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
  0.00 0.0% 62.50 60.00 65.00 - 0.00 01:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 0.6 0.1 0.1 480.8 24

Jpmorgan Brazil Investment Share Discussion Threads

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Mitchell Harris Long/short equity, momentum, deep value, special situations about Cuba: The 54-year embargo between Cuba and the United States is hopefully coming to an end. This is a no-brainer and will open the door to a massive inflow of investment, tourism, property expansion, and natural resource development. All good things for a country only 90 miles from the tip of Florida, such easy access for American travelers looking for new places to vacation. Yes, there will be a healthy amount of criticism while we sit and wait for Congress to approve the "lift," but there is a place to invest your money now that could pay off handsomely once all the chips fall into place. This is not a quick hit or a three to six month trade; I recommend dollar cost averaging into these positions over a period of one year to maximize a conservative strategy. As I do some more research, other ideas may come across my desk, but let us stick to this one for now - Melia Hotels Intl SA, it currently operates roughly 25% of the hotels in Cuba. The Cuban lodging market currently is dominated by small local operators and some European and Canadian chains, many of which often offer all-inclusive packages. Spain's Melia Hotels International SA and Canada's Sunwing Vacations are among the active players there. Some other chains have expressed interest in hotel development in Havana. I just feel as relationships grow between the U.S. and Cuba, the aggressive business minds will create a stir and try to develop this country as fast as possible. As we all know, nothing is easy, and it will take time to hurdle the political, monetary, labor, infrastructure issues. There are other industries that will benefit while Cuba is being rebuilt. A tremendous amount if investment is needed. Let's not forget the trillions of dollars U.S. companies currently have in offshore banks. How great would it be to invest some monies into Cuba at this early stage once an agreement can be reached. Over time, I think it is inevitable that Cuba will become an island oasis to be enjoyed by millions of people in the coming years.
Well, a couple of things to note about Macau. Two mega resorts ( Sands and Wynn) have opened just this year in Cotai. And a road bridge between HK and Macau is due for completion in 2017. - Both are game-changers. How would on invest in Cuba please? QP
QP - Yes I would invest in Cuba, especially now as it beginning to open up and after going to Macau many times, no I wouldn´t invest in Macau. Macau is very small and now completely built on and has little space for new development, unlike Singapore which has reclaimed about a square mile from the sea, Macau is in less of a position to do so.
Very interesting posts , loganair. Thank you. I think our timing on Brazil and Russia was similar and for similar reasons. Fully concur with your sentiments and views. Cuba - a fascinating idea - but how would you invest ? Thank you for your response. Another esoteric/specialist investment which I wanted was Macau where the economy was smashed after China clamped down on conspicuous spending a few years ago and visitors/gamblers to Macau plummeted. Macao is now picking up after several years in recession . I invest in Macau through Macau Property Opportunities Fund (MPO) which has performed well and which still looks very promising. Not a frontier country but another Trust I recently encountered with a massive Discount to Nav of 30% is Canadian General Investment Trust (TSX: CGI and LSE: CGI ). I have mentioned them recently on the bulletin board for Scottish Mortgage Investment Trust LSE SMT. Thank you for sharing your ideas and thoughts. ALL IMO. DYOR. QP
A closer look at Brazil’s economy by Kimberley Browe: The Brazilian economy isn’t looking great these days. The country is facing one of its most severe economic crises since the Great Depression, with unemployment at almost 12 per cent and inflation hovering around 8 per cent. The scene has caused a lot of anger, resentment and suffering across the country. But Brazilians are about to get yet another shock, since the new President Michel Temer has chosen to respond to the country’s economic troubles with a series of neoliberal measures that include cutting funds to social programmes, healthcare and education – which many Brazilians have come to rely on. Temer took office this summer after former President Dilma Rousseff was impeached for manipulating budget numbers. The move booted the left-wing Workers’ Party (PT) government from power for the first time in over 12 years. Temer then proceeded to load his cabinet with unelected officials and allies of his Brazilian Social Democratic Party government. To unpack some of the implications of a floundering economy and new neoliberal policies, New Internationalist spoke with Brazilian political scientist Sergio Gregorio Baierle. Baierle previously worked with the Central Bank of Brazil and advocated for Participatory Budgeting with the NGO Cidade in Porto Alegre. Brazil’s economy is in one of its worst recession its been in since the 1930s, while President Temer also announced last week that the economy isn’t expected to emerge from recession until the second half of next year – which is also later than expected. How is this actually unfolding in Brazil itself? How is it affecting people right now in the country? The