When Brazilians contemplate the beauty of their country or the ability of their soccer team, they like to joke, “God is Brazilian.” It seems foreign investors have taken the joke seriously. No emerging nation has attracted portfolio flows the way Brazil has in recent years. Charts tracking the money pouring into the country this year have shown a near vertical line to surpass the totals for 2010, which itself was a record year. This has made the Brazilian real one of the most expensive currencies in the world, and it sure feels that way on a visit to the country (Time).
The three-year build-up to the 2014 soccer World Cup is set to boost Brazil’s economy by 1.5% of GDP, according to Ilan Goldfajn, chief economist of the Itau Unibanco Holding, Latin America’s largest bank by market value (Mercopress).
Brazil sees more risks from worries over foreign debt and a possible economic slowdown in China, the central bank said in minutes of their most recent policy meeting (Reuters).
FDI in Brazil grew from US$ 25.9 billion in 2009 to US$ 48.4 billion. Only the US (US$ 228.2 billion), China (US$ 105.7 billion), Hong Kong (US$ 68.9 billion) and Belgium (US$ 61.7 billion) received more foreign investments (Portal Brasil).
Brazilian newspaper Estado de Sao Paulo revealed documents from Chinese company Sun Falcon International Inc. offering triangulation scheme through Los Angeles port, the busiest container port in the US, to avoid Brazilian anti-dumping tariffs (MercoPress).
The Big Mac Index, created by “The Economist” 25 years ago, has a new version, which takes into account not only the price of the sandwich but also GDP per capita of each country. Result: Brazil’s real is the world’s most expensive currency and is 149% above the dollar (Forbes).
With the currency ever so strong against the US dollar Brazilians are travelling overseas and spending as never before, according to the latest figures from the Central Bank (MercoPress).
The Brazilian government, in its frustrated attempt to save the dollar and keep its currency from overvaluation, has come up with a new set of macroeconomic measures for the currency markets. Two new rulings were handed to dollar traders. It was a surprise move, with many people expecting the dollar to weaken to BRL1.50 before any new measures were announced (Forbes).
Dow Chemical has agreed to sell two Texas polypropylene plants to Brazilian plastics producer Braskem as part of a $340 million cash deal. Two units on Dow’s Freeport and Seadrift complexes are among four facilities that Dow plans to sell in the deal. The others are in Germany (Fuelfix).
Brazilian drugstores Drogasil and Drogas Raia are in talks to combine their operations, the companies said in a securities filing. Earlier, IstoE magazine reported online that the companies are in advanced talks to create a retail giant with 700 stores and about $700 million in annual sales (Reuters).
General Motors Co., the biggest U.S. automaker, is preparing a five-year investment plan through 2017 for its Brazil operations, which surpasses the current 5 billion reais ($3.21 billion) for 2008 to 2012 (Bloomberg).
The pilots of an Air France plane that crashed into the Atlantic in 2009 lacked adequate training, French investigators have found. France’s BEA authority said pilots had failed to discuss repeated stall warnings and did not have the training to deal with the hazard. Air France rejected the accusation (BBC).
During the 2nd quarter of 2011 (2Q11) Embraer delivered 25 jets to the commercial aviation market and 23 to the executive aviation market (20 light jets and 3 large jets). 2Q11 Revenues reached US$ 1,358.6 million, and Gross margin grew from 20.2% in 2Q10 to 22.4% in 2Q11 (Embraer).
Demand for regional flights in Brazil increased by 19.54% in June 2011 compared with June 2011. On the supply side, growth was 12.48%. The occupancy rate consequently reached 68.10% in June, compared with 64.09% in June 2010 (Portal Brasil).
TAP is to add one additional flight per week between Lisbon and Belo Horizonte between 29 August and 12 September responding to high levels of demand on this route with its average occupancy rates at over 90%. In 2011 TAP carried 16% more passengers on this route than in 2010 and for September it has reported a growth of 34% in total bookings (TAP).
Mexican airport operator Asur said it will likely not bid for airport concessions in Brazil as Chief Executive Adolfo Castro cited weak returns on those ventures. Asur, or Grupo Aeroportuario del Sureste, said earlier this year it would be interested in building a new airport in the Brazilian northeast beach resort of Natal (Reuters).
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BANKING & FINANCE
Caixa Economica Federal, Brazil’s biggest housing lender, expects mortgage lending growth to slow by half this year to more sustainable levels, Chief Executive Jorge Hereda said (Reuters).
Brazil says the planned production of tablet computers will help spur technological innovation in Latin America’s biggest country. Brazil has signed agreements with at least 10 companies that make tablets. One of them is with Taiwanese manufacturer Foxconn, which is expected to start producing Apple Inc.’s iPads later this year in Brazil (Washington Post).
IT industry experts are unanimous. Brazil will have to move to circumvent the lack of skilled labor in the country in order to have a tablet industry by 2014, as scheduled by the Ministries of Science and Technology (MCT) and the Development, Industry and Foreign Trade (MDIC ) (India-Brazil Chamber).
MINING & STEEL
Steelmaker CSN has again raised its stake in rival mill Usiminas to 10.84 percent of its ordinary voting shares, CSN said in a market filing (Reuters).
OIL & GAS
Late last week Petrobras announced a long-awaited five-year investment plan of US$224.7 billion for the period between 2011-2015. The company thinks it can nearly triple its production, from around 2 million barrels per day to 6 million by 2020. Brazil’s government is Petrobras’ main shareholder, directly owning 54 percent, and it was Finance Minister Guido Mantega who had rejected the company’s first two investment plans (The Rio Times).
Petrobras Gás S.A. (Gaspetro) completed the acquisition of Gas Brasiliano Distribuidora (GBD), a natural gas distribution utility operating in the northwestern region of the state of São Paulo. Previously, the utility was controlled by Italy’s ENI International B.V. (BW).
Petrobras plan to sell off assets will focus largely on projects in South America where returns have been low, sources familiar with the situation told Reuters.
Brazil’s fuel imports will likely rise ten percent this year compared to 2010, Petrobras said, a further sign of the country’s growing importance in global oil products markets (Reuters).