre-determined prices. The sector is currently putting up with a lack of demand ever since the recession led to an oversupply. The Government is considering the possibility of freeing up the market, setting aside the use of pre-determined prices and enabling sellers to conduct business with big industries. The funds would help the government build up revenues in order to tackle a R$ 129 billion (US$ 40 billion) deficit and achieve its 2017 fiscal target.
Latin America’s largest economy is estimated to have grown 0.5 percent to 0.7 percent quarter-on-quarter in the three months ending in March, Finance Minister Henrique Meirelles said. He expects the economy to expand 2.7 percent in the fourth quarter from a year earlier. He also said that the government had not much room for further concessions on its key pension reform bill currently being discussed in Congress. "We’re at the limit or very close to the limit," he said, adding that the government wants to ensure the pension overhaul results in savings of at least 600 billion reais ($190 billion). If the bill passes as it currently stands the government estimates savings of 630 billion reais. Meirelles ruled out any tax increases, saying that revenue was more likely to surprise on the upside. He said the extraordinary income will include fees from oil and gas tenders. President Michel Temer’s administration is in an uphill battle to convince investors it can dig the economy out of recession while bolstering public finances through austerity. That task has proven far from easy as policy makers slash growth estimates and confront stiff resistance to their flagship pension overhaul. Companies that were deleveraging last year exacerbated the country’s slump, he said, but were now bouncing back. Economists surveyed by the central bank forecast gross domestic product to expand 0.4 percent this year.
I think many of the banks in Brazil are going to report an increase in profits as they are poised to benefit from a new lending cycle, lower funding costs and a fall in provisions/cost of risk. When the macro-cycles for emerging markets banks turns, this sector is a license to print money.
Astonishing profits announced today from Banco Santander's operations in Brazil. ALL IMO. DYOR. QP
Klaus Schwab, the founder and executive president of the World Economic Forum, was optimistic when it came to Brazil, and believes that the country is demonstrating promising signs of economic recovery. However, it is important that the "country doesn't discard everything it has obtained over these past 18 months". "The country must implement the necessary reforms and make sure that the corruption scandals that emerged become a thing of the past", he said. "There are signs that Brazil's economy is starting to improve, given the increases in the stock market and the regaining of investors' trust. These are promising indicators, however, there's still a lot of work that needs to be done". "The main challenge is to overcome political fragmentation in the country. The recent corruption scandals have tarnished Brazil's reputation, yet there are still important efforts being made to try and resolve these issues, and these efforts will be of great help. I'm an optimist when it comes to Brazil's future". "The country mustn't discard everything it has obtained over these past 18 months. But, of course, the country must make sure that the corruption scandals that have come to light don't repeat themselves in the future. Witnessing Brazil's independent judiciary has been quite impressive. We are going to see a country that is less corrupt"
Markets expect a 100 basis-point reduction in the Selic overnight lending rate at next months central bank's April 11-12 meeting. Brazil's annual inflation eased to the lowest rate since 2010 and came close to the government's long-missed target, leaving the door open for the central bank to accelerate the pace of interest rate cuts next week. "The latest drop in Brazilian inflation leaves it only a whisker above the central bank's target and probably seals the deal on a larger 100-basis-point cut in interest rates at next week's Copom meeting," wrote Neil Shearing, chief emerging markets economist at Capital Economics.
The good, the bad and the Donald: Countries to buy and avoid when it comes to the emerging markets By Jonathan Jones. Brazil and Russia should be on investor’s radars while Venezuela and Ukraine should be avoided within emerging markets as well as China and Mexico because of the Donald. . “If we are to believe Trump and his renewed friendship with Russia I think Russia becomes a country that you want to be invested in,” the manager said. “For ourselves we’ve got a lot of exposure to Russian corporates and have done since 2015/2016 and the reason behind that is in a perverse way the sanctions put in place have actually helped the Russian corporates.” Sanctions were placed on Russian exports and visas following the threat to Ukraine’s sovereignty in 2014, with western powers including the US and the European Union imposing bans. “As a result, when companies have come to market they’ve had to raise cash and de-lever so Russian corporates have got some of the lowest leverage out there and they’re cashflow positive. So there is no pressure on them to come to market to refinance,” Lad said. Indeed, while Russian equities have slipped back of late they are among the top performers since Trump was elected, 13 per cent higher since 8 November last year. The other country he likes is Brazil, which the manager began to invest in at the tail end of 2015 and is an example of looking at top-down and bottom-up fundamentals. Lad said: “Brazilian politics and economics all look pretty weak so the top-down investor probably says they wouldn’t touch Brazil as there was an impeachment potential as well as scandals about bribery and corruption. “But we looked at it slightly differently and said ‘yes the politics don’t look great and the economics aren’t great but actually let’s think about who benefits from this environment – it’s the corporates who are doing their trade with countries outside of Brazil’. “There they get dollar revenues and for the big exporters the currency depreciated 60 per cent and it doesn’t take a lot to work out which companies are doing business with countries outside of Brazil and not relying on the consumer for their revenues. “I think the story is still a positive one and the way we look at it is those countries that are willing to do reforms are where we feel most comfortable to be invested because emerging markets goes through cycles,” the AXA IM manager said. “Now you are getting countries like Argentina, Brazil to some extent, India, Indonesia, those are the sorts of places we feel comfortable investing in right now because we feel momentum is going in the right direction and change is happening.”