situation is awful – the situation for the poor but even for middle classes. It’s very difficult because the economy is not recovering. For example, this year they [the government] have been able to produce some primary surplus for only two months of the year. They have not been able to achieve any primary surplus for the remaining months, so the debt with the banks is increasing, despite all this speech that there is a new hope for the economy and that many investors are trying to come to Brazil. But what are investors actually doing? They are profiting off of the highest interest rate in the world. So, for example a debt in credit card costs you around 500 per cent a year. It’s unbelievable. And for the government, of course, their interest rate is much less, although it’s still very high. They can make a lot of money. People with money, they actually don’t want to invest in anything because it’s much easier to make money just buying the debt bonds from the government. It’s much easier. So, all the sectors are suffering. The industrial sector was already in a decline and continues to decrease, while the service sector was the last one to fall, but now is falling. And that means a lot of unemployment because this sector employs a lot of people. The traditional retail sector is also facing a severe crisis. The only sectors that are surviving are the renters, for example the shopping centre owners. They live from the rent that people pay to put their stores there, so they can make some money. But even this group is suffering. They are suffering because, in some areas of the city, a lot of places are now vacant. This is just an example to show that the populations’ consumption too is decreasing. I don’t see how to get out of this, because I think both projects are failing. Of course, this project of trying to implement a pure neoliberal political economyis just for the benefit of the very rich so it saves, at least, the banks. That’s its main proposition, save the banks. But the other project that was using traditional Keynesian policies in order to push consumption and grow the economy was also not working. Dilma [former president Dilma Rousseff] tried to improve the economy through just investing government money in this process, decreasing taxes for industries or very low interest rate loans for some business sectors, and it didn’t work. Brazil, of course, is now facing its most severe crisis in its history. But I think the problem is more complicated than that and it’s not restricted to Brazil: it’s not working in many places. Even in the United States, the gross domestic product’s rise was slow compared to other periods where they tried to recover from recessions. Now they recovered from the recession of 2008, but it was much harder than in the past. Maybe we should consider crises not to be just crises in a linear time line: they are accumulating. So, I think we are in a process of arriving at a harsher crisis in the near future, internationally. Do Temer’s neoliberal policies actually differ that much from what Rousseff was putting forth in the last couple of years? Because she was heavily criticized for her neoliberal policies too. Yes, she was. Dilma received criticism from the right wing at the beginning of her term because of the policies she implemented in the first years. But in her last mandate she appointed a neoliberal minister to run the economy. And some measures they [the Temer government] are implementing today, she tried to implement then, but was not able to get the majority to do that. The idea of reducing funding for health and education was already there, but what occurred was that now they really implemented that measure. Now they have accentuated these policies, and have the majority in congress, so they can pass what they want. What are some of these specific policies that Temer has recently passed? They passed one that freezes public expenditure on all levels of government for 20 years. But the point is that they are also in a harsh crisis so they are investing almost nothing right now. So this policy implies that, regardless of how well the economy is doing, for the next two decades they will be investing next to nothing.. It’s not sustainable. For now, they get political support for those regressive decisions and I don’t know how much time it will take for people to withdraw their approval. It depends how fast people realise they are not in a new economy that will build fast. No. They are in the beginning of a crisis that will get worse and worse and worse for the foreseeable future. Right, this is the Proposed Constitutional Amendment (PEC) 241? This is one of the more controversial new measures. What will some of the more specific effects of this spending cap be? And how will it affect the legacy of social policies built by the Workers’ Party (PT)? Now they [the Temer government] are reviewing all beneficiaries of all social policies, one by one. They are obliged to go through, for example, in the case of the family grant, Bolsa Familia, they are checking all the beneficiaries and they cut the beneficiaries that are making more than $100 per member of the family. So they are going into some details and attacking people individually, and making them feel guilty – and if they are making some more than the cap, even just a few cents more, they can no longer receive the family grant. Some programmes they are cancelling altogether, and they are also preparing to increase the retirement age. In terms of education, for example, they are proposing a change in the educational system, cuting some disciplines like