News from Brazil

Business & Economy

In Brazil on February 18, 2011 at 11:02 am

ECONOMY

Imports totaled 21.8 percent of Brazil’s consumption in 2010, a new record in the South American country, according to foreign trade figures compiled and released by the Federation of Industries of the State of Sao Paulo, or FIESP (Herald Tribune).

Brazilian state-run development bank BNDES will receive at least 45 billion Real or 27 billion US dollars from the government to extend its program of low-cost loans for supporting company investments in capital goods (MercoPress).

Brazilian economists forecast inflation will continue to accelerate, and interest rates rise more than previously expected, signaling 50 billion reais ($30 billion) in budget cuts may not be enough to cool the world’s 8th-largest economy. Yields on interest rate futures jumped (Bloomberg).

Brazil’s Gross Domestic Product (GDP) growth in 2010 was estimated at 7.8 percent, the country’s Central Bank announced (Xinhua).

AGRI-PECU

Brazilian federal prosecutors are investigating allegations of irregularities in state-run development bank BNDES’s purchase of 3.5 billion reais ($2.1 billion) of debentures from meat producer JBS (Reuters).

AVIATION

Embraer S.A. is in talks with several airlines in India to sell its regional jets in the country, where it expects economic expansion to continue to drive demand for air travel (AvIndia).

The Brazilian National Civil Aviation Agency (ANAC) has published its operational data for the month of January 2011. TAM Airlines maintained its market leadership in Brazil (MercoPress).

Lufthansa is continuing to expand its presence in South America and next winter is adding a new destination to its route network: Rio de Janeiro (BW).

BANKING & FINANCE

Brazil is this year’s hot market for private-equity firms and hedge-fund managers. Money is pouring in, as investors throng funds’ offices on bustling avenues like Faria Lima in São Paulo and Paiva de Ataulfo in Rio. Local hedge funds managed around $243 billion in assets at the end of 2010, up by 23% from 2009 (The Economist).

Brazil’s private banking industry grew 23% in 2010 according to a survey made by the Brazilian Association of Financial and Capital Markets Entities (Anbima) (India-Brazil Chamber).

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BIOFUELS

Brazilian sugar and ethanol group Cosan Industria e Comercio SA and Royal Dutch Shell disclosed more details about the $12 billion ethanol joint venture the companies formed last year, which will be called Raizen (Dow Jones).

Brazil’s Cosan, one of the world’s largest sugar and ethanol producers, said it planned to boost its annual sugar production capacity to 6 million tonnes from the present 4 million in five years (Reuters).

INFRA

At least three consortia will bid in April for the right to build and run a high-speed railway in Brazil, the head of the nation’s transport regulator told Reuters.

MINING

Billionaire Eike Batista’s AUX Canada Acquisition Inc. reached a verbal agreement to buy about 80 percent of gold explorer Ventana Gold Corp. in a deal that values the company at C$1.54 billion ($1.56 billion) (Bloomberg).

OIL

Petrobras approved the bidding process for the construction, in Brazil, of the first seven of a total of 28 offshore drilling rigs intended to meet its long-term drilling program with priority given to the pre-salt wells. The new rigs are expected to come into operation in 2015. The remaining 21 rigs will also produced in the country (BW).

REAL ESTATE

BM&FBOVESPA and the Getúlio Vargas Foundation (FGV) have launched the first profitability index for the Brazilian real estate sector. The General Index for the Real Estate Market – Commercial (IGMI-C) was developed by the Brazilian Institute of Economics (Ibre/FGV), with the sponsorship and support of 26 bodies representing companies in the financial and real estate sectors and pension funds (Bovespa).

STOCK EXCHANGE

Brazil’s BM&FBovespa and China’s state-owned Shanghai Stock Exchange will sign a deal that could lead to joint ventures between two of the world’s largest exchange operators (Reuters).

BM&FBovespa is interested in China and India as markets where it could pursue expansion because of their growth potential and similarities in terms of products (Reuters).

BATS Global Markets and Brazilian asset manager Claritas signed a memorandum of understanding to create a new stock exchange with clearing and depository services in Brazil (Reuters).

Morgan Stanley strategists led by Guilherme Paiva wrote that domestic policy risks will continue to weigh on Brazilian equities in the short term (Reuters).