Economic reforms including a revamp of Brazil's pension system may allow Latin America's largest economy to reach a 4 percent annual growth rate in coming years without stoking inflation, Finance Minister Henrique Meirelles said on Tuesday. Brazil's so-called potential growth rate currently stands at 2.5 percent, he added. The country's gross domestic product (GDP) contracted 3.6 percent last year, capping its longest and deepest downturn on record. Brazil's inflation eased as expected in mid-March towards the center of the official target as food and fuel prices fell, government data showed on Wednesday, paving the way for a sharper interest rate cut by the central bank. Consumer prices rose 4.73 percent in the 12 months through mid-March, down from 5.02 percent in mid-February and close to the 4.5 percent target. Falling inflation is expected by economists and investors to prompt the central bank to accelerate the pace of rate cuts at its next meeting in April and drive rates down to 8.50 percent by the end of 2018 from the current 12.25 percent. Brazil's sudden inflation slowdown highlights the unprecedented severity of the country's two-year recession and is helping President Michel Temer's economic team to restore the credibility of fiscal and monetary policy to curb price rises.
Industrial output in Brazil rose on an annual basis in January for the first time in nearly three years, in a sign that a severe recession could be ending soon. Production increased 1.4 per cent from a year earlier, government statistics agency IBGE said on Thursday. Industrial output had been falling on an annual basis for 34 consecutive months as Brazil’s economy went through its worst recession on record. Data on Thursday showed the nation’s gross domestic product shrank 3.6 per cent in 2016, failing to improve in the fourth quarter as economists had forecast. The stronger-than-expected industrial performance in January strengthens the argument of many economists who see Brazil emerging from recession this quarter. Finance Minister Henrique Meirelles said the nation was “clearly”; growing again. “The data that we already have for February suggest another increase in industrial output,” economists with Sao Paulo-based Banco Bradesco wrote in a research note. Economists expect industrial output to grow 1.1 per cent in 2017 from 2016, according to a central bank survey.
Brazil Recession: Time To Buy On The Slump? Economic woes are not new to the Brazilian economy with its gross domestic product shrinking for the eighth successive quarter. Brazil recorded a 0.9% sequential decline in GDP in the fourth quarter of 2016, reflecting the steepest slump in a year after a revised 0.7% drop in the previous quarter and wider than market expectations of a 0.6% fall. With this, the Brazilian economy saw two straight years of recession in 2016. On a yearly basis, Brazil's GDP plummeted 3.6% in 2016, following a 3.8% slump in 2015. Investment declined 10.2% last year, probably reflecting Brazil's high interest rates. Household consumption was also in bad shape. How Should The Investing World React? Brazilian stocks and ETFs have been on a tear this year with the large-cap Brazil fund iShares MSCI Brazil Capped advancing about 13.8% and the small-cap fund iShares MSCI Brazil Small-Cap surging about 30.2% (as of March 7, 2017). The reason for this was successive rate cuts by the Brazilian central bank. Hopes of new reforms that can shore up the country's recession-stricken economy after the impeachment of President Dilma Rousseff, commodity strength and easing inflationary pressure perked up Brazil ETFs. In view of cooling inflation (which was once sky-high) and soft economic growth, Brazil embarked on an aggressive policy easing cycle. The country slashed interest rates by 25 bps for the first time in four years in mid-October, giving signs of a turnaround in the long-ailing economy. The Brazilian central bank cut rates by 25 bps in November, by 75 basis points to 13.00% in early January, and by 75 basis points to 12.25% in late February. The fourth rate cut pushed down borrowing costs to almost a two-year low. Now, the recently released weak GDP data has stirred talk of further and steeper rate cuts in the coming days. And rate cuts are possible given the fact that the inflation rate declined for the fifth month to 5.35% in January, reflecting the lowest level since September of 2012. Low rates would provide some relief to debt-ridden families and perk up business sentiments. Has Brazil Recession Bottomed? A group of analysts believe that Brazil is now showing signs of recovery. Some expect the economy to log a meagre 0.5% expansion in 2017, though the government had forecast 1%. However, responding to the weak GDP data, some economists lowered their view on the economy and see no growth. In fact, they believe that anything meaningful on the positive side is not expected before 2018. Note that, President Temer is trying to clear an austerity agenda through Congress. Finance Minister Henrique Meirelles said, "the government could raise taxes or cut spending further if necessary to achieve its 143.1 billion reais ($45.87 billion) primary deficit goal." Finance minister of Brazil also indicated that the latest GDP data bore the mistakes of past policies. Market watchers now believe that this could be the end of recession and the economy will take root, but slowly. So, moderate gains are likely ahead.