history, sociology and philosophy at the high school level. They would just be an option, and not an integral part of the key curriculum. Another proposal is for full time schools. In Brazil, we have a tradition of half time schools, with different morning and afternoon students. But many people in high school are also at the age that they need to work, so if they need to be at school full time during the day it will be very difficult. School will also become more expensive because students need to be there during the entire day. The government is also considering reducing the number of places in schools – because they will not be able to fit both morning and afternoon students at the same time. How do you see the Brazilian public responding to these measures? Some areas of Brazil have very active social movements. Yes, there is a strong response today. Public sector school workers are striking to protest the proposed changes in school policies. But the problem in Brazil is that the media are strong and very controlling, and they have almost the same interests. Two or three groups control the mainstream media. One of the reasons that they were in favor of Dilma’s impeachment was because they wanted more public funding for big media. And that was one of the first things the new government did, to put a lot of money in publicity in the big media, such as the Folha de Sao Paulo and Globo. They are also offering them contracts. For example, the Globo was offered a contract for administrating museums, and they are also interested in the school books industry – they are going far beyond just being a newspaper. They are trying to be present in the daily life of the schools and communities. Besides Michel Temer taking office recently, the Brazilian Social Democratic Party has made other gains in the country in the last few elections, including the municipal elections in October and in Sao Paulo a few weeks ago. They picked up a lot of seats that were once occupied by the PT. Some media organizations are interpreting this as an indication that voters, or citizens, are angry with the PT for leading them into a two-year recession. Do you agree with this? It’s half true. Because what is really happening is that people have thrown their vote, most of the ballots are blank. Most of the people went there but they didn’t vote for any candidate. So, for example, in Puerto Alegre, the mayor was elected with only around one third of the vote. And most of the voters they voted for no-one. People distrust the Workers’ Party for two reasons. One reason is what the media is saying about the Workers’ Party or whatever. But the other reason is that they don’t feel a strong difference between the Workers’ Party and the other parties. In the beginning people used to say the Workers’ Party was different, they were more ethical etc. But the middle class that traditionally showed more support for them now distrusts the party, although that doesn’t mean they are in favour of right-wing politics: they don’t see any other option that could follow. Is there any truth to the media reports that it was predominantly the policies and actions of the PT that lead Brazil into this recession? No. What lead to the recession was the end of the commodities boom. On the one hand, the end the commodities boom was linked to an internal problem where Brazil was not able to profit from the commodities boom. They were not able to recover industry or to establish a better relation with the financial sector in Brazil, because they had never really addressed that kind of dominance of the financial sector. And on the other hand, the crisis has an international context, because in my opinion the key point was the price of oil falling and hugely impacting the countries that were taking profit from the commodities boom, like Russia, Iran, and Venezuela. I think that the crisis in Venezuela would not be as big as it is today if the price of oil wasn’t as low as it became. Of course there are internal factors, but things don’t just happen by chance. How will this affect the economic bloc between BRICS countries (Brazil, Russia, India, China and South Africa)? The problem now is that Brazil is not part of the BRICS, Brazil is trying to get connected to the United States again. They think that the chance for Brazil to survive the crisis is to get a more friendly connection to the United States, increasing our exports there. I don’t think this will occur, especially with incoming US president, billionaire businessman, DonaldTrump. Why would they increase imports from Brazil if they can import for cheaper from other areas? Over the past years, Latin American countries – particularly the traditionally left-wing countries, Brazil’s previsous PT government, Ecuador, the former Argentine government, and Bolivia – have been trying to create more regional union and trade amongst themselves, and to aid Latin American integration. How are Temer’s policies going to affect this Latin American unity? Temer’s governmet is trying to break with this trend. Now the international relations sector in Brazil is very right wing. José Serra is the new minister for foreign affairs, and he is in favour of improving ties with Argentina, blocking Venezuela. And I think for Mercosur (Southern Common Market), for all the policies they have been trying to implement before, they will have a difficult time in the present. Unless another change occurs in the near future… for Latin America I think we are going back to that traditional alternation between some liberation and some return to dependence on the United States policies for the area.
Currently I invest via Morgan´s monthly investment plan and 2 1/2 years ago I said to myself once JRS reached 500p and JPB (JP Morgan Brazil) reached 70p I would look at another of JP Morgan´s Investment Trusts to invest in. Here´s the thing, at the moment other then JPB I can see of no other JP Morgan trust to invest in while I still see tremendous value left in continuing to invest in JRS. When it comes to investing in Russia and Brazil I was lucky to be in the right place at the right time Russia - the collapse in the price of oil and sanctions, Brazil - their worst recession for 100 years. I have written to JP Morgan a few times asking them to look into a ´Frontiers´ Trust, for their Indian trust (JII)to include the whole of the Sub-continent, in the same away as the China trust includes Taiwan and Hong Kong, for their Asian trust (JAI) to be no more than 40% China, Taiwan and Hong kong, currently at around 60% and for this trust to include other Indian sub-continent countries and the ex-CIS states. I like Kenya and Cuba, I think Myanmar may also do very well, then their is Vietnam which has promised so much over the past 10 years while sadly delivering very little.
Yes. Concur. Which other EM's would you say are interesting to look at please, LoganAir, which in your opinion may be bottoming out? Thanks QP
Hi Logan - a long time since I looked at these posts. Note your Russian and Brazilian investments have been paying off recently. Very well done, sir.
Brazil's economy contracted 2.9 percent in the third quarter, compared to the same period in 2015, the Brazilian Institute of Geography and Statistics (IBGE) said Wednesday. The latest drop in the gross domestic product (GDP) indicates that there is no end in sight to the severe recession in South America's largest economy, economists said. The economy has contracted for 10 straight quarters, with GDP declining 4 percent in the first nine months of 2016, marking the worst performance in a January-September period since the current statistical methodology was introduced in 1996, the IBGE said. The poor performance in the July-September period casts doubt on forecasts by the government and economists calling for the economy to start growing in the second half of 2016. Brazil's economy contracted by 3.8 percent in 2015, marking the worst economic downturn in the past 25 years. The South American country's GDP contracted 4.4 percent in the January-October period on a year-on-year basis, a performance that is worse than analysts' forecasts of a 3.4 percent decline for the entire year. If the forecasts turn out to be accurate, Brazil's economy will contract for two years in a row for the first time since 1930. Brazilian Finance Minister Henrique Meirelles said on Thursday that the economy could contract in the first quarter of 2017, admitting that a recovery from a two-year recession will take longer than expected.