Latin America’s largest economy Brazil has contracted by 3.6 percent in 2016, shrinking for the second year in a row; statistics agency IBGE said on Tuesday. It confirmed the country is facing its longest and deepest recession in recorded history. Data shows gross domestic product (GDP) fell for the eighth straight quarter in the three months to December, down 0.9 percent from the previous quarter. The figure was worse than the 0.5 percent decline economists had forecast and left the country’s overall GDP down 3.6 percent for the full year following a 3.8 percent drop in 2015. “In real terms, GDP is now nine percent below its pre-recession peak,” Neil Shearing, chief emerging markets economist at Capital Economics, told the Financial Times. “This is comfortably the worst recession in recorded history,” he added. The two-year slump has seen the number of unemployed rise by 76 percent to almost 13 million. Once one of the fastest-growing economies in the world, Brazil has been hit by the fall in commodity prices and an internal political crisis. The corruption scandal that involved the impeached President Dilma Rousseff and some of the country's biggest and best-known companies has undermined investor confidence. Some economists along with the Finance Minister Henrique Meirelles, say Brazil’s recession may be over soon, and recovery could follow. “We suspect that Q4 should also mark the end of the recession. For a start, many of the one-offs that pulled down GDP in Q3 and carried over into Q4 have faded. Auto production is growing once again. More fundamentally, inflation is falling, interest rates have been lowered, and financial conditions have eased,” said Shearing. Chief Latin America economist at Goldman Sachs Group, Alberto Ramos, however, does not expect a dramatic turnaround. “This is far from the expectation of a vigorous, V-shaped recovery after a long recession of historical proportions,” Ramos said. “Growth of one percent or less this year “is not something to write home about. But it’s better to have a positive print than a negative one, and there is a certain sense of relief that at least the recession is over,” he added.
Investing In The World's Highest-Performing Emerging Market: Brazilian equities have nearly doubled over the past year as it emerges from a two-year recession. Re-emergence of positive growth, a loosening in monetary policy, and fiscal reforms are likely to boost the market further. The above factors combined with a recent rule change should also increase demand for mortgage loans. Brazil has been the top-performing emerging market over the past year and through the first two months of 2017 and this is a trend I expect to continue. The basic story on Brazil is that it's been mired in a recession for ten straight quarters measured year-over-year and seven straight quarters measured quarter-over-quarter. The central bank increased rates up to a peak point of 14.25% in the latter half of 2015, and has dropped them 275 bps since. The rate hike amid the onset of a recession seems counterintuitive, but was designed to stem capital outflows from the country to avoid exacerbating the decline. The 200-bp reduction in the first two months of 2017 has generated gains of 15% for the Brazilian equities market year-to-date. The ideal point to get into Brazilian securities would have been at the 14.25% mark, which was kept on for about a year signaling that's where the Banco Central do Brasil ("BCB") was likely to keep rates before a cut was in order. While the Brazilian corporate outlook has improved and capital markets have consequently generated large gains, the BCB is likely to aggressively cut rates throughout 2017. Inflation has fallen faster than previously believed. Combined with the fact that growth remains negative, a continued series of rate hikes will be in store. By the end of the year, I would expect rates to fall to around 10.0%-10.75% to support lending growth and business activity, a drop of another 150-225 bps. This will continue to be directly bullish for both the country's stock and bond markets. Inflation has fallen from 9% in August 2016 all the way down to 5.35% as of January. The drop has been derived from a stronger exchange range as high yields and signs of a recovery have attracted capital inflows. Additional factors include falling food prices and subpar consumer demand, which goes hand in hand with weak ongoing economic growth. Inflation should hang in a range from 4.5%-5.5% over the next 3-5 years. The BCB targets a 3%-6% band and the recent drop has helped better establish the central bank's credibility on this front. Although inflation may fall a bit further, perhaps even a bit below 5% in some months later this year, the BCB's loosening on its monetary policy to support growth should keep inflation elevated toward the higher end of this range in the years ahead. There is also support for further upside from the fiscal end, with the senate approving a spending limit amendment in December to help rein in expenditures. The reform will peg federal noninterest spending to a level