JP Morgan - Brighter skies for Brazil after economic storm. The clouds are starting to lift over Brazil after an economic storm in 2015. But what factors should investors consider when turning their attentions to the South American giant? Brazil’s economy suffered in 2015, with an economy which declined 3.8 per cent and political scandals which flooded the headlines. Unease continued into 2016 with the president’s suspension, the weakness of commodity prices and the slowdown in China cast a dark cloud over the nation’s economic prospects. Prior to Rio de Janeiro’s successful hosting in August of the world’s greatest athletics competition; the skies above Brazil were starting to brighten. As we discuss further, for investors looking at the opportunities in the emerging market, the long-term view is one that may be needed. Economic storms: Following the twists and turns of Brazil’s economic and financial scene may not be recommended to those of a nervous disposition. Storms may brew up seemingly out of nowhere, only to blow themselves out equally quickly. It was only in May last year that Christine Lagarde, managing director of the International Monetary Fund (IMF), concluded a visit to the country by heaping praise on “the remarkable advances Brazil has made in addressing poverty and inequality”. True, she said also that “preserving these social gains and ensuring strong and inclusive growth in the future hinges on strengthening macro-economic policies”. Supply-side bottlenecks needed to be addressed, said Ms Lagarde, and infrastructure improvements were needed, but she ended by praising Brazil “as one of our most dynamic member countries”. By the end of the year, most of the IMF’s 188 other members concluded that if Brazil represented economic dynamism, they would prefer to stick with sloth. A deep recession caused by plunging demand for commodities such as iron ore, soya and oil was exacerbated by a huge financial scandal involving the state-owned oil company Petrobras. Falling confidence: Understandably, business and consumer confidence dropped sharply and by April this year the IMF, in its World Economic Outlook (WEO), was forecasting that 2016 would see the Gross Domestic Product (GDP) shrink by a further 3.8 per cent and that there would be zero growth next year. Brazil, said the Fund, was “mired in deep [recession]” and faced “severe macro-economic conditions”. Add in wider concerns about corruption and inequality and Latin America’s emerging giant was looking in poor shape. But true to form, obituaries for the world’s seventh-largest economy would have been premature. Come July, and the IMF was having second thoughts. In its WEO update, it upgraded its forecast for Brazilian GDP by 0.5 percentage points for this year, giving a revised figure of minus 3.3 per cent. At the subsequent press conference, IMF officials were queried about this, with one questioner asking: “How do you explain this newfound strength that you’re projecting?” Oya Celasun, of the IMF’s research department, replied: “So what we’ve observed in Brazil recently, since March, has been a turning around in confidence. We see that in indicators of consumer and business confidence. We definitely see it in financial markets. Exchange rate has strengthened quite significantly as well.” Investors should always keep in mind that movements in currency rates can adversely affect the return of your investment. Negative effects were wearing off, she said, “and we do see evidence of the economy turning around”. Her research department colleague Gian Maria Milesi-Ferretti added “the contraction is halting as the tide gradually turns”. Meanwhile, shares have rallied this year, with prices surging from the low point seen in the late winter. Some firming of commodity prices has helped, as have inflows from foreign investors seeking better yields in a world of very low returns. Underlying strengths: What seems to be happening is that the underlying strengths of the economy are reasserting themselves. These include the use of past revenues from the country’s commodity wealth to grow other parts of the economy, whether aerospace manufacture or infrastructure investment. For the investor, the real growth opportunities are likely to be found less in the huge energy and commodity companies that have long loomed large on Brazil’s financial scene and more in the smaller enterprises that are on the way up and offer the potential for rapid growth. However, investors should be reminded that securities of smaller companies may be more difficult to sell, more volatile and tend to carry greater financial risk than securities of larger companies. These are likely to include businesses catering to the needs of Brazil’s burgeoning middle class, such as retailers and providers of consumer staples. When those firms are well managed with a firm grip on costs, the long-term growth prospects can be bright, regardless of economic and political squalls. But identifying such stocks in a vast and complex economy such as Brazil calls for deep knowledge and expertise. The JPMorgan Brazil Investment Trust is currently the only closed-ended fund offering “pure” exposure to the Brazilian market. Its methodical approach to stock selection has proved its worth over many years. For investors it’s important to keep in mind that past performance is not necessarily a reliable indicator for current and future performance and that the value of investments and the income from them can fall as well as rise and investors may not get back the full amount invested. Further, investment in emerging markets may be more volatile and therefore risk to your capital could be greater. Superpower of tomorrow? Brazil has suffered a torrid 12 months and, despite a brightening outlook, it still faces challenges. The IMF has noted that “political and policy uncertainties remain” and “cloud the outlook”. Inflation is high, inequality is rife, the political scene is far from settled and corruption concerns have yet to be fully addressed. That said, there is the possibility that price rises will subside and that the interim president will embark on privatisation measures that could give a renewed sense of purpose to the Brazilian economy. Investing in this fascinating and fast-changing country means looking through short-term problems to the prospect of an economic superpower of tomorrow, one whose middle class will demand, and receive, an ever-improving standard of goods and services. As with those who competed so thrillingly in Rio this year, such an investment strategy requires focus, planning, preparation and a willingness at all times to take the long-term view.