on par with the consumer price index of the previous year. This is set to be valid for the next twenty years. With real growth unlikely to hit above 2.5% by the end of 2019, controlling expenditures will help shrink the budget deficit down to around the 7% range (as a percentage of GDP) by the end of the decade. This is still not appealing, but will be a notable improvement from the 10%+ mark as of year-end 2015. Social security reform remains the most pressing budgetary reform issue. Getting the budget back down to pre-recession levels of 2%-3% will necessitate spending cuts in this area, though it's a thorny issue for incumbents given the political unpopularity associated with cutting entitlements. Nonetheless, if business investment recovers and political uncertainties remain subdued (i.e., corruption probe doesn't re-emerge) growth should break into the green in 2017. The BCB projected 2017 growth at 0.8% for the year with a steady increase to around 2% expected by year-end 2019. With Brazil's reliance on trade and commodity exportation, its own growth is subject to the economic performance among its top trading partners (e.g., China and the U.S.) and prices in the various commodity markets in which it's involved. Brazilian Real Estate: Less than two weeks ago, Brazil's National Monetary Council ("CMN") began loosening lending restrictions by allowing households to use their accounts in the national workers' fund as a source of capital for down payments on mortgages. This is a positive development for larger commercial banks in the country by facilitating increased accumulation of lower-risk mortgages. Retail banks have struggled in recent years given the recession and subsequent tightening of credit that tamped down on loan volumes at the corporate and household level. While monetary tightening is often positive for lending by widening the spread between deposit interest requirements and lending rates, the benchmark rate reaching at a peak level of 14.25% too heavily discouraged growth in loan volumes. Brazilian homebuilders have struggled from surplus supply and loosening the credit markets is the one main tool the CMN can use to engineer demand to soak up the excess inventory. Supply that too heavily exceeds demand could engineer a drop in home prices and engender further recession-related economic pain. The rule change is largely a positive for wealthier borrowers and larger banks who have a sufficient deposit base on which to facilitate mortgage lending. Caixa Economica Federal has about two-thirds market share in the Brazilian mortgage market, though additional lenders such as Banco Santander and Banco do Brasil can use their robust capital bases to capture greater share of the market. Conclusion: I remain underweight equities in both the US and abroad, but Brazil is the one market with both strong underlying reasons to be long based on ongoing monetary and fiscal initiatives. It continues to be a market that I believe is going in the right direction. Declining inflation combined with negative growth provides incentive for the central bank to continue dropping interest rates in 50-bp increments in 2017. Rate cuts are likely to be cut another 150 bps (or more) by the end of the year, which is a direct catalyst to further price appreciation in the bond and equity markets. Spending restrictions and fiscal consolidation at the federal level will help push down the deficit from its bloated current level. Net public debt will continue to expand from its present 45%-50% figure to around 65% in five years' time, which is a fairly moderate degree of leverage. Gross domestic investment and national savings are expected to increase over time. Recovering commodity prices will help boost the country's terms of trade, which was a contributing factor to the initial economic downturn in mid-2014. Credit costs are declining, which encourages business investment, decreases discount rates in the market for valuation purposes, and will support the health of the banking sector. Greater accommodation in the credit markets combined with a rise in growth should also benefit the real estate market.
Brazilian Finance Minister Henrique Meirelles said Tuesday the recession affecting the country over the past two years is over and the economy has resumed growth. However, the largest economy in South America is still experiencing the consequences of the long recession, he said. "Brazil is growing today. This is very important because we all went through a tough time when Brazil faced its worst recession in history. But the important message is that the recession is over, though we are undergoing its consequences in many ways," said Meirelles. "It was a long, difficult recession. It has generated mass unemployment. But Brazil has already started growing," he added. Meirelles believes the current growth trend is sustainable as indicators have showed the business sector's confidence has begun to grow for the first time since 2011. Still, many states are faced with a serious economic crisis and depending on federal aid to pay their civil servants.