Interesting to see City of London Investment company starting to buy in here to now being over 5% as they have been steadily buying JRS (JP Morgan Russian Securities Trust) which they now hold around 27% of.
Slow Recovery: Unemployment soared to a 12-year high as economists estimate that gross domestic product contracted for the seventh consecutive quarter in the three months through September. The economy will recover late this year or early next, and is projected to grow 1.6 percent in 2017 and "maybe" around 2.5 percent in 2018, Meirelles said. Reasonable Rally: Brazil’s business and investor confidence have improved since Temer took office on an interim basis in May, driving the Ibovespa stock index to a two-year high and extending the real’s world-beating rally this year to 23 percent. "The recovery from that level, which was so low, is reasonable," Meirelles said. Many in Brasilia see Meirelles, 71, as potential candidate in the presidential race in 2018 if his term as finance minister proves successful. He has had a foot in several political parties and was elected to the lower house of Congress in 2002. A former president of BankBoston Corp., Meirelles slashed inflation when he was central bank chief for most of the past decade. After leaving the central bank, he became a senior adviser at Kohlberg Kravis Roberts & Co. Ltd and the chairman at J&F Investimentos SA, the holding company that controls the world’s largest meat producer, JBS SA. Meirelles stepped down from all positions in the private sector upon being nominated for finance minister.
That's what Brazil really needs - the US to support it as opposed to picking it up and then surruptiously knocking it down..
The US treasury chief praised Brazil's new government on Tuesday and said the Latin American giant is "poised" to exit a painful recession and return to economic growth. Treasury Secretary Jack Lew said after meeting with Brazilian President Michel Temer and Finance Minister Henrique Meirelles that "ambitious" reforms are taking the economy in the right direction. "Brazil’s economy appears poised to return to growth, following the deepest recession in over 100 years," Lew said in comments after talks in Brasilia. "I am convinced that the government’s proposed structural reforms, if passed by Congress, will help the Brazilian economy realize its enormous growth potential, including promoting the strong and balanced growth which is so important to strengthening the middle class and protecting Brazil’s most vulnerable populations," he said.
They had the Olympics and the Football World Cup - there should have been an influx of money in to Brazil. I guess even those two events weren't enough.
Oil prices moving higher should benefit Brazil economy greatly. ALL IMO. DYOR. QP
Emerging markets recover, but now for the hard part by Michelle McGagh: Emerging markets have been strong performers this year, but now earnings need to improve, say investment trust managers. Emerging markets have only entered the first leg of a recovery and company earnings need to improve before a genuine turnaround can take hold. Emerging markets have had a rocky few years but investments trusts focused on the sector are among the best performers of 2016. Shares in these trusts have risen 31% on average since the start of the year. The outcome of the EU referendum in June provided a further boost to emerging market investments as the value of sterling fell, however, it is only just the start of the recovery. Carlos Hardenberg, manager of the Templeton Emerging Markets investment trust, said the ‘pendulum was swinging back’ in favour or emerging markets. Shares in the trust are up 42.8% this year, making up all the ground lost in a torrid 2015. Hardenberg took control the fund from veteran emerging market manager Mark Mobius last September. ‘The market always over reacts when the general consensus turns negative,’ said Hardenberg. ‘Share prices are more volatile than underlying earnings. We are seeing industrial production, as a measure of recovery, increasing in emerging markets...if you go country by country, there is a healthy degree of orders. ‘GDP growth is slowly improving and over the next two years markets like Russia and Brazil will see the biggest relative improvements.’ Omar Negyal, manager of the JPMorgan Global Emerging Markets Income trust, targets income rather than capital growth in his fund and said the real recovery in emerging markets will have begun when company earnings stabilise. ‘What we are seeing in emerging markets is the first leg of recovery,’ he said. ‘China is stabilising and there is an improvement in trade balances in emerging markets. For the second leg [of recovery] to come through, earnings have to start to improve. We are at the start of that,' he said. He said improved earnings would help the ‘rerating of high yield equities in the asset class’. China has been the main problem for emerging markets, with slowing growth dragging the sector down. Hardenberg holds 19% of his trust in the country. He said there were still concerns around housing and ‘over capacity in steel and cement that will have to be dealt with in future’. ‘The big negative for emerging markets is the overall impact of global uncertainty and demand and supply in commodity markets,’ said Hardenberg. Former chief economist at the International Monetary Fund Ken Rogoff has also warned of the threat China poses to the global economy due to its high levels of debt. He said there was ‘no question’ that ‘China is the greatest risk’. ‘China has been the engine of global growth,’ he said. ‘China has been really important. But China is going through a big political revolution. And I think the economy is slowing down much more than the official figures show,’ he said. However, the good news is that sentiment towards other emerging markets is becoming more positive and local emerging market currencies are ‘slowly recovery’ and companies are finally keeping ‘capital expenditure down and concentrating on cost management’, said Hardenberg. Emerging companies in mid and small cap - there are more opportunities there,’ said Hardenberg, adding that many tech companies - of which he has been a fan - were ‘leap-frogging’ more established businesses. In particular, Hardenberg said he looked for companies ‘that have sustainable business models in an area with a high barrier to entry’. ‘We are expecting that emerging markets will see a sideways development over the next 12 months and there is a clear risk from China...and there is some danger already priced in,’ he said. Although Asia is the largest geographic weighting in his trust, Hardenberg said he did not ‘have exposure to Chinese banks or insurance companies’ because of their poor asset quality and concerns the companies were ‘hiding how they are restructuring’. China is the concern for Negyal, whose trust has mounted a recovery almost as impressive as Templeton's this year, with the shares up 38.6%. ‘China is very important for emerging markets at a quarter of the asset class and for the rest of the emerging markets it is vital... because it drives the rest of the emerging markets via trade links,’ he said. ‘That’s commodity prices in Latin America or manufactured goods in the rest of Asia. There are very few emerging markets that are isolated from China. From an economic perspective, Latin America will benefit from stabilisation [in China].’ Also important for Negyal is for emerging markets ‘to re-enter growth territory’ to ensure companies can continue to pay dividends. ‘Emerging market dividends and earnings have been under pressure,’ he said. ‘The near term outlook for dividends is still a concern and it is something we want to be cautious about but in the mid and long-term growth opportunities can be seen as well,’ said Negyal.
The Brazilian economy has bottomed out - By Adrien Pichoud: The Brazilian economy showed some signs of improvement in the last few months. Industrial production increased this summer after two years of nearly non-stop decline. Consumer and industrial confidence are continuing to edge higher and the IMF recently revised up its projection for 2017 GDP for a modest expansion of +0.5% (vs. nil growth before). On the political front, the senate officially voted to impeach Dilma Rousseff following the corruption scandal in the Brazilian government. This will allow Temer’s more pro-business government to begin the expected reforms that are needed. – On the monetary policy side, the BCB is turning more dovish which suggests a possible easing cycle in the coming months. Nevertheless, on the negative front, consumers are still suffering as incomes continue to fall and the unemployment rate rises above the 11% threshold. Moreover, the president will also face the difficult task of reducing the budget deficit. Ultimately, the performance of the Brazilian economy and its stock market next year will largely depend on the evolution and implementation of the most important reforms.
Brazil Is in a Shambles. Can the New President Save the Crumbling Economy? - by Otaviano Canuto (Executive Director on the Board of the World Bank for Brazil): Now that impeached Brazilian President Dilma Rousseff is out of office, it is up to the newly empowered administration of President Michel Temer to clean up Brazil's macroeconomic mess. Can Temer's government save Brazil's crumbling economy? The situation is certainly dire. In fact, Brazil has lately been experiencing the most powerful economic contraction in its recent history. Its per capita gross domestic product (GDP) will be more than 10% smaller this year than it was in 2013. And unemployment has soared to more than 11%, up four percentage points from January 2015. Brazil has no easy route to recovery for a simple reason: the current rout derives from the intensification in recent years of long-standing economic vulnerabilities - in particular, fiscal profligacy and anemic productivity growth. Today, counter-cyclical policies are not an option; there simply isn't enough fiscal or monetary space. This leaves Brazil's government with only one real option for restoring business confidence and reviving economic growth: tackling Brazil's structural weaknesses. The good news is that Temer's government seems to recognize this imperative. Already, it has proposed to Brazil's Congress a constitutional amendment forbidding for the next 20 years nominal annual increases in public expenditures, including at the subnational level, that exceed the previous year's inflation rate. Provided that inflation stabilizes at some lower level, such a cap would cause public expenditure as a share of GDP to decline as soon as the economy began to grow again. If increases in tax revenues accompany GDP growth, fiscal imbalances and the accumulation of public debt would automatically be addressed. At a time when Brazil has little flexibility in its budget, such a rule could turn out to be a fiscal game changer. Of course, a cap on expenditure growth would not by itself eliminate the need to address existing budget rigidities. Temer's government has declared its intention to present to Congress a pension reform plan for precisely this reason. As for productivity, the government is focused on reducing waste caused by insufficient infrastructure construction in recent decades. Scaling up infrastructure investment also promises to spur private investment in other sectors. The key will be to fine-tune the division of responsibilities between the private and public sectors - including independent regulatory agencies - in the various segments of infrastructure services. Temer's government also hopes to tap investment in human capital as a source of productivity growth. As it stands, private companies in Brazil invest less in personnel training than those in other countries with similar per capita incomes, owing largely to disincentives embedded in tax and labor laws - incentives that Temer's government has proposed to change. To maximize the impact of these efforts, Temer's government should also focus on reducing waste in the private sector caused by other problems with the business environment. The more efficient use of human and material resources would make firms more competitive and boost Brazil's total-factor productivity, especially if Brazil's human capital were enhanced. Add to that efforts to facilitate foreign trade, and Brazil's "animal spirits" of entrepreneurship could be unleashed, enabling Brazil to escape the current crisis and move toward a more prosperous future.
Thank you for the useful ongoing updates, loganair. Much appreciated. QP
Brazil Markets Predict Economy to Grow 1.2 Percent in 2017. The expectation of financial institutions for the Selic rate stays at 13.75% per annum at the end of 2016, and followed by 11% per annum at the end of 2017 and inflation to be 7.1% by the end of this year and 5.1% by the end of 2017.
Brazil’s economy expanded at its fastest pace in one-and-a-half years in June, as improving business and consumer confidence drives an incipient recovery in industrial production and retail sales. The central bank’s seasonally adjusted economic-activity index, a proxy for gross domestic product, rose 0.23 per cent in June from the previous month, after falling a revised 0.45 per cent in May. It was its best performance since December, 2014. Many economists see the economy improving in the second half of the year as confidence levels start to improve under the government of interim President Michel Temer. “We believe that the stabilization of the industrial sector and a slowdown in the pace of contraction of retail sales and services will improve activity results in coming months,” economists with Sao Paulo-based bank Bradesco wrote in a research note. Markets have rallied in recent months on bets the impeachment process will strengthen the hand of Acting President Michel Temer and improve his chances of reviving growth. He and his aides have said the ouster of his predecessor Dilma Rousseff, which could be decided this month, will allow him to pursue more ambitious reforms designed to shore up fiscal accounts and attract investment. Analysts surveyed weekly by the central bank have also been revising up their GDP estimates, forecasting a milder recession in 2016 and a more robust rebound next year. Consumer and business confidence are on the rise as well, leading to some gains in retail sales and industrial output. The rebound in investor confidence will also require more work from the government to be sustained, according to central bank chief Ilan Goldfajn.”It’s fundamental the approval and implementation of reforms needed to rebuild the confidence of economic agents and to create conditions for the economy to recover with low inflation,” he said at an event in Sao Paulo. But Latin America’s largest economy still faces numerous challenges.
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