BRASILIA, Feb 8 Consumer prices rose less than expected in Brazil in January for the fifth straight month, increasing the chances of steeper interest rate cuts and a stronger economic recovery as the inflation rate falls toward the government's long-missed target. The annual inflation rate eased by nearly a percentage point to 5.35 percent in the 12 months through January, below economists' expectations of 5.41 percent, overnment statistics agency IBGE said on Wednesday. Prices rose 0.38 percent from a month earlier, the smallest rise for January since 1994. The surprising pace of the inflation slowdown has boosted consumer and business confidence, helping the economy pull through its worst recession in decades. Lower inflation also comes as relief for unpopular President Michel Temer as he pushes an austerity agenda through Congress. "Single-digit interest rates this year, something that was very questionable until recently, are increasingly feasible," Sandra Pires, chief analyst at São Paulo-based brokerage Coinvalores, wrote in a research note. Banco Fator Chief Economist José Francisco de Lima Gonçalves said he saw room for the central bank to accelerate the pace of rate cuts this month to 100 basis points, from 75 basis points at its last meeting. Most economists and traders still expect the bank to keep its current pace of easing. Inflation is a sensitive issue in a country traumatized by runaway prices in the past. It contributed to the eroding popularity of former president Dilma Rousseff, who was ousted last year, by climbing past 10 percent until early 2016. Slowing inflation should boost Temer's approval ratings from near-record lows even as unemployment remains high, Banco Fibra Chief Economist Cristiano Oliveira said. "All else equal," Oliveira wrote in a note, "Temer's popularity will be up in 2018, an election year."
MoneyWeek - It’s time for investors to head back to Brazil: Brazil’s stockmarket jumped by 40% in 2016; this year, it has already gained 10%. The economy is gradually rebounding from a deep recession, while the impeachment of the former president, Dilma Rousseff, cleared the way for a business-friendly administration led by Michael Temer. All very well, Albert Ramos of Goldman Sachs told the Financial Times, but the market seems to be pricing in a V-shaped recovery that won’t happen. “All sectors are overstretched and need to de-lever.” The International Monetary Fund is pencilling in growth of just 0.5% in 2017. But that may be a bit pessimistic, according to Capital Economics. Investment has dropped so far amid the political crisis and fall in commodity prices that it can hardly decline any more. That removes a big drag on output. The outlook for exports is brighter now that commodities have recovered. Meanwhile, interest rates have been coming down from a ten-year high since October, as the central bank has brought inflation under control. Looser monetary policy is generally good news for stocks, and Brazil is no exception. In every past easing cycle there has been an equity rally of at least 20%, according to Luis Oganes of JPMorgan. The prospect of liquidity entering the economy and market is making up for relatively lacklustre GDP growth. Brazil is also one of the few emerging markets that would be shielded from Trump-induced turbulence in the global economy thanks to its large domestic market, says Goldman Sachs. The government’s gradual progress with structural reforms, notably a public spending cap designed to last 20 years, has also encouraged investors. Brazil remains one of the world’s cheapest stockmarkets, trading on a cyclically adjusted p/e of ten. In short, it does not seem too late to join the party.
President Michel Temer will propose legislation to lift restrictions on foreign ownership of airlines and agricultural land in Brazil as he strives to pull the economy out of a two-year recession, government sources say. Temer's centre-right government plans to send Congress a bill allowing 100 per cent foreign ownership of airlines, though investors will be obliged to help expand regional flight services, two sources said. The government will soon propose a bill lifting a ban on foreign investors buying agricultural land in Brazil, on the condition that 10 per cent of any purchase is destined to land reform to benefit landless farmers and peasants, said a presidential aide who was not authorised to speak on the matter. "The initial idea is to reopen regional routes that were abandoned so that they get regular flights again," a source with knowledge of transport policy said on condition of anonymity. Foreign companies currently can hold up to a 20 per cent stake in Brazilian airlines. US carrier Delta Air Lines has 9.48 per cent of Gol Linhas Aereas Inteligentes SA , Brazil's largest domestic airline. Attracting investors to buy into Brazilian airlines might not be easy due to jet fuel taxes and falling domestic traffic due to the recession. Despite huge market shares, Brazilian carriers have struggled to make a profit. Plans to open up land to foreign purchases again, however, are bound to draw plenty of investors in Brazil's expanding agribusiness industry that is seeking new partners. Brazil restricted the sale of land to foreign investors in 2010 due to concerns that countries such as China could take control of large segments of arable land in the midst of a super commodity boom. Companies in Brazil's commodities sector have pushed to review the rules to allow more investment to flow into the country, especially in the pulp, paper and ethanol sectors.
QP - since being listed MIL has been on my watch list. My main worry is many of Myanmar´s challenges and difficulties are similar to those being experienced by Vietnam, mainly corrupution at the highest level. I remember while I was living in Vietnam the sports minister bet $250,000 on a European Manchester United football match. The minister used the ministries, the governments money as his own money and Man United lost. Never mind, the sports minister was still the sports minister the next day.....never lost his job over the bet